Time to be heard!

MICROLOFTS modified

– Vancouver Courier

Old people have money. Young people have time. It’s a broad statement, I know. But in general it is true. The older we get, the more we’d trade wealth for extra years. The younger we are, the more we demand both. We are so arrogant.

And this brings us to the worn stone steps of the Vancouver Art Gallery today, Sunday, where the youth of YVR are revolting. They’re angry, too. Not gonna take it.

“It’s time to be heard! There is no end in sight to the stratospheric home prices in Vancouver and its impact is being felt across our communities.

“Families and professionals are leaving in frustration, homes sit vacant while too many need shelter, rent is sky-high, businesses can’t retain talent in this city, and the next generation of Vancouverites are forever priced out. The affordability crisis is affecting everyone in the income-spectrum and problems are all interconnected. But what’s to be done?”

So, a big rally against real estate prices in a city where the average detached hovers around $1.4 million. The kids, led by Twitter warrior Eveline Xia (I spoke with here a few days ago, as you know), have turned this into a Millennial-vs-Boomer, local-against-Chinese, all-vs-politicians movement. It started with her #DontHave1Million campaign, spread to the conflict-loving MSM, spawned a tax-foreigners petition with 25,000 names and now has gripped the pliant mayor, Gregor Robertson.

Friday night, after years of silence, and as it became apparent the winds were shifting against him, he issued this statement:

“We definitely need taxation tools that discourage speculation on real estate. It’s clear that rampant speculation on real estate is driving up prices in Vancouver. Vancouver needs the BC Government to take action on creating a speculation tax and recognize that we need a fair and level playing field to make housing more affordable for residents in Vancouver, and throughout the province. Their complete absence in supporting low and middle income housing is making it extremely difficult for people, especially young people, to live and work in Vancouver.”

Next in line was the local condo king, Bob Rennie – one of those West Coast, anything-goes marketing guys as responsible as anyone for blowing on the embers of housing lust. We need a speculation tax, he told a big conflab of business people last week. “It’s speculation we should be concerned about. The conversations aren’t about foreign investment, the conversation is about China. That’s the elephant in the room.”

Rennie (and his political horse, Robertson) is calling for a sliding-scale tax linked to the length of time someone owns a property – in addition to capital gains tax, and the CRA’s treatment of quick gains as 100%-taxed income. Where should the money go? “Let’s repatriate some of that money back to first time buyers,” he said graciously, hoping everyone in the room would forget he makes his living selling boxes in the sky to horny kids.

Well, it’s clear those same kids are feeling victimized – persecuted by a system they say is broken and unfair. In 1976, they argue, the Boomers needed to save for only five years to amass a down payment. Now it’s fifteen. Average wages, they add, are pitiful. Besides, everyone has to go and get a degree or two, incurring debt. They feel the world has failed them when they cannot turn into their parents and within a short time of leaving university have a marriage, a kid, a detached urban house, a retriever and a picket fence.

And so they Tweet. They petition. They op-ed. They blog. And they march. Here is how it looked on Sunday:

RALLY modified

Time will tell if others, like the mayor, bend and sway with the wind. With a federal election on the horizon, and the moist generation leaning left, it would not surprise. But I would obviously be a mistake. It’s always sexier and more fun to blame the system than yourself, your peers or your family.

The truth is a spec tax won’t make a SFD in Vancouver more affordable. Nor will beating up on Chinese immigrants or investors. Only by addressing the root causes of this stupid-price situation will any sanity return to the real estate marketplace.

We know what they are. I just devoted eight years to telling you. At the top of the list are the lowest interest rates ever which have encouraged excessive debt, overspending, and inflated house prices. Once rates start to normalize, the thud will be deafening. Then there’s financial illiteracy. You know, the kind that leads BC residents to spend (on average) 108% of their incomes, adopt a high-risk, one-asset strategy and turn their houses into a futures market. Add in irresponsible lenders, like Vancity with their laneway and free-down payment mortgages, plus CMHC, which strips away banker risk and gives cheapo loans to people without money. Low rates, easy credit and market-bending policies have bred greed and entitlement. It’s classic bubble thinking.

But there’s an even greater cause. It’s Mom.

Seriously. If the market were left to its own devices, house prices would have started to wither several years ago. Today 42% of all first-time buyers rely on the Bank of Mom for the down payment – a reliance that is swelling along with house prices. BMO also found that an equal number of move-up buyers are being financed by parents, most of whom are tapping their own windfall equity to keep the party going.

As you might expect this has bred the very kind of irresponsible, anti-social behaviour the moist Millennials are accusing everyone else of exhibiting. Almost half (48%) of Mom-financed first-timers are willing to jump into a bidding war, as are 36% of the upsizers. And here’s the most telling fact (that you will not hear on the steps of the VAG today): without the Bank of Mom 40% of first-timers and a whopping 50% of the move-up crowd would not be buying.

If that were the case, if this torrent of money from the hated Boomers and local families was not gushing into the real estate market to support the entitlement of the virgins, prices would descend rapidly. But, it’s so much easier to blame the Chinese. The premier. The oldsters. The system.

Of all the things wrong in the world to vex about – climate change, over-population, ISIS, Canada at war, public debts and deficits, punishing taxes, animal depopulation, homelessness, a sliding economy – the young protest over real estate.

We are so arrogant.

284 comments ↓

#1 Phil on 05.24.15 at 9:07 am

Good morning first

#2 Weener on 05.24.15 at 9:11 am

love this line:

“And this brings us to the worn stone steps of the Vancouver Art Gallery today, Sunday, where the youth of YVR are revolting. They’re angry, too.”

#3 Rikk on 05.24.15 at 9:12 am

It’s called a first world problem …

#4 Ben on 05.24.15 at 9:15 am

Never like to see the “poor old people are going to die soon” appeal. They were young once, they had their time. And during that time housing was far cheaper.

The young should not apologise for being young. The old should apologise for being part of a horrible system that appropriates labour.

Next up for people who should apologise: the guys who put in mortgage insurance. Removing risk from the system for the banks was a totally economically illiterate move. Properly stupid.

Next up are the banks who need clipping big time. Let’s have the state issue our money instead of the banks. Let’s have a policy where we try to get the average house price below 5 years average wage.

Again I reiterate: the young have nothing to be ashamed of for being young. The old were young once and they had it better. It’s good that they are angry. Be angry young people – you are getting a very bad deal.

Time for a boomer haircut on housing and pensions. You guys messed up and we are dumping the mess in your lap. Enjoy.

#5 Ben on 05.24.15 at 9:17 am

Oh and part of getting and keeping house prices low would be land value tax. Let’s get that in and remove income tax. Tax land not labour.

Workers are getting next to nothing whilst the rentiers make out like bandits. This *has* to change.

#6 Ben on 05.24.15 at 9:19 am

Finally land prices are the problem not house prices. I find the idea that young people are “entitled” for demanding land in their country of birth disgusting.

This land is ours. My labour is not yours. I will work with my wife for 25 years straight to pay for land because you were born earlier.

#7 Evan on 05.24.15 at 9:30 am

Housing use to be a great place to put your money for investment. Over the past 25 or so years, housing prices in Vancouver have taken off and made a lot of people who bought in a lot of money.

But, at current Vancouver prices, can you really expect the party to continue?

People investing in real estate today are generally incurring a huge amount of debt and investing at highly speculate prices. The result is not going to be pretty.

A lot of people say that a home is not an investment because you have to live there. That argument fails to take into account that you can RENT rather than buy. You can also live outside of Vancouver, on a major transit route, and bus in; or, move to a much lower cost city and invest your money in something that will have much better long term returns. A diversified portfolio of cheap stocks relative to value is a great option:

http://www.netnethunter.com/buy-cheap-stocks/

As for me, I left the country during 2009 for Asia where work and cheap housing was plentiful. While I would love to own a house in Vancouver (or the GVRD in general) it’s not reality until thw bubble is finally pricked. Until then, I’ll keep growing my savings a smarter wayway.

#8 Gord In Vancouver on 05.24.15 at 9:37 am

Of all the things wrong in the world to vex about – climate change, over-population, ISIS, Canada at war, public debts and deficits, punishing taxes, animal depopulation, homelessness, a sliding economy – the young protest over real estate.

_____________________________________

As logical as it sounds, we’ll never see a protest against over-population.

#9 mango on 05.24.15 at 9:38 am

High prices and young people who can’t afford a property is a story of planet earth! Vancouver is not the only one.

The reason why all those grey haired folks have so much cash is they never leave work to allow for others to come in. Job Creation is stale at best and now with almost all being spent on mortgage ( exit of Target), Vancouver 2M burbs with only a few massage parlors as community shopping, the hollowing out of Canada is has started.

Companies need to start dusting off old folk who continue to suck pensions, benefits and are overpaid. This will allow more young to enter the system and start earning.

We can’t control the cost of things, never have and never will. However, we can control our income and need to work on getting people more of it!

#10 brucebruce on 05.24.15 at 9:48 am

LET me tell you all about a recent Public Meeting I was at. Townhouses and around 25 singles were proposed. Within one day, the towhouses were sold out. They start at 1.2 million. There is an 800 strong waiting list for the singles. They start at 1.5 million.

So what I am led to believe is that this ‘money’ is coming from low interest rates and mom (which is basically inheritance)… it does’t add up. Is everyone this dumb. It can’t be true. Well it is and I think we are all going to be proven wrong.

#11 ShawnG in TO on 05.24.15 at 9:48 am

let me sling some hashtags out there and see if any will stick.
#lookInTheMirror
#raiseRatesNow
#increaseDownPaymentTo30%
#reduceAmortizationTo15Years
#eliminateCMHCnow

more?

#12 NMV on 05.24.15 at 9:52 am

Good morning . Can anyone comment on syndicated mortgages?

#13 Lotus YVR on 05.24.15 at 10:05 am

Garth,
The following is a strong statement from you.
“Almost half (48%) of Mom-financed first-timers are willing to jump into a bidding war, as are 36% of the upsizers. And here’s the most telling fact (that you will not hear on the steps of the VAG today): without the Bank of Mom 40% of first-timers and a whopping 50% of the move-up crowd would not be buying.”

Do you have a resource to back up this statement that we can study?

I referenced the BMO report. — Garth

#14 gladiator on 05.24.15 at 10:07 am

The young protest over real estate because it affects their lives far more than isis, global warming etc. They just want to have decent lives and have the same opportunities as their parents had. The concept deeply rooted in today’s culture is that buying a place to live is something normal, it’s part of life like getting into the workforce, having kids and so on. Why call this entitlement? Are the youngsters saying that someone owes them a house/dwelling? I did not hear that. The young ones are ready to work for it. The frustration is that there are no jobs that would allow them to afford a place at current prices. Somehow, things that were normal for boomers are considered caprices of the young generation. Is it fair to treat a generation differently (read “worse”)?

#15 crowdedelevatorfartz on 05.24.15 at 10:07 am

I guess Gregor finally realized how expensive housing was when his wife booted him out when he was caught fooling around…..
As for Bob Rennie, he’s “schtupping” everyone else financially.
The Bank of Mom. True.
But its far trendier and media savvy to have a few thousand gather at the Art gallery holding a $5 Starbucks coffee in one hand and a placard in the other.
All to blame “the man” or “the system” or “foreign money”…….
Would the MSM even care if thousands of people (one person per yard) stood on their mothers lawn with a sign(and a Starbucks natch)…..

#16 mnpr on 05.24.15 at 10:09 am

This dad and mom are holding firm. If you can’t afford a house then don’t buy one. Rent instead. No shame. But get this culturally conduced idea that you MUST own a house out of your head, and instead invest your surplus as suggested on this blog. Smoking man makes a lot is sense when he takes about herdonomics.

#17 billy on 05.24.15 at 10:09 am

1. China is buying Canada’s land, but Canada cannot ever buy Chinese communist land. End game, Canada sold to highest Chinese bidders.

argue with that

#18 JO on 05.24.15 at 10:11 am

Charles Ponzi would be proud. The whole house of cards is already on its way to collapsing with only 3 markets holding up the national numbers

The system is stacked against the young in every way. It is the same in most of the developed world. Weak salaries, under and unemployment, sky high house prices that were mainly driven by manipulated credit flows including blatantly mispriced Cmhc loans that will result in a future bailout paid by today’s young, and exploding taxes and user fees including dramatically higher pension contributions with deep cutbacks in benefits and inflation protection and on and on.

It is so obvious to see the game these scam artists are playing

Unfortunately while things will get worse before they get better, the end game 2020-2025 will see the majority of the boomers left financially devastated and essentially wiped out at exactly the wrong time in their lives

I don’t want to see this happen but it is just how the system will reset

#19 dutch4505 on 05.24.15 at 10:18 am

The increase of housing is a reflection of higher land costs. Although construction costs are higher each year the main culprit is land costs. Note that in the lower mainland of BC there is an estimated two thousand acres of non Agricultural Reserve Land (ALR) being held for development between Chilliwack and Richmond/Delta and Surrey. Developers can hold land for future development and therefore restrict the supply of land and thereby increase land costs. The difference in BC is that developers can avoid a major holding cost such as property taxes. This is done by enrolling in a government program of farm class. Producing receipts of 2500 in agricultural sales (ie sale of one horse) will reduce property taxes by at least 90%. In other words the provincial government for example will pay a developer $10,000 (property taxes on 5 acres of raw land) if a horse or a cow is sold. (or produce fake receipts) Only in BC.

#20 Randy on 05.24.15 at 10:19 am

I blame the Fed, The Bank of Canada the Parents and financial imbecile buyers who keep inflating this bubble

#21 Lotus YVR on 05.24.15 at 10:21 am

BMO Report re your Comments?
Would you mind being more specific?
Do you happen to have a link?
Thanks!

BMO report. — Garth

#22 Sameer on 05.24.15 at 10:25 am

Of all the things wrong in the world to vex about – climate change, over-population, ISIS, Canada at war, public debts and deficits, punishing taxes, animal depopulation, homelessness, a sliding economy – the young protest over real estate.

– Sums up why things are the way they are!

#23 Ray Vasquez on 05.24.15 at 10:35 am

To Ben #4

It does not if it is banks, corporations, governments or anyone else that is in charge of the monetary system, all they want is control over the population and they have it.

#24 IKnow on 05.24.15 at 10:36 am

#13 gladiator on 05.24.15 at 10:07 am

Somehow, things that were normal for boomers are considered caprices of the young generation. Is it fair to treat a generation differently (read “worse”)?

———————————-

Agreed 100%, Garth you should not make light of the frustration felt by young YVR’ers.
We older had it much easier, we did not need to think about owning land in Vancouver, just took that for granted.
We had more choices, Millenials had better cell phones.

#25 Francis on 05.24.15 at 10:43 am

If they want to call for a tax that will cool down RE, they should tax capital gain on every house. But it will never happen because they all want to make tax free gain on house even if they don’t own.

#26 HAM R Us on 05.24.15 at 10:57 am

1. China is buying Canada’s land, but Canada cannot ever buy Chinese communist land. End game, Canada sold to highest Chinese bidders.

argue with that
_____________________________

It’s not YOUR land! I bet more than not Vancouver house owners willing to sell to the highest bidder, whoever he/she may be.

#27 Mithan on 05.24.15 at 10:57 am

What did you expect Garth?

These people have never known anything but good times. Expectations are warped, because their reality for their entire life has been to be alive during the greatest time in human history.

I don’t blame millennials or Gen-Xers for this, or their parents either.

The troubles the rest of the world currently has are oceans away in distance or history.

The truth is, “we are different” in Canada. I have no clue how long it will last, but for now, in this brief period in history, we are different.

#28 Michael King on 05.24.15 at 10:59 am

Thanks for this reminder about what is driving the local market in Vancouver. You are correct. My friend just sold a 2200 sq. ft. duplex in Kitsilano. A duplex. It went in just eight days for $40k over the list price of $1,788,000. The buyers were a non-Asian couple with a little one. The Bank of Mom was very involved in the deal. The market insanity continues. Another point I’d make is that an anti-Chinese attitude is becoming widespread. It is misplaced, racist and quite unsettling.

#29 prairieboy43 on 05.24.15 at 11:00 am

This will be eventful. All stress over a little piece of land. In the second largest country on Earth. I will watch Vancouver from offshore. Fishing for Coho this summer.
PB43

#30 crazy world on 05.24.15 at 11:05 am

Seriously. If the market were left to its own devices, house prices would have started to wither several years ago.
____________________________________________

Seriously?
you’re kidding right?

“if the market were left to its own devices…”??

exactly WHAT market is “..left to its own devices…”??

#31 HAM R Us on 05.24.15 at 11:10 am

Of all the things wrong in the world to vex about – climate change, over-population, ISIS, Canada at war, public debts and deficits, punishing taxes, animal depopulation, homelessness, a sliding economy – the young protest over real estate. Garth.
__________________________________
Because The Land of Canada nowadays produces youngsters who are only good at using Twitters, FB. I bet the protesters in Vancouver whose educational “degrees” are mostly Political Science, Sociology, Economics, Philosophy, Organizational Behaviour.

#32 Keith in Calgary on 05.24.15 at 11:11 am

When I was a banker I got transferred from YYC to YVR in 1983. I will never forget the first mortgage application that hit my desk. The appraisal showed a water logged shit shack that might have garnered $50K in Calgary……yet the appraiser had a $400K value on it. Vancouver RE has always been overpriced as far back as I can remember. Having said that, a gifted down payment was a non starter and we were not allowed to count it if it was enough to put you below the 15% margin to avoid CMHC fees. Times have changed………and not for the better.

#33 pinstripe on 05.24.15 at 11:15 am

What I read on this blog this day is what I heard loud and clear from geezers on my last visit to vancover and Victoria.

what is missing on this blog is how the feds are ;pushing fear mongering to Canadians about terrorists only to learn that the gangs are running the major shipping ports in Canada and kandr is free.

there is nothing to gain by educating the uneducated. prentice tried the “look in the mirror” analogy. the swearing-in of Rachel today is a result.

The bottom line is that the policy makers in Canada are the root cause. their policies forced many to do what they are doing because they lost all trust and confidence in government policy.

#34 Capt Canada on 05.24.15 at 11:21 am

Absolutely no figures are kept on foreign ownership in Canada. It’s a disgrace.

#35 old gringo on 05.24.15 at 11:28 am

I get tired of all the finger pointing. As you point at HAM, banks, mortgage co’s ,interest rates etc don’t you realize that all your other fingers are pointing back at “YOU”.
If you don’t like or can’t afford Dodge City, then get out of town.
We need to accept responsibility for our mistakes and accept credit when due.
The world is huge…..find a new home that makes your life full. Yes, step out of the BOX.

#36 landlessinvan on 05.24.15 at 11:31 am

You can blame Mom, and blame the Millennials, but Vancouver is not an isolated situation. It’s low interest rates and wealthy investors. All over the world (London, Auckland, New York, San Francisco, Stockholm, etc.) the wealthy buy up real estate, and it sits, mostly unused for most of the year.

#37 Julia on 05.24.15 at 11:31 am

#4 #5 #6 Ben
Wow. Just wow.

Garth: “without the Bank of Mom 40% of first-timers and a whopping 50% of the move-up crowd would not be buying.”

I can almost understand the bank of mom for first-time buyers. Almost. But the move-up crowd? How entitled are you that you need or deserve to move-up so badly?

#38 Squirrel meat on 05.24.15 at 11:42 am

#4,5,6
What a whiny ass there Ben. So don’t buy a house.

#39 Slow Canada on 05.24.15 at 11:56 am

“I just devoted eight years to telling you.”

True words, Garth, with a touch of self-deprecating humour. You have walked the walk, you have held the line, and when interest rates (finally) rise, those who listened to you will be very thankful. Most of them already are.

I don’t see why some reasonable foreign ownership restrictions couldn’t be part of an overall package, but I greatly admire your steadfast resolution. You have been called on to serve for far too long. We salute you.

#40 OttawaMike on 05.24.15 at 12:03 pm

Sino Krystal Nacht in Van?

#41 Millmech on 05.24.15 at 12:05 pm

Millenials are awesome,they will buy overpriced assets that they feel they are entitled to only because it’s going up in price.If prices were declining do you think they would all be lined up to buy?Funny thing is if you do the math on a $600,000 mortgage over 25 years and add2% for property tax and upkeep it’s well over $1,200,000 of after tax dollars.You need to gross $2,000,000 dollars just to buy that status symbol,when I run the numbers for me for 25 years to rent its $250,000 of net or $370,000 gross wages.Ill take the extra $1,000,000 and relax and retire early.

#42 Eco Capitalist on 05.24.15 at 12:05 pm

Hey, “young people”; adapt and survive or innovate and thrive. The world has changed; stop trying to be your parents. Stop looking for old world solutions to new world problems. Remember the dinosaurs? They tried to maintain the status quo in a changing world too and look where it got them.

For context, I’m a self employed Gen Xer, who lives where he has to (905), not where he wants to (519) because (A) that’s where the work is and (B) a commute longer than 30 minutes one way is a waste of the one thing Garth keeps reminding you that you can never get more of.

#43 Rain on 05.24.15 at 12:09 pm

Where did Mom get the money?
Answer: she sold her big house on the west side, moved into a condo and – poof – look at all this money. She just won a lottery. Why not give some of it to the kids?

So, one of the causes of high prices is low interest rates, but, the other cause is foreign money who purchased her big house on the West Side and thus a domino effect.

The kids that do not have a parent who has a large house to sell are the victims of this chicken egg game.

#44 Cowtowner on 05.24.15 at 12:20 pm

I don’t feel sorry for the people of VanCity. If you can’t afford something, you just don’t buy. I don’t cry because I can’t afford a Ferrari…..you don’t see me starting to cry to the media. The best solution to high house prices is high house prices. Come back and retire inVancity when it is a much less desirable place to live . Until then, quit complaining. Go build a life somewhere else. To me this is no different than maritime ts that demand the rest of Canada to subsidize their living because there are no jobs there. Entitlement at its finest. Just move, please!

#45 pinstripe on 05.24.15 at 12:24 pm

I grew up seeing the effects of the great depression. My parents and grandparents went through the depression. stay out of DEBT and SAVE for the rainy day was pounded into my head at all times. Never follow the sheeple.

today in the global economy many people are preaching that it is different now. What I see is that history is repeating itself over and over and there is no stopping it. Money will move to safety regardless what the politicians attempt to do.

adding a tax or levy will stimulate the thought process to find ways to not pay the tax or levy. Money holds the most power.

I encourage the millinels to do whatever they want to do. I stay out of their way. I make sure to stay tuned to what is happening around me and seek whatever it takes to survive. At the end those with money will have more money.

#46 Bottoms_Up on 05.24.15 at 12:27 pm

A spec tax on real estate is a good thing regardless of who’s buying or the local market conditions.

#47 Patience is a Virtue on 05.24.15 at 12:37 pm

I feel it’s important to note Rennie was referenced in a CBC article:
“if we put a tax on foreign ownership, I think it starts to look like the tip of the iceberg, that now we’ll end up putting a tax on foreign ownership whether it’s investment in LNG or a manufacturing plant. A tax on foreign ownership, it seems we’re really talking about a tax on China and I don’t want to see a tax on race.”

“The Asian purchaser that we see buying a condo or townhouse, they’re local … 44 per cent of our population is of Asian origin and I think we’re mixing it up”.

http://www.cbc.ca/m/news/canada/british-columbia/topstories/vancouver-condo-king-bob-rennie-calls-for-tax-on-speculation-1.3085211

#48 Face It on 05.24.15 at 12:39 pm

Face it, our economy would be so deeply troubled if the housing bubble were to burst that our politicians will do everything they can to engineer a soft landing. Devalue the CAD, reinstate laxer mortgage rules, new tax benefits for home owners, you name it. Renters can keep waiting on the sideline, but our govt simply does not care about them. So, you wait and wait for a day that will never arrive.

#49 SWL1976 on 05.24.15 at 12:43 pm

We are so arrogant.

We are, and it is not just the young who should be upset by a failed system. People are a product of their environment. Now how do you think we got here? The system breeds entitlement, and one doesn’t have to look very deep into our ‘leadership’ to see this. The system is being designed to fail and until people realize this, then I would expect more of the same.

Try telling a boomer that everything they thought they knew about what is happening in the world is a lie, and a scam… Blank stare… Couldn’t be… Let’s talk about something comforting please.

People have every right to be upset by all of this and Canadian RE is just the tip of the iceburg here. Too many people have become complacent with the status quo, and this class divide and one upmanship needs to end. While we squabble over houses, tee vee’s, I-pads, sports, and cars that are destined for the scrap bin, the real game is being rigged against us in ways that most simply cannot comprehend.

Many are still in denial about the real scope of the problem here. The time for squabbling and finger pointing is over. It is now time for the masses to wake up and accept who the real oppressors are and go forward from here

Young and old alike, with the exception of the shadow governments and the ruling ‘elite’ we are all in this together.

#50 HJD on 05.24.15 at 12:55 pm

Those Canadian youngsters protesting outside the Vancouver Art Gallery are the adult children of my generation. For the reasons outlined they have many reasons for being angry and frustrated. And it’s completely understandable that under the current circumstances parents with the resources to financially help would step in and give their kids a hand. Those who ridicule the actions of these parents (Mom’s bank) probably have no children of their own – they don’t get it.

#51 Andres on 05.24.15 at 1:17 pm

What a joke to have an “affordable housing” rally for people who want to buy a million dollar house. Get real.

#52 JustMe on 05.24.15 at 1:17 pm

Real estate prices in Singapore have plummeted since the beginning of 2015

The government of Singapore has tried to cool its property market since 2009. Its measures have mostly targeted foreigners and include higher taxes, borrowing limits, and restrictions on the number of properties that can be owned.

The implementation of the Additional Buyer’s Stamp Duty (ABSD) in late 2011 imposed an additional 10% tax on foreigners buying property, and was then increased to 15% in 2013 resulting in a reduced transaction volume.

Since then, prices have suffered a massive decline

http://www.investasian.com/2015/05/22/singapore-faces-property-bubble-will-it-burst/

#53 BS on 05.24.15 at 1:28 pm

But there’s an even greater cause. It’s Mom.

Actually Mom is part of your first list of causes. Easy lending and low rates. The bank of Mom and Dad is not writing a cheque from a savings account for the kids to buy a house. They are borrowing the money using a HELOC taking advantage of the low rates and easy HELOC terms based on the bloated house value not income. The bank of Mom and Dad can give the kids a $200K downpayment for a HELOC payment of $500 per month. All they have to do is defer the property taxes (another BC government program to inflate housing) to make that $500 per month payment. Presto, kids get a house with never saving a penny, parents hand over $200K with never saving a penny, parents pay the same every month based on the PT deferral, the money can be paid back later. What’s not to like?

#54 BS on 05.24.15 at 1:34 pm

Friday night, after years of silence, and as it became apparent the winds were shifting against him, he issued this statement:

Note Gregor Robertson just sold his Westside house about 2 weeks ago (due to divorce) and for the first time does not own property in Vancouver. That might have changed his view point on slightly.

http://www.vancitybuzz.com/2015/05/mayor-gregor-robertsons-kitsilano-home-sold-1-98-million/

#55 New Found Man on 05.24.15 at 1:37 pm

Thanks Garth, for more Real Estate “Humour” https://www.pinterest.com/petertarshis/monday-am-real-estate-humour/

#56 Bill on 05.24.15 at 1:38 pm

@HAM R us
“It’s not YOUR land! I bet more than not Vancouver house owners willing to sell to the highest bidder, whoever he/she may be.”

I forgive you for misunderstanding this as a Vancouver issue. While it wasn’t explicit the comment was to draw attention to a macro issue.

It’s Canada’s land which is a nation. The issue at hand is that we CANNOT allow foreign nations to own our land if land ownership capacity isn’t reciprocal.

The stock market put this principle at play. We can buy US stocks, and European stocks, and they can buy our shares.

You cannot however buy Chinese mainland land. Which is unique. Even though Chinese can buy Canada & US land.

Net net, ‘free market nations’ lose thousands of acres of land which are never offset with reciprocal land purchases.

The Chinese land is not for sale by government mandate.

So why in the heck would we put ourselves in an inferior position and sell our land?

You can print money, but you cannot print land.

#57 SydCixel on 05.24.15 at 1:39 pm

After the economic elite transferred manufacturing jobs to slave labour jurisdictions, in order to retain the profits for themselves, they recognized that the middle class was becoming restless over their loss of income. Therefore, the same economic elite drastically lowered interest rates to generate the “wealth effect” of houses with constantly increasing value. Now that that scenario has played itself out, and the real estate bubble is beginning to burst, the people are finally and fully realizing how badly abused they have been. What will follow will not be pretty.

#58 Underhoused on 05.24.15 at 1:45 pm

As others have noted above, Millennials need to adapt.

Regrettably, their Boomer parents and the Boomers in charge of the education system when they were going through it gave them all a trophy, no matter how mediocre or substandard they were at their pursuits. But the housing market doesn’t give everyone a house just for wanting one.

Expensive housing markets might be the best thing ever to happen to Millennials. Time to buck up, face your limitations, figure out what you can make work for you given your employment/financial circumstances, live within your means, and in general just start being a grown up.

Handout from the Bank of Mom = epic fail. Financial self-reliance = priceless.

#59 crowdedelevatorfartz on 05.24.15 at 1:47 pm

@#16 billybob
“argue with that”
++++++++++++++++++++++++++++++++++++
Ok.
You’re an idiot?

#60 BS on 05.24.15 at 1:48 pm

I can almost understand the bank of mom for first-time buyers. Almost. But the move-up crowd? How entitled are you that you need or deserve to move-up so badly?

Because the belief is it is a good financial decision. I bet more often that not it is the parents idea not the kids. The reasoning is the kids get less of an inheritance but make millions on their house which will double and triple in value. Of course this assumption is wrong and the kids will end up with much less. In many cases the parents may end up in poverty trying to pay off the HELOC when rates rise and their house plummets along with the kids house.

#61 Vamanos Pest on 05.24.15 at 1:48 pm

I’m just wondering what exactly the demands of the protesters are? Ok, house prices are to high, not enough jobs, wages too low, got it. But what are they asking for?

What do they want, specifically?

House prices lower? That’s not a demand, it’s a wish. It would be exactly analogous to Albertans protesting oil prices, demanding that they be higher.

Good luck with that.

#62 crowdedelevatorfartz on 05.24.15 at 1:53 pm

@#30 Ham R us
“Because The Land of Canada nowadays produces youngsters who are only good at using Twitters, FB. I bet the protesters in Vancouver whose educational “degrees” are mostly Political Science, Sociology, Economics, Philosophy, Organizational Behaviour…..”
++++++++++++++++++++++++++++++++++++

True very true.
And the $100k per annum job that ISNT waiting for them when they graduate as an HR gabberwockey regurtitating usless pablum spoon fed from a prof that never actually worked in the “real world”…..
They realize that maybe that education didnt garantee a millionaire lifestyle.
The horror.

#63 mathman on 05.24.15 at 1:53 pm

cry me a river…. pawn your iPhone, iPad and IMAC. maybe cut out the $10 in sbucks a day, designer handbags, $1000 strollers etc. Drive a basic car instead of a begging for status mobile (low end BMER.mERC.AUDI.LEXUS ETC.) or better yet ride the bus. rampant consumerism is as much to blame as anything else, with rates this low it becomes that much easier to make irresponsible choice after irresponsible choice.

when i go to vancouver, everyone looks the part. Take off the fancy clothes and gadgets and they are thirty thousand dollar millionaires. Make 30k but look like a million, very smiliar to certain hoods here in the GTA(Yorkville/BWV/Leslieville etc)

take away CMHC, the condo market would be cooked, the SFH house < $ 1Mil would plummet in value. Low rates lead to irrational exuberance, compound that with CMHC and this is why were are where we are. If this was a free market prices would be less than half what they are today.

we will go through a very dark period in this country once the bubble bursts.

#64 sixtyfourk on 05.24.15 at 1:57 pm

I think Ben’s comments typify the entitlement that people associate with the younger generation.

Look around the world to see what it is you “deserve”. Just living in North America puts you better off than 90% of the world’s population.

The difference between those less fortunate and you is they don’t have any easy way to improve their circumstances. You do:

Work hard, take risks, and spend less than you make. Simple.

#65 Italians love real estate on 05.24.15 at 2:05 pm

am
Oh and part of getting and keeping house prices low would be land value tax. Let’s get that in and remove income tax. Tax land not labour.

Workers are getting next to nothing whilst the rentiers make out like bandits. This *has* to change.
——-

Eh oh .. Oh .. Eh. Whadahell you talkin about??

Somebody gotta wash your mouth out with soap.!!

#66 hahah - the young want hand-outs on 05.24.15 at 2:09 pm

I say, to all complainers, go do some business, like launch a construction company, and make big $$$, can make 40000 a month remodeling kitchens – then with a 500000 income (on business ;) housing wont be unaffordable anymore…. :)

Plus, they want communism apparently (because thye are at the bottom of the MONEY/POWER structure) – buut what they actually want, as Garth pointed is SPECULATION. I say indirectly they want to speculate, because they want to buy low (this is stealing from a spiritual perspective) and future prices eventually to be guaranteed by government!!! hahahah

They should ask the GOVT to nationalize land and build a new subdivision of subsidezed housing (RENTING) in a suburb. That’s the solution fellas, say Thank You for it.

#67 Freedom First on 05.24.15 at 2:10 pm

I am a Boomer. When I was in my twenties I heard the same whining and complaining of people in my age group about how the wrinklies had all the money. I just shut up because I knew it took the wrinklies years of working to get to where they were.

Cue the replies to my post…….but, but but, but. But nothing. Most young start from 0. There is no but. Start thinking for yourself, as self-pity, blame, criticism, and expectations will get you no where. It is what it is. Deal with it.

#68 Zinc Whiskers on 05.24.15 at 2:15 pm

Given that Mayor Gregor just flipped his own house in Kits (after less than 2 years)…what kind of “speculation tax” is he volunteering for?

#69 Nemesis on 05.24.15 at 2:16 pm

“Only by addressing the root causes of this stupid-price situation will any sanity return to the real estate marketplace.” – HonGT

It’s always gratifying to know that we agree on at least one thing apart from air-cooled V-Twins, AuldPol… which reminds me:

#TheOldBait&Switch… #Isn’tFoolingAnyoneThisTime…

[VancouverObserver] – Mayor’s speculation tax is a set-up

…”Vancouver Mayor Gregor Robertson’s call on Friday for the provincial government to impose a tax on housing speculation has all the look of a not-very-elaborate set-up. It’s a sop thrown to a furious public, and nobody’s buying.

After all, the mayor just repeated a proposal made hours earlier by condo sales magnate and master ventriloquist, Bob Rennie. Rennie is one of Robertson’s most powerful financial backers and and stalwart supporter of Premier Christy Clark. Respect.

The unexpected arrival of Rennie’s bouncing new proposal suggests both the Vancouver and B.C. governments are getting jumpy about the clamouring masses now openly demanding government action on the global capital flooding into Metro Vancouver’s residential real estate…

…And note how swiftly the Vancouver mayor adopted Rennie’s proposal, in the complete absence of any substantiation by independent experts. After years of claiming we lack sufficient data for a major policy response to the affordability crisis, Robertson reversed himself overnight.

Where’s the evidence that our real problem is investor flipping rather than the influx of global capital? Nonexistent. The provincial government doesn’t track foreign buying in real estate transactions, and it’s not going to.

On May 7, Housing Minister Rich Coleman declared that B.C. won’t gather data that might tell us what’s going on in our own market. Unlike such socialist sissies as Hong Kong, Singapore, Sydney and London that do track foreign buying, B.C.’s government knows the value of wilful blindness.

The provincial government doesn’t want data about global capital, and doesn’t want the public to have it either. “…

http://www.vancouverobserver.com/opinion/mayors-speculation-tax-set

#BonusZen… #HeiressCoolTwins:

http://tinyurl.com/lag2sej

#70 Shawn on 05.24.15 at 2:18 pm

Why Interest Rates are so Low and May not Rise much anytime soon.

The answer is in the first short sentence of today’s editorial.

“Old people have money.”

Yes, they do. And the percentage of old people has been rising and is still rising.

The essence of mortgage lending is that on average old people who have money are lending it to young people who need money to buy houses.

As the proportion of old people in the population has grown dramatically and the proportion of young people of prime house-buying age has declined we have a simple matter of a change in the supply and demand for money.

The supply of money to lend is up and there are fewer people to create demand.

This creates two predictable and perhaps unavoidable results:

1. Interests are down dramatically

2. The average amount borrowed by each young person has risen dramatically.

Here is a bit of an extreme example of how it happened.

If on average 5 old people lent money to 25 young people each young person borrows on average 20% of the savings of one old person and the interest rate was high based on small supply and large demand.

If, due to demographics changing 25 old people on average lend to 5 young people then each young person borrows on average the savings of 5 old people. In this extreme example the amount borrowed has risen 25 fold. Interest rates are low to due to huge supply and small demand. The price being interest rates adjusts down until the amount borrowed soaks up every dollar available to be loaned. It was inevitable in this scenario that debt per young person had to rise dramatically.

Now, if this is how we got low interest rates and mega mortgages: Demographics and the fact that people accumulate savings over their life and it is the old that on average have money. When well we get higher interest rates?

That would be when we stop having such an imbalance of many old people with money compared to few borrowers. Well, with longer lives and fewer kids per person, that may NEVER happen. Or it could happen when the tax system somehow removes wealth from the old. That is not happening. We have been going the other way with more generous income supports to the old and with TFSA and RRSP rules.

So, when should se expect interest rates to rise much and drive house prices down? Perhaps no time soon.

Maybe those young protesters have a point. No one individual is forced to borrow. But in a system where there are many old people with money and few borrowers, supply and demand dictates that average borrowing must be high. Should our economy be set up to allow the old to have such a large share of the wealth and money?

#71 Yabba Dabba on 05.24.15 at 2:41 pm

Yup..a speculation tax will do nothing…the problem isn’t with speculation..at all…zero. The issue is and always has been money laundering HAM…everyone knows it…:”the elephant in the room”…what a laugh…it’s a freaking 800 pound statue of Godzilla in a 300 sq ft coffin sized condo.

The Government of China has complained about Canada being a money laundering capital….and Mayor Moonbeam is trying to misdirect the blame away from his HAM mother in law and onto speculators?

#72 fleabitten monkey on 05.24.15 at 2:43 pm

I’ll hope for a good outcome from this over time. To date I have never seen an open honest educated well informed forum of discussion hitting the media about the real root causes of the price question. There hasn’t ever been a connection of all the dots, except here on this blog. All u get is commentary on one or two issues. Lets put it all together now and have all the variables connected. Finally perhaps there will be a realization that this situation is something created by everyone. Then maybe it will begin to unwind.

#73 Obvious Truth on 05.24.15 at 2:48 pm

Easy money and predictable human behaviour leads to same thing every time.

Garth continually last out the road map of cheap money, easy lending, get rich off leveraging homes to buy more homes and so on.

Now we see the bank of mom backing kids that the banks won’t touch.

There is no shortage of land and the population of Canada can’t even sustain itself. Birth rate is close to that of Japan. Immigration has not changed in a long time. And people from Asia have been buying canadian real estate all of my lifetime.

We as a country own this but politicians will gladly pass the buck on to speculators. It’s funny that these youngsters don’t even know that they just let policy makers off the hook. They didn’t read the sheeple post.

#74 takla on 05.24.15 at 3:01 pm

so raise the god-dam rates already,lets bankrupt all these “moms” of all races that have made Van/T.O housing unaffordable for all but the rich,entitled alpha home consumers in our society…enough already
Why is this economic cycle any different then all the other boom-busts we’ve had in this modern banking era

This theme has been beat to death here,and we all know just why the interest rates will “not “rise,consumer/world debt
Hair cuts across the board !!lets get this party started

Rant over

#75 Linda on 05.24.15 at 3:12 pm

https://m.youtube.com/watch?v=Fv6w_ys5sJo

Everything was revealed
on Barney Miller back in 1981

#76 ILoveCharts on 05.24.15 at 3:19 pm

Here is the thing….

Mom and Dad bought in the 90’s when prices were cheap and have long since paid off their mortgage. Places that were maybe $300,00 are now north of $1 million. Even in a savage crash, they won’t go back down to $300,000 ever. Mom and Dad aren’t relying on their home to fund their retirement. Their house only cost them $300,000 and they’ve been saving outside of that. They find themselves with an excess of wealth and instead of waiting until they die, they are transferring it now. It makes perfect sense and it’s not going to cause a crash – what it will do is lock people like me (who don’t have a Mom and Dad with a $1 million house here,) out of the local market.

#77 Suede on 05.24.15 at 3:27 pm

The party is not over.

It’s re-igniting on overdrive.

Shawn has it right in his post.

Lots of cash rich boomers with money to lend, especially in tiny YVR. It’s like the TSX-V, much easier to move the needle up or down in a small market compared to Toronto.

This may not end well.

But it won’t end for a long time.

Just to get back to where we were for the last two years, rates have to go up .25%. And if that happens, people will lock in uber-cheap rates and gorge on houses for another couple years.

Only a drastic market shock that gets boomer parents to tighten the down payment purse strings and scare millenials and Gen Xers will end this party in Vancouver.

I own.

And i rent.

Also have a balanced portfolio.

So i have a vested interest from many angles and well diversified. SFH’s in and around Vancouver are much more popular than Nortel in 1999.

Why?

Real Estate is more accessible to buy than stocks and bonds every will be to the masses.

Bored boomers are not retiring into the sunset.
They’re living longer.
They’re healthier.
They’re happier.
They’re much richer.
They’re going to spoil their kids, especially the ethnic immigrant cultures. That’s how it is in the old country.

The trend is your friend.

Until it isn’t.

#78 Entrepreneur on 05.24.15 at 3:32 pm

Keep up with the protest and demand your rights, do it within the law which makes its stronger. The government will watch for any wrong misdoings to show what a bunch of misfits. Will have to watch the news to see how the news media & the government controls this. Keep it clean, keep it to the point & be prepared to stop an extremists (might be hired by an outside) on vandalism.

Mayor Gregor Robertson maybe knows more than he is saying as isn’t he dating an foreigner? Will have to goggle this.

#79 Victoria Real Estate Update on 05.24.15 at 3:33 pm

Let’s take a look at house prices in the US (where incomes are approximately the same as in Canada):

Arizona:

$135 K, Maricopa, AZ (Phoenix) 3 beds, 2.5 baths, 2,200 sq. ft., built in 2005, attached double garage.

$105 K, Coolidge, AZ (Phoenix) 5 beds, 3 baths, 2,337 sq. ft., built in 2005, attached double garage.

$106 K, Coolidge, AZ (Phoenix) 4 beds, 3 baths, 2,306 sq. ft., built in 2006, attached double garage.

Similar homes in Winnipeg, Regina, Edmonton, Victoria… would probably cost at least 4 times as much.

Canada’s massive housing bubble inflated as a result of lax lending standards (starting in 2000) and emergency interest rates (starting in 2009).

#80 BS on 05.24.15 at 3:38 pm

As the proportion of old people in the population has grown dramatically and the proportion of young people of prime house-buying age has declined we have a simple matter of a change in the supply and demand for money.

If true household debt would be declining not going parabolic and savings rates would be higher. The old people are still borrowing money, more so than when they were younger. Old people are buying second and third investment houses and vacation houses along with financing their kids houses. They are also buying new cars and other nice items old people wouldn’t normally buy. The wealth effect created from bloated housing prices and availability of HELOCs. The household debt numbers tell you all you need to know.

#81 Victoria Real Estate Update on 05.24.15 at 3:47 pm

Florida:

$119 K, Fort Pierce, FL (3 beds, 3 baths, 2,362 sq. ft., built in 2007, attached double garage, located in a gated community with a pool).

$129 K, Jacksonville, FL (3 beds, 2 baths, 1,858 sq. ft., built in 2005, attached double garage)

#82 BC Interior on 05.24.15 at 3:50 pm

The Coast is not the end all be all.

I accuse the Feds and the Province for a shortsighted strategy instead of developing the Interior and building an economy where the land is cheap and abundant.

Even France is better developed and more diversified in its centralist Paris driven state.

Victoria is a crap location for the parliament. It should have never been on the island or at least make plans to moving political headquarters dead smack into the middle of the province.

The rest will follow.

Vancouver is beautiful but that beauty is fading with every new building going up and it’s hard to maintain and satisfy the huge demands on its infrastructure.

Brucebruce the 29 y/o “urban planner” is part of the problem. But he’s just another link in the in the long chain of planning failures when it comes to Vancouver and BC in general.

Hydro is building site C dam with tax payer Dollars to offer cheapest energy on the planet to a foreign owned LNG facility. That’s all you need to know about how this province functions.

There are few to no jobs outside the GVRD. Cost of living in the GVRD is too high.

Talent will leave the GVRD for other jurisdictions either in Canada, the US or elsewhere.

Lack of foresight, short term greed and hubris are to blame.

#83 BS on 05.24.15 at 3:51 pm

According to newly released data from Statistics Canada, 71 per cent of all Canadian families carried some form of debt in 2012 — yes, that includes mortgages, but it also includes a growing pile borrowed to buy cars, new kitchens and many of the fashionable material trappings of the modern middle-class lifestyle.

http://business.financialpost.com/news/economy/the-debt-crisis-in-canada-if-your-paycheque-is-100000-plus-that-means-you

That leaves 29% of households which is made up in part by people who can’t get credit to borrow. It looks like the savers are vastly out numbered by the borrowers by at least 4 to 1.

#84 Victoria Real Estate Update on 05.24.15 at 3:53 pm

Georgia:

$130 K, Covington, GA (Atlanta) (4 beds, 3 baths, 2,433 sq. ft., built in 2006, attached double garage)

$120 K, Atlanta, GA (4 beds, 2.5 baths, 2,643 sq. ft., built in 2005, attached double garage)

#85 Mr.Hulot on 05.24.15 at 4:00 pm

I rent a townhouse on Bayshore Drive, behind the Westin Bayshore Hotel in Vancouver. Last night the fire alarm went off at 3 AM. This affects at least three entire buildings and 100s of suites. Fire trucks appeared. Impossible to sleep with all the noise. It was myself and another guy in his pyjamas out trying to figure out what was going on. I looked up, three quarters of the lights in these buildings were off.

Make your own conclusions.

#86 Victoria Real Estate Update on 05.24.15 at 4:07 pm

Canada’s Housing Market More Overvalued Than The U.S. At Its Peak, The Economist Says (November 25, 2011).

Add on another 3.5 years of bubble inflation and Canada’s housing bubble could quite possible be the biggest the world has ever seen.

All metrics that can be used to gauge the size of a housing bubble clearly indicate that Canada’s bubble is much larger than the 2006 US bubble. Let’s take a look at some of them:

1. Overall increase in house prices (first chart):
Canada: — + 124% — (from 2000 to present)
US: — + 53% — (from 2000 to the peak in 2006)

2. Increase in price-to-rent ratio (second chart):
Canada: — + 73% — (from 2000 to late 2011)
US: — + 35% — (from 2000 to peak)

The rest of the world knows what happens next in Canada. They are watching and when the inevitable happens they will not be surprised.

#87 BREAKING NEWS on 05.24.15 at 4:09 pm

USA alleges that if a house is listed for sale in Vancouver, the money transfer transaction can take place overseas (only if a cash transaction). Many brokerages have set up offices overseas.

Once the home is sold. The new buyers take out a mortgage…and pay the proceeds back to the seller.

Voila….money laundering?

http://www.vancouversun.com/news/alleges+Metro+Vancouver+homes+were+part+scheme+launder+money+embezzled+China/10926774/story.html

#88 Shawn on 05.24.15 at 4:20 pm

Savings must match Debt

#80 BS on 05.24.15 at 3:38 pm

As the proportion of old people in the population has grown dramatically and the proportion of young people of prime house-buying age has declined we have a simple matter of a change in the supply and demand for money.

If true household debt would be declining not going parabolic and savings rates would be higher.

*****************************************
When savings go into a bank they are loaned out.

In an advanced economy savings and debt can both be expected to rise over time and to remain in some kind of balance with each other.

One man’s debt is another man’s savings.

My post at 70 explains why interest rates are low in most of the world and why the average home buyer has a huge mortgage (many old savers, fewer young borrowers).

Japan is touted as the country with the biggest bulge of old people. And it has had for a long time the lowest interest rates in the world. Also high home prices. It’s not a coincidence.

As long as savings are concentrated in the old and as long as the percentage of old people rises and as long as the number of young people coming up to buy houses is much lower in proportion to the total population than it used to be and keeps trending lower we are likely to have low interest rates and high home prices and mega mortgages to soak up all those savings of the old people.

I am increasingly of the view that interest rates will not rise very much for quite a few years.

I would not be inclined to buy a house and take on a mega mortgage.

Instead young people should think about renting and buying equities. In this low interest rate scenario, P/E ratios will stay high (or rise) and stocks will do well.

#89 Victoria Real Estate Update on 05.24.15 at 4:22 pm

# 77 Suede

“The party is not over.

It’s re-igniting on overdrive.

This may not end well.

But it won’t end for a long time.

Only a drastic market shock that gets boomer parents to tighten the down payment purse strings and scare millenials and Gen Xers will end this party in Vancouver.”

You must not have seen this chart:

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 rates hadn’t been suddenly been slashed from near-normal to emergency levels in 2009, prices in Vancouver would have continued to fall.

A rising housing market can reverse at any time and rising rates aren’t a necessary condition for that to happen. Several other Canadian markets have already peaked, including Victoria, Regina, Ottawa, Edmonton… (more on that in another post).

When Vancouver’s market turns (and it will) it simply won’t be possible to rescue it by slashing rates from near-normal to emergency levels (Canada already has emergency rates).

#90 Lolo on 05.24.15 at 4:30 pm

#77 Suede
I mostly agree with you…what you say could happen. And I too rent, own, and have a balanced portfolio.

The part where you lost me was the ethnic immigrant culture spoiling their kids. I wish someone had told my dad that.

#91 ron b on 05.24.15 at 4:39 pm

Thanks so much, Garth.
I do learn a lot on your site.

Write on.

#92 takla on 05.24.15 at 4:45 pm

re #80 Saving rates among the mass’s is not going up do to “stupid low” interest rates.Everyone with a credit rateing is looking for yield,hense housing investment hopeing the party continues.For savers,Interest payed on deposites is below the inflation rate so give it to the banks and you lose money.
the smart money ,savers/debt free in this current paradigm are sitting on the sidelines, and not spending on risky investment and stacking cash awaiting a correction

welcome to the matrix

#93 Victoria Real Estate Update on 05.24.15 at 4:47 pm

Canada’s housing bubble will deflate. It’s what housing bubbles do. There have been many examples throughout the world over the last 40 years.

Housing bubbles always prove to be a temporary fix for a weak economy. They are unsustainable. The deflation of a housing bubble always has a huge negative impact on a country’s economy for several years. The US is only one example. This will happen in Canada as well.

The following metrics show that Canada’s bubble is much bigger than the 2006 US bubble. These particular metrics are among those that provide a temporary boost to the economy of a country while the bubble inflates:

1. Increase in real estate investment as a percent of GDP (second chart):
Canada: —– + 63% —– (from 2000 to 2012)
US: —– + 41% —– (from 2000 to peak)

2. HELOC debt

Canada: —– HELOCSs amounted to 14% of GDP —– (at the end of 2013)
US: —– HELOCSs amounted to 5% of GDP —– (at peak)

Real estate investment and the use of HELOCs will decrease in Canada as our bubble deflates.

#94 Diversified in Oakville on 05.24.15 at 5:03 pm

Too EVERYONE

#95 cubbs12 on 05.24.15 at 5:09 pm

Thanks Garth. Well said. Always appreciate your insignt. Cheers

#96 ben on 05.24.15 at 5:12 pm

Amazing – how entitled of the kids to want to work in a good job and have a good home just like their parents did.

Garth I would love to know the age profile of your site. Do you have / have you collected stats on this? I’m guessing it’s mostly old people.

You guessed wrong. Figures. — Garth

#97 Diversified in Oakville on 05.24.15 at 5:14 pm

Too EVERYONE who thinks they are “entitled” to live in Vancouver or Toronto.
If you can afford 1 Million plus for a house, go for it. If you cannot, please SHUT-UP and live some where that you can afford or rent. There is an abundance of affordable housing in Canada with jobs. You just need to look past your nose.
Life is all about choices. Choices to live and work where you want to, which means what you can afford. Live within your means, not beyond. Interest rates WILL rise, and if you take on too much debt, you will be pooched. Don’t do it.
I am neither a boomer or retired. I work hard for a living, live within my means, and invest in a diversified portfolio. I didn’t buy a house until I was 40, because that is when I could afford it.
In 3 years when I retire I will sell you my overpriced house in Oakville, and move to the Prairies or the East coast.
And smile all the way to the bank………….,especially if interest rates stay low until then.

#98 Andrew Woburn on 05.24.15 at 5:14 pm

Coming soon to a country near you.

“The True Cost of the Homeownership Obsession

In 2014, the US homeownership rate fell below 65 percent, which means it’s back to where it was during the 1970s and much of the 1990s. Various federal agencies have long made a and quasi-government programs including the GSEs like Fannie Mae, FHA insured loans, VA-insured loans, the Bush administration’s “American Dream Downpayment Initiative” and, of course central bank meddling to keep interest rates nice and low for the mortgage markets.

And for all their efforts, all the inflation, and all the taxpayer-funded subsidies poured into bailouts, we have a homeownership rate at where it was forty years ago.”

https://mises.org/library/true-cost-homeownership-obsession

#99 ben on 05.24.15 at 5:17 pm

Also more “it is what it is”. Would love for you to have had a conversation with Ghandi.

“Look Indians, yes the British exploit you and steal from you, but it is what it is, get your head down and work hard”.

Where would that have gotten them? Were they not better to fight the root causes of an unjust system so their children could have a better life?

This is typical boomer justification. Same with the “at least you are not in Bangladesh” rubbish. So what – we shouldn’t complain as long as we have clean water even if most of our labour is taken from us as economic rent to fund the boomer lifestyle?

Really you guys are a disgusting mix of greed and ignorance.

#100 Godth on 05.24.15 at 5:25 pm

#88 Shawn on 05.24.15 at 4:20 pm
“One man’s debt is another man’s savings.”

Totally, completely and utterly wrong. This has been pointed out to you ad naseum but you’re and ideologue with a head like a rock.

Banks create ‘money’ (credit, mortagages, etc.) and deposits.

This housing bubble is systemic, and worldwide (developed economies). We’ve had 40 yrs. of financialization and neoliberal economics. Bubbles, bubbles everywhere. When the next crash comes all you folks that are calling out the entitled, bratty kids for whining will be first to the trough again I’m sure. “We have to save the system”. Sick stuff, you ‘capitalists’.

Take your pick:
https://www.google.ca/webhp?sourceid=chrome-instant&rlz=1C1AVNA_enCA615CA615&ion=1&espv=2&ie=UTF-8#q=financialization%20and%20housing%20bubbles

#101 Vamanos Pest on 05.24.15 at 5:31 pm

Following the Affordable Housing Rally in Van on Twitter. From what I can see, not a single tweet reporting what the protesters actually want. Yes, stating they feel there’s a problem. Yes, their calling our government at all 3 levels, but it’s very vague. It’s “the government needs to act” type bullshit. WHAT DO THEY WANT TO SEE DONE!?

I’m not accusing them of simple bitching and moaning because they’re millenials, or because they’re “entitled”, or spoiled. I’m accusing them of bitching and moaning because, well, they’re just bitching and moaning.

(Correction: I did see a call for an increased minimum wage. Haha, yeah, you can’t buy a 1M dollar house because you make $12 an hour and not $15 an hour. Laughable.)

#102 Kagaovich on 05.24.15 at 5:31 pm

“It’s always sexier and more fun to blame the system than yourself, your peers or your family.”

All these groups are significant constituents of the system, they are inextricably linked, unless you adhere to the Maggie Thatcher school of thought.

Shawn “When savings go into a bank they are loaned out.”

Your diatribes usually start out on the wrong foot with this maxim you seem to hold dearly.

Here, Ann Pettifor is respected, experienced and quite bright. She starts out in a more plausible direction and ends up at a destination that does not have to engage in increasingly complex acrobatic apologetics to legitimize the financial system:https://www.youtube.com/watch?v=NzrvsOZTqKo

#103 Throw it to the ground on 05.24.15 at 5:31 pm

https://www.youtube.com/watch?v=gAYL5H46QnQ

I’m not going to be part of this over priced system.

Throw it to the ground, change it, vote, petition, etc.

#104 Julia on 05.24.15 at 5:34 pm

#85
“I rent a townhouse on Bayshore Drive, behind the Westin Bayshore Hotel in Vancouver. Last night the fire alarm went off at 3 AM. This affects at least three entire buildings and 100s of suites. Fire trucks appeared. Impossible to sleep with all the noise. It was myself and another guy in his pyjamas out trying to figure out what was going on. I looked up, three quarters of the lights in these buildings were off.

Make your own conclusions.”

The other residents are old and deaf?

#105 Mark on 05.24.15 at 5:36 pm

“Even in a savage crash, they won’t go back down to $300,000 ever.”

The ‘math’ of mean reversion, overshoot, and reverting to even normal P/E ratios (8-10 for housing) implies that $1M houses will go down to $300k. There’s a certain commenter here who points out all the time that in another country, with no land constraints and similar levels of personal income, similar houses sell for $100-$200k easily.

Additionally, the combination of high taxes, relatively low incomes, and the past 2 decades of interest expense — as well as the propensity of the boomers to HELOC, means that that $1M house probably doesn’t have as much equity in it as you think. The mortgage more likely than not, isn’t paid off.

Japan is touted as the country with the biggest bulge of old people. And it has had for a long time the lowest interest rates in the world. Also high home prices. It’s not a coincidence.

True, however, house prices have been falling, on account of overcapacity there, for decades. Which is what has been happening in Canada for the past couple years, and likely will continue for quite a long time to come.

I suspect America is to Zimbabwe, as Canada is to Japan. Canada being a chronic net exporter, producer of more than it spends, accumulator of savings. While the US is a chronic net importer and dis-accumulator of savings. This is why I believe we’re going to eventually see a complete inversion of the 63 cent Canadian dollar (ie: $1.55 CAD$/$USD), as the other half of the cycle appears. America’s tech stock bubble being replaced with a Canadian gold mining stock bubble.

#106 David #1 on 05.24.15 at 5:40 pm

Love the truth. Today 42% of all first-time buyers rely on the Bank of Mom for the down payment.

My Mom and Dad couldn’t/wouldn’t have done this. They kicked my as out of the cradle years ago.

I don’t know where you are getting your Stats from but where did these first-time buyers “Bank of Mom” come from?

#107 LL on 05.24.15 at 5:42 pm

#14 gladiator on 05.24.15 at 10:07 am

The young protest over real estate because it affects their lives far more than isis, global warming etc. They just want to have decent lives and have the same opportunities as their parents had.

Completely agree with you!
“Faut comparer des bananes avec des bananes!”

#108 Nagraj on 05.24.15 at 5:42 pm

When NAPOLEON espied all those magnificent Russian Orthodox cupolas gracing the Moscow skyline, he said “Many churches are the sign of a backward people.”

When NAPOLEON was shown a list of Vancouver house prices, he said “Little million dollar homes are the sign of a demoralized people.”

And then, as I recall, he laughed.

#109 Leo Trollstoy on 05.24.15 at 5:45 pm

Blame outwards.

Blame foreign money.

Typical poor people reaction.

#110 Mister Obvious on 05.24.15 at 5:50 pm

I’d planned to watch the news tonight to see how the ‘protest’ went at Robson Square. Tonight’s post has made that entirely unnecessary. Among its many other virtues, greaterfool.ca also saves you precious time.

#111 Shawn on 05.24.15 at 5:59 pm

Savers versus Borrowers

#83 BS on 05.24.15 at 3:51 pm

According to newly released data from Statistics Canada, 71 per cent of all Canadian families carried some form of debt in 2012 — yes, that includes mortgages, but it also includes a growing pile borrowed to buy cars, new kitchens and many of the fashionable material trappings of the modern middle-class lifestyle.

http://business.financialpost.com/news/economy/the-debt-crisis-in-canada-if-your-paycheque-is-100000-plus-that-means-you

That leaves 29% of households which is made up in part by people who can’t get credit to borrow. It looks like the savers are vastly out numbered by the borrowers by at least 4 to 1.

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

I suspect that most of the 71% who are in debt also have some savings of some form. People with massive savings locked in an RRSP for example still borrow.

The simplest and most logical explanation for low interest rates is that there is a lot of money available to be loaned out.

In economics prices adjust until supply equals demand. Interest rates fell because there was less demand for loans because there was less young people and because there was more money available to lend because there were more old people. First sentence today covered it: Old people have money.

Rates fell and this allowed young people to be able to afford to borrow much more. This pushed up the price of houses.

House prices will stay high until something in the supply of and demand for money changes or (as in the U.S.) until something disrupts the normal credit markets.

House prices seem likely to stop rising if it is true that interest rates have bottomed.

#112 saltpony on 05.24.15 at 6:01 pm

Comparing USA and Canadian house prices just isn’t of equal measure.

Prostate cancer in USA? $100,000+.
Prostate cancer in Canada? Free.. even for street people.

Somehow, you’ll end up paying no matter which place you choose.

#113 Raging Ranter on 05.24.15 at 6:09 pm

Taxing speculation to dampen home prices, then using that revenue to help the kiddies get into the market….. Which makes it a compete wash as far as the effect on home prices is concerned. Bob Rennie either has one hell of a sense of humour or he’s an idiot.

#114 Andrew Woburn on 05.24.15 at 6:17 pm

If it ain’t HAM, it’s techies.

“Gentrification Spreads an Upheaval in San Francisco’s Mission District”

http://www.nytimes.com/2015/05/23/us/high-rents-elbow-latinos-from-san-franciscos-mission-district.html

#115 Marco on 05.24.15 at 6:22 pm

Thanks Garth,

I agree with you that interest rates have had everything to do with price appreciation in Vancouver. That and realtor propaganda.

Foreign investment is a completely separate issue. For instance “Mom” selling her place to the highest bidder is only because of price appreciation up to this point -because of low interest rates. Mom ain’t complaining though.

In the early 90’s there was a large influx of foreign buyers from Iran into the British Properties. Did this cause price appreciation across the lower mainland? No it did not.

When interest rates are forced to rise here because of our big brother America and the Federal Reserve, will Vancouver Boomers board planes and try to personally sell their houses on the streets in China?
They could probably start up a direct airline service and call it Boomer Air,
comes with complimentary tissues to soak up the tears of the runaway debt years.

Cheers.

#116 ShawnG in TO on 05.24.15 at 6:31 pm

agreeing with crowdedelevatorfartz on 5$ starbucks.
and let me add more:
– in designer jeans and 100$ t-shirts, and other expensive clothing.
– 70$ phone plans and 800$ phones (i know you didn’t pay that at first, but that’s the cost of the phone and you are paying over 2 years time)
– annual vacations, because you deserved it
– 500$ pads
– $$ spend in bars and restaurants. how many young “professionals” brown bag their lunch?

#117 devore on 05.24.15 at 6:32 pm

#170 Mark

In considering the 19 metropolitan regions in Canada with populations of at least 200,000, the Vancouver CMA was right in the middle of the pack with the Saskatoon and Regina CMAs (0.9 percent)

It’s so easy to believe cockamamie theories about asians buying everything up in Vancouver, because they are such a visible almost-majority here, so it seems plausible, even if foreign ownership is same or higher in other Canadian cities. I think, additionally, Vancouver is racially homogenous, with non-caucasian non-asian population being basically zero, it just seems like such an invasion compared to other places, when in reality almost all of them are Canadians.

#118 SickofBC on 05.24.15 at 6:45 pm

Vancouver’s famous condo booster says things are good—and could be even better with a little rezoning.

http://www.bcbusiness.ca/real-estate/vancouverites-unhappy-about-housing-bob-rennie-isnt-so-sure

#119 Cici on 05.24.15 at 6:46 pm

Great observations Garth, especially this paragraph:

“Of all the things wrong in the world to vex about – climate change, over-population, ISIS, Canada at war, public debts and deficits, punishing taxes, animal depopulation, homelessness, a sliding economy – the young protest over real estate.”

It’s sad to me that so many people don’t get the fact that having their own little plot of RE won’t save them from the bigger threats. That rights folks, that little plot of land or sky won’t save you from the effects of deforestation, climate change, animal depopulation, war, famine, etc.

I guess they’ve taken basic biology concepts such as “the wheel of life” out of the school curriculum?

Although, what is seriously funny (in a sickly ironic way), is that Canadians can’t stop going into debt buying tons of *&?% that’s “made in China,” yet then get all upset when a handful of Chinese who’ve struck it rich thanks to Canadian-style greed want to invest the cash they’ve earned within Canada.

#120 johnk on 05.24.15 at 6:53 pm

C’mon millennials, all those greedy boomers who snaffled nice houses for you to grow up in are going to die one day. And leave their houses to you. Free. Gratis.

#121 Generational theft on 05.24.15 at 6:57 pm

https://www.youtube.com/watch?v=3PJO09fPT1Q

https://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=video&cd=24&cad=rja&uact=8&ved=0CC0QtwIwAzgU&url=http%3A%2F%2Fwww.bloomberg.com%2Fnews%2Fvideos%2Fb%2F2db26592-e012-4d24-bdf5-99181e09bde5&ei=AVdiVdn4DMvyoAT5ioG4BQ&usg=AFQjCNHqYAOPpOtX3yec95keZV–Se-YPA&bvm=bv.93990622,d.cGU

Who is Stan Druckenmiller?
https://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CB0QFjAA&url=http%3A%2F%2Fen.wikipedia.org%2Fwiki%2FStanley_Druckenmiller&ei=P1diVZ-gNc3loATX-oOABQ&usg=AFQjCNHuTmbzdmaUfUMuyWV7n-YZqxIvGg&bvm=bv.93990622,d.cGU

#122 Can we be a Japan? on 05.24.15 at 7:08 pm

There are lots of difference between Canada and Japan. Japan is a density populated area with really “no more land” compared to Vancouver’s claims. Japan has aging population, low birth rate and low immigration. I don’t know what will happen in the future but can we be another Japan?

http://www.doctorhousingbubble.com/wp-content/uploads/2012/02/Japanese-US-Housing-Bubbles_2011.png

http://images.angelpub.com/2010/48/6690/japan-housing-bubble-2.png

#123 MSM-free Zone on 05.24.15 at 7:08 pm

“We know what they are. I just devoted eight years to telling you. At the top of the list are……”
_________________________

Best paragraph ever written.

Unfortunately, as every (non-self-serving) politician will secretly admit, you can’t put the toothpaste back in the tube.

#124 devore on 05.24.15 at 7:13 pm

#3 Rikk

It’s called a first world problem …

Definition of first world problem #donthave1million Kids fresh out of college, already leading comfortable middle-class lifestyles, vexing about not owning real estate. They’re young, healthy, safe, educated, well-fed, posting indecipherable twits full of hashtags from their ipads and expensive smart phones. Think of the productive things they could accomplish this weekend instead of “protesting” downtown blaming anyone and everyone for a non-problem. When not having 1 million is the biggest problem in your life you can be troubled with…

#125 Michael on 05.24.15 at 7:14 pm

Word.

#126 Godth on 05.24.15 at 7:20 pm

#116 Cici on 05.24.15 at 6:46 pm
“That rights folks, that little plot of land or sky won’t save you from the effects of deforestation, climate change, animal depopulation, war, famine, etc.”

What’s really sad is that you haven’t connected the dots to realize that this is all a by-product of capitalism and the entitled life we all enjoy at the expense of multitudes. The chickens are coming home to roost though. It’s all the reservation now.
http://www.paulcraigroberts.org/2015/05/21/memorial-day-hoax-paul-craig-roberts/

#127 Generational theft on 05.24.15 at 7:22 pm

A longer speech by Stan Drunkenmiller at USC

https://www.youtube.com/watch?v=X0Mcw5iGvcI

#128 Trojan House on 05.24.15 at 7:27 pm

The sins of the father are paid for by future generations. The age of entitlement began post WWII. You will understand what this means when the sovereign debt crisis hits.

Btw, there is no such thing as global warming. Weather patterns are cyclical. To think humans have caused this over the last 100 years or so, is arrogant.

#129 eddy on 05.24.15 at 7:38 pm

Canada’s massive housing bubble inflated as a result of lax lending standards (starting in 2000) and emergency interest rates (starting in 2009).

—-
but usa has lax standards and low rates too… there must be other reasons

#130 wearehere on 05.24.15 at 7:42 pm

Your constant assault on ‘Moist Millenials’ is getting tiresome.
It is no different from harper saying keep debt down while the CMHC is fully pumped, the B of C cuts rates t zero and the banks are pushing debt while Oliver twiddles his thumbs.

I guess they are entitled to want a home to raise a family in and not compete with anyone who can bring untaxed money in or have to worry about the whims of a landlord.

There are lots of affordable places to live. — Garth

#131 Retired Boomer - WI on 05.24.15 at 7:42 pm

I might suggest a simple -if crude- solution to high RE prices.

QI issues a property tax roughly equivalent of 3 to 3.5% of the “value” of the property to the current owner.

At 150G say it amounts to $2500 or so per year.

At 1.5M well, it’s $25,000 that gets the old farts out-FAST!

Glad to be of service. Oh we have no delay of tax crap, pay or in 4 tears it gets sol;d for unpaid taxes to highest bid.
Keeps the place clean

#132 Lobster Man on 05.24.15 at 7:44 pm

Yesterday’s #163 – Mark on 05.24.15 at 1.06 am

Isn’t there an “Allowance” or “Allowance for the Survivor” in addition to the minimum of more than 16K/year that you mentioned. The Allowance can add 12.8K or more per year.
I agree with you. There is no incentive to save or to generate any additional earned income.

#133 John Prine on 05.24.15 at 7:45 pm

#2 Weener on 05.24.15 at 9:11 am
love this line:

“And this brings us to the worn stone steps of the Vancouver Art Gallery today, Sunday, where the youth of YVR are revolting. They’re angry, too.”

They are the future politicians and voters, right or wrong nobody will ignore a 25,000 signature petition, wait until Christy figures out that these people are potential Liberals…

#134 Smoking Man on 05.24.15 at 7:49 pm

Millennials have it way tougher than boomers.

Reasons why.

Education that goes against human nature and logic.

Restructuring of income, less for the tax farm slaves , more for the share holders.

Machines making the labour pool expand.

Off shoring of labour and services.

Let’s face it. Unless you are a revenue generator, or someone managing the revenue generator. Your an expence on the bottom line.

Just wait till the trans pacific deal gets past into law.

Doomed…unless you

Buy Shares….

#135 JimmyJoe on 05.24.15 at 7:53 pm

Global car market in great shape…

http://www.zerohedge.com/news/2014-05-16/where-worlds-unsold-cars-go-die

That post was proven to be false. More made-up crap from the zero guy. — Garth

#136 Retired Boomer - WI on 05.24.15 at 7:59 pm

Mrs. Yellin- Adjust those interest rates UP at least half a point, and add a .25 minimum every meeting until the US economy gags.

The upstairs neighbors party is getting out of hand!

thank you- RB

#137 Generational theft on 05.24.15 at 8:12 pm

#129

our banks got bailed in 2008 out to keep the kool-aid going

#138 JimmyJoe on 05.24.15 at 8:18 pm

“Global car market in great shape…

http://www.zerohedge.com/news/2014-05-16/where-worlds-unsold-cars-go-die

That post was proven to be false. More made-up crap from the zero guy. — Garth”

Oh..didn’t know that would you be kind enough to post a link to the source?…thanks…

W

#139 Shawn on 05.24.15 at 8:25 pm

Banks create Money (But they don’t own it once created)

Godth on 05.24.15 at 5:25 pm

#88 Shawn on 05.24.15 at 4:20 pm

“One man’s debt is another man’s savings.”

Totally, completely and utterly wrong. This has been pointed out to you ad naseum but you’re and ideologue with a head like a rock.

Banks create ‘money’ (credit, mortagages, etc.) and deposits.

*******************************
True, banks create money. They do it by simultaneously creating a loan and a deposit. But they don’t own the deposits (the money) they create.

The fact remains, one man’s debt IS another man’s savings. Just look at the balance sheet of any bank and note that the deposits are liabilities of the bank. Someone owns the deposits.

The total amount of debt and savings in the world has been rising steadily for centuries. Not only in absolute dollars but per capita. And not only in nominal dollars per capita but in real dollars (adjusted for inflation) per capita. This will continue, thankfully.

Excess wealth of the rich is always growing and much of the excess is always loaned to the poor. Sometimes the return on such lending is positive after inflation and sometimes (like now) it is negative.

I have explained why interest rates are low and why that leads to high house prices and mega mortgages.

Until the reasons for low rates go away, expect house prices to stay high.

#140 Generational theft on 05.24.15 at 8:30 pm

F/U Generational Theft – Start at 1:00:00 for Stan.
Seniors’ wealth increase and children’s decrease

https://www.youtube.com/watch?v=X0Mcw5iGvcI

#141 Canada is a house of cards on 05.24.15 at 8:32 pm

Canada the country is a house of cards built on a sea of lies. Without Immigrants and CHMC Canada would be in trouble. The Canadian insiders who run Canada lie to attract immigrants and CHMC is a tool to create a lie of financial stability and financial prudence. Remove either pillar and Canada would crumble over night. It’s a ponzi scheme that is now out of control. The ponzi scheme could of survived but the Canadian insider Harper was greedy and hungry for power and created the biggest housing ponzi scheme that dwarfs the US housing bubble two fold. Housing using any metric makes no financial sense.

#142 Sheane Wallace on 05.24.15 at 8:35 pm

# 104 Mark

I suspect America is to Zimbabwe, as Canada is to Japan. Canada being a chronic net exporter, producer of more than it spends, accumulator of savings. While the US is a chronic net importer and dis-accumulator of savings. This is why I believe we’re going to eventually see a complete inversion of the 63 cent Canadian dollar (ie: $1.55 CAD$/$USD), as the other half of the cycle appears. America’s tech stock bubble being replaced with a Canadian gold mining stock bubble.
………………………………….
It is the opposite, US savings rates go up, they deleverage while we continue to borrow and save nothing.

net exported nation of what, farts? We manufacture nothing,

Oil to hit $ 45 soon.
The current weak loonie is not reflecting any fallout from the huge debt bubble, only oil going down and Poloz’s stupidity of talking down the dollar.

Gold will go up but Canadian dollar – down, there is little correlation between the Ca dollar and price of gold.

We are NOT major gold producer even though many gold producing companies are Canadians, they are best miners but their mines are abroad.

#143 Entrepreneur on 05.24.15 at 8:38 pm

#124 devore…you stereotyped the youth as if they are all spoiled with gadgets. MMMMM….

Tomorrow is going to be interesting. Wonder which leader (from which level of government) will be there? Secret: If the government does not listen to you the first time do another protest (use antics, even to the point of comical) until satisfied. Keep it coming/keep it strong.

#144 april on 05.24.15 at 8:40 pm

#115 – Marco. Exactly! low interest rates and “realtor propaganda”

#145 Canada is a house of cards on 05.24.15 at 8:43 pm

Remove CHMC and let the free markets take care of everything. What do you say realtors? Should canada get rid of CHMC and see what happens to this powerful strong housing market? Got to love the shysters kick and scream when they touch CHMC . Realtors and the rest of the FIRE industry are the biggest communist and free market haters in the world. In the end Garth it’s the government that needs to remove CHMC which is the biggest contributor to this housing ponzi but I suspect the insiders hate and I mean hate free and open markets. How else will they steal?

#146 Canada is a house of cards on 05.24.15 at 8:44 pm

Sorry it’s CMHC

#147 omg the original on 05.24.15 at 8:46 pm

HOUSE PRICE AIN’T GOIN’ DOWN ANYTIME SOON

Yes prices in Canada’s two major cities and many other places are grossly overvalued.

But for the reasons GT speaks of today they are not going lower any time soon and may keep going higher.

Low Interest Rates – will stay low for a long time – government’s around the world are just too addicted to low rates for them to make any type of meaningful change. And no government can raise rates significantly on it own so long as most other developed countries continue with ultra-low emergency rates. Besides even if the rates that Central Banks control (short rates) were to double they would still be at multi-decade lows. Return to normal rates will be a LON, SLOW ride up – it may take a decade.

Financial Literacy – When it comes to money and bubble markets we are all dumb asses – as the GFC proved, even guys with MBA’s from Harvard are financial bimbos when faced with a bubbly market. NO HOPE OF YOUNG CANADIANS GETTING SMART.

Irresponsible lending – see Financial Literacy above – same point – the people running our lending institutions are bimbos when faced with a frothy market. THEY JUST CANNOT UNDERSTAND IT

Bank of Mom (and Pop) – mom and pop are sitting on hundreds of thousands of dollars in appreciation on their house bought in the 1980s and 1990s. Plus they likely got an nice inheritance from their parents in the past few years. So their flush and more than happy to make their kids lives easier by helping them into a lifestyle killing mortgage. Just hope they do not want grandchildren as their kids will be working their asses off to cover the costs of the house.

#148 I'm stupid on 05.24.15 at 8:49 pm

If you had no morals Garth you would be Prime Minister, but that ship has sailed. I’m sure if you’d be willing to forget your morals the Realestate board could pay you a few million to tell all your followers on this blog that it’s time to buy. You could keep the party rolling for another year or two and generate (conservatively) $500 million in extra commissions for agents across Canada. You could be like a celebrity getting paid to endorse a product. If Lebron gets $80million for selling $200 shoes imagine what you could get for selling $2million homes. The only problem is you have a conscience and morals so you get respect from millions of anonymous people on a pathetic blog.

Thank You Garth for exercising your freedom of speech and telling it like it actually is.

#149 young & foolish on 05.24.15 at 8:50 pm

“herdonomics” = behavioural economics …. and it’s the reason “free markets” do not always correct themselves in a rational manner

#150 omg the original on 05.24.15 at 9:00 pm

SO WHAT ARE PEOPLE TO DO

Its a real dilemma.

I can almost assure you that the real prices of houses will trend down over the next decade or two – but when it will start and how far it will go is anyones’ guess.

Based on historic long-run numbers for the US (and Canadian housing is closer to the US than to Singapore, Hong Kong or London) Canadian prices are 30 to 70 percent overvalued.

Prices in Canada will revert, but with how entrenched prices are, it will likely take years – maybe 10 to 25 years. And likely the reversion will be in real terms as opposed to nominal terms, as inflation slowly erodes away the value of a house.

So what should you do? Buy a house that will almost certainly be worth less in 20 years than it is now? Or continue to rent for the next couple of decades?

There are BIG pressures to buy. The whole “pride of ownership” thing is a really big deal for people. And parents really like to see their kids grow up by getting into their first house. And WTF, everyone else is doing it so how wrong can it be?

So the choice is to be part of the crowd and buy knowing it will at best be just a crappy investment, but at worst could turn out to be a life changing financial crisis.

Or forego the status and experiential joy of owning and continue to rent. But then you’ll likely just piss away the money you save on other things – like trips to Thailand and having kids.

#151 Mr.Hulot on 05.24.15 at 9:02 pm

# 104

Ask the few retailers underneath those buildings who are poor and almost bankrupt.

#152 MinInMission on 05.24.15 at 9:09 pm

We have not learned. The low interest rates are what started this and are what allow it to continue.

There will be serious consequences when this finally topples.

#153 devore on 05.24.15 at 9:12 pm

#93 Victoria Real Estate Update

2. HELOC debt

Canada: —– HELOCSs amounted to 14% of GDP —– (at the end of 2013)
US: —– HELOCSs amounted to 5% of GDP —– (at peak)

Although I’m quite certain HELOC debt in Canada is off the charts, the two numbers are not directly comparable. In the US, it is very advantageous to refinance the mortgage, rolling other consumer debts into it, as rates have been falling for 30 years and house prices rising. Mortgage expenses are income tax deductible, credit cards and HELOCs are not. Three is no such comparable advantage in Canada, as a result HELOCs will be higher.

#154 young & foolish on 05.24.15 at 9:14 pm

Shawn #70: “So, when should se expect interest rates to rise much and drive house prices down? Perhaps no time soon.”

Interesting explanation of why expecting a measure of today’s economy using yesteryears yardstick may not be such a good idea.

#155 young & foolish on 05.24.15 at 9:22 pm

” I can almost assure you that the real prices of houses will trend down over the next decade or two – but when it will start and how far it will go is any ones’ guess.”

You could also say this about “growth” investments like global equities. I suspect that a lot of older people would sell, rent and invest if they felt more confident about stock markets.

#156 Made in BC on 05.24.15 at 9:26 pm

*******************************
True, banks create money. They do it by simultaneously creating a loan and a deposit. But they don’t own the deposits (the money) they create.
+++++++++++++++++++++++++++++++++++

And you feel its okay to charge “interest” on money they create out of nothing? I assume you will say yes as you continue to feel the banks can do no wrong (like the big 5 that got got insider trading. LIke HSBC that laundered 700 billion in drug money).

So its just fine….that banks charge interest to govt….which means taxpayers…..for creating money out of nothing. No?

#157 Made in BC on 05.24.15 at 9:27 pm

Sorry….like the Big 5 that just caught insider trading and were fined…..with no one going to jail of course……

#158 Millmech on 05.24.15 at 9:31 pm

Don’t understand the whiny entitled millenials here like Ben.I turned down a job in Quesnel for $80,000/yr ,lots of jobs in that area that pay well and no takers.I looked at housing and I could get a three bedroom house with 5acres of land for around $160,000 that’s about a 6 million Vancouver special.Oh that’s right it’s not cool to live there without a Starbucks on every corner,Apple store in every mall,that’s why millenials are where they are.Its all about appearances, got to look rich and a house in Van is the ultimate trophy status symbol.Sister-inlaw lives in that area no HAM there,they’ve been mortgage free for years,investing half their money,imagine doing that in Van.Good Luck

#159 jibsers on 05.24.15 at 9:32 pm

#166 Mark on 05.24.15 at 2:26 am
“Unrelated: the BEA has given the green light to RE-SEASONALLY-ADJUSTING GDP which means that Garth is absolutely correct that the Fed will hike this year.”

I’ve always been on the record as believing that the US is far closer to the ‘hiking’ moment than Canada. With Canada likely to lag many years behind the Federal Reserve in hiking,…”

Yup and the loonie is on the verge of a major plunge contrary to what you say…..sounds like you are trying to convince yourself that you will be able to afford a trip to Mexico, but it ain’t gonna happen….enjoy the cold!

#160 JimmyJoe on 05.24.15 at 9:39 pm

So, why was this post deleted boss?

Distasteful use of language. — Garth

#161 devore on 05.24.15 at 9:41 pm

#85 Mr.Hulot

This affects at least three entire buildings and 100s of suites. Fire trucks appeared. Impossible to sleep with all the noise.

I’ve lived in several Van downtown locations for over 10 years, and have no problem sleeping through car alarms, harleys, fire trucks/ambulances/etc making a racket outside all through the day.

If there’s a siren outside my window at 3 am, the only thing that’s happening is me turning over in bed.

Make your own conclusions.

People who are asleep keep their lights off?

#162 lee on 05.24.15 at 9:45 pm

A tax aimed at a specific group of people? Should a mayor even be entertaining such an idea? Like such a tax has never gone bad before in Canada, especially in B.C.? This is not a dividend withholding tax. This is a tax meant to keep people out. Period.

#163 devore on 05.24.15 at 9:47 pm

#85 Mr.Hulot

Even if they’re not asleep, turning lights inside to see what is going on outside DOES NOT WORK AT NIGHT. That’s idiotic.

I’m not disputing that many units in the Coal Harbor area are empty, I’ve owned a condo there for some years. But your observations do not match your colclusion.

#164 Pa Joad on 05.24.15 at 9:54 pm

Never understood what the attraction or purpose of living in Vancouver (and even moreso Victoria) is???

We may well be on the verge of a reverse Steinbeckian West -East exodus as people chase the dwindling fish/lobster stocks all the way to Cape Breton and beyond….after all if you go far enough east you are in Asia, and with technology,physical proximity don’t matter much!

BTW is there a Bank of Garth? If so, it would be kind of cool to refer to it as the BoG…..hard to beat a good ol’ Bog-standard…..

#165 tundra pete on 05.24.15 at 10:07 pm

Very few people will save money to buy a car but many will make payments on one every month. Go figure that out. They will pay someone else so they can have a car. W.T. F? Why not just save the money then go buy a car.

Why do all these youngsters have to have everything now? Why is it others problem when they dont get everything they want right now? Talk about a reason that will drive housing prices up! Way to go. The old school way worked much better. Saving then buying when you had enough.

If Vancouver is too expensive for you, move somewhere you can afford. Vancouver has been this way for years. People with larger incomes, wealth have always had a dominance in Vancouver real estate that will likely never change. Suck it up.

#166 Shawn on 05.24.15 at 10:07 pm

On Banks charging Interest…

#156 Made in BC on 05.24.15 at 9:26 pm
*******************************
True, banks create money. They do it by simultaneously creating a loan and a deposit. But they don’t own the deposits (the money) they create.
+++++++++++++++++++++++++++++++++++

And you feel its okay to charge “interest” on money they create out of nothing? I assume you will say yes as you continue to feel the banks can do no wrong (like the big 5 that got got insider trading. LIke HSBC that laundered 700 billion in drug money).

So its just fine….that banks charge interest to govt….which means taxpayers…..for creating money out of nothing. No?

**************************************
Yes, of course I feel it okay for banks to charge interest on money that is created out of nothing (actually created out of promises of customers to repay loans).

The creation of “money” (credit) by banks is a vital and needed part of the economy. Banks make a reasonable and not excessive return on shareholder money after covering their costs. They are subject to competition.

How would they cover their costs if they did not charge interest on loans?

Banks don’t force anyone to borrow. People line up begging to borrow.

Virtually every wealthy person has borrowed money at some point or other and often on a continuous basis over their lives. But their assets far exceed their debts (else they are not wealthy)

How much would houses cost if money could be borrowed without interest?

Of course banks sometimes “do wrong”. They have been fined hundreds of billions in recent years. This actually punishes share owners for the sins of management and I agree the punishment should be on the wrong doers not the owners.

#167 Nosty, etc. on 05.24.15 at 10:08 pm

#134 Smoking Man on 05.24.15 at 7:49 pm — “Just wait till the trans pacific deal gets past into law.”

Seems to be close. It would be great fun to be a fly on the wall, listening to all the politicos scrap with one another over inconsequential gibberish.

Wonder how much any of the preceding has to do with this? Divisions are being made, that’s for sure.

#168 JimmyJoe on 05.24.15 at 10:12 pm

There’s a simple way to address the high cost of housing in Canada……but it would never happen for obvious political reasons…

Capital Gains tax on primary residences and CMHC insurance limited to 500K..

Home prices would gradually decline and Fed coffers start to bulge..

I know too simplistic…

Like what politician wants to see his 2mil home in Ontario start to drop in price. Even our host wouldn’t be thrilled!

So, that only leaves the inevitable housing crash which will be hugely destructive to the entire economy. Likely will occur when the over inflated global stock markets start their overdue correction…

#169 Retired Boomer - WI on 05.24.15 at 10:15 pm

“Pride of Ownership”…”Pressures to Buy”…”Bank of Mom and Dad”…”Entrenched Prices”…”Interest rates may stay LOW for a long time”……. I’ll add in Ben’s rant on 5 posts tonight…..

Canadians are they’re own worst enemy in RE prices. Not HAM, though that may influence a couple of markets, more likely the BANKERS and your own Federal Government.

Your words bely your intentions. Should prices drop magically- 20% tomorrow- I would bet much of the available investors would be sold!! Since much of it would be sold in the normal course of time, WHY should anyone drop their price? Fair priced property sells, always has, always will.

BEN- People who buy land, and pay the taxes upon it should decide what becomes of it, who may have 1st options 2nd options on it etc. I “own” it like my car, and clothes. I, AM the decider on disposition, not you! Clear?

#170 Smoking Man on 05.24.15 at 10:16 pm

#153 devore on 05.24.15 at 9:12 pm
#93 Victoria Real Estate Update

2. HELOC debt

Canada: —– HELOCSs amounted to 14% of GDP —– (at the end of 2013)
US: —– HELOCSs amounted to 5% of GDP —– (at peak)

Although I’m quite certain HELOC debt in Canada is off the charts, the two numbers are not directly comparable. In the US, it is very advantageous to refinance the mortgage, rolling other consumer debts into it, as rates have been falling for 30 years and house prices rising. Mortgage expenses are income tax deductible, credit cards and HELOCs are not. Three is no such comparable advantage in Canada, as a result HELOCs will be higher.

Ah you discovered the bank of mom.

My entire mortgage is a heloc, 2% var cost invested in 8% return in syndicated commercial mortgages.

Don’t include my other stuff.

Why let dead money not work for you.its against my religion.

My kids need to figure it out themselves. Its what makes our short life fun.

They will be sitting pretty one day, two oldest for sure, the young one, he’s me. Can’t fool the bastard.

And he don’t want nothing. The irony, he gets it.

#171 Smoking Man on 05.24.15 at 10:32 pm

Fear and loathing in las Vegas .

The hitch hiker. Its the brilliant move hunter pulled on all of you.

He nailed the characters. But who hitch hikes in the desert. Then who jumps in a converable in a 120 degree day not asking for water.

Damn I see the obvious.

Why can’t you.

#172 Mark on 05.24.15 at 10:39 pm

“Yup and the loonie is on the verge of a major plunge contrary to what you say…..”

Not at all. Domestic austerity and Canadian deflation, along with rising US inflation expectations and potentially rising US interest rates, will drive the CAD$ much higher.

“The current weak loonie is not reflecting any fallout from the huge debt bubble, only oil going down and Poloz’s stupidity of talking down the dollar.”

The fall-out from too much debt is debt deflation. And repaying and/or a cessation in domestic debt expansion is extremely positive for a currency.

Remember, every time somebody takes out a loan, they are borrowing money and then selling that money in the market for goods and/or services. Effectively they’re short selling the currency when taking out a loan.

When someone repays a loan, they’re doing the opposite. And we know that all loans must either be repaid or defaulted on.

Debt peaking and falling, Canadians going into significant consumer austerity, is profoundly CAD$ positive.

CPI is barely above zero and trending lower at this time, showing us that significant consumer austerity is upon us (even at a time when the currency, temporarily, lost 20% — price growth was significantly less than 2%). Airfares for this summer are also down dramatically more than simply the reduction in oil prices would imply, also telling us that consumers are basically out of money and are cutting back severely. All very positive for the CAD$ over time.

#173 Dad on 05.24.15 at 10:41 pm

Ahem, that should be the bank of Mom n Dad……

#174 Leo Trollstoy on 05.24.15 at 10:44 pm

Toronto real estate is unsustainably booming across the sales mix. Everywhere. For 20 years. Crazy amounts of building of condos in the city continues.

http://www.bloomberg.com/news/articles/2015-05-21/canada-as-new-switzerland-driving-toronto-condo-development

#175 DON on 05.24.15 at 10:46 pm

#149 young & foolish on 05.24.15 at 8:50 pm

“herdonomics” = behavioural economics …. and it’s the reason “free markets” do not always correct themselves in a rational manner

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

Agreed…but an irrational free market can be corrected in an irrational manner.

Like playing the old game of pick up sticks…it is all inter connected the stick that collapses the entire pile is hard to locate prior to the collapse.

I’m betting on the ‘house poor’ lifestyle being the one that brings this house of cards down. No money to spend on retail, less jobs, loss of dual incomes for some…divorces, forced sales on your block…and Wham…avalanche!

Story: I know a couple who is divorcing – he works for the man, she works at home (for the children). Mutual divorce. She has limited training. He will live in the basement until she can come up with $2500 plus utilities. I hope everything turns out alright for them.

#176 Suede on 05.24.15 at 10:49 pm

#78 Victoria Real Estate

Yes you’re right, they wen’t down 10-15% and lots of sideline sitters went and scooped up properties b/c prices were “cheaper” not because the trend was down.

We have to be careful in throwing the word “bubble” around as there are no hockey stick charts anywhere.

All i see – through an unbiased eye – is a bull market trend upward.

Until that trend is broken, can’t fight the tide of the market.

Compare the YVR chart to S&P500, they’re not much different.

Are we getting closer to a temporary top – maybe.

But there’s lots of speculative capital being deployed and any 10-20% correction will bring us back to prices of 2013-2014 where sideline sitters will jump in full force.

Bear trap – could be. But they won’t care and end up holding the bag “long term” or until the mortgage can’t be paid.

Most people are wishing the market lower so they can get in. That’s not an indication of a top. The top will be in when the majority don’t want to get in.

When will the black swan show up? who knows.

BTW… keep those Arizona links coming, i almost bought one last year.

#177 Leo Trollstoy on 05.24.15 at 10:49 pm

I think I understand why Mark has no money. His armchair economic forecasts are always wrong. Gold has done nothing. Miners suck. Canadian dollar sucks. Toronto real estate prices keep going up.

Can’t make coin if you’re always wrong. Hopefully you’re still a wage slave! Gotta pay the rent somehow!

#178 Washed Up Lawyer on 05.24.15 at 10:52 pm

Garth:

Any chance you could devote one of your blogs to grooming tips for boomers? I need to know what to do with the hair growing out of my ears.

Stifling heat up here in NE Alberta and it is having consequences. Current temps are 27 in Ft. McM and 17 in Lillooet.

Cenovus (Foster Creek) and CNRL (Primrose) are shutting in due to wildfires and workers are being choppered out. 7% of Alberta’s production.

I saw the article but cannot find it again. Maybe I dreamt it.

Hellacious fire season ahead.

Looking forward to the grooming tips.

#179 GenXer on 05.24.15 at 10:55 pm

Garth,

Why the resistance to foreign ownership policies? China and India block the purchase of real estate by foreigners completely. Most European nations place heavy taxation on foreign ownership. By not doing the same, canada is turning housing into an international investment opportunity. This activity will severely increase the price of housing and require Canadians to be highly paid, thus uncompetitive in the global marketplace. How does an open door policy work in our Favour as a nation in the long run? How about we stop selling off our houses and start actually making things again? I don’t understand your position on this topic.

#180 NFN_NLN on 05.24.15 at 10:55 pm

We need to have a free for all “purge”. Fairness as dictated by the hand of god and your ability to survive.

#181 whitehorn on 05.24.15 at 10:56 pm

“House of Mom” I understand that for parents helping to purchase a home that are in the stratosphere or becoming very unaffordable. The part that gets me – does mom pay the mortgage for the next 25 years. I can see “perhaps” assistance for the first year. But hey come on 3000-6000 monthly payments on a 5500-750k home for 25 years. That person who owns the house must have some type of income to be able to support. Most parents can only help so much. Anyways, with slow job creation and poor quality created jobs since the recession in 2009, it puzzles me to extreme how house prices continue to climb. I agree totally with lots of Garth’s comments. What in God’s earth is supporting this continual rise in house prices at historic highs. On a side note, to this article, you don’t have to live in Vancouver or other high priced areas. Many jobs probably pay equally in other parts of Canada with 1/3 the house price. Each to their own.

#182 DisgustMadeMePost on 05.24.15 at 11:13 pm

Well, you might think they’re entitled, or whining, or whatever. You might KNOW that they’re wrong. The masses, however, have a history of dealing with those that ignore them when they’re collectively upset.

The talk of foreign investment, money laundering is everywhere.

Gee. Since it doesn’t exist, why the resistance to tracking ownership? Seems it would be an easy way to put the issue to rest and avert potential problems.

#183 Ulsterman on 05.24.15 at 11:18 pm

Keith in Calgary on 05.24.15 at 11:11 am
When I was a banker I got transferred from YYC to YVR in 1983. I will never forget the first mortgage application that hit my desk. The appraisal showed a water logged shit shack that might have garnered $50K in Calgary……yet the appraiser had a $400K value on it. Vancouver RE has always been overpriced as far back as I can remember

Keith this is an oversimplification. Yes it has always been the most expensive place in Canada but it was affordable. My house sold in 1999 for 299k. A 80x130ft lot in North Burnaby. Teachers in the nearby school maxed out at 60k. Now the house is assessed at 1.2m and the teachers max out at 75k after 10 years on the job. Examples like this are commonplace.

#184 dadeedum on 05.24.15 at 11:25 pm

#88 Shawn

“Japan is touted as the country with the biggest bulge of old people. And it has had for a long time the lowest interest rates in the world. Also high home prices. It’s not a coincidence. ”

Keep in mind that Japan’s house prices peaked in 1985 and now, 30 years later, still have not recovered to 1985 prices. This happened in an environment of falling interest rates. So it won’t necessarily take rising rates to kill Canada’s real estate bubble. And like Japan, the aftermath could last a generation or more.

#185 Mixed Bag on 05.24.15 at 11:31 pm

Why blame Mom? Why not Dad? Or Mom and Dad? Or simply Parent (s)?

Not to detract from the message of an otherwise excellent post, but putting the blame on mom while dad is not mentioned, appears to absolve dad of any responsibility, indeed keeps dad out of the reader’s mind completely, and focuses all the blame on her. Yet another thing mothers need to be blamed for.

You’re too good a writer, Garth, for me to believe that this is accidental.

#186 Chaddywack on 05.24.15 at 11:35 pm

In Nanaimo this weekend with the babe. Lots of real estate here and all had SOLD stickers on them. Not sure how much HAM is here, but a couple of the signs had Chinese on them. Makes me think low interest rates are to blame if Nanaimo is hot. Then again a taxon speculation is the right thing to do.

#187 [email protected]##$ on 05.24.15 at 11:37 pm

In that picture alone was probably all of the Vancouverites that actually live in the city!

Talk about excess speculation

#188 Mark on 05.24.15 at 11:41 pm

I think I understand why Mark has no money.

I have plenty of money. So once again, please apologize for your uncalled for remarks and bullying. If you have a problem with what I say, sure, write something in response, but personal attacks have no place here. I’m sure Garth agrees.

#189 Derek R on 05.24.15 at 11:45 pm

#172 Mark on 05.24.15 at 10:39 pm wrote:
Debt peaking and falling, Canadians going into significant consumer austerity, is profoundly CAD$ positive.

But only if the debt is falling as a result of debt repayment. If the debt is falling as a result of bankruptcy or debt write-off, or reduced consumption that is profoundly CAD$ negative.

#190 Mr.Hulot on 05.25.15 at 12:16 am

#163

In case you are unaware, you are supposed to leave your suite and exit to the outdoors when a fire alarm rings especially when fire trucks appear. It appears you have found a better way. To sleep though it.

#191 Hedge city on 05.25.15 at 12:21 am

According to Harvard Vancouver is a hedge city

http://hir.harvard.edu/archives/10888

#192 Chico Rodriguez on 05.25.15 at 12:22 am

“#179 GenXer on 05.24.15 at 10:55 pm
Garth,

Why the resistance to foreign ownership policies? China and India block the purchase of real estate by foreigners completely. Most European nations place heavy taxation on foreign ownership. By not doing the same, canada is turning housing into an international investment opportunity.”

Well said! Developing countries in Latin America have tried the open market approach and many locals have been priced out of the best properties due to an invasion of gringo money….Canada is headed the same way, ….

#193 Vanecdotal on 05.25.15 at 12:38 am

Gee-zus. Blog absolutely rife with ivorytoweritis tonight. Emergency smudging required.

For as long as chimps in pants have been on Earth, there have been whiny, lazy, entitled pricks in EVERY generation. Thankfully, there are also hard working, innovative, inspired, compassionate people in each cohort too. This inter-generational warfare is just a distraction from much bigger problems.

RE being essentially out of reach for even good earners is only a symptom of deeper problem of income disparity, stagnant median incomes (adjusted for inflation) that have barely moved in 3 decades(!), and now TWO generations behind the boomers watching their buying power continuously erode, incomes stall, taxes increase, relentless inflation in the cost of necessities, etc. Sheeple are waking up, momentum is building. Politicians take note, there may be a big orange finger coming BC’s way in less than 2 years for all these reasons (and more). YVR’s brain drain out-migration is increasing yoy. This is not a sign of a healthy economy, or society.

Sure you can assign blame, call them entitled, say it’s all the kids’ fault they’re financial illiterates & believe housing only goes up forever, suck it up & move from your hometown to make way for capital inflows from non-residents, etc. to which I might actually agree, (if people kept mindlessly buying anyways), but only IF we had the following in place:

– basic financial literacy in public school curriculum from elementary age on
– Real Estate industry subject to same laws and regulatory oversight as financial services industry (no more “realtor math”, no more false advertising of outrageous investment returns, fictional “sold out” developments, etc. or you go to jail)
– Complete RE data transparency, similar to other jurisdictions. How can one be an educated consumer when the very information they require to make an intelligent buying decision is with held under the guise of “proprietary” RE Board data?
– Public access to foreign ownership data in local RE, as already exists in many other jurisdictions
– Elected officials at all 3 levels who actually serve their constituents (not deep pocketed special interests), and certainly not the interests of non-residents before residents

… but we do not YET have any of the above now, do we? I actually agree with Smoking Man @134, the deck is most definitely stacked. The can can only be kicked down the road so much longer, dear Boomers, as we will ALL be paying for the social and financial repercussions from years of bad fiscal policy in higher taxes, reduced benefits and services, and increasing societal unrest, (even in oh so polite Canada), unless this changes, and soon.

#194 Nagraj on 05.25.15 at 12:39 am

#178 Washed Up Lawyer: “I need to know what to do with the hair growing out of my ears.”

Well, here’s what you do. You let it grow at least six inches long, then you braid it, and tie a colourful bow at the ends. Hot.

As for the nose hairs, ditto.

You’ll be famous.

Kindly note that the younger guys can’t grow excessively long ear and nose hair, so you’ll be distinguishing yourself generationally too. The “Boomer Groomer”!

Girls will follow you everywhere you go, govern yourself like an accordion. (I always read your posts.)

I see Garth on the cover of Zoomer magazine, riding his Harley with ear pigtails and nose pigtails flying in the wind, “Canadian Millenials’ Enemy No.1” !

Who first said “The most one may say of a man my age is that he is well groomed” ?

#195 Smartalox on 05.25.15 at 12:44 am

Rob Rennie is a piece of work: low, low interest rates mean lots of condo projects get financing, lots of product for him to ‘market’. He sets the price, then spins the story to justify his profit margins. Others see sales at exorbitant prices, and claim “if that’s what a shoebox in the sky costs, my place must be worth so much more!”

And low low rates, and manageable monthlies make that a reality. Probably helped by some foreign cash purchases, laundered with hefty HELOCs, to pay cash for tuition and finance $250k rides.

#196 dosouth on 05.25.15 at 12:55 am

Tilting at windmills that don’t exist…

#197 Aaron - Melbourne on 05.25.15 at 1:17 am

Hi From Melbourne Australia where the recently elected government decided that Foreign Investors should indeed be slugged more tax to dampen their enthusiasm to buy (and too frequently hold as vacant) property.

Read all about it here: http://www.abc.net.au/news/2015-05-02/foreign-home-buyers-set-to-pay-higher-taxes-in-victoria/6439650

#198 Vanecdotal on 05.25.15 at 1:18 am

Regarding the “Just suck it up and move to a cheaper jurisdiction” meme that peppers the subject of YVR RE here, I would point out that this is already happening due to high cost of living vs. incomes here in YVR.

If you believe they’re entitled, well, let me appeal to your financial side and ponder this:

These people are doctors, nurses, diagnostic technicians, policemen, firefighters, teachers, day care workers, trades people, engineers, restauranteurs,etc. People from all walks of life ARE leaving Van. Forecast is that provincial out-migration for young people will continue to accelerate in coming years, (this is in spite of a generous immigration policy), BC is still coming up negative.

Now ponder, how will we who are still in Van, attract the best and brightest across industries when the workers are told to have no expectation of owing their own home locally, possibly EVER, (that’s “entitled” thinking)? We will have to pay them higher wages, perhaps also subsidize their housing costs. Now ponder, how many of these professions are paid with the PUBLIC purse. Hmmm…

The remaining TAXPAYERS will be paying ever-increasing taxes, for ever-increasing wages to attract and retain talent we need to function as a society, especially as the aging Boomers begin outnumbering (by a large margin) the younger earners subsidizing their taxpayer funded entitlements and care.

As for those employed in the PRIVATE sector, do you honestly think those who remain here (including business owners), will just eat their high cost of living? No, they will pass it straight on to the consumer. Everything becomes even more expensive in this scenario, for everyone, young AND old unless we put the brakes on this RE train wreck now and start the unwinding back to a more balanced reality.

#199 West Coast on 05.25.15 at 1:20 am

We are not alone….even if real estate ‘goings on’ in London make us look like country bumpkins in YVR…….have fun reading……….

http://www.nytimes.com/2013/04/02/world/europe/a-slice-of-london-so-exclusive-even-the-owners-are-visitors.html?_r=0

http://www.nytimes.com/2015/02/08/nyregion/stream-of-foreign-wealth-flows-to-time-warner-condos.html

https://www.newyorker.com/magazine/2015/06/01/house-of-secrets?intcid=mod-yml

#200 Timmy on 05.25.15 at 1:20 am

Your logic is flawed–if it was just low interest rates that have caused sky high prices in Vancouver, then why are they so much higher than anywhere else in the country?

#201 pypes_diver on 05.25.15 at 1:29 am

We are so arrogant –Garth

You got it wrong. Majority of Canadians are just effected by permafrost; completely blind and stupid. It’s what happens when you live in Canada too long.

#202 Jonathan B Worth on 05.25.15 at 1:30 am

South China Morning Post article on the Vancouver market…

http://www.scmp.com/comment/blogs/article/1804916/something-grotesquely-wrong-vancouvers-housing-market-and-time

#203 Blacksheep on 05.25.15 at 1:56 am

Shawn # 88,

“When savings go into a bank they are loaned out.”
———————————————————-
Your statement is 100% false and you know this.

You are trying to mislead, please share why?

#204 Johhny Licks on 05.25.15 at 2:01 am

The ‘Bank of Mom’ thing is as insidious as syphilis. Not only is it wrong for her to help the kids to buy in at the top of an insane market ready to pop…or even if it goes nowhere it will create a lifetime of pain. But…the MOM is borrowing against her own paid off house and creating debt for herself to repay and the kids sink into bigger mortgage payments when rates rise meaning she will never get her promised repayment. Now you have TWO suckers lives destroyed and swirling down the vortex of a real estate scam. Mom should have rented her house out for income, bid good bye and left for the Bahamas and let the kids grow up .

#205 Dony Darko on 05.25.15 at 2:31 am

There is a interesting petition going on regarding Real Estate in Vancouver https://www.change.org/p/premier-christy-clark-mayor-gregor-robertson-mayors-and-city-councillors-of-the-gvrd-restrict-foreign-investment-in-greater-vancouver-s-residential-real-estate-market

#206 passerby n on 05.25.15 at 2:32 am

Hence i would like to commend the True Lies post with a slight delay, as others have done so, and wish it all the bite it deserves.

http://www.greaterfool.ca/2015/05/06/true-lies/

First cent: the anatomy of a lie can be pretty complex, and the same holds for truthfulness. Sorry for being a bit of a bore here.

Upon that, my generic answer to the concluding question would be that efforts to put falsehoods into reality tend to turn out as an unproductive undertaking; with mention of similar thought from #90 Harbour on 05.06.15 at 7:13 pm.

Finally, these couple cent refer to the propositions as such and the stranger has also ruthlessly self-censored all the bread and fun parts.

Oops.

Serge Thill

#207 nubbers on 05.25.15 at 2:35 am

Despite being in a position to know better, I’m willing to bet that most Moms and Dads believe that the equity in their homes is never going to decrease. How many are going to wake up one day to find that they have given away money that they never really had, thereby dooming themselves whilst also dooming their offspring?

Speculating on numbers now will be an interesting but inexact exercise, but I guess all will be revealed when the tide goes out, as Buffet the Wise might put it.

#208 Mark on 05.25.15 at 3:38 am

“Most people are wishing the market lower so they can get in. “

Au contrarie my friend. Most people (>70% of Canadians) already own, and exceedingly few people are even left who don’t own and actually have a reasonable shot at ever being qualified to own given their life situations. As we’ve seen over the past number of years, basically anyone with a job who can sign their name, is into home ownership in Canada. Many who have no business being landlords, are also trying to play that game as well. And housing ownership has been extended to a lot of non-traditional groups as well — condo-ized long-term care homes, for example, and newcomers to Canada barely a year or two off the plane, who traditionally would not be represented in the ranks of ownership.

In other words, there is no “pent up demand”. There are exceedingly few people sitting on “the sidelines”. Housing demand has been fully satiated by the onslaught of supply brought to market over the past number of years, and prices have been stagnant, if not falling for the past two years on account of such.

Gee. Since it doesn’t exist, why the resistance to tracking ownership? Seems it would be an easy way to put the issue to rest and avert potential problems.

Ownership by foreign nationals / temporary residents has been tracked. Its in the 1% range in Toronto/Vancouver. I posted a good link yesterday. The housing pricing bubble is completely and fully explainable by the mortgage credit statistics, and anecdotal evidence of extremely loose practices at the CMHC and at the provincially regulated credit unions.

The other big factor that has driven Canadian housing is a complete lack of confidence in Canada’s publicly traded companies. Simply put, we’re a nation of whiners — we want lots of jobs, well built infrastructure, etc., but Canadian investors have largely hung up on buying and properly valuing the shares of Canadian firms to provide the capital to make the job and wealth growth possible.

#209 Made in BC on 05.25.15 at 3:38 am

So its just fine….that banks charge interest to govt….which means taxpayers…..for creating money out of nothing. No?

**************************************
Yes, of course I feel it okay for banks to charge interest on money that is created out of nothing (actually created out of promises of customers to repay loans).
+++++++++++++++++++++++++++++++++++++

Sucks to be you man…….

#210 gtrz4peace on 05.25.15 at 3:50 am

Good for these kids. Several great cities have some restrictions on real estate speculation and on “investors” leaving homes sitting empty while people go homeless.
Vancouver could do a lot worse.

The basic problems of cheap money and excessive greed are there — but we live here in Van, and from what we see these kids sadly have a point.

What is happening here, overall is destroying diversity. But the biggest problem is this — many of us here on the blog love to say “You can always rent.”

But what is happening in San Francisco, with rents being driven sky high by the same greed — that is happening here too. So renting is just NOT a “one size fits all” solution.

These kids are the future and if they want to try and change things up, power to them.

We ignore their message at our own peril.

#211 YVR2ZRH on 05.25.15 at 3:58 am

I realize I am pretty much more than 180 comments down the screen. I have not read any of them yet – but I am interested to see such a reasonable topic being presented.

Here in Switzerland, we have such a system. This “Speculation Tax” is likely one of the main reasons that prices here are very stable. Here the tax is serious and people are aware of it – and speculators are 100% absent because you cannot speculate.

I also agree with the “Sliding scale”. We have the same here in Switzerland.

Essentially here – the tax is 100% of the gain (i.e. – you must forfeit the entire gain) and this is reduced over a 10-year period.

When they talk about taxing speculators – to be effective – and if you are trying to prevent speculation – you need to take 100% of their gains.

You could even make it where primary residences are exempt (which would make some sense since they are not taxed already).

If you must forfeit 100% of your capital gain for a short-term flip this will do the following:

1.) Eliminate speculation
2.) Price properties at their fair value – driven by rental income (as we have here in Switzerland).
3.) Increase the professionalism of landlords and eliminate the specuvestors.

As a transition – I would even propose to make it retroactive to existing investors. You could give the investors an option at transition.

1.) Your existing investment is subject to the new rules (i.e., you may select this if you have owned it for the holding period already).
2.) Your existing investment is subject to the old rules – but if you select this – you need to make a “deemed disposition at fair value” on the transition date, reset your cost base, and pay all taxes due now.

You could say that you are changing the rules midway but this is not entirely true. You are giving people the option for their transition methed and based on this, they can pay up now or pay later. If you have owned for a long time – it does not even matter any way.

Finally – one thing we must ensure we are doing is controlling the sale of property by a non-resident. It is already up to the buyer to withhold a portion of the sales proceeds to cover the tax clearance of a non-resident sale. However – it seems anecdotally that this is a self-declaration and that non-residents are just saying they are resident. I think we need to place the responsibility on the buyer to be responsible in the case of sales to non-residents such that if the declaration is ultimately false – the buyer is responsible for any money / taxes that have not been paid. This would increase the level of scrutiny made by the lawyer for the buyer.

Overall – the speculation tax is a good idea. However – Unless you set the rate essentially at 100% of gains in the earlier period, you are not going to put much downward pressure on this activity.

#212 eddy on 05.25.15 at 4:36 am

@#166 Shawn on 05.24.15

you’re missing the point-

https://www.youtube.com/watch?v=X5oYba7zzVc

#213 Mark on 05.25.15 at 6:00 am

“Here in Switzerland, we have such a system. This “Speculation Tax” is likely one of the main reasons that prices here are very stable. Here the tax is serious and people are aware of it – and speculators are 100% absent because you cannot speculate.”

Just out of curiosity, does Switzerland have a government organization that has guaranteed the repayment of over 2/3rds of the outstanding private residential mortgage debt in the country with the nation’s full faith and credit?

I guess Canada could enact all these anti-speculation measures, but when the government itself is the biggest speculator, facilitating the issuance of large amounts of subprime credit to prop up the market, I’m not sure how effective such would be. And as it stands, foreign ownership of Canadian residential RE is only approximately 1% of housing units — a statistically insignificant amount.

#214 Mark on 05.25.15 at 6:04 am

“Your statement is 100% false and you know this.
You are trying to mislead, please share why?

As far as I can see, Shawn is absolutely correct. Banks must borrow savings, in order to lend savings. Banks cannot themselves create ‘savings’ or money — they are merely intermediaries between those with savings, and those looking to borrow savings.

Hence, Shawn’s argument, that demography is to account for much of the housing bubble and low interest rates, has quite a significant amount of credibility.

#215 Mark on 05.25.15 at 6:17 am

“But only if the debt is falling as a result of debt repayment. If the debt is falling as a result of bankruptcy or debt write-off, or reduced consumption that is profoundly CAD$ negative.”

Actually, even bankruptcy/default would be CAD$ positive, as while there is a loss associated with an individual loan, risk premia rises across the board. Defaults tend to spread lot of fear in the economy, truncating consumption and borrowing. That, again, is CAD$ positive. At least until, of course, investment is truncated to such a point that it is depleted (ie: investment < depreciation for a lengthy period of time), and then eventually you start getting inflation and currency devaluation coinciding with a new consumption and ultimately investment cycle.

I don't think there's much of an argument to be made that there's a lot of malinvestment in Canada. Canada has been relatively austere, especially compared to the rest of the developed world, for quite a few years now. So defaults, when they do occur, are mostly a matter of shifting ownership of assets within the domestic economy (ie: banks effectively take houses in foreclosure and parcel them out pro-rata to shareholders and creditors), rather than resources being legitimately misallocated.

Contrast this with the USA which appears to have a substantial amount of resource misallocation, particularly in their oversized financial services, public, and healthcare sectors. Resources are allocated so poorly in the US that they've run chronic trade and government budget deficits for decades now. This pattern of long-term profligacy will come home to roost as expressed through the loss of value of the USD$ and its purchasing power.

#216 Bobby on 05.25.15 at 6:54 am

Now that the momentum of this issue is rapidly growing, politicians will be forced to do something. But what?
Much of the cash fuelling this market is from dubious sources and it can disappear just as quickly as it first appeared. Bidding up crack shacks, then leaving them empty, makes no economic sense. But selling again to another fool in some way legitimizes the funds. Sure, take whatever you can get and run. You win.
But what about the poor souls who have legitimately overpaid for a shack? What happens when politicians act and the market crashes? When the money leaves, just as quickly as it arrived, prices have no where to go but down. With those left behind now grossly underwater in their mortgages, the people will again take to the streets to demand the government do something to prop up prices.
What’s that saying about closing the barn door after the horse has bolted?

You say: “Much of the cash fuelling this market is from dubious sources.” In reality, the lion’s share is coming from parents. — Garth

#217 drydock on 05.25.15 at 7:20 am

http://www.google.ca/imgres?imgurl=http://a57.foxnews.com/global.fncstatic.com/static/managed/img/Scitech/0/0/Earth%252520from%252520Saturn%2525204.jpg&imgrefurl=http://www.foxnews.com/science/2013/07/22/day-earth-smiled/&h=371&w=660&tbnid=7KLckWuZ0MGKaM:&zoom=1&docid=3EjTPIWO_ml1kM&ei=hwNjVfzWF–1sATPx4CIBQ&tbm=isch&ved=0CB0QMygBMAE

Above is a link to picture of earth from Saturn which illustrates how small we are in the infinite blackness of space.And yet we were blest with a paradise ,which we have turned into a cess pool.
Now the laws of the universe are going to give us what we so richly deserve.

#218 fancy_pants on 05.25.15 at 7:57 am

Compare Canada’s MLS cartel to Zillow in the US. Zillow supplies so much information and history of a property where MLS hides and monopolizes the market.

Even if you decided to sell private and simply list onthe MLS system in Ontario through a ‘sell it yourself’ outfit, it doesn’t get your listing onto your local board, only the Toronto or Ottawa board. It’s all rigged for the cartel so you almost have to sell with an agent to get full exposure. So you then get fleeced paying ridiculous commissions for the cartel to sell your house and then they get fleeced by the brokers.

The whole setup stinks. Cartels and monopolies win, doesn’t matter what country you look in.

#219 crowdedelevatorfartz on 05.25.15 at 8:34 am

I nominate Mark as the new leader of the “Babylon Society” (sorry Smokey)
8 posts so far and they are getting progressively longer……
Proving once again that quantity doesnt necessarily indicate quality.

#220 Chris on 05.25.15 at 9:17 am

The more I think about it, the more I see the parallels with countries like Switzerland and the Philippines who have enacted either foreign buyer restrictions or speculation taxes. These countries are very small geographical areas that are densely populated. Canada is much the same way — despite the massive land mass, most of the population and jobs are clustered into relatively small islands of territory. What makes sense in Switzerland and the Phillippines probably also makes sense here.

Yes, just like the Philippines, minus 50 million people and plus nine million square kilometres. Say, Chris, did you know Canada has water equal to three times the size of P? — Garth

#221 HD on 05.25.15 at 9:31 am

http://time.com/money/3894599/millionaire-neighbor-money-secrets/

“18. He’s not impressed that you drive an over-priced luxury car and live in a McMansion that’s two sizes too big for your family of four.”

Best,

HD

#222 David Hawke on 05.25.15 at 9:32 am

#35 Old Gringo, spot on and one doesn’t need a couple million 80 cent loonies to do it, especially when you ‘get out’ of Herr Harper’s Canuckistan!

#223 Randy on 05.25.15 at 9:44 am

QE4 is coming

#224 DisgustMadeMePost on 05.25.15 at 9:52 am

I agree with the above poster… Please call it ‘the bank of mom and dad’. Just feeding a stereotype otherwise. Unless of course there’s data to show that dad’s never give money to their kids for real estate.

Dads probably aren’t tracked though …

Stereotyping and wild generalization, plus malleable stats and a surfeit of hormones is what this pathetic blog’s all about. Get with the program. — Garth

#225 rosie "moving forward" in the knowledge that, "this won't end well" on 05.25.15 at 10:12 am

Then, of course, there’s the other side of the #Donthaveamillion debate. Funny how $500,000 is considered low rent these days.

http://www.thestar.com/news/gta/2015/05/25/midtowners-battle-the-rise-of-the-midrise.html

#226 Stupesing in Cabbagetown on 05.25.15 at 10:31 am

#14 gladiator – They just want to have decent lives and have the same opportunities as their parents had.

Times have changed in so many ways. There has been a cultural shift. Thirty five years ago when young people left home, they lived in humble apartments while they built their careers and saved for that 25% down payment on a starter home. Now kids out of high school expect granite and stainless steel in their luxe first homes while they attend university and mom and dad are only too eager to provide it for them.

But more than that, there has been a technological change.

Kids no longer have the ability to earn money delivering newspapers because we download our news online. Students no longer work as cashiers because self-checkout machines are replacing warm bodies. Retail and restaurant work is scarce because people are so broke they aren’t spending and book and music stores have disappeared. And the technological shift has allowed good paying, skilled IT jobs to be outsourced to other countries while free trade agreements have enabled manufacturing jobs to be off-shored.

To accuse the old, the boom, the genX or the millennial generations for causing today’s problems is simplistic. As my dad used to say, “when you’re bitten by a buzzsaw which tooth do you blame?”

#227 Shawn on 05.25.15 at 10:54 am

How Banking Works

203 Blacksheep on 05.25.15 at 1:56 am
Shawn # 88,

“When savings go into a bank they are loaned out.”
———————————————————-
Your statement is 100% false and you know this.

You are trying to mislead, please share why?

*************************************
Actually, trying to educate and have had some success notably even with you.

Yes Banks (together with their borrower customers) create deposits by simultaneously creating a loan and a deposit.

That is step 1.

Step 2 the borrower buys say a house and the deposit is now transferred to the former home owner (now a renter let’s say). Former house owner’s bank has cash or credit from the first sank sent over to it but it now owes this deposit to the former home owner.

Step 3 Some bank has now cash or credit at the central bank sent over from the first bank and a liability (deposit owed). Cash earns nothing so said bank loans out the deposit.

Rinse and repeat.

Banks make a good but not outrageous return on shareholder money.

Lending and the creation of credit (effectively money) is a vital and needed service in the economy.

Bank bashers are simply wrong (and usually poor, else they would buy bank shares). I try to educate them.

Note to eddy at 212, I don’t click on You tube links especially when you did not give even any tiny summary of what the link is about or just what the point is that you refer to.

#228 saskatoon on 05.25.15 at 10:56 am

#224 DisgustMadeMePost

how’s about your organize a protest for this?

next sunday–at vancouver art gallery?

i hear eveline xia is free.

#229 gut check on 05.25.15 at 11:01 am

Mark is out of control today. I usually ignore him so I can’t be sure but today has to take the cake… am I right?

Holy sheet. He’s like those “because science” trolls except he’s “because banks”

wowzers.

#230 bubblelicious East Van on 05.25.15 at 11:07 am

This is probably closer to the truth especially about blaming low interest rates as the whole world has low interest and not sky high prices everywhere. Very good analysis.

http://www.scmp.com/comment/blogs/article/1804916/something-grotesquely-wrong-vancouvers-housing-market-and-time

#231 Hot Albertan Money on 05.25.15 at 11:12 am

Wonder how many of these #DontHave1million-ers have the latest iphones, fashions, drop off their laundry, eat out every night and generally live like they actually have 1 million?

If you act like you’re a millionaire, the market will treat you like you’re a millionaire

#232 Rational Optimist on 05.25.15 at 11:13 am

76 ILoveCharts on 05.24.15 at 3:19 pm

“Mom and Dad bought in the 90’s when prices were cheap and have long since paid off their mortgage…It makes perfect sense and it’s not going to cause a
crash.”

Some people bought in the 90s, but fewer people did than during the bubbles prior and since.

Maybe some parental banks are in the position that you describe, but logically they mostly aren’t. Someone who reached the peak of the “property ladder” in the mid-90s was probably in his early 40s at the time, so now into his 60s and maybe retired. His kids, Gen-Xers who would now be well into their thirties, likely already bought earlier in the noughts.

I bet that more are younger boomers with children now in their twenties, and are reaping the effervescent gains on their McMansions purchased within the last decade or fifteen years. This is the situation that I have seen: 50-year-old guy has “made” x hundred thousand on his place in the last decade or so, and decides to help his kid out with a down payment. Instead of asking whether the prices are at all based in reality and can be sustained, they access them through a line of credit and (as a family) leverage further into real estate. This at a time when the parents should be looking seriously at cashing out to minimize risk, and prepare for retirement. Instead, they feed the market

#233 Vamanos Pest on 05.25.15 at 11:21 am

#198 Vanecdotal

I’m getting frustrated with this argument. Do you really think, on this blog, you’ll find widespread opposition to the opinion that residential real estate in Vancouver is too high?

Please stop arguing that there is a problem, nobody is saying there isn’t (except those that actually own in Vancouver perhaps, but even they’re bitching that thier taxes are too high because house values are too high).

The argument starts at what to do about it?

Are you willing to support ending CMHC? Raising interest rates? Unless you are, you’re wasting everyone’s time. (These are the causes of the problem).

#234 Nemesis on 05.25.15 at 11:26 am

#JustYourBasicStarterIsland,Or… #QuelleSurprise…

…”a Hong Kong-based family that bought the island (not to be confused with the Moresby Island in Haida Gwaii) in the 1990s put the property on the market last summer…”…

[TimesColonist] – Island near Victoria can be yours for $50 million – What you get: 583 hectares, three-bedroom residence and a small farm

http://www.timescolonist.com/news/local/island-near-victoria-can-be-yours-for-50-million-1.1945759

[NoteToGT: What was that John Donne said?… I think it begins, “No man is an Iland, intire of itselfe; every man is a peece of the Continent, a part of the maine…”…]

#235 Tony on 05.25.15 at 11:53 am

most comments refer to an economy that no longer exists, it might be dead, or in transition, I don’t know,
all attempts at tuning the economy will only help one
of the three dominant groups prospering currently, they are, workers that can demand a good cash flow, boomers, with inherited wealth to pass on, and people with access to off shore investment funds, the despair of the young will push them to the left..

#236 Marco on 05.25.15 at 11:54 am

“Your logic is flawed–if it was just low interest rates that have caused sky high prices in Vancouver, then why are they so much higher than anywhere else in the country?”

Most desirable, popular place to live in Canada. We are made to believe we must pay more to live in the BPOE. Even though wages lag even behind Winnipeg. We are made to believe we should work for less pay sky high prices to be one of the special ones living in the BPOE, propaganda, real estate fuelled city by the Bay. Not the world class city by the Bay, that’s San Fran.

Cheers.

#237 Harbour on 05.25.15 at 12:05 pm

#217 drydock

Yup and to think that spec of dust is in our dinky solar system let alone our galaxy upon which there are billions of galaxies in our universe and to think how many universes there may be?

Pretty tough to wrap your head around and still hang onto religious beliefs.

#238 TurnerNation on 05.25.15 at 12:10 pm

Time to be herd.

#239 LP on 05.25.15 at 12:18 pm

#237 Harbour on 05.25.15 at 12:05 pm
#217 drydock

Yup and to think that spec of dust is in our dinky solar system let alone our galaxy upon which there are billions of galaxies in our universe and to think how many universes there may be?

Pretty tough to wrap your head around and still hang onto religious beliefs.
**********************
Actually, for me, it’s pretty hard to wrap my head around it all and NOT have religious beliefs. (And no, I don’t think it took 6 of our days, so please don’t chirp me about that.)

#240 long time lurker here on 05.25.15 at 12:25 pm

Those RE developers are definitely having all these house buyers by the balls. They basically name their own price now and is playing the “game” at their own pace.

last year, in Markham, new detached houses are selling at 1.2-1.4m. People thought it was expensive and stupid. This month, new builds in remote area in Richmond hill are going for 1.6-1.7m, making anything 1m look cheap. All of a sudden, people are talking about 1m-1.2m houses like good deals.

I know this is not going to end well because same thing was happening to the Condo market 6-7 years ago in toronto. Price were soaring. Every condo sale was a bidding war. “We are running out of land”. Look what happen now, new condos coming up every where. There are so much condo supply that no one is buying condo any more. Anyone who bought in the past 3 years are losing if they were to sell now. The attention has since shifted to houses because once again “we are running out of land”.

#241 Ponzius Pilatus on 05.25.15 at 1:01 pm

#85 Mr.Hulot on 05.24.15 at 4:00 pm
I rent a townhouse on Bayshore Drive, behind the Westin Bayshore Hotel in Vancouver. Last night the fire alarm went off at 3 AM. This affects at least three entire buildings and 100s of suites. Fire trucks appeared. Impossible to sleep with all the noise. It was myself and another guy in his pyjamas out trying to figure out what was going on. I looked up, three quarters of the lights in these buildings were off.

Make your own conclusions.
————–
Suggestion for a science project:
Trip the Alarm in of the downtown highrises in the middle of the night. Count the number of people assembled and extrapolate the number of empty units.
Move on to next highrise.
Next project: Count number of HAM and extrapolate.

#242 Ponzius Pilatus on 05.25.15 at 1:10 pm

#108 Nagraj on 05.24.15 at 5:42 pm
When NAPOLEON espied all those magnificent Russian Orthodox cupolas gracing the Moscow skyline, he said “Many churches are the sign of a backward people.”

When NAPOLEON was shown a list of Vancouver house prices, he said “Little million dollar homes are the sign of a demoralized people.”

And then, as I recall, he laughed.
———————-
Wrong recall, it was Attilla the Hun, and he invaded.

#243 Holy Crap Wheres The Tylenol on 05.25.15 at 1:13 pm

#171 Smoking Man on 05.24.15 at 10:32 pm
Fear and loathing in Las Vegas .
The hitch hiker. Its the brilliant move hunter pulled on all of you.
He nailed the characters. But who hitch hikes in the desert. Then who jumps in a convertible in a 120 degree day not asking for water.
Damn I see the obvious.
Why can’t you.
_____________________________________________
“Buy the ticket, take the ride.”
“We can’t stop here, this is bat country!”
― Hunter S. Thompson, Fear and Loathing in Las Vegas

#244 Retired Boomer - WI on 05.25.15 at 1:14 pm

All this complaining that the NEW generation doesn’t have the ‘opportunity’ for a decent job, doesn’t have the ‘opportunity’ to own a fair priced home…doesn’t have an ‘opportunity’ to pay off their student loans…doesn’t have…
doesn’t have…

Look, nobody gave me a free lunch either. Besides, we have bigger issues here than your bullshit problems.

We face Global Warming perhaps a result opt over a 100 years of addiction to fossil fuels

We have water problems, food problems, global competition, overpopulation, immigrants who might want your job and be more talented, and finally., even McDonalds is opening up their first robotic store -that will put a ding in the “value” of unskilled labor if it woks well.

You, dear generation, are NOT special. Get used to that idea.

You will never enjoy what previous generations have enjoyed. Reason: some of it is extinct -goon forever!

Consider what has gone before you

my 2 cents.

#245 Retired Boomer - WI on 05.25.15 at 1:15 pm

Dam should read “gone” forever!

#246 Blacksheep on 05.25.15 at 1:48 pm

Shawn # 139,

“The fact remains, one man’s debt IS another man’s savings.”
———————————————-
Ahem, no. This is how it should have read:

“The fact remains, one man’s debt (debtors liability), IS another COMMERCIAL BANK’S asset (lenders asset)”

THIS is technically, correct.

“One mans debt”, has absolutely zero to do with, “another mans savings” when it comes to commercial banking.
———————————————————-
Shawn # 227,

Here are two comments from your post:

A) “Yes Banks (together with their borrower customers) create deposits by simultaneously creating a loan and a deposit.”

Your doing good, but then you contradict the very words above you typed in the same post with:

B) “Cash earns nothing so said bank loans out the deposit.”

Just because you place statement (B) at the end of some irrelevant info, does not change the way commercial banking system functions, as per laid out in your statement (A)

Your really struggling today buddy, maybe a little review of the facts is in order.

Here is the gold reference for commercial banking, the BoE pdf.

http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q102.pdf

And by all means, You, Mark or anyone, please feel free to prove the Bank of England wrong. Please copy and paste the section from the BoE pdf, supporting your claims.

Remember, I’m only the messenger.

#247 Bottoms_Up on 05.25.15 at 2:07 pm

#217 drydock on 05.25.15 at 7:20 am
———————————————-
Pretty hard to look at that and not call it ‘home’.

#248 young & foolish on 05.25.15 at 2:08 pm

” … most comments refer to an economy that no longer exists … ”

This is what is confusing a lot of people today, the notion that we cannot measure today’s economy using yesterday’s norms. Or are things never “different this time”, and in the near future we will be able to buy houses in Vancouver and Toronto at 3 times earnings like our parents/grandparents could?

#249 mechanized on 05.25.15 at 2:09 pm

Bank of Mom isn’t the cause, it’s the response. Don’t forget it was Fleherty that started inflating the market with 30-year, then 35, then 40-year mortages, 100% financed properties (own home and income properties), and THEN the interest rates started going through the floor. Oh no, it’s not Mom, it’s Jim. Housing was unaffordable by normal standards as of even 4-5 years ago, let alone now.

#250 Victoria Real Estate Update on 05.25.15 at 2:09 pm

# 176 Suede

“Yes you’re right, they wen’t down 10-15% and lots of sideline sitters went and scooped up properties b/c prices were “cheaper” not because the trend was down.”

You really don’t get it.

As I wrote in my previous post, prices in Vancouver only stopped falling in 2009 because emergency interest rates were suddenly brought in. If that hadn’t happened, prices in Vancouver would have kept falling.

Those who bought in Vancouver as prices were falling in 2009 (before emergency rates were brought in) got lucky. They had no idea rates would be slashed from near-normal to emergency levels.

“We have to be careful in throwing the word “bubble” around as there are no hockey stick charts anywhere.”

A bubble isn’t defined by a hockey stick chart.

A housing bubble is defined by several metrics, all of which every major Canadian market satisfies.

Some of these metrics include:

* a sudden and steep increase in house prices, where increases in prices far exceeds gains in income and rents

* a sudden and steep increase in household debt

* higher than normal (record-high in Canada’s case) homeownership rate

* a dramatic increase in real estate investment

* a dramatic increase in residential construction

Are you a realtor? You probably wouldn’t admit it if you were.

Vancouver’s market will peak and there will be a major, multi-year price correction.

Vancouver’s bubble is enormous. There are many examples of much smaller housing bubbles that have corrected 40 – 60%. It is absolutely possible that Vancouver’s correction will be that much or more.

#251 Mark on 05.25.15 at 2:20 pm

“Most desirable, popular place to live in Canada. We are made to believe we must pay more to live in the BPOE.”

That still doesn’t fully explain such. After all, if people wanted to live in Vancouver so bad, then rents would have also tracked prices. And the market wouldn’t have freaked out with even relatively minor tightening of lending standards.

An explanation I’ve offered up is that Vancouver historically has been the world “headquarters” of the junior mining industry, particularly in the precious metals. An extremely speculative culture exists, which, at any given time, is either speculating in real estate, or is speculating in the junior mining stocks. But not really both, as there’s only very limited amounts of capital available for either. So you get some pretty extreme highs when Vancouver’s crop of speculators speculate on the mining stocks, and some pretty extreme lows when the mining stocks are out of favour and the speculators are involved with RE.

A lot of money can be made by smart investors who are “out of phase” with the cycles of speculation (ie: those who buy the out of favour assets, sell them when they’re in favour, to buy the next round of out of favour assets) in Vancouver. But most end up losing their shirts, especially if their speculation is at all “in-phase” with the market. Only deep contrarians, over the long term, do well in the Vancouver economy as investors. Basically anyone with a true long-term ‘one-asset’ strategy is usually doomed to failure as Garth points out, but especially so in the Vancouver economy.

#252 Huh? on 05.25.15 at 2:27 pm

Garth – it’s not clear to me whether the bank-of-Mom-and-Dad is the chicken or the egg.

I do know that this boom clearly benefits those who have a BofM&D who have seem their asset value skyrocket. In that respect it has clearly exacerbated social inequality in favour of the upper middle class – no wonder Stevie H doesn’t want to jump in.

#253 Blacksheep on 05.25.15 at 2:47 pm

This is a shout out to all the bitter millennia’s out there that don’t have a million bucks for a house.

Come on out to the valley (45 min commute) and I’ll give you a sweet deal on my hovel @ 750K. I only paid 425K a year ago, but I want to retire soon goddammit, so get the loot from Mom and get your asses out here.

#254 Paul on 05.25.15 at 2:53 pm

#237

Maybe all the more reason to hang on to Religious beliefs.
Or we are just special snow flakes that got real lucky.

#255 Investorz on 05.25.15 at 3:26 pm

We shut our office in Vancouver, precisely because of affordable issues. We couldn’t get enough applicants.

Now it’s clear we weren’t the only ones to have a problem with affordability.

#256 Waterloo Resident on 05.25.15 at 3:49 pm

The solution to this bubble is simple: Stop government insurance of all mortgages. If you want to buy a house, then you have to go and get PRIVATE mortgage insurance. CMHC would be unavailable, it would be ‘history’.

That would sure shake things up.

But from what I have been hearing lately, this is the PEAK of the economy / housing-market. A lot of tradespeople I know had their summer booked full of work just a few months ago, now suddenly many of their customers have called in and cancelled house renovations work, so now they are telling me that they have a lot of spare time this summer with no work available for them.
That is how a recession starts, it’s always in small things like that and then it starts to snowball from there.

#257 brucebruce on 05.25.15 at 3:51 pm

I believe BC Interiors comment couldn’t attest more to the thematic of “whiners” and “Canadian cry babies.” BC environmentalists give your head a shake the Province is HUGE larger than most countries and you are concerned about the beauty of materialistic little Vancouver? When I lived there I couldn’t wait to leave. Half hippies and half gucci loving future wannabe housewives of vancouver (men and women). Worst City in Canada hands down. Vancouverites need to pull there head out of their *** and grow up. No culture (and no Commercial Drive is not a “cultured hip area” it’s joke really). Inflated big-city egos (even though your smaller than Mississauga) and no clue as to what is going on in the rest of the world. People come to the City to do drugs and be fake. Live the fake hippy life. Oh and my favourite, can’t forget the ‘protestors’ who trash the beautiful City. Pathetic.

#258 Mark on 05.25.15 at 3:51 pm

“Instead of asking whether the prices are at all based in reality and can be sustained, they access them through a line of credit and (as a family) leverage further into real estate.”

Very well put, and exactly what I’ve seen as well. The same also applies on the funding end of the equation.

A friend of mine recently came into a relatively small inheritance ($50k), and the Executor, a boomer, was practically demanding that he put it into a GIC with a certain Credit Union so the “family” would qualify for a ‘better rate’. The Executor, who has strong feelings against “the stock market” even went to far as to threaten my friend with payment of the bequest in the form of a GIC, instead of cash as prescribed because there were some liquidity issues in the Estate. Indeed, some of the recipients even consented to this. I was horrified when he turned to me for ‘advice’ and I told him to look into a balanced portfolio of low-cost ETFs, debt repayment when appropriate, and rebalancing periodically.

Of course, a one-asset strategy of a GIC in some podunk Credit Union is quite foolish compared to investing in a balanced portfolio, or, heaven forbid, using the money to pay down credit card and HELOC debt. But that the boomer Executor attempted to impose his view of ‘investment’ and his ‘success’ at GIC investing upon others is a lot like what the boomers are doing to their kids when it comes to housing. And it is equally as boorish and dangerous for their long-term financial health.

#259 4 AM Sunrise on 05.25.15 at 3:58 pm

When this madness ends, it’s party time for the vultures on property tax sale day, right?

#260 saskatoon on 05.25.15 at 4:46 pm

#259 4 AM Sunrise

that’s the title of garth’s new book:

“party time for the vultures”

#261 Vanecdotal on 05.25.15 at 4:57 pm

#233 Vamanos Pest

“Are you willing to support ending CMHC? Raising interest rates? Unless you are, you’re wasting everyone’s time. (These are the causes of the problem).”

YES… and I’m a homeowner, well above median household income. The unwinding may be financially painful for some. The scenario presented in my op is the likely outcome if these issues are not addressed.

There is no simple solution.

#262 Albertaguy on 05.25.15 at 4:59 pm

Solution to today’s blog photo puzzle…

http://en.m.wikipedia.org/wiki/Micro_(novel)

#263 Mark on 05.25.15 at 5:02 pm

“When this madness ends, it’s party time for the vultures on property tax sale day, right?”

I doubt that. Property tax sales didn’t really occur in significant numbers in the US RE crash, and since property taxes tend to be lower in Canada, probably even less of an impact here. Canadian RE really can’t be left unoccupied for any significant length of time due to extensive HVAC and other expenses arising from the northern climate, so additionally, vendors are more strongly incented not to overbuild because non-discretionary cash carrying costs are much higher on unoccupied properties than you would see in the US where its actually realistic to turn off the water, gas, and electricity for most of the year without inducing irreversible damage.

I’m not even all that convinced that we’ll see much of a freak-out, unless the government threatens to or actually defaults on its obligations under CMHC subprime mortgage insurance. More like a Japanese-style long-term melt, which appears to have begun in 2013. Only partially obscured recently by the dramatic change in the sales mix seen in the Canadian RE marketplace. Over time, those with balanced portfolios will gradually get richer, especially with the stock market only priced at 1/3rd of that of Canadian RE. While those with house ownership will most likely pay into their mortgages for the next 10-20 years and accumulate no equity as price decreases and structural depreciation basically offset the principal component of their mortgage payment. The rest of the economy will charge forward, while leveraged RE owners will be stuck as financial zombies with forced personal austerity.

#264 Nagraj on 05.25.15 at 5:03 pm

Re #211 YVR2ZRH, poster from Switzerland (aka Heidi)

Yodleleheehoo!

Many years ago I was inna hot tub at my fave hotel in Alexandria, VA, and in comes this family of Swiss true bluebloods. I immediately told them that I couldn’t find a recording of Dalcroze’s Le Jeu du Feuillu ANYWHERE IN AMERICA! Of course the Swiss embassy had one, but only for loaning out. Herr Von – casually asked where I live. Well whaddayaknow one day I go to get the mail and there’s a package from Switzerland containing said record. Classy people. I sent them a big thank you note.

You, Heidi, probably read a lot to keep from goin’ stir-crazy in your lonely Alpenhuette. You wouldn’t happen to have any old 1880’s LUDWIG GANGHOFER novels lyin’ around? So far I got seven of ’em.

What a great blog this is.

#265 Vanecdotal on 05.25.15 at 5:05 pm

It is a combination of the factors you mention, as well as unrestricted foreign investment, at least locally. The bank of Mom and Dad whose sfh has risen substantially in recent years in some (many?) cases GET the $ to lend their kids a downpayment from extreme price appreciation related to recent substantial capital inflows from other jurisdictions.

Chicken or egg? It is still a mitigating factor, likely significant locally, in the market.

My point was clearly made. If new buyers stop buying, the market will fall. If the Bank of Mom stopped lending, this would occur. — Garth

#266 Mark on 05.25.15 at 5:11 pm

‘The solution to this bubble is simple: Stop government insurance of all mortgages.”

Absolutely. But the dilemma policy makers face is how do they wind CMHC down without precipitating a crash in the market, ironically accelerating claims against CMHC?

In a previous post, I did a back-of-the-napkin analysis — the CMHC is short approximately $160B of capital, based on a reasonable amount of leverage (5X) against their mortgage guarantee base of $900B, and their existing capitalization of $20B.

No government, let alone the current Tories, want to be on the hook for a $160B shortfall. So they have lots of incentive to kick the can as far as it will go.

Except that, as seen in the US, there’s only so much can kicking that can occur until the RE supply side becomes so large and overstimulated that prices fall simply on account of supply exceeding demand, with large amounts of additional supply continuing to come to market. This is what we are now seeing in Canada, with over 70% of the population owning.

Will the Tories be able to avoid the blow-up? Who knows. Maybe they’re implicitly planning to lose the upcoming election so it blows up under the NDP or the Liberals — thus imputing a public reputation for bad economic management onto those particular political parties.

What can I say, buckle up, the next few years are going to be awfully interesting in Canada socially and politically. Anyone who can’t see the storm clouds on the horizon is probably blind or willfully ignorant.

#267 dustyfool on 05.25.15 at 5:15 pm

“Much of the cash fuelling this market is from dubious sources.” In reality, the lion’s share is coming from parents. — Garth
______________________________________

stop shifting the blame.
this is a direct result of interest rates at near zero.
PERIOD.

have the central bank raise rates to normal levels
have 4% 5 year bond yields in Canada
then you’ll see speculation end in the housing market.
then you’ll see the savings rate rise.

when money is had for nothing, what do you expect. for it to be used in a productive capacity? blame central banks.

#268 Marco on 05.25.15 at 5:19 pm

How much does the publics sentiment play in a housing bubble?

I would argue a lot.

https://michiganross.umich.edu/rtia-articles/new-way-gauge-housing-market

Cheers.

#269 cramar on 05.25.15 at 5:20 pm

It is interesting how some things have changed today for the Millennials, and yet some have not. Fifty years ago, when attending collage, we use to look on those getting arts degrees as being crazy. “How is that going to get you a good job?” Technology and engineering was where it was at.

Forty years ago, living in a rented townhouse in Brampton, supporting a wife and two little kids, with mortgage rates well into double digits, inflation 3x of what it is today, I thought:

“I will NEVER be able to afford a house if I don’t get out of the GTA!”

I moved, got a job paying far less, but was able to buy a house a year later. The quality of life for a family was much better outside of the GTA anyway.

If Millennials want a house so bad, then move out of Van or GTA to where buying a house is possible! BTW, as of the end of April, the average house price is still under $200k in Windsor.

http://www.windsorstar.com/business/Housing+sales+rise+Windsor+Essex/11031491/story.html

#270 Mark on 05.25.15 at 5:22 pm

“related to recent substantial capital inflows from other jurisdictions.”

What ‘recent substantial capital inflows from other jurisdictions’? Is that why our dollar is down, implying capital flight, not capital inflows? Is that why leverage is off the charts in places like Vancouver? Lots of people claim money is coming into Canada from overseas, but practically no evidence has been offered up of such, nor is there any reflection in in the real, non-housing economy. The only claims of ‘foreign money’ appear to be shrouded in racist attitudes towards Asian-Canadians, that they are somehow “foreign” compared to European-derived Canadians.

#271 Shawn on 05.25.15 at 5:38 pm

Wasted Days and Wasted Nights

This Blog is a terrible time waster.

It’s freakin’ ground hog day

Eight years of some people saying house prices will fall and others saying, nope. (So far, the nopes have it) Same for a few other topics like Gold where the “will fall”s won out. And some side-topics like Banks are all evil.

No minds ever seem to be changed here, at least not among those who post regularly.

Why are so many people wasting their time here?

#272 Katherine on 05.25.15 at 5:39 pm

Keith in Calgary on 05.24.15 at 11:11 am
When I was a banker I got transferred from YYC to YVR in 1983. I will never forget the first mortgage application that hit my desk. The appraisal showed a water logged shit shack that might have garnered $50K in Calgary……yet the appraiser had a $400K value on it. Vancouver RE has always been overpriced as far back as I can remember

I disagree with your statement because if you backup to 1979, a house in a great North Vancouver neighbourhood like upper Delbrook (5 bedrooms, 2 bathrooms, big lot, full view of the city) went for $80,000. Then, boom, prices went sky high by the time you were transferred to Vancouver. I may not know a lot about real estate, but I do know that every 14-16 years real estate starts to calm down in Vancouver. For example, up to 1981 or 1982, it was affordable in North Vancouver. Then the early 1980s it went way up and was unaffordable. Then in the 1990s (another 13-16 or so years later) it was somewhat affordable again. Then, once again, unaffordable. Then another 13 years or so (up until 2003-2004), you could still buy a really great house in North Van. for well under $500,000. We are getting close to the 13-16 year mark. I wonder if we will see the same change- somewhat affordable housing in North Vancouver. This is totally based on what I have watched over the years. I am hoping I am correct in saying we will see change very soon. Garth, thoughts on my timeline?

#273 Mark on 05.25.15 at 5:43 pm

“have the central bank raise rates to normal levels
have 4% 5 year bond yields in Canada”

The problem with that is that the real economy actually does need the low interest rates. Because it is, outside of FIRE, pretty much on the verge of death. Manufacturing had shed hundreds of thousands of jobs. The O&G sector is now undergoing a severe purge. The technology sector is but a fraction of what it was as late as 2000-2001. Railways employ a fraction of their former workforce. Telecoms have been in almost permanent austerity mode. Etc.

What has caused the problem in Canada, though, is the government effectively price-fixing mortgage credit so that it is cheaper than other credit. Through the CMHC. So capital and savings, instead of flowing into industries that desperately need capital, has flowed into housing — alchemized into “risk-free” credit through the GoC’s guarantee of CMHC obligations.

4-5% policy rates, at this point, would just leave the economy as one big smoking crater in the ground. I doubt that’s in anyone’s interest, and would hardly be sustainable. If anything, now that CMHC has no ability to expand, house prices are falling, and inflation practically non-existent, the BoC has the “all-clear” to reduce the policy rate further at Wednesday’s announcement.

#274 Snowboid on 05.25.15 at 6:10 pm

#263 Mark on 05.25.15 at 5:02 pm…

Pray tell where “in the US where its actually realistic to turn off the water, gas, and electricity for most of the year without inducing irreversible damage”

I assume you made this up because it’s not realistic at all.

Certainly not Arizona, and not likely anywhere else.

In Phoenix leaving the water or power off while we summer in Canada would mean returning to a moldy, smelly mess.

Yes, turning the AC off in an Arizona summer results in rapid growth of mold as interior temps soar to 45-50C.

Turning the water off results in dried out traps, toilets, and the resulting sewer gas, not to mention dried out seals. Oh and any plants that require the drip irrigation system will be dead and gone!

#275 crowdedelevatorfartz on 05.25.15 at 6:22 pm

Mark
This is how your blithering is regarded by the majority.

Blah, blah, blah,……blah,blah,blah……………….blah blah.

Blah?

Blah blah blah blah blah.

Blah blah blah?

Blah.
Blah blah blah blah……blah blah..blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah.
Blah blah.

Lots of scrolling past, nothing read, on to the next poster.

#276 Entrepreneur on 05.25.15 at 6:34 pm

Someone mentioned “how come the bank of mom, not the dad.” Let me try on this one:

Of course it is both, mom & dad, but mostly mom for a very simple reason. Dads worked outside the home; while, the child-rearing to left to the mom. Moms know that women have a time-line to get pregnant & hears all the “bragging rights” of other moms. The push is on, and to move the push in the right direction, buy that house. Oh, to be a grandparent is so strong. Dads are watching on the side line but goes along with it.

My story and sticking with it. Have to go & garden, better half complaining. Noticed that the news media had Kevin O’Leary on the news about restricting foreign investors. I heard him say that he wants the pipeline to go though, also, wonder if he has house(s) there. He even said at one time that is all about money.

I would like to see restrictions and why not? Stop the money laundering.

#277 sam on 05.25.15 at 6:40 pm

http://www.thestar.com/business/2015/05/25/single-detached-homes-in-dramatic-decline-in-gta-says-cmhc.html

#278 45north on 05.25.15 at 6:56 pm

Kathleen Wynne and the sale of Hydro One:

Before she proceeds with the folly of privatizing 60 per cent of Hydro One, the Premier ought to carefully consider the alternative, an alternative with deep roots in the Ontario experience.

http://www.theglobeandmail.com/globe-debate/in-selling-a-chunk-of-hydro-one-wynne-is-forgetting-ontarios-history/article24136219/

Wynne and her Liberals have looked and there are no easy answers. So they want out. While still retaining power.

apparently Hydro One spent $180 million on a new billing system which produced a huge number of errors. Here’s what Ontario ombudsman Andre Marin said:

Rather, its fatal flaw is a technocratic and inward-facing organizational culture that is completely out of step with public sector values

http://www.ottawasun.com/2015/05/25/ombudsman-to-release-report-on-hydro-one

this is as tough as it gets

here’s reporter David Reevely on the subject:

http://ottawacitizen.com/news/national/reevely-hydro-one-lost-touch-with-a-public-service-ethos-ombudsman-says

#279 45north on 05.25.15 at 7:02 pm

drydock: Above is a link to picture of earth from Saturn which illustrates how small we are in the infinite blackness of space.

it also illustrates the technological feat of sending a space craft to Saturn and sending the images back to Earth.

Earth is special. Nobody on Saturn plays the saxophone or speaks French.

#280 crowdedelevatorfartz on 05.25.15 at 8:57 pm

@#279 45north

Earth is special. Nobody on Saturn plays the saxophone or speaks French.”
+++++++++++++++++++++++++++++++++++

Or can create a device that quickly whisks a person from one floor to another all while holding ones breath due to the ofaculatory repulsiveness of the air………

We are truly an amazing species capable of unimaginable wonders……..

#281 The American on 05.25.15 at 11:19 pm

At #112: saltpony, LMFAO. Prostate cancer costs in the U.S…? Seriously? Have you read a newspaper in say, ohhhhhhh I don’t know, the last four years? Hell, at least my chances of survival are SIGNIFICANTLY better at ANY cost in the U.S. Fact. Oh, if you haven’t read recently, Canadian so-called “free” healthcare comes at a huge cost to Canadians in way of wait times, taxes, more and more closing of medical facilities, etc. Go ahead! Ask a Canadian politician where he/she goes in times of cardiac issues, cancer, oh hell, just about everything. Haven’t you heard? Oh yeah, probably not. Your media wouldn’t ever tell you as it doesn’t unify the country. Shit. Fox guarding the naive little henhouse all the time. So sad. So very, very sad.

#282 Pulp Faction on 05.25.15 at 11:55 pm

Dear #DontHave1Million,

20 years ago, I moved from Vancouver to Prince George because we could not save enough money for a down payment on a house in the lower mainland, due to the prices. I busted my ass for half my life in Vancouver, living in apartment rentals and basement suites.

If anybody is going to make houses in the Vancouver area affordable, then I’m moving back.

Why ? Because I have seniority, that’s why.

In other words, junior….I’m #FirstInLine.

You are #JohnnyComeLately and #ToTheBackOfTheBusKid.

It should be your turn in about 20 years.

Try to get an education by then. I didn’t have Mom money, and you really did need a downpayment in cash. The bank didn’t give it to you, and nobody bidded up a price, we were all trying to steal it from them.
Why ? Because we knew it was real money and you really did have to pay it off, and your house was not going to be worth #1Million in a couple of short years.

Warning: It’s an adventure in adversity trying to stand on your own feet, you probably won’t like it. :-)

#283 Spectacle on 05.26.15 at 1:00 pm

Regarding : #282 Pulp Faction on 05.25.15 at 11:55 pm
Dear #DontHave1Million,

Thank You for truly adding to Mr Turners blog, and raising the bar for discussion.

( smokey, that’s creative writing. You can do it too! )

Regards

#284 Why the resistance to foreign ownership on 05.26.15 at 4:20 pm

#179 GenXer
Garth,

Why the resistance to foreign ownership policies? China and India block the purchase of real estate by foreigners completely. Most European nations place heavy taxation on foreign ownership.

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

In order to demand that you can move your capital, business, location of taxing, purchasing, trading, etc. virtually anything, anywhere you need a couple of countries where you provide similar, in order to demand the same from everywhere.

US, Canada are some of those countries that provide this example for the rest of the world.

You can’t take advantage of it? Too bad for you, the opportunity is there for everyone.