Bull talk

TOW modified

Housing bulls were snorting, pawing and humping all moving things yesterday as the latest sales figures cane out of YVR and the GTA. As you may know, the market moved into a frenzy in these two markets in May – a direct result of the Bank of Canada rate wiggle in January and an inching down of mortgage costs the month following.

The headline number is price. It’s all the media cares about, of course (like many people who come here). Detached houses gained 9.4% year/year in Van and 18.2% in 416. This doesn’t mean they’re higher than ever, of course. For example, Toronto prices have just recovered to the high touched more than a year ago.

Before you swallow the realtor meme that you must buy now or be priced out forever, I suggest you weigh some facts carefully.

First, the sample of houses upon which average price stats are based is incredibly narrow, and therefore likely misleading. For example, 1,572,585 households exist in the GTA, with a home ownership rate of 70%. That means there are roughly 1.1 million properties in the region. Last month 1,447 detached homes sold, the majority of which fetched over $1 million and some many multiples of that, dragging the average higher. (Note that real estate boards in Canada use average prices. US board publish median numbers – more accurately reflecting market conditions).

The point is this: sales of detached homes in May amounted to 0.13% of the housing stock. And yet the average price is extrapolated across the entire market. This is exactly the mentality that speculative bubbles are gassed with. Be careful.

Second, there’s been a dramatic and meaningful slowdown in national real estate sales, commensurate with rising prices. Housing analyst and former realtor Ross Kay tells me this was the situation as of June 1st, Monday:

  • Only 2.3% of current home owners in Canada were actively trying to move.  This is the lowest activity level ever recorded on June 1st between 1990 and 2015.
  • New Home builders currently have the lowest level of new homes under construction since 1990, which will add only 1.4% new privately owned and occupied homes across Canada over the next 21 months.
  • On June 1st there were less than 56,000 home owners who had sold their existing home and were still waiting to purchase their next home.
  • On June 1st, first time buyers were increasingly choosing resale homes over new homes while the overall number of first time buyers purchasing was continuing to decline as a percentage of the national market.

Now that real estate and related activities account for roughly a quarter of our entire GDP, this is not great news – coming atop a contraction in the economy so far in 2015, two months of really sucky trade numbers and the OECD’s new warning of a global slowdown. “The sharp decline in imports indicates that domestic demand only got weaker,” says Capital Economics. “Overall, these latest trade figures suggest that hopes for a snappy recovery from the oil price shock are misplaced. We expect the economy to struggle over the rest of the year, with the Bank of Canada eventually lowering rates again before year end.”

It’s hard to imagine worse news. More bubble talk. More buy-now-or-buy-never pressure. More Bank of Mom. More predatory lending. More subprimes. More risk.

Third, as prices move higher, the universe of potential buyers shrinks – even with the lowest mortgage rates ever in place. If the average 416 detached is $1.15 million, a new buyer not bringing big equity to the table would need 20% down and enough for closing costs (land transfer tax along is $38,500). That’s cash of $270,000. The mortgage would be $920,000, cost $5,100 a month (at just 2.8%) with property tax and require an income of at least $185,000.

So, the average family ain’t buying the average detached home. In fact, this is more than double the income of the typical GTA household, even ignoring the fact most people don’t have three hundred large saved up. This is why you should expect fewer sales and higher prices, since it is the move-up buyer fueling the market, with first-timers increasing shut out. Just as Ross Kay’s stats attest.

With financial assets, this spells danger – higher prices on reduced volumes. If you believe this is sustainable when it comes to real estate, I have a unicorn herd to sell you.

Of course, prices can escalate. With a pre-election rate cut by the Bank of Canada poodles, they will. Then we reap what we sow.

217 comments ↓

#1 TurnerNation on 06.03.15 at 6:25 pm

Dollarama stock on a tear again. Symptom of a down (economy)?

#2 boonerator on 06.03.15 at 6:34 pm

I am thinking of the person who bought a tulip bulb for the highest $$$$$$$$ and thought, “Whew, good thing I got in now!”
http://en.wikipedia.org/wiki/Tulip_mania

#3 H on 06.03.15 at 6:36 pm

Garth,

As you acknowledge yet another rate cut to come, have you finally shifted out your expectations of the “slow melt” predicted about a year ago?

#4 Edward on 06.03.15 at 6:39 pm

If the BOC announces a another rate cut before the election, it will signal a huge problem in the Canadian economy. Never a good sign for the incumbent in a general election.

“It’s the economy stupid”

If a lower rate comes in, the Conservatives will lose.

#5 Smoking Man on 06.03.15 at 6:40 pm

Ah, an election rate cut…..now your thinking like a Smoking Man Sr Gartho.

Those trade numbers today where brutal .

Turner Nation , I’m in a dollar store right now. Packed it is

#6 José on 06.03.15 at 6:42 pm

“Then we reap what we sow.”
————————-
You’ve been singing this same tune for a years now – just sayin

Have you heeded it? Just askin. — Garth

#7 TurnerNation on 06.03.15 at 6:44 pm

The Keg came out with new menu with higher prices. KEG.UN yield almost 5%, stock is at highs.
Viva low to mid market.
I’d never eat at a 5 star place. Only for liquidity.

#8 rk usa on 06.03.15 at 6:50 pm

prices up 18% year over year

this is getting downright scary

especially when “real estate and related activities account for roughly a quarter of our entire GDP”

once this bubble pops Toronto and the GGH will take down the economy of the whole country

#9 JO on 06.03.15 at 6:54 pm

junk economics alive and well
In technical terms TO RE has just put in a classic and very bearish double top on volume non confirmation
It would make complete sense to begin a devastating correction with the next 3-4 months
Good riddance, as if the masses are going to get rich swapping residential RE

While the masses may think they are getting richer, they are instead being taxed in spectacular fashion.

The correction is inevitable and for most of the next 10-15 years they will be hit with round after round of property tax increases, user fee increases, service cuts which will simply result in the house they overpaid for being confiscated by the govt

Whatever modest equity and savings the rest have will be whittled away through steady currency depreciation and taxes on fake gains. There will be very few ” legal” places to hide.

Sorry folks, it’s just how neoliberal economics goes

#10 unwishful_thinking on 06.03.15 at 6:57 pm

I am beginning to question whether Canada will not repeat Japan’s experience, how long can we have contraction while the US expands?
Maybe the rates in Canada will take 10 years or more to normalize

#11 Obvious Truth on 06.03.15 at 7:00 pm

Statscan has two more scary charts today.

Talked to realtor this week about renting. He laughed at me.

We did some quick math. Then he actually did a double take. I don’t think anyone in RE even believes there is any alternative to buying. Seems to me that most have never really considered it.

#12 Millmech on 06.03.15 at 7:04 pm

Nothing like the feeling of being priced in forever!

#13 crowdedelevatorfartz on 06.03.15 at 7:06 pm

“With a pre-election rate cut by the Bank of Canada poodles, they will…..”
+++++++++++++++++++++++++++++++++

Expecting something idiotic from the pre election Conservatives and the BoC Garth?

#14 Curt on 06.03.15 at 7:06 pm

Hey Garth, you should dig up some horror stories from the US real estate meltdown in 2008 and do a comparison with how leveraged Canadians are.. that would be fun to read!

#15 zedgt87 on 06.03.15 at 7:11 pm

With financial assets, this spells danger – higher prices on reduced volumes. If you believe this is sustainable when it comes to real estate, I have a unicorn herd to sell you.

That sounds exactly like stock markets. The price run ups have occurred on ever declining volume. Will end in tears, just like the housing bubble.

PS housing bubble is back in America. Housing has reached similar levels as it did before the crash while income is virtually unchanged. Everywhere you look there are signs of financial bubbles. Thanks zirp and QE

You are wrong on stocks, where valuations are reasonable relative to earnings. As for US real estate, prices remains 12% below levels of 2005. — Garth

#16 Keith on 06.03.15 at 7:14 pm

@ #13 Curtis

Comparisons to other times and other jurisdictions aren’t always valid. Check out this story from the U.S. housing crash:

http://www.doctorhousingbubble.com/yearly-income-14000-purchase-of-house-720000-have-we-all-lost-our-minds/

#17 Italians love real estate on 06.03.15 at 7:19 pm

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#18 Julia on 06.03.15 at 7:21 pm

Anecdotal: One of my colleagues is in the process of listing his SFH for sale in the GTA. They have been planning this for a few months.
This winter, the realtor looked at comparables sales dating from the fall 2014 and advised that a good listing price should be in the $520 to $550 range.

He talked to them again this week with new comparables showing sale prices in the $650 to $725. Realtor says: I’m not even sure what the right list price should be anymore. They are going to list for $619.9.. 2 other similar house on the street listed at $625 and $699. Realtor thinks house will sell within a week of list.

Colleague is happy, retiring and selling out in the city, bought small in the country, far from any of this craziness.

#19 bdy sktrn on 06.03.15 at 7:27 pm

416 burning hot , maybe hockey sticking?

604 – steady, regular, healthy gains year after year. no sherwood or ccm.
steady push into record terr.
expect 6-10%/yr for the next 5-7 years.

2 of my neighbours are cashing in on their e van lotto tkt.
Moving to the sunshine coast. packing in the job.
Both never made or had much cash, they got their 1mil shacks for 175k. Great for them.
Both will sell in a war likely. there is nothing else for sale in the area.

#20 250 Days and Counting on 06.03.15 at 7:29 pm

This truly looks and feels like the Wile E Coyote moment.

Higher priced properties distorting price averages, volumes down and enthusiasm rapidly dropping.

This thrill ride ends this year. All of this current froth will be eradicated soon enough, plus years more of “gains” people are funding helocs with.

By early 2016, Day 0 by my calculation, we will be awaking to a very somber spring market that won’t really happen, and the correction will be fully upon us.

Pity the children of those who dive into bidding wars now.

#21 Paul on 06.03.15 at 7:31 pm

How low can the rates go got a mortgage today for a client 2.59% for five years.
So their question was do you think they will go lower?

#22 Condo Wong on 06.03.15 at 7:31 pm

DELETED (Advertisement)

#23 PM on 06.03.15 at 7:32 pm

I don’t get it. You critique current numbers for being a small percentage of the market even though sales volume is up YoY. Sure it’s small but that’s because people don’t move every month. You have no data that says the sales mix is any different now than 1/2/5 years ago. So you can’t say this data is any more misleading that it claims to be, the average sale price of a home in Van and TO.

Then some 56K people who sold a home and are shopping? Compared to what? The number means nothing without context.

#24 José on 06.03.15 at 7:38 pm

“Have you heeded it? Just askin. — Garth”
—————
Actually I have and sold. Now I’m a basement dwelling renter with regrets….

Very credible. — Garth

#25 praire person on 06.03.15 at 7:41 pm

There is something missing from this equation. The number of people I know, I’m a retired professional, who can afford the prices described and the payments are very few. Seventy percent of Canadians own homes. Okay, outside of Toronto and Vancouver, house prices aren’t as crazy. If you live in Wynyard, Sask or Teulon, Manitoba, you can afford a home with a lot less cost. But even in the countryside, houses and farm land have been escalating in price. Retiring farmers cannot afford to pass on the farm to the kids. The price of land is drawing speculators. The kids can’t afford the family farm. Who then, can? Jobs in the country do not pay 100k and up. People where I am right now fight over minimum wage jobs. There’s a disconnect that I don’t understand. Some blog dogs say that disconnect is money coming from outside Canada. The data is not transparent. The figures questionable. Garth says not enough outsiders to make a difference. Okay. But even with the bank of mom, what is happening doesn’t make sense. Money from black pools looking for a safe place to invest? Certainly, from my recent trip across Western Canada, prices are not being supported by the l local economy. Go into towns, smaller cities, talk to business people. They’re living on the edge. No customers, no customers. The money isn’t there. I don’t understand. Something else is happening. But what?

#26 Freedom First on 06.03.15 at 7:42 pm

Record debt, record margins, & asset bubbles. I’ve seen this before. It’s ok. The blog dawgs know how to deal with this. It’s just another beautiful day in paradise.

#27 The American on 06.03.15 at 7:43 pm

At #14: Curt, reliving the real estate horror stories from the U.S. real estate meltdown would only be exhausting for everyone. You wouldn’t want to scare the kiddos now, would you? But, here are some interesting links with some pretty charts and graphs, sure to provide minutes of reading euphoria… I’ll start with my favorite link (click the interactive “Canada”hyperlink in the graph to graph statistics for Canada)…

http://www.economist.com/blogs/dailychart/2011/11/global-house-prices

http://www.macleans.ca/economy/realestateeconomy/a-canadian-housing-chart-that-puts-the-bubble-in-perspective/

http://www.mybudget360.com/canada-debt-bubble-canada-real-estate-bubble-the-coming-deleveraging-for-canada-unit-labor-costs-in-manufacturing-above-us-labor-costs-and-household-debt-to-income-at-160-percent/

http://business.time.com/2014/01/17/canada-has-its-own-housing-bubble-and-its-about-to-burst/

http://globalnews.ca/news/1860605/sturdy-as-a-house-of-cards-a-look-at-canadas-property-boom/

http://www.huffingtonpost.ca/2015/01/08/canada-housing-debt-deutsche-bank_n_6438440.html

http://wolfstreet.com/2015/04/24/housing-bubble-gone-wild-42-of-second-time-buyers-in-canada-rely-on-mom-dads-checkbook-to-buy-a-home/

http://www.cbc.ca/news/business/face-it-canada-s-housing-market-could-fall-like-oil-don-pittis-1.2873740

http://www.cbc.ca/news/business/overvalued-housing-prices-and-how-to-read-them-don-pittis-1.2898003

http://www.ctvnews.ca/canada/canadian-house-prices-overvalued-by-35-per-cent-report-says-1.2336125

I could post these links for days, but this should keep you occupied for a while as I go do my workout in a bit. I’ll check back in later with you all. You kids play nice in the sandbox while I’m away.

#28 Musty Basement Dweller on 06.03.15 at 7:44 pm

All of this housing hysteria sounds so much like the classic Ponzi scheme.

It would be interesting to see a chart on the condo prices in Vancouver. Even with this so called red hot market here anyone I know who has bought and/ or sold a condo recently tells me that basically the condo prices have been flat for the last 6 years. I wonder why that never makes the news.

#29 Country Girl on 06.03.15 at 7:48 pm

Time to add another feather in Smoking Man’s cap for his past predictions now happening.

#30 My Wife Loves Garth on 06.03.15 at 7:58 pm

I went to a 3 day real estate seminar in Toronto last weekend. The promoters were Americans pumping a Canadian version of “Flip that House”.

Over 600 people in a seminar room for 3 days learning how to get rich buying and selling real estate.

They were charging $25K USD for the basic program. The “upgraded” platinum package cost $30K USD.

At the end people were pulling out the credit cards. Overheard one sales guy tell a single mom to call the credit card company and ask for a credit increase.

#31 Retired Boomer - WI on 06.03.15 at 8:02 pm

Just think, if you are a retiring boomer in 416 or Van what better time than right now to cash in that winning RE ticket and move somewhere …more sane, shall we say.

Yup, seen this flick before, and it doesn’t end well. You be the judge for your own life. When everybody was movin’ on up in the early 2000’s we were busting our hump to get our place paid off.

Bread and circuses now, enjoy the show!

#32 Sean on 06.03.15 at 8:04 pm

Well, I may have posted this a year ago, I dunno… but it is getting to the point that Vancouver (and now Toronto) housing would have to fall 70% or more, to make any sense. I know that sounds impossible, but hey… compared to incomes, compared to rents, compared to what you actually get for your money… Let’s not forget that you “get” to live in a quasi-socialist state, with high and increasing taxes, modest and deteriorating services, and unquestionably the worst climate this side of Siberia… Whatever! People are just f#cking nuts.. that’s all I can say… lol!

#33 Balmuto on 06.03.15 at 8:14 pm

Don’t look now, but the benchmark 5yr Canada Govt Bond yield just rose 10 bps over the last two days. And up half a percent from the January lows. US bond market sell-off is leading the way. It might not matter whether the Bank of Canada cuts again or not. If this sell-off continues we WILL see higher (fixed) mortgage rates.

Now, where have I read that before? — Garth

#34 Victoria Real Estate Update on 06.03.15 at 8:24 pm

In Victoria we are seeing some areas with fewer SFH listings than normal. It indicates that homeowners acknowledge that prices are too high. Garth has talked about this several times. It means that prices in those areas will be falling soon. In Victoria’s case it won’t be from peak prices. Instead it will be a continuation of a well established price downtrend.

Much lower prices are coming to Victoria.

Recently I posted several examples of core area condos that are listed at 12 to 26% below assessed value. It’s only a matter of time before this degree of weakness spreads to Victoria’s declining SFH market.

As Garth talked about, move up buyers are much more active than first time buyers. This situation is always temporary. Move up sales require first time buyers to support the lower end. If that isn’t happening (and it isn’t) then the bottom of the market weakens and that weakens the upper end of the market and that results in falling prices across the board.

This is the sequence of events that takes place before a housing market turns on a dime and either stops rising and begins to fall or in Victoria’s case heads down faster.

#35 Mister Obvious on 06.03.15 at 8:25 pm

Stuart Levings, head of Genworth describes first time buyers as a great sea of plankton upon which higher RE life forms depend for their continued sustenance.

It takes the form of recent immigrants and current millennials sponsored by the Bank of Mom. Levings assures us plankton will be plentiful for quite a while.

Good analogy… plankton… I like that.

#36 Nagraj on 06.03.15 at 8:26 pm

Tsk, tsk. Garth! It’s not “unicorn HERD”. How gross. There’s no such thing as a HERD of unicorns. The proper collective noun for unicorns is, believe it or not, BLESSING as in A BLESSING OF UNICORNS. You ought to have written “I have a blessing of unicorns to sell you” – for hummingbirds it’s a CHARM or GLITTERING (there’s more), and my favourite for crows: A MURDER OF CROWS (though CONGRESS OF CROWS is appealing too).

Can we have collective noun suggestions for: Harperites, realtors, predatory lenders (consider “A SHREWDNESS OF ALLIGATORS”) and people employed by Genworth – or the BoC.

Nagraj does apologize for his nitpickiness but English aint his first language and it does have its fascinations.
(Blogdogs: A FLUFFLE OF BUNNIES?)

#37 Kreditanstalt on 06.03.15 at 8:26 pm

All over the world the bond markets are under pressure and the governments and central banks are powerless to do much about it.

German Bunds, for one…

If this results in rate rises – and higher mortgage costs – it will be in spite of the central planners, not because of them. They’re impotent and anyway were the cause of the problems to begin with.

It will finally be MARKET-DRIVEN!

#38 Italians love real estate on 06.03.15 at 8:35 pm

Why the delete. Since when do you sensor an opposing view to yours ?

You have been warned before. — Garth

#39 crossbordershopper on 06.03.15 at 8:38 pm

you know your in trouble when toronto people with inflated real estate come down the 403 to hamilton and start bidding up prices. the locals are just saying, wow, so in a rising tide, all boats, even the dingy fisherman boat in hamilton are getting multiple offers. its all inflated real estate buying more inflated real estate, with super low carrying costs.
its a crazy game
spent the weekend in upstate ny. i still dont know why garth doesnt discuss the cottage market and how its a play on real estate. why location cant be used as an excuse, no foreigners are buying cottages, but prices are high there as well. how about saskatchewan land prices doubling in 5 years. lots of rich farmers out there now, cant pass on their farm to kids is a problem but hey crazy world.
garth should talk about the biggest problem this all creates that people become less mobile and nimble, when you are entrenched you simply wait for the storm to come and it will come and you cant do anything about it since your finances have cornered you into it.

#40 Dean Armeneau on 06.03.15 at 8:39 pm

I was thinking about some American ETF’s for my tfsa. While researching some, it seems the US. gov. will withhold 15% as a dividend tax. Kinda defeats the purpose of a tfsa. Is there away around this 15% tax for Canadians? Isn’t this important info when you give advice for us to buy US. ETF’s, stocks etc…

Btw Garth, the Amazons say they want to come home…haha just kidding….no they don’t.(never gets old)

Th

#41 Robin Giesbrecht on 06.03.15 at 8:42 pm

#25 prairie person

You are correct I think. There is no coherent reason why townhouses and 1500 square foot SFH in a bald subdivison should be selling for $400-500,000.00 in Saskatoon. This is completely out of control. Why would anybody sign on to something like that? In a prairie city. It is nice enough but not that nice. People give your heads a shake. I have no idea where the money is coming from or what runs through these peoples heads. Water maybe.

#42 Andrew Woburn on 06.03.15 at 8:58 pm

#35 Mister Obvious on 06.03.15 at 8:25 pm
Stuart Levings, head of Genworth describes first time buyers as a great sea of plankton upon which higher RE life forms depend for their continued sustenance.

It takes the form of recent immigrants and current millennials sponsored by the Bank of Mom. Levings assures us plankton will be plentiful for quite a while.

Good analogy… plankton… I like that.
=========================

I laughed when I read it. The smile on the face of the whale?

I noticed he didn’t talk much about the effect of rising interest rates or how many of the little immigrant plankton actually bring a downpayment in their suitcases.

#43 Neta on 06.03.15 at 9:03 pm

OK, folks, it is happening right in front of you eyes. The dream of rising rates and resulting market crash went up the smoke with surprized BOC 25 pts cut. The last cohort of the most adherent Garth’s disciples who have been stoically holding out for the past 8 years had enough and start capitulating in droves.
The market has exploded. The obsession turned into the mania. The exuberance turned into the madness. Never before in the history of Canadian RE the future looked so bright and unstoppable.
And, finally, it spells the beginning of the end. It is the classic breaking point…, I just feel it, smell it…

#44 Mark on 06.03.15 at 9:06 pm

“Is there away around this 15% tax for Canadians”

Yes. Either hold such investments in a taxable account. In which case, you can claim the Foreign Tax Credit for the 15% IRS withholding. Or hold the US investments in a RRSP where a tax treaty provides for 0% withholding.

If you can’t re-arrange your portfolio to do either, you could, inside the TFSA, purchase call options to provide an equivalent amount of notional exposure to the US investments of your choice. With call options, the dividends are not explicitly paid but are implied as a reduction in the purchase price of the option.

The other option, of course, is to find a non-dividend-paying business that is highly correlated to that of the dividend payers, and simply invest in it instead of the dividend payers. Berkshire Hathaway stock, for instance, due to its exposure to the US economy, may very well be a suitable non-dividend-paying substitute. (not a recommendation, but merely an observation — it does seem unlikely that BRK will be able to perpetually outperform the index though, even though the past 30 years have been a pretty good run!).

#45 Bill Grable on 06.03.15 at 9:06 pm

“Lies, Damn Lies, and then there’s statistics”. I think that is the quote.

Look, bottom line. 99% are having a heck of a time keeping the VO flowing, and 1% are buying new yachts.

The middle Class is shrinking.

I know that this sounds basic but here it is – IF YOU OWE A TON OF MONEY NOW, you will be in a World of hurt soon – and no Government poodle will be able to bail your profligate butt out.

Anyone in Government that tries will be running a pool hall in Strathmore, in double time.

Do you think McKay quit because he was desperate for a career change? Uh, no. It was for a huge Pension pay off and he knows there is a change in the wind. (*wonder how much of HIS pension will go to Charity, like a certain former Federal Pol you know).

I say we draft our fearless leader for PM – Bandit can be the Party Whip.

#46 Peter on 06.03.15 at 9:07 pm

Give it up Garth. It’s over. The bulls have won. Adiós.

#47 Andrew Woburn on 06.03.15 at 9:10 pm

Many people think that online shopping is killing the retail store. The CEO of the Bay doesn’t agree.

“It’s much cheaper for consumers to serve as the end of the retail supply chain by buying a product at a bricks-and-mortar store rather than having a retailer shoulder the burden, even if that retailer does not have the overhead costs of a store.

That is because there is a “huge” cost penalty in home delivery, Storch told a full audience at the Retail Council of Canada’s Store 2015 conference, saying direct-to-home retail costs are three times higher than traditional classic retail costs.”

http://business.financialpost.com/news/retail-marketing/online-retailers-need-bricks-and-mortar-stores-in-all-channel-future-hbc-chief-says

Yes he’s a bit biased but we’ve seen this movie before. Online shopping is really just the updated version of the Eaton’s catalogue first published in the 1880’s and the Consumers Distributing chain that collapsed in the 1990’s. Consumer’s had a chain of showroom/pickup stores where you could look at merchandise and place an order. Customers were frustrated by the frequent lack of stock. Eaton’s had a problem with high rates of returned merchandise. The move from print to pixels doesn’t change the underlying costs of stocking and delivering goods direct to the customer. It wouldn’t surprise me if the Post Office and the parcel delivery guys are making more than many of the online sellers.

Obviously there are categories of goods that do work for online ordering. Retail will evolve, especially to meet the challenge posed by Amazon which is apparently unconstrained by any need for profit. But even for larger ticket items, Amazon is not always competitive after delivery costs, and for some third party items, delivery times can be weeks out, so they are effectively out of stock. I realize that Amazon is going to take over the world with drone delivery. I just haven’t figured out which liability insurer is going to step up to the plate for them, and at what cost.

I’m already getting tired of finding that the one item I need today is only available online and won’t arrive until next week. I’m probably not alone.

#48 Henry Rearden on 06.03.15 at 9:11 pm

Listings are skyrocketing here in God’s County: http://www.halifaxrealestateblog.net/

#49 Mark on 06.03.15 at 9:12 pm

“The obsession turned into the mania. The exuberance turned into the madness. Never before in the history of Canadian RE the future looked so bright and unstoppable.”

And back in the real world, the average house in Canada hasn’t appreciated one iota in the past couple years since the 2013 apex. Consumers are retrenching. HELOCs are not getting larger. Fear is spreading everywhere. Just because a few banker types in Vancouver/Toronto are transacting in the very highest echelons of the market, comprising an increasingly large chunk of the sales mix, doesn’t mean that the houses of average Canadians are rising.

Not only that, but falling rates won’t do anything to stem the decline in housing prices, because the market simply suffers oversupply relative to demand. Demand is exhausted. Supply is exploding. A few bps on rates isn’t going to do anything, and the banks themselves are acting to tighten credit on account of poor credit-worthiness. With CPI almost in deflation and banks holding firm on actual retail interest rates, the real cost of credit is exploding higher.

But as long as this clown show continues, smart Garth disciples are acquiring out of favour assets instead of plowing into housing only slightly down from the top of the market. Patience has its rewards, and the amount of cashflow, earnings, and value available from non-housing related assets is currently enormous.

#50 Carl on 06.03.15 at 9:16 pm

Prices are a little lower my Toronto neighbourhood. Still correcting a bit, might be another 10-15% to go. This is Riverdale/Leslieville. I think it will stop at 25%.

#51 Steve French on 06.03.15 at 9:22 pm

Sir Garth’s-a-Lot Turner, who led the victory of the Harper guerillas in the ‘Twa with the TFSA, and who is now a Greater Fool editor, recently returned from Vangroovey to sound out the housing situation for the GF blawg dawgs.

Turner told the blawg dawgs that “things with the housing bubble felt much better, and smelled much better over there.”

Kurtz looks over to Smoking Man.

Kurtz (to Smoking Man):

“How do they smell to you, soldier?”

#52 young & foolish on 06.03.15 at 9:23 pm

“You are wrong on stocks, where valuations are reasonable relative to earnings.”

I am sooo crossing my fingers this is correct!

#53 Linda on 06.03.15 at 9:23 pm

In Calgary, home builders are apparently trying to build up lot inventory so they can build more homes. However, development of new subdivisions appears to have slowed down – the majority of the action is taking place in already approved subdivisions & especially in previously developed areas along the transit corridors or near to the city centre. Lots of older, small homes on big lots being purchased for redevelopment. Buyers knock down the old, put in either whopping big new home or a multi-family or condo type set up. Some are unhappy, feel the ‘hood is being compromised. However, in many such areas all that is occurring is that the population levels are returning to what they were when the ‘hood was shiny new. Back in the day, those modest homes had on average 4-6 or more people living in them. In recent years, most had no more than 1-2 people living in them, so if the ‘new’ units end up housing 4-6 people then the ‘hood regains its old population, but does not exceed its capacity.

#54 Chaddywack on 06.03.15 at 9:24 pm

I thought Real Estate Boards use either the average or median as it suits their needs.

Or some other thing called an HPI?

#55 Frustrated Kiwi on 06.03.15 at 9:25 pm

#25 praire person “Something else is happening. But what?”

I think Garth is correct that is is mostly about people pigging out on debt. Take a look at Chart 1 which compares debt in the US to Canada:
http://business.financialpost.com/personal-finance/debt/canada-household-debt-ratio-hits-new-record-of-163-3

Then, be aware that
“the majority of money in the modern economy is created by commercial banks making loans”
http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf

The money doesn’t have to “come” from anywhere – just peoples willingness to be up to their eyeballs in debt and the banks willingness to create that debt. (Not that foreign money isn’t part of the equation but I suspect it’s a relatively small part of the story for most of Canada.)

#56 Steve French on 06.03.15 at 9:28 pm

Smoking Man doesn’t answer. Kurtz rises. The blawg dawgs are laughing and giggling. Kurtz drops the ipad on Smokey’s lap.

KURTZ:
“You’ll be free. You’ll be under guard. Read these blog posts your leisure. Don’t lose the ipad. Don’t try to escape to Longbranch or Seneca Casino, you’ll be required to do shots of JD. We can post of these things later.

#57 Mark on 06.03.15 at 9:35 pm

“It takes the form of recent immigrants and current millennials sponsored by the Bank of Mom. Levings assures us plankton will be plentiful for quite a while.”

How? Over 70% of Canadians already own their own home. Ownership has been pushed deeply into non-traditional groups such as very recent immigrants, young people, and even the elderly through condominium-ized long term care homes. If anything, the potential pool of buyers (and borrowers) is rapidly drying up, and the poor performance of the economy over the past decade for hiring young people hasn’t done any favours either.

In other words, there are actually few ‘plankton’ left. And even fewer as the RE downturn accelerates.

#58 Code Red on 06.03.15 at 9:36 pm

Penticton real estate market is on fire , strange stuff is happening once again, can you say “bubble”. Rich, (at least on paper),lower mainland homeowners are coming up here and buying their retirement home. New construction starts are evident every where, and realtors are walking around with big smiles.. The spin offs from Vancouver is starting to ripple our way, has been for 12-18 months now…

#59 TurnerNation on 06.03.15 at 9:39 pm

A Badger of Blogdogs.

A Hector of Harperites?

#60 Washed Up Lawyer on 06.03.15 at 9:48 pm

#53 Linda on 06.03.15 at 9:23 pm

I read and re-read your comment and parts of it made me think of Altadore and Windsor Park. The disappearance of the 1950’s bungalows of 1100 square feet but a delightful and relaxing commute to downtown.

Am I reading that right? How are those hoods doing?

Alas, I am up here in Fort McMurray answering the economic imperative of housing and feeding the family back home in the Stampede City.

Two murders on Clearwater Court last month. I can hit a pitching wedge to the apartment buildings on that street from the front lawn of my rental. Another shooting yesterday a few blocks away.

I am not worried about the shootings. They seem to occur between 3:30 and 5:00 a.m. when I am home reading Greater Fool and fulminating.

Hope you are not my sister named Linda. She will recognize my pathos and arrange yet another intervention.

#61 Smoking Man on 06.03.15 at 9:54 pm

#56 Steve French on 06.03.15 at 9:28 pm
Smoking Man doesn’t answer. Kurtz rises. The blawg dawgs are laughing and giggling. Kurtz drops the ipad on Smokey’s lap.

KURTZ:
“You’ll be free. You’ll be under guard. Read these blog posts your leisure. Don’t lose the ipad. Don’t try to escape to Longbranch or Seneca Casino, you’ll be required to do shots of JD. We can post of these things later.
…….

Youre just a grocery clerk coming to collect the bill. I love the smell of napam in the morning.

Haven’t seen it in a few years. Thanks for the reminder. Watch it again this week end. Second best movie ever made. My all time favorite. Blade Runner.

#62 D Boy on 06.03.15 at 9:55 pm

I just inherited enough to buy a Vancouver house….opinions? It’s ‘found money’ I don’t really know what to do with it…aside from the usual ‘investment crap’…which is no fun. I wanna have some fun….not just look at balances on statements.

If this was yours what would you do? My wife wants a house with a pool…what should I tell her? Travel, cars, but where and what?

#63 PM on 06.03.15 at 9:59 pm

And back in the real world, the average house in Canada hasn’t appreciated one iota in the past couple years since the 2013 apex. Consumers are retrenching. HELOCs are not getting larger. Fear is spreading everywhere. Just because a few banker types in Vancouver/Toronto are transacting in the very highest echelons of the market, comprising an increasingly large chunk of the sales mix, doesn’t mean that the houses of average Canadians are rising.

Not only that, but falling rates won’t do anything to stem the decline in housing prices, because the market simply suffers oversupply relative to demand. Demand is exhausted. Supply is exploding. A few bps on rates isn’t going to do anything, and the banks themselves are acting to tighten credit on account of poor credit-worthiness. With CPI almost in deflation and banks holding firm on actual retail interest rates, the real cost of credit is exploding higher.

But as long as this clown show continues, smart Garth disciples are acquiring out of favour assets instead of plowing into housing only slightly down from the top of the market. Patience has its rewards, and the amount of cashflow, earnings, and value available from non-housing related assets is currently enormous.

Prove it. Prove anything you say.

#64 rawdiswar on 06.03.15 at 10:01 pm

The job market now is even worse than when the current Millennials who own houses graduated and entered the work force. The Bank of Mom can get you into your house via help with the DP, but where is the money to keep it all going coming from?

Can’t see how RE can outpace jobs and the economy for very long, seeing has how wages fuel mortgage payments.

#65 Don on 06.03.15 at 10:01 pm

#3 H on 06.03.15 at 6:36 pm

Garth,

As you acknowledge yet another rate cut to come, have you finally shifted out your expectations of the “slow melt” predicted about a year ago?
*************************************

Really H?

We are getting to the point when 1st time house buyers in cities with some of the highest incomes per capita and the most employment opportunities are increasingly not able to buy. Rate cuts have very little room to move and the need to lower them further means we are in deep shit.

Remember the over indebtedness and loss of jobs in a bad – worsening economy might just bring the cliff into the immediate view of many greaterfools and speculators. Rates are low and the frenzy is subsiding. The financially aware can see that even the real estate talk at work is gone.

How can smart people not be aware. Well there is greed and the fact the smart does not necessarily equate to high intelligence. I agree with Smoking Man when it comes to the herd and learning how to regurgitate what you learn in school. The whole idea of being a specialist in your field alone is risky. Intelligence comes from the general knowledge of a whole lot of stuff, not just one field. BE diversified.

holy shit – SURVIVAL is about being diverse in skill, able to adapt, excel and embrace change. Now that is intelligence.

By the way they dropped rates in other countries as well and that didn’t stop the crash. But one thing is for sure, the news of a not so good economy is getting around even the main herd has noses in the air.

TO each their own… the downturn is inevitable – much like a hang over after a night of binge drinking. The pain has to be felt before recovery can occur.

#66 Smoking Man on 06.03.15 at 10:04 pm

#29 Country Girl on 06.03.15 at 7:48 pm
Time to add another feather in Smoking Man’s cap for his past predictions now happening.
………..

Easy when your an Alien from Nectonite.

#67 Ole Doberman on 06.03.15 at 10:09 pm

Gartho I’m telling ya it’s all foreign money invading Canada:

Even in Australia and Canada where there are real estate booms going on in Sydney and Toronto, criticism is rising attributing the booms to low interest rates when in fact it is foreign capital inflows that have some calling Canada the new Switzerland. The problem is always blinders on with analysts who only see everything domestically and are ignorant of international capital flows. They play with government budgets and money supply and attribute everything to domestic consequences. They help to keep the majority the victim in these major international events.

We have asset bubbles in property that will be blamed on low interest rates when it is driven by capital flows. The Chinese are the biggest ticket buyers in US property while Canadians are the biggest buyer in the number of properties in the United States. So just like the 1987 Crash caused by the G5 currency manipulation, the domestic analysts always turn out to be the fool since they cannot see the wildcard coming in from the outside.

http://armstrongeconomics.com/armstrong_economics_blog/

That makes sense.

#68 TRT on 06.03.15 at 10:14 pm

The word immigration mentioned in only 2 of the first 58 posts. Wow. This blog is the epitome of ‘1984’.

Now why would only Vancouver and Toronto prices skyrocket and not Victoria, Winnipeg, Montreal, Ottawa?

Have fun figuring this out guys. lol

#69 ANON on 06.03.15 at 10:21 pm

Don’t Worry About It. We will continue.
–Tsipras, A. Excerpt from “The days before the 2015 Event”

#70 Leo Trollstoy on 06.03.15 at 10:25 pm

you know your in trouble when toronto people with inflated real estate come down the 403 to hamilton and start bidding up prices. the locals are just saying, wow, so in a rising tide, all boats, even the dingy fisherman boat in hamilton are getting multiple offers.

It is unfortunate that the continually rising prices in Toronto real estate is causing the infection to spread in Hamilton, Kingston, London and surrounding metropolises.

I don’t know how long prices can continue to rise in Toronto. It’s already ridiculous. My friend’s home was bought in 1990 in the York mills/ Don mills area for $200k. He sold it last month for $1.2m. That’ll fund a nice retirement for him.

#71 John Maclean on 06.03.15 at 10:28 pm

So I took Garth’s advice. My house sold in May, and since then I’ve decided to rent.

I’ve been looking for a place to rent and so far, nothing decent has come up. I’m living in a motel room out of several suitcases, all possessions in storage, every morning scan the “house for rent” ads in the local paper and Craigslist. I’ve called about 25 places. About 10 are already rented, another 10 are not until July 1st. I’ve been to see the other 5. One I saw today was a hovel, dark, dingy basement in a rooming house with ceilings so low I had to stoop. Another place has no phone and no internet service. Another place I got rejected because I am a freelancer. Another place I got rejected because I have a pet.

Getting a little desperate I have given up trying to rent a house and am now trying to rent a one bedroom apartment. We’ll see if they allow pets and allow freelancers. Even though I have $200k cash in the bank, when you tell them you don’t have a full time job but freelance, they look at you sideways. Then they want references. I tell them I just sold a house. They want a complete history of my life.

So, moral of the story, renting is a f****cking pain in the ass. No wonder people would rather pay sky-high prices to buy a condo or house.

True story. To be continued.

Get a realtor to assist you. Prepare a personal package with credit score, references, resume. Invest the cash in a proper portfolio. And why didn’t you start this process the day you got an offer? The problem isn’t renting. It’s probably you. — Garth

#72 45north on 06.03.15 at 10:31 pm

The point is this: sales of detached homes in May amounted to 0.13% of the housing stock.

if for some mysterious reason the 0.13% changed hands at half of what it was then the whole shebang goes down!

rk usa: once this bubble pops Toronto and the GGH will take down the economy of the whole country

what’s GGH? you mean GTA? talk about dyslexic. If the GTA crashes the effects will be enormous, absolutely enormous. I cannot imagine the political fallout. Well yes I can imagine. Right now we are organizing an All Candidates Debate at the Federal Level. How about a question like

“recently house prices have fallen 10% leaving many families with mortgages more than the value of their houses. What would your party do to help them?”

JO: It would make complete sense to begin a devastating correction with the next 3-4 months

that got my attention

prairie person: ( you mean prairie ) People where I am right now fight over minimum wage jobs. There’s a disconnect that I don’t understand.

that got my attention too

The American: nine first class links to articles about the Canadian housing market! from link number 3:

At the peak of the US housing and debt bubble, US households had something close to 120 percent debt-to-income ratios. Canada today is above 160 percent. So they are fully into uncharted territory. Household debt is incredibly high largely because of the massive Canadian housing bubble.

I’m thinking a 50% crash.

#73 Smoking Man on 06.03.15 at 10:35 pm

Steve French , follow Me on Twitter @SmokingMan

Week and a bit away, I’ll be posting pics like a mad man in Vegas, going to chettas strip club, and area 51 get a better vision of screens in my book.

Ever since I posted the first few paragraphs of my book on my blog, then put the link in my twitter profile ..

Famous best selling writers with millions of followers have followed me. Get like 10 a day. They have been sending me amazing private messages of encourgment, they love it .

Which is scaring the shit out of me.. Fame is a prison.

I’m going with smoking man as the author , no book signing, to late night talk shows…

Only you blog dogs will get free autograft hard covered copies.

Every one but Mark , less of course he types something human. So I know he’s not a android.

#74 kommykim on 06.03.15 at 10:41 pm

RE: #62 D Boy on 06.03.15 at 9:55 pm
I just inherited enough to buy a Vancouver house….opinions? It’s ‘found money’ I don’t really know what to do with it…aside from the usual ‘investment crap’…which is no fun. I wanna have some fun….not just look at balances on statements.

Invest it and have “fun” with the returns. $500K invested in a balanced portfolio can spin off $2900 per month in pretax returns (7% return). Have fun with that.

#75 Karma on 06.03.15 at 10:42 pm

Interesting that this is being written about more often… I’m a big believer in the war between Boomers and Millennials will get ugly. I’ve definitely noticed more of this adversarial attitude over the past 12 months. I’m sure it will only get worse.

“Is it time to leave Vancouver?”

http://www.vancourier.com/opinion/is-it-time-to-leave-vancouver-1.1953813

#76 Mike in Toronto on 06.03.15 at 10:42 pm

#62 D Boy

I’m looking at multi-family real-estate. CMHC rules are different for 5plexes and bigger. I’m hoping it means that people without money aren’t buying. Gets you the RE, the investment income and keeps you out of the bidding wars and bubble.

Just saw a building slip past me at $1.4M, 11 tiny units though, which is unbelievable at current prices. Profits would be slim but present. But that’s always how these things are priced.

Ex girlfriend lived in the building, which kinda made me feel weird looking at it. Probably best that it slipped by.

#77 Andrew Woburn on 06.03.15 at 10:43 pm

Hey, the kid’s hot. He can do it. He’s a classic entrepreneur. It will all work out in the end.

“Elon Musk’s growing empire is fueled by $4.9 billion in government subsidies”

http://www.latimes.com/business/la-fi-hy-musk-subsidies-20150531-story.html#page=1

Now that Musk is building the mega-factory to produce storage batteries, soon we’ll all be able to buy some roof-top panels and a couple of Tesla batteries and we’ll be able to kiss the grid goodbye, right?

British engineer Euan Mearns has calculated how many Tesla batteries it would take to let a Northern California resident go completely off grid in a typical house. He says:

“To fill winter demand the batteries now have to store 676 kWh of surplus summer generation, requiring 68 Tesla 10kWh wall units costing $238,000.”

Don’t even ask about Canada.

http://euanmearns.com/how-much-battery-storage-does-a-solar-pv-system-need/

#78 Run joe run on 06.03.15 at 10:46 pm

Meanwhile back in Europe, EU regulators tell 11 countries to adopt bank bail-in rules or face

http://ca.reuters.com/article/businessNews/idCAKBN0OD14Z20150528

#79 CC on 06.03.15 at 10:48 pm

Harper is ruining this country.
Every needs to stand up to the CMHC.
And then maybe something will be done.
Don’t people see that?

Taxing foreign ownership is a red hearing.
All that matters is interest rates and CMHC
Xeveryone should get that.

#80 april on 06.03.15 at 10:54 pm

#67 – Read RossKay.com

#81 Mark on 06.03.15 at 10:59 pm

“Now why would only Vancouver and Toronto prices skyrocket and not Victoria, Winnipeg, Montreal, Ottawa”

If you’ve ever visited those cities, you’d understand that there simply isn’t the sort of severe wealth stratification like you see in Vancouver/Toronto. Largely on account of those cities being relatively absent of high performing, mega-wealth generating industry. Hence, changes to the sales mix, although occurring, are relatively minor in comparison to what you see in Vancouver/Toronto.

Regina, which, of all major Canadian cities, has amongst the least difference between lower-end housing units and higher end housing units (the SFH is dominant in Regina for obvious reasons, and ‘rich’ people in Regina are few and far between) price-wise, was the first to have its Realtors report outright declines to the average. Why? The sales mix simply wasn’t able to shift enough to cover up the stagnation/declines experienced on an average, “identical” resale property.

#82 Mark on 06.03.15 at 11:00 pm

“Prove it. Prove anything you say.”

Prove a mastery of proper use of the bold function before you expect anyone to take you seriously.

#83 TurnerNation on 06.03.15 at 11:01 pm

If everyone’s taken equity out and traded up houses who’s left to buy?

If realtors can no longer accurately gauge home prices is this like tech stocks swinging $20 in one day back in the tech bubble? Now you know what was their real worth like.

#84 TurnerNation on 06.03.15 at 11:02 pm

June is a dividend month. What to do with this pesky fiat currency payments. Bury in backyard?

#85 Made in BC on 06.03.15 at 11:08 pm

#7 TurnerNation on 06.03.15 at 6:44 pm
The Keg came out with new menu with higher prices. KEG.UN yield almost 5%, stock is at highs.
Viva low to mid market.
I’d never eat at a 5 star place. Only for liquidity.
+++++++++++++++++++++++++++++++++++

People still eat at the KEG? Sorry but $28 for a hunk of meat, a couple boiled veggies and an onion ring is beyond ridiculous.

#86 Mark on 06.03.15 at 11:11 pm

“If everyone’s taken equity out and traded up houses who’s left to buy?”

Almost nobody. Over 70% of Canadians already own. This is a historical record. There is no pent-up demand. This is why prices are stagnant and falling.

“If realtors can no longer accurately gauge home prices is this like tech stocks swinging $20 in one day back in the tech bubble? Now you know what was their real worth like.”

Realtors have access to the full dataset of statistics concerning the market. They simply are rather selective and secretive on what sort of information they release. It appears that they fight efforts to have such data liberalized on a “Zillow”-like website. Instead, spoonfeeding data to the public that casts themselves in the most favourable light.

But on that note, there’s a CIBC report out there where they were able to extract enough data and present it clearly enough to show that nearly all of alleged price gains in property went to the >$1M category. Its not just the evil Mark that came to the conclusion that the sales mix had shifted dramatically, its also CIBC:

http://research.cibcwm.com/economic_public/download/if_2014-0908.pdf

#87 Smoking Man on 06.03.15 at 11:13 pm

#83 TurnerNation on 06.03.15 at 11:02 pm
June is a dividend month. What to do with this pesky fiat currency payments. Bury in backyard?
….

Your hammered , stop trying to hide it. Let it go, come to my world you bastard .

#88 Smoking Man on 06.03.15 at 11:15 pm

#81 Mark on 06.03.15 at 11:00 pm
“Prove it. Prove anything you say.”

Prove a mastery of proper use of the bold function before you expect anyone to take you seriously.
….

I give you an android , no free book for you.

I’m the book Nazi.

#89 Greg on 06.03.15 at 11:20 pm

Overheard a 50-something giving advice to two 20-somethings around the photocopier today:

You should pull as much as you can from your mortgages at 3% because you can make 7-8% in the market.

Not sure that’s the best advice as logical as it sounds.

By then way I’m pretty sure all 3 of them are broke. Who needs a mortgage in their 50s anyway?

#90 Mark on 06.03.15 at 11:24 pm

“June is a dividend month. What to do with this pesky fiat currency payments. Bury in backyard?”

Fans of balanced portfolios would tell you to put it into the least well performing components of your balanced portfolio.

But on that note, if we are heading into a long-term bond bear market, are we really supposed to keep shovelling money into bonds merely to keep our portfolios “balanced” at the target allocation? Once interest rates start rising, does anyone think they’ll really stop rising until eventually we see, over time, double digit interest rates and a substantial destruction in the market value of debt relative to GDP?

Maybe diversify further with your dividends if you have the opportunity. Asset classes with significant inverse correlation to the bond market are awfully cheap right now.

I really don’t know what the golden key is, but I suspect its doing something quite different than the proverbial ‘herd’.

#91 Karma on 06.03.15 at 11:26 pm

#68 TRT on 06.03.15 at 10:14 pm
“The word immigration mentioned in only 2 of the first 58 posts. Wow. This blog is the epitome of ‘1984’.

Now why would only Vancouver and Toronto prices skyrocket and not Victoria, Winnipeg, Montreal, Ottawa?

Have fun figuring this out guys. lol”

First of all, Winnipeg, according to Teranet, has had the highest growth since 2005 on their HPI. It beats Toronto and Vancouver. Download it’s historical data here: Source: http://www.housepriceindex.ca/

Secondly, Calgary and Edmonton have both grown much faster on a per annum basis than Vancouver or Toronto over the past 10 years due to immigration. Alberta’s growth has been almost 2% per year, compared to about 1.1% for BC. Montreal’s population growth has been decent too.

So your point of immigration

FYI,
Check out The National’s “Retiring on Risk” tonight. It’s about Boomers needing to sell their houses to solidify their retirements. It will likely get a lot of Boomers thinking…

#92 Karma on 06.03.15 at 11:34 pm

Continued from above:

So your point of immigration being the main difference between Vancouver and Toronto and the rest of Canada isn’t exactly without its flaws. Particularly when 1/3rd of new people in Metro Van end up in Surrey.

#93 Karma on 06.03.15 at 11:38 pm

#62 D Boy on 06.03.15 at 9:55 pm
“I just inherited enough to buy a Vancouver house….opinions? It’s ‘found money’ I don’t really know what to do with it…aside from the usual ‘investment crap’…which is no fun. I wanna have some fun….not just look at balances on statements.

If this was yours what would you do? My wife wants a house with a pool…what should I tell her? Travel, cars, but where and what?”

When I was young, my mum told me that you can’t call yourself “Wealthy” unless you can live off of the interest on the interest of your principal. Think about that. My mum is old school… She also said you can’t call yourself “Rich” if you owe someone else a dollar.

Oh how the world has changed…

#94 OttawaLuke on 06.03.15 at 11:45 pm

Garth, what is the probability we will be in a technical recession when second quarter GDP is reported?

#95 Smoking Man on 06.03.15 at 11:48 pm

Wife just toped my wine, little does she know. The 26 onz of JD went down in one glulp , and one CIG

#96 Love my Kia on 06.03.15 at 11:52 pm

Corporate profits are now at the cost of debt fueled consumers.

I dont know about you Garth, but I work in the trenches in a government funded post secondary institution and see students graduating with low prospects.

Those damn statistics touting a high employment rate dont disclose the fact that students are working more in McJobs now, not a well paying profession. Schools are suffering too and we offer more useless programs than ever before just to keep revenues coming in. Wynne has been a year late with her transfer payments to us as well.

I dont see how corporate profits coming in at the expense of the debt fuelled consumer and recent college grad can sustain itself for much longer without collapsing on itself.

#97 Spiltbongwater on 06.03.15 at 11:56 pm

And why didn’t you start this process the day you got an offer? The problem isn’t renting. It’s probably you. — Garth

I have accepted offer on my house, but conditions don’t get removed until next week. No deposit, I think it is a waste of everybody’s time to look at a rental.

#98 PVS Insight on 06.03.15 at 11:57 pm

#25 prairie person

It’s called “running on empty” and people figure as long as many others are in the same boat, it’s alright. Everyone expects to have a chair when the music stops. Problem is, the music has been playing for years and people are forgetting that it will stop eventually. It always does. A word to the wise.. be frugal and pay off that debt as Garth keeps repeating. There is a huge shift happening and the old rules are not reliable anymore. Save your pennies.. the rainy day will come. If you’re prepared, you will reap a harvest when others sell the farm.

#99 Don on 06.04.15 at 12:01 am

#3 H on 06.03.15 at 6:36 pm

Garth,

As you acknowledge yet another rate cut to come, have you finally shifted out your expectations of the “slow melt” predicted about a year ago?
***********************************

hey what takes down a bull…oh yah a big freak’en BEAR.

#100 Correct SIR on 06.04.15 at 12:03 am

“So, the average family ain’t buying the average detached home.”

– Correct. It’s largely international money (much of it illegal), flowing into the safe haven of two of our largest cities.

#101 plumber on 06.04.15 at 12:11 am

Garth,

Where is my comment? Nothing abusive, obscene or disrespectful. Just the truth that YVR prices keep going up and it’s not due to low interest rates. Why doesn’t Montreal’s prices behave the same, the same low rates there too and a bigger city. The only explanation possible is that money is coming from outside of the existing population of Vancouver. The injection of funds into YVR. You have no creditable data that say is not happening because nobody has collected any, Ms. Clark loves the property transfer tax.

Your comment was published. — Garth

#102 PharmBoi on 06.04.15 at 12:13 am

#77 Andrew Woburn

Remember that there’s no truth in the news and no news in the truth. It’s true for real estate reporting but it applies to all industries. Look at the total subsidies other companies get and ask yourself why Elon Musk is constantly singled out in the media. Who owns those media outlets I wonder and why would they be on the attack?

Solar industry is now adding more jobs per year than fossil fuel industries, jobs are coming back to the U.S. via high tech manufacturing, and Garth has been correct in investing in the growth of the U.S.. Isn’t energy independence what the U.S. wants anyways?

It’s laughable to think that the whole point of the battery storage is to allow everyone to go off grid and using that as the point of analysis. Think bigger picture. Solar will allow peak shaving, hence stabilize the grid. Why would utilities fight tooth and nail against solar? I wonder who has the most invested into fossil fuel peaker plants? It will fun to see those same utilities push for more subsidies as they begin to install utility scale batteries themselves as their plants can run at a higher efficiency.

Do your own research, run your own analyses, crunch some numbers, and invest accordingly. Btw, TeslaEnergy URL has been reserved since 2004. All of this is old news.

#103 Karma on 06.04.15 at 12:15 am

Gregor wrote a letter…

http://www.theglobeandmail.com/news/british-columbia/vancouver-mayor-pitches-affordable-housing-idea/article24794084/

#104 Christopher Lackey on 06.04.15 at 12:18 am

You know how many 5 and 6 figure HELOCs there are out there? Thousands if not hundreds of thousands. Let me tell you something, you look at the average Canadian with credit cards they may or may not be paying off, car payments, loan payments, mortgage payments, revenue Canada installments from when they withdrew RRSPs, that HELOC has the lowest rate and just languishes at the bottom of the list. A massive debt that most people just pay the interest on and probably dont think about paying off.

Remember these are pretty recent inventions. Changes in the prime rate or property values (and therefore the loan to value ratio the debt is based on) could mean…what’s that expression? Who’s swimming naked when the tide goes out

@#85 Made in BC LOL at your Keg description. Couldn’t agree more. But I do have $100 gift card on my fridge for that high priced onion ring. Now if only I could find a baby sitter/

#105 Obvious Truth on 06.04.15 at 12:30 am

2.75 could be the number to watch.

No it’s not the time Ben Johnson could have achieved if science was left to run its course. Dublin inquiry spoiled that.

It’s a meagre Interst rate that could break a 35 year downtrend.

History being made before our eyes.

Almost as good and maybe as fleeting as Seoul 1988.

Housing Bulls cruising to the finish line, arms in the air, will be tested.

A group of ‘cheetahs’ is a ‘coalition’.

#106 Carpe Diem on 06.04.15 at 12:33 am

#36 Nagraj

Thank you. After a stressful day (or the last year of stress) … the image of a BLESSING OF UNICORNS sure sounds wonderful!

#107 Carpe Diem on 06.04.15 at 12:35 am

#38 Italians love real estate

I was deleted once. Garth’s assumptions were dead wrong but whatever.

Be proud to be deleted and in the same league as the Smoking Man!

#108 Carpe Diem on 06.04.15 at 12:35 am

#61 Smoking Man

I love your choice of movies!

#109 Carpe Diem on 06.04.15 at 12:37 am

#81 Mark

Mark … you are wrong … In Ottawa/Kanata, I’ve never seen so much engineers and high-tech companies. Vancouver does not compare in terms of ventures. I lived in Vancouver for 13 years and TSX Ventures (Vancouver) is all BS. Hightech in Vancouver is much more BS. Like mining companies try to cheap fund high-tech companies on the TSX Venture. At least that’s what I saw before I decided to leave that city.

Ottawa is just a nice place to live where the average income is higher than Vancouver and life (and mortage costs) much saner.

#110 PEAK 604 and 416 RE on 06.04.15 at 12:37 am

Credit where credit is due.

I’ve been saying for weeks now that RE peaked this Spring and that the best place to hide is the USD.

Get on the train before its too late.

Another rate cut and we will all yearn to be living in Margaritaville…. drowning our sorrows in any booze our Canuck Peso will buy us.

70 cents before or after the election? I wager they will defend right up until the election with all they got but after October, it’s lights out for the Canadian Dollar with a slow grind down to 65 cents or lower by end of 2016.

Sorry fools. You’re not richer than you think in US Dollar terms.

#111 S.Bby on 06.04.15 at 12:38 am

Immigration to BC down. The immigration numbers contain TFWs which added to the volume. A lot less immigration into BC than we are led to believe.

http://www.news1130.com/2015/06/03/international-immigration-down-in-bc-for-the-first-time-in-10-years/

“There were so many people with temporary status here in BC that artificially pumped up were the numbers of foreigners or new immigrants to the province. When you close the door on foreign workers, no surprise to see that the total number of foreign workers plus permanent residents descends.”

#112 Vanreal on 06.04.15 at 12:39 am

Mark. I have to say that I worry about your sanity. I can tell you for a fact that my house in east vancouver has increased by over 40 % in the last 2 years. Was 800,000 and is now almost 1.2 mil. I don’t know where you’re getting the idea that house prices are stagnant or declining.

#113 pypes_diver on 06.04.15 at 12:49 am

Plenty of plankton and four other reasons why Canada’s housing market won’t crash

Katia Dmitrieva, Bloomberg News | June 3, 2015 2:29 PM

http://business.financialpost.com/personal-finance/mortgages-real-estate/plenty-of-plankton-and-four-other-reasons-why-canadas-housing-market-wont-crash

#114 Mister Obvious on 06.04.15 at 1:02 am

#85 Made in BC

“People still eat at the KEG? Sorry but $28 for a hunk of meat, a couple boiled veggies and an onion ring is beyond ridiculous.”
——————————

The meat and veggies are only $2.50. The rest is for rent on the space you occupying, operational overhead, and the wages of the charming waiters and attractive young hostesses which you are obliged to supplement with a decent tip so you don’t come off looking like a putz in front of your date.

It’s called ‘eating out somewhere reasonably nice’. It’s not supposed to be cheap. For that, there’s Arby’s.

#115 Skip on 06.04.15 at 2:05 am

New Zealand seems to be experiencing identical patterns. Only a blip of a downturn when US prices crashed in 2008-10. Exorbitant increases in a couple of urban hot spots far outstripping fundamentals like rent or earnings. And most recently a sudden collapse in sales volume…while prices in select urban markets still rise.

So Garth what is happening with the dearth of listings? Is this what happens before a correction?

#116 Love my Kia on 06.04.15 at 2:17 am

#73 Smokey:

Week and a bit away, I’ll be posting pics like a mad man in Vegas, going to chettas strip club, and area 51 get a better vision of screens in my book.
——————————–
Id be curious to see if you are willing to send a drone to camcord a better view of Area 51.

On the other hand, this girl isnt all that interested in the strip club pics….

Regardless, enjoy.

#117 M on 06.04.15 at 2:26 am

Gartho baby,

I keep tellin’ ya: Before housing will implode leaving a whole in the ground banks will lower the rates further. THAT is actually the moment of “timing”.
And yes there will be Canadian banks that’ll need to be bailed out.

Everywhere where housing collapsed, banks lowered the interest even further exactly when nobody believed that those low rates can be lowered even further. Everywhere.

Look for the next mortgage reduction. 6 months later.. Pada-Boom.

Remember, the elephant in the room is the bond market. Who gives a damn about equities.. ?

It is a tremendous opportunity for gain when that happens. These are good times indeed since the best asset is other people’ stupidity.

#118 JWD on 06.04.15 at 3:12 am

My sister just sold her house in Richmond, BC. On and off the market for a few years now. Old character house, on a very busy street. Mostly developers looking for a potential subdivide as it’s on a large lot. Re-listed again recently and planned to have multiple showings in one day. The first couple, I guess assuming everyone else would bid for it, offered about 100k over asking!!! WTF? They are in shock – after years of low ball offers from developers etc. The agent must have done a real sales job on these people. Offer high now or lose the house to someone else. Unreal. The market is totally crazy and out of control. The greater fool….

#119 observer on 06.04.15 at 3:35 am

#49 Mark on 06.03.15 at 9:12 pm ..

Yes as long as this gong show continues it would mean an added bonus to hedge against the Canadian dollar and buy USD.

1) us is going to raise its rates
Canada is thinking of lower rates
2) Us job market is expanding and growing
We have real estate and raw materials, both which are suffering
3) they already taken their medicine (on real estate prices) We kept and creeping upward all supported by government intraventions

So when the dominos falls, and the average Canadian will all be eating dog food, just to substain their houses. The small creatures hiding in the shadows will come out and rule

#120 davikk on 06.04.15 at 6:04 am

Canadian Mortgage Insurer Tells US Hedge Funds Why Canada’s Housing Bubble Is Immortal. Hilarity Ensues

http://investmentwatchblog.com/canadian-mortgage-insurer-tells-us-hedge-funds-why-canadas-housing-bubble-is-immortal-hilarity-ensues/

#121 Sebee on 06.04.15 at 7:13 am

Speaking of unicorns…unicorn and acorn is just a different way to say one corn.

Funny thing, only girls like unicorns really, anf how many more stories must we read here about women asking their man to buy them a herd, or just one if that’s all he can afford.

#122 fancy_pants on 06.04.15 at 7:53 am

BofC poodles at the helm… adjust logic accordingly. We finally did.

We are having a house built for end of October. Prepping the other to put on the market this month. KW area is pretty stable for prices. 150k mortgage on a half million house is not fiscal irresponsibility.

For those looking to drop 1.2 million with little down on a house in Wetcouver or the godless GTA; tune your ears and take heed to warnings.

#123 Llewelyn on 06.04.15 at 8:10 am

In 2001 total residential mortgage debt in Canada was $448 billion

By 2015 total residential mortgage debt in Canada had increased to $1.3 trillion

Between 2001 and 2015 residential mortgage debt increased by an average of 7.85%/year

In 2001 residential mortgage debt averaged $14,450/
capita

By 2015 average residential mortgage debt has increased to $36,600/capita

Between 2001 and 2015 per capita residential mortgage debt increased by an average of 6.9%/year

In 2001 the disposable income of Canadian citizens averaged $20,390/capita

In 2015 the average disposable income of Canadian citizens has increased to $32,560/capita

Between 2001 and 2015 per capita disposable income has increased by 3.3%/year

In 2001 average residential mortgage debt represented 76.8% of per capita disposable income

By 2015 average residential mortgage debt represented 112.4% of per capita disposable income

By 2015 the total per capita debt exceeds 162% of average disposable income

Anyone see a problem with a world where average debt is increasing twice as fast as average disposable income. Nope!!! Isn’t life grand on the good ship lollypop!!

#124 crowdedelevatorfartz on 06.04.15 at 8:29 am

@#111 Vanreal
“I can tell you for a fact that my house in east vancouver has increased by over 40 % in the last 2 years. ”
++++++++++++++++++++++++++++++++++

You house has increased in price by 40% in 2 years and you still own?
It aint just Mark thats crazy…….

Take the free money and run

#125 Londoner on 06.04.15 at 8:32 am

Type in “Canadians retirement” in Google and this is what you get:

Canadians reasonably well-prepared for retirement, report says – G&M

Millions of Canadians risk losing ‘retirement of their dreams,’ study warns – G&M

Millions of Canadians headed for ‘trouble’ in retirement: CIBC report – CTV News

Canadians reasonably well-prepared for retirement: CD – CTV News

Seriously, you can’t make this up. No wonder you guys are so confused.

#126 crowdedelevatorfartz on 06.04.15 at 8:34 am

@#102 Karma

Gregor didint write anything.
Penny Ballem dictated, Gregor typed without interrupting, and then posted it like the good little brainless flunky that he is.
He’s just annoyed at housing prices now that he’s out on the street after his wife booted him out and took the house.

#127 TurnerNation on 06.04.15 at 8:35 am

I eat only the bar food menu @ Keg. 10-15$ items.

No I don’t drink at home. Big into my kando’s gym now. 3-4x a week up to 9 different cardio and strength exercises. It’s working. I’m bulking up for the coming face off against hulking boomers the likes of which get pictured on this weblog.

#128 crowdedelevatorfartz on 06.04.15 at 8:51 am

@#75 Karma
“I’m a big believer in the war between Boomers and Millennials will get ugly. I’ve definitely noticed more of this adversarial attitude over the past 12 months. I’m sure it will only get worse. ”
+++++++++++++++++++++++++++++++++++

My Gawd.
Not another. “Its ALL the Boomers fault”

Please
A “war” between generation Boomers and “Generation Why bother”?
That’ll be the day. Most people today are too busy playing Candy Crush or some other eye destroying game on their Ipads. Or texting or talking on the phone.
Blame everyone but yourselves for your bad university education choices, your bad financial decisions, and a planet thats gone global for work options.
Thay’ll fix everything.
Dont forget to say “Good job!” everytime your 10 year old child puts one step in front of the other. Nothing like continous, endless positive reinforcement to create another generation of kids totally unprepared for anything but whining about how unfair everything in the real world is.

Good job.

#129 Julia on 06.04.15 at 8:57 am

#103 Christopher Lackey
“You know how many 5 and 6 figure HELOCs there are out there? Thousands if not hundreds of thousands. Let me tell you something, you look at the average Canadian with credit cards they may or may not be paying off, car payments, loan payments, mortgage payments, revenue Canada installments from when they withdrew RRSPs, that HELOC has the lowest rate and just languishes at the bottom of the list. A massive debt that most people just pay the interest on and probably dont think about paying off.

Remember these are pretty recent inventions. Changes in the prime rate or property values (and therefore the loan to value ratio the debt is based on) could mean…what’s that expression? Who’s swimming naked when the tide goes out”

—————————————–

Here’s the thing too. There has been a lot of talk about CMHC’s exposure to the real estate market and how much their “portfolio” of insured loans has increased.

People usually do not get a HELOC from the get-go. They buy with a small downpayment and the Bank insures the loan through CMHC or others.

What happens later is the house gains value, homeowners want to renovate said house or use the equity for other things and apply for a HELOC. The value has increased enough that CMHC is no longer required and it falls off their books. Not because the borrower repaid the loans really, not from normal repayments anyway, only because it converted to a different product.

So Banks refi the same house without CMHC as a backstop (that said Banks do get some blanket CMHC insurance on portfolios) and the CMHC exposure keeps growing.

#130 LL on 06.04.15 at 9:21 am

Real Estate Update

…”Lol that’s funny. The assessed value of the building takes into account the year it was built silly”….

You’re funny too because even FMI says Canada RE is over evaluated – even by over 63% – (and I would say over evaluate all around the world…except in Ecuador..for now)!

RE actual price doesn’t match with today salaries.

#131 X on 06.04.15 at 9:33 am

Would the BoC need to lower rates if the US Fed raises in September? Both would result in driving our dollar lower, and a flow of investment $ out of Canada….

#132 Mark on 06.04.15 at 9:48 am

“Mark … you are wrong … In Ottawa/Kanata, I’ve never seen so much engineers and high-tech companies.”

Ottawa’s high-tech industry is but a fraction of what it used to be in the heyday of the late 1990s with Nortel, Corel, Newbridge, JDSU, etc. going strong. And the staff associated with the contemporary industry are mostly not getting rich off of stock options, etc. At best, the companies are paying out modest salaries and the path to monetization for non-social media startups is murky at best. Ottawa is mostly a one-trick pony, public servants, who are on very well defined salary schemes with little upside and no windfalls.

Would the BoC need to lower rates if the US Fed raises in September? Both would result in driving our dollar lower, and a flow of investment $ out of Canada….

Higher rates won’t necessarily push the USD$ up, and lower Canadian rates won’t automatically depreciate the CAD$. The USD$ has risen dramatically in spite of 0% Federal Reserve policy rates. Interest rates are just one piece of the puzzle — speculative fervour and trade flows are far larger of influencers of currency valuations.

As pointed out, typically the Bank of Canada follows what goes on in the US, but this time around, since there’s so many deflationary forces built into Canada’s economy, the lag could be very considerable and BoC policy rates could lag those of the US for a generation.

#133 Mark on 06.04.15 at 9:53 am

“Yes as long as this gong show continues it would mean an added bonus to hedge against the Canadian dollar and buy USD. “

Its a really, really bad idea to be selling Canadian dollars going into a deflationary period. And the USD$ bandwagon has long left the station and is getting pretty old itself.

The time to buy USD$ was when the CAD$ was riding higher, much higher. Upside now is quite limited in comparison, and there’s plenty of downside as the long-term USD$ bear market resumes its course.

#134 Alberta Ed on 06.04.15 at 9:53 am

“… I have a unicorn herd to sell you.”
Too late… the MSM already bought up all the unicorns.

#135 Mark on 06.04.15 at 9:55 am

“Mark. I have to say that I worry about your sanity. I can tell you for a fact that my house in east vancouver has increased by over 40 % in the last 2 years. “

If you really believe that, then you should try selling. How can you claim it is a ‘fact’ if you haven’t actually sold?

#136 Grantmi on 06.04.15 at 10:03 am

Hmmmmmm!! Interesting!

Fed Urged by IMF to Postpone Rate Liftoff to First Half of 2016
http://bloom.bg/1Mp7jIC

Yes, but the Fed doesn’t care. — Garth

#137 Broke Dick on 06.04.15 at 10:06 am

That means there are roughly 1.1 million properties in the region. Last month 1,447 detached homes sold –

1.1 million properties and only 1447 sales.
That means households, on average, are moving every 760 months or so.

Might wanna check those numbers

Check what? Those are the actual monthly sales and the actual number of households. I can make up better numbers if you want. — Garth

#138 bdy sktrn on 06.04.15 at 10:06 am

WASHINGTON (AP) — The International Monetary Fund urged the Federal Reserve to wait until the first half of 2016 to start raising short-term interest rates because the U.S. economy remains subpar

#139 bdy sktrn on 06.04.15 at 10:10 am

Fed Urged by IMF to Postpone Rate Liftoff to First Half of 2016
Yes, but the Fed doesn’t care. — Garth
——————————-
the dow spiked +100 on this release.

mr. market thinks the fed does care.

#140 Henry on 06.04.15 at 10:28 am

Well it looks like the “Hot Asian Money” is flooding into Seattle and driving up house prices. But of course that’s not taking place in Vancouver where the only buyers are young Canadian couples with financial help from their moms.

http://www.theglobeandmail.com/report-on-business/economy/housing/rom-com-heightens-chinese-interest-in-seattle/article24622655/

#141 Grantmi on 06.04.15 at 10:30 am

Madame Lagarde should keep her pie-hole shut.. and worry about the Euro Zone. (Her neck of the woods) Go fix Greece and leave North America alone!!

#142 Josh in Calgary on 06.04.15 at 10:44 am

#77 Andrew Woburn on 06.03.15 at 10:43 pm

British engineer Euan Mearns has calculated how many Tesla batteries it would take to let a Northern California resident go completely off grid in a typical house. He says:

“To fill winter demand the batteries now have to store 676 kWh of surplus summer generation, requiring 68 Tesla 10kWh wall units costing $238,000.”
—————–
Well if a British Engineer says so then it must be true :)

His original assumption is that you want to get the entire state of California off the grid. That’s a false dichotomy. It’s not an all or nothing solution. The problem with “the grid” is that it currently has to be built to handle peak load. So let’s say your average requirement is 100. The system has to be built to handle 150 because that’s the peak (units left off because it’s just an example and I don’t have time to look up the numbers). So even without adding solar into the picture you can reduce the size of the grid simply by adding enough batteries to the system. For residential that doesn’t matter so much but for industrial they are frequently charged by their peak load requirements. Reduce your peak load and you reduce your bill.

Now if you want to add solar into the picture for the case of residential you don’t have to cover 100% of your needs. The numbers will change drastical if you only seek to cover yourself 80 to 90% of time. You can draw power from the grid to make up the difference.

Also, let’s go ahead and can the idea that alternative energy has to be a fix all solution. It’s going to work well in certain applications and not so well in others. It’s going to take a mix of traditional power and alternative energy. The better alternative energy gets the higher percentage it will make up.

Not to mention that oil and gas are getting more and more costly to produce every year. Alternative energy is getting cheaper.

#143 The American on 06.04.15 at 10:48 am

So, let’s point out some facts:
1) Deutsche Bank sends message Canadian real estate is overvalued by 63%
2) U.S. hedge funds are diligently shorting Canadian real estate
3) Bank of America/Merrill Lynch shorting Canadian real estate, while at the same time sending a message the CAD will drop below $0.70USD
4) The Economist estimates homes are overvalued by 35% compared to incomes, and overvalued by 85% compared to rents (many believe this is the more accurate key performance indicator by which to measure the market value of real estate)
5) IMF shoots yet another warning, stating Canadian real estate is “grossly overvalued.”
6) Canadian household debt is now 33% higher than American household debt at peak
7) Canadians somehow believe mortgages in the U.S. are non-recourse – NOT TRUE. False notion the Canadian people have been sold by your media. All but 12 states are full recourse in the U.S. So, how does this make circumstances different for Canadians?
8) Canadians ignoring the fact they received bail outs greater than American banks, about 60% higher per capita than American, yet somehow still believe Canadian banks act responsibly (or “liquidity injections” as your government calls it, to avoid the negative connotation associated with “bail out.”)
9) National attitude of “We’re different,” which somehow circumvents economic fundamentals
10) Since 2000, Canadian home prices have jumped 140%, but yet that is somehow viewed by many as “sustainable.”
11) And now we have the Canadian mortgage insurer trying to tell U.S. hedge funds why Canadian real estate markets won’t collapse. Which begs the question WHY they feel the need to explain anything at all if everything is already so “rosy and sound” in the real estate markets in Canada?
12) International immigration into BC down for the first time in over a decade, so now who to blame for perpetually higher prices? Americans wanting a piece of that lovely frozen tundra due to disposable incomes being much greater than Canadians and a USD that is worth 25% more than the CAD? I think not, although this is the new CREA game they’re selling Canadians.

That’s right… Nothing to see here folks. Move along. Shiny, pretty, sparkly over here! Look, really, over here! Stainless steel and granite countertops! Surely these items quadruple a home’s value! LMFAO

#144 Godth on 06.04.15 at 10:51 am

Interesting discussion (the video) – “the end game”, “this is how it always ends, whether it was Rome, Ming Dynasty or Zimbabwe”…
Why Did These Former Fed Members Admit Mathematically, Logically, & In Reality: “It’s Over”?
http://www.zerohedge.com/news/2015-06-03/why-did-these-former-fed-members-admit-mathematically-logically-reality-its-over

#145 Dup on 06.04.15 at 10:57 am

The current DOW bull market will probably end around 2019 looking at the long term graphs… I believe there is a lot of time to still make money in the market.

#146 Leo Trollstoy on 06.04.15 at 10:58 am

If you really believe that, then you should try selling. How can you claim it is a ‘fact’ if you haven’t actually sold?

Same as how you claim financial knowledge without having any money. ;)

#147 Realtor007 on 06.04.15 at 10:59 am

#71 John Maclean on 06.03.15 at 10:28 pm

Sorry to hear you made the mistake of selling, unfortunately many have made the same mistake and they are looking once again, some sold several years ago just to watch the market increase as they pay down someone else’s mortgage.

The best thing to do is buy another place with 20% down and invest the rest. Being a freelancer could be a problem getting a mortgage now, mortgage rules are far tighter for self employed then they were several years back.

#148 Leo Trollstoy on 06.04.15 at 11:00 am

Would the BoC need to lower rates if the US Fed raises in September? Both would result in driving our dollar lower…

Our dollar will follow our economy.

Into the toilet.

#149 Leo Trollstoy on 06.04.15 at 11:02 am

Type in “Canadians retirement” in Google and this is what you get:

Because the news media knows that retirement doomer stories pull more readers.

Nobody reads articles about retirement success stories. It makes readers feel bad.

‘Journalism’ 101

You’re welcome.

#150 H on 06.04.15 at 11:05 am

Garth

Looks like the IMF now sees the us economy the same as I have been mentioning for months now.

These economists you often quote;do you pick the ones who are on one side of the line?

There are plenty of economists who clearly see the US in trouble. Outside the jobs (which can be debated as false) there is NOTHING looking good.

But wait, what about cars? At 84 month terms, I am sure you can sell a car to anyone breathing.

Oh well, I guess the last holdouts will repeat “September” then change to 2016.

The US is not ‘in trouble.’ If yo wish to worry about an economy, pick ours. — Garth

#151 just nej on 06.04.15 at 11:10 am

RE: #25 praire person

this is exactly what i’ve been thinking…the people around me in my suburban kw neighbourhood carry so much debt it’s nuts…we rent a 5 year old 4 bedroom house for 1300.00 a month, way less than if we bought in this area and carried the mortgage, we’ve crunched all the numbers…and we save about 800/month which we invest… our neighbourhood was hit hard with job losses at rim and other tech companies…my next door neighbour is delivering flyers/newspapers every morning at 5 am…no joke…400,000 mortgage and he’s delivering flyers…there are lots of people who are on the edge, who were flying back and forth to the oilfields, who were working in smaller manufacturers that have closed in kw, or who are working part-time…there are dancing with lines of credit to keep it all going…but what happens after that? in blogs, comment sections, mainstream media i see little discussion of the ‘average’ family … the REAL average family, the family with a couple of kids, both parents working, lots and lots of expenses and a boatload of debt… it’s like they are invisible to the media….but their numbers are huge…they are typically massive consumers and spenders and when they are maxed out what happens?

as you said praire person – something is missing from this equation…..

#152 Mark on 06.04.15 at 11:12 am

“Same as how you claim financial knowledge without having any money. ;)”

Talking about yourself again I see?

#153 bdy sktrn on 06.04.15 at 11:16 am

#111 Vanreal on 06.04.15 at 12:39 am
Mark. I have to say that I worry about your sanity. I can tell you for a fact that my house in east vancouver has increased by over 40 % in the last 2 years.

———————————————-
he is beyond delusional in his ‘sales mix’ foolishness.

got a realtor friend, he let me use the search system. ( can see ALL solds since 95)

went to check the last 2 years data for comm dr area
and i was shocked. totally.

i thought your 40% may have been a stretch.

for bare land value it’s closer to 50+

in 2013, this time of year, ALL the teardowns in this hood went (sold) for 700-750k (there are many)

in 2015 the same size lot, same street, same block are SELLING for 1.1 to 1.2.

thats a 58.6% increase on avg for the SAME PROPERTY.

the sales mix must be lowering the averages as it is mostly teardowns getting sold!

i know this will not change mark’s mind, but the truth is the truth.

wanting the present to be different from what it is makes one unhappy and messed up.

#154 pwn3d on 06.04.15 at 11:17 am

What a time to be a homeowner! How can you people keep denying the facts in front of your face? Go read the treb report. Overall sales are up 6.3%, overall prices are up 11.1%, dom is down 14.3%, and active listings are down 10.1%. Toronto is in a huge bull market and has been for many years.

Now, a realtor might say buy now or forever be priced out, but I disagree. If you were waiting because you couldn’t afford it then I would say don’t buy ever, as you already missed that boat. Stick with renting and investing.

#155 bdy sktrn on 06.04.15 at 11:20 am

#85 Made in BC

“People still eat at the KEG? Sorry but $28 for a hunk of meat, a couple boiled veggies and an onion ring is beyond ridiculous.”
—————————–
28 for a steak at the keg? laughable.

looked at the menu lately? try $35-40.

for 28 i think you can get a chicken leg.

#156 pwn3d on 06.04.15 at 11:20 am

#145 Leo Trollstoy on 06.04.15 at 10:58 am
If you really believe that, then you should try selling. How can you claim it is a ‘fact’ if you haven’t actually sold?

Same as how you claim financial knowledge without having any money. ;)
——————-
Not his fault, he used to have money but followed his own advice and now he has none.

#157 Mark on 06.04.15 at 11:26 am

“So a lot of these groups do what they know, sink it into big houses and these house are inter-generational assets. 3 generations may live there at a time and the home likely gets willed to the kids. Sometimes two entirely separate families will occupy one house. “

I don’t think anyone doubts that certain ethnicities of Canadians have a higher propensity for real estate ownership than others. Previous cultural experiences with fiat money, the stock market, etc. may have something to do with this.

But the bottom line is that, whether they’re of Asian, European, or even native Canadian descent — they’re Canadians. And the money being used for purchases is not brought to Canada from foreign lands, but is rather being borrowed from Canadian banks who in turn borrow it mostly from Canadians.

Actually what you appear to be arguing, with multiple generations under one roof, is that certain ethnicities perhaps consume less real estate per capita than ‘born and raised’ Canadians. Less consumption should over time suppress prices. So if Canada as a whole adopted household density more typical of these multiple generation families, prices would absolutely crash on account of reduced per capita RE consumption.

First of all, investing in equities is a very WASP thing.

I guess the most recent Chinese stock market boom, has been lost on you. Investing in equities, ie: business ownership, is a worldwide thing crossing all ethnicities, languages, and religions. The environment in some countries is a bit more vibrant than others, but a “WASP” thing? Couldn’t be anything further from the truth. Once Canada’s stock market starts doing well, Canada’s currently RE-focussed speculative crowd — the ones that survive the current RE downturn, both white and brown, will be there bidding things up just the same.

#158 Victoria - the original on 06.04.15 at 11:27 am

We bought a house in Leaside in 1996 for 300,000 – it was a really pretty house on a busy street. 3 bedrooms, small kitchen – lack of closet space. 1 bathroom upstairs, 1 bathroom in the basement. we did renovations because it was very dated with 70s stuff. Painted the cupboards – re – did the basement, pulled out purple carpet etc. Sold it 6 years later for over 600,000. I just sold for 1.1 million and nothing has changed. A friend sent me the listing. Same paint job same everything – this is crazy.

#159 bdy sktrn on 06.04.15 at 11:44 am

ps; im still logged in if anyone wants 604 sold data just give the address or mls#

#160 };-) aka Devil's Advocate on 06.04.15 at 11:46 am

The market goes up. The market comes down. But, overall, it never comes down so much as it goes up.

This too shall pass.

SHIFT happens… learn to ride the tide.

};-)

#161 Mike T. on 06.04.15 at 11:53 am

200 000 jobs 15 out of 16 months means a lot more than an IMF tagline
get a clue man

I guess there is no app for that…..ideas brewing….

#162 bdy sktrn on 06.04.15 at 11:58 am

Well if a British Engineer says so then it must be true :)
——————————
i’m fairly sure that a UK kilowatt is the same as a US kilowatt.

this is not rocket science.

I have been using a solar/battery off grid system for about 5 years. It’s VERY VERY expensive compared to BC hydro.

If I wanted to run the same capacity system with those new tesla batts, i could, but the batts would cost 5x what i pay now(lead acid). Sure they MAY last twice as long (but highly unlikely) but even then they would be 2.5x the cost of regular batteries.

oh well, nothing like selling to the masses who haven’t a clue what a Watt is.

#163 Nemesis on 06.04.15 at 12:05 pm

#PostManPatAlwaysRingsTwice,Or… #WouldYouLikeSomeMoreAusterity… #WithYourPrivatization?…

[BBC] – Royal Mail stake to be sold off, George Osborne announces

…”The government’s remaining 30% stake in the Royal Mail is to be sold and £3bn cut from government spending this year, George Osborne has said…

…The government is committed to clearing the deficit by 2018/19 without increasing income tax or VAT, something Mr Osborne said would not be “easy”.

He needs to find a further £30bn of savings over the next three years, including £12bn to come out of welfare spending and £13bn from cuts to government departments.”…

http://www.bbc.com/news/uk-politics-33004664

#FromForceMajeureToFastForeclosure,Or… #”AdviceYouCanBankOn?”…

[CBC] – RBC threatens ‘Fast Foreclosure’ to seize Port Coquitlam home: Man hit by misfortune now could lose his home of almost four decades because of bank’s “hard-nosed approach”

…”Normally, the bank would give a homeowner six months to find funds before foreclosing.

RBC has instead applied to BC Supreme court to request Philbrook be given just 24 hours, before the condo can be listed by a real estate agent — Philbrook would be kicked out upon sale of the home.

This, despite the fact Philbrook found a stable, full time job last November — and has pledged to pay back approximately $500 a month.”…

http://www.cbc.ca/news/canada/british-columbia/rbc-threatens-fast-foreclosure-to-seize-port-coquitlam-home-1.3099202

#CouldBeWorse….

[WAPO] – The fascinating connection between how much married people make and how likely they are to cheat

…”It turns out, according to the study in this month’s issue of the American Sociological Review, that husbands and wives cheat more when their spouses make a lot more money. In other words, husbands and wives are less likely to cheat when they are both contributing equally to the household’s earnings.”…

http://www.washingtonpost.com/blogs/wonkblog/wp/2015/06/04/the-fascinating-connection-between-how-much-married-people-make-and-how-likely-they-are-to-cheat/?hpid=z5

#PublicServiceAnnouncement… #ForOkieHouseholders…

[PentictonHerald] – 3,200 Jehovah’s Witness delegates attending Penticton Convention

…Convention spokesman Peter Matkovich said this year’s theme is “Imitate Jesus!” and Friday’s keynote addressed is entitled “Concealed in Him are all the treasures of wisdom.”…

http://www.pentictonherald.ca/news/article_f3c0a73a-0a4b-11e5-afee-2399ba2035eb.html

#BonusTreasuresOfWisdom…

http://tinyurl.com/nbf49fh

#164 Grantmi on 06.04.15 at 12:08 pm

#144 Dup on 06.04.15 at 10:57 am

The current DOW bull market will probably end around 2019 looking at the long term graphs… I believe there is a lot of time to still make money in the market.

Yup! another 4 more years of UP UP UP!!!!

whose duping who, Dup!

LOL

http://screencast.com/t/iSI3Y7akrO

#165 bdy sktrn on 06.04.15 at 12:09 pm

Nonfarm productivity fell at a 3.1 percent annual rate instead of the previously reported 1.9 percent pace, leading to a jump in labor-related production costs. This was the first back-to-back fall in productivity since 2006.

http://finance.yahoo.com/news/us-stocks-u-stocks-edge-154918347.html

#166 Mark on 06.04.15 at 12:18 pm

Just in case anyone doubted the willingness/ability of Canadian banks to rapidly exercise their right to convert a defaulted mortgage to cash:

http://www.cbc.ca/news/canada/british-columbia/rbc-threatens-fast-foreclosure-to-seize-port-coquitlam-home-1.3099202

“The 58 year old is facing a “fast foreclosure” — a procedure in which a bank requests foreclosure in 24 hours rather than several months — by the Royal Bank of Canada on his home of 36 years, after he fell on hard times. ”

As I’ve written many times in the past, far easier/more profitable for the banks to foreclose and take the CMHC up for the underwater balance than it is to work with customers on loan modification and/or repayment plans.

#167 Joe2.0 on 06.04.15 at 12:19 pm

Here’s how it works Coles notes.
1-banks do whatever they can to promote lending.
2-banks leverage loans via derivitives..
3-banks unethical practices create financial havoc.
4-banks via FEDS cheap money continue to lend.
5-banks cheap money results in housing prices to rise almost globally.
6-banks need to create an environment that will appear to balance the ledgers.
7-banks (fed)continue to print and devalue the dollar.
8-prices go up but the value of money down.
9-the day of reckoning comes markets crash and the banks balance the books.
10-rinse and repeat.

#168 Bby604 on 06.04.15 at 12:19 pm

June , September, now calls are for December …..

Isn’t this game fun ?

#noratehikecoming

#169 Leo Trollstoy on 06.04.15 at 12:22 pm

in 2013, this time of year, ALL the teardowns in this hood went (sold) for 700-750k (there are many)

in 2015 the same size lot, same street, same block are SELLING for 1.1 to 1.2.

This sounds about right. My friend bought 2 years ago for $750k and he just listed for $1.1m. He’s got balls. I could never buy real estate in a market like Toronto.

#170 bdy sktrn on 06.04.15 at 12:34 pm

more on marks ‘sales mix’…

just checked prices on large(50′) lots for 2013 to 2015

there are 2 just around the corner, they back onto each other.

SOLD prices.

2013 fall – 1.25m
2015 spring- 1.538888m (yes really)

1.5 years almost a 300k gain

both lots have 2 new detached under construction on now 25’ lots – one is listed at 1.4m each.

#171 Andrew on 06.04.15 at 12:36 pm

Garth,

As the expert on the TFSA as you are, do you have any idea what TFSAs mean for the million+ Canadian-Americans? Are they still a good place to put our money? Or will the IRS boogeyman come to take it all away?

#172 Henry Rearden on 06.04.15 at 12:37 pm

Interesting. Greenspan and co. on interest rate rises: https://www.youtube.com/watch?v=pfpEHwARhvc&feature=youtu.be

#173 bdy sktrn on 06.04.15 at 12:45 pm

but don’t buy a poco condo!

can you spot the sins of garth?
——————————-
By the 1990’s, Philbrook had paid off his Port Coquitlam condo and was planning for his retirement.

He decided to remortgage*** to buy a recreational property*** with relatives*** on Pavilion Lake, between Lillooet and Cache Creek, 300 kilometres northeast of Vancouver.

But in 2011, Philbrook was laid off from his job of 23 years. He burned through $40,000 from his RRSP*** to keep paying his condo mortgage, but then fell behind and into debt.***

That’s when disaster struck.

——————-
it gets much worse…
http://www.cbc.ca/news/canada/british-columbia/rbc-threatens-fast-foreclosure-to-seize-port-coquitlam-home-1.3099202

#174 Cici on 06.04.15 at 12:58 pm

Word of warning to the great indebted: losing it all is easier than you think

https://ca.news.yahoo.com/rbc-threatens-fast-foreclosure-seize-133414984.html

#175 Debtfree on 06.04.15 at 1:04 pm

RBC threatens ‘fast foreclosure’ to seize Port Coquitlam home. Title of CBC bc article .
I did not know that the banks had two options for foreclosure (or maybe more ) fast or slow . Guys life is like a disaster movie .

#176 Jacko McTavish on 06.04.15 at 1:11 pm

Bonds gutted. Traders routed. Returns lost. Safety Lost. Balance unbalanced. All Good news for a stock picker. Where will all that money go? Methinks into prime dividend payers….like the rock hard financial stocks.

http://business.financialpost.com/investing/bond-rout-wipes-out-years-gains-as-trader-stay-glued-to-screens

Bond prices fall as yields rise. Is this not what I have been warning people about for a year? — Garth

#177 Mark on 06.04.15 at 1:13 pm

“2013 fall – 1.25m
2015 spring- 1.538888m (yes really)”

Is that the best you can come up with, lots that are roughly 6-7X the median Canadian price (~400k, and figure half of that is land value)?

That CIBC report I pasted earlier clearly found that there were some gains in the very high end category. Examples of which you cite. However, that has nothing to do with the average identical house not having appreciated in the past few years. And most Canadians, most GTA/GVR residents own housing more closely resembling the average. Not housing at the extremities of pricing, which, given the amount of housing in the GTA/GVR, is relatively rare.

#178 bdy sktrn on 06.04.15 at 1:31 pm

#179 Mark on 06.04.15 at 1:13 pm
“2013 fall – 1.25m
2015 spring- 1.538888m (yes really)”

Is that the best you can come up with, lots that are roughly 6-7X the median Canadian price (~400k, and figure half of that is land value)?
——————————————

no, all of it is land value. did you miss the ‘tear down’ part?

and the discussion is houses in ‘vancouver’ not the GVA, where these are in a rather grimy, lower end area compared to the city in general. ham owns the west side market.

#179 Mike in Surrey on 06.04.15 at 1:35 pm

Three Families I know of in Greater Vancouver Sold and Buy another house; sold a condo then buy house, sold townhouse then buy house. Just last weekend a couple want to build new on their old timer property. We’re constantly trading each other houses, and adding value to our homes. And it doesn’t seem that they’re sacrificing their lifestyle.

#180 bdy sktrn on 06.04.15 at 1:37 pm

lots that are roughly 6-7X the median Canadian price (~400k, and figure half of that is land value)?
——————————————

no, all of it is land value. did you miss the ‘tear down’ part?

——————-
correction ; half of the 400 . read your intent wrong. my bad.

vancouver land is still shooting upward regardless.

#181 Squirrel meat on 06.04.15 at 1:51 pm

How did that work in Ontario!…

http://news.nationalpost.com/news/canada/canadian-politics/notley-looks-to-ontario-as-she-gets-ready-to-phase-out-alberta-coal-plants-and-offer-subsidies-for-solar-and-wind

#182 DisgustMadeMePost on 06.04.15 at 1:56 pm

#182 bdy sktrn on 06.04.15 at 1:37 pm

2996 e 8th avenue…

when was last sale and for how much?

Thanks

If you’re still on site…

Was sold less than a year ago in about 1 day for i think 900$?

Then relisted a few months later.

#183 bdy sktrn on 06.04.15 at 1:57 pm

her turnernation you sure about that bull?

and oil seems glutty today too.

#184 Shortymac on 06.04.15 at 1:59 pm

My husband works in the construction industry (Concrete/Soil Testing) and usually summers are crazy busy for him.

This summer is different, there is basically no local work coming in to his lab. His lab does get international work but we’re still concerned.

I wonder what the coming years will be like for the housing market, the the fact that my hubby and I make 100k combined and we’ve been priced out of the market is very telling, I don’t know how others are doing it.

#185 bdy sktrn on 06.04.15 at 2:00 pm

the giant ‘conehead batman’ on this http://finance.yahoo.com/echarts?s=%5EDJI+Interactive#{“showArea”:false,”lineType”:”line”,”range”:”3mo”,”showPrePost”:false} may have been the (pre correction)top.

or is that the gleaming top of smokeys dome?:)

#186 DisgustMadeMePost on 06.04.15 at 2:16 pm

Michael Moore’s movie Capitalism was on last night. Never saw it before. Fascinating. And so timely to the discussion.

What would prompt RBC to go for a speedy foreclosure?

Trying to beat the other guys to any available CMHC funds??

Canadians aren’t usually that heartless, no?

Wonder if it will scare the crap out of others living on the edge.

#187 Since 2007 on 06.04.15 at 2:28 pm

Interest rates are not rising anytime soon… There is no treat of inflation at all…only threat is deflation.

Don’t tell me a couple of quarter percentage rises in a year or two is interest rates rising… its an rounding issue in the grand scheme of things.
Also the rates will go back down , as soon as the economy even thinks about stagnating….

#188 Nagraj on 06.04.15 at 2:34 pm

Re #175, 176, 177

Big headline story on the CBC: “Mean banksters torture poor old man!”

Subheadline: “Evil ins co fails to pay up, cites Act of God!”

Evidently “our national broadcaster” got involved, to help out, and I imagine the phone conversation went like this:
CBC: We, on behalf of all good Canadians, want you to be soft-nosed, not hard-nosed, about foreclosing on this guy’s condo.
Bank: He’ll never be able to pay up.
CBC: We, representing all decent Canadians, prefer your foreclosures to be slow not fast foreclosures.
Bank: He’ll never be able to pay up.
CBC: But he suffered an Act of God!
Bank: We do God’s work.
CBC: We’ll trash you in the press.
Bank: OK, we’ll give him a few more days.
CBC: Thank you.
Bank: Why don’t you pay his debt off, eh?

#189 bdy sktrn on 06.04.15 at 2:42 pm

in vancouver…

the west side has become the ‘international’ side of town , recent asian influence is just the cherry on top of decades of hot”-ish” money from world wide. the 250K+ set has to contend with the offshore demand with shrinking supply.

the formerly shunned east side is now the ‘domestic’ side. great ppl from the world over came here with sweet bupkis, hustled. worked smart and hard, started families and made their cash in canada. most bought houses and won big. along with native cdns who wanted the hell out of dartmouth or ottawa or salmon arm who want to live in the city yet have a family. sfh supply is crumbling before ones eyes as the teardowns accelerate.

only a worldwide recession/depression will melt away van’s values.

Pride goeth before the fall. — Garth

#190 Mark on 06.04.15 at 3:02 pm

“What would prompt RBC to go for a speedy foreclosure?

He had only $500/month to service a $115k debt. That can only, at best, sustain an interest rate of 5.2%, which is substantially below market for a subprime loan with those characteristics including being in substantial negative equity. With no prospect of being able to even collect market rates of interest from that borrower, it was obviously in their best interests to do the foreclosure, collect the deficiency from the CMHC, and move on.

The CMHC will get a judgement against him for the deficiency, and, at their discretion, can take action to enforce its claim. But its not RBC’s problem anymore. Which means there’s zero incentive for them to negotiate.

Get enough people like him mad, and maybe people will start electing politicians who are serious about growing personal income. Not merely the current clowns who are all about policy that does quite the opposite except for their cronies.

#191 TorontoBull on 06.04.15 at 3:02 pm

I must say that Realtor 007 makes some good points. I just read an OECD reportwhich says that “the rapid appreciation of property prices vis-a-vis consumption prices in Australia, Belgium, Canada, Spain and the UK has been a key factor leading to higher median wealth compared to other OECD countries”. And then, in Canada for the period of 1970-2013 annual growth rate in real prices for houses was 2.5% whereas it was 2% for stocks. Source: “In it together. Why less inequality benefits all”. page 246
So there you go, you were better off to invest in property in 1970 than in stocks.

Incorrect with a balanced, diversified portfolio. — Garth

#192 Mike S on 06.04.15 at 3:09 pm

“Get a realtor to assist you. Prepare a personal package with credit score, references, resume. Invest the cash in a proper portfolio. And why didn’t you start this process the day you got an offer? The problem isn’t renting. It’s probably you. — Garth”

Not sure where is the original writer from. In GTA there are plenty of condos to choose from (never checked apartments, but I’m sure it is OK)

For houses, there is lot’s of quality choice in the higher range, and somehow less choice in the mid range (townhouses), but nothing that a realtor won’t solve

Anyway, selling a house (and presumably) making a good profit but being cheap about paying a realtor is weird

#193 Josh in Calgary on 06.04.15 at 3:22 pm

#194 TorontoBull,
“in Canada for the period of 1970-2013 annual growth rate in real prices for houses was 2.5% whereas it was 2% for stocks. Source: “In it together. Why less inequality benefits all”. page 246
So there you go, you were better off to invest in property in 1970 than in stocks.”
—————-
A great superficial analysis of a complex problem. First of all, stocks pay dividends which you have failed to capture by just looking at price. Houses have carrying costs (maintenance, taxes, insurance, etc).

Finally you have failed to take into account that the “price” for today’s houses is not the same mix as in 1970. In 1970 people often lived in 1000 sq ft homes. Today they make homes WAY bigger. So to do a proper analysis you would have to look at the price increase on a group of unrennovated homes (or include the renos on the cost side).

It doesn’t matter how you slice it. Homes are a place to live. Not an investment. If you enjoy owning your own home and are ok with the extra costs involved over and above renting, then fine. But let’s stop pretending it’s a money making venture outside of periods where falling interest rates and de-regulation cause it to go up faster than normal.

#194 jess on 06.04.15 at 3:38 pm

from 2007? so this sort of thing doesn’t happen here right?

Department of Justice
U.S. Attorney’s Office
District of New Jersey
FOR IMMEDIATE RELEASE
Thursday, May 28, 2015

Two Canadian Men Admit Roles In $17 Million Microcap Stock Manipulation Scheme

NEWARK, N.J. – Two Canadian men have admitted their roles in a stock market scheme that artificially inflated the stock price of two publicly traded companies through manipulative trading and other fraudulent means, U.S. Attorney Paul J. Fishman announced.

Michael Taxon, 52, of Toronto, Ontario, Canada, and Itamar Cohen, 52, of Thornhill, Ontario, Canada, each pleaded guilty before U.S. District Judge Jose Linares to separate informations charging them with conspiracy to commit securities fraud. Taxon entered his plea today and Cohen entered his plea on May 27, 2015.

============
straw buyers

‘Ricks was among 11 defendants charged in July 2012 with conspiracy to commit wire fraud and conspiracy to commit money laundering. Ricks and others located oceanfront condominiums overbuilt by financially distressed developers and negotiated a buyout price with the sellers. They then caused the sales prices for the properties – located in Wildwood Crest and North Wildwood, New Jersey, other locations in New Jersey and in Naples, Florida – to be much higher than the buyout price to ensure large proceeds. Other defendants helped conceal the true sales prices of certain properties through inflated sales contracts and sale and finder’s fee agreements.

Ricks and others recruited straw buyers to purchase certain properties at the inflated rates. The straw buyers had good credit scores but lacked the financial resources to qualify for mortgage loans. The conspirators created false documents, such as fake W-2 forms, pay stubs, bank statements and investment statements, to make the straw buyers appear more creditworthy than they actually were in order to induce the lenders to make the loans.

Ricks and others also caused fraudulent mortgage loan applications in the name of the straw buyers, including the supporting documents, to be submitted to mortgage brokers that the brokers knew were false. Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with real estate closings, Ricks and others received a portion of the proceeds after conspirators had funds wired or checks deposited into various accounts they controlled…”
http://www.justice.gov/usao-nj/pr/essex-county-new-jersey-man-sentenced-seven-years-prison-role-15-million-mortgage-fraud
——————

Tuesday, June 2, 2015
Three People Sentenced Prison For Their Roles In $15 Million Mortgage Fraud Scheme

———————————-
Thursday, May 28, 2015
on a large scale
Former Loan Officer Admits Role In $6 Million Mortgage Fraud Scheme

#195 bdy sktrn on 06.04.15 at 3:42 pm

#184 DisgustMadeMePost on 06.04.15 at 1:56 pm

2996 e 8th avenue…
—————
not showing, address correct?

about an even mil for others in the block

#196 bdy sktrn on 06.04.15 at 3:47 pm

#184 DisgustMadeMePost
found it 9even

#197 TorontoBull on 06.04.15 at 3:51 pm

@196
Note that this is not my analysis but OECD’s. It is difficult argue that this organization is biased towards realtors though.Please contact them with your concerns…
The point I was trying to make and didn’t get across is that for unsophisticated investors (the vast majority) investment in housing has been a better choice.
btw, I am not sure if the new housing stock is bigger than in the 70s, since condos(which represent a big chunk of new construction) continue to shrink in size. Yes, you have the mcmansions but they are occupied by either the rich or the multigenerational households (eg Brampton).

#198 Realtor007 on 06.04.15 at 3:52 pm

It is not ‘stocks’ vs a ‘house’, as much as you realtors like to make that contrast. Everyone needs liquid assets and a balanced portfolio has a minority of exposure to large equity markets. You are being disingenuous. Big surprise. — Garth

You have said many times that people are too risk averse hence their lack of interest in the markets, so yes, it’s RE vs stocks, if people were as comfortable with the markets as they are with RE then we wouldn’t be having this conversation.

#199 Timing is Everything on 06.04.15 at 3:58 pm

Spring 2016:

President “Bobby”: Mr. Gardner, do you agree with Ben, or do you think that we can stimulate growth through temporary incentives?
[Long pause]
Chance the Gardener: As long as the roots are not severed, all is well. And all will be well in the garden.
President “Bobby”: In the garden.
Chance the Gardener: Yes. In the garden, growth has it seasons. First comes spring and summer, but then we have fall and winter. And then we get spring and summer again.
President “Bobby”: Spring and summer.
Chance the Gardener: Yes.
President “Bobby”: Then fall and winter.
Chance the Gardener: Yes.
Benjamin Rand: I think what our insightful young friend is saying is that we welcome the inevitable seasons of nature, but we’re upset by the seasons of our economy.
Chance the Gardener: YES! There will be growth in the spring!
Benjamin Rand: Hmm!
Chance the Gardener: Hmm!
President “Bobby”: Hm. Well, Mr. Gardner, I must admit that is one of the most refreshing and optimistic statements I’ve heard in a very, very long time.
[Benjamin Rand applauds]
President “Bobby”: I admire your good, solid sense. That’s precisely what we lack on Capitol Hill.

#200 TurnerNation on 06.04.15 at 4:12 pm

Bdy sktrn I place 5-8 trades each week. Nimbly.
As the saying goes “Trade what you see not what you think.”

#201 Julia on 06.04.15 at 4:14 pm

Interesting:

http://www.thestar.com/news/gta/2015/06/04/if-only-you-had-bought-these-toronto-houses-in-1915.html

#202 Why bother? on 06.04.15 at 4:16 pm

#1 TurnerNation on 06.03.15 at 6:25 pm

Dollarama stock on a tear again. Symptom of a down (economy)?
#7 TurnerNation on 06.03.15 at 6:44 pm

The Keg came out with new menu with higher prices. KEG.UN yield almost 5%, stock is at highs.
Viva low to mid market.
I’d never eat at a 5 star place. Only for liquidity.
——————–

Sure lots of pumping here

#203 JSS on 06.04.15 at 4:18 pm

Garth – can you please phone this guy and give him some advice…soon…

http://www.cbc.ca/news/canada/british-columbia/rbc-threatens-fast-foreclosure-to-seize-port-coquitlam-home-1.3099202

#204 James on 06.04.15 at 4:19 pm

Garth,

It’s not like 100% of the float trades every day on any given stock. You take the last trade as representative of the level you would sell your holdings at when you’re valuing it. I don’t think your point about the housing ‘trades’ occurring this month not being representative of the market is valid.

#205 MF on 06.04.15 at 4:23 pm

#200 TorontoBull

I don’t come on here to become an unsophisticated investor, I come on here to learn.

The reason why this market is doomed is just as you say, most people are dumb. Toronto being number one on the list there.

#196 Josh in Calgary

You are right but stocks require doing some research by actually reading books and learning. Most people are incapable of doing that and are easily manipulated. People learned that lesson down south. I think we will learn that at some point too, we just are not there yet.

MF

Solution: don’t buy stocks. — Garth

#206 MF on 06.04.15 at 4:30 pm

#201 Realtor007

I agree. No one trusts the stock market. Someone above surmised that certain ethnic groups may be more comfortable with the fluctuations in their net worth that stock market swings bring.

With a house, you constantly just assume you are making money and going up.

However, I am not interested in feeling warm and fuzzy always. I am more interested in being smart with my money. I think if done right the stock market can be more lucrative than RE, especially Toronto RE which is highly overvalued.

MF

#207 MF on 06.04.15 at 4:38 pm

Solution: don’t buy stocks. — Garth

You are right Garth.

My sentence was not edited properly. It was in reference to the US housing collapse, and how many were easily manipulated by the real estate industry. I believe the same thing is happening here.

MF

#208 Calgary Rip Off on 06.04.15 at 4:51 pm

“The problem isn’t renting. It’s probably you.” — Garth

Very very easy to post one sided arguments by anyone. What is harder is a balanced view with the honesty to say may not apply to everyone.

Renting and mortgage ownership-both are lame. But you must live somewhere. In Calgary renting and mortgage, about the same. So the variables that are personally decided such as age to retirement and mobility, not costs, decide.

Either way chances are high that you will have to have a job dealing with people that assume you think as they do and want to talk all day long about boring things. There are some coworkers that may be interesting, but 80% are not likeable. You determine whether your life is wasted on rent or a mortgage, unless you win the lotto and are fortunate enough to confirm the ticket, disconnect the phone, and then never have to listen to another stupid coworker ever again.

#209 Entrepreneur on 06.04.15 at 5:03 pm

Anyone noticed PM Stephen Harper speech on updating biometric screening to all foreigners coming into Canada. He also said “who they are say they are…fake name, fake document but can’t fake fingerprint” or something similar. Wonder if this has any impact on the crazy housing in Vancouver/Toronto or does anyone worry about about foreign ownership in these areas? Legal or illegal.

#68 TRT…for Vancouver: Victoria, ferry expense; Winnipeg, Montreal, Regina, snow; Ottawa, snow & close to the Parliament. As for Toronto, how much does it rain, snow & open to variety.

#210 TCContrarian on 06.04.15 at 5:07 pm

Just listed my house in YVR (Fraser Valley). Hoping for an intense bidding war so that I can get even more than listed.
No more debt; limited relationship with banksters…
As Garth says, “liquid and mobile”. I may even take a vacation to some exotic place (any suggestions?). Only questions is: do I bring my wife? :-)

Do you enjoy breathing? — Garth

#211 espressobob on 06.04.15 at 5:18 pm

Hopefully in future generations that are hybridized, can look back on our time period and with great laughter wonder what racism was all about?

It’s our ignorance.

#212 raisemyrent on 06.04.15 at 5:33 pm

stop focussing on the foreigners. no one talks about the Indians in Surrey; why no bubble there? (see what i did there?)

overheard a payroll worker today talk about how her daughter is trying to buy a place but they keep coming off the market before they even make it to the listing. we’re in greater Vancouver but I suspect some suburb for this one. “so it’s a good time” was the conclusion I overheard. to buy, to sell? who knows. real estate is crazy was the overall tone I heard. the daughter can’t be over 25. bank of mum I suspect. she’s a server at one of those franchise restaurants people think are high-end. you know it’s not right when you are looking at a mortgage on that kind of a job. but hey, it’s the chinese’s fault. everyone keep trooping. nothing to look at here.
now NDP says maybe we need a refinery. Like Garth said, simple solutions to complex problems get votes, but not results. sigh…

Smokey, sign me up for a book mate, I’m happy to pay full value though.

#213 Mark on 06.04.15 at 6:32 pm

“And then, in Canada for the period of 1970-2013 annual growth rate in real prices for houses was 2.5% whereas it was 2% for stocks. Source: “In it together. Why less inequality benefits all”. “

Sounds about right. However, roughly 30 of the 43 years or so in the study were in a falling long-term interest rate environment. So there are more years of falling rates than there are years of rising rates. Thus biasing RE prices upwards relative to stocks.

Its no secret that the equity risk premium in Canada has been quite poor. Almost negative in many significant periods since 1980.

This makes investing in equities all that much more attractive — eventually, and probably in a rising rate environment, the equity risk premium will re-emerge. And probably re-emerge with a vengeance.

Canadian boomers got rich off of investing in bonds and real estate. Those who held disproportionate levels of those assets since 1980 have been rewarded with above-average returns. Might Canadian millennials get rich off of holding the opposite to such — stocks and gold?

As it stands today, there is almost no investor enthusiasm for Canadian equities. The largest and best long-term performing mutual fund in Canada, XIU, hasn’t grown its unit issuance in over a decade. The cash dividend yield of the TSX is now significantly in excess of the yield on 10-year and 30-year GoC bonds — something which hasn’t occurred in a generation! Buying a TSX index fund on margin is instantly cash flow positive, and that’s with payout ratios in the mid 30%-range of earnings.

#214 The American on 06.04.15 at 8:43 pm

At #140: Henry, Hot Asian Money is not in the least driving the Seattle market at ALL. The article you provided is for the Globe & Mail, a Canadian “news” source, largely funded by real estate ads and marketing campaigns. It’s just one way to make Canadians believe the bullshit Hot Asian Money story they’ve been pumping for years up there. What is driving the Seattle market is an explosion of JOBS, much in part of the global expansion of Amazon.com, biotech companies, Expedia.com, Starbucks, Nordstrom, tech companies, and new divisions within Microsoft.

#215 The American on 06.04.15 at 8:48 pm

At #140: Henry, also keep in mind the source providing the bullshit information in that so-called “news” story was coming from Dean Jones (see article), a Canadian who now lives and Seattle and does his best to use Canadian-esque sales tactics to move property, ie HAM. This story was never reported in Seattle, and I can assure you o Seattleite has ever heard of this movie. What a sad state of affairs that Globe & Mail is now obviously being approached by these RE roaches from Seattle, albeit still Canadian mind you, to help prop this false notion. I suppose it somehow provides a sense of validation to the readers that what they’re being told within their own markets is true in the U.S., specifically Seattle – it isn’t.

#216 Linda on 06.04.15 at 9:20 pm

#60 Washed Up Lawyer – nope, not your sister Linda for sure. All the siblings live in Ontario. Regarding your question, pretty much any inner city ‘hood including Altadore & Windsor Park have seen quite a bit of redevelopment. So much inner city rebuild is going on the developers are crying foul to the city, because the developers in the inner city are not being assessed the same fees as the developers in greenfield, outer city limits are paying. The MGA (municipal gov’t act) does not permit acreage assessments to be collected twice on the same land, so inner city developers are making out like bandits. Sure, they may have to fork over as much as a million for that huge old lot, but if they can then build & sell two, three or more infills or a condo with four or more high end units on that big lot, well yeehaw & pull up the truck for the big wad of cash profits. The city is all for densification, because sprawl is expensive to maintain & if they can get those inner city ‘hoods back up to full capacity then property tax revenues will rise even as infrastructure is renewed (builders naturally have to renew or even replace the old water mains, sewers & so forth when they are ripping out the old & putting in the new). To the credit of all involved, the new builds are usually constructed to reflect neighborhood character, albeit to a much grander scale. Thing is, the market who wants to buy in the ‘hood likes the character, but wants the modern amenities & the smart builder caters to those who are buying.

#217 Ret on 06.05.15 at 8:40 am

Housing prices in Hamilton up ,up, up!

http://www.thespec.com/news-story/5662351-home-prices-soar-in-hamilton-as-another-sales-record-set-in-may/

Everyone wants to live here!