Thrilling

DINNER modified

It was 1982. I wore cowboy boots, a tie wide enough to be a shirt and mutton chops so thick small animals thought of nesting there. Joe Reporter, with a daily column for a big-city daily paper. All over everywhere. My beat was money, and then (almost as now) that meant houses. Real estate was as hot as Farrah Fawcett. I was on it.

One day the shocking news broke that Canada’s major development company, Cadillac Fairview, was selling 10,900 apartment units in Toronto to some unknown, bit-player former mortgage-broker dude name Leonard Rosenberg, for $270 million. The spectre of massive rent increases exploded on the subsequent revelation that Rosenberg flipped the deal to some other no-name tin-star speculator named Bill Player, for $310 million.

Within days Player has flipped the massive portfolio to a few shady Saudi guys for $500 million, using financing obtained from some weensy trust companies Rosenberg had commandeered. The media went nuts. The government went ballistic. Rosenberg and Player vanished. The manhunt was intense. And then came word Ontario would take the unprecedented step of taking over the trust companies, tighten up rent controls and initiate criminal charges against the flippers.

This, I wrote the next morning, was draconian. No law was broken. Flips weren’t crimes. It was an example of politicians pandering to the great unwashed with laws bound to distort the market and lead to fewer people building rental units. Which, of course, is what happened.

Charged with fraud: Andrew Markle; left; Bill Player; centre; and Leonard Rosenberg are among seven men charged with 82 counts of fraud in connection with Seaway and Greymac trust.

So Rosenberg called me from some borrowed mansion in Palm Beach. “That took guts,” he said. “Come see me. I’ll give you the whole story. Tell no one. I’m sending a plane.”

The next night I was knocking back Scotch with the most wanted white-collar felon in Canada.

For those born after Abba, the whole idea of taxing speculation and flipping, of governments controlling housing costs and pretending real estate ownership’s a human right, is thrilling. Especially now, when the world has organized itself into the 1% and the 99%. Especially in Toronto again, and in Vancouver, where detached houses in the core long ago saw a $1 million tag in the rear view mirror.

“Is there a need for a speculation tax in Toronto,” a media publication asked me yesterday. “How do you think it should work? What other options are available to government to cool the market, if that is what is needed?”

In YVR, this is turning into an obsession. Mayor Gregor Robertson – who recently made a $420,000 short-term killing in a house flip (albeit after his GF walked) – is grandstanding large. He demands  the province (a) create a speculation tax aimed at foreigners (Chinese, natch), (b) goose the land transfer tax to milk those buying luxury properties and (c) track the nationality of buyers and ensure investment properties are occupied, “in a timely fashion.”

The premier says no, but the finance minister says he’ll examine it all. In a city where property values have increased in windfall fashion, the mayor argues, “These measures would help moderate the excesses of the Vancouver housing market, without unfairly punishing those who have built up home equity through hard work and personal savings.” Of course, nobody’s real estate has actually gone up because of hard work and extra savings. Nor will taxing the Chinese or anybody buying a $5 million house make it any easier for the #DontHave1Million Millennials to secure a detached house.

The premier gets it. “Experts estimate that local investors are 3 to 4 times more active in the region’s housing market than foreign investors,” she told the mayor. As this blog has shown a few times, based on available data, foreign buyers are skinny market players – maybe 5% of YVR sales and just 1.6% in Victoria. That has not stopped realtors from creating the Yellow Peril meme, and using it with devastating effectiveness. BTW, real estate association economist Cameron Muir agrees with me. Off shore buyers? “Less than five per cent,” he says.

The premier added this: “Using any method of new taxation with the goal of driving down the price of housing could have the unintended effect of hurting current homeowners across the region.” Translation? The government doesn’t want lower prices. It would be suicidal in a region where the savings rate is negative and houses are a religion.

So, what to do?

First, nothing. The market will tip under its own weight as the population becomes even more pickled in debt. We’re entering years of rising interest rates and leaving almost a decade of historically-low ones. Even Monday’s housing starts – on top of the jobs stats Friday – guarantee no Bank of Canada cut, so we’re now at the bottom. Up from here with predictable consequences.

Second, stop trying to do something. With every ‘break’ given to make housing more affordable, it gets less so. Low mortgage rates bring higher prices. So does the 5%-down CMHC rule. Every first-time-buyer tax incentive, land transfer tax rebate or cash-back loan incentive adds to the value of houses. If politicians are serious about restoring house prices to levels average people can pay, don’t screw around with the market.

Third, shutter the Bank of Mom. More than any other single factor, this inter-generational transfer of housing equity is sustaining price levels, encouraging bidding wars and shutting out those with normal parents. We know that 42% of first-timers wouldn’t be buying now without the BoM, and absent that fuel, the fire would quickly burn out. Imagine how novel that would be – requiring buyers to actually have some of their own money. Just like the olden days when working people could afford houses. I’ll leave it to the evil minds at the CRA how to deal with this untaxed financial benefit.

In conclusion, we don’t subsidize people to buy cars, iPhones or puppies, all of which are about as essential as a house. We don’t pay a portion of people’s rent, either. And whatever government touches becomes more expensive and intrinsically less fair.

So, Rosenberg got a five year sentence, then moved to Florida and ran out of money.

Maybe someday there’ll be a statue of him in downtown Toronto. The father of modern rent control.

 

194 comments ↓

#1 TurnerNation on 06.08.15 at 5:39 pm

Yup this is not a bigarider blog. ..

#2 Mike S on 06.08.15 at 5:43 pm

Canada’s debt problem getting depressing

http://www.cbc.ca/news/health/debt-stress-affects-health-fuels-depression-1.3082449

Garth,
Thank you for all the good work you’ve been doing over the recent years

#3 Love my Kia on 06.08.15 at 5:51 pm

TSX is down quite a bit today I see…something to do with Harper’s announcement to get rid of fossil fuels?

Notley didn’t even tank the stock market like this when she was elected.

A 1.4% drop isn’t exactly a ‘tanking.’ — Garth

#4 JG on 06.08.15 at 5:53 pm

I remember those days well. I owned about 20 houses in Barrie when I was in my 20’s. Life was good. Walk into Allendale mortgages and a few hours later I was financed on my newest 3 or 4 purchases.
High interest rates in late 80’s early nineties is what killed guys like me. Bill Player and Rosenberg were gods.

Rosenberg was not only responsible for rent control, but he was also responsible for the average guy NOT to be able to buy / build/ create a trust company.

Remember Greymac Trust? :)

Damn Garth, I never got a free ride in his plane. You were a real “shooter” back then.

#5 LL on 06.08.15 at 5:54 pm

..”Third, shutter the Bank of Mom. More than any other single factor, this inter-generational transfer of housing equity is sustaining price levels, encouraging bidding wars and shutting out those with normal parents. We know that 42% of first-timers wouldn’t be buying now without the BoM, and absent that fuel, the fire would quickly burn out. Imagine how novel that would be – requiring buyers to actually have some of their own money”….

If Mom says no or doesn’t have the $$, why not borrow from the sub prime market? They will advance the down payment, no problem.

#6 LL on 06.08.15 at 5:58 pm

# 2 Mike S

…”Canada’s debt problem getting depressing”..

Buy share in pharmacies company…Prozac, Zoloft, etc…sales will be high and lawyers will do $$ too..lots of separation, divorce because money problem!

#7 Mike S on 06.08.15 at 6:00 pm

“Second, stop trying to do something”

I would continue tightening up the CMHC rules, a little by little

How does 10 yr amortization for less than 10% down sound?

#8 Mike S on 06.08.15 at 6:03 pm

“Buy share in pharmacies company…Prozac, Zoloft, etc…sales will be high and lawyers will do $$ too..lots of separation, divorce because money problem!”

Is that a society we are aiming for?

besides what’s wrong with balanced portfolio?
If I would be picking stocks there are much better oportunities …

#9 North Burnaby on 06.08.15 at 6:05 pm

In calculating for rental yield, would you include the equity portion of the mortgage payment or only the net cash flow?

Paying debt is not cash flow. — Garth

#10 JustMe on 06.08.15 at 6:05 pm

” We’re entering years of rising interest rates and leaving almost a decade of historically-low ones.”

——————————————————————–

So bonds should not be part of a balanced portfolio until interest rates return to normal? They seem to be as overpriced as Vancouver houses.

Of course you should have some bonds in a balanced portfolio, for the same reason as always – to mitigate equity volatility, plus add stability. Just go with shorter duration in a mix of governments, corporates, high-yields and real-returns totaling no more than 18% of the total invested. — Garth

#11 Bob Dog on 06.08.15 at 6:06 pm

Allow me to explain how you get $1.3 million homes in a city with an average salary of 50K. Imaging 10 people sitting around a table each with a piece of paper. Written on the papers is the number 200 representing 4x their salary. Every 15 minutes 2 random people point at each other and exchange their pieces of paper but before the exchange takes place they erase the current number and write down a slightly larger number. This goes on for days until all the papers have 1.3 million written on them. Nothing else has changed. They still have a 50K salary and the papers are a bit worn from all the erasing. They delude themselves into thinking the numbers are reasonable by looking out the window and smugly pointing at the pretty mountains that have been there for millions of years. Now the children of these 10 people enter the room and want to play but their papers all have 200 written on them representing 4x their salary. Obviously nobody will exchange papers with the children who become upset. The parents tell them to suck it up and go out and get 4 jobs. Save every penny you make until you have 1.3 million on your piece papers. Now another man walks in and he has 2 million written on his paper because he came from a country with a brutal communist dictatorship government that allows slavery. He had hundreds of slaves working for him and he only had to provide food and shelter. All the players see his number and instantly write 2 million on their papers and the game continues. Children throw a hissy fit and blame everything on the guy from china.

Link for Chinese slaves? — Garth

#12 Mark on 06.08.15 at 6:07 pm

Declining profit margins on account of lower house prices experienced in all of Canada’s major markets should push the short-term acceleration in housing construction as we see today. As vendors race to deliver supply and convert costly fixed plant and investment in equipment/supply chains to cash before the window to do so closes.

Eventually even these opportunities will have closed, and wham, there won’t be any excuses left whatsoever for the BoC not to cut policy rates down to zero, and either do NIRP or some form of QE.

Oversupply, whether in the past few years, or into the future, will continue to truncate housing prices. 70% of Canadians already own. There is no “pent-up demand”.

#13 Nemesis on 06.08.15 at 6:16 pm

“In conclusion, we don’t subsidize people to buy cars, iPhones or puppies…”… – HonGT

http://en.wikipedia.org/wiki/Car_Allowance_Rebate_System

http://www.wsj.com/articles/new-iphone-faces-risk-as-carriers-phase-out-subsidies-1410133579

http://www.rescuedogsmatch.com/available_dogs.html

You were saying?…

#14 Mike S on 06.08.15 at 6:19 pm

“Of course you should have some bonds in a balanced portfolio, for the same reason as always – to mitigate equity volatility, plus add stability. Just go with shorter duration in a mix of governments, corporates, high-yields and real-returns totaling no more than 18% of the total invested. — Garth”

These are many different asset classes, such a diversification would be hard to achieve for many without couple of 100s K$

Speaking of which, recently and going forward into the near future it seems that volatility is the main game in town. This means that for these with a significant portfolio the volatility harvesting opportunity (by re-balancing more often) is greater than for these with lower portfolios (Who will probably re-balance once a year because of higher costs relative to portfolio size)

So once again 1% win?

#15 Suede on 06.08.15 at 6:19 pm

First off, Bank of Mom and Dad is more like 90% in Metro Vancouver (condo’s and SFH)

Secondly, Mayor Gregor loves to grandstand to the public. Especially the free papers and cyclists who are the loudest. Loudest voices are often first heard, so good on em.

He should clean up his own house. Then maybe there will be less vacant houses in Vancouver.

Take a look at what a pain getting a housing permit is by this blogger.

http://buildinginvancouver.com/2015/06/dealing-with-the-city-of-vancouver-permit-process-part-2/

And now he wants a spec tax? Who is going to govern this thing and administer it?

Not city workers, for the love of manly (or womanly for the PC) beards everywhere.

#16 Bobs ur uncle on 06.08.15 at 6:29 pm

No more CMHC guarantees/subsidies – then the problem’s solved.

Never gonna happen but would be quite the show

#17 North Burnaby on 06.08.15 at 6:42 pm

Gartho, you were so sure that there’s no HAM in Vancouver. Then, what’s this? West Van home sold
$1.1mil above asking https://www.bisnow.com/vancouver/news/state-of-market/chinese-buyer-bids-11m-over-asking-for-west-van-home-46656#ath

#18 Goldie on 06.08.15 at 6:48 pm

Rosenberg blew his 40 million? I’m guessing he was a bit of a risk taker.

As someone who lives in BC, it bugs me just a little to read of the premier saying how unfair it would be to tax foreign speculators, while at the same time being perfectly fine with raising taxes so many of our essentials the last few years (with more increases on the way). It would be nice if she could show a little consistency. So many British Colombians voted for her out of fear that the alternative NDP government would raise taxes and squander money. I wonder if those people are feeling like suckers yet.

And Gregor is a hypocrite, as Garth pointed out above.

#19 Steve French on 06.08.15 at 6:51 pm

http://www.theglobeandmail.com/report-on-business/collected-woes/article1110094/?page=all

“After his release, Rosenberg returned to Miami, where he and his wife, Renée, had a mansion. He dabbled in a few businesses and became a consultant to a company run by his daughter Alison, Value Holdings Ltd. It held investments in a number of companies, including a few lumber businesses in Canada, but ran out of money in 2001. Not much has been heard from Rosenberg since. He popped up in 2002 with a column in the National Post that warned about the “condo bubble.”

“History has a habit of repeating itself,” Rosenberg, now in his late 60s, wrote. “A word to the wise. Be careful where you invest your hard-earned money.”

#20 Leo Trollstoy on 06.08.15 at 6:55 pm

First, nothing. The market will tip under its own weight as the population becomes even more pickled in debt.

Mmm like a real estate crock pot stew.

I’m hungry already.

#21 pinstripe on 06.08.15 at 6:57 pm

on my last trip to Vancouver the old geezers there made it very clear that 5% of the real estate buyers are from offshore, and these same bring 95% of the money to the Vancouver area.

When money is making the flight to safety there is no stopping it. Money does not know any rules.

Leave the bank of mom alone, they will fade.

I encourage the millillenials to follow their dream.

at the coffee shop this morning the talk was all about the corruption led by the PCs in their power days. the leakage is steady and gets better by the day. Many big corps took Albertans for a darn good ride and athe pcs made it happen with fear mongering.

#22 Goldie on 06.08.15 at 6:59 pm

#13 Nemesis

Ouch! :-)

#23 jess on 06.08.15 at 7:00 pm

The average inflation of Canada in 1982: 10.79 %
http://www.inflation.eu/inflation-rates/canada/historic-inflation/cpi-inflation-canada-1982.aspx

CPI inflation Canada april 2015: 0.80 %
===============
securitization —
http://whoswholegal.com/news/features/article/31673/securitisation-brief-history-road-ahead

=====
Many factors have contributed to the growth
of subprime lending. Most fundamentally, it
became legal. The ability to charge high rates
and fees to borrowers was not possible until the
Depository Institutions Deregulation and Monetary
Control Act (DIDMCA) was adopted in 1980. It
preempted state interest rate caps. The
Alternative Mortgage Transaction Parity Act (AMTPA) in 1982 permitted the use of variable interest rates and balloon payments”…”These laws opened the door for the development of a subprime market, but subprime lending would not become a viable large-scale lending alternative until the Tax Reform Act of 1986 (TRA)

https://research.stlouisfed.org/publications/review/06/01/ChomPennCross.pdf

#24 Leo Trollstoy on 06.08.15 at 7:00 pm

Canadian housing starts going crazy.

Prices continue to climb in most major cities, especially Toronto and Vancouver.

It’s all so surreal.

http://business.financialpost.com/personal-finance/mortgages-real-estate/canadas-housing-starts-jump-more-than-expected

#25 Edward on 06.08.15 at 7:00 pm

Vancouver becoming a kidless city.

http://www.macleans.ca/news/canada/can-families-still-afford-vancouver/

#26 zedt87 on 06.08.15 at 7:01 pm

Disagree about stopping inter generational wealth transfers.

In a truly free market there is no reason a parent shouldn’t be able to help pay the cost of putting a roof over their children’s heads.

Funny Garth preaches against government interference of markets and then proposes exactly that.

#27 cramar on 06.08.15 at 7:02 pm

Ah, the 1980s! Remember it well…sort of! The highlight for most reading the Toronto Sun in those days was the Sunshine Girl and Business Editor Garth Turner’s column. Don’t remember you talking RE, but remember you dissing gold. Kept some of those columns in a file folder, but the wifey threw them out a few years ago. Sometimes women cannot see the real value in anything! Guess not much has changed in 30 some years in RE and gold. The more things change the more they stay the same.

#28 Macrath on 06.08.15 at 7:08 pm

What`s going on in the States is really quite disturbing.
The poor and disenfranchised in Canada are shoplifting and doing holdups for booze, drugs and strip-loin steaks on a regular basis.
Rarely are they shot point blank, unless your alone on a streetcar with a dangerous pen knife surrounded by the G20 swat force.

Today the world witnesses a young bikini clad child of colour man handled and demeaned by a law and order thug in her posh nieghbourhood.

Black-swan event me thinks .

#29 Kevin on 06.08.15 at 7:10 pm

“Of course you should have some bonds in a balanced portfolio, for the same reason as always – to mitigate equity volatility, plus add stability. Just go with shorter duration in a mix of governments, corporates, high-yields and real-returns totaling no more than 18% of the total invested. — Garth”

I can’t find individual bonds that yield the same as a GIC, and bonds don’t have CDIC protection. Bond ETFs never mature so you can be under water for a long time. No to bonds.

#30 Third, shutter the Bank of Mom. on 06.08.15 at 7:11 pm

“Third, shutter the Bank of Mom. More than any other single factor, this inter-generational transfer of housing equity is sustaining price levels, encouraging bidding wars and shutting out those with normal parents. We know that 42% of first-timers wouldn’t be buying now without the BoM, and absent that fuel, the fire would quickly burn out. Imagine how novel that would be – requiring buyers to actually have some of their own money. Just like the olden days when working people could afford houses. I’ll leave it to the evil minds at the CRA how to deal with this untaxed financial benefit.”

===========

Really, Garth? Seriously? Especially after writing that “No law was broken. Flips weren’t crimes.”

What law is broken by Bank of Mom?

You are suggesting that Bank of Mom should meet “the evil minds at the CRA how to deal with this untaxed financial benefit”.

How is your suggestion not the same ugly “example of politicians pandering to the great unwashed with laws bound to distort the market”?

Obviously because it would work. — Garth

#31 Maybe... on 06.08.15 at 7:14 pm

Maybe Garth could shut down the comments section of this blog to everybody besides Mark & Victoria Real Estate Update. They could then just debate each other’s made up statistics, knowledge & incorrect analysis?

#32 Market Timing on 06.08.15 at 7:18 pm

Meanwhile in the land of newbie investors… my presumably balanced portfolio bought in early April consisting of VCN, XRE, VXC, ZPR, CPD and VAB is down in every one of them between 0.67 and 8.31% (XRE FTW!), not considering transaction costs or dividends.

Is ‘long term’ for you until after lunch? — Garth

#33 Freedom First on 06.08.15 at 7:19 pm

I like today’s photo. Shows the thinking going on in the world we live in today. People want to do what they want to do and have no consequences for their actions.

The good news, if you don’t learn there is going to be consequences for everything you say and do, the world will provide the consequences for you. No exception, as not even the Bank of Mom will save you.

#34 Smoking Man on 06.08.15 at 7:20 pm

Bank of Mom…..

Ha, good luck shutting down that one. Her kid will not be caught dead in a rental when Jane’s kid is an proud owner.

We learn to compete in school.. Its about getting better marks than the otheres. And that ingrained compition carry’s on in every fasit of our lives.

And then there is the smoking man…worlds best at what he does and no one knows it…

Its called Art….

#35 IronicParadox on 06.08.15 at 7:23 pm

That picture doh!

Oh, look at this article; these people aren’t happy with police either. 1000’s of bikers rally in protest of police handling of WACO shootings:

http://www.usatoday.com/story/news/2015/06/07/waco-bikers-protest/28645363/

Obvs, white people don’t like being guilty by association either.

#36 Cici on 06.08.15 at 7:24 pm

Rosenberg ran out of $270 million? How did that happen?

That amount should have covered all the RE, yachts, hookers, JD and blow needed to satisfy even the shadiest of the most shady guys on the planet.

But a 5-year sentence for doing nothing illegal? It’s seriously worrying that they can write the laws in reverse like that, yet these days they make it easy for the Brad Lamb developer types to do practically the same damn thing, but with condos.

In any case, I’m starting to believe that the goverment won’t let this RE mess ever come down from its devastating heights. House values represent household net worth, and if the prices come down at all, the majority of the population’s debt-to-asset ratios will be skewed towards the rouge. And I can only imagine the economic tsunami that would lead to. And even if the decent is slow enough to be considered “painless,” by the time most millenials and GenXers have their mortgages paid off, there won’t be much point in selling to fund a retirement if prices are down while rents have climbed higher.

There’s another little catch to the great Canadian RE love-affair: ever-rising rental and purchase prices will lead to more and more people not being able to afford shelter. Those people will either leave the country, or leave the workforce and look to government benefits and/or petty crime for survival. Less workers means less productivity, which would probably mean less potential for profits.

Or, maybe I’m completely wrong and average wages will jump by 50% (although, the way it’s currently going only minimum wages are going up, meaning that sometime soon it will be easier for some of us to quit our demanding and somewhat stressful jobs to flip burgers or greet shoppers at our favourite big-box outlets. In which case, education…who’ll need it?)

#37 Ray Vasquez on 06.08.15 at 7:24 pm

Interest rates were supposed to rise for the last 20 years.

They will be lower every 5 years to stable, a tad higher at best.

It has been years that everyone is predicting higher interest rates but they never come.

Remember when 3.5%, 5 year, fixed mortgage rates were supposed to be the bottom and we reached as low as 2.2% for 5 years which are 2.48% now.

Keep waiting until we are all old, grey and maybe still alive.

#38 Forzudo on 06.08.15 at 7:26 pm

To be fair to the Ferguson, Missouri protesters: http://blogs.riverfronttimes.com/dailyrft/2014/10/jailhouse_tales_an_protester_who_was_arrested_sunday_night_tells_about_her_experience.php

#39 sideline sitter on 06.08.15 at 7:28 pm

Five years for what?

#40 Paul on 06.08.15 at 7:29 pm

Re-#30
What makes you think you have the right to give your AFTER TAXED money away? You did not build that just like Oboma says you own nothing that the Government can not take with a stroke of a pen!

#41 Third, shutter the Bank of Mom. on 06.08.15 at 7:29 pm

Really, Garth? Seriously? Especially after writing that “No law was broken. Flips weren’t crimes.”

What law is broken by Bank of Mom?

You are suggesting that Bank of Mom should meet “the evil minds at the CRA how to deal with this untaxed financial benefit”.

How is your suggestion not the same ugly “example of politicians pandering to the great unwashed with laws bound to distort the market”?

Obviously because it would work. — Garth

=======

So does rent control, nationalization – or basically all laws: they just “work” – depending on your ideology.

You want cheaper houses? This is how. — Garth

#42 Retired Boomer - WI on 06.08.15 at 7:30 pm

Let’s see what the Janet might deliver in terms of a rate goose. Me, I’m all FOR a 6% goose, but that is total fantasy here. Maybe .5% to save the US’s ass, who cares about the neighbors up nort’. They live in a world of delusional oil and houses chart grow in price forever.

Markets’ suck just now. Not changing a dam thing, but I’ve seen better numbers than this crapola. NOT getting paid adw

#43 Retired Boomer - WI on 06.08.15 at 7:31 pm

oops- …not getting paid adequately for the Bond risks.

end of rant.

goodnight

#44 Look at the standard of Living on 06.08.15 at 7:35 pm

When I get around neighborhoods I grew up in and lived in recently, it becomes obvious.
The standard of what is called a decent life has trickled down to a race to the bottom.
The affordability issue starts with that something called a mortgage helper. The basement suite…what was a basement suite in the 70s and 80s has turned into a basement condo situation with multiple units where ONE once stood. Add that revenue stream to the income.
Add to that the acceptability factor. It used to be in the 70s, that everyone knew basement suites were a no no unless some neighbor finked. Now it is openly promoted and considered legal. ( Where’s revenue canada on this?) I imagine most do not report basement suite incomes. I could be wrong.
Finally, the main floor living has also turned into multiple units as well.
Even in the GTA suburbs..basement suites which used to be rare is widespread now. I mean who would want to live in a basement suite in say Aurora….but they exist! OMG. I can understand Toronto downtown…but Aurora!
The standard of living as to what is acceptable and decent is quite low now. The dream of increasing living standards is exactly that. A bad dream today.
I never thought in the space of 15 years how the acceptable standards would drop to this level but they have. It is globalisation and the transferring of acceptable values to the lowest common denominator.
Look at the neigborhoods now. There is no longer enough space for cars on the road. Use the lawn.

#45 FTP - First Time Poster on 06.08.15 at 7:35 pm

Looks like the CRA is intending on treating trading accounts as a business & taxable as such.

http://armstrongeconomics.com/archives/31171

Anyine have anything to add?

#46 David W #2 on 06.08.15 at 7:37 pm

TSX is going backwards, no new highs for a year or two now, just more red – 2011 all over again?

The TSX is positive for 2015 and made 13% last year. — Garth

#47 A Yank in BC on 06.08.15 at 7:42 pm

Gosh I miss 8.5% fixed-rate 30-year mortgages. Homes were way more affordable, and the bond-market actually paid an investor a real return on his money. Things are insane now.

#48 LLewelyn on 06.08.15 at 7:46 pm

I am a bit confused as to why you brought up the ‘Oklahoma’ swindle that Bill Player and Leonard Rosenberg orchestrated back in 1982. This example only proves that greed can infiltrate every component of the real estate market and that regulations are essential to protect consumers from adding to the wealth of the 1%.

Your youthful claim that no law was broken in 1982 was a bit rich considering that both Bill Player and Leonard Rosenberg were convicted of fraud after it was discovered that as the owners of Greymac Trust, Seaway Trust and Crown Trust they used, or more appropriately abused, their financial institutions to deliberately inflate the value of real estate they owned.

Perhaps you have forgotten that once the smoke cleared the Canadian Deposit Insurance Corporation had to cough up $400 million to reimburse investors in their shady Trust companies. This money had to come from somewhere, any guesses!

An ‘Oklahoma’ scheme works when lending institutions lose sight of the true market value of an asset and issues loans on the inflated value to entities created by the sellers. It works because the sellers created a false impression that past market value was based on arms length transactions not on fiction..

Financial institutions and the Government of Ontario learned a very valuable lesson back in 1982. I would advise potential purchasers of real estate in 2015 to pay attention to this lesson.

‘Market value’ does not always reflect the actual value of the asset being purchased and mortgage insurance only minimizes, or eliminates, the risk to financial institutions. It is the mortgagees that will be on the hook to the issuers of mortgage insurance when music stops and the true value of the asset becomes evident through all the smoke. Caveat Emptor indeed!!!!

My reference was to the flip, not the financing. Player got 15 years. — Garth

#49 Cici on 06.08.15 at 7:51 pm

Oh, oops, I’m lazy tonight…so Rosenberg only took a $40 million profit (although I imagine he couldn’t have borrowed the entire initial $270 million?…must have had a pretty good net worth going into that show, no?)

#50 don’t screw around with the market on 06.08.15 at 7:53 pm

“Low mortgage rates bring higher prices.”

How exactly? Only if RE supply can’t meet demand.
Leave it to the market, there will be more houses, etc. built, demand supply gets balanced. No need to mess with the market with the interest rate.

“So does the 5%-down CMHC rule. Every first-time-buyer tax incentive, land transfer tax rebate or cash-back loan incentive adds to the value of houses.”

Again, only if there is no supply-demand balance, just like above. Solution: build more, until prices are pushed down by supply.

If politicians are serious about restoring house prices to levels average people can pay, don’t screw around with the market.

This IS the market in low interest rate environment.

(Why do we have the low interest rate environment, around the Western economies? It’s a different story: not for screwing around with the current housing market.)

You can screw around with the market from different ideological directions, the only way to let the market work is to build as much houses, that the supply effects the price.

Everything else is screwing around the market.

#51 Fed on 06.08.15 at 8:01 pm

Sure would love though for more accurate market data reporting than to rely on real estate sales people and their organizations that represent them.

#52 Mad on 06.08.15 at 8:03 pm

Garth,

Love the picture today. It can’t be real?! Where did you get it?

#53 Investorz on 06.08.15 at 8:05 pm

“Third, shutter the Bank of Mom.”
How? Parents will always be able to gift cash.

“we don’t subsidize people to buy cars”
Some parents do.

“we don’t subsidize people to buy …iPhones”
Some parents do.

“We don’t pay a portion of people’s rent”
Some parents do.

Parents will help their kids however they can. It’s just that these days, kids want houses more than cars. Boomers must feel the urge to help, being criticized for having it easy and leaving the next generation in a bad position.

#54 Housing Starts on 06.08.15 at 8:08 pm

Housing starts up big time but the construction industry shed 3700 jobs last month.

Few days ago someone here posted about Seattle. They’ve got a number of office towers on the go down there and Vancouver is all about condos.

Same with Surrey and Langley. Multi residential beaver barf boxes they call “town houses”. A glut of those on the market which is why prices on older units are never going to appreciate.

Just take a drive down 203rd in Langley and see the garbage they’re building everywhere. Each of the units going for 300k+. Who is moving in there is anybody’s guess.

Cheap money is the source of all this nonsense. Developers leveraged 7 ways to Sunday and trying to complete as fast as possible (with deficiencies of course) and selling it to whomever is willing to buy a 300k+ box of cornflakes with 3000 stairs or so…

Sheer lunacy!

#55 Mark on 06.08.15 at 8:13 pm

“How exactly? Only if RE supply can’t meet demand.
Leave it to the market, there will be more houses, etc. built, demand supply gets balanced. No need to mess with the market with the interest rate. “

That’s what I’ve been arguing all along — excessive stimulation through lower interest rates eventually causes lower prices as the supply side delivers far more product to market than is really needed.

Even an interest rate of 0% or -1% may very well be too high if the buying public is so exhausted and over-loaded with excess real estate that they no longer desire any more. Prices hence fall.

The rest of the economy, IMHO, desperately needs the stimulation implied by lower rates as unemployment/underemployment is severely high and capacity utilization in the toilet. Meaningful demand barely exists across the spectrum. And inflation is all but dead.

Wrong again. — Garth

#56 Nemesis on 06.08.15 at 8:18 pm

“More than any other single factor, this inter-generational transfer of housing equity is sustaining price levels, encouraging bidding wars and shutting out those with normal parents.” – HonGT

Funny you should say that…

[People] – HRH Prince William Is Back in the Cockpit – and Donates His $60,000 Salary to Charity

…”The palace has said that William will donate his annual salary – reported to be around $60,000 – to an undisclosed charity. He is splitting his training between Cambridge, Norwich and Staverton in Gloucestershire, the home base for Bond Air Services, the company that directly employs him.”…

http://www.people.com/people/package/article/0,,20395222_20927394,00.html

#BonusBankOfMum:

http://upload.wikimedia.org/wikipedia/commons/1/17/Kensington_Palace-0770.JPG

[NoteToGT: “BondAirServices”… How delightfully droll… I wonder what HolyCrap’s HithertoUnsungPals would say about that… I certainly recall their motto – “Anywhere, Anything, Anytime”: https://youtu.be/k-l6PUlazuU ]

#57 Cici on 06.08.15 at 8:21 pm

#46 Llewelyn

Well that puts a whole new spin on the story…thanks for the due diligence!

#58 Nemesis on 06.08.15 at 8:22 pm

Erratum [FunctioningLink]:

http://tinyurl.com/qzrc7jh

#59 The single file download of the RE market on 06.08.15 at 8:26 pm

It’s really not that difficult.

The ultra low interest rate environment arrived fast and unexpectedly, due to the financial crisis.

This ultra low interest rate environment had an unexpectedly long lifespan.

The unprecedented, long ultra low interest rate environment created a condition, when paying rent started to cost the same or more than paying mortgage.

As a result of it, more and more people started to think: why pay rent when you could pay mortgage with the same money and become a homeowner.

This created a huge and sudden demand for homes – so fast and forcefully as the ultra low interest rate environment appeared.

The huge demand was met very slowly by supply.
The massive fail in supply is causing massive price increase.

In Toronto, the unprecedented condo development in the past 5-7 years is just starting to meet the demand and curb the high prices, driven by overwhelming demand.

Let the market take care of this, by leveling off demand by matching supply – in the macro-economics of interest rate environment, whatever it is.

Obviously, the scope of the interest rate environment is way beyond the housing market. For this reason, it is also not the tool to “fix” the housing market.

Everything else is just screwing around with the market.

You are either for the market economy – or not.
You can not pick and chose how you want to distort the market at ideological convenience.

#60 Pete on 06.08.15 at 8:39 pm

Here is the key line: “I’ll leave it to the evil minds at the CRA how to deal with this untaxed financial benefit.”

People asking the government to open the can of worms including what kind of gifts can be transferred between family members.
People have been effectively manoeuvred into clambering for socialism after first being manoeuvred into suicidal levels of debt, look at the latest Alberta election.

#61 TRT on 06.08.15 at 8:48 pm

$1Million OVER asking price. Sold!

Vancouver.

Still think it’s local money?

http://www.nationalpost.com/m/wp/news/blog.html?b=news.nationalpost.com/homes/bidding-war-gets-vancouver-homeowners-more-than-1-million-over-their-asking-price&pubdate=2015-06-08

One house. Irrelevant. — Garth

#62 DisgustMadeMePost on 06.08.15 at 8:58 pm

Parents have been helping kids forever. my folks bought me a new washer dryer set when i got married… wanna tax me for the thousand dollar benefit i got? Where would the line be for that one? Are foreign students not going to be able to be housed by their overseas families because you’d have to be pretty fair with that tax. Its a ludicrous idea. How about all the South Asian families? i have plenty of friends that have had a hand for the last number of decades. The bank of Parents isn’t the cause of the housing crisis but a response to it. Ok maybe a bit deluded to think it will work for long because the stakes are just so high now, but still. I also wish parents wouldnt do it but not because i think they should be taxed on their already taxed money.

It is the policies of the BOC and Feds that have allowed the cheap money orgy to go on and on and on.

They had the chance to shut it down in 09. They get a big FAIL on their interfering ways.

#63 live within your means on 06.08.15 at 9:00 pm

An old girlfriend of mine sold 2 houses in AB based on the same 2 books that I have. Money Road & After the Crash. Also bought Gore Vidal’s Into the Buzzsaw – The Myth of a Free Press. Recently bought Scott Feschuk’s The Future & why we should avoid it. It’s hilarious.

#64 waiting on the westcoast on 06.08.15 at 9:00 pm

Mark – describing what happens at the moment of the maxima in a parabola is not the definition of the forces that took it there. The 70% may not be the limit.. artificial increases in equity values have given boomer parents the paper wealth to finance their kids dreams. That will soon be over (this year, next year, etc).

While Garth may be right about removing the BoMOM to reduce the process, I am against it. Too much interference in the market as it is. Let them eat cake now… Soon they will wish they spent money on a little protein..

#65 the Jaguar on 06.08.15 at 9:06 pm

#44 Look at the standard of living

You make a very good point about the income not being reported. Why doesn’t CRA crack down on this? Garth? You should be able to provide some input.
It’s huge, especially in some areas. Surrey, BC for example. Everyone who lives in the lower mainland knows what I am referring to…
I recall a blog dog once suggesting that a tax break to renters who provide their landlords address/rental record could provide a cross reference to isolate the offenders. Or do the ‘offenders’ represent a political constituency? Or do we just like to apply the law of the land selectively?

#66 Squirrel meat on 06.08.15 at 9:08 pm

#55 Mark on 06.08.15 at 8:13 pm
“How exactly? Only if RE supply can’t meet demand.
Leave it to the market, there will be more houses, etc. built, demand supply gets balanced. No need to mess with the market with the interest rate. “

That’s what I’ve been arguing all along — excessive stimulation through lower interest rates eventually causes lower prices as the supply side delivers far more product to market than is really needed.

Even an interest rate of 0% or -1% may very well be too high if the buying public is so exhausted and over-loaded with excess real estate that they no longer desire any more. Prices hence fall.
———
Another howler from the financial wizard called mark.

#67 DG on 06.08.15 at 9:09 pm

I liked the first blog picture better than the dogs, what happened?

Additional research suggested it was bogus. — Garth

#68 live within your means on 06.08.15 at 9:09 pm

Read that Kevin O’Leary owns an island in NS. Saw a video of him & his island. Can’t stand the guy so he’s now on US TV. What happened to Amanda Lang? She’s still on CBC, but Harpie appointed 9 out of 10 cons to the Board of Directors. And it’s about time that Peter Mansbridge retired.

#69 Observer on 06.08.15 at 9:12 pm

Some interesting Canadian names at this year’s Bilderberg meetings in Austria….

http://bilderbergmeetings.org/participants2015.html

#70 Llewelyn on 06.08.15 at 9:12 pm

Garth

The flips were the scam since the flips were financed by financial insitutions the fraudsters controlled.

When Goldman Sachs created securities that included mortgages that they knew could never be repaid and then bought credit default swaps from AIG to cover their butts deceit was used to fool the bond rating agencies into believing market value was actually what Goldman Sachs said it was. Beware of players who don’t have any real skin in the game.

Financial insitutions in Canada issue mortgages based on an inflated market value they helped to create and then cover their butt with insurance the mortgagees are forced to pay.

This is better than 90% of the confidence games introduced since time began. Last ones in reward the early players while the financial institutions get rewarded each time a purchase takes place without exposure to any risk.

Remove Government of Canada guarantees from mortgage insurance and watch Humpty Dumpty in action.

It all looks so good until the music stops.

#71 Russ L on 06.08.15 at 9:20 pm

Can we have a link to the first pic that was featured for this blog entry?

I think the middle guy’s sign is hilarious.

Cheers, Russ

#72 Mark on 06.08.15 at 9:31 pm

“The 70% may not be the limit.. “

Did it even get to 70% in the US prior to coming down?

Another howler from the financial wizard called mark.

I beg your pardon? What I described is one of the most basic tenets of supply and demand — excess pricing stimulates excess supply, which eventually cannot be taken up by demand. Hence, excess pricing eventually collapses towards, and even overshooting equilibria.

Not sure why anyone would disagree with this. Its so basic. And its what’s being experienced in Canada now, with demand rapidly disappearing against an explosion of supply. With lower interest rates most likely required in the future because with so much of Canada’s GDP devoted towards RE supply, the economy is going to be in a very weak growth, if not recessionary mode for years to come until something rises out of the ashes.

#73 Leo Trollstoy on 06.08.15 at 9:32 pm

Mark are you a clown in your regular job? Or just on this blog?

#74 Washe Up Lawyer on 06.08.15 at 9:35 pm

#70 Llewelyn on 06.08.15 at 9:12 pm

I have enjoyed your comments tonight and you are making sense to me. Thank you.

A minor, trifling and neurotic point (on my part) which does not change the gist of your message.

The “mortgagee” is the bank or the lender as that is the party to whom the mortgage has been granted. Like payor and payee.

The homeowner is the mortgagor.

Sorry to be so trifling. Carry on.

#75 Hickster on 06.08.15 at 9:36 pm

At the end of the day, the CMHC is the problem. Without guarantees from the taxpayer, banks would lend based on actual risk, rather than government covering their butts. House prices would fall in half overnight, regardless of interest rates.

#76 MF on 06.08.15 at 9:37 pm

#32 Market Timing on 06.08.15 at 7:18 pm

Hey I have a similar portfolio to you and I’m down as well. I started in April as well.

We just picked a bad month I think. But like Garth and many others have said, the month to month is meaningless. We should also start getting some interest payments to help soften the blow.

Also, I was down like 9% last month and this year it’s improved to being down only 2% so we are moving up.

It’s all a learning experience. We are not always going to win but we have to pick a strategy and stick to it.

you are probably like me in that you can’t stand paying rent regardless of how logical you know it is. I think we just are in the learning stages of a great financial education and we have to remind ourselves about that.

Things should continue to improve by rebalancing time I hope.

MF

#77 Nagraj on 06.08.15 at 9:40 pm

It’s a given, isn’t it, that both Trudeau and Mulcair will present an AFFORDABLE HOUSING PROGRAM, a YOUTH JOBS INITIATIVE and, later on, MORTGAGE MODIFICATION MEASURES.

If for some reason (such as “electoral math” aka gross proportional misrepresentation) Harper ekes out a slim majority in October, Canada is in for what’s called civil unrest; the great unwashed are, above all, greatly angered.

The Notley win in Alberta is not an outlier, street protests in Montreal are not meaningless, and Granny Wynne (who can’t find the Drummond Report) by stabbing her most ardent supporters in the back with back-to-work legislation, has (malgre soi) radically altered the political landscape in Ontario.

It’s not that “the times they are a-changin” – they’re already quite changed.

“What’s that sound?”: whoosh/thud whoosh/thud whoosh/thud whoosh/thud whoosh/thud . . .
It’s the great unwashed guillotining Cons in Oct.

[Back in 1980 I’d go down to Charltons, buy gold in the morning, have lunch across the street, and sell it back in the afternoon; blessedly I quit when the line-up got too long. If memory serves, the fed funds rate peaked in May ’80 at, yes, 24%.]

#78 MF on 06.08.15 at 9:41 pm

#29 Kevin on 06.08.15 at 7:10 pm

This is a scary post. I am a newbie and I don’t understand bonds totally. I’ve got a large chunk of my portfolio in a bond ETF. What do you mean never mature?

My understanding was that bonds improve when stocks are rocky, providing a balance to normal market volitility. Also as your stocks gain, you can buy more bonds and have a safe haven?

Was buying a bond ETF a bad idea?

MF

#79 LL on 06.08.15 at 9:45 pm

#8 Mike S

“Buy share in pharmacies company…Prozac, Zoloft, etc…sales will be high and lawyers will do $$ too..lots of separation, divorce because money problem!”

Is that a society we are aiming for?

J’en ai bien peur.. Looks like it….

#80 MF on 06.08.15 at 9:45 pm

#37 Ray Vasquez on 06.08.15 at 7:24 pm

Also a scary post.

I know Garth, most posters here, and even my boomer parents keep saying how rates will rise and we should
Be prepared – but I have my doubts to be honest.

My limited understanding of finance says rates rise in response to inflation or currency crisis. We have neither right now. Long term rates are set in the bond market apparently, and everyone here keeps saying long term bonds (10-20 years) are going down not up.

Where is the need to increase rates? No one can seem to answer that basic question?

MF

#81 Ray Vasquez on 06.08.15 at 9:47 pm

To Pete #30

What do you call giving people loans at 2.48% or 1.99% and paying 0.90% or less on their savings. It is called socialism.

What do you call negative interest rates? It is socialism.

By the way, the money that anyone gives to anyone they choose to do of their own free will has been taxed already many times through income taxes, property taxes, sales taxes, C.P.P. E.I., water, sewer taxes, user fees, land transfer taxes, gasoline taxes, tobacco taxes, liquor, beer taxes etc. etc. etc. and any other taxes that people would pay.

So it is not tax free money or a tax free benefit. It was taxed to death many times over and over!

#82 young & foolish on 06.08.15 at 9:51 pm

“Meanwhile in the land of newbie investors… my presumably balanced portfolio bought in early April consisting of VCN, XRE, VXC, ZPR, CPD and VAB is down in every one of them between 0.67 and 8.31% (XRE FTW!), not considering transaction costs or dividends.”

Hahaha … you ain’t seen nothing yet! People think they will get their 7% like a monthly pay check.

#83 Randy Randerson on 06.08.15 at 9:55 pm

Wait, the guy went to prison for 5 years just for flipping a whole lot of condos? What are we, Communist Russia? There must be something else afoot, like tax evasion.

#84 Randy Randerson on 06.08.15 at 9:58 pm

#6 LL on 06.08.15 at 5:58 pm

Why not booze companies then? DEO, BUD, TAP for beers and liquors. Not sure what the wine equivalent would be. Maybe even LIQ for a liquor retail play.

#85 young & foolish on 06.08.15 at 10:00 pm

“Remove Government of Canada guarantees from mortgage insurance and watch Humpty Dumpty in action.”

What, did you actually think we are living in a real “free market” economy? Politics trumps economics every time.

#86 bobo on 06.08.15 at 10:03 pm

Garth -what happened to the first photo you posted ?

#87 Mcarath on 06.08.15 at 10:06 pm

#29 Kevin
I can’t find individual bonds that yield the same as a GIC, and bonds don’t have CDIC protection. Bond ETFs never mature so you can be under water for a long time. No to bonds.
———————————–

The hidden cost of buying individual bonds is uneconomical for a retail investor. I used to buy some new issue Ontarios at par but this is difficult and really annoys the brokerage.
CLF, CBO are laddered and paying ~4%. It remains to be seen how they react to a rising rate environment.

The mid term funds are volatile now, but this could be just another head fake as the so called recovery keeps
sinking into the swamp.

Funds for fun and GIC`s for a good nights sleep.

#88 Sheane Wallace on 06.08.15 at 10:07 pm

DELETED

#89 Sheane Wallace on 06.08.15 at 10:09 pm

#78 MF

Stay away from bonds.
At zero interest rates they are overpriced, this is about to change big time.

Return free risk. Pile of crap. Won’t touch it with a stick,

#90 IM in C on 06.08.15 at 10:14 pm

The modern history of rent controls began in July 1975 when the Residential Premises Rent Review Act 1975 was enacted after the demand for rent controls became a major issue in the period leading to the 1975 provincial election.[1] In 1979, the Residential Tenancies Act was enacted – Wikipedia
Garth , rent controls in Ontario were in place 8 years before this flip deal took place. Granted new legislation was brought in as a result, but, it only tightened up what was already there.

What I said. — Garth

#91 Sheane Wallace on 06.08.15 at 10:15 pm

#72 Mark

There might be some hope for you after all, you seem to understand impact of pulled-up demand

http://www.investopedia.com/terms/d/demandpullinflation.asp

Of course tomorrow there would be less buyers,

But the biggest problem is not there, the biggest problem is the government guarantee of debt through CMHC and here we should look for independent court investigation on why government is in the business of ‘Insuring’ sub-prime mortgages and why is the chief of BOC destroying the canadian dollar.

#92 Sheane Wallace on 06.08.15 at 10:18 pm

#59 The single file download of the RE market

None of this would have been possible without CMHC ‘insurance’.

No bank would lend sub-prime loans if not backed by CHMC.

#93 Karma on 06.08.15 at 10:19 pm

“If we want to make property more affordable, it’s time to bite the bullet and raise interest rates” – The Telegraph

Truth:
“Any business worth the name would easily be able to live with a 3pc bank rate. Those that can’t frankly don’t deserve to survive.”

http://www.telegraph.co.uk/finance/property/house-prices/11660347/If-we-want-to-make-property-affordable-to-the-young-its-time-to-bite-the-bullet-and-raise-interest-rates.html

#94 Ray Vasquez on 06.08.15 at 10:19 pm

To #80 MF

You know what is scary. How long they have given peanuts in interest to people with their savings, investments.

I have see now 20 years the drop in rates from over 10%+ to 2.5% on GIC’s, bonds, other interest paying investments.

If you think that they are finished keeping interest rates low then just wait and see.

Where were you guys when they started with 1% to below, negative interest rates?

Another financial downturn and it is the perfect excuse to do some more financial engineering to their benefit, governments, corporations, lenders etc.

#95 MF on 06.08.15 at 10:21 pm

#82 young & foolish on 06.08.15 at 9:51 pm

Gotta apologize about my multiple posts tonight (it’s a day off lol)

I’ve heard this before a few times on this blog.

Isn’t that the point of being balanced and diversified?

Is there something you know about the market young & foolish that Garth amd the rest don’t?

Again I’m sorry for all the questions.

MF

#96 fleabitten monkey on 06.08.15 at 10:22 pm

Hey Garth,
Shuttering the bank of mom and CRAs actions to deal with taxation of the benefit….do your sources indicate this is being considered? Any taxable consequence I feel would need to be fairly immediate on the beneficiary of the funds or “mom” personally.

#97 Squirrel meat on 06.08.15 at 10:23 pm

#72 Mark on 06.08.15 at 9:31 pm

“The 70% may not be the limit.. “

Did it even get to 70% in the US prior to coming down?

Another howler from the financial wizard called mark.

I beg your pardon? What I described is one of the most basic tenets of supply and demand — excess pricing stimulates excess supply, which eventually cannot be taken up by demand. Hence, excess pricing eventually collapses towards, and even overshooting equilibria.

Not sure why anyone would disagree with this. Its so basic. And its what’s being experienced in Canada now, with demand rapidly disappearing against an explosion of supply. With lower interest rates most likely required in the future because with so much of Canada’s GDP devoted towards RE supply, the economy is going to be in a very weak growth, if not recessionary mode for years to come until something rises out of the ashes.
—————————
Except the REALITY that doesn’t seem to exist in your parallel universe proves you wrong as low rates have driven up housing like crazy. Did you not notice!. In the mobile millennial world people only care what their monthly payment looks like on their phone. They give zero thought to the debt… no real plans to pay it anyways.

#98 young & foolish on 06.08.15 at 10:23 pm

“Why do we have the low interest rate environment, around the Western economies?”

Makes you wonder about diversification, doesn’t it? Remember when the Fed tried to convince people that the housing collapse would be “contained” to sub-prime markets? Yes, you can get 7% …. over the looong term (an probably not this year).

#99 Linda on 06.08.15 at 10:25 pm

I am glad you changed the picture, Garth. The first one suggested a kind of black-shaming that is truly appalling, and beneath you. Even if it was authentic.

There were black and white people in that pic. I saw entitlement. You saw race. In any case, I removed it when informed it was a Photoshopper. — Garth

#100 Sheane Wallace on 06.08.15 at 10:26 pm

#77 Nagraj

when bond market revolts the next financial minister would be panicking,

I personally won’t buy Canada’s or provincial bonds at any premium or interest rate. Never.

If they force me with some law I will move out (already on my way).

#101 young & foolish on 06.08.15 at 10:30 pm

“Is there something you know about the market young & foolish that Garth amd the rest don’t?”

For sure NOT! Except that it doesn’t often pay to be in a hurry (especially if you are not a professional).

#102 devore on 06.08.15 at 10:35 pm

#13 Nemesis

How is any of those things a Canadian government subsidy?

#103 The commie Conservative Realtor on 06.08.15 at 10:39 pm

Sheane Wallace on 06.08.15 at 10:18 pm
#59 The single file download of the RE market

None of this would have been possible without CMHC ‘insurance’.

No bank would lend sub-prime loans if not backed by CHMC

____________________________________

Every commie conservative realtor, mortgage broker and the other commies in the FIRE industry hate an open and free market. The RE housing ponzi would crash over night and every commie knows it.

#104 The commie Conservative Realtor on 06.08.15 at 10:46 pm

Randy Randerson on 06.08.15 at 9:55 pm
Wait, the guy went to prison for 5 years just for flipping a whole lot of condos? What are we, Communist Russia? There must be something else afoot, like tax evasion.

____________________________________
There is nothing more communist then CMHC, realtors, bankers. These are the scum of the earth who HATE and I mean HATE free markets. If commie Harper removed CMHC these captains of communism would go crazy. Let the free markets price in risk.

#105 MF on 06.08.15 at 10:46 pm

#101 young & foolish on 06.08.15 at 10:30 pm

Then what do you recommend to invest in.. RE is overpriced. What else is there?

#89 Sheane Wallace on 06.08.15 at 10:09 pm
#78 MF

Stay away from bonds.
At zero interest rates they are overpriced, this is about to change big time.

Return free risk. Pile of crap. Won’t touch it with a stick,

Heard this a few times on here too. In my baby two month old portfolio there are some days when all equities are down but the bonds are marginally up (I own a Canadian bond ETF). Always thought bonds are a hedge against stock losses, even if it is not a 1:1 ratio and are “safe”. Every book I have read recommends owning at least some.

I’m starting to rethink this though, and will decide at rebalancing in about 7 months. REITs are paying monthly 5% dividend for example.

MF

#106 young & foolish on 06.08.15 at 10:49 pm

“You know what is scary. How long they have given peanuts in interest to people with their savings, investments.”

Is this also a sense on entitlement? Why should they give you a healthy return for sitting on “savings”?

When everybody had good jobs and lots of surplus income, rates were high (but so was the cost of borrowing). Saving was encouraged, and borrowing was expensive. Then, it was time to strip the middle class down to their underwear … no more money for nothing. Lower rates turned savers into big spenders.
Now, that everybody is a disposable employee and likely in debt, rates will begin to creep higher again.

yin yan

#107 Mark on 06.08.15 at 10:55 pm

“No bank would lend sub-prime loans if not backed by CHMC”

Of course they would. There are subprime loans in Canada today that of such poor quality that the CMHC won’t touch them. They tend to have interest rates of 8-10%, sometimes more, attached to them. See: Home Capital Group. The banks would obviously fill the space inbetween the Prime lending business, and the deep subprime business that HCG et al engage in.

Would average interest rates as applicable to real-life loans be higher? Perhaps by 2-3%. But life would go on, and people would still get subprime mortgages if they wanted them. However, the hurdle rate that individuals and wannabe landlords would have to put into their calculations would be much higher, and house prices probably lower. One could also argue that the rest of the economy, the economy that has suffered abnormally expensive credit on account of the CMHC creating a credit preference towards the CMHC subprime sector, would be performing better. The end result, that of high rates of home ownership, may very well not be all that different. But we certainly would have a far more balanced, and likely more productive economy not characterized by high rates of unemployment and underemployment. Sure, fewer $100k+/year Realtors would be part of the mix, but we’d see a higher standard of living for everyone else.

#108 omg the original on 06.08.15 at 10:58 pm

FTP – First Time Poster on 06.08.15 at 7:35 pm
Looks like the CRA is intending on treating trading accounts as a business & taxable as such.

http://armstrongeconomics.com/archives/31171

Anyine have anything to add?
————————–

Just like they treat the TFSA if you are using it to speculate rather than invest long-term.

Fact is though 99% of traders lose money over the long-term. And if that loss is inside an RRSP you can bet that CRA will not allow it to be deducted from income earned outside an RRSP.

#109 The single file download of the RE market on 06.08.15 at 11:06 pm

#92 Sheane Wallace on 06.08.15 at 10:18 pm

#59 The single file download of the RE market

None of this would have been possible without CMHC ‘insurance’.

No bank would lend sub-prime loans if not backed by CHMC

========

It is happening all over the Western economies with ultra low interest rate, without the CHMC.

#110 Calgary Retiree on 06.08.15 at 11:08 pm

I read the Leonard Rosenberg story with interest and thanks to Dr. Google I found some more details on Leonard Rosenberg, and others, as listed below.

http://www.globeadvisor.com/servlet/ArticleNews/story/gam/20061124/RO12COLLECTED

It seems that those free market destroying government regulators thought that quick price moves from $270 million to $310 and next to $500 million was not based on a “free market”. The article says it best:

“After more than a decade of investigations, inquiries and preliminary hearings, Rosenberg pleaded guilty in April, 1993, to 13 counts of fraud. Crown prosecutors said the fraud cost investors more than $131 million.”

In the U.S. the Judge would have locked Leonard up and thrown away the key. Not so in Canada:

“Rosenberg spent barely a year of his five-year sentence in jail. He was granted full parole on Oct. 31, 1994. Parole board records show he faced a contraband charge while inside that was later dismissed. Some prison officials opposed his parole, arguing in documents that they had seen an increase in fraudulent behaviour by Rosenberg and a lack of respect for rules “similar to that toward defrauded institutions.” In fact, his case-management team “strongly opposed” his release on day parole. But the parole board decided that he showed remorse.”

Here is Leonard quoted in is later years:

“History has a habit of repeating itself,” Rosenberg, now in his late 60s, wrote. “A word to the wise. Be careful where you invest your hard-earned money.”

Thank you Len!

#111 Mcarath on 06.08.15 at 11:10 pm

Joe Reporter, with a daily column for a big-city daily paper.
————————————-
Loved your columns, Got me started on the save your money investment trail. A real Maverick they used to say, a grey area specialist. A lot of folks were disappointed when you got that CRA gig and went all quiet and conservative.

Well your back and we are grateful for this pathetic blog.

Being able to debate your opinions is a real treat.

#112 omg the original on 06.08.15 at 11:12 pm

MARKETS RETURNS TO DECEMBER 2014 LEVELS

Of course the world is coming to an end, light your hair on fire and sell all your stocks, ETFs, or god help you, mutual funds. Its only down from here.

This of course is what the doom and gloom idiots would have you believe.

But every decade for the last 100 years on average has two to three essentially flat years. However flat years in the stock market are almost always followed-up by a positive year, sometimes two.

Could this be the beginning of the end of western civilization – sure its a possible extreme longshot. just like there is a possibility that I could marry a Kardashian (even if its just Kris).

But based on history, its HIGHLY, HIGHLY, HIGHLY LIKELY that the world will muddle on as it has for decades and we will see continued gains in world economies and with it equities.

Must feel shi**y to be a doomer.

#113 Third, shutter the Bank of Mom. on 06.08.15 at 11:23 pm

41 Third, shutter the Bank of Mom. on 06.08.15 at 7:29 pm

Really, Garth? Seriously? Especially after writing that “No law was broken. Flips weren’t crimes.”

What law is broken by Bank of Mom?

You are suggesting that Bank of Mom should meet “the evil minds at the CRA how to deal with this untaxed financial benefit”.

How is your suggestion not the same ugly “example of politicians pandering to the great unwashed with laws bound to distort the market”?

Obviously because it would work. — Garth

=======

So does rent control, nationalization – or basically all laws: they just “work” – depending on your ideology.

You want cheaper houses? This is how. — Garth

======

You want less taxes? Tax someone else – this is how? Give me a break, Garth.

In market economy you control prices with supply demand. Period.

Everything else is screwing around to distort the market.

#114 TurnerNation on 06.08.15 at 11:24 pm

I remember “Gartho’s” wide-lapeled and hirstutely composed columns from my weekend paper route days.
Back then the main attraction was Max Haines, Dunf’s ramblings, and Comics. Page 3 was a-rumbling. Why’d we need to know her astro sign? The colourless G&M took a different tack: If it tweeds it leads.

Seems like that was the last era of free speech – filtered of course through a cigar chomping editor’s naked eye of golf club conformity.

http://torontosunfamily.blogspot.ca/

#115 Nemesis on 06.08.15 at 11:40 pm

#@Devore… #AnachronisticRhetorical…

“2 obsolete : moral conduct or behavior : discretion”

Believe it or not… Among other things, that’s what Governance once meant…

#116 kommykim on 06.08.15 at 11:45 pm

RE: #72 Mark on 06.08.15 at 9:31 pm
Hence, excess pricing eventually collapses towards, and even overshooting equilibria.
Not sure why anyone would disagree with this. Its so basic.

I’m sure most don’t disagree with the premise of cyclical RE prices but rather with your premise that it is caused solely by low interest rates. Interest rates are just one of the many inputs to the unstable feedback loop of market cycles.

#117 The single file download of the RE market on 06.08.15 at 11:53 pm

# 93 Karma

“If we want to make property more affordable, it’s time to bite the bullet and raise interest rates” – The Telegraph

======

That’s basically artificially limiting demand, by playing with the interest rate.

How about naturally increasing supply to meet demand at a lower price?

The purpose of interest rate is not to “fix” the housing market, which is just one segment of the whole economy.

Blaming low interest rate for high house prices and not insufficient supply, opens the door for demagogue argument, which aims to drum up populist ideological support to serve the push for higher interest rate, possibly for wild variety of financial interests – unrelated from the housing market.

We see already that greatly increased condominium supply has started to lower prices in several markets – even with the same low interest rate.

#118 BS on 06.09.15 at 12:25 am

It’s a given, isn’t it, that both Trudeau and Mulcair will present an AFFORDABLE HOUSING PROGRAM, a YOUTH JOBS INITIATIVE and, later on, MORTGAGE MODIFICATION MEASURES.

Of course they will (if elected). More government intervention as a remedy for the problems government intervention has caused. More tax payers dollars flushed down the toilet which will end up hurting the average home buyer and job seeker.

#119 Carpe Diem on 06.09.15 at 12:27 am

#11 … Garth…

Example link:

http://finance.yahoo.com/news/are-your-favorite-products-created-by-slave-labor–new-report-indicates-it-s-possible-144633547.html

News worthy? Probably not.

There are people all over the world who work like slaves or are slaves to a war-lord, miner, clothing manufacturer, computer maker, whatever!

Eyes-wide open. Each time you buy something cheaper than 10 years ago … Some person lived as slave so you can buy it.

Do you know about Coltan?

You don’t need to look to Asia for slavery.

Just take a selfie and you are guilty.

#120 BS on 06.09.15 at 12:37 am

Mulcair’s plan for housing:

He said an NDP government would work with Canada Mortgage and Housing Corp. (CMHC) on an income tax incentive that would allow people investing in rental housing units to avoid capital gains taxes if they plow money back into more “affordable” rental housing investments. An aide to Mulcair said the program would cost Ottawa $500 million annually.

That should help with affordability. Give investors and speculators tax breaks to buy second properties to rent. Great plan. Create more demand for speculators to buy housing by giving them much needed tax breaks. We don’t have enough people already doing this so lets create more demand in this area which should lower housing costs, right?

http://www.thestar.com/news/canada/2015/06/06/mulcair-promises-city-housing-costs-reform.html

#121 Gen X Confessions on 06.09.15 at 12:37 am

#34 Smoking Man on 06.08.15 at 7:20 pm
Bank of Mom…..

Ha, good luck shutting down that one. Her kid will not be caught dead in a rental when Jane’s kid is an proud owner.

We learn to compete in school.. Its about getting better marks than the otheres. And that ingrained compition carry’s on in every fasit of our lives.

——————————

Exactly. I’m getting a little sick of comments that the Millennials are all lazy and asking for handouts. I suspect the Bank of Mom and Dad is pushing the money a lot of the time. They tell each other that they’re “helping”, but really there are underlying motives of competition (over having “successful” kids) and control (having fun playing family patriarch/matriarch). Of course, you can always say no. We turned down a large gift recently – amazing how the power dynamic shifted after that.

#122 Steve French on 06.09.15 at 12:47 am

Folks:

We have lift off….

Vancouver real estate to infinity and beyond!

http://news.nationalpost.com/homes/bidding-war-gets-vancouver-homeowners-more-than-1-million-over-their-asking-price

This crash is going to be something too behold….

#123 Retired Boomer - WI on 06.09.15 at 12:47 am

Rent controls usually do not have the desired result. They lead a landlord to minimize investment in his property (as his return is not enough to adequately maintain it, which leads to few new rentals being developed. See NYC as a good indicator of this nonsense.

Government facilities to assist 1st time buyers with less than a standard down payment (20%), should be limited to the median priced home in a geographic domain.

Yes, money ‘gifted’ by the bank of Mom should not be allowed. Either you have the creds to buy it yourself, or no government assistance for you.

Let’s get interest rates moving ahead (UP) shall we?
Government interference here -AGAIN- is preventing the market from doing it’s job…. Same as the interference provided in 2008 to ‘protect’ moribund industry.

Just like the surveillance state today, which sweeps up too much data to be useful. Where are the lawmaker’s with the ability to say NO to fear mongering military-intellugence complex? (yeah, broad subject)

#124 BS on 06.09.15 at 12:47 am

In case anyone forgot how we got into this mess, here is a 2006 headline for CMHC announcing new policies to help make housing more affordable (remember 2006 when housing was affordable).

“CMHC to insure interest-only mortgages in a bid to make ownership easier”

The Canada Mortgage and Housing Corp. is cutting the cost of mortgage insurance in a bid to make home ownership easier and cheaper.

The federal agency announced Wednesday that it plans to offer mortgage insurance with a longer repayment period and more flexible repayment options. In some cases, borrowers will be able to devote their entire monthly payment to interest, allowing them to better manage their housing budget.

CMHC will also eliminate, effective immediately, the hefty application fees that it has charged for high-ratio mortgage insurance. These fees typically range from $165 to $235.

“These innovative financial solutions will allow more Canadians to buy homes, and do so sooner,” CMHC president Karen Kindley said in a statement. “By reducing costs and increasing flexibility, CMHC continues to help Canadians realize their dreams of home ownership.”

The new mortgage insurance will be offered to borrowers with a proven history of managing their credit. They will have the option of paying interest only for up to 10 years when they purchase or refinance their home.

CMHC will also offer insurance on mortgages with an amortization period of up to 35 years, a first for Canada.

And it has cut the cost of mortgage insurance premiums by up to 30 per cent.

http://www.cbc.ca/news/business/cmhc-to-insure-interest-only-mortgages-in-a-bid-to-make-ownership-easier-1.571519

#125 Nemesis on 06.09.15 at 1:03 am

#IBlameLeo…. #Coulrophobia:MarkBusted!

http://youtu.be/AiKBPjO1j_U

#126 Timing is Everything on 06.09.15 at 1:12 am

#48 LLewelyn
#57 Cici

And this is a ‘No Spin Zone’. Yikes!

#127 waiting on the westcoast on 06.09.15 at 1:20 am

Re: my suggestion and Mark’s comment and someone else’s ad hominem attack:

#72 Mark on 06.08.15 at 9:31 pm
“The 70% may not be the limit..

Did it even get to 70% in the US prior to coming down?”

WOTWC – it did not but there were not extremely low rates when the US real estate bubble collapsed. So with our even lower rates, perhaps the market can absorb even more.

Also – there are many purple who are speculatively investing beyond the 70%… Owning multiple units is becoming fashionable. Reminds me of the early 80’s.

Comment from another poster and Mark’s response:

“Another howler from the financial wizard called mark.

I beg your pardon? What I described is one of the most basic tenets of supply and demand — excess pricing stimulates excess supply, which eventually cannot be taken up by demand. Hence, excess pricing eventually collapses towards, and even overshooting equilibria.

Not sure why anyone would disagree with this. Its so basic. And its what’s being experienced in Canada now, with demand rapidly disappearing against an…”

WOTWC – I don’t think people should attack you personally but concentrate on issues with your arguments. Having watched a number of your theses so far, I think you have have used many theories inappropriately. You seem t to have confused which element is the cause and which is the effect and in some cases confused correlation with causation. That said, I really do believe if you preface with I believe, I think, I feel, you will get better reception from others here.

In my post, I tried to clarify my belief that the dynamics at saturation (or utility) are not the same dynamics that get you there (ie – lower interest rates drive demand to a higher prices/volume of sales until a new saturation point takes hold). But then they have shifted. First to balance and then quickly to excess supply. I think we are at the top given the significant increase in volume in Van/GTA but you need the top to churn high volume without prices increasing… Classic top. The price has not stalled (in Van/GTA) so there could still be upward movement.

#128 TRT on 06.09.15 at 3:20 am

http://www.cbc.ca/news/canada/british-columbia/air-canada-customs-breach-at-vancouver-airport-after-arrival-from-beijing-1.3105010

#129 Sheane Wallace on 06.09.15 at 6:23 am

#109 The single file download of the RE market

It is happening all over the Western economies with ultra low interest rate, without the CHMC.

………………………….

Not really, here is overdone, in the states the guarantee is limited and the prices are much lower, and in Europe there is no guarantees at all and there is no housing bubble.

The problem is where the governments start messing around and without surprise it is usual suspects – Canada, US, UK, Australia.

#130 Kalergie on 06.09.15 at 7:10 am

Love the dog picture. Which is what I basically come here for!

Me too. — Garth

#131 fancy_pants on 06.09.15 at 7:44 am

Garth is dead on when he says If politicians are serious about restoring house prices to levels average people can pay, don’t screw around with the market.

If the boneheads on the hill did not introduce ’emergency’ rates or 0/40 amortizations back in 2009 and instead left rates put and less entertain the idea they tighten lending requirements to 10/25 to prevent speculation, they would not be dealing with the gassy elephant in the room now.

Instead they have rewarded mortgage+debt holders and punished savers long enough to finally get many savers to say ‘f* it’ and also jump in.

Then they have the audacity to wag a finger to those playing the game by the rules they created; rewarding bad behavior with one hand while wagging the other saying how naughty they chose the reward. dumb a$$es.

#132 Honey Dripper on 06.09.15 at 7:53 am

Let’s get the guvmint out of the mortgage business period!

#133 Rory on 06.09.15 at 7:59 am

Garth,
There seems to be little difference between US bashers and Canadian Bashers. Our jobs report was much stronger than the US, and Western Canadian Select is trading at $62 a barrell. You may need to rethink your Canada going down thesis.

http://www.theglobeandmail.com/report-on-business/canadian-crude-prices-hits-highest-level-this-year/article24865590/

Canada is not going down, but should experience 2015 growth of 1.5% or less. Swampy. Stay diversified. — Garth

#134 Ray Vasquez on 06.09.15 at 8:12 am

To young and foolish #106

Low interest rates is just an excuse for many people that are irresponsible to get into a huge pile of debt and get deeper in debt.

Most of Canadians debts is mortgage debt, line of credit debt, refinancing and other debts on primary and secondary real estate.

It is not credit card debt, car loan debt, payday loan debt etc.

Nobody turned savers into debt accumulators. Savers are still savers and others that make any investment know debt and accumulating more debt year after year is not a good financial move.

They did not get tricked into their low interest rate financial engineering.

As for getting interest paid on savings, longer term investments, inflation at minimum 2.00% a year and income taxes of 25% to 30% on average, getting 0.90% to 1.75% on your savings is costing money to savers.

Interest rates should be 3.5% to 4.25% at a minimum from savings to longer term GIC’s, lowest risk bonds.

Nobody would go to work or open, run a business and lose money everyday or pay someone to go to work.

#135 nobody on 06.09.15 at 8:23 am

#100 Sheane Wallace on 06.08.15 at 10:26 pm
#77 Nagraj

I personally won’t buy Canada’s or provincial bonds at any premium or interest rate. Never.
__________________________________

Why not? For non-residents living overseas especially, such bonds have been an excellent, no-worry, non-taxable investment.

#136 crowdedelevatorfartz on 06.09.15 at 8:26 am

@#127 waiting…….
“That said, I really do believe if you preface with I believe, I think, I feel, you will get better reception from others here…..”
+++++++++++++++++++++++++++++++++++
Nah, ha’s still a blowhard.

Mark, have you ever thought of becoming a speechwriter for the harper Conservatives? Harpers always right too. Should be interesting putting you both in the same room.

#137 corinvest on 06.09.15 at 8:34 am

Ah, yes Garth. I remember your newspaper column well.

It was a must read for those of us working at National Trust when we were taken over by Victoria & Grey.

The Christmas gifts for our children’s annual party were seized by the new owners and offered as incentives for people opening new accounts.

After the fact, I learned that the guy in the next office provided you with the memo about the Christmas party cancellation and reallocation of the gifts.

Never has capitalism had a finer moment. All under the guidance of Hal Jackman and his puppet Bill Somerville.

#138 Q2 Class Duplex Drive on 06.09.15 at 8:46 am

One of those ‘weensy’ trust companies you mentioned was Crown Trust, a long-time jewel in the old Argus Corp. empire. Crown vanished after that flip fiasco, and the rest of Canada’s independent trust companies, with the exception of CT, were gone by the end of the decade. A shame.

#139 Leo Trollstoy on 06.09.15 at 9:35 am

You (Mark) seem t to have confused which element is the cause and which is the effect and in some cases confused correlation with causation.

Translation: Mark, you’re wrong.

#140 maxx on 06.09.15 at 9:50 am

#47 A Yank in BC on 06.08.15 at 7:42 pm

“Gosh I miss 8.5% fixed-rate 30-year mortgages. Homes were way more affordable, and the bond-market actually paid an investor a real return on his money. Things are insane now.”

Me too.

Higher rates don’t make people worse off, it lights a fire under their butts, thereby crafting far wealthier societies.

Today, money is practically free, but the average person can’t afford much at all anymore- unless the brain-dead CEO of the BoM rides in and malinvests retirement savings.

#141 Bottoms_Up on 06.09.15 at 10:04 am

#131 fancy_pants on 06.09.15 at 7:44 am
—————————————————-
0/40 was actually introduced in 2006, in 2009 they changed it to 5/35.

#142 MF on 06.09.15 at 10:14 am

#135 nobody on 06.09.15 at 8:23 am

What about for residents like us?

MF

#143 45north on 06.09.15 at 10:14 am

whatever government touches becomes more expensive and intrinsically less fair.

in the case of housing, that is what has happened

#144 The 7% Solution on 06.09.15 at 10:23 am

Surprised nobody has mentioned this. Under new rules drawn up by the Liberal government and the Ontario Real Estate Board, real estate agents will no longer be allowed to tell a potential buyer about other offers — unless those bids are signed, sealed and delivered.

Garth, do you think this might cool off the bidding wars?

http://www.cbc.ca/news/canada/new-ontario-real-estate-rules-bar-phantom-bids-1.3102810

#145 NEVER GIVE UP on 06.09.15 at 10:26 am

#11 Bob Dog on 06.08.15 at 6:06 pm
Children throw a hissy fit and blame everything on the guy from china.
————————————————————–
Bob Dog, It is not that simple. The actual businessmen of China that make real money love it there. They dont need to move here.
See below as to how it really works.

http://www.scmp.com/news/china/article/1554704/china-searches-entire-bureaucracy-10-provinces-pinpoint-naked-officials

http://www.newsweek.com/chinese-officials-go-naked-fleeing-85265

#146 Bottoms_Up on 06.09.15 at 10:49 am

#121 Gen X Confessions on 06.09.15 at 12:37 am
———————————————————-
Don’t forget it’s also OK for parents to want to help out their kids.

They see how hard it is to ‘make it’ in today’s society. If the average house is $400,000, and a ‘normal’ downpayment is 20%, where is a Millenial going to come up with $80,000? That’s 13 years of saving $500/mo.

So I think parents try to help where they can. Nothing wrong with that.

Then don’t complain about high house prices. Subsidizing buyers fuels them. — Garth

#147 Mike S on 06.09.15 at 11:02 am

“You want cheaper houses? This is how. — Garth”

Have to disagree with you Garth.

If you want cheaper houses just relax sit back and do nothing. Cheaper houses are already in the cards

Then we should regret all the kids now being pushed into over-inflated assets and elevated debt levels by their copter parents. — Garth

#148 Paul on 06.09.15 at 11:15 am

Perfect crack down on rental suites rents go up or people end up out on the street . There are thousands of them being subsidised by property owners or let’s give them no money down interest only mortgages and get this market moving!

#149 Cmhc on 06.09.15 at 11:17 am

Bank of mom cannot trump cmhc. All new immigrants are using cmhc and maybe rental suites if they can lie enough on their application. Sub prime non existent in Canada? Think again and visit your local credit union. Rules of the game are political and if nothing changes on that front … Sorry Canada it was nice to live here for 10 years but it’s time to go

Need help with the luggage? — Garth

#150 Julia on 06.09.15 at 11:24 am

#146 Bottoms_up
” #121 Gen X Confessions on 06.09.15 at 12:37 am
———————————————————-
Don’t forget it’s also OK for parents to want to help out their kids.

They see how hard it is to ‘make it’ in today’s society. If the average house is $400,000, and a ‘normal’ downpayment is 20%, where is a Millenial going to come up with $80,000? That’s 13 years of saving $500/mo.

So I think parents try to help where they can. Nothing wrong with that.

Then don’t complain about high house prices. Subsidizing buyers fuels them. — Garth
______________________________________

Are you the one arguing with me? LOL

http://www.cbc.ca/news/business/18-of-first-time-homebuyers-get-help-from-parents-caamp-says-1.3104661

The CAAMP report’s stats are being called into question. — Garth

#151 Leo Trollstoy on 06.09.15 at 11:25 am

Garth, do you think this might cool off the bidding wars?

No. Most agents abide by this rule anyway. When I sold a Toronto bung in 4 days this spring there was a bidding war and I saw all the offers.

#152 Leo Trollstoy on 06.09.15 at 11:26 am

Don’t forget it’s also OK for parents to want to help out their kids.

What’s your definition of help?

#153 Julia on 06.09.15 at 11:46 am

The CAAMP report’s stats are being called into question. — Garth

Is that stat too low?

Yes, some believe dramatically so. — Garth

#154 Mike S on 06.09.15 at 12:02 pm

“Then we should regret all the kids now being pushed into over-inflated assets and elevated debt levels by their copter parents. — Garth”

Some of these kids are my friends.
I already did my part on warnings and regretting especially in the last few years, when things became REALLY crazy

It doesn’t help really. Some times you just need to let things be and get people figure out things by themselves

The few millennials who did listen to you are way ahead today than their peers, and will continue to be so in the years to come. It is what it is, the housing market will sort out itself sooner rather than later

#155 Vamanos Pest on 06.09.15 at 12:11 pm

I rent and would like to see prices go down. Having said that, I have no specific problem with Bank of Mom, as long as there is enforceable documentation that the money is a gift and not repayable. (Or,full disclosure that the money is a loan so that that liability can be accounted for in qualifying for the mortgage).

In general, I have no problem with gifts. People can do what they want with their own money. (I think it’s stupid, but I don’t think a gift from parent to child is an area that the government needs to be legislating.)

I do have a huge problem with borrowing a down payment, from any source. How is it not absolutely a universally agreed upon notion, that someone buying a house should have some money.

You only need 50k to borrow a MILLION. If you can’t come up with that relative pittance unencumbered, then the lenders should just be saying no. And if the lenders won’t say no (why would they, they’re protected by the full faith and credit of the government of Canada) then there should be rules restricting this practice.

Wait, that’s all too complicated. Instead, we should just end the CMHC. High price problem fixed.

#156 Mike S on 06.09.15 at 12:21 pm

“What’s your definition of help?”

Leo Trollstoy, this answer seems to be one of your major contributions to the comment section. the rest of the time you seem to troll on Mark

What is the point? you have nothing better to do?

#157 Mister Obvious on 06.09.15 at 12:52 pm

#122 Steve French

“This crash is going to be something too behold…”
————————————

I picture it differently. Think of a new, taught, shiny, fully inflated birthday balloon being slapped about by a room full of wide-eyed party goers.

Then just leave it in the corner for a few days.

Now what have you got? A soft, thin, wrinkly rubber bag about two thirds it’s former size that nobody wants to touch anymore because it feels creepy.

That’s a more accurate visual.

#158 Jonathan B Worth on 06.09.15 at 12:58 pm

Great blog as usual Garth. Here’s a news article on the topic from 1983. Would love to here more about this story…you kinda left us hanging without more details.

https://news.google.com/newspapers?nid=1946&dat=19841222&id=k0YwAAAAIBAJ&sjid=r6UFAAAAIBAJ&pg=3063,690738&hl=en

#159 Nonno60 on 06.09.15 at 1:06 pm

Garth, have to disagree with your thinking of taxing the BoM!

BoM helped me and I in turn will help my kids. This is ingrained in our culture to help your kids get off to a good start in life especially if you can afford to. To suggest to tax after taxed dollars again is lludicrous.

BoM or BoD (DAD) have the right to do whatever they want with their hard earned money!

If you want lower house prices this is NOT the way to do it.

If you wish higher house prices, then carry on. — Garth

#160 Realtor007 on 06.09.15 at 1:09 pm

I’m just taking a little well deserved lunch break while reading my favourite blog, someday’s I really do wish this blog was right about the RE slow down, I’ve been doing 10-12 hour days 7 days a week and I need a break, the amount of buyers coming into the market is insane, even Wasaga is hit with bidding wars from what I hear from fellow colleagues.

#161 nobody on 06.09.15 at 1:22 pm

#142 MF on 06.09.15 at 10:14 am
#135 nobody on 06.09.15 at 8:23 am

What about for residents like us?
____________________________________

Talk to your accountant. Applies only to non-residents as far as I know.

#162 Laurie on 06.09.15 at 1:24 pm

Greetings from the Nation’s Capital. My husband and I just spent 4 days searching for a new rental home in downtown Ottawa. It was an interesting, easy search. The real estate market here has flatlined so much it is impacting the rental market. People trying to sell their homes can’t move them, and are now so desperate to start earning income on empty properties, they will happily take whoever comes first – a renter or a buyer. For us this meant having the pick of the crop of homes and basically naming our rental price. No complaints.

#163 rosie "moving forward" in the knowledge that, "this won't end well" on 06.09.15 at 1:26 pm

Tony Abbott is telling the truth. What a strange politician.

http://www.smartcompany.com.au/legal/politics/47209-tony-abbott-is-absolutely-right-on-house-prices-terry-ryder.html#

#164 HD on 06.09.15 at 1:28 pm

@ MF

Here is my 2 cent for it’s worth:

http://canadiancouchpotato.com/2015/05/07/should-you-replace-bonds-with-cash/

Bond yields are dismal today, but let’s remember that you add bonds to a diversified portfolio not to boost your returns, but to dampen your overall volatility. Bonds funds can fluctuate in value, but they are nowhere near as volatile as equities, so they’re like adding cool water to a hot bath to make it more comfortable.

There will always be an asset class that will be out of favor…..nowadays, bonds seem to be the one.

The temptation to time the market or predict the future is strong as demonstrated by some posters today.

Remember, the whole point in rebalancing is to be a contrarian. Buy more when people or selling and sell when people are buying (until target weighing is reached). You are not supposed to make ‘money’ with bonds. They are in your portfolio to tame volatility.

You just started investing. Give your strategy at least a year before you start playing around with the design.

Did you end up applying for that margin account at BMO?

Best,

HD

#165 Linda on 06.09.15 at 1:33 pm

Wow. Wow. Wow.

http://www.theglobeandmail.com/report-on-business/economy/housing/canadians-borrow-over-10-billion-annually-for-home-down-payments/article24871171/

These numbers, as reported, show the terrible financial fragility of new buyers who are driving up our markets with the help of mom and dad.

Now if, as has been suggested, the amounts borrowed just to make a down payment are even larger?

Holy crap, are we in for some trouble.

Talk about precarious……..

#166 condopoor on 06.09.15 at 1:37 pm

“I’ll leave it to the evil minds at the CRA how to deal with this untaxed financial benefit.”

I’m wondering how this could ever be stopped. Parents will always (and should always, in my opinion) be able to give their family cash of any amount, for any reason, should they choose to – without penalty. Once in the hands of the stupid, how could we change what they do with it?

Cash gifts for downpayments must, by law, be revealed as such to a lender, who is then responsible to CMHC. Wonder if that always happens? — Garth

#167 He's Sparticus on 06.09.15 at 1:38 pm

I get the fact that Hot Money (regardless of origin) is a small proportion of YVR purchases. I really do. But it does exist and fuels the fire. Prices are set at the margin and at whatever level people are willing to pay for it.

Works on the way up and on the way down.

If a house in any area is bought with money that has to be used or lost, they will pay the premium to achieve their objectives and overbid. This sets the level for other houses in the area that the sheeple have to match (aided and abetted of course by debt pushing banks and complacent, gullible “millionaire” parents who drank the cool aid offered by that nice equity release man, again from the bank).

The Borg assimilation and collective madness of otherwise rational people is astounding. An inevitable runaway critical mass reaction that results when you withdraw the control rods of normal interest rates combined, a little, with unquestioned, apparently unregulated look-the-other-way capital inflow.

We will look back at this time and think “what the hell where we doing” in the same way that previous generations said, “How much? For a bloody Tulip!!”

Prices are set at the margin. Able denialists will sit it out, but the price in the block will be set by distressed sellers (death, divorce, debt burdened downsizers & unemployment). The illusion of wealth evaporates quickly and house value will be defined by whoever is willing to catch the falling knife in the death spiral that always always follows a boom.

The roller coaster is at the top. Put your hands up in the air as it will feel faster on the way down.

#168 Holy Crap Wheres The Tylenol on 06.09.15 at 2:04 pm

If we are headed for a nasty crash, (I prefer an abode implosion) then when all of the ex-home owners hit the pavement without major equity, the existing renters are going to suffer. As masses vacate their humble abodes they will all require a domicile to bed up with the kittens. Thus renting and it will start to look like uber-renting rates shall trickle in as old leases renew. Or should I say flood in. Rent control my ass! There is so many basement apartments holding the huddled masses now it’s going to look like the diaspora of WWII just landed on our shores. Renting may not be as lucrative if this scenario occurs.

http://globalnews.ca/news/1887724/canadian-home-prices-to-fall-40-50-per-cent-financial-author-says/

#169 Entitled Conservative Senator on 06.09.15 at 2:33 pm

Move along, move along, nothing to look at today. The auditor’s report will only put you to sleep.

Garth, stop being such a rebel and keep your mouth shut if you know what’s good for you.

Remember, I am keeping a seat warm for you :)

#170 Holy Crap Wheres The Tylenol on 06.09.15 at 2:34 pm

The American! Had to laugh at this one! This is what a typical American knows about Canada. Hell I grew up as a Canadian born American kid and was educated in four states including my stint in university! If it wasn’t for my parents teaching me stuff about Canada I could have been one of these guys. Well lets hope wealthy US citizens know to stay away from our real estate!

http://www.cbc.ca/news/arts/jeopardy-contestants-completely-stumped-by-canadian-cities-category-1.3098217

#171 Gen X Confessions on 06.09.15 at 2:47 pm

#146 Bottoms_Up on 06.09.15 at 10:49 am

———————————————————-

So I think parents try to help where they can. Nothing wrong with that.

Then don’t complain about high house prices. Subsidizing buyers fuels them. — Garth

—————————————
I think the question is whether the parents are truly helping them. By playing Bank, are they exerting too much influence in their kids’ lives and saddling them with a house-poor lifestyle that they might not have chosen for themselves? Is it really right to continue the “parent knows best – dependent child” dynamic when the child is into their 30s and has their own spouse and/or kids? No wonder people still (wrongly) refer to grown Millennials as girls and boys. Like writing someone else’s final exams for them – is their future success really going to be as sweet when they realize they didn’t really do it themselves?

Not to mention Garth’s point about the BOM&D actually being part of the reason the prices are inflated in the first place…

#172 Ponies Pilates on 06.09.15 at 2:57 pm

Rosenberg was an amateur.
The true King of Flip was Nelson Skalbania.

#173 Canada is a credit and housing ponzi on 06.09.15 at 3:35 pm

Every useless realtor and banker knows it.

http://www.cbc.ca/news/business/household-debt-rises-4-6-to-1-82t-in-april-1.3098583

#174 Pete on 06.09.15 at 3:52 pm

#149 Cmhc on 06.09.15 at 11:17 am
Bank of mom cannot trump cmhc. All new immigrants are using cmhc and maybe rental suites if they can lie enough on their application. Sub prime non existent in Canada? Think again and visit your local credit union. Rules of the game are political and if nothing changes on that front … Sorry Canada it was nice to live here for 10 years but it’s time to go
____________________________________

CMHC is going to bankrupt Canada. Canada may end up like Greece forced to either go bankrupt or sell its assets for pennies on the dollar. If that happens the people of Canada aren’t smart enough to fight like the greeks as the politicians will agree to sell Canada away for pennies on the dollar. Not that harper isn’t doing that now.

#175 PM on 06.09.15 at 3:53 pm

No problem with mom and dad helping out that needs a change.

Just be aware many do it by taking out a HELOC against their home they’ll repay when they sell (they don’t sell because junior wants a place) so there’s more debt.

If rates rise then they’ll be in the same pickle as junior. They’ll learn a debt lesson together as a family.

…if rates rise…

#176 Jimmy Beamer on 06.09.15 at 4:04 pm

I love the new BNS commercial that has a young family ecstatic that they can save $1500 a year and qualify as ‘richer than you think’…too funny. But, they don’t save the money…even at that paltry ‘riding the razors edge of impoverishment’ $1500…they end the commercial with the family ‘investing’ in a new computer and faster broadband.

I don’t know about y’all…but it costs more than $1500 for brakes on my unit these days. How are Canadians so broke that they have a total of $1500 net at the end of the year…with two kids….one bad set of brakes and the kids go hungry I guess.

Has anyone noticed that nothing on offer has an advertised price tag anymore….it’s just a monthly payment…nothing to do with how much the thing actually costs? Even furniture can’t be bought anymore? The cost of a couch and love seat is now offered on the basis on ‘reduce your monthly pmts’.

Of course the only way to ‘reduce your monthly pmts at near zero interest rates is to punch out the term….and pay for that cheap couch for the next 9 years…..paying double what you would have paid cash…you poor sap.

There’s trouble a brewin’ in paradise.

#177 Bottoms_Up on 06.09.15 at 4:10 pm

#171 Gen X Confessions on 06.09.15 at 2:47 pm
————————————————————
LOL! And to think you’ve gotten where you are in life “all by yourself”.

I’ve got news for you, EVERYONE needs or has needed help and support at one time or another.

#178 Bottoms_Up on 06.09.15 at 4:19 pm

#162 Laurie on 06.09.15 at 1:24 pm
——————————————-
“Downtown” ottawa doesn’t really have rental homes, unless your definition of downtown is used very loosely.

and on mls I couldn’t find anything really decent for under $3000/mo except for one listing near Dow’s lake.

#179 Holy Crap Wheres The Tylenol on 06.09.15 at 4:23 pm

The BOM is rampant in our generation. Thank god my wife and I told the children that if you want something work for it. If you need help ask. Help not meaning I will pay your bills. The only thing we gave them was a paid education. That way when they graduated from University they were debt free with a degree and a clean slate. We have a neighbor that still pays the phone bill, car insurance, food, and lets their two young men live at home in the basement RENT FREE! These two dropouts have jobs but they blow it all on weekend fun and girls. There is nothing wrong with living the way they do but they will never make it on their own. Oh and the father gave the one son his car to use free. Holy Crap I said to him are you nuts. Well he needs it to get to work. I reminded him we have a bus system that is pretty cheap!

#180 jess on 06.09.15 at 4:37 pm

lessons (not) learned

…” March, 1984–Failure of Empire Savings of Mesquite, TX. “Land flips” and other criminal activities are a pattern at Empire. This failure would eventually cost the taxpayers approximately $300 million.

March, 1985–Ohio bank holiday. Anticipated failure of Home State Savings Bank of Cincinnati, OH and possible depletion of Ohio state deposit insurance fund cause Governor Celeste to close Ohio S&Ls. Eventually, those that can qualify for federal deposit insurance are allowed to reopen.
May, 1985–S&L failures in Maryland eventually cause loss to state deposit insurance fund and Maryland taxpayers of $185 million. Ohio and Maryland S&L failures helped kill state deposit insurance funds.
July, 1985–Chairman Gray begins transfer of federal examiners to the twelve regional Federal Home Loan Banks so that they are no longer overseen by OMB and their salaries are paid directly by the Bank Board system.
August, 1985–Only $4.6 billion in FSLIC insurance fund. Chairman Gray tries to gain support for recapitalizing FSLIC on Capitol Hill. In 1986, GAO estimates the loss to the insurance fund to be around $20 billion.
December, 1985–Bank Board allows S&L examiners to “classify” questionable loans and other assets for the purpose of requiring loan loss reserves.
….
https://www.fdic.gov/bank/historical/s%26l/

Other major provisions of FIRREA include: $50 billion of new borrowing authority, with most financed from general revenues and the industry; meaningful net worth requirements and regulation by the OTS and FDIC; allocation funds to the Justice Department to help finance prosecution of S&L crimes. Additional bank crime legislation the next year (i.e., the Crime Control Act of 1990) mandates a study by the National Commission on Financial Institution Reform, Recovery and Enforcement to uncover the causes of the S&L crisis, and come up with recommendations to prevent future debacles.”

#181 Gen X Confessions on 06.09.15 at 4:40 pm

#177 Bottoms_Up on 06.09.15 at 4:10 pm
————————————————————
LOL! And to think you’ve gotten where you are in life “all by yourself”.

I’ve got news for you, EVERYONE needs or has needed help and support at one time or another.
——————————————————

I never said “all” by yourself.

#182 jess on 06.09.15 at 4:43 pm

Faulkner in 1995 began serving a 20-year federal prison term.

TROUBLE IN DANNYLAND
High-rolling, Holy-Rolling Faulkner made a fortune in condos. But how?
By Eric Miller From D Magazine February 1984
http://www.dmagazine.com/publications/d-magazine/1984/february/trouble-in-dannyland

#183 Karma on 06.09.15 at 4:48 pm

“Bond Market’s Storm Finally Hits Junk Debt as Buyers Flee ETFs”

http://www.bloomberg.com/news/articles/2015-06-09/bond-market-s-storm-finally-hits-junk-debt-as-buyers-flee-etfs

Now, why would you buy a junk-bond ETF? — Garth

#184 Squirrel meat on 06.09.15 at 5:11 pm

#176 Jimmy Beamer on 06.09.15 at 4:04 pm

I love the new BNS commercial that has a young family ecstatic that they can save $1500 a year and qualify as ‘richer than you think’…too funny. But, they don’t save the money…even at that paltry ‘riding the razors edge of impoverishment’ $1500…they end the commercial with the family ‘investing’ in a new computer and faster broadband.

I don’t know about y’all…but it costs more than $1500 for brakes on my unit these days. How are Canadians so broke that they have a total of $1500 net at the end of the year…with two kids….one bad set of brakes and the kids go hungry I guess.

Has anyone noticed that nothing on offer has an advertised price tag anymore….it’s just a monthly payment…nothing to do with how much the thing actually costs? Even furniture can’t be bought anymore? The cost of a couch and love seat is now offered on the basis on ‘reduce your monthly pmts’.

Of course the only way to ‘reduce your monthly pmts at near zero interest rates is to punch out the term….and pay for that cheap couch for the next 9 years…..paying double what you would have paid cash…you poor sap.

There’s trouble a brewin’ in paradise.

—————————————–
Totally.
Everything is now just-in-time cash flow.
With peer-to-peer loans, folks will be taking out loans at the cash register on their phones.. and just keep it all flowing.

Kidults Kiiji everything and just keep it flowing from one to another. They have no intention of ever paying the mortgages off – the number is irrelevant to them. They have never known a different world.

#185 The American on 06.09.15 at 5:21 pm

At #170: Holy Crap Where’s the Tylenol, I totally get what you’re saying! Of course, can you understand why? I mean, that’s like asking an American to focus on one of it’s 50 states and asking trivia that really doesn’t affect their day-to-day life, or much like asking Canadians in their own country questions about their own country, history, or global affairs, sort of like this! ;-) THESE ARE JUST FOR FUN! Ignorance of both countries exists on either side of that boarder.

https://www.youtube.com/watch?v=xLuNX_1U2zg

https://www.youtube.com/watch?v=-4ml6pc5cyc

https://www.youtube.com/watch?v=MbbLzoVSp7k

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

https://www.youtube.com/watch?v=1MMI_lfK6N8

http://www.vice.com/en_ca/read/why-are-dumb-canadians-waving-the-confederate-flag

https://www.youtube.com/watch?v=9ZE3kwCJpjc

https://www.youtube.com/watch?v=-UnU8XcKdEU

https://www.youtube.com/watch?v=3liA1GLKbW4

Seriously, though, what’s up with milk in bags? ;-)

#186 Vanecdotal on 06.09.15 at 5:26 pm

“The premier gets it.”

LOLz really GT? Not exactly someone many would presently align themselves with, (including former BC lib supporters). Zombie apocalypse must be near. But hey – the yogathon on one of our busiest downtown bridges this weekend will distract those worker bees… Go Christy go!

Every time she opens her mouth I think of “Veep”.

#187 Squirrel meat on 06.09.15 at 5:39 pm

#185 The American on 06.09.15 at 5:21 pm

At #170: Holy Crap Where’s the Tylenol, I totally get what you’re saying! Of course, can you understand why? I mean, that’s like asking an American to focus on one of it’s 50 states and asking trivia that really doesn’t affect their day-to-day life, or much like asking Canadians in their own country questions about their own country, history, or global affairs, sort of like this! ;-) THESE ARE JUST FOR FUN! Ignorance of both countries exists on either side of that boarder.

——————-
True enough, but you got a whole lot of explaining to do for this mess!….

https://www.youtube.com/watch?v=ghrDIQ-K8mg

#188 Nagraj on 06.09.15 at 6:51 pm

BOMMERS STRIKE AGAIN !!!
(Canadian Press 14/6/2015)

Members of the Bank-of-Mom United have lynched popular Canadian blogger, G. Turner.
Wearing goalie masks and beating on cookie tins with wooden spoons, the ladies swarmed his house, stripped him naked, hogtied him, and drove him to woods. There they rubbed him, generously and vigorously, all over with bacon fat. [Despite his distress the victim couldn’t help giggling]. Then they strung the naked and hogtied blogger from a tree branch and left him dangling, about four feet off the ground. His coyote-ravaged carcass was discovered this morning by a class of botany students on a field outing.

This is the second such lynching in recent days. The previous three lynchings were carried out by MAHO (Mothers Against Homeless Offspring) who threw their victims into the zoo gorilla enclosure.

According to various reports, the ladies of both groups join in lustily singing “Oh Canada” before leaving the scene of the crime in their minivans.

#189 Sspectacle on 06.09.15 at 7:05 pm

On a related note:
” #172 Ponies Pilates on 06.09.15 at 2:57 pm
Rosenberg was an amateur.
The true King of Flip was Nelson Skalbania. ”

Wow, you’ve got a great memory for history!

I recall those days…but I was very young. He and his partners had an issue , seemed they owed $140,000,000 to the banks ( inside info…it was $175,000,000 ).

They avoided any legal issues, and paid back 10 cents on the dollar. Garth may recall this agreement?

The final story was:
“When you owe the Bank $1,000,000 ( and they call It in) You have a problem. When you owe the Bank $175,000,000 , They have a problem. ”

Ahh the days, they had company had Rolls Royces, Private corporate Jets, Limos, Yachts, Presidents Suit ( I even had direct access from my office to a 200 foot top floor balcony in heart of DTown, private log burning fireplace in my office). Man I was young then.

Great education And that was Real money back then!

When it all fell down , there was only one Crane on a job site in downtown, and that was because they were arguing who paid the bankrupt developers removal fee!

#190 Stuck on 06.09.15 at 8:52 pm

Stuck in the skytrain after almost 2 hours of no response from @TransLink i realized that canadians are too polite, no anger for being treated like cattle, same with RE nobody remembers that prices can be. Negociated down, people gave up hope and just sign on the dotted line. Maybe is the driver’s fault at the end of day…

#191 Arch Douche on 06.10.15 at 2:01 am

#190 Stuck on 06.09.15 at 8:52 pm

Vancouver…best city on earth…I’m sure all those Skytrain passengers would agree.

#192 Alex Smith on 06.10.15 at 2:32 am

You forgot to mention that the sellers in that massive Toronto sell-off were the Montreal Bronfmans, Edgar and Charles. One wonders if they knew how flaky/shady the buyers were. No matter, the Province of Ontario took over all debt in the deal, and the Bronfmans skated off to the U.S. with the money, eventually ending up with 25% ownership in Dupont.

#193 Laurie on 06.10.15 at 9:47 am

#178 Bottoms Up – actually you’re wrong. We are renting a semi-detached house in Byward Market for $1750: 2 bedroom + den, 1.5 bathrooms, living/dining, laundry, parking, newly reno-ed bathroom with jacuzzi tub, skylights…. Best you take a closer look at those rental listings.

#194 jess on 06.10.15 at 12:24 pm

occupancy fraud

https://www.fanniemae.com/content/fact_sheet/mortgage-fraud-statistics-0315.pdf