Ground zero

CREMATED modified

As of now, we have $1.82 trillion in personal debt, which is a gonzo number for a country of 35 million people.

So, $1.27 trillion (a trillion is a thousand billion, and a billion is a thousand million) is mortgages. We’re increasing this housing debt at the rate of $71 billion a year, or about $6 billion a month. That’s net new debt, after everybody has already paid off some of the old borrowing. And it doesn’t count the $10 billion a year the mortgage brokers say comes from the Bank of Mom (for down payments).

Obviously we’ve never owed this much before. But then, mortgage rates have never been this low, either. There’s a direct correlation. The cheaper money gets, the more we consume.

On Tuesday we found out there are 270,000 jobs sitting open in the US, waiting for candidates to fill them. That’s more  than at any time in the past 14 years. Companies are expanding faster than the pool of qualified people can grow. On Friday came news 280,000 new jobs were created there last month, so that means at least two hundred thousand more paycheques in 15 of the past 16 months. The best stretch in decades.

So, the Fed will start raising its key rate in September, based on this stream of data. Already 30-year mortgages have popped in the US, and the bond market is adding yield. In Canada we just heard that, despite oil, almost sixty thousand jobs were created here. Yesterday came word housing starts have rebounded. And the car guys are selling up a storm.

Thus, the Bank of Canada won’t be cutting its rate again. As this pathetic, prophetic, prophylactic blog said on the weekend, this is the bottom, baby. Mortgage ground zero. That likely means the poodles in Ottawa will start following the Fed higher sometime after Valentine’s Day, taking variable rate loans with them. But in the meantime, fixed-rate, five-year mortgage costs will be swelling in Canada along with bond yields.

Once the herd gets the first whiff of looming rate increases, expect a brief surge of buying. This is lemming logic – rushing to get a property at its highest-ever cost so you can enjoy a few years of lower mortgage payments, but end up with more debt and less equity. Duh. It happens every time.

Once that surge ends, the path ahead should be clear. Rates trickle higher over the course of a number of years and housing trickles lower. It’s already happening, as I’ve told you. We have a two-city bubble, with weak markets and real price reductions across the rest of the country. Factor out YVR and the GTA and the annual increase of 1.1% is lower than inflation – even with the cheapest mortgage costs on record.

And the bubble cannot withstand more costly loans. Two things will quickly become apparent in our two capitals of delusion: (a) foreign capital may have a sizable impact on the top end of the market, but it sure won’t rescue the rest of it, and (b) when people wake up one day and hear housing isn’t a sure thing, they stop buying. Witness Calgary.

Given this, it’s a reasonable conclusion that five years from now mortgages taken out at 2.8% will be renewing at 5%, housing appreciation will grind to zero nationally and be negative in many major cities, while Canadians will be among the most personally indebted citizens on earth. That will subdue consumer spending, keep economic expansion below that experienced in the US, and be reflected in a higher unemployment rate.

One day your daughter gives up and sells her condo for a loss. Why, she asks, did you push me into it?

Welcome to the crash. Not with a bang but a whimper.

168 comments ↓

#1 TurnerNation on 06.09.15 at 6:31 pm

Reporting live from a Dollarama.

Ain’t too proud to beg ;)

#2 Squirrel meat on 06.09.15 at 6:32 pm

As of now, we have $1.82 trillion in personal debt, which is a gonzo number for a country of 32 million people.

And many have none.. so it’s really quadruple-gonzo.

https://www.youtube.com/watch?v=8rh6qqsmxNs

#3 PM on 06.09.15 at 6:36 pm

Debt is higher than last year but so are wages and population and inflation etc.

How does it look on a relative basis? What’s the per capita debt load? Is that rising too?

#4 JSS on 06.09.15 at 6:37 pm

“Given this, it’s a reasonable conclusion that five years from now mortgages taken out at 2.8% will be renewing at 5%”

Then it’s a reasonable conclusion that $500,000 houses will be worth, what? $350,000?

#5 tom on 06.09.15 at 6:41 pm

Garth you are such a nimrod, believing all the job stats coming out of the BLS(missing 2 important letters)! All the NEW jobs where in the bar recovery and illegal aliens. If you think in 5 years rate will be 5% your a dreamer, no growth won’t allow that to happen. Keep pumping the US, stock markets and realize that everything is in a bubble buddy.

#6 Oracle on 06.09.15 at 6:43 pm

Garth,

That may be true for the rest of Canada, but here in Vancouver (Canada’s Asian city) prices will continue their relentless climb higher, unless immigration and $ transfer and tax rules are tightened and enforced.

Until then, the foreign buying juggernaut continues its unabated onslaught, pricing us poor loyal taxpayers out of the market.

I do hope you are right…love your blog, it’s a daily read for me!

#7 Smoking Man on 06.09.15 at 6:47 pm

Makes Sense to move South.

#8 Mr. Reality on 06.09.15 at 6:51 pm

And then all Canadians will understand the term:

Unintended Consequences.

Poor sheeple

Mr. R.

#9 Butch on 06.09.15 at 6:52 pm

Well, it’s looked like the insanity would end before. Maybe (hopefully) this time it will be for real.

#10 Llewelyn on 06.09.15 at 6:54 pm

I wonder how many readers of this blog are aware of the influence the Canada Housing Trust (CHT), established by CMHC in 2001, has had on the supply of high ratio mortgage funds

In 2015 the CHT contains over 75% of CMHC’s total housing related liabilities and holds approximately 20% of total residential mortgage debt in Canada.

CHT’s exposure to risk is mitigated by collateral based on derivatives in the form of Government guaranteed NHA Mortgage Backed Securities (NHAMBS) approved by CMHC and constructed using pools of high ratio residential mortgages insured by CMHC and private mortgage insurers.

At regular intervals the CHT issues Canadian Mortgage Bonds (CMB) and uses the proceeds from bond sales to purchase guaranteed NHAMBS from financial institutions, who in turn use proceeds from NHAMBS sales to issue more high ratio insured mortgages that in turn are packaged into more guaranteed NHAMBS that in turn are sold to the CHT to secure the next issue of CMB Etc, Etc.

CHT mitigates their risk through swap agreements negotiated with approved financial institutions as counterparties. Under these swap arrangements the counterparties agree to pay the CHT an amount equal to the coupon payments established for the CMB issued by the CHT.

Nearly all risk incurred by CHT, CMHC, the Government of Canada, the purchasers of CMB, the financial institutions issuing insured high ratio mortgages and the institutions insuring these mortgages against default has been placed on the backs of Canadian homeowners who remain on the hook for any shortfall between the value of their mortgage and proceeds realized when the asset is sold.

This begs the question of whether it was prudent of the Government of Canada to base increased availability of high ratio mortgage funds on the financial health of homeowners unable, or unwilling, to contribute 20% of the ‘market value’ of their purchase.

There are many ways to construct a house of cards but very few options start with the weakest foundation possible. It would be interesting to calculate the tipping point for the house of cards the Government of Canada and CMHC helped create on the backs of Canadians who might not qualify for a mortgage if 20 % of the purchase price of their home had to be provided as equity.

Our chartered banks are making billions of dollars in profits issuing high ratio mortgages to Canadians with the greatest exposure to a decline in real estate values. These profits are being fully guaranteed by the Government of Canada.

It was fortunate the Government of Canada didn’t offer similar guarantees for margin accounts opened by Canadians with limited resources prior to the 1929 stock market crash.

Leonard Cohen said it best

Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows the fight was fixed
The poor stay poor, the rich get rich

Everybody knows that the boat is leaking
Everybody knows that the captain lied
That’s how it goes
Everybody knows

#11 SmallTownTokenBrown on 06.09.15 at 6:55 pm

I still can’t believe that I’m still a minority in my group of coworkers, friends, relatives who think this market is nuts. Only my Mom and her friend have doubts about the housing market.

It’s crazy. I told someone that a term being used is “house horny” and he replied “Well, I guess I’m horny” he moved here from Guyana when young and has worked hard and done decent for himself and flipped a house every 2 years for the last 18 so this is all he knows. Work and houses. It was almost as if he had never even heard of a market bubble before.

#12 ILoveCharts on 06.09.15 at 7:00 pm

Garth and blog dogs: Honest question.

Won’t the government just “fix” this problem with immigration and lax environmental rules?

There are hundreds of millions of people who want to come to Canada. Faced with economic ruin for a decade or more, we aren’t going to close the doors like Japan – we’ll just open the doors and achieve growth that way.

Also, if we got rid of those pesky environmental rules, we could do a lot more mining, forestry, etc.

#13 Prairieboy43 on 06.09.15 at 7:02 pm

American license UHauls heading south, pulling cars. People are pulling out. Millennial cut me deal on a nice big WEBER BBQ,$0.05 on the dollar. I expect better deals down the road. Patience!! A good hunter is patient.

#14 Leroy Washington on 06.09.15 at 7:04 pm

Canadians are a truly stupid class of people, when it comes to money matters.

God bless the U. S. of A. motherfarmers!!!

Woo hoo!

#15 Cj on 06.09.15 at 7:05 pm

Garth it now looks like we will actually start to see rates increase, would your advise be to decrease exposure to bonds? If so where would one go? Doesn’t the stock market like low interest rates?

#16 Mark on 06.09.15 at 7:10 pm

“On Tuesday we found out there are 270,000 jobs sitting open in the US, waiting for candidates to fill them. “

Careful there. This sort of thing has been claimed for decades now, but the real proof in the pudding would be wages rising. Which they aren’t for non-supervisory employees. Wage growth has been anemic, and productivity is falling.

I know in the IT sector, with 3rd party recruiters looking to score a commission, its not uncommon for a single job posting made by a principal to be replicated 10-20 times. This might be mistaken, by an amateur, as 10-20 jobs being available and going unfilled, but in reality, its a single job. And often employers aren’t even bothering to fill positions.

Other reasons jobs might be posted but aren’t real include trying to get existing employees green cards. Firms have to advertise a job, but they have no intention whatsoever of filling it with an applicant. This Youtube video describes the process many employers go through:

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

#17 Bby604 on 06.09.15 at 7:11 pm

t rescue the rest of it, and (b) when people wake up one day and hear housing isn’t a sure thing, they stop buying. Witness Calgary.

———
Calgary isn’t even bad, prices are barely lower , the way this blog talks you’d think it was Florida 2009. Even the layoffs have quieted down. Keep it real

#18 Doomer Gloomer on 06.09.15 at 7:12 pm

“the Fed will start raising its key rate in September”
“the Bank of Canada won’t be cutting its rate again”

As much and I like you and respect you Garth, I think you’ll have your tail between you legs come sept or dec when both prediction will be wrong. No western central bank is raising rates in the foreseeable future. Their governments won’t allow it. We are all Japanese now.

#19 Vanecdotal on 06.09.15 at 7:14 pm

“…foreign capital may have a sizable impact on the top end of the market, but it sure won’t rescue the rest of it…

Exactly, how refreshing! Welcome to the YVR dark side GT, but don’t worry, we have cookies. Very special cookies… :)

#20 BS on 06.09.15 at 7:15 pm

Standing behind a family in the grocery store today. Little kid says “Mom can I buy this gum?”Mom says no we can’t afford it. The kid says “what about grandma?” Mom says “No, Grandma just gave us money to buy a house”.

Not just mom and dad handing out the money. People are getting their inheritances early.

#21 Mark on 06.09.15 at 7:16 pm

” If you think in 5 years rate will be 5% your a dreamer, no growth won’t allow that to happen.”

I tend to agree. Risk premia on mortgages and consumer credit is likely to rise, so it may very well be a 5% loan as a person’s equity recedes and they’re considered to be much higher risk. But systemic (ie: BoC policy) rates rising that much? Not a chance! It will take much longer than 5 years for central banks to fully fight off the deflation associated with house prices falling in Canada. Heck, 9 years after the USA market peaked, they still haven’t fixed their problem either.

There is no deflation. This is making you look comical. — Garth

#22 zee on 06.09.15 at 7:19 pm

hi

Last week, you said BoC may cut rates, today you say that wont happen and tomorrow it will be back on a rate cut because of new weak data points. Same goes for America.
I just wish they would raise rates so that we can stop talking about this.

Actually I did not say the BoC would cut, but others did. The data does not support it. — Garth

#23 Bill Blankstein on 06.09.15 at 7:21 pm

Blacks is closing up shop with its retail locations. Will this hurt Telus’ stock? Sad to see an iconic Canadian retailer go the way of Blockbuster and Kodak.

#24 mike leblond on 06.09.15 at 7:24 pm

June 9, 2015 9:08 a.m. ET
CANBERRA, Australia—Australia promised more investigations into foreign buyers of residential property, in an intensifying crackdown on the abuse of homeownership laws by investors from China and elsewhere.

http://www.wsj.com/articles/australia-gets-tough-on-foreigner-home-buying-1433838354?KEYWORDS=australia+property

#25 Karma on 06.09.15 at 7:31 pm

“One day your daughter gives up and sells her condo for a loss. Why, she asks, did you push me into it?”

Lol! My friends are just realizing this now. Some blame their parents (Azns) already.

One of my friend has parents who want her to takeover their house to rebuild a new house so her parents can live in a custom basement suite. For 2-3 years or so, my friend was entertaining the idea, but not anymore, despite it being in a great neighbourhood and the one she grew up in. But she doesn’t want to have $1 million mortgage while trying to start a family in the next few years. Can’t blame her…

#26 Leo Trollstoy on 06.09.15 at 7:31 pm

UBS more U.S. Jobs, more full-time U.S. Jobs and higher paying U.S. Jobs. Recovery is fine.

“2.7 million of the 3.06 million total jobs created were full-time”

“Additionally, the number of persons forced to work part time for economic reasons dropped by 660,000”

“High-wage jobs…have increased by 1.4 million in the past 12 months”

U.S. Recovery underway. Bonds will crash, yields will rise. Fed will hike. USD will rise.

http://www.businessinsider.in/Not-only-are-more-Americans-employed-but-their-jobs-are-better/articleshow/47606386.cms

#27 Karma on 06.09.15 at 7:40 pm

#5 tom on 06.09.15 at 6:41 pm
“Garth you are such a nimrod, believing all the job stats coming out of the BLS(missing 2 important letters)! All the NEW jobs where in the bar recovery and illegal aliens. If you think in 5 years rate will be 5% your a dreamer, no growth won’t allow that to happen. Keep pumping the US, stock markets and realize that everything is in a bubble buddy.”

Careful now… M3 is growing in the US and Europe.

“”Forecasters ignore broad money at their peril,” says Gabriel Stein, at Oxford Economics.

Mr Stein said total loans in the US are now growing at a faster rate (six-month annualised) than during the five-year build-up to the Lehman crisis. “The risk is that the Fed will have to raise rates much more quickly than the markets expect. This is what happened in 1994,” he said.”

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/11539696/Bonds-beware-as-money-catches-fire-in-the-US-and-Europe.html

Each to their own. I’d prefer that you are heavily indebted over the next 5 years rather than less indebted. But that’s just me.

#28 deaner on 06.09.15 at 7:45 pm

Echoing Marks’ comment, the count of open jobs sitting open is pretty speculative.
We should expect the number of postings to increase as the marginal cost of advertising a job gets closer to zero.
Does it include:
– Craigslist and Kijiji, like our Canadian Numbers
– Bulk advertising purchased by temp agencies
– 15 postings for the same job through intermediaries
– Government organizations leaving the same posting up for a year, to prove they can’t get anyone, so that they can hire a TFW or contractors without pensions, etc…
– Orgs posting job ads just so that they can improve their backlinks and Google search rankings.

#29 Retired Boomer - WI on 06.09.15 at 7:56 pm

Speculation, anyone?

Interest Rates, economic futures. Is YOUR crystal ball all shined up, and never fails??

Mine has never been foolproof. That’s why I hold Bonds as well as recently weak performing stocks. I am an idiot.

This idiot doesn’t really need all the investments, he gets ‘enough’ otherwise. Thus far 2015 has ‘underperformed’ on average, but I don’t much care if rates shoot to Mastercard levels, or crash through the floor.

Balance and affordable living are my mantra. So it goes.
I’ll muddle through whatever comes along.

#30 S.Bby on 06.09.15 at 7:57 pm

No bulldozers allowed in Shaughnessy:

http://www.cbc.ca/news/canada/british-columbia/one-of-vancouver-s-wealthiest-neighbourhoods-could-be-protected-from-density-development-1.3105944?cmp=rss

#31 Karma on 06.09.15 at 8:02 pm

#18 Doomer Gloomer on 06.09.15 at 7:12 pm
““the Fed will start raising its key rate in September”
“the Bank of Canada won’t be cutting its rate again”

As much and I like you and respect you Garth, I think you’ll have your tail between you legs come sept or dec when both prediction will be wrong. No western central bank is raising rates in the foreseeable future. Their governments won’t allow it. We are all Japanese now.”
———————————————————-

Speak for yourself. The US’s debt to disposable income is significantly lower than Canada and many other nations, and thus is not as relatively at risk of rising rates. The IMF’s latest “advice” was actually a plea to delay rate rising for the sake of the rest of the world. The US can, and will, do what it needs to do for its own best interest. Raising rates, albeit slowly, won’t affect the US as much as you believe. If you think they won’t, then you’re betting on Yellen’s sympathy for other countries’ plight…

http://globalnews.ca/news/1727157/canadians-pile-on-more-debt-as-u-s-households-pay-it-down/

http://www.telegraph.co.uk/finance/economics/11637086/ECB-fears-abrupt-reversal-for-global-assets-on-Fed-tightening.html

#32 Mistet Obvious on 06.09.15 at 8:03 pm

#23 Bill Blankstein

“Sad to see an iconic Canadian retailer go the way of Blockbuster and Kodak.”
————————–
I can’t speak for Blockbuster but Kodak deserved it.

#33 Victoria Real Estate Update on 06.09.15 at 8:07 pm

# 6 oracle

In 08-09 (6 years ago) prices in Vancouver were falling fast and hard. Wealthy buyers from China didn’t prevent that from happening.

Prices fell 12% and would have continued to fall if interest rates weren’t suddenly slashed from near normal to emergency levels in 2009.

The performance of Vancouver’s housing market at that time was below average when compared to the rest of Canada, including many cities that aren’t talked about when the topic of wealthy Chinese buyers comes up.

Vancouver’s next major price correction will not be stopped by a major rate drop (rates are already at emergency levels in Canada).

Your claims of unstoppable proce appreciation are based on nothing.

#34 Forzudo on 06.09.15 at 8:11 pm

Online real estate brokerage Zoocasa will cease to exist as of June 22nd, 2015. That means more MLS control of the message:

http://www.cbc.ca/news/business/real-estate-website-zoocasa-to-shut-down-june-22-1.3106428

#35 nubbers on 06.09.15 at 8:13 pm

Ha! Lemming logic! That is exactly how my other half thinks. I know I am in for a rough ride just as interest rates start to rise.

#36 Time to pony up on 06.09.15 at 8:16 pm

Come on Garth.
No crash ever ends with a whisper.
The bang from this one will be heard around the world.

#37 Leo Trollstoy on 06.09.15 at 8:18 pm

UBS shows more jobs, more full time jobs, less part time jobs and more high paying jobs.

The U.S. Economy is getting stronger. The Fed will raise rates. Sorry U.S. doomers.

http://www.businessinsider.com/more-americans-have-high-quality-jobs-2015-6

#38 Chaddywack on 06.09.15 at 8:19 pm

Foreign capital may be involved at the top, but wouldn’t foreign investors be even more likely to start buying cheaper properties as they fall more and more? I’m sure these rich foreigners didn’t get that way by being stupid. The theory I hear often in Vancouver is that the city is basically immune to price falls because prices dropping would just lead foreign investors to buy even more property because now they could afford even more since prices are down.

I buy good stocks when they are on sale, why wouldn’t foreign investors do the same with real estate?

#39 Godth on 06.09.15 at 8:20 pm

If Your BS Detector Isn’t Shrieking, It’s Broken
http://charleshughsmith.blogspot.ca/2015/06/if-your-bs-detector-isnt-shrieking-its.html

#40 IKnow on 06.09.15 at 8:21 pm

Garth said: (a) foreign capital may have a sizable impact on the top end of the market, but it sure won’t rescue the rest of it,

—————————————–

Hooray, Garth final accepts the not quite insignificant impacts of foreign money.
Hope we won’t hear too much more of that hair-spliting distinction between Foreign vs Locals, as in someone who lands at YVR a microsecond ago has to be Local.

China money still will have diffusion effect, someone made big profit will buy multiple condos or houses, and it will give the psycho boost for house lust – first affecting the local ethnic Chinese and then the rest.

Vancouver is singular because ethnic Chinese here have enough critical mass whose action becomes very noticeable. I’m ethnic Chinese, so no racial card.

Actually lower mainland is far more affordable.
Remember when a SFH in Vancouver worth $300k, a comparable house in Surrey was $200k, $100k difference.
Now the gap is like 1.4M vs 700k, $700k gap!
Money is nothing.
Discrimination against Surrey is fact.

#41 Setting the Record Straight on 06.09.15 at 8:24 pm

@64
@ 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?

$$$$$$$
I am not clear why you would hold bonds instead of cash to reduce volatility. For that to be true a portfolio of bonds and stocks would have to be less volatile than cash and stocks. (Same ratios)

Is this really true?

By holding cash you are giving up a small amount of interest income. By holding bonds you may be giving up opportunities.

Is volatility the problem? Or is it running out of money?

Cash does not get more valuable when equity markets fall. Bonds do. — Garth

#42 Karma on 06.09.15 at 8:25 pm

#21 Mark on 06.09.15 at 7:16 pm
“I tend to agree. Risk premia on mortgages and consumer credit is likely to rise, so it may very well be a 5% loan as a person’s equity recedes and they’re considered to be much higher risk. But systemic (ie: BoC policy) rates rising that much? Not a chance! It will take much longer than 5 years for central banks to fully fight off the deflation associated with house prices falling in Canada. Heck, 9 years after the USA market peaked, they still haven’t fixed their problem either.”

I don’t think Garth meant BoC at 5% (i.e. Banks’ Prime rates @ 7%), but rather rates banks give borrowers. So that’s only an increase of 2.26% over 5 years (using TD’s 5-year variable rate of 2.74%) to get to 5%. That’s hardly “not a chance!”…

Garth, feel free to correct my assumption.

My reference was to a 5-year fixed mortgage, as stated. — Garth

#43 crowdedelevatorfartz on 06.09.15 at 8:26 pm

@#23 B. B.
“Blacks is closing up shop with its retail locations.”
+++++++++++++++++++++++++++++++++++
Blacks…..Kodak…..both who made most of their money from film developement.

http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=1&cad=rja&uact=8&ved=0CCAQqQIwAGoVChMI6eC4xO6DxgIVhEKSCh00jgGl&url=http%3A%2F%2Fwww.cbc.ca%2Fnews%2Fcanada%2Ftoronto%2Fblacks-camera-stores-across-canada-closing-aug-8-1.3106137&ei=6YN3VanIEISFyQS0nIaoCg&usg=AFQjCNEoeyB7zTlPkQNAmHzJ_Dg0oC5Zjw&bvm=bv.95039771,d.aWw

Not much film sold these days.
And as for cameras……..
Dont see much of a market for cameras when everyone with a phone has one….
Changing times.

#44 Mark on 06.09.15 at 8:33 pm

“There is no deflation. This is making you look comical. — Garth”

Have you seen the CPI numbers over the past few months? Claiming there’s no deflation when YoY CPI is trending closer to zero…

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/cpis01a-eng.htm

March 2015 to April 2015 — CPI = -0.1%. There you go. Deflation.

And the housing bust hasn’t even really gotten underway in earnest. Just a slow melt over the past 2 years. Does anyone really think its not going to start accelerating downwards, taking the economy deeper into a deflationary mode?

You point to one month of data? Seriously? There is no deflation, nor will be. — Garth

#45 not 1st on 06.09.15 at 8:41 pm

#43 crowdedelevatorfartz on 06.09.15 at 8:26 pm

Not much film sold these days.

Of all the companies that have ever been listed on the stock exchange, nearly half no longer exist. There really is no long term investing anymore.

#46 Ray Vasquez on 06.09.15 at 8:44 pm

So why are we not at 5.0% to 5.5% GIC rates and 5.75% to 6% government bond yields and 7% to 7.5% 5 year fixed rate mortgage rates like back in June-2001, 14 years ago?

We will not get there either in 5 years, 10 years maybe never!

#47 Vanecdotal on 06.09.15 at 8:49 pm

#38 Chaddywack

“I buy good stocks when they are on sale, why wouldn’t foreign investors do the same with real estate?”

Good points.

This is a likely scenario here, at least locally, IF govn’t. controls are not put in place prior to rising rates (directly affecting local worker bees) potentially preceding a correction. Pick your poison, speculation tax (foreign and domestic), CRA capital gains exemption and RE income reporting changes, foreign ownership restrictions, etc.

Or we can continue the status quo until most locals are completely priced out, or “locked-in” to their sinking-value-mega-leveraged home, but just imagine all the unwashed, indebted masses watching additional foreign capital hoover up significant quantities of local residential RE while they’re losing paper “equity”, or are still priced out on the sidelines.

Recipe for societal unrest, to say the least… and a potential political sh*testorm for those that “allowed” it to happen on their watch.

#48 Paul on 06.09.15 at 8:51 pm

#18 Doomer Gloomer on 06.09.15 at 7:12 pm

“the Fed will start raising its key rate in September”
“the Bank of Canada won’t be cutting its rate again”

As much and I like you and respect you Garth, I think you’ll have your tail between you legs come sept or dec when both prediction will be wrong. No western central bank is raising rates in the foreseeable future. Their governments won’t allow it. We are all Japanese now.
———————————————————-Yes we are!
https://www.youtube.com/watch?v=IP9-_836quo

#49 Joe2.0 on 06.09.15 at 8:52 pm

Interesting article in today’s Zero Hedge regarding foreign money’s impact on the Vancouver housing market.
Pie charts and all.

As factually accurate as the usual zero fare, I am sure. — Garth

#50 Mark on 06.09.15 at 8:56 pm

“You point to one month of data? Seriously? There is no deflation, nor will be.”

The trend is downwards. YoY is 0.8%, and falling. I agree, one month of data doesn’t tell the complete picture, but deflation is increasingly upon us as Canadians cut back on their consumption due to falling house prices. The ‘wealth effect’ going into reverse.

Not sure why you are so insistent that deflation isn’t possible, especially in an article which cites Canadian personal debt being at all-time record highs. Is it because it doesn’t fit your narrative that interest rates only have upwards to go in the short term? How bad is the BoC going to let things get in the real economy until their hand is finally forced into implementing additional policy rate cuts?

Unworthy of debate. — Garth

#51 Prediction2015! on 06.09.15 at 8:58 pm

The central issue is whether the US economy is heading towards recovery or recession after the QE punch bowl has been taken away.

Given that Q1 was horrible for the US, its economy must produce better Q2 and Q3 GDP figures to encourage the US Fed to increase rates by only 0.25%.

If Q2 and Q3 GDP figures are horrible but not negative then the Fed will prolong the rate hike waiting game.

If the US economy head towards recession, there will be no rate hike. Instead, the Fed will resort to QE4 just like how it relied on the previous 3 rounds of QE to inflate the stock market.

The US is nowhere near recession. Q1 was far worse in 2014, and the year was a most profitable one. — Garth

#52 TurnerNation on 06.09.15 at 8:59 pm

Ran out of money?

800k for a semi near me with an unfinished reno.
One might wonder why at least two houses on that stretch of road have had foundational underpinning renos.

Permits had better be framed…:

http://www.realtor.ca/Residential/Single-Family/15787887/104-PORTLAND-ST-Toronto-Ontario-M5V2N2-Waterfront-Communities-C1

#53 Mark on 06.09.15 at 9:07 pm

“So why are we not at 5.0% to 5.5% GIC rates and 5.75% to 6% government bond yields and 7% to 7.5% 5 year fixed rate mortgage rates like back in June-2001, 14 years ago?”

When is the last time the economy has actually grown at 5-6% nominal for a 5-year period? How can interest on risk-free (or nearly risk-free) instruments sustainably exceed nominal economic growth?

The whole fixed income/RE universe is in a significant bubble, having grown much faster than GDP over the past 30 years. It will take decades of interest rates that lag nominal GDP growth to fix such. This doesn’t mean that interest rates can’t rise, but only that rises in interest rates will be accompanied by increases in inflation.

#54 Freedom First on 06.09.15 at 9:16 pm

….lemming logic. :-)

This one is a keeper.

If it was from Dr. Smoking Man, PHD of herdonomics, it would read: “Schooled lemming logic”. Either way, I think there is a lot of truth in both ways. I have always been amazed at the arrogant thinking of the Ivory Tower crowd. Not surprised that Smoky mocks them so much.

#55 JO on 06.09.15 at 9:28 pm

The level of ignorance among Canadians including many financial professionals in interest rate knowledge is stunning.
The massive growth in debt and the bonds created from the debt through securitization has left us in a rare and very dangerous situation. The bond market and junk monetary policy has created what is effectively a noose on the real economy. The massive debt growth inflated GDP and asset values but each dollar of new debt continues to create a smaller unit of GDP / income.
As we get closer and closer to 0, the upside in bond prices becomes limited even with the likely slide into a brief period of negative yields. However the noose comes from the outcomes the economy provides us with: if the economy does grow on a sustained basis we eventually use up the slack and start generating inflation. The bond market will move yields sharply higher and eventually shut down the economy.

The more likely outcome over the next 3-5 years is we see a steadily deteriorating global economy blow up Europe and then Japan with a loss of confidence in the govt bond markets and banking systems. The deflation is being exported to North America and eventually an overvalued US dollar destroys the U.S. Economy and blows up the 9-12 trillion in U.S. debt held in China, Brazil, Russia etc.
The final stage sees a shock loss of confidence in the U.S. And Canadian bond markets

So yes, rates can and likely will rise sharply when growth is poor and society has massive debt
This is happening again in Greece right now
It will spread to Spain and the rest of Europe, then Japan and eventually the rest of the world including the U.S.

And no, the government and bank of Canada DO NOT control rates.

Bond buyer beware

#56 suede on 06.09.15 at 9:30 pm

Way too much confidence in the yvr market. Absolutely in mania.

trouble is that its the 4th mania in 8 years. Long term trend is still up with no signs of breaking the technical trend line.

could be a double top batman though. Time will tell

but rates dont matter to boomers sellling 2M homes and buying 1.2M ones. Only millenials buying condos. And that market has beem stagnant for 7 years now.The property ladder died when that disconnect happened in 2010

#57 Nemesis on 06.09.15 at 9:32 pm

“Not with a bang but a whimper.” – HonGT

#Indeed… #SpeakingOfGroundZero&Whimpers…

[CBC] – 19 Vancouver school closures suggested by audit: Ernst & Young audit says Vancouver School Board could save $750M by selling assets

…”The 225-page review by Ernst & Young found the board could find a one-time saving of up to $750 million in asset sales, and total annual savings of $72 million though increased revenues and reduced costs.

The latter includes $37 million in savings that could be found by addressing nearly 10,400 surplus seats in Vancouver schools.”…

http://www.cbc.ca/news/canada/british-columbia/19-vancouver-school-closures-suggested-by-audit-1.3106385

#BonusWhimper,Or… #WhyHamishIsn’tParticularlyWorried…

“We believe that boys learn differently than girls and therefore our facilities must facilitate boy-centric instructional practices that are varied and engaging.” – Thomas Matthews, HeadMaster

[GeorgiaStraight] – Vancouver’s St. George’s School aims to expand

http://www.straight.com/news/729861/vancouvers-st-georges-school-aims-expand

#Engaging&VariedBoyCentricInstructionalPractices…

[RichmondNews] – Vancouver Authorities Seize 13 Exotic Vehicles From StreetRacing Teens

…”Media reports have indicated some of the drivers were from St. Georges School, a prestigious private facility which has cited privacy concerns in refusing to confirm or deny its students were involved.”….

http://www.richmond-news.com/news/street-racing-teens-could-lose-luxury-cars-1.494067

#BonusBonus… #SmokingMansEnhancedCurricula: Engaging&VariedBoyCentricInstructionalPractices…

https://youtu.be/eqzUI5t9qJ4

#58 joe on 06.09.15 at 9:38 pm

what was the interest rates in the US when their market tanked in 07? interest rates will go down to 0 if need be like in Japan. Politicians wont allow interest rate hike. housing can crash at 1% interest because of fear, job loses and other economical reasons but not because interest rate went up 1 point and added $100 to mortgage payments

#59 MSM-free Zone on 06.09.15 at 9:41 pm

Given paragraph 4, the opposition Republicans and Tea Partiers to the south must be eating crow right now witnessing this ‘best stretch in decades’, considering that the entire U.S., not to mention the entire world, blew its brains out under their own failed ‘less oversight’ ideology.

Ditto for paragraph 10 and our own failed ReformaCon ideology.

Oh well, there’s always fearmongering and warmongering to keep Canadian voters in the dark and distracted.

#60 Sheane Wallace on 06.09.15 at 9:41 pm

The bond market will determine the mortgage interest rates and it ain’t going to be pretty.

4.00-4.50 % on Canadian 10 year bonds translates into 6-6.5 % minimum mortgage rates. It is that simple.

It will happen in the next 3-5 years. With 100 % certainty.

It does not matter what the governor of BOC wishes or what a financial minister dreams for.

People with mortgages will get creamed. While savers loose their savings at the same time.

And the economy contracts big time.

Impossible? I don’t think so, I personally won’t buy these treasuries even at 5-6 % considering the real inflation.

#61 Trojan House on 06.09.15 at 9:43 pm

“There is no deflation. This is making you look comical. — Garth”

No deflation? Now that’s comical.

#62 S.Bby on 06.09.15 at 9:43 pm

Kodak:
The irony is that Kodak invented the first digital camera.
Google it.

#63 Leo Trollstoy on 06.09.15 at 9:44 pm

Unworthy of debate. — Garth

Penniless ignoramus getting schooled by Garth.

Again.

#64 Sheane Wallace on 06.09.15 at 9:45 pm

#53 Mark

Dear Mark,

The economy in Greece is not growing with 12 %, it is actually contracting.

And look at the interest on their bonds.

The cost of money has nothing to do with growth and has everything to do with risk and expected inflation/return.

#65 Steve French on 06.09.15 at 9:54 pm

This is the way the flamin’ world ends.

Look at this flamin’ shit we’re in, man.

Not with a bang, but with a GF whimper.

And with a whimper, I’m flamin’ splitting, blawg dawgs.

#66 crowdedelevatorfartz on 06.09.15 at 9:54 pm

@#45 Not 1st

“Of all the companies that have ever been listed on the stock exchange, nearly half no longer exist. There really is no long term investing anymore……’
+++++++++++++++++++++++++++++++++++
Unfortunately I wasnt talking about ALL listed companies on the Stock exchange. Or long term investing.
I was talking about companies (Blacks and Kodak) that sell film for photography and some of the obvious reasons for their inexorable demise.
Hows Fuji film doing?
When was the last time you bought film for a camera?
Do you own a film camera or know anyone with a film camera?
When was the last time you saw someone take a picture with a camera that held film?

I was visiting an 80 year old uncle a few years ago and he wanted to take a picture with his film camera of his 7 year old grandson………
“Click”!
The grandson then wanted to “see” the photo…He was looking into the viewfinder hoping to see an instant image…….
“You cant”, was the response.
“Why”? he innocently asked
“Its a film camera. The picture in on film inside the camera. We have to take 10 more pictures before the film is used up. THEN we take the film has to the drugstore.
“Can we see the pictures at the drugstore?”, he asked
“No, the drugstore sends the pictures away to a lab to be developed. Then we wait for about a week to get the pictures mailed back to the drugstore. They will phone us when the pictures are ready for us to pick up”, was my explanation.

He thought about this for a minute and then said….

“Thats STUPID!”

And in two words a 7 year old sums up what happened to the personal camera film industry.

#67 dosouth on 06.09.15 at 9:55 pm

Rates may be at 4% in 5 years still see a rate drop this year. Just like they “created” 59k in jobs, I believe in January 2015 they revised job numbers by 62,000 down for 2014. This is just a numbers game of which trust no one and you will never be disappointed.

#68 Evan on 06.09.15 at 10:01 pm

Don’t buy real estate. Buy fine art for long term appreciation.

#69 Smoking Man on 06.09.15 at 10:04 pm

#54 Freedom First on 06.09.15 at 9:16 pm
….lemming logic. :-)

This one is a keeper.

If it was from Dr. Smoking Man, PHD of herdonomics, it would read: “Schooled lemming logic”. Either way, I think there is a lot of truth in both ways. I have always been amazed at the arrogant thinking of the Ivory Tower crowd. Not surprised that Smoky mocks them so much.
…..

Its pathatic actually, the higher up the Ivory tower one climbs the more they live in fear, they are true slaves. Slaves to a system, a code of behavior, a process. They project strength, yet any low level bull shitter can spot the weekness and fear.

I project fear, being the hired help I play my role on this stage well. But I’m strong.. I walk around chewing on a stir stick all day. I say stupid shit. Some call me the rain man.. The reality is, what I am on contract for..I’m the best in the world. Some call me the rain man.I ham it up.

But I’m different, I’m educated, I know 1001 ways to make 250k a year. 10 ways to make 1 million a year…1 way yet to be tested to make billions.

The ivory tower knows but one method, memorize, regurgitate, obey and know your placement on the hierarchy. Don’t make mistakes, and kiss the right ass all the time.

Its a god damn Prison for them in my mind..

When I took this gig I was hell bent on revenge for what happens in 2007, the real book I was working on…

But I’ve mellowed , I like these dudes now. And they have the shittest jobs in the world. Mind you they pay extreamly well.

Altho by not writing that book, I’m pissing away millions.. guaranteed to be a bestseller, trust me.

But I’m sticking to alien fiction and moving on..

I’m a free man…

#70 rawdiswar on 06.09.15 at 10:07 pm

Boy, things sure went from desperate and bleak to rosy and cheerful all of a sudden.

Thought you said deflation was going to take hold Garth?

In Van right now for work and everyone, literally everyone, talks about RE.

#71 observer01 on 06.09.15 at 10:07 pm

You forgot to mention the number of defaults and behind payments has increased in Alberta and ScatLand.

7.6 % increase in debt for non mortgage loans. And the beat goes on and on until the music stops.

Which is about to happen in the two prairie provinces

#72 Holy Crap Wheres The Tylenol on 06.09.15 at 10:10 pm

#7 Smoking Man on 06.09.15 at 6:47 pm
Makes Sense to move South.
————————————
I thought you already left the tax farm and were on your way to a better life in LA?

#73 Washed Up Lawyer on 06.09.15 at 10:13 pm

#57 Nemesis

I just had to read that article about the high end cars being seized from the street racing teens from St. Georges.

Only one of the teens was the registered owner.

It took me back to that night about 8 years ago when my 19 year old nephew took me for a spin in his dad’s Ferrari 550 Maranello at 180 km in 3rd gear (with 3 more gears to go) on SW Marine heading out to UBC.

No cops that night. Hah! Pooped my pants.

He was a St. Georges grad.

#74 crowdedelevatorfartz on 06.09.15 at 10:17 pm

@#62 S.Bby
“Kodak:
The irony is that Kodak invented the first digital camera.
Google it….”
++++++++++++++++++++++++++++++++++++
ahhhh and Im sure the president of Kodak crapped his pants at the thought of his company being rendered obsolete overnight by his own R&D lab.

Speaking of which.
Xerox R&D labs invented Graphic User Interface (GUI) which eventually became “icons” on a computor screen.
They didnt use the technology and werent interested in developing it.
They showed it to a couple of MIT students( Bill Gates, etc.)
The rest is history.

#75 Smoking Man on 06.09.15 at 10:34 pm

#70 Holy Crap Wheres The Tylenol on 06.09.15 at 10:10 pm
#7 Smoking Man on 06.09.15 at 6:47 pm
Makes Sense to move South.
————————————
I thought you already left the tax farm and were on your way to a better life in LA?
…..

I’m waiting for them to higher my replacement, they’re having trouble finding one . I need to train it up for the basics.. So I’m not bugged.

They’re doomed even then.. But when it all goes to shit…in about 3 months by my calculations and know what’s coming down the pipe. I’ll through out a ridiculous number and see what happens.

As far as California.. Bit to far away, wifee and her kids.

Remember I was comfortably retired when I took the gig 4 years ago.

But I want to get out of Canada , I’ll leave long branch for the kids to destroy..

Commies are coming for everything that really counts. And if you have any loot you better start planing…

#76 Rav Puni on 06.09.15 at 10:48 pm

“From 2005 to 2012, about 45,000 millionaire migrants arrived in Vancouver through the federal and Quebec immigrant investor schemes. To put this in perspective, the entire United States accepted less than 9,500 wealthy immigrants in the same period under its EB-5 immigrant investor program, representing less than 30,000 people.”

Source:
https://www.biv.com/must-read/#bc-immigration-goes-negative-wealthy-migrants-floo

If this is accurate, then undeniably Comrade Harper’s red carpet welcome is having a major ripple effect in the Lower Mainland. The story is more than just low interest rates.

#77 Squirrel meat on 06.09.15 at 10:49 pm

#72 Holy Crap Wheres The Tylenol on 06.09.15 at 10:10 pm

#7 Smoking Man on 06.09.15 at 6:47 pm
Makes Sense to move South.
————————————
I thought you already left the tax farm and were on your way to a better life in LA?
——————————–
Yeah what gives Smokey…. thought you were heading to NYC………..get away from the commie teachers in power…………blowing smoke again.

#78 Doug in London on 06.09.15 at 10:49 pm

@BS, post #20;
Yes, they are getting their inheritances early, and spending the money foolishly.

#79 Tony Mears on 06.09.15 at 10:58 pm

Re: Victoria Real Estate Update. Anyone can lie with statistics (there’s a book on how to do that) but the reality in Victoria is there is no crash. Prices are stable, if not slowly climbing, and properly priced properties sell quickly. Sorry to burst your bubble (pun intended).

#80 Franco on 06.09.15 at 11:01 pm

Yeah right, rates at 5% in 5 years, I doubt it. The world has changed. Growth in Canada is going to be very slow or non existent over the next few years at least. The housing market has been fueled by low interest rates and has saved Canada from an economic disaster. What will be will be.

#81 Nagraj on 06.09.15 at 11:03 pm

1) Thanks for that highly informative post #10 Llewelyn

2) Is it just me or does GT lately sound more certain about about everything? Pronounced certainty, especially looking years ahead, makes me nervous.

3) Trashing MARK, mothers, mllinillialls, teachers, universities, what have you – is telling; it tells me that mothers, millillans. etc., even MARK have succeeded in pricking some silly little bourgeois balloons.

4) GT’s blog is a valuable free-of-charge public service. Nobody’s required to buy into GT’s analyses wholesale. Canadian MSM can’t hold a candle to this site.

4) ” . . . not with a bang but a whimper” comes from the 1925 poem by T.S.Eliot (didn’t he also write ” . . . dividing the stars into common and preferred . . . “) In my opinion Eliot was also a snob and a fascist-prone political idiot kinda like Ezra Pound (“condoms filled with black beetles”).

#82 Techno Raj on 06.09.15 at 11:08 pm

Will Uber type business take over Real Estate as well eventually.

What do you think Garth (Can possibly do a blog post on this alone):

http://www.realtypoint.ca/are-real-estate-brokers-in-danger-of-being-uber-ed-out-of-a-career/

#83 waiting on the westcoast on 06.09.15 at 11:11 pm

#38 Chaddywack on 06.09.15 at 8:19 pm
” The theory I hear often in Vancouver is that the city is basically immune to price falls because prices dropping would just lead foreign investors to buy even more property because now they could afford even more since prices are down.”

This is a nice theory… Here is a different one:

Foreign investors buy up properties as the market rises. Once stupid multiples are achieved and the market begins to head into bear territory, the investors unload their portfolio and wait for the market to bottom. Then they buy up more properties at a steep discount and wait for next top. I am not that smart but it seems a much better plan. Why but as it fails… Wait for bottom and initial rise, then come back in…

#84 waiting on the westcoast on 06.09.15 at 11:17 pm

Oops – serious typos Batman. I meant:

Why buy as it fails… Wait for bottom and initial rise, then come back in…

#85 Smoking Man on 06.09.15 at 11:22 pm

Unreal, Evan Solamen gets broomed by CBC for running a bit of side action, little art dealing on the side….

The polyp Bureau, Toronto Star breaks the story…fking Commines.

You see , youth, direct your anger against those that lack decorm, kill those that drive cars and not bikes.

Focus your energy on things that make you feel good , save the planet.

My dad a sweeper , back in the 50s bought a house, cottage and car, mom dident work..

Now go after big oil…. Yes. And hate anyone that makes an extra bucks selling paintings.

Thank your teachers for making you stupid ..

#86 Smoking Man on 06.09.15 at 11:32 pm

DELETED (Language)

#87 chasing my tail on 06.09.15 at 11:41 pm

Garth or bloggers,

Any views on whether fat tails/leptokurtosis are applicable to Canadian real estate?

#88 Vanecdotal on 06.09.15 at 11:42 pm

One more thing Garth, I like to post as others on this blog.

We so needed to know that. — Garth

#89 JunkieMan on 06.10.15 at 12:05 am

#6 Oracle
Vancouver is not “Canada’s Asian city” Toronto has the largest Chinese population outside of China. And Markham would be the highest percentage of Chinese Canadians residing in one area.

#90 Victoria Real Eatate Update on 06.10.15 at 12:09 am

#79 Tony Mears

Crashing? Please provide that quote. I didn’t say that.

Recently I posted charts with information take directly from Victoria’s board.

3-month median price charts up to the end of 2013 (beginning of 2014) indicated that SFH prices in Victoria (city) had fallen 13% below peak, Oak Bay (-15%) and Langford (-21%).

Victoria’s SFH 6-month average in May 2015 was flat compared to a year earlier.

In comparison, Toronto’s SFH average increased almost 20% year over year and Vancouver’s around 10%.

With record low rates house prices in Victoria should be skyrocketing and hitting new record highs month after month but instead prices have been flat year over year. Victoria’s market has missed out on the opportunity of the century to make huge price gains but it failed to do so.

Only a realtor could come up with a way to spin the performance of Victoria’s housing market as anything other than negative over the past year, or since 2009 when emergency rates were brought in.

Since 2008 some Canadian markets have seen price gains of almost 50% while prices shrank in Victoria.

Sometimes flat year over year really means that a market has performed weakly. Flat year over year is nothing to be positive about considering that we have record low rates.

Victoria’s bubble will continue to deflate.

#91 Joe2.0 on 06.10.15 at 12:28 am

Smoking Man
I agree 3 months and the fat lady starts to sing, market turns bad and gets worse over the following year.

The BRICS have had it with the US and their banking techniques, derivitives payback 2.0.

Out with the petro dollar in with the gold backed Chinese currency as a barometer.

The US of A run and fuelled by corrupt policies is coming to a nasty end.

Get ready people you’ve been warned.

#92 John on 06.10.15 at 12:44 am

Interesting article for those who fail to see China’s real plans: http://qz.com/415649/china-is-building-the-most-extensive-global-commercial-military-empire-in-history/

#93 Peon from Hell on 06.10.15 at 12:44 am

“The ivory tower knows but one method, memorize, regurgitate, obey and know your placement on the hierarchy. Don’t make mistakes, and kiss the right ass all the time. Its a god damn Prison for them in my mind..”
————————-
I see this every day. Corporate Slaves I call them. You think they make good money until you realize that most are working 10-12 hour days for 8 hours of pay.

I too am a peon, one of the many who actually keep the place running and making money whilst the slaves pat each other on their backs. The only redemption I get from the whole thing is from calling the them on their bullshit. It’s quite comical to watch them squirm.

#94 Kevin on 06.10.15 at 12:49 am

Garth things aren’t that bad on Calgary. Housing still selling just taking a bit longer. Prices in good neighbourhoods sell fast and for asking! I’m in the construction industry and everyone still seems to be busy. A house down the street from a Great Lake community just sold for 600,000. I paid for similar house 400,000 2 yrs ago.. Maybe I need to sell, that would put my daughter to the curb with her 2 kids :(

#95 Smocking Man go home on 06.10.15 at 12:49 am

Smocking Man,
You’re way past your expiry date.
The new top blog dogs are Washed up lawyer and Nagraj.

#96 Mark on 06.10.15 at 12:50 am

Garth was certain rates would rise in June just a few months ago. Now September he says. In September he’ll say December, and on it goes.

Seriously Garth, the US recovery is 6 years old now, remember the “green shoots”, and still 0% interest rates? How long does it take to get a pathetic quarter point rise?

Drink the koolaid all you want Garth, if recoveries take 6 years, 3 rounds of QE and historically low interest rates and still we just need a few more months at 0%, it’s all lies, and you know it.

#97 Andrew Woburn on 06.10.15 at 1:11 am

Just buy the dips. It will all work out.

“Why China is blowing an equity bubble

Far from being an unintended consequence of policy, the authorities are egging investors on with articles in the state-run press seeking to justify extreme valuations. The People’s Bank of China has been busy cutting interest rates. And to good effect. The Institute of International Finance, a club of global banks, says Chinese retail investors have increased their equity investment via margin borrowing by almost 85 per cent this year to a record $400bn.”

http://www.ft.com/intl/cms/s/0/4565cddc-0df2-11e5-9a65-00144feabdc0.html#axzz3cYCCaQVq

#98 Time to pony up on 06.10.15 at 1:27 am

1.7 Trillion seems like chumb change compared to what our neighbors to the south are owing.

#99 TRT on 06.10.15 at 1:53 am

I noted that the Liberal Party of Canada is now a Twitter follower of the author of this blog.

Another run at parliament Garth?

In your dreams. — Garth

#100 PM on 06.10.15 at 2:10 am

They showed it to a couple of MIT students( Bill Gates, etc.)

Bill Gates went to Harvard, not MIT. His companies first product was a BASIC interpreter and then an command line based OS. They didn’t offer a GUI-based OS for another 10 years.

About the only thing you got right was the bit about Xerox PARC coming up with the GUI OS.

Don’t share amusing historical anecdotes unless they’re true.

Re: debt increasing. I’d imagine debt as an absolute it higher this year than last and higher than in 1952. Any data on per capita numbers?

#101 james on 06.10.15 at 2:15 am

#59

“the opposition Republicans and Tea Partiers to the south must be eating crow right now witnessing this ‘best stretch in decades’, considering that the entire U.S., not to mention the entire world, blew its brains out under their own failed ‘less oversight’ ideology.”

Less oversight? You lump together the political platforms of the GOP and the Tea Party with two words? Two radically different (and indeed opposed) movements in US conservative politics?

The GOP and the Tea Party have nothing in common. The latter is a collection of constitutional literalists that has never held power. I don’t know how they are to blame for neoconservative or neoliberal parties in power in the USA.

By ‘less oversight’ you mean the highly regulated mortgage industry in the USA? You know, the one with Fannie Mae, Freddie Mac, laws forcing mortgage originators to provide loans to risky clients on account of political correctness, etc etc.

I would love to see an argument that there has been a single government in the USA that didn’t increase the number of laws on the books, the density of regulatory mechanisms, etc. Reagan, Clinton, etc etc.

#102 Bob dog on 06.10.15 at 2:21 am

60 Year Old Vancouver House Sells For 40% Above Asking As Chinese Buyers Go Full Tilt
………..

At least it’s not cmhc insured

I wonder why the police fire and other essential service workers even show up for work in Vancouver. And who is enlisting in the military? Chumps!

http://google.com/newsstand/s/CBIw4IDihSA

#103 james on 06.10.15 at 2:22 am

#80 Franco

“The world has changed.”

Yeah, I heard that a lot from those nutters during the dot com bubble who believed that companies don’t have to have revenue. Economics may not be much of a science, but thinking that there is nothing to common economic wisdom is probably a bad strategy.

“The housing market has been fueled by low interest rates and has saved Canada from an economic disaster.”

On what theory?

An Austrian perspective would be that state intervention has merely delayed the day of reckoning. Market distortions have to resolve themselves, and the Canadian government’s sudden introduction of 40 year amortizations, expansion of the CMHC cap, 80+ billion dollar subsidy to the banks to purchase mortgage securities (etc) was about as interventionist as it gets.

So far I see no evidence that it would have been a ‘disaster’ to let that play out naturally through market mechanisms, and I see no evidence that there aren’t equally bad dynamics at play in the system.

Some processes, like rust on a car or cancer in a human body, are gradual, accretive and not always visible from the surface. Personal debt levels are high, capital available for business formation is low, etc etc.. there are dynamics in the Canadian economy that should worry people.

#104 Khoek on 06.10.15 at 3:24 am

Or we get hit with an external economic shock pushing us into recession (they happen about every seven years so we’re almost due). Only this time with everyone indebted to their eyeballs and interest rates at close to zero (giving the government little room to maneuver) the jig is up and it ends with a bang.

#105 Fortune500 on 06.10.15 at 3:28 am

Interesting infographic

http://big.assets.huffingtonpost.com/20150609_C6498_PHOTO_EN_17764.jpg

Apologies if this has already been shared.

#106 Blobby on 06.10.15 at 3:33 am

“No deflation? Now that’s comical.”

Er, this isnt rocket science. You are suggesting that the BoC will keep rates low while the Americans raise their rates.

Most of what we buy up here from food, to oil (even the oil we make ourselves) is bought from the americans.

If their rates rise, and ours dont – our dollar will be worth less… and in turn we’ll have massive inflation (not deflation).

Raising our rates, may cause property prices to go down, but the alternative of CONSIDERABLY higher prices on pretty much everything, is a much worse scenario.

Use your brain.

#107 Mark on 06.10.15 at 5:59 am

“If their rates rise, and ours dont – our dollar will be worth less… and in turn we’ll have massive inflation (not deflation).”

Not true. The reason rates rise is because of inflation, and the need to put the proverbial ‘brakes’ on the economy. Inflation is, by definition, a weakening of the currency with respect to the goods and services that people buy. Hence, rising relative interest rates imply relative currency weakening.

Having said that, inflation isn’t a concern on either side of the border, and won’t be for a while to come. Especially in Canada, where the main driver of demand for the past decade has been in the household sector. Take that away, and what’s really left? Nothing. Just a fairly productive, chronic net exporting country with significant overcapacity in our export related industries.

#108 Mark on 06.10.15 at 6:03 am

“Garth was certain rates would rise in June just a few months ago. Now September he says. In September he’ll say December, and on it goes.”

For the record, the “Mark” writing the above is not the famous “Mark”. Its not generally the policy of the real “Mark” to attack anyone for their previously wrong prognostications, as the real “Mark” has occasionally gotten a few of them wrong himself.

Having said that, central bankers have done some awfully strange, and in hindsight, completely regrettable things in the past. For instance, the Federal Reserve raising policy rates 2006-2008, which clearly was not justified given the state of the economy over the medium-long term and the crash that was ultimately precipitated as the yield curve inverted.

#109 Ghomeshi, Lang, Mansbridge, Murphy & Solomon Inc. on 06.10.15 at 6:20 am

Hello Mr. Turner!

Sounds like this “whimpering crash” you speak of could be a public relations nightmare down the road.

Please spread the word:

If you or anyone else needs top quality PR services, crisis communications management, perhaps a profitable little side business to tide you over the worst of the crash, or even a few well-delivered reality-inducing slaps to the face, our firm of current and former broadcast professionals can provide just the help you need.

Our fees are reasonable and we provide all brown envelopes plus whips and chains, and of course our reputation, funded by your tax dollars, is impeccable.

#110 Waterloo Resident on 06.10.15 at 7:34 am

Forget about a 20% fall in house prices, instead
“Get ready for a 4,000-point Dow drop”.

http://www.marketwatch.com/story/get-ready-for-a-4000-point-dow-drop-2015-06-10?dist=beforebell

Written by yet another doomer with a book to sell. Yawn. US stocks won’t crater with an expanding economy. — Garth

#111 Mark is Wrong on 06.10.15 at 7:50 am

Mark is almost wrong on every of his analysis.

He is bullish on gold and CAD and bearish on USD and US Stock since 2011.

He’s now preaching that CAD, Bank stock, Resource sector will do well once the house bubble deflate.

Basically, it’s easy to make money by doing what Mark is NOT doing.

I will be worried if Mark thinks there will be recovery in US.

It’s comical.

#112 Leo Trollstoy on 06.10.15 at 7:55 am

No deflation in my lifetime. U.S. Jobs report looking better and better. More full time jobs, less part time jobs and more higher paying jobs. Mortgage renewals increasing as bond rates spike higher. USD strong.

With a portfolio consisting primarily of U.S. Rental property purchased during the housing meltdown (when all the wage slave naysayers were telling me that ‘this downturn is DIFFERENT’. No, it isn’t. It never is.) I gotta wear sunglasses cuz the future is so bright

#113 Willy2 on 06.10.15 at 7:58 am

@110: Can’t agree more.

– The US economy was flat for April and that was including a build up in inventories. So, without the inventory build up the US economy was down.
– Everyone says that falling oilprices are beneficial for the US economy because then people will spend more. But US consumers have used the extra money left in their wallets to pay down debt instead of using it for extra spending.

US economy expanding ?? You got to be kidding.

#114 fred boyle on 06.10.15 at 8:07 am

More Headlines

Home equity lines of credit gone wild: Canadians’ love affair with easy loans

According to an RBC report last week, Canadians’ outstanding debt on personal lines of credit hit $266 billion as of April, a 3.2 per cent gain over last year.​

http://www.cbc.ca/news/business/the-national-lust-for-home-equity-lines-of-credit-should-we-worry-1.3106533

#115 Ray Vasquez on 06.10.15 at 8:17 am

To Mark #53

All this talking up jobs growth in U.S being the strongest in 14 years should of translated into higher bond yields, almost double at least 80% higher.

This is why the U.S. economy is not robust and strong as many as stating and just wait for another economic downturn or other bad global economic events and see what happens to interest rates, down they go again.

This is all their financial engineering that will not stop because they are really are getting really rich off the backs of savers, fixed rate investors.

I know B.S. and when excuses on why they cut interest rates to the bone. Their policies got us in this big, financial, economic mess.

It is all about them and we are just economic casualties to them!

#116 TurnerNation on 06.10.15 at 8:21 am

H should appoint a Dollar Store Czar.

Auto industry? What’s that – now we have self-driving cars. Growth industry:

“DOLLARAMA REPORTS STRONG FIRST QUARTER RESULTS AND RENEWS NORMAL COURSE ISSUER BID
Sales increased by 13.0% to $566.1 million; Comparable store sales(2) grew 6.9%, over and above 3.3% the previous year; Gross margin(3) was 36.0% of sales compared to 35.4% of sales; EBITDA(1) grew 22.9% to $105.9 million, or 18.7% of sales, compared to 17.2% of sales; Operating income grew 22.4% to $94.8 million, or 16.7% of sales, compared to 15.4% of sales; and Diluted net earnings per common share increased by 28.2%, from $0.39 to $0.50.In addition, 17 net new stores were opened during the first quarter of Fiscal 201”

#117 crowdedelevatorfartz on 06.10.15 at 8:25 am

Evan Solomon gets “nuked” by the CBC for selling art in his spare time? WTH?
“He used his personal connections to broker art deals…”
Uh….isnt that how most part time sales people work?

Well, I fully expect him to be working for a great deal more money in the not to distant future.

As for the CBC HR dept becoming knee jerk nazis AFTER how many years of “rumoured” Ghomeshi assaults…… You should all be fired.

#118 TurnerNation on 06.10.15 at 8:27 am

#66 crowdedelevatorfartz

It’s for the joy of analog. I remember CDs sounding so ‘tinny’ and thin compared with cassette tapes. Then I heard my first vinyl record (Led Zep 2, natch). Amazing sound you can almost hold. All music pre 1980 should be heard on vinyl imo. Sounding exactly as they planned it.

#119 Mark in Guelph on 06.10.15 at 8:46 am

My apologies, #96 is Mark in Guelph, and I just want clarification as to why some of us question CREA or TREB stats but blindly accept US government stats?

If the Fed is really planning to raise rates they would have done it by now. Nearly 7 years at 0% and still just a few more months needed before liftoff? All lies.

#120 LL on 06.10.15 at 8:51 am

#68 Evan
Don’t buy real estate. Buy fine art for long term appreciation.

Picasso cost too much.
Why not investing in rare books?

#121 2-10-4 Texas Type on 06.10.15 at 9:00 am

Garth –

Brilliant post. Rates and dates all in the same sentence, no less. This should be required reading for all house-horny snowflakes – at least the ones who can read.

#122 Karma on 06.10.15 at 9:06 am

Got to love the fear being spewed about the potential lack of liquidity in the bond market….

http://www.bloomberg.com/news/articles/2015-06-10/a-3-trillion-traffic-jam-is-seen-looming-in-credit-by-citigroup

#123 Leo Trollstoy on 06.10.15 at 9:19 am

Wage slaves telling me that the U.S. economy sucks.

My peers telling me that the U.S. economy is robust and growing.

If I hated money, I would listen to the former.

#124 Realtor007 on 06.10.15 at 10:15 am

Look it DOL go this morning, TurnerNation is shaking in his skivvies

#125 rosie "moving forward" in the knowledge that, "this won't end well" on 06.10.15 at 10:16 am

Looks a lot like inflation to me, but I’m not as schooled as some on this pathetic blog.

http://www.marketwatch.com/story/employee-compensation-grew-49-in-first-quarter-2015-06-10

#126 Nemesis on 06.10.15 at 10:44 am

“my 19 year old nephew took me for a spin in his dad’s Ferrari 550 Maranello at 180 km in 3rd gear (with 3 more gears to go) on SW Marine heading out to UBC.” – WUL

For some inexplicable reason… That kid sounds awfully familiar…

This is what it looks like today:

https://youtu.be/zFe4d87T-lg

#127 Unhinged Citizen on 06.10.15 at 10:49 am

I’m loading up on Dollarama stock in this prelude to the liquidity starvation, when the society finds itself in negative equity territory.

They recently put in a Dollarama at a failing strip mall where I live in Etobicoke and it has seen a revival thanks to the new business. In fact, this store has reinvigorated cultural activity, with credit-starved, heavily leveraged mortgage owners making pilgrimages to the store with their entire families, apparently, the only leisure the family can afford in addition to the $700,000 mortgage that gives them daily access to a bungalow.

#128 Nemesis on 06.10.15 at 10:56 am

#MoreTalesFromGroundZero,Or… #YetMoreQualitativeMischief… #WhyBCREA+”EXPERT”=Oxymoron…

[SCMP] – Bogus ‘analysis’ obscures the role of foreign money in Vancouver’s runaway housing market: BC’s government is relying on flawed data provided by the real estate industry

…”As usual in Vancouver, all roads lead to the real estate industry. The expert opinion that formed the basis of the ministry’s analysis was that of the BC Real Estate Association and its chief economist Cameron Muir, who wrote to the ministry on May 28.”…

http://www.scmp.com/comment/blogs/article/1819499/exposing-bogus-analysis-ignores-role-foreign-money-vancouvers-housing

#129 Mr. Pink on 06.10.15 at 11:12 am

Addicted to debt.

http://www.cbc.ca/news/business/the-national-lust-for-home-equity-lines-of-credit-should-we-worry-1.3106533

#130 45north on 06.10.15 at 11:19 am

As of now, we have $1.82 trillion in personal debt, which is a gonzo number for a country of 35 million people.

for 20 years I have borrowed a ladder from my neighbour – I figure how many ladders do we need? Anyway this year he said maybe I could buy my own ladder. So I did. The point is in the real world borrowing is taken seriously. This gonzo number has a day of reckoning.

TurnerNation: Reporting live from a Dollarama.

Ain’t too proud to beg ;)

(shopping at ) Dollarama is not begging

Llewelyn: I wonder how many readers of this blog are aware of the influence the Canada Housing Trust (CHT), established by CMHC

not me, but thanks for the info

At regular intervals the CHT issues Canadian Mortgage Bonds (CMB) and uses the proceeds from bond sales to purchase guaranteed NHAMBS from financial institutions, who in turn use proceeds from NHAMBS sales to issue more high ratio insured mortgages that in turn are packaged into more guaranteed NHAMBS that in turn are sold to the CHT to secure the next issue of CMB

the details of this arrangement are important. It is one thing to calculate the tipping point but it’s an entirely different matter to have it actually happen.

Vanecdotal: Exactly, how refreshing! Welcome to the YVR dark side GT, but don’t worry, we have cookies. Very special cookies

I don’t understand. special cookies?

Pony: Come on Garth.
No crash ever ends with a whisper.

my feeling too

#131 The American on 06.10.15 at 11:20 am

At #187 from yesterday’s post: Squirrel Meat, yes, no doubt when you post a video link from 2012 and seek out unattractive people from the lowest common denominator, Wal-Mart, you will certainly find those who shouldn’t dress the way they are in public, especially in a country ten times the size of Canada. There is no explanation or excuse for those people, other than just not giving a damn. Come to think of it, Wal-Mart is in Canada as well! YAY! I’ll provide an example in the People of Wal-Mart Camada edition below. It’s a real hoot, too!

Also, it was interesting to note that despite all the indignant appearing Americans found in that video you provided, that somehow the U.S. found its way on a top 5 list of the World’s Most Attractive People. Canada? Well, you won’t like the results. Canada was in the top 5 Most Unattractive People list (it actually made the top spot, but the interviewer failed to state this fact) from the same publication (see pod cast link below).

Apparently it made a lot of noise up in your neck of the woods. It is HILARIOUS as the French Chief Editor responds to the interviewer’s questions. She has no apologies whatsoever. It’s interesting how Canadians truly constantly compare themselves to the U.S., even in this interview, to show the world what they aren’t, as opposed to what they are. Hmmmmmmmmmmmm. Very telling. Side note – this is often a topic of conversation in several expat communities (not American expat communities, mind you – these are British, German, and Dutch expat communities) where I own a home in Spain. Personally, I LOVE MY CANADIANS. Truly, I do, but it does sometime feel like a little child screaming for attention. Again, bad behavior exists on both sides of that border, for which I cannot personally explain. I tend to myself and do my best to be a good neighbor domestically and internationally, stay current on domestic and international events and politics, dress appropriately, and try not to offend.

Perhaps you could explain this Canadian phenomenon to me found in the links below, Squirrel Meat?

http://www.cbc.ca/radio/thisisthat/new-ranking-lists-canadians-as-least-attractive-1.1726351?autoplay=true

http://www.peopleofwalmart.com/category/location/canada/

http://www.huffingtonpost.ca/vice-com/canadian-identity_b_2775749.html

#132 Holy Crap Wheres The Tylenol on 06.10.15 at 11:47 am

#126 Nemesis on 06.10.15 at 10:44 am
“my 19 year old nephew took me for a spin in his dad’s Ferrari 550 Maranello at 180 km in 3rd gear (with 3 more gears to go) on SW Marine heading out to UBC.” – WUL

For some inexplicable reason… That kid sounds awfully familiar…

This is what it looks like today:

https://youtu.be/zFe4d87T-lg
__________________________________________
I know this old news but I hope he wasn’t one of these guys?
http://www.vibikers.com/forum/index.php?topic=6139.0;wap2

#133 maxx on 06.10.15 at 11:48 am

“One day your daughter gives up and sells her condo for a loss. Why, she asks, did you push me into it?”

Stupid BoM malivestment will comprise the lion’s share of the loss, but a far bigger loss may be the relationship between the BoM and its entitled child.

#134 observer on 06.10.15 at 11:55 am

DELETED

#135 Bottoms_Up on 06.10.15 at 12:08 pm

#12 ILoveCharts on 06.09.15 at 7:00 pm
————————————————-
easing environmental rules, no.

increasing immigration, yes.

#136 Canada Is Great #1 on 06.10.15 at 12:18 pm

“The American” you are a idiot. Your not educated just like all other americans and can not even form a opinion of your own. Canadians are allot smarter than americans so who cares if we are voted as ugly people. We know we are smarter than you and its why are economy and housing market never took a dive. Go away because you are not welcome here. Your just so stupid! I am not angry we are on that worth less list but I think your abusing free speach. That is the problem with americans they all think they can say anything they want when ever they want and nobody will check them for it because they think their number 1 at everything. I am not a apologetic Canadian so I guess I am beautiful. I went to University at a TOP TIER University in Toronto. And it is a much better education than anything I would have got in your country. So I am smart and not apologetic so this is one Canadian who is not taking it from you.

#137 Centurion on 06.10.15 at 12:24 pm

The national lust for home equity lines of credit: should we worry?

http://www.cbc.ca/news/business/the-national-lust-for-home-equity-lines-of-credit-should-we-worry-1.3106533

#138 Squirrel meat on 06.10.15 at 12:25 pm

#131 The American on 06.10.15 at 11:20 am

At #187 from yesterday’s post: Squirrel Meat, yes, no doubt when you post a video link from 2012…….
—————————————————-
Well there does seem to be monthly updates of the Walcreatures and Walmartians if you wanted some more current versions…. that was just a sampler… It’s an industry! The US sure does know how to make some $$ off crazy, and well, why not.

And your ugly canuck link is from 2013… but anyways no one can compare to Parisians

We are still traumatized by our Swedish fitness comparison.. a shame I have lived with since high school when that all started and the eager gym teacher mandated extra jumping jacks to make us mushy canucks buck up a bit to match those virile swedes. Don Cherry has also never recovered from the insult.

http://www.theglobeandmail.com/globe-debate/were-still-not-as-fit-as-swedes-but-we-shouldnt-stop-trying/article22674881/

But for Canucks behaving badly we are making it easy for you…. many of them may have had a maple leaf tattooed on their ass which may now get flogged!

http://www.theglobeandmail.com/news/world/canadians-in-nude-mountain-photo-case-to-remain-in-malaysian-jail/article24893434/

#139 Mark on 06.10.15 at 12:29 pm

“All this talking up jobs growth in U.S being the strongest in 14 years should of translated into higher bond yields, almost double at least 80% higher.”

I don’t know if I’d put any numbers to such a claim, but I agree that if the US economy where anywhere near as strong as claimed, there would be inflationary pressures. Yet they seem to be suffering deflation as well. -0.2% YoY.

http://www.bls.gov/cpi/cpid1504.pdf

I’m not sure why the resident blog troll is claiming deflation is impossible. Not only is it not impossible, but its hear, and its real. On both sides of the border.

#140 Holy Crap Wheres The Tylenol on 06.10.15 at 12:39 pm

#129 The American on 06.10.15 at 11:20 am

At #187 from yesterday’s post: Squirrel Meat, yes, no doubt when you post a video link from 2012 and seek out unattractive people from the lowest common denominator, Wal-Mart, you will certainly find those who shouldn’t dress the way they are in public, especially in a country ten times the size of Canada. There is no explanation or excuse for those people, other than just not giving a damn. Come to think of it, Wal-Mart is in Canada as well! YAY! I’ll provide an example in the People of Wal-Mart Canada edition below. It’s a real hoot, too.
____________________________________________
Well I can’t disagree with you on ugly Canadians in Walmart. Since America is ten times larger than Canada we just get inundated with your Walmart Hillbillies more than ours. I do have to ask you a question “Have you lived in Canada” or is all of this information you provided just from googling? At the age of 7 I was relocated to Michigan, then Florida, Arizona and then California. I have a pretty good idea of what living in USA is like. I have dozens of relatives in the USA still. I graduated from a Bay area university and was summarily adopted by Uncle Sam and the USAF. After my stint with the USAF I worked in the bay area then had an opportunity overseas and finally when I met my wife (she is from Ireland) we decided to move back to Canada to start my company and raise my children. So you could say Ive lived the American dream, and if there is such a thing I am presently living the Canadian dream. Just saying eh!
BTW what is this crap with about, and aboot? Ive never heard anyone ever say that!
I did get razed by my friends when I came back to Canada however when I would say something like shes a hella bitchen chick. They would give me the deer in the headlight look.

#141 Squirrel meat on 06.10.15 at 12:46 pm

#75 Smoking Man on 06.09.15 at 10:34 pm

#70 Holy Crap Wheres The Tylenol on 06.09.15 at 10:10 pm
#7 Smoking Man on 06.09.15 at 6:47 pm
Makes Sense to move South.
————————————
I thought you already left the tax farm and were on your way to a better life in LA?
…..

I’m waiting for them to higher my replacement, they’re having trouble finding one . I need to train it up for the basics.. So I’m not bugged.

They’re doomed even then.. But when it all goes to shit…in about 3 months by my calculations and know what’s coming down the pipe. I’ll through out a ridiculous number and see what happens.

As far as California.. Bit to far away, wifee and her kids.

Remember I was comfortably retired when I took the gig 4 years ago.

But I want to get out of Canada , I’ll leave long branch for the kids to destroy..

Commies are coming for everything that really counts. And if you have any loot you better start planing…
——————————————–

Smokey.. is that you?

http://www.peopleofwalmart.com/wp-content/uploads/2015/06/633.jpg

Maybe this is why you haven’t managed to fly south yet…

#142 Blacks Cameras on 06.10.15 at 12:52 pm

Commentators stating that Blacks went under because film is obsolete missed the point. Black hasn’t sold or developed film in years. Blacks is simply a poorly run company. There are lots of places to buy cameras, and lots of places to buy film. There are also lots of places to buy overpriced frames, and get your grandsons picture lasered onto a coffee mug.

The problem was Blacks had no idea what kind of store it was in the new millenium. They didn’t sell high end cameras or equipment, and they were more expensive to print photos than london drugs or wal-mart. They recently started to sell mobile phones, but who would visit Blacks to buy a cellphone? Anyways, don’t read too deeply into it, crappy companies come and go. Good riddance.

#143 PitchFork Pete on 06.10.15 at 1:22 pm

A group spearheaded by Ms. Xia, Vancouverites for Affordable Housing, is planning another rally on June 24 and calling for more data on foreign ownership and capital.
—————–
I’ll be there with my stand.
Come early for best deals.
I’m getting my instant TAR and Feather Kit patented.
Stay tuned for more.

#144 Cowtown Cowboy on 06.10.15 at 1:44 pm

Update from Cowtown:

As I mentioned a week or two ago, my neighbor one house over had listed, $599k, seemed to have lots of showings, first deal fell through on financing, and now they have a conditional offer contingent on inspection, apparently a young couple as they had to raid their RRSP’s to fund.

Even more suprising, another house a street over, but very similar to this house, had listed at 725k and sold within a week.

Another neighbor is ripping the roof off their house and redoing most of the upstairs, as well as pushing the house out at the back. They just moved out for 6-9months while the work is being done. Probably cheaper just to buy a new house, but they do have a pretty sweet ridge lot.

Starting to get the Stampede party invites and there is definitely some scaling back on the festivities this year. :-(

#145 45north on 06.10.15 at 1:51 pm

Blacks Camera: The problem was Blacks had no idea what kind of store it was in the new millennium.

that’s what I heard

it sure isn’t Henry’s

http://www.henrys.com

#146 Mike S on 06.10.15 at 2:25 pm

“Garth and blog dogs: Honest question.

Won’t the government just “fix” this problem with immigration and lax environmental rules?

There are hundreds of millions of people who want to come to Canada. Faced with economic ruin for a decade or more, we aren’t going to close the doors like Japan – we’ll just open the doors and achieve growth that way.”

Unlike Japan we do accept yearly immigration, and this is one of the reasons that prolonged deflation in Canada is not likely. but still the current numbers are not sufficient to replace the massive number of baby boomers that we have. Try looking at demographic pyramid for Canada, and compare it against the US.

Moreover “demand” If defined like “desire to purchase RE” is already in place, but demand as “ability to purchase RE” is loosing momentum daily. Increasing immigration won’t help with the second simply because most of the immigrants don’t have sufficient funds. Once RE crush happens, jobs will be an issue as well, so don’t count on immigration to increase

Besides that look at what Harper government (TM) is actually doing recently:
– Limiting/Removing temporal workers
– Makes it harder to get permanent residency
– Makes it harder to get Canadiam citizenship
– Makes it harder to sponsor family members

“Also, if we got rid of those pesky environmental rules, we could do a lot more mining, forestry, etc.”

Yep go ahead and try to propose that to Liberal/NDP provincial governments …

#147 Joey Maple on 06.10.15 at 2:29 pm

#109…..I’m sure a lot of Canadians are happy to see the backs of the likes you mention. That team of political fanatics who thought they’d be in line for a GG job if they kept up the Harper Hate diatribe long enough will not be missed….good riddance to bad rubbish.

#148 Mike S on 06.10.15 at 2:35 pm

“Drink the koolaid all you want Garth, if recoveries take 6 years, 3 rounds of QE and historically low interest rates and still we just need a few more months at 0%, it’s all lies, and you know it.”

Mark,

If this is indeed all lies, what real difference does that make? Who cares if it is lies or not. Fed stated the desire to increase rates soon. Be it because of real economic growth or some mysterious political reasons, but this means they are going to get there this year or maybe beginning of 2016, does that matter really?

Maybe share with us the scenario you see playing out in the next year?

#149 calgary64 on 06.10.15 at 2:42 pm

housing update from Calgary:
– even good houses now lasting over a week instead of a day or two
– prices are stable but likely because sellers are holding instead of selling at a lower price
– overall only a minor change (to the benefit of buyers)

it looks like nothing but a mortgage rate jump would make the prices reasonable again. i am holding for now.

#150 Ray Vasquez on 06.10.15 at 2:47 pm

To Mark #139

Unlike Mark, we live and work in the real world and pay real bills, expenses, costs of living.

How much did your gas bill, electricity bill, water bill property taxes, rent, car insurance, house, car repairs, maintenance, house repairs, maintenance, gas costs for your vehicle(s), house condo, property insurance, condo fees, food, daycare, childcare expenses, taxes, fees, medical costs, healthcare costs, etc. etc. go down over the last decade?

They didn’t go down. They are all much higher, anywhere from 50% to 250% depending on the item. This is not deflation.

How much did interest rates on savings, GIC’s, bonds, etc. go up? Oh, they are much lower, from 45% to 55% lower, 5% to 2.5% to 3.0%.

The only thing deflating is people’s pockets and common sense.

#151 Bottoms_Up on 06.10.15 at 3:05 pm

#136 Canada Is Great #1 on 06.10.15 at 12:18 pm
————————————————————-
That was either a beautifully crafted rant containing some ironic sprinkles of misspelled words and blatant generalizations, or it is just truly embarrassing. I’m going with the latter.

#152 Blacksheep on 06.10.15 at 3:07 pm

All those who identify with this “my country is better than your country” bullshit are just displaying the severity of your indoctrination.

You sound like Cattle yelling over the fence at each other, arguing why MY farm, is superior to YOUR farm.

#153 Vanecdotal on 06.10.15 at 3:17 pm

#130 45north

Vancouver’s known for 2 things.

1) Over priced RE

2) Herb

Herb makes goooood cookies.

#154 The American on 06.10.15 at 3:26 pm

At #136: Canada Is Great #1, there are simply too many ways I can respond to you. My better sense tells me not to engage with the meaning of your post.

I will simply provide you some assistance with all of the grammatical, punctuation, spelling, and word usage you presented. I truly hope your writing is not indicative of that so-called education you received at a “Top Tier” Canadian university. So, let’s get started, shall we?

You said, ““The American” you are a idiot. Your not educated just like all other americans and can not even form a opinion of your own. Canadians are allot smarter than americans so who cares if we are voted as ugly people. We know we are smarter than you and its why are economy and housing market never took a dive. Go away because you are not welcome here. Your just so stupid! I am not angry we are on that worth less list but I think your abusing free speach. That is the problem with americans they all think they can say anything they want when ever they want and nobody will check them for it because they think their number 1 at everything. I am not a apologetic Canadian so I guess I am beautiful. I went to University at a TOP TIER University in Toronto. And it is a much better education than anything I would have got in your country. So I am smart and not apologetic so this is one Canadian who is not taking it from you.”

I am not perfect in my writing skills at all, but I do recognize a writer with a significant set of challenges when I struggle so much to continue reading due to overwhelming laughter.

Instead, next time try these corrections, all noted in parenthesis:
“The American(,)” you are a idiot. You(‘re) not educated just like all other (A)mericans and can not even form a(n) opinion of your own. Canadians are (a lot) smarter than (A)mericans(,) so who cares if we are voted as ugly people(?) We know we are smarter than you(,) and it(‘s) why (our) economy and housing market never took a dive. Go away(,) because you are not welcome here. You(‘re) just so stupid! I am not angry we are on that (worthless) list(,) but I think you(‘re) abusing free (speech). That is the problem with (A)mericans(;) they all think they can say anything they want (whenever) they want(,) and nobody will check them for it because they think the(y’re) number 1 at everything. I am not a(n) apologetic Canadian(,) so I guess I am beautiful. I went to University at a TOP TIER University in Toronto(,) (a)nd it is a much better education than anything I would have got in your country. So(,) I am smart and not apologetic(,) so this is one Canadian who is not taking it from you.

These helpful suggestions will help your readers track and comprehend the content and meaning of your vexation in the future. Also, I should make one more friendly suggestion. You may want to consider throwing out those Lululemon sweatpants as these have been out of style for nearly a decade for the purposes of everyday attire (as was noted in the link I provided). Anyway, good luck to you, and stay warm!

#155 Vanecdotal on 06.10.15 at 3:31 pm

#88 Vanecdotal

“One more thing Garth, I like to post as others on this blog.

We so needed to know that. — Garth”

= Impersonator Troll

NOT me GT, I only post under this alias and always from same e-mail. Always. All other “Vanecdotal” is trolling.

#156 rosie "moving forward" in the knowledge that, "this won't end well" on 06.10.15 at 3:55 pm

See, it’s not as expensive as you were meant to think it is.

http://business.financialpost.com/personal-finance/mortgages-real-estate/you-may-not-need-to-panic-about-million-dollar-homes-not-even-in-toronto-and-vancouver

#157 Nagraj on 06.10.15 at 4:10 pm

Sometimes a cigar is just a cigar.

Unless price increases are due to an excess of money supply, they’re just price increases. By definition it’s not inflation.
If gasoline goes up (cuz yer being gouged) – and those gas prices work thru the system to raise the price of everything – even that systemic increase in prices is not inflation, it’s just a systemic increase in prices.

So what’s all this talk about inflation and deflation? Without reference to money supply?

MSM loves to misuse the term inflation, because it deftly covers a multitude of excruciatingly simple sins of supplier greed.

[Ages ago I took a course in economics, hated it, I thought it was Propaganda 101, and when I came across Herbert Marcuse “only an idiot believes in the law of supply and demand” I tortured the prof with Marcuse et alia. I got a C- ]

#158 Calgary Rip Off on 06.10.15 at 4:10 pm

These arbitrary predictions on this site are speculation. It is smarter to use the information for personal variables.

Rent vs. buy? How about both suck? That is certainly the case for Calgary. The high paying job is wonderful and so is the altitude(3500 ft), but it is either freezing or hot as hell. If you come here, bring cash otherwise, dont come unless your job is solid.

As far as this “crash” the prices for NW Calgary are still probably $250K over real values. Im one of the idiots who had the choice of renting for what my mortgage is now, or paying rent until around 2050, I’ll be lucky to retire before Im dead. Seriously.

All this crap that people talk about in terms of traveling and retirement reminds me of a toilet flush. Pure nonsense. This self entitlement attitude of Canadians is pure arrogance in its finest. Totally unbelievable the amount of whining instead of the acceptance of the cleanest air and water in the world(shakes head).

Last thought: A person as a newborn baby has no money. And when they are dead they have no money. Debt is only relevant if the person or entity you are indebted to has an actual gun to your head. Otherwise, dont worry about it, unless you are about to be foreclosed.

#159 Generation YOW on 06.10.15 at 4:17 pm

Debt is holding Canadians back from living the lives they want to. I just got back from a long-term backpacking trip in South America, and all I’m hearing from friends, relatives and old colleagues is, “I wish I could do something like that.” So, why don’t they? Thanks GT for teaching your readers to be liquid and free.

#160 Iconoclast on 06.10.15 at 4:20 pm

#131 – The American

LOL

“This is That” is one of my favourite news sources.
Facinating stories you just won’t hear anywhere else!

#161 Leo Trollstoy on 06.10.15 at 4:24 pm

U.S. wages, salaries and benefits show rapid pick up. Sorry doomers. No deflation here. Fed will raise rates and decimate bonds soon enough. I hope you’ve prepared for the next chapter. I am.

http://www.businessinsider.com/ecec-wage-gains-june-10-2015-6

#162 Rexx Rock on 06.10.15 at 4:37 pm

My spouse went with her sister in Vancouver to open houses for condos and she said it was all Asian buyers.$800 to $1000 sqft.condos were the norm.With very lax money laundering laws,Vancouver and Toronto real estate prices will continue go up.Our government really loves to get our young generation highly in debt just to own shelter.Central bank devalue our currency and zirp forever,I think you can predict the outcome by looking at Japan.Along with tax free day today.I’m so proud to be a Canadian.

#163 Derek R on 06.10.15 at 5:05 pm

#136 Canada Is Great #1 on 06.10.15 at 12:18 pm wrote
“The American” you are a idiot. Your not educated just like all other americans and can not even form a opinion of your own. Canadians are allot smarter than …

…and its why are economy and housing market never took a …

…better education than anything I would have got in your country. So I am smart and not apologetic so this is one Canadian who is not taking it from you.

**Facepalm**

#164 Deckard on 06.10.15 at 5:44 pm

#136 Canada Is Great #1

I hope the above thread was a joke. God please!

#165 Mark on 06.10.15 at 5:46 pm

“How much did your gas bill, electricity bill, water bill property taxes, rent, car insurance, house, car repairs, maintenance, house repairs, maintenance, gas costs for your vehicle(s), house condo, property insurance, condo fees, food, daycare, childcare expenses, taxes, fees, medical costs, healthcare costs, etc. etc. go down over the last decade?”

Of course there was inflation over the past decade. The Bank of Canada calculator says there was an 20.27% change from 2004 to 2014 in prices.

However, the whole point of CPI is to represent the average basket of goods and services that a Canadian buys. Certain items in that basket have probably exceeded the rate of growth of the broader basket in price. Certain items have certainly lagged the rate of growth.

Each individual will have their own personal view of inflation, particularly if certain items are over-weighted in the basket relative to the average basket.

The point I’m making, based on StatsCan and BLS data, is that prices are no longer growing and are now in contraction. Largely on account of a weakening economy, a substantially increased supply side response stimulated through low interest rates. And decreasing consumer demand for goods on account of the desire to repay debt.

In other words, deflation.

The problem with deflation, particularly in big ticket items such as housing (as we’ve seen in the past 2 years or so) is that as prices fall, expectations become even more embedded in the minds of consumers for even larger decreases. Why settle for a mere few percentage off of the price of a house versus levels 2 years ago, if waiting another year can get you another few percent? And so on and so forth.

How much did interest rates on savings, GIC’s, bonds, etc. go up? Oh, they are much lower, from 45% to 55% lower, 5% to 2.5% to 3.0%.

The total return on a typical balanced portfolio as quoted by Garth was approximately 7%/annum for the past decade. Easily besting the less than 2% annualized growth in the CPI basket.

“No deflation here.”

Sorry to burst your bubble, but the BLS showed deflation on a YoY basis. I gave the link earlier. The StatsCan data for Canada is clearly trending towards deflation.

Moreover “demand” If defined like “desire to purchase RE” is already in place, but demand as “ability to purchase RE” is loosing momentum daily. Increasing immigration won’t help with the second simply because most of the immigrants don’t have sufficient funds. Once RE crush happens, jobs will be an issue as well, so don’t count on immigration to increase

Very good point. Some people think that ‘immigration’ can push housing prices to the moon arbitrarily, but it takes successful integration of the immigrants into the economy, and economic growth to increase house prices over the long term. And even then, without meaningful land constraints, housing in Canada will eventually revert to construction cost minus depreciation, and even lower during periods of cyclical overshoot.

#166 Ray Vasquez on 06.10.15 at 7:22 pm

Yes, Mark, not everyone uses heat, electricity, water, food and pays rent or property taxes to live somewhere.

They don’t use a car or transportation either paying much higher gas, insurance, taxi, bus fares etc.

Nobody believes it is an average of 20.27% in 10 years. We did not pay higher taxes, fees either in 10 years. Right!

People know this is B.S. and know that the real cost of living of most of their expenses is up way more than 20.27% in 10 years.

Real estate prices going up more than 3% to 4% a year is just plain speculation that super inflated prices from deflating interest rates, more financial engineering from your policymakers in charge that messed things up even more.

They were no supposed to go up that much in the first place and the average housing prices are still high over decades.

People are living in a fantasy land that will end sooner or later. Just wait and see.

Deflation is in people’s living standard making them poorer but everything costs way more expensive over years, decades.

Mark, economists, analysts are there to fool, trick the population into believing that the cost of living is low or going down. Ha!Ha!Ha!What a joke!

Interest rates have deflated by 75% since 20 years ago so take this information anyway you want, 10%+ to 2.5% to 3.0%.

#167 crowdedelevatorfartz on 06.10.15 at 10:40 pm

@#136 canada is great #1

My God!
You illiterate boob. You actually went to school beyond the 8th grade?
I find that extremely hard to fathom.
Please inform us as to what “Top Tier (Tear?)” University education you slept through……
Was you plagarism spellcheck and grammar check not working?
Back to the drawing board.
Next time write something that actually makes sense(cents?).

#168 LL on 06.11.15 at 12:33 pm

# 44

You’re right!

…”A bubble is “like a mental illness,” Shiller said. “The American Psychiatric Association’s diagnostic and statistical manual, which defines mental illness, consists of a checklist of symptoms.” For Shiller, the checklist symptoms of a financial bubble are”…

http://www.usatoday.com/story/money/markets/2013/12/09/bubble-talk-overblown/3923375/