Seriously

COP modified

Sometimes I hate this blog. Yesterday was one of them. The number of comments which didn’t see the light of day peaked at a new level. A mess of people in this country believe interest rates will never rise, that kicking out the Chinese will drop house prices or that they can borrow without consequence. The more those myths spread, the greater the risk for all.

The message here has been consistent: be balanced and diversified. Don’t have a one-asset, house-only financial strategy; don’t over-leverage; and always invest with your pants on. Getting emotional will kill ya. House horniness and financial phobia lead to the wrong place, where so many of your co-workers and crazy relatives are headed.

Because normal folks never come to this pathetic blog, I’m probably wasting my time. But why stop now?

Let’s start in hipster city, land of teeming masses in skinny jeans, lumberjack beards, leggings, Ray Ban Wayfarer shades and vintage Metallica shirts. This Toronto crowd has been supporting the biggest condo hatching in global history, with almost 150 residential towers being built simultaneously. Developers don’t start erecting until they have sold a mess of units (usually to rank speculators, amateur landlords and virgins financed by the Bank of Mom), and then try to offload the rest while the cranes are swinging.

But there’s trouble, apparently. A research note by National Bank’s Marc Pinsonneault has caused a stir since, combined with housing start numbers released last week, it suggests a classic glut is developing. Based on CMHC stats, the number of unsold condos is spiking bigtime – at 2,837 in May. That’s a record. And only two months ago, the highest level in about 25 years.

This is how the bank represented the surge:

CONDO 1

But to US blogger and investment analyst Wolf Richter, it’s clear evidence Canadian real estate is goin’ down, baby. “Condo construction booms have a nasty tendency to flip suddenly into busts, and then no one can turn off the spigot of new units coming on the market because high-rise condos take years to plan and build, and they just keep coming.” Combined with a 29% surge in condo starts recently, this has the potential “to turn into one epic condo glut.”

Here’s how he sees the chart:

CONDO 2

Now to Alberta, where the Calgary and Edmonton markets are fading, even as oil prices have stabilized. Cowtown’s monthly sales just fell 4.6%, says Teranet. The local real estate board reports deals are 27.3% less than at this time last year. And Capital Economics adds: “With the hit from lower oil prices likely to push the oil-rich Alberta economy into recession, we expect those housing markets to continue weakening. Moreover, since households in those regions have some of the highest debt loads in the country, we also anticipate some negative feedback from the housing downturn back into the Alberta economy.”

By the way, when it comes to Canadian real estate in general that firm also says, “We still think that the housing market is a ticking time bomb, presenting a dangerous threat to the longer-term economic outlook. When market rates do eventually go up, that will spell trouble for the most overvalued markets. We still expect house prices to fall by as much as 30%.”

How do Albertans feel about it?

They’re waiting, says a new RBC report. Almost 80% believe it is either a buyer’s market now, or that prices will be lower next year – and a majority say they will wait until 2016 before thinking of making an offer.

This is classic behaviour. In markets where sales and prices escalate (like YVR), people are desperate to buy. In markets where sales are down by a third and the average MLS price is dropping (like Calgary) people run away. Lose, lose.

Anyway, here’s a sexy, interactive Calgary Herald infographic to amuse you for three seconds:

What are we to make of this?

It’s a mess. We have two dangerous unbalanced, emotional and speculative bubble markets, a bunch of mediocre ones (like Ottawa or Halifax), unfolding misery in Alberta and a nation of people with the financial literacy of a doorknob who think money’s free and they’ll never really have to repay it. – because houses always go up. Meanwhile HGTV-inspired house lust has concentrated net worth in a single, unstable asset and fueled resentment among those now priced out and looking for a scapegoat. Like any Chinese dude.

Well, there’s one thing to be thankful for. I’m not writing tomorrow.

235 comments ↓

#1 Doomer Gloomer on 06.12.15 at 6:23 pm

If you are so sure about interest rates rising then why won’t you take my $100,000? It is easy money that you can make in 6 months. I will pay you in full on Dec 31. Put you money where your mouth is.

That would be child abuse. — Garth

#2 Boots Dhaliwal on 06.12.15 at 6:25 pm

The timing of a real estate crash in Alberta is fantastic. All the old players can stand back and say “It wasn’t us, it was them”. There is no doubt the market and the economy is unwinding in a very ugly way and can/will all be blamed on the NDP. It’s a perfect set-up to trash the commies.

“Hey, everything was fine until you showed up”.

#3 Goldie on 06.12.15 at 6:26 pm

“Sometimes I hate this blog…”

We love you Garth. This is where folks can debate these subjects and blow off steam, thus purging ourselves and allowing ourselves to remain typically Canadian in an apathetic sense when returning the regular world to be abused for another day.

#4 Victoria Real Estate Update on 06.12.15 at 6:27 pm

2007 was an average year for single family home sales (number of sales) across Greater Victoria.

The source of the following information is the local real estate board’s website.

Number of SFH Sales by Year in Greater Victoria:
(without population adjustment)

2007: 4,464 sales

1989: 5,920
1991: 5,496
1992: 5,103
1988: 4,939
1987: 4,688
and so on…

Greater Victoria’s population has grown significantly since the 1980s.

For example, from 1989 to 2014, the area experienced a population increase of 26.6%.

More population means more houses and, obviously, more house sales. Thus the need to increase the number of SFH sales in 1989 by 26.6%, the same amount that the population grew.

This is population adjustment.

Population adjustment is simple and necessary when comparing sales totals from one year to another.

When we increase 1989’s SFH sales total by 26.6% (rounded), we get 7,493 sales (instead of 5,920).

Similarly, from 2007 to 2014, Greater Victoria’s population grew by approximately 4.7%. When we boost 2007’s SFH sales total by 4.7%, we get 4,673 sales (instead of 4,464).

I’ve adjusted yearly SFH sales totals from 1986, 1987… up to 2014. The average worked out to be approximately the same as 2007’s sales total. Thus 2007 can be used as an average year for Greater Victoria.

Comparing SFH sales totals (population adjusted):

2007: 4,673 sales
1989: 7,493
2012: 2,947

. .Total (Yearly) Single Family Home Sales. .
. . . . . . . . Greater Victoria. . . . . . . . . . .
. . . . . . . .Compared to 2007. . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1989. . . . . . . . . . . ****************
2007. . . . . . . . . . . *
2012. . .**********
———————————————————————
. . . .-40%. . . . . . .0%. . . . . . . . . . .+60%

These charts allow us to understand how weak SFH sales have been this year compared to Victoria’s long term average.

Total Single Family Home Sales
. . . .January through May. . . .
. . . . . Greater Victoria. . . . . .
. . . . . . . . . . . . . . . . . . . . . .
2007…*****************
2015…**
————————————————-
. . . . .-15%. . . .-10%. . . . 0%

(source: Victoria’s board)

#5 Sheane Wallace on 06.12.15 at 6:28 pm

Increase in long term bond yields and further steepening v.s. flattening of the yield curve clearly indicate that:

1. There is first rate hike coming soon/September in US and most likely others pretty soon after that, I bet on at least 1 .5 % increase in the next 2 years.

2. Mortgage rates are already increasing in the states – from 3 to over 4 % in few weeks.

Can you smell the storm coming? Are they losing the bond market?

PIMCO – the largest bond holder offloaded 2/3 of it’s treasuries portfolio.

It is starting folks,

Yield on Canadian 10 year bonds over 4 % in the next 2-3 years and yes, mortgages over 5.5%-6 %.

The cherry on the cake is that inflation actually would be higher than the interest rates, i.s negative interest rates policy will continue and savers will get screwed anyway.

BTW BOC will be delaying the rate hike initially due to the predicament with CMHC and Ca dollar will get creamed, going potentially to the .60 even 0.50 handle.

This will force late but much more aggressive rate hike on our part, just watch the feuerwerks,

#6 dave on 06.12.15 at 6:31 pm

:) first

#7 Mister Obvious on 06.12.15 at 6:34 pm

The rate of rise in unsold completed GTA condos is truly astounding. That one graph is worth a million words. So I’ll stop talking…

#8 Sheane Wallace on 06.12.15 at 6:34 pm

Well, there’s one thing to be thankful for. I’m not writing tomorrow.

Can I post a Guest Column? No gold, I promise…

#9 Davis W on 06.12.15 at 6:34 pm

Love your work Garth, thank you. Ever thought about mentoring someone (besides everyone who reads your blog)? There are a lot of knowledge hungry ppl out there, I’m one.

#10 DR. WAYNE on 06.12.15 at 6:35 pm

Now I know why I visit this blog … I’m not normal … my wife keeps telling me this . Now … I have to believe it if Garth says so … jeeezzz, all along I thought I was ‘somewhat’ normal.

#11 What about CMHC? on 06.12.15 at 6:36 pm

Nice infographic ;)

At first I thought it’s about October election…

I feel Harper and Cons have no interest in winning Oct election. Half of them have gone away and the remaining are in it for “also ran”.

#12 Gulf Breeze on 06.12.15 at 6:36 pm

Garth,

You have attracted many financially astute individuals to your blog who are equally confused by your emotional reactions.

I feel that the answer underlying your aversion to the idea that foreign money is driving up detached homes in Toronto and Vancouver is because it undermines your thesis about a market correction in those locales.

Diversifying includes keeping some cash on hand as well, plus a small percentage in gold bullion. So, go ahead…characterize me as a paranoid rifle toting moron.

And while you are at it don’t forget to turn everybody who counters your opinion into caricatures of humanity.

As you just did? — Garth

#13 PM on 06.12.15 at 6:37 pm

Yesterdays thread became a dumpster fire of racism and rate rants. I wanted to re ask my question to hear any opinions:

Given the economic indicators that signal a rising rates in the US this fall (if you don’t believe it that’s fine) how would you re-balance a balanced portfolio? I get the point of a balanced portfolio but surely there are some adjustments to make going into a rising rate environment.

#14 gladiator on 06.12.15 at 6:37 pm

Garth, let’s put things in perspective: with 65k condos in the pipeline, what’s 3k unsold condos? Less than 5%.
And most of the 65k are presold, of course.
Nuttin’ to worry aboot.

#15 crowdedelevatorfartz on 06.12.15 at 6:41 pm

Come on financially illiterate xenophobes.
Blame everyone but yourselves for the biggest real estate bubble in Canuckdian history.
Its so much easier than looking in the mirror or telling your family and friends they’re idiots for buying.

#16 Karma on 06.12.15 at 6:42 pm

“Well, there’s one thing to be thankful for. I’m not writing tomorrow.”

Slacker…

#17 Julia on 06.12.15 at 6:47 pm

Ahhh. Montreal police picture. Aren’t they lovely?

#18 mishuko on 06.12.15 at 6:48 pm

it’s scary… my peers think houses are great ‘investments’

an article on the g&m (I know I know…) was talking about how housing bulls never talk about potential risks. bang on.

#19 nonplused on 06.12.15 at 6:50 pm

And then there is this:

http://www.financialpost.com/m/wp/blog.html?b=business.financialpost.com//fp-comment/ezra-levant-meet-albertas-new-chiefs-of-staff

Dog help us.

The irony is that our new team of out-of-province chiefs of staff will all be jetting around in planes fueled in large part by the oil sands.

Also why does our new Premier want to hire so many out of province folks? Does she think her accidental success in Alberta (she won due to a split vote not by majority) will lead to national aspirations? Well I guess if Trudeau is the competition why not?

I actually think it probably doesn’t matter at this particular juncture that Alberta’s new head of the energy department is a professional oil sands opponent. None of the projects make economic sense right now anyway. However now we have a great scapegoat for when the $hit hits the fan.

I also think $60 oil might be here to stay for the NDP’s whole term, unless the situation in Yemen goes to hell and spills over into Saudi Arabia. OPEC is not going to cut, because they don’t believe they are the ones that caused the over-supply situation. They believe it is the US that caused it with the shale fracking boom. The Saudi’s are like “why should I shut in my $20 oil so the US can produce $80 oil???”

I also don’t think the US will do anything to slow production. I think the furballs at the Fed think it’s probably better to have the US shale industry on life support, even if it costs billions a year in write-offs, because by driving the price of oil down the US economy saves trillions in imports. And it buggers the Russians, which is quite popular these days. Unfortunately it also buggers Alberta and to a large extent Canada as well. Don’t forget the Canadian government gets royalties and taxes on oil too. On the income tax side more than Alberta does. Much more. All those soon to be unemployed oil patch workers pay taxes to Ottawa at present, many at well into the top bracket.

I have a feeling this is going to get really interesting, and not in a good way.

#20 Smoking Man's Old Man on 06.12.15 at 6:53 pm

Balanced and diversified all the way. That’s one thing about money, it’s as easy to manage no matter how much you have. Most things weigh you down; cars, pets, spouses, houses, belief systems. Done with all those things.

My girlfriend gets upset from time to time because I’m non-committal. I don’t want to be in a cage even if it’s made of gold.
Smoking Man is right about the school system, not interested in being a cog in the machine.

Get yourself free…

#21 Dean on 06.12.15 at 6:54 pm

Funny, thought the same thing yesterday.

Much of what you have been preaching has been repeated many, many times. It’s pretty obvious very few are paying attention,at least in the comment section any way.

Keep on keepin on Garth, I’m listening and still can’t believe you give all this advise away for free.

#22 Not a Yoga hater, just a plain old fashioned racist and xenophobe on 06.12.15 at 6:55 pm

Looks like Christy has gone a Burrard bridge too far.
She should have known better than to alienate the people who own BC, just to pander to her power base in Surrey.

#23 JSS on 06.12.15 at 6:58 pm

Gotta tell ya, the job market in Alberta is sooo dead. My hunny, with her Comp. Sci degree and nearly seven years experience, has been looking for over six months…and nothing.

This is the worst I’ve seen here in Alberta in a decade. You can sense the somber mood in the air. Seems like everyone’s crying these days – govt workers, private sector workers, business people who run liquor stores, meat shops, etc. losing money.

We put an ad on Kijiji to sell some stuff like toddler clothes, used rim, fender, axe, play sand etc. WOW! you should see the response we got! Everything sold within days, and nearly every person we could tell was educated, drove a decent car, had some sort of white collar job, and lived in our neighbourhood which has its share of 2,800+ square foot houses. People just have no money left after paying bills.

just think what will happen when people wake up and say “hey what the f^&k am I doing with a 3,000 square foot house. I don’t want to be a slave anymore. I want liberation”. They try to sell the mini-mansion and can’t get what they asked for. They’re hooped.

Man o-man, what a disaster.

#24 Mister Obvious on 06.12.15 at 7:01 pm

#14 gladiator

It isn’t the number of unsold condo’s that is disturbing. It’s the rate at which that number has risen. That’s one nasty derivative. Proceed with caution.

#25 Voluntary Tax Payer on 06.12.15 at 7:04 pm

As for blowing millions:
Hockey idol Derek Anderson, once the highest paid athlete on the planet, blew his fortune and ended up broke and living in New York’s Central Park for a while.
Ironically, he’s now a financial adviser.

#26 Karma on 06.12.15 at 7:07 pm

“The hipsters make me chuckle, I remember the real bearded men from the 70′ – 80’s. I just hope the 80’s hair and clothes don’t make a return. Could you imagine – I could sit on a bench all day and giggle at the sights.”
————————-
Ha, this made me chuckle. On the weekend, I was with my gf and her hipster bro. We were talking about tennis (French Open was on), and he said “Wait. Do you like tennis in like an unironic way?”

Bunch of weirdos…

#27 NoOneOfConsequence on 06.12.15 at 7:07 pm

A truly terrifying chart if you are a speculator in the “middle of the road condo” market – add in the fact that CRA has their sites firmly on the flipping of properties never occupied…there is a storm coming fast to people who have been less than careful.

You have never expansively commented on the possibility of a rather sudden interest rate rise. I mean, this has happened in the past.

Since it’s the bond market that sets fixed mortgage rates – isn’t there some risk that rates could rise rather abruptly?

With the rumbling in the bond market recently…I’ve been wondering if there isn’t some risk of a sudden large pop in rates that surprises everyone.

I am not talking 10 or 20 bps, but rather maybe 100 or 150?

Is there a risk of a sudden and significant move in rates upward?

#28 bdy sktrn on 06.12.15 at 7:07 pm

Sometimes I hate this blog. Yesterday was one of them. The number of comments which didn’t see the light of day peaked at a new level
——————————

Garth you missed one…. “Mobile amusment service providers” do not appreciate the slur ” the carny folk”

bill gets the boot too!

#29 Mark on 06.12.15 at 7:10 pm

“Mortgage rates are already increasing in the states – from 3 to over 4 % in few weeks.

Can you smell the storm coming? Are they losing the bond market?

Nearly all of the change was on account of risk premia blowing out against the specific asset class of residential mortgages. Not US Treasuries increasing in yield. In fact, the 10-year and 30-year US T-bonds haven’t really moved more than 25bp from last month’s levels. Of course, it portends a crisis, but its due to investors being fearful of private debt, not the economy magically starting to grow.

As for your claims of the CAD$ plummeting, nothing is likely to be further from the truth. Deflation is very CAD$ positive. Canada has one of the best fiscal situations in the developed world. This is not a recipe for a weak CAD$, that’s for sure.

#30 Ponies Pilate on 06.12.15 at 7:12 pm

Garth,
Even God took the Sabbath off, so you’re in good company.

#31 When will they raise rates? on 06.12.15 at 7:17 pm

The FED has followed the market since 2000, specifically the 3 month treasury yield in it’s rate moves… Telegraphed perfectly, as seen here:

https://www.elliottwave.com/images/freeupdates/image/mw%2006-24-2014two.GIF

Looking at the current 3 month yield, I don’t see anything to indicate a rate hike, although I sure do hope that Garth is correct. Take a look at the live chart here:

http://finance.yahoo.com/echarts?s=^IRX+Basic+Chart&t=my#{%22range%22:%2210y%22,%22allowChartStacking%22:true}

#32 bdy sktrn on 06.12.15 at 7:18 pm

http://www.zillow.com/homes/for_sale/fsba,fsbo,new_lt/house,mobile,land_type/2102473946_zpid/0-200000_price/0-756_mp/250000-_lot/priced_sort/48.951641,-122.686858,48.940818,-122.710998_rect/15_zm/0_mmm/?view=map

———————–
just called the agent for above, made a lowish offer.

we will see monday.

10 flat acres one hour from downtown vancouver for the price of a mid level german sedan.

new massey bridge on the way.

#33 Gulf Breeze on 06.12.15 at 7:20 pm

#5 Sheanne Wallace,

If yields are spiking in the bond market, is it a reaction to the fed’s pronouncements? If it is, can the fed take measures to stem mounting panic by reassuring markets that rates will remain on hold?

Do treasuries have to compete with corporate bond yield? It’s a weird horse and cart conundrum and I am unsure how these dynamics are sequenced. Thanks!

#34 Mark on 06.12.15 at 7:20 pm

“Given the economic indicators that signal a rising rates in the US this fall (if you don’t believe it that’s fine) how would you re-balance a balanced portfolio? I get the point of a balanced portfolio but surely there are some adjustments to make going into a rising rate environment.”

The whole point of a ‘balanced portfolio’ and rebalancing is that you aren’t taking outsized bets on a certain outcome in the markets. Whether it be rate hikes, rate cuts, etc. The advice you are likely to receive is that you stick to your plan of asset allocation, and if there are some extreme moves, it might be a good opportunity to rebalance accordingly.

Since 2011, US stocks and US bonds have outperformed. Canadian stocks, emerging markets stocks, etc. have underperformed. Gold has underperformed. Rebalancing implies that you lighten up on the outperforming assets, and buy underperforming assets. However, you would have to evaluate the specifics of such with the circumstances of your individual portfolio and whatever asset allocation it may contain presumably selected with your risk tolerance in mind.

#35 Spiltbongwater on 06.12.15 at 7:21 pm

My comments didn’t see the light of day yesterday but they were none of the issues on the list.

#36 Prairieboy43 on 06.12.15 at 7:21 pm

“Seriously”, your message has been understood, by the few. Thank You.
Take a break. Drive that bike on a tour. Let Mark, Victoria Real Estate & Smoking Man, carry the load for a while.

Cheers
PB43

#37 paul a on 06.12.15 at 7:23 pm

So It Looks Like History may well Repeat itself , Unless We The People Convince The Government to” God Forbid” Step Up With Some Good Governance, Make Some Changes In The Tax Rules to make it less profitable for the professional house flippers out there, the bulk of said by the way have only one connection to the Chinese, thats the number to there local Chinese take out food joint . the Elephant in the room, you guessed it CHMC aka we the peoples funded insurance company, lets face it, our Big 5 Banks are Profit Piggies, and thanks to CHMC they are covered and insured, potentially to the detriment of the tax payor . so try to tell me that they are not bending the rules, with prices at record levels in toronto/van, where you need a min 180k household income just to qualifie, assuming you had 250k + closing . time for some changes in the rules

#38 mitzerboy aka queencity kid on 06.12.15 at 7:25 pm

take a break garth
fire-up the hog and let r rip

#39 BuyWhenAppropriate on 06.12.15 at 7:26 pm

Overheard a group of 4 twenty somethings at a Starbucks in Surrey today. The idea was to scrape together 50k each to buy an investment property because ‘it beats working 9-5 as a CPA’..

The only hitch was none of them had full time jobs, and only one or two had part-time. It was interesting that no-one mentioned interest rates or anything which might possibly derail their well thought plans.

In order to get access to listings the bright idea was to take a realtor’s license – however, the monthly fees that would have to be paid quickly seemed to put down that idea.

The main plan was to obtain ‘work’ just so they could combine their payroll stubs after a year and obtain a mortgage for their “investment” property from the bank.

Apparently not-present “friend #5” had to ditch their leased Audi since the banks tend to frown on that sort of thing when going to get a loan now.

Sigh.. this should end well!

#40 cdns watch too much usa tv on 06.12.15 at 7:31 pm

it is amazing to seen the house porn in Canada. my cdn friends want bigger and bigger homes, with all the toys. not sure why? is it too much usa tv? I think more cdns need to travel to usa and see that so many of us live in simple & ordinary homes.

#41 Lilyflor on 06.12.15 at 7:32 pm

montreal police, always clowning around, lol

#42 Retired Boomer - WI on 06.12.15 at 7:33 pm

While Garth has a love / hate relation with his blog, it is still the most entertaining, and fun read around. Not only have I gained some financial wisdom, and developed a much more balanced portfolio, I have switched much from mutuals to ETF’s for simplicity.

Where else could you find Smoking Man, love him or not, a very enlightening dog. Mark imparts some wisdom, though some would argue. Even more who must remain nameless (blameless).

No matter how the Canuck RE resolves itself, what a great window on the processional. My daily dose of sanity / insanity in an otherwise rather insane world. Keep it up!

#43 Kevin on 06.12.15 at 7:39 pm

I think the best strategy is to invest in art through Evan Solomon.

#44 Fixed yer typo on 06.12.15 at 7:43 pm

#25 Voluntary Tax Payer on 06.12.15 at 7:04 pm

As for blowing millions:
Hockey idol Derek Anderson, once the highest paid athlete on the planet, blew his fortune and ended up broke and living in New York’s Central Park for a while.
Ironically, he’s now a financial adviser.

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

Hockey idol Derek Sanderson

#45 crowdedelevatorfartz on 06.12.15 at 7:44 pm

@#25 Voluntary T P
“As for blowing millions:
Hockey idol Derek Anderson……”
++++++++++++++++++++++++++++++++++++

I assume you were referring to Derek Sanderson of the Boston Bruins fame.
His problem was substance abuse…. not stupidity.

http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=3&cad=rja&uact=8&sqi=2&ved=0CC4QFjACahUKEwjjpZvfqovGAhVNNYgKHfihADs&url=http%3A%2F%2Fwww.theglobeandmail.com%2Fsports%2Fhockey%2Fbooze-pills-and-the-rise-and-fall-of-former-nhler-derek-sanderson%2Farticle5016334%2F&ei=kW57VaOZK83qoAT4w4LYAw&usg=AFQjCNHf73KxaoaObMsCT7b3fzcPi9xMNQ&bvm=bv.95515949,d.cGU

#46 North Burnaby on 06.12.15 at 7:44 pm

BC stands for Bring Cash

Our newly arrived immigrants all bring a load of cash to buy properties wohooo!!!

#47 Smoking Man on 06.12.15 at 7:44 pm

So the Fed is going to spike….

What’s changed, yes more jobs have been created. But all low paying. Where are the surfs going to the extra loot to fuel inflation and spending. With so many working ready on the side lines, if there is a semblance of good paying jobs, they will come of disability and releave any potential wage growth pressure.

My question
Whats more important to Yellen, save face.. Or save a week recovery.

People need money, or an expection of money before the economy can really start to rock..

I’ll poll some of my american opponent’s in the poker rooms this week.

#48 Quayside Explorer on 06.12.15 at 7:46 pm

Garth, the reason “normal” people don’t stick around here is while you harp on the risk one-asset strategy you don’t provide much advice for the first time home/condo buyers who do want to get into this crazy market.
After exploring in New West I finally succumbed to the need and bought a place. Its the same building where the mayor lives. We put down 20% and borrowing half the mortgage we are qualified for (2.2X of gross income). Instead of renting at $1800 my current monthly commitment is $2000. I know it’ll increase in a few years- I don’t care. I know the condo pricing will at best stay at the same level and will decline slightly but it doesn’t matter.
The markets had a good run- with interest rates going up I don’t think the “balanced” portfolio return will be in the 7- 10% range going forward.

You ascribe zero value to your down payment. Your mortgage will renew higher. Thus, the condo will be worth less. You pay more to live now. You have debt plus risk. And the balanced portfolio’s returns are right on target and poised for many good years, thanks to the non-Canadian weightings. You make many amateur mistakes. — Garth

#49 cramar on 06.12.15 at 7:47 pm

I just found out today that one of the Pelee Island ferry boats will be replaced by the Ontario Government with a new bigger one for $40 million. What has outraged me is they gave the contract to a company in Chile, when there is a local boat builder in Wheatley (Hike Metal) that say they can build it for the same amount! They have a proven track record of building boats for the Coast Guard, research vessels, fire boats, search & rescue, etc.

Why cannot our provincial government put Ontarians first? Will a Chilean company employ workers living here? Will they pay taxes to the Ontario Government?

What is wrong with our elected governments? Are they deliberately trying to screw the Canadian economy and destroy jobs? I hope there is a political backlash over this. It is no wonder the future looks bleak for the Canadian economy. A perfect storm is brewing. Future rising interest rates and a pathetic economy north of the U.S. border. Won’t end well for doorknobs who buy expensive real estate.

#50 Karma on 06.12.15 at 7:52 pm

#123 Alan Dee on 06.10.15 at 11:54 pm
“Garth,

Why should anyone know what a person paid for a house in the past. Isn’t that private information? Just because realtors are collecting it, that does not make it public.”

It’s registered in the Land Registry of their respective provinces and collected by the governments to do land value assessments, and in BC it’s on the assessment website. So clearly, it’s not “private” information. Only the person’s identification is private information. Thus, the whole defence by CREA and TREB is very weak and the case should be easily decided in favour of the Competition Bureau.

“Why should anyone know how many people are hitting a web site advertising my house? In what way is that public information?”

This isn’t public information, unless the website’s host wants to disclose it to drum up interest.

“You apparently don’t have to disclose who your clients are, or how much money you manage, or what rate of return each of your clients got. Why not?”

Because that’s very private information, not akin to house prices. With that said, you can easily for public information on any company that is publicly traded and investible, which is akin more akin to the housing market, and material to making purchasing decisions.

#51 Brian Ripley on 06.12.15 at 7:54 pm

My little ongoing opinion poll for Calgary has SFD prices next year at:

26% SAY 20% DOWN
15% SAY NO CHANGE
14% SAY 5% DOWN
13% SAY 10% DOWN
13% SAY 5% UP
7% SAY 10% UP

This has become more negative in the last month or so.

I show results for Vancouver and Toronto as well here:

http://www.chpc.biz/opinion-polling.html

#52 FormerSaskie on 06.12.15 at 7:56 pm

Your advice has been invaluable to many people, Garth and helped us make better financial decisions than we would have done on our own. Thanks. I don’t read the comments very often anymore ( which isn’t an option for you, sadly) but the truth of what you are saying will be obvious in the not too distant future and then you will blog to try to help those people who are living a financial nightmare because of a house. I would never have guessed that Canadians could be this crazy about housing.

#53 AlanC on 06.12.15 at 8:01 pm

Great quote

“… a nation of people with the financial literacy of a doorknob who think money’s free and they’ll never really have to repay it. – because houses always go up. ”

Now I understand.

#54 Holy Crap Wheres The Tylenol on 06.12.15 at 8:01 pm

Why worry about unsold condos or for that matter anything regarding real estate. There is a war coming and it won’t make any difference. So as Smoking Man always says live for today!

#55 Smoking Man on 06.12.15 at 8:02 pm

#42 Retired Boomer – WI on 06.12.15 at 7:33 pm

Where else could you find Smoking Man, love him or not, a very enlightening dog. Mark imparts some wisdom, though some would argue. Even more who must remain nameless (blameless).
……

Did you notice what you just did here. Ah I must enlighten you..

“Love him or not” that’s practing safety. Hedging.

I know you love me man.. But are unsure where I stand in the minds of the rest of the pack. So you left a door open just in case I have way more haters than lovers.

I’m sure you go with safe and balanced with your port folio, but every once in a while take small risky bets.

Am I Right?

Dr Smoking Man
PhD Herdonomics.

#56 Sheane Wallace on 06.12.15 at 8:05 pm

#33 Gulf Breeze

Mid and Long term bonds are increasing, the are only partially influenced by the Fed’s forward guidance.

Mid and long term bonds reflect better the cost of money and are difficult to influence, steepening the curve between short term and mid and long term bonds is evidently influenced by expectations and perceived strong job market.

But the speed of change is really the problem.

If inflation shows up notably there is nothing central banks can do but increase interest rates.

This thing can spike out of control pretty quickly.

We might actually see 8 % and even 10 % rates 3-5 years from now, no matter how strange it looks today.

Inflation is the key.

Japanese (deflationary) scenario on world scale is highly unlikely due to many obvious (not to Mark though) reasons.

#57 Sheane Wallace on 06.12.15 at 8:08 pm

#47 Smoking Man

They WILL increase interest rates this year.

Chance of 70-80 % of single increase by 0.25 %
20 % chance of no increase
0-10 % – increase higher than 0.25 % (this could change),

#58 sideline sitter on 06.12.15 at 8:10 pm

One of the biggest issues for this condo bubble in Toronto is that all these new buildings have shitty little units that no one except a landlord would want to buy… I live in 1100 sqft downtown but in a building that’s from the 90s.

I could never live in 700 sqft or less no matter what the price. Amateur condo investors are pooched!

#59 Ben on 06.12.15 at 8:10 pm

Montreal police trying to get a reasonable retirement deal just like the olds already retired and creaming it in on an unfunded pension, paid for by the working kids.

#60 raisemyrent on 06.12.15 at 8:16 pm

so AB messed up and overreacted with the NDP jazz.
is there a chance that Harper will mess up, things will blow up in his face, and we will end up with a parliament that’s the product of an overreaction nation-wide?
I thought elections didn’t have a fixed time, when is the next one and why? can anyone chip in? I know we’re expecting September but I forget why exactly.
as much as it would be fun to see harper leave in disgrace, it would probably have some serious consequences for the nation.
but all people can think of is real estate.
no wonder Smokey spends most of his time debauching south of the border.

ps still to catch up on whatever you lot got up to in the comments section yesterday.

#61 betamax on 06.12.15 at 8:21 pm

#39 BuyWhenAppropriate: “Overheard a group of 4 twenty somethings at a Starbucks in Surrey today….”

RE + ??? = PROFIT!!!

#62 Blogbitch on 06.12.15 at 8:24 pm

You’re not writing tomorrow? Where are we going to get our sanity fix?

#63 SWL1976 on 06.12.15 at 8:25 pm

Thanks for this blog Garth.

I don’t always agree with you, but you deliver a solid message and have the patients of a monk when dealing with this comments section. This blog and its comments section is a great daily dose of reality.

What’s obvious to some is clearly not obvious to others regarding many different subjects and topics.

We all have a lot to learn from one another

Thanks again Garth for this forum, and thanks to all the eccentrics who come here with something to share

#64 45north on 06.12.15 at 8:27 pm

Toronto Completed & Unsold Condos

Mister Obvious: It isn’t the number of unsold condo’s that is disturbing. It’s the rate at which that number has risen.

yeah it’s vertical!

NoOneOfConsequence: A truly terrifying chart if you are a speculator in the “middle of the road condo” market

truly

the banks have got to know this stuff

#65 Freedom First on 06.12.15 at 8:27 pm

#23 JSS

Yes. The mood in Alberta is dark. I have lost track of how many people have shared their loss of employment in my presence. I’m talking the 6 figure + crowd as well as the average Ken/Barbie.

On a brighter note, I was offered a move-in bonus to sign a 1 year lease on my rental I currently rent. I love where I live and signed. Worked out to about 1 month free. First class place with all the amenities, of course. Rental incentives are now common.

I have owned 2 houses before, and I would consider buying again, but now if I was to buy in Alberta, I need a 65% price drop to make it worth my while. My money, my rules. No exception.

#66 Seriously.... on 06.12.15 at 8:30 pm

And as the Harper bubble is set to deflate, we are about to elect a national NDP government.

http://www.theglobeandmail.com/news/politics/ndp-the-party-most-trusted-by-canadian-families-poll-shows/article24928628/

Just like with Bob Rae years ago, the Mulcair government will be unfairly blamed for the economic chaos it inherits from the economic incompetents, the conservatives.

Still, it will be better than the alternatives and likely make some lasting positive changes if it does not lose sight of its purpose.

Get ready, everyone. This will happen.

God help us. — Garth

#67 Karma on 06.12.15 at 8:39 pm

#14 gladiator on 06.12.15 at 6:37 pm
“Garth, let’s put things in perspective: with 65k condos in the pipeline, what’s 3k unsold condos? Less than 5%.
And most of the 65k are presold, of course.
Nuttin’ to worry aboot.”

Roughly 85% of the 65k are presold, so let’s say 9.75k will be delivered unsold over the next 2-3 years. As rates rise over the same period, they won’t be moving as fast as they previously have and the developers will eventually give big incentives to sell them.

It’s possible that the unsold inventory is elevated for the new few years… good for rents, bad for owners.

#68 Spectacle on 06.12.15 at 8:42 pm

Hi everyone, Mr Turner….

Never underestimate the positive impact You have on another individual !

It’s all about risk management, preparing for life; as GT relates, a balanced & diversified portfolio. Check your blood pressure, hug those you love, live with some compassion.

I have my first Baby boy arriving in 4 weeks, Wow, and a puppy . Love my wife beyond words. Thanks Garth Turner.

I’ll Leave you with an inspiration video for the weekend:

http://www.youtube.com/watch?v=mz2kDH0MCn4

#69 Ray Vasquez on 06.12.15 at 8:43 pm

To #5 Sheane Wallace

Dream on! Interest rates are staying low and any rise in the bond market will be short lived.

They have it all under control and those suckers waiting for 5 year GIC’s of 4%, 5%, 6% and 10 year government bond yields of 4%, 5%, 6% will be waiting until they are old and grey.

Even 8 years ago with the strongest U.S housing market and much stronger economy at 4%+ a year plus much stronger employment, better quality jobs, interest rates were still falling from year 2000 highs of U.S. 30 year bond yield 6.74% versus today’s low 3.10%.

Remember, U.S. 30 year bond yields reached many times in the 2.3% to 2.5% range since 2009, probably 4 times at the least.

It has been 15 years and things just keep getting worse for those waiting to earn decent interest rates. Wake up!

#70 Blacksheep on 06.12.15 at 8:48 pm

Holy Crap # 54,

“There is a war coming”
———————————–
What exactly, do you foresee?

Not being a dick, actually want your experienced, old dude, opinion.

#71 Smoking Man on 06.12.15 at 8:57 pm

#57 Sheane Wallace on 06.12.15 at 8:08 pm
#47 Smoking Man

They WILL increase interest rates this year.

Chance of 70-80 % of single increase by 0.25 %
20 % chance of no increase
0-10 % – increase higher than 0.25 % (this could change),
……

Off course she will, big egos on the line. But food banks in NYC running out of food… Demand outstrips supply.

Remember this term, its a hot topic on the list at Bulderberg.

Crap I forgot what it was exactly… But a word something to do with the herd waking up. And refusing.

Damn, kiss good by another brain cell.

Bozze

#72 plumber on 06.12.15 at 8:58 pm

Can’t believe how incredibly stupid you are. It has been well documented that capital flight is enormous from China since at least a decade ago, billion and billions of dollar have left the country. I am too lazy to look up links for you but just google it. These amounts are estimates from world wide banking organizations. This money has been and continues to land in world wide real estate. It’s not just Vancouver, Toronto but London, Singapore, Hong Kong, Sydney, Los Angeles, even Seattle.

#73 Smoking Man on 06.12.15 at 8:59 pm

It came to me..

Rejectionist….. Remember that one.

#74 polecat on 06.12.15 at 9:08 pm

Good for you Garth, shut her down, get on the hog and giggle with glee.

#75 Dee on 06.12.15 at 9:09 pm

Should a 79-year-old take on a new mortgage?

No, seriously, that’s what the Globe and Mail is asking today.

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/is-it-mad-to-buy-a-house-and-take-on-a-mortgage-at-79/article24946052/

We are so doomed.

#76 The American on 06.12.15 at 9:12 pm

Karma, from your post from the previous string subject, as much as I’d like to “suck it,” I simply cannot, being how sucky that article was written. Honestly? It was sad and comical at the same time.

I understand you may believe Canada will become a Superpower. That’s quite amusing and cute, but to that I say to keep on trying! That was a fun little piece you provided, written by a Canadian for Canadians to feel better about being so insignificant, on a blogish Bloomberview site, not a *real* Bloomberg news site. This is a “what if” or “I wish” scenario that has been going on for over a decade in Canada, without really understanding what defines a Superpower, as is evidenced in the considerably redefined meaning of the term itself by the writer of the article. Karma, did you read the comments section of that so-called “article?” I think you should, before you post such nonsense.

So, does Canada want to be a Superpower or not? It’s such a conflicted little country, always saying they want no such thing… that is until there is the slightest incling that it may be one someday, of course under redefined key performance indicators as this writer provided.

In case you don’t understand, and clearly you do not, a Global Superpower must have the following characteristics: A Superpower is a state with a dominant position in international relations and is characterized by its unparalleled ability to exert influence or project power on a global scale. This is done through the means of both military and economic strength, as well as diplomatic and soft power influence. Traditionally, superpowers are preeminent among the great powers (i.e., as the United States is today). The term first applied to the British Empire, the United States, and the Soviet Union. However, following World War II and the Suez Crisis in 1956, the United Kingdom’s status as a superpower was greatly diminished; for the duration of the Cold War the United States and the Soviet Union came to be generally regarded as the two remaining superpowers, dominating world affairs. At the end of the Cold War and the collapse of the Soviet Union in 1991, only the United States of America appeared to fulfill the criteria of being a world superpower.

Alice Lyman Miller defines a superpower as “a country that has the capacity to project dominating power and influence anywhere in the world, and sometimes, in more than one region of the globe at a time, and so may plausibly attain the status of global hegemony.”

1) Does Canada have a dominant position in international relations? No where even on the map! Nope! Not even close!
2) Is Canada characterized by its unparalleled ability to exert influence or project power on a global scale? Not when you rely on the U.S. as protection 24/7/365! You’d have to have a military first, and that costs real money. This is real money that Canadians simply cannot afford to pay as an even higher tax burden would necessitate. Additionally, Canada’s economy in both GNP and GDP is minuscule compared to others, let alone the U.S. Canada per capita is smaller as well, meaning much less efficient. So, this doesn’t fit the bill either.
3) Oh yeah, one last thing…. the CAD is not the global reserve currency, and it never will be.
4) Nope! No Canada here! https://en.wikipedia.org/wiki/Potential_superpowers

I’ll say it again… I love my Canadian friends and family. But as a nation, its a one-trick pony. Natural resources. Good luck with that, because it is very naive to think those with bigger military’s will play fair if and when those resources are needed. You’ll love the U.S. when that time comes.

In conclusion, please read the comments of those who responded to this article in the link you provided, and understand the “WHAT” of your postings, before you are so eager to have an American “suck it.” The responders to the article are mostly Canadian, and even they aren’t buying it. You made a novel attempt, but as usual came off like a little brat brother trying to scream his way to authority and/or domination. That’s just not how it works. Cheers to you, anyway! :-)

#77 DG on 06.12.15 at 9:22 pm

Why it may be better to rent, not buy that condo

10 years of GTA condo prices compared to 10 years of Toronto stock prices

http://www.durhamregion.com/news-story/5675530-why-it-may-be-better-to-rent-not-buy-that-condo-mayers/

#78 Randy Randerson on 06.12.15 at 9:28 pm

#48 Quayside Explorer on 06.12.15 at 7:46 pm

So the best way to invest your hard earned money is to succumb to your emotions? And how can you be sure that your condo will only drop in price by a little bit? Haven’t you heard of leaky condo? If that happens you couldn’t wait to get rid of it quick enough.

That’s why there is a word for amateur, it’s called “amateur.”

#79 Smoking Man on 06.12.15 at 9:32 pm

If you hate Jews, Muslims, Blacks, Gays, Whites, Chinese. And not in any particular order.

There’s something seriously wrong with you.

Hate projects short electron wave lengths, which guarantees bad luck.

Love has long electron wave lengths. Good fortune falls on you like a ravaging rain storm.

Teachers are still fare game..I despise their stupidity.

#80 Lobster Man on 06.12.15 at 9:32 pm

Praising Canada, a early celebration for our July 1st:

http://www.bloombergview.com/articles/2015-06-12/canada-might-have-the-goods-to-become-a-superpower

#81 Andrew Woburn on 06.12.15 at 9:38 pm

“Canada’s Lust For Home Equity Lines Of Credit”

According to the chart supplied, Canadian Helocs have touched on 14% of GDP as opposed to 4% of US GDP before the housing crash. I assume (pray) CMHC doesn’t cover any part of HELOCS.

“Canadian household debt rose to a fresh all-time high in April above 1.8 trillion. Trustees in bankruptcy are warning that they have never seen so many 2nd mortgages and Home Equity Lines of Credit (HELCO) on Canadian household balance sheets.”

Please tell me this is wrong.

http://seekingalpha.com/article/3254035-canadas-lust-for-home-equity-lines-of-credit?ifp=0

#82 lee on 06.12.15 at 9:40 pm

The first chart is telling. Today it looks like 1991-1995 when everybody and their brother owned an investment condo and shares in NBS and then sold the condo eventually for 50 to 60 cents on the dollar. Some condos were simply being sold for half price, and tehy were bigger then, with people losing $100000 before factoring in closing/sale costs. I don’t to tell you what happened to NBS. It’s also when agents had to cut their fees fromwhat was typically 7 per cent because banks refused to pay that much since it was coming out of their pockets rather than the vendors. The chart looks worse today. I think you are a fool to buy a condo in Toronto today.

#83 Smoking Man on 06.12.15 at 9:40 pm

Trivia, on my last post I forgot to include.

Big Red Rock Eater… Boomers don’t tell the millennials.

Its our secret from days gone by…

Damn, we have google now..no more secrets.

#84 Llewelyn on 06.12.15 at 9:49 pm

It would seem some followers of this blog missed the fact that there are thousands of condos not recorded as unsold because they remain hidden in the pipeline.

The 25 to 35 year old demographic has been the primary market for condos in Toronto and this age group is declining not increasing. This can’t be good!

It would be very useful for potential purchasers of a condo in Toronto to be informed of just how many units in the pipeline have been pre sold and how many will be available for sale once they are completed.

The days of long lines and crowded showrooms appear to be over and it is my guess that banks are tightening the screws for new projects as I write.

Conversion to rental units seems very probable in the forseeable future.

It would seem the poor little Lambs have lost their way.

Bah Bah Bah.

#85 palebird on 06.12.15 at 9:50 pm

#76

Exactly. The truth does hurt the old fantasy.

#86 TurnerNation on 06.12.15 at 9:54 pm

Hipsters are annoying. I suspect first they were Slackers.
At least Hippies had a cause.

#87 Suede on 06.12.15 at 9:56 pm

Am I the only one that sees rates are moving up too fast right now, yet all central banks are still utting rates (NZ and Korea latest).

Bond yields will drop in the fall, sending prices up to record highs. This is the mother of all bear traps. It’s what’s needed to absolutely shake and destroy confidence in bonds.

From there, rates up up and away!

You heard it here first.

Some good action at Bilderberg. Wonder if I can use freedom of I formation to get the details from the Canada pension plan attendee…

#88 Smoking Man on 06.12.15 at 10:00 pm

#86 TurnerNation on 06.12.15 at 9:54 pm
Hipsters are annoying. I suspect first they were Slackers.
At least Hippies had a cause.
……

We all wanted to be sky pilots, wanted to fly higher than the next guy.

My altimiter is impressive at times.

#89 Smoking Man on 06.12.15 at 10:19 pm

#87 Suede on 06.12.15 at 9:56 pm
Am I the only one that sees rates are moving up too fast right now, yet all central banks are still utting rates (NZ and Korea latest).

Bond yields will drop in the fall, sending prices up to record highs. This is the mother of all bear traps. It’s what’s needed to absolutely shake and destroy confidence in bonds.

From there, rates up up and away!

You heard it here first.

Some good action at Bilderberg. Wonder if I can use freedom of I formation to get the details from the Canada pension plan attendee…
……

I now ordain you as a member of the UCC, the all seeing society..

You see it clearly…

#90 tundra pete on 06.12.15 at 10:25 pm

Hipster millenials with beards in yoga pants on a bridge in vancouver raising interest rates, building their empire with a one asset strategy, convinced that rates will never go up, filling their mcmansion basement with beans, bullets and band aids, pissed at some chinese mainlander for high cost housing.

God i love the interweb!

#91 Washed Up Lawyer on 06.12.15 at 10:28 pm

Re: The debate on Canada becoming a Superpower.

I had to dip into that article to see what preposterous nonsense was being touted. I got as far as the statement that this country will have more arable land when the glaciers have more fully retreated.

This must be a very old article. Alberta was under a few kilometres of ice a very long time ago. The author should have said that once the tropical jungles were covered by miles of ice and that ice melted, the Rockies were fully formed and the plains evolved, people could grow stuff here.

If in fact the author is talking about the retreat of the Athabasca Glacier, I would recommend a trip down the Icefields Parkway (Jasper to Lake Louise) and a few hours in the seat of a John Deere “D” to understand the folly and the risks of baling hay on the sides of a lateral moraine.

The author mispelled Stupidpower.

https://www.google.ca/search?q=pictures+of+lateral+moraines+at+athabasca+glacier&sourceid=ie7&rls=com.microsoft:en-US:IE-Address&ie=&oe=&gfe_rd=cr&ei=AZN7VYGTF87tiAKD_oDYDw&gws_rd=ssl

The above are my own thoughts. I did not read the comments on that article (Scout’s Honour) but will do so now. Surely others picked up on the idiocy espoused therein.

#92 mdm on 06.12.15 at 10:30 pm

when are you going on vacation garth?? you’re sounding like it’s time to give yourself a reprieve! you’re preaching to us about diversity and spreading your wealth of economics knowledge free of charge and the bashers need you to go on holidays!! cuz nothing worse for them than to have no one listen to them!! love your blog!

#93 Tony on 06.12.15 at 10:32 pm

So if/when there is a correction, I’m wondering if it would be a good time to buy to live, and/or to rent/investment?

Say a 20% reduction in prices. at bottom then realized strata fees stay the same usually, still maintenance, broken dishwasher. In the end, is it ever worth it to buy. Do we know the sweet spot?

Man, I need a beer

#94 Tony on 06.12.15 at 10:32 pm

only thing that decreases is mortgage payment

#95 Bladalint on 06.12.15 at 10:43 pm

Garth,

There was much debate and angst on this blog about the false inflated statistics and HAM rumours in Victoria and Nanaimo. Is there any provision within the criminal code to file a complaint against realtors if they are spreading false information to potential buyers, whether local or foreign….as a man of the people/sheeple, maybe you could lead the charge and file a complaint if warranted, and help shake a few apples from the tree…

#96 Binder Dundat on 06.12.15 at 10:45 pm

Re: Big Red Rock Eater

This one is for you, Smokey:

Q: What did the elephant say to the naked man?
A: How the hell do you breathe through that thing?!

#97 Balmuto on 06.12.15 at 10:54 pm

Well that unsold condo chart sure looks scary but this article is worth reading as a counterbalance:

http://urbanationinc.blogspot.ca/2015/06/no-condo-glut-data-is-wrong.html?m=1

#98 Realtor007 on 06.12.15 at 10:57 pm

Those are nice charts but irrelevant today. Capital flight from around the world is immense, the rich want to move themselves and their money to places that have at least a smidgen of democracy, Canada and the US are prime triple A land.

The late 80’s and early 90’s were not the same world we’re living in today, I think that is the one big thing being over looked.

You realtors can’t help yourselves, can you? Constantly stoking the fear of shadowy ‘immensely rich’ foreign buyers. How disingenuous, since the numbers are minuscule and the influence limited. Put as much effort into educating and assisting your clients. — Garth

#99 Broken down Skytrain on 06.12.15 at 11:04 pm

#32
new massey bridge on the way.
—————-
I know you’re kidding.
But just in case you’re serious:
You’re probably pushing up dandelions before that sucker will be build.

#100 Smoking Man on 06.12.15 at 11:04 pm

#96 Binder Dundat on 06.12.15 at 10:45 pm
Re: Big Red Rock Eater

This one is for you, Smokey:

Q: What did the elephant say to the naked man?
A: How the hell do you breathe through that thing?!
…..

Puts a whole new spin on the sport of snorkeling.

#101 NoName on 06.12.15 at 11:06 pm

interesting read

Mortgages Are About Math: Open-Source Loan-Level Analysis of Fannie and Freddie

“I started by calculating simple cumulative default rates for each origination year, defining a “defaulted” loan as one that became at least 60 days delinquent at some point in its life. Note that not all 60+ day delinquent loans actually turn into foreclosures where the borrower has to leave the house, but missing at least 2 payments typically indicates a serious level of distress.”

http://toddwschneider.com/posts/mortgages-are-about-math-open-source-loan-level-analysis-of-fannie-and-freddie/

#102 Agent007 - you'll be surprised on 06.12.15 at 11:18 pm

Agent007 – you’ll be surprised — but Realtor007 is unfortunately right – my prediction: the locals are soon to be completely outpriced + this is not the venue to spill valuable insights

another 20% jump sprig 2015 to spring 2016

did u really look how much $$$ builders have increased their PRICES…..? prices of quality product are not (yet) coming down….

I say to all: wake up and share what’s on the ground not on your mind

#103 Ubermastersensei on 06.12.15 at 11:22 pm

#76 The American on 06.12.15 at 9:12 pm
….. Traditionally, superpowers are preeminent among the great powers (i.e., as the United States is today). The term first applied to the British Empire, the United States, and the Soviet Union….”

You have a very limited reading and understanding of world history for someone who bloviates so much…do some reading and enlighten yourself….before the rise of the nation state 5-600 years ago, there were many empires/kingdoms/super powers in the world….Romans, Ottoman, Hapsburgs, Chinese dynasties etc…..
Even since the rise of the nation state, the game has constantly been evolving with constant wars in Europe over that period….suggest you read Rise and Fall of the Great Powers by Paul Kennedy to bone up on your recent history, and then go further back than that after you have mastered the basics….the pebble will still be waiting in my hand when you get back grasshopper…

#104 Holy Crap Wheres The Tylenol on 06.12.15 at 11:25 pm

Smoking Man Ijust showed my wife your post about teachers being fair game. She’s 5’10” of pure Irish woman and she said tell that jerk to come down to the harbor in Iakville and I’ll kick his ass all over the street. She’s been drinking Jamison’s with me and our friend all evening on the boat! My advice don’t come it could be messy! She was a no nonsense calculas teacher!

#105 Carpe Diem on 06.12.15 at 11:28 pm

#139 Julia

I live in Ontario for a reason.

But look at news about Quebec balancing their defects.

Do the same for Ontario.

From what I see Quebec has a high number of small cities that folks living their are happier than anywhere else in Canada.

No need for Coast Mountains or the Pacific Ocean or big city live and overpriced homes! All you need in live a nice community and a job!

Then chill out.

Personally, I had it all wrong for 45+ years.

Time for a change.

#106 Josè on 06.12.15 at 11:37 pm

Garth’s Weekly Quote From Capital Economics: By the way, when it comes to Canadian real estate in general that firm also says, “We still think that the housing market is a ticking time bomb, presenting a dangerous threat to the longer-term economic outlook. When market rates do eventually go up, that will spell trouble for the most overvalued markets. We still expect house prices to fall by as much as 30%.”
———————————–
They’ve been saying a 30% correction is coming for 7 years now. In the meantime, home prices have gone up by almost 50% – more in some areas.

Well, at least you’re not using quoting David Madani by name anymore – the Capital Economics Guru.

#107 God on 06.12.15 at 11:45 pm

#66 Seriously…. Just like with Bob Rae years ago, the Mulcair government will be unfairly blamed for the economic chaos it inherits from the economic incompetents, the conservatives.

Still, it will be better than the alternatives and likely make some lasting positive changes if it does not lose sight of its purpose.

Get ready, everyone. This will happen.

God help us. — Garth
……………………………

Dear Garth, I don’t give a damn about your conservative apprehensions over a possible Mulcair win. I hope Canadians finally vote for a government that responds to the needs and aspirations of the majority. For too long, political power has been in the hands of Liberals and Conservatives, and I’ve never noticed much difference in outcome as they regularly exchange roles as government and opposition – both appear to mainly look after the interests of big business and large bank accounts. The times they are a-changin’, and I approve. God

#108 Steve French on 06.12.15 at 11:55 pm

#86

Nihilist hipsters!

Flock me.

I mean, say what you want about the tenets of National Socialism, Dude, at least it’s an ethos.

#109 Karma on 06.12.15 at 11:57 pm

#76 The American on 06.12.15 at 9:12 pm
“Karma, from your post from the previous string subject, as much as I’d like to “suck it,” I simply cannot, being how sucky that article was written. Honestly? It was sad and comical at the same time.”

Relax, dude. It’s a joke of an article. Buddy doesn’t even get the population and immigration rates right…

#110 Dirt Dog on 06.13.15 at 12:01 am

So the Federal Election is around the corner. Let’s suppose Mr Mulcair says The NDP will fix the housing issue in Canada, or fix the Hot markets in YYZ and VYR. Just saying this could, light the fuse!!

#111 millenial1982 on 06.13.15 at 12:01 am

It’s simple human nature to be in a constant state of reaction rather than taking action. Procrastination, hating change, lack of drive, laziness, complacency…whatever you want to call it. That’s why yesterday you got hammered in the comment section. It’s already been long enough that the majority are in disbelief. But like all misfortunes we look back after the fact and say how did we not see this coming? Or even better, I knew i should have prepared but didn’t! Just like the guy who didn’t back up his computer and then it crapped out…thought it would never happen. Too little too late. Buying high and selling low.

#112 Karma on 06.13.15 at 12:02 am

@The American

And your response was wayyyy more epic than I expected.

Cheers

#113 the_truth on 06.13.15 at 12:03 am

Stop it Garth!
Stop your nonsense about being diversified.
When you look at the balance sheet of most Canadians,
their liabilities are greater than their assets.
Canadians have no money to invest in tfsa,etfs,pref shares or anything of that matter!
why? Because it’s called social engineering. Debt, more debt and no future financial prosperity is what they’ve been thrown into by our gov. with the help of banks and and the parasitic realturds.
They simply have no money to support this low vol. high p/e bubble called the stock market.
You might as well start a mandarin blog to at least get some of the offshore illicit money finding its way into the CDN real estate for your source of funding.

Delete me if you want, it won’t stop the fact that whatI’ve said is the truth.

C’Ya

#114 Cici on 06.13.15 at 12:04 am

Enjoy your day off Garth!

#115 Nagraj on 06.13.15 at 12:05 am

Dear Garth,
Your response to #66 at 8:30PM , “God help us”, is what catechetics defines as Ejaculatory Prayer. This type of prayer is always heard. (Even though Contemplative Prayer is of course a superior form of prayer.)

I regret to inform you that this year my Dad will be voting NDP.

Let me also advise you that my Dad is about to curse Toronto and Vancouver because all those stupid condos interfere with angel flight paths. Quoting Dad, “Who the Hell do those Canadian twerps think they are anyway?”

Sincerely, JC

#116 Washed Up Lawyer on 06.13.15 at 12:06 am

For those of you interested in rambling and incoherent articles about Fort McMurray, the price of lynx pelts, CFL football, Al Gore, Somalia, Ralph Klein, local theatre, prostitution, Washed Up Lawyers, real estate, etc., Here Ya Go:

http://www.theglobeandmail.com/news/alberta/meet-the-real-fort-mcmurray/article24915022/

#117 Cici on 06.13.15 at 12:13 am

#10 DR. WAYNE

Not normal is the new normal.

#118 Retired Boomer - WI on 06.13.15 at 12:33 am

#55 Smoking Man

Man, can’t FOOL you!

Quite right. Main dough balanced.

Then we have that “flyer” into oils when they were crashing…. no money there yet.
Shall we discuss the utility bet? Not the best one either, but hey it’s not over.
Healthcare has made up for those dim calls.

Smokey, you said it before, “It’s only money.”
While we can’t take it with us, we can hardly go anywhere without it.

Enjoy Vegas! Looking forward to he finished book, too.

Cheers RB

#119 Golden Daze on 06.13.15 at 12:34 am

Anyone else see this??? Maybe we can debate it while Garth is off…when the cat’s away, the gold mice will play!

http://www.marketwatch.com/story/avi-gilburt-doubles-down-gold-is-going-to-25000-2015-06-12?siteid=yhoof2

Avi Gilburt doubles down: Gold is going to $25,000

By Avi Gilburt

Published: June 12, 2015 11:24 a.m. ET

#120 Steve French on 06.13.15 at 12:35 am

#86

Nihilist hipsters!

Flock me.

I mean, say what you want about what the banned Waterloo Resident said…. Dude, at least it’s an ethos.

#121 Victoria Real Estate Reality on 06.13.15 at 1:16 am

#4 Victoria Real Estate Update

I fail to see how stats from 30 years ago are in any way relevant. Your obsession with the 1980’s (and 2007–the biggest sales year in the last decade as someone else pointed out) is pointless.

#122 Mark on 06.13.15 at 1:30 am

“So if/when there is a correction, I’m wondering if it would be a good time to buy to live, and/or to rent/investment?
Say a 20% reduction in prices.

20%? Pfft, that’s not really much of anything. Currently the P/E of Canadian real estate is around 35. That is, you pay 35X the net “earnings” on residential real estate (ie: 35X net after-tax rent) to buy a place. In Toronto/Vancouver, even higher.

You can buy the Canadian stock market, the TSX, through an index fund such as XIU, and pay roughly 15X earnings.

More or less, when you want to cycle out of stocks, and into RE is when the tables have turned. Stocks in a bubble, at 30X+ earnings. Real estate down at 10X earnings. This implies that the stock market is likely to have a return somewhere on the order of 300% relative to the housing market over the next decade or two. This leads to a wide variety of possible outcomes, including stocks remaining stagnant and houses going down 70%. Or houses going down 30% and stocks doubling.

Practically speaking, nobody will make the switch from stocks to RE investment at precisely the correct time. But at least if you get the overall ‘direction’ correct, and have some sort of relative valuation framework, you can make an informed decision.

#123 Tom from Mississauga on 06.13.15 at 1:39 am

YMQ with their funny pants aren’t much better than YTO with 2,598 unabsorbed condo units there. Ottawa, Quebec City, Saskatoon and Regina based on population have a lot as well. 438, 550, 281 and 306 respectively.

#124 Kdr on 06.13.15 at 2:06 am

Gotta tell ya, the job market in Alberta is sooo dead. My hunny, with her Comp. Sci degree and nearly seven years experience, has been looking for over six months…and nothing.

It’s bad but not that bad. I’ve still had recruiters poking around for Calgary area jobs.

#125 Mike T. on 06.13.15 at 2:19 am

that Jays game was something else

wow – anyways, just remember as stuff starts getting more and more weird that it is in rapport that humans thrive

conflict and rivalry are for others

#126 But these stats are positive! on 06.13.15 at 7:00 am

http://www.thespec.com/news-story/5675752-household-debt-to-income-ratio-inches-down/

#127 But these stats are positive! on 06.13.15 at 7:01 am

And these too!

http://winnipeg.ctvnews.ca/teranet-national-bank-index-shows-home-prices-up-across-canada-except-calgary-1.2420389

#128 Smoking Man on 06.13.15 at 8:34 am

#104 Holy Crap Wheres The Tylenol on 06.12.15 at 11:25 pm
Smoking Man Ijust showed my wife your post about teachers being fair game. She’s 5’10” of pure Irish woman and she said tell that jerk to come down to the harbor in Iakville and I’ll kick his ass all over the street. She’s been drinking Jamison’s with me and our friend all evening on the boat! My advice don’t come it could be messy! She was a no nonsense calculas teacher!
……..

Why man, why did you show her… You broke guy code.
Don’t tell here about @SmokingMan. Going to be some wild pictures and comments this week from the desert.

#129 rosie "moving forward" in the knowledge that, "this won't end well" on 06.13.15 at 9:04 am

This is what you can get for $1750 in T.O., according to the Globe.

http://www.theglobeandmail.com/life/home-and-garden/real-estate/heres-what-1750-a-month-gets-you-in-toronto/article24820871/

This is what’s available on Kijiji today.

http://www.kijiji.ca/b-apartments-condos/city-of-toronto/c37l1700273

#130 Realtor007 on 06.13.15 at 9:58 am

You realtors can’t help yourselves, can you? Constantly stoking the fear of shadowy ‘immensely rich’ foreign buyers. How disingenuous, since the numbers are minuscule and the influence limited. Put as much effort into educating and assisting your clients. — Garth

—————————————————————

I wanted to correct my initial comment but was not able to, I don’t even mean the rich, I mean the middle class that has been growing exponentially around the world in the last 25 years, they have some money and are looking for a better place to live, that’s where Canada and the US come in. Is the ad hominem necessary every time you respond to my comments?

Suggesting that, as a professional, you spend equal time helping people deal with the market as you do pumping it, is hardly ad hominem. — Garth

#131 NoName on 06.13.15 at 10:20 am

Interesting read

A decade after U.S. home sales peaked, 15.4 percent of owners in the first quarter owed more on their mortgages than their properties were worth, according to a report Friday by Zillow Inc.

http://www.bloomberg.com/news/articles/2015-06-12/scariest-u-s-housing-chart-shows-nasty-scar-years-after-bust

#132 The American on 06.13.15 at 11:10 am

Karma, waking up and reading the news this morning while enjoying my coffee. I had a couple of drinks in me when I responded last night. My apologies. :-)

Meanwhile, I found this article interesting…
http://www.seattletimes.com/pacific-nw-magazine/the-new-american-dream-whats-it-mean-for-you/

America… The only place a middle class white girl can grow up to be a privelaged Black woman and head of the NAACP Chapter of Spokane. Amazing!
http://www.seattletimes.com/seattle-news/naacp-reacts-to-rachel-dolezals-curious-case/

#133 Y-gen on 06.13.15 at 11:19 am

Garth, you are so real. If I had to name a hero throughout my mid to late 20’s, hands down you’re it.

#134 Uh Oh Canada on 06.13.15 at 11:37 am

Quote from this article, even lawyers can’t afford houses in hot RE market, so how can the average Joe Shmoe?

Toronto lawyer Michael Kril-Mascarin calls it the “stupid premium,” meaning how much extra buyers are willing to pay to get into the Toronto real estate market. “When people have lost a couple of places already, they’re at the point of ‘Screw it,’” says Kril-Mascarin, who’s lost his fair share of bidding wars, including one on a house with no kitchen and graffiti-covered walls that still drew 19 offers and a selling price of $601,000.

http://www.macleans.ca/economy/realestateeconomy/the-crazy-world-of-peak-real-estate/

We need a housing crash to save us from ourselves. Get ready, ’cause it ain’t gonna be pretty.

#135 Marco on 06.13.15 at 11:52 am

@Realtor 007

Was on Zillow USA the other day, great site if you’re buying a home.

Question for Realtor 007: Are you for or against a resource like Zillow in Canada?

The CREA overlords seem to have a problem with it. What are they hiding?

When this asset bubble blows watch for more transparency coming online.

I mean geez you’re just realtors, not control freaks right?

Cheers.

#136 Karma on 06.13.15 at 11:59 am

Articles like this really shakes the core of the ideal that Canadian banks are “prudent and responsible” lenders…

“So the question is: Am I mad to take on a $250,000 mortgage at my stage in life?” Susan asks. “The bank will give it to me, and my trusted financial adviser says it’s okay, so why do I hesitate?”

Although she seems to rich enough to cover the costs, it sounds like a bad precedent…

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/is-it-mad-to-buy-a-house-and-take-on-a-mortgage-at-79/article24946052/

#137 Balmuto on 06.13.15 at 12:00 pm

#129 Rosie

“This is what you can get for $1750 in T.O., according to the Globe.”

Yeah, not much, right? Rents aren’t cheap in downtown Toronto. Savings from not owning are limited. But I don’t think rents are driving up prices – they may be supporting higher prices for now, but with more and more vacant condo units coming onto the market, and new rental projects on deck, the rental market should soften. I expect you’ll see the impact on rents before prices, actually. That seems to be what’s happened in Montreal over the past 1-2 years.

#138 Mister Obvious on 06.13.15 at 12:03 pm

#119 Golden Daze

“Maybe we can debate it while Garth is off…”
————————-

Garth is never “off”. This blog lives in his back pocket 24/7. It is, in fact, Garth Turner himself.

Even though he chooses not to post on Saturdays, he must still babysit these vapid comments.

The fact anyone thinks this blog has an independent existence is a testament to its fine and transparent management.

#139 Keith on 06.13.15 at 12:08 pm

Nice view, but location is a bit noisy. Needs updating.

http://vancouver.craigslist.ca/van/reo/5070302976.html

#140 pinstripe on 06.13.15 at 12:54 pm

lately I had the opportunity to visit new construction of SFH and hirise condos. I found it most interesting how much construction quality decreases as sfh and condo prices increase. There are codes for everything but many contractors are doing the minimum because the chance of enforcement of the code is probably zero. so much is happening so fast that no one wants to be the speed bump along the way. that is the new industry standard.

from what I witnessed, the buyer of a sfh better know what to look for and what questins to ask, otherwise he better be prepared to pay for a lot of rework down the line. otoh, imo I would stay away from a hi rise condo even if it was given to me free and paid me to live there, and many of these condos will the future ghetto in the area.

I would consider using FSBO for a SFH. I wouldn’t touch a condo with a ten foot pole. I findit very interesting how cheap money destroys the quality of the building industry.

#141 Mister Obvious on 06.13.15 at 1:39 pm

#140 pinstripe

Yep. Developers pay huge permit fees to the city. In part, these fees cover the cost of inspections at various stages of construction.

Developers further agree that the city is in no way accountable for defects. That’s what insurance is for.

I’m not exactly sure what the inspections are for.

#142 BigM on 06.13.15 at 2:16 pm

@136 Karma on 06.13.15 at 11:59 am
Articles like this really shakes the core of the ideal that Canadian banks are “prudent and responsible” lenders…
“So the question is: Am I mad to take on a $250,000 mortgage at my stage in life?” Susan asks. “The bank will give it to me, and my trusted financial adviser says it’s okay, so why do I hesitate?”

Because deep down, that woman has a brain cell, and she knows it’s just plain wrong.

A mortgage for a 79 year old should be illegal.

#143 4 AM Sunrise on 06.13.15 at 3:29 pm

#39 BuyWhenAppropriate on 06.12.15 at 7:26 pm

Looks like those twentysomethings are taking business cues from the “underpants gnomes” of South Park:

Phase 1: Collect underpants
Phase 2: ?
Phase 3: Profit

https://vimeo.com/79954057

#144 Victoria Real Estate Update on 06.13.15 at 3:50 pm

# 121 Victoria Real Estate Reality

You realtors must think you’re clever – after being proven wrong under one name you come back under another chirping the same thing.

You would love to limit all sales comparisoms to the last 8 years of sales data only (2007). We all get that.

I would too if I was a realtor. 2011 had the third worst SFH sales total since 1984, 2012 the worst and 2013 the second worst. And that’s without population adjustment (source: Victoria’s board).

In typical realtor fashion you are cherry picking stats to make the most recent sales numbers look stronger.

The local board probably already did that. If anyone who reads this blog wanted that cherry-picked point of view they probably would have gone to the local board’s site to get it.

It makes no sense at all to draw the line at 2007 (8 years back) and not at 12 or 15 or 20 or 29 years back. Sales numbers from the same city are always relevant.

The local board’s website has SFH price graphs with data dating back to the 1960s. Obviously they think it’s relevant. Of course it makes today’s prices look lofty, so why not, right?

I will post another write up on this for you. You seem to be having trouble accepting the facts. I’ll help you with that. In the process others may learn more as well so it’ll be worth it, right?

#145 Dominoes Lining Up on 06.13.15 at 3:54 pm

The Evan Solomon bubble-bursting this week shed some unintentional light on why things are not “different here” when it comes to the overall international appeal of places like Toronto and Vancouver.

From an art world perspective:

“Toronto is not an international city, it is not New York, it is not London,” Metivier says. “It’s not a very good thing for us to compare ourselves . . . it’s apples and oranges.”

http://www.thestar.com/entertainment/2015/06/12/inside-the-art-market-evan-solomon-operated-in.html

Some obvious parallels with real estate values I think, but decide for yourself.

#146 Freedom First on 06.13.15 at 4:17 pm

#79 Smoking Man

“Teachers are still fare game..I despise their stupidity”
…………………………………………………………………………….

I would like to edit your remark Smoky to make it more precise. “Teachers are still fare game..I despise their arrogance and stupidity”. After all, though they are far from the top of the income scale, they most certainly are in the penthouse of the ivory tower. Hence the saying: “Those that cannot do, teach”. There, that ought to do it.

#147 Mark on 06.13.15 at 4:20 pm

“Gotta tell ya, the job market in Alberta is sooo dead. My hunny, with her Comp. Sci degree and nearly seven years experience, has been looking for over six months…and nothing.”

Even at the best of times, Comp Sci / IT jobs were few and far between in Alberta. Many companies in the field were actually driven out by the extreme cost of doing business inflated by the RE and oil and gas industries. During the boom, it was almost harder to hire a mere secretary/receptionist that could be trusted as being reliable, than it was CS / IT talent.

#148 Andrew Woburn on 06.13.15 at 4:48 pm

#95 Bladalint on 06.12.15 at 10:43 pm
Garth,

There was much debate and angst on this blog about the false inflated statistics and HAM rumours in Victoria and Nanaimo. Is there any provision within the criminal code to file a complaint against realtors if they are spreading false information to potential buyers
===========================

I hear your concern but have we really become such a collection of gullible children that we need the government to arrest people who try to assert that their laundry soap “washes whitest”? It’s not like Google hasn’t been invented yet. If people were expected to take responsibility for their own actions we might actually wind up with smaller governments.

#149 bc petition RE continues on 06.13.15 at 5:25 pm

https://www.change.org/p/premier-christy-clark-mayor-gregor-robertson-mayors-and-city-councillors-of-the-gvrd-restrict-foreign-investment-in-greater-vancouver-s-residential-real-estate-market/u/11048847?tk=EUEqCuFm51iNeHwzexJ3C3dQSKN5z2recPhwAyRGNtI&utm_source=petition_update&utm_medium=email

Hard to believe so many people think house prices will change if we add more government to tax ‘foreigners’. Ah, to be young and dumb again. — Garth

#150 zee on 06.13.15 at 5:32 pm

hi

the same guys also said that the number of unsold units is not a concern and that there is no housing bubble. you should also mention this.

#151 wealthy selling on 06.13.15 at 5:40 pm

This very wealthy successful business man from a middle eastern country who invested in a hotel and sold a couple of years ago is selling his house in West Van. He builds factories and shopping malls in other countries. He is so astute. Follow the wealthy. Follow the money. The wealthy know to get out early. It is unfortunate that the middle class follow their emotions and will get hooped.

#152 Mark on 06.13.15 at 5:48 pm

“Rents aren’t cheap in downtown Toronto. Savings from not owning are limited”

Are you kidding? Savings from renting vs. owning are enormous in Toronto and Vancouver. Canadian RE broadly trades at 35X earnings. Its even worse in Toronto. And with RE prices declining/stagnant for the past 2 years including Vancouver/Toronto, there is no ‘free’ unearned equity emanating from owning in those places either.

#153 children are luxury items on 06.13.15 at 6:06 pm

In Vancouver, you have to have $$$ to have children

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

#154 Sheane Wallace on 06.13.15 at 6:09 pm

#69 Ray Vasquez

I won’t touch government bonds of indebted countries with a stick.

You always can buy Chinese bonds, yield over 5-6 % and Yuan is strengthening against the dollar.

Oh, they are’developed’ country, right? The number one economy on the planet growing at 6-7 % annually, that will be 2 times the US economy in 10 years and potentially 3.5 times in 15-20, maybe more as their internal consumption accelerates while our declines.

Noticed AliBaba lately? Keep watching.

So how long you are saying will the rates stay low?

#155 children as luxury on 06.13.15 at 6:09 pm

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

#156 Sheane Wallace on 06.13.15 at 6:09 pm

developing country

#157 Sheane Wallace on 06.13.15 at 6:13 pm

McLeans has the front page and probably much of the content dedicated to the real estate in Canada, I am certain in their ‘fine journalism’ there won’t be a single negative word about CMHC and the moral hazard it represents.

American, you can’d make the blind see, accept that.

In the land of the blind the single eyed is the king.

But it is an amazing ride, amazing,

#158 Sheane Wallace on 06.13.15 at 6:18 pm

#122 Mark

That was a surprisingly good post from you,

Don’t forget the great rotation out of bond that is coming, stocks can easily double from here, bond’s crisis will be horrific, they can’t sustain BRICS with negative interest rates for very long time, the crash would be epic.

That’s why PIMCO is selling treasuries, they are NOT dumb.

#159 waiting on the westcoast on 06.13.15 at 6:20 pm

So… Picked up 24hrs Vancouver (daily low-brow news rag) and it has a front page ad saying you a party day loan isn’t your only option. Turn the page and there is an ad from Vancity for small loans $100-2500 in size with same day approval… Scary…

Still – probably better than going to payday loan companies…

Vancity.com/fastcash

#160 Linda on 06.13.15 at 7:10 pm

OK, Garth, this story has Greater Fool blog pic written all over it – enjoy your Saturday!

https://ca.news.yahoo.com/blogs/daily-buzz/a-woman-photographed-the-exact-moment-she-betrayed-171044937.html

#161 Jake in calgary on 06.13.15 at 7:17 pm

Does anyone know what happened to the Alberta bubble blog? Is there a new version of it somewhere? I think it was run by squidly77 who still comments on here occasionally. Are you still blogging squid?

#162 SWL1976 on 06.13.15 at 7:24 pm

Off topic here, but if anyone would like some weekend reading material in regards to what is happening in our skies overhead

http://www.realitynext.ca/contrails/

#163 Andrew Woburn on 06.13.15 at 7:48 pm

#86 TurnerNation on 06.12.15 at 9:54 pm
Hipsters are annoying. I suspect first they were Slackers.
At least Hippies had a cause.
======================

Hippies and hipsters are really the same people in different decades. There are a few originals and a herd of wannabe’s who rent an identity. Both represent twenty somethings who believe that wearing non-standard hair and clothing somehow cleverly sticks it to the Man while differentiating them from the herd.

The wheel of Karma will ensure that the hipsters will become parents of horrible children who snort in derision at their “Mommy” skinny jeans and rudely ask “What was that blob of colour on your back supposed to be?”

As for me, I have now reached the age when my old photos clearly reveal why my parents maintained a tight-lipped restraint on the subject of disco era fashion. As for the hipsters, god bless them for the end is all too near. Ironic, isn’t it?

#164 West Coast on 06.13.15 at 8:15 pm

Enjoy your ‘day off’….meanwhile…. we know that staying away from mutual funds (MERs at 2.42 %) is a good idea, but what’s up with the Canadian Securities Administrators and their foot dragging regarding fiduciary rules. Apparently the CSA and the provinces are still negotiating a statutory ‘best interest standard for advising’. This has been going on since 2012 – no end in sight. Apparently only a ‘discretionary portfolio manager who has a special licensing arrangement and is a true fiduciary’ is compelled to put their clients interests ahead of their own. Only the wealthy are served by true fiduciaries. The rest of us will continue to be scammed on many levels by ‘advisors’.
Between the banks, the real estate industry, ‘financial advisors’ etc….. do we actually stand a chance?
http://www.moneysense.ca/invest/mutual-funds/mutual-fund-fee-disclosure-rules-ignore-fiduciary-responsibility/

Untrue. A fee-based advisor, who sells nothing and collects no commissions, has a fiduciary responsibility and relationship with clients. — Garth

#165 bigtown on 06.13.15 at 8:31 pm

The Tim Horton Bruhaha over Enbridge Ads are a decoy so people don’t have to notice the real horror: INFLATION…my chicken salad wrap which used to set me back $1.50 in the last couple of months has gone up to close to $2.00. That is serious inflation folks. Maybe we should point our Bank of Canada Governor Mr. Poloz to the nearest Tim Horton’s so he can see for himself what is happening in the land of Timbits and double double. Enbridge is hardly a story. The Press as usual is barking up the wrong do-nut but that is to be expected in the land of the politically correct where you remove reality and replace it with SUGAR-COATED dodo.

As a consumer I would prefer to buy my fossil fuel products from a country that respects human rights and Canada is the head of the pack. Being Canadian we always are the first to respect others and as a result we have the Hollywood set using us as the preferred punching bag for CO2 gas and carbon in the atmosphere.
We are ahead of the world in human rights and the Oil Patch is first in human rights but our own stupid Canadian Press has no balls and no respect for our culture.

#166 Annek on 06.13.15 at 8:58 pm

Hey Garth
I also love this blog. Don’t give up in frustration.
If it wasn’t for your daily comments (and wit) I may have been wondering if I was the only one that could see the light.
I work with a group of PTs and OTs . ( health professionals) Out of about 10, 7 already own houses in Toronto. Two millennials have just bought: one a condo and the other a house. They are moving in this month. Everyone is congratulating them on their smart moves.
i have learned to shut up.
( funny thing though, both are Chinese heritage. Canadians, not foreign buyers. The Bank of Mom is subsidizing one of them )
I sometimes wonder if I am wrong,
if it was not for your blog which gives me some sanity, I just find it difficult to comprehend how these educated health professionals cannot understand finances. They all state that one has to start somewhere and they are eager to start! I am sure that if housing corrects in the GTA, these people will say that they are in it for the long term and will pat themselves in the back for locking into a five year mortgage. I doubt that they will ever even see if they have made a mistake.
I believe they represent the masses. Even with a correction, they will go forward with blinkers on, paying their monthly mortgages.

#167 brett on 06.13.15 at 9:01 pm

We have been watching a segment of the market in Calgary. 22 homes in the segment. Most have been on the market for three months, one since early last Dec.

What do we find interesting? They are not selling, they are still on the market BUT prices have not been reduced. The oldest one on the market has been vacant for 4 months.

Are sellers not adjusting to the new reality or are buyers that few and far between?

#168 45north on 06.13.15 at 9:05 pm

UberMasterSensei: The American

You have a very limited reading and understanding of world history before the rise of the nation state 5-600 years ago, there were many empires/kingdoms/super powers in the world….Romans, Ottoman, Hapsburgs, Chinese dynasties etc…..

Of course there are many parallels between the Roman Empire and the present day American super power. For instance they both control a continent. More or less. But the two are entirely dissimilar because life under one is so unlike life under the other. Under the American empire most people have access to the internet, various news sources ( such as this blog ). Under the Roman Empire most people didn’t. Actually nobody did.

#169 PM on 06.13.15 at 9:54 pm

Are you kidding? Savings from renting vs. owning are enormous in Toronto and Vancouver. Canadian RE broadly trades at 35X earnings.

I dunno about that. I’ve been looking for a new rental and something like this:

http://vancouver.craigslist.ca/van/apa/5049074838.html

sells for $800K Which is 22X.

Or even if we go generous and take this guy:

http://vancouver.craigslist.ca/van/apa/5058646979.html

make it 25% bigger and sell it

http://www.realtor.ca/Residential/Single-Family/15583361/-806-1633-ONTARIO-ST-Vancouver-British-Columbia-V5Y0C2

You’re still only at 22X.

It’s not a sure fire investment but the Vancouver core (I don’t know what the burbs are like) is still a tight rental market.

#170 Scully on 06.13.15 at 10:04 pm

I have just come from two different gatherings where everyone was chatting about RE. It’s all the same crap. So when I ask why Seattle (close American comparison) does not have our stupidly insane prices I get blank stares. When I mention low interest rates they think they will be low forever and they all think the Chinese are buying even when they know I’m in the business and see exactly what you do. Before I can tell them about more fundamentals to consider they quickly change the subject and move away from me, banishing me to the corner to converse with the house plants, which i am beginning to feel are smarter than my friends and family. I don’t remember people ever being so stupid. Oh yes! Just before the US housing crash. So Garth, you are not alone.

#171 Non-Prophet on 06.13.15 at 10:05 pm

bigtown on 06.13.15 at 8:31 pm

“As a consumer I would prefer to buy my fossil fuel products from a country that respects human rights and Canada is the head of the pack…
We are ahead of the world in human rights and the Oil Patch is first in human rights but our own stupid Canadian Press has no balls and no respect for our culture”.

Really Ezra you don’t think “ethical oil” looses a bit of credibility by the fact that we ship are oil overseas and import oil from Saudi Arabia for our eastern refineries or how about the fact that we just sold billions worth of arms to said same Saudis. I support ethical oil just like I support ethical clear cutting and ethical open pit strip coal mining and ethical over-fishing and ethical real-estate agents and ethical bank robbery. All ethical because they are done in Canada. Hmm that gives me an idea: ethical Canadian marijuana.

#172 rosie "moving forward" in the knowledge that, "this won't end well" on 06.13.15 at 10:14 pm

Brett #166

I have noticed this phenomenon as well. I was looking for a used Mac Mini last winter on Kijiji. No one selling would budge on the price. All were of a similar age, 20-30 somethings. I explained to a couple that their price was almost the same as the price of a new one. Their response was, ” I need to sell it at this price. ” Remarkable.

#173 Non-Prophet on 06.13.15 at 10:18 pm

Sorry,

a wee typo…we ship our oil overseas

I also support ethical spelling mistakes.

#174 Mark on 06.13.15 at 10:20 pm

“I dunno about that. I’ve been looking for a new rental and something like this:

http://vancouver.craigslist.ca/van/apa/5049074838.html

sells for $800K Which is 22X.

That’s gross. To come up with net, to compare it to the stock market’s P/E ratios, you need to subtract property taxes, depreciation, operating expenses, income tax and vacancy allowance. When you do this, on Vancouver RE, you get a number that is dramatically higher than 22X. If you go through the exercise on an average basis for Canadian residential RE, the multiple is 35. In some locales in Vancouver, the ratios are so out of whack that you can’t even get to a positive “earnings”.

What you’re calculating with your 22X is the price to gross rent ratio. A good rule of thumb is that a property that costs more than 100 months of gross rent is probably overpriced historically. 22X yearly gross rent is a multiple of 264X monthly gross rent, hence 2.6X the more traditional 100X multiple.

#175 Leo Trollstoy on 06.13.15 at 10:33 pm

And with RE prices declining/stagnant for the past 2 years including Vancouver/Toronto

Wrong.

Again.

#176 Leo Trollstoy on 06.13.15 at 10:38 pm

Rents aren’t cheap in downtown Toronto. Savings from not owning are limited

You are correct. The month-to-month savings between renting and owning are minimal. The big benefit from renting comes from not having hundreds of thousands of dollars at risk in a down payment and not being on the hook for hundreds of thousands more in the form of a mortgage.

#177 Leo Trollstoy on 06.13.15 at 10:42 pm

The Tim Horton Bruhaha over Enbridge Ads are a decoy so people don’t have to notice the real horror: INFLATION…my chicken salad wrap which used to set me back $1.50 in the last couple of months has gone up to close to $2.00. That is serious inflation folks.

More inflation to come. This is just the start.

#178 Leo Trollstoy on 06.13.15 at 10:49 pm

U.S. economy’s lookin good boys and girls.

More $ for the folks who listened to Garth and increased U.S. allocations

Sorry gold bugs. Another crappy year for you guys. So obvious so nobody to blame but yourself.

http://www.businessinsider.com/americans-think-they-will-get-a-raise-2015-6

#179 Tyler Burden on 06.13.15 at 10:59 pm

#128 Smoking Man on 06.13.15 at 8:34 am
#104 Holy Crap Wheres The Tylenol on 06.12.15 at

Why man, why did you show her… You broke guy code.
Don’t tell here about @SmokingMan.”

First rule about Fight Club and Garth’s Blog is……

#180 Mark on 06.13.15 at 11:15 pm

“The month-to-month savings between renting and owning are minimal. “

Couldn’t be anything further from the truth. Renters are able to put aside enormous amounts of money every month that they aren’t needing to spend on overpriced housing. Additionally, in the contemporary declining RE market, they’re not seeing their equity eroded through lower prices. Not only is renting dramatically cheaper nearly everywhere in Canada than owning, but there is also an element of flexibility which simply cannot be matched through ownership.

“More inflation to come. This is just the start.”

Why is the economy sliding into deflation then? Why are practically all of your comments to this blog 180 degrees from the truth?

#181 Render unto Ceasar what belongs to Ceasar on 06.14.15 at 12:23 am

#168
Under the American empire most people have access to the internet, various news sources ( such as this blog ). Under the Roman Empire most people didn’t. Actually nobody did.
—————
but the Romans had Julius who kind of ruled, whereas the American empire has Obama who kind of thinks he rules.

#182 Smoking Man on 06.14.15 at 12:29 am

Final approach to bull head arazona . so it begins

#183 Render unto Ceasar what belongs to Ceasar on 06.14.15 at 12:33 am

There are some similarities between the Roman Empire and the Neocon Amercan Empire.
After Ceasar, most Emporers called themselves Ceasar, too.
The Americans have the Bushes, Jeb maybe the next.

#184 The American on 06.14.15 at 2:59 am

At #157: Shane Wallace, Thank you for reminding me of this. As we Yanks say, “You can lead a horse to water, but you can’t make it drink.” Moving forward, I’ll remember your wise words.

At #167: Brett, just as it happened in the U.S., it took sellers well over six months before they realized they would have to reduce price because buyers were either 1) No longer in the market due to being priced out, or the number of buyers was far less than inventory, or 2) Sellers would have to reduce prices to entice a smaller pool of buyers to make an offer as the buyers realized economic fundamentals no longer made sense.

At #170: Scully, your post was most interesting to me of all this evening. Your experience is testament to a market that is broken and soon will be in decline. Housing and real estate values should never be a primary topic of conversation at any kind of gathering. It’s telling because it wouldn’t be discussed, unless people needed to feel validated their investments were sound, as well as gaining reassurance the market isn’t going to correct downward; Hence, this is the reason your company began justification of ridiculous prices in Vancouver, such as lower rates, while ignoring real economies and housing markets that are working (like Seattle), and blaming immigrant populations, having absolutely no statistical data to support the bigotry (meaning your company was racist and/or imperialistic). I’m sorry your evening was so filled with ignorance and stupidity. I’m sorry you were pressed to speak with the plants. Truly, though, you ended up in better and wiser company. Plants are not a waste of air.

#185 What about CMHC? on 06.14.15 at 3:02 am

#157 Sheane Wallace – good points…

McLeans – did you know that McLeans is also partly funded by tax-payers just like you and I?

Of course the amounts must be way different – billions for CMHC, I have no idea how much McLeans receives.

#186 Bytor the Snow Dog on 06.14.15 at 8:10 am

Mark, I am one of the supporters of live and let live and leaving your comments be (aka, Use the Scroll Wheel). However, your constant comments asserting that there is deflation are so off the mark I don’t even know where to begin.

It may be true that once the ranks of those of us who have had our jobs exported to third world countries reaches critical mass there be downward pressure on prices that point has not been reached yet.

Corporations still believe that we are all cows to be milked for every single dollar and that attitude will prevail until the teat runs dry.

Higher interest rates will definitely accelerate the coming of that day.

#187 Julia on 06.14.15 at 8:29 am

#166 Annek

Well, I work in the financial industry and financial knowledge is no better. My assistant, 2 years away from retirement, sold their family townhouse just north of Toronto to purchase a new build much further north because her adult kids think they should have more room. 30 more minutes of go train commute and a half million mortgage.

Another co worker, this one with young kids, wants to do the same. Cash in on increase in value and buy a bigger new build further north.

We have these discussions at the office and I just don’t get it.

#188 Archie on 06.14.15 at 8:40 am

I’ve been following this blog like forever and still don’t know what to make of it. I was just in Calgary for a “vacation” and not one of my friends is in a house that was less than half a mil. When I bought a house there 10 years ago (Kensington, $140K if you must know) people were in a panic that there was a bubble but here we are and still no real sign of collapse. I see your stats and interviews with experts but no end in sight. Meanwhile, I am rotting away here in Halifax with a house that ain’t gonna sell.

#189 Julia on 06.14.15 at 9:03 am

#176 Leo Trollstoy
“Rents aren’t cheap in downtown Toronto. Savings from not owning are limited

You are correct. The month-to-month savings between renting and owning are minimal. The big benefit from renting comes from not having hundreds of thousands of dollars at risk in a down payment and not being on the hook for hundreds of thousands more in the form of a mortgage.”

Not sure about that, I have that discussion occasionally. People I talk to compare rent vs mortgage payment (sometimes property taxes as well). I firmly believe owning cost should also include a monthly repairs and maintenance reserve, not limit to actual cost paid. I think that could make a big difference.

#190 Stupesing in Cabbagetown on 06.14.15 at 9:31 am

#136 Karma – “… it sounds like a bad precedent…”

A friend of mine is an insurance flogger. He was recently approached by a couple in their seventies who were first-time home buyers. The bank gave them a mortgage but wouldn’t qualify them for mortgage insurance. They were hoping he could find coverage for them. No luck.

#191 Investorz on 06.14.15 at 9:59 am

I was thinking about the fact that the average detached in Toronto is 1.1M and whether the underlying fundamentals support it.

There’s a lot of high paid jobs in Toronto. Remember that young Hydro One engineer who made that vulgar comment on TV? He was paid 106k. And that’s a clown. There are thousands of people moving to the city making over 100k. Hundreds are couples making over 200k. 1.1 million is high but not insane. Remember that many of those did not sell for 1.1M.

That stat isn’t worth much. What we need to see is a 2d plot of SFH prices on the Y-axis and the count on the X-axis. The top 10% could be skewing the average. On MLS there’s a lot of 750k houses. Nothing grand, but 20 minute drives from the core.

For me, a Montreal 400k two bedroom “condo” (converted creaky duplex) with no parking, in a province with higher taxes and less well-paid jobs, is far more insane.

#192 Ray Vasquez on 06.14.15 at 10:11 am

To #154 Sheane Wallace

It has been at least 11 years since we saw anything close to 4.5% to 5% interest rates on government bonds, GIC’s.

Just wait and see, this is going to be at least the next 5 to 7 years of low interest rates and like I said, anytime they get close to 4.0% or above 4.0%, they will fall back down again.

As for Chinese bonds, their 3, 5, 10, 20, 30 year bond yields are currently 2.83%, 3.26%, 3.64%, 4.01%, 4.11%.

This is with 6% to 7% Chinese economic growth rates. Wait until their economy slows even more, they will have low interest rates just like us.

Look at Australia, they used to have 5% to 5.5% bond yields just 5 to 6 years ago and 6%+ bond yields just 10 years ago. Their 3, 5, 10, 15 year bond yields are much lower, 2.14%, 2.48%, 3.033%, 3.33%.

They are all in it together to lower interest rates and keep them down over a longer term period.

If these 5% to 6% bond yields are out there, they are regional bonds. China has a lot of debt just like other developed countries so watch out.

#193 Unhinged Citizen on 06.14.15 at 10:30 am

Garth, while I find your economic narrative enlightening, your vicious partisan nature, not so much.

The Liberals and Conservatives have ruled exactly the same way, and broadly followed the same policies.

I welcome an NDP government, even if it does plunge the economy into turmoil (which can’t be attributed to any one government). Besides, a crashed market is a value market.

Warning unsuspecting young souls like you about socialism is hardly showing a ‘vicious partisan nature.’ When I was immature I had similar thoughts and beliefs, but later learned collectivism doesn’t work, as most people are unambitious yet entitled. It’s a lesson every generation has to absorb, hopefully with correctable damage. — Garth

#194 NoName on 06.14.15 at 10:43 am

SFH in San Jose is around 900k, according to this article it is most expensive RE in us, funny thing is that is cheaper than tor or van.

“Bloomberg used data from the U.S. Census Bureau, Zillow Group Inc. and Bankrate.com to quantify how much more money millennials would need to earn each year to afford a home in the largest U.S. cities. The good news is that out of 50 metropolitan areas, 37 are actually affordable for the typical 18-34 year-old ”

http://www.bloomberg.com/news/articles/2015-06-08/these-are-the-13-cities-where-millennials-can-t-afford-a-home?cmpid=BBD060815

#195 Setting the Record Straight on 06.14.15 at 10:49 am

#99 Victoria Real Estate Update on 06.12.15 at 12:48 am
# 80 Tony Mears

Case closed?

Lol you are making a bigger fool of yourself with every post.

Do you really think it is possible to determine Victoria’s long-term SFH sales per year average by going back only 10 years?

As I said, the sales numbers I used from Victoria’s RE board are from the 80s (when they first began keeping stats) to present.

I could post SFH sales totals from each year but that isn’t necessary.

You think you know what you’re talking about here but you don’t. Perhaps you should let this go. I’m sure many others who are following this conversation would agree.

&&&&&&
I believe you have calculated population adjusted sales rates. However the question remains whether such adjusted rates are pertinent to an immediate assessment of the market remains in question.

To start with, I would think you would need to look running a regression using comparable cities with sales as the independent variable and population, population growth rates and composition by age cohorts to determine the expected influence of population on sales rates.

Since that’s not likely to be possible for the average commentator, perhaps looking at the unadjusted figures for the previous decade is a more useful rule of thumb for assessing the market.

#196 Sheane Wallace on 06.14.15 at 10:51 am

#192 Ray Vasquez

That is wrong, Greece has no growth but decline in GDP and their bond rates are high.

Interest rates are determine by cost of money and risk (which with highly indebted counties is higher) and not by their growth.

The bond bomb will explode onemway or another.

#197 Ray Vasquez on 06.14.15 at 10:54 am

To #193 Unhinged Citizen

There is no easy way out. People are looking for life to go always smoothly and this entitlement mentality by taking from others and thinking there will not be devastating consequences will be the down fall of our society.

The NDP and any government that promises social programs, benefits with no real way to financially pay for it is living in a dream that will eventually turn into a nightmare.

#198 Ret on 06.14.15 at 11:00 am

Why would investors buy US ten year bonds at 2.45% when they can buy ten year Chinese bonds at 3.64%?

Some people are really dumd and stupit I guess or could transparency of the Chinese economic data be an issue?

#199 Sheane Wallace on 06.14.15 at 11:01 am

Warning unsuspecting young souls like you about socialism is hardly showing a ‘vicious partisan nature.’ When I was immature I had similar thoughts and beliefs, but later learned collectivism doesn’t work, as most people are unambitious yet entitled. It’s a lesson every generation has to absorb, hopefully with correctable damage. — Garth

——————————

I see more entitlement here these days than I have seen anywhere else in my live (including housing).

To be clear – the world we live in has very little to do with capitalism, just look at the municipal governments/teachers, not providing report cards for the students in Toronto.

Capitalism implies free markets, where cost of money is not determined by bureaucrats. And certainly CMHC has nothing to do with capitalism.

There are different degrees of collectivism and socialism and it seems some are working, see China as an example.

As for socialism it has nothing to do with NDP,

It seems government miss-management is intentional as to discourage any thought of collective ownership of productive assets.

And yet LCBO and OLG are publicly owned…

#200 Sheane Wallace on 06.14.15 at 11:08 am

#191 Investorz

sure, lets then disband CMHC

#201 Mike from Montreal on 06.14.15 at 11:10 am

To #191 Investorz For me, a Montreal 400k two bedroom “condo” (converted creaky duplex) with no parking, in a province with higher taxes and less well-paid jobs, is far more insane.
======================================
Right on, got to be careful with averages. Whilst it is rather amusing to read how the RoC is doing, it’s not all smiles and poutine here. Average rentals may on the surface seem like a good deal here but in reality that’s because we have a huge number of low-rise 70yr+ junkers that get rented for the lowest possible maintenance (read amateur landlords).

Anything decent still costs, 1br 3.5 at least 1200-1400$ 2br 4.5 1300-2000$. Now thankfully I can afford better. Don’t get me started on condo “conversions”, what a crock. New construction seems like a godsend (1980s~mid2000s nothing new happening) but they’re very expensive for what and where it is, 400k 700sft is a bit crazy. One I literally laughed in the sales lady’s face 550k STARTING PRICE! haha. Sales haven’t moved since six months, hmmm wonder why?

Our job market is not great, never has been and if you can somehow make 100k+ you’re considered well off.

Same goes with SFH, average seems very reasonable but I wouldn’t want to live in those 300k jobbies.

#202 The American on 06.14.15 at 11:34 am

At #185: What about CMHC, I agree that tax payer-backed programming and “news” publications are problematic. Fox guarding the hen house. Also, the entertainment and informational value simply cannot be compared when the government is in control of literally everything that sets forth before your eyes.

So, I’ll focus on entertainment alone. Sure, this isn’t the most cerebral entertainment of choice, but it certainly is testament of a kind of “fun factor” and hilarity that is missing from one method of approach to the other.

American style:
https://www.youtube.com/watch?v=5SZfznYgToc

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

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

https://www.youtube.com/watch?v=NCxdfCydeq0

And now, Canadian style:
http://www.globaltv.com/et-canada/video/clips/et-canada-lip-sync-battle/video.html?v=422062147939

Now, I can almost guarantee you that Canada will create it’s own Lip Sync-esque show, again without credit where it is due. That’s the difference in ideals overall. Lead vs. copy.

#203 Gulf Breeze on 06.14.15 at 11:41 am

Sheane Wallace,

Thanks for responding to my question. As far as collectivism goes, there seems to be plenty of crony capitalism stalling free enterprise. People tend to equate more govt, ever more red tape and the Byzantine nature of the US tax code, plus systems like Obama-care as ‘socialism’ when in fact the large corporations benefit from any complexity that creates a high barrier to entry to those trying to get into the game. Obamacare, though slightly better than nothing for the millions of uninsured is a clear cave in and give away to big pharma and other ‘capitalist’ institutions.

Public private partnerships, in this country, entrench controlling interests by offsetting costs onto the public sector while driving profits into the private sector.

Anyway, my two cents. It has to be made clear who is most collectivist and where the greatest threat lies.

That aside, I am interested in your take on bonds and wonder if you have anything to add to Ambrose E Pritchard’s thoughts, or if you would qualify them in any way

Also, if you would indulge all of us here, could you write up a quick scenario — your best guess of how the bond market might implode and what the implications are for Canada??

#204 4 AM Sunrise on 06.14.15 at 11:57 am

#192 Ray Vasquez on 06.14.15 at 10:11 am
To #154 Sheane Wallace

It has been at least 11 years since we saw anything close to 4.5% to 5% interest rates on government bonds, GIC’s.

FYI: little technicality: last time I saw high-ish GIC rates was in 2009, when I, on pressure from my Boomer parents, bought a 5-year GIC @ 4.4% .

#205 Leo Trollstoy on 06.14.15 at 12:41 pm

FYI: little technicality: last time I saw high-ish GIC rates was in 2009, when I, on pressure from my Boomer parents, bought a 5-year GIC @ 4.4% .

Sorry to hear that. :(

2009 was the last great year to buy stocks.

Don’t listen to your Boomer parents during the next downturn!

#206 Sheane Wallace on 06.14.15 at 12:49 pm

#203 Gulf Breeze

I am not familiar with Ambrose E Pritchard’s view.

I would recommend on bonds: El-Erian, Bill Gross, Michael Pento.

My 2 cents:

In short: in some places for a while there has been bull market in bonds due to:
1. Increasing debt
2. Declining interest rates since the 80-es

Bond market is much larger than any other markets and is derivative of interest rates.

He have reached the point of debt saturation, when measured against real economy, and there is no much room to grow debt further.

Money are being replaced by debt, this can not go for much longer, money are savings, debt (at current lower rates) is overpowering savings, debt is driving certain economic activities that are not healthy in long run, in context of globalization this is deadly wrong.

The more we continue current debt policies the bigger the damage to the economy would be.

Look at what Germans and Chinese are doing and follow.

Bond market implosion due to interest rates rises would be horrific, people would not be able to pay back debt (nobody will increase your salary because there is inflation in environment of global ‘slack in labour force’), consumption will contract, businesses will close and inflationary depression will ensue.

Increase in interest rates to market values will kill the housing market.

Persistence in blowing further the housing bubble will cause major inflation and destruction of real economy, diminishing our competitiveness on the world markets and will imminently lead to some sort of capital controls further damaging markets.

Or we can get unparalleled era of prosperity due to wise central bankers actions.

#207 Doug in London on 06.14.15 at 12:54 pm

Combined with a 29% surge in condo starts recently, this has the potential “to turn into one epic condo glut.”
******************************************
Wow, no kidding. I remember going into the Downtown Toronto core near Steam Whistle Brewery, seeing all these condos being built so close together you couldn’t swing a broom around without hitting one, and thinking it HAS to cause a glut sooner or later. Now the punch line, that was back in March 2012.

#208 Ray Vasquez on 06.14.15 at 1:01 pm

The NDP is has the most socialist, social programs, entitlement programs in Canada so stop trying to confuse people and make them out to be what they are not.

If you want to tax people and businesses to death, regulate and red tape everything and live in a nanny state where the government controls, tells what you can and can’t do, then the NDP is that party.

If you don’t like Canada now, they will make you could go back and have it the the way it was.

If you play with fire, you will get burned but it may be too late as you will get charbroiled.

Don’t be surprised if you guys get your NDP wish. People always have to learn the hard way.

#209 Ray Vasquez on 06.14.15 at 1:10 pm

Look at the history of Greece, it was always an economic basket case and a socialist government.

If Greece was not in the EU, and did not join the Euro, their interest rates on their bonds would be way higher, probably 5% to 10% points higher and their currency the Drachma would be at least 50% lower.

Greece is always used as an example but what do they really have economically? Olives and tourism that is it.

#210 De.Man on 06.14.15 at 1:13 pm

Seriously?? why buy Vancouver when you can have this for less than the average in Van.

http://www.realtor.ca/Residential/Single-Family/15568178/54115-RR12-RD-Rural-Parkland-County-Alberta-T0E1V0-NONE

#211 Ray Vasquez on 06.14.15 at 1:22 pm

I don’t know about others but I don’t Canada to be like China.

China opened up its trade with the world because precisely it could not survive as a complete communist country.

Cuba is trying to do the same thing. If they did not do this, they would of collapsed long time ago just like the U.S.S.R.

Socialism, collectivism, fascism, marxism, leninism, communism and other words these people used to confuse and distort facts about their command economic ways all don’t work.

They are disasterous.

#212 crowdedelevatorfartz on 06.14.15 at 1:37 pm

@#149 bc petition

You actually trust Christy Clark and Gregor Robertson to look out for your best interests?
My how naive.
They are politicians riding a band wagon of stupidity.
With Christy at the helm due to her unbelievable ability to stick her hoof in her mouth.
And in typical political fashion they are knee jerk reacting to events far far to late to have any useful result.

Good luck with your misguided “petition” blaming 5% of the population for the other 95% of people’s greed and ignorance..

#213 Daisy Mae on 06.14.15 at 1:37 pm

“….a mess of people in this country believe interest rates will never rise, that kicking out the Chinese will drop house prices or that they can borrow without consequence. The more those myths spread…”

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

People don’t think. They believe everything they hear unconditionally and without question. The same stupidity abounds in this gated community.

As an example, some homeowners truly believe we have teeny weenie strips of common property everywhere utilities are buried. As we know, utility companies have legal access to their equipment buried on private property…but that doesn’t mean it’s ‘common’ property. Which would be an administrative nightmare. Stupidity is universal.

#214 rosie "moving forward" in the knowledge that, "this won't end well" on 06.14.15 at 1:37 pm

Looks like U.S. housing is really getting hot, and gooey.

http://abc13.com/realestate/family-gets-free-pizza-for-life-for-selling-home/763767/

#215 DM in C on 06.14.15 at 1:40 pm

#210

Why? Cause it’s in the middle of BF nowhere, west of EDM, the armpit of AB.

Who is their right mind would pay half that. Ugh.

#216 crowdedelevatorfartz on 06.14.15 at 1:43 pm

@#46 North Burnaby
“BC means “Bring Cash”
+++++++++++++++++++++++++++++++++++
Yup, BPOE (Best Place On Earth) has relocated from his Richmond home to north Burnaby.

Still bleats the same old boring drivel.

Have they broken ground on the ‘Mountain Shadow” condos yet? What a waste of a perfectly good pub.

#217 alex grant on 06.14.15 at 1:59 pm

To Ray Vasques @208 – you don’t think you live in a nanny state when either of the other two major parties are in power? and @209 – Canada doesn’t have the olives!

#218 Broke Dick on 06.14.15 at 2:03 pm

But there’s trouble, apparently. A research note by National Bank’s Marc Pinsonneault has caused a stir since, combined with housing start numbers released last week, it suggests a classic glut is developing. Based on CMHC stats, the number of unsold condos is spiking bigtime – at 2,837 in May. That’s a record. And only two months ago, the highest level in about 25 years.
========================

How many of those condos, if any, are temp residences for the Pan Am athletes?
And will they be for sale after the games?

#219 cynically on 06.14.15 at 2:11 pm

To Ray Vasquez @208 – You don’t think you live in a nanny state when the other two major parties are in power? and @209 – Canada doesn’t have the olives!

#220 Ray Vasquez on 06.14.15 at 2:20 pm

To #217 Alex Grant

Vote for NDP and see what you get! You guys are looking for alot of trouble and don’t be surprised how bad it gets.

If you think it is bad now just make your move. It seems you guys think this is a big joke.

As for olives, I can live with out olives and going to Greece so who cares what they do.

#221 Julia on 06.14.15 at 2:52 pm

#218 Broke Dick
“How many of those condos, if any, are temp residences for the Pan Am athletes?
And will they be for sale after the games?”

From what I understand there will be about 100 units up for sale after the games (condos and townhouse). Affordable units, whatever that means. The rest are either rentals or dorms for George Brown College.

#222 crowdedelevatorfartz on 06.14.15 at 3:19 pm

Had a conversation with my 35 year old nephew 1.5 years ago about real estate.
He was mortgaging 2 condos at the time( one his residence, the other a rental “investment”).
His wife wanted “acreage” ie a house
I advised him to sell at least 1 of the condos if not both BEFORE buying a house.
His response,” Why? the prices always go up?”
Just recieved a call. ” Well I bought my Father in Laws House ( but FiL is still gonna live there in the basement as a mortgage helper).
Him: “I’m trying to sell 1 of the condos but the prices are tanking. I wont make any money so I’m gonna hang on and wait…..”
Me: How much are ALL your mortgage payments?
Him: “4K/month plus 450/month condo fees”.
Me: ‘Well , you should dump at least one of those condos, if not both, take a small loss, before interest rates rise and the bottom falls out”
Him: “There’s NO WAY interest rates will rise! It would kill the economy!”
Me: “Remember what you said about real estate prices a year ago…….”

I may be wrong but Garth and time seems to be proving me right.

#223 Washed Up Lawyer on 06.14.15 at 4:05 pm

Up here in Fort McMurray, the first signs of spring have arrived. The trees are budding out and the edges of the lawn are now greening. The only snow is in the shady spots.

We can enjoy it for a week and then the days start getting shorter.

#224 Useless Realtor on 06.14.15 at 4:14 pm

Investorz on 06.14.15 at 9:59 am
I was thinking about the fact that the average detached in Toronto is 1.1M and whether the underlying fundamentals support it.

There’s a lot of high paid jobs in Toronto. Remember that young Hydro One engineer who made that vulgar comment on TV? He was paid 106k. And that’s a clown. There are thousands of people moving to the city making over 100k. Hundreds are couples making over 200k. 1.1 million is high but not insane. Remember that many of those did not sell for 1.1M.

That stat isn’t worth much. What we need to see is a 2d plot of SFH prices on the Y-axis and the count on the X-axis. The top 10% could be skewing the average. On MLS there’s a lot of 750k houses. Nothing grand, but 20 minute drives from the core.

For me, a Montreal 400k two bedroom “condo” (converted creaky duplex) with no parking, in a province with higher taxes and less well-paid jobs, is far more insane.
—————————————————————–

That’s why I like talking with fellow realtors. We are so clueless (due to our lack of education) that we make up stories . The funny part is we believe our own lies. When you don’t have high school what do you expect? Realtors are useless eaters which is why we HATE and I mean HATE free and open markets since our services would be worthless.

#225 ANON on 06.14.15 at 4:31 pm

For those fascinated by the way this is unravelling and where it is likely headed, the comment section is invaluable, as usual. I’m sure the comments not seeing the light of day would reveal even more. But that’s for Garth’s keen eyes only. :) Oh, the stories we tell ourselves…

#226 Washed Up Lawyer on 06.14.15 at 4:31 pm

On another pointless tangential note, 36 years ago, Bev McLachlin (now our Chief Justice) was my first year Contracts professor.

She was kinda hot then.

#227 Sheane Wallace on 06.14.15 at 4:33 pm

#211 Ray Vasquez
……………………………….
knowledge is constant but the population is increasing hence stupidity is increasing.

When you can turn around a country of over a billion and get growth over 6-8 % constantly for 30 years that implies you are smart.

And frankly I don’t care what you think about China, this is where the future of the business is whether you like it or not.

As to comparing to Cuba to justify how well you are off …

is stupid.

Compare Canada to Norway, if you dare.

#228 Sheane Wallace on 06.14.15 at 4:34 pm

Norway is socialist country. As is Sweden.
Germany to large extend.

#229 Ray Vasquez on 06.14.15 at 4:40 pm

Just some info about condos in Toronto. Condo fees in Toronto are about $450 a month on average.

I read somewhere in 2009 that the average annual increase in Toronto condo fees is 5.5%.

People don’t realize that in a 25 period when the mortgage on a condo is paid off, the monthly condo fees of $450 a month will be $1,716 a month.

This is just the monthly condo fees, add insurance, property taxes, utilities(water, gas, electricity) and this is really getting to $4,500 a month. This is for only a mortgage free condo.

Where are people going to get this money? It is going to be a financial wipe out!

#230 Sheane Wallace on 06.14.15 at 4:56 pm

Apparently banks are the prudent lenders, read this stupidity from yahoo:

http://www.nationalfinancejournal.ca/guy-laugh-bank.php?SID=TaboolaDesktop

#231 Julia on 06.14.15 at 5:29 pm

#230 Sheane Wallace
“Apparently banks are the prudent lenders, read this stupidity from yahoo:

http://www.nationalfinancejournal.ca/guy-laugh-bank.php?SID=TaboolaDesktop

____________________________

Some years ago I used to work in the frontline at a Bank. We would get complaints from people having been turned down for mortgages. The complained because they deserved to buy a house and it was their right to get a loan. How dare the Bank decline.

#232 Leo Trollstoy on 06.14.15 at 7:29 pm

Just some info about condos in Toronto. Condo fees in Toronto are about $450 a month on average.

It’s around 63c p sq ft

#233 VanCity D-man on 06.14.15 at 10:31 pm

Hey Tony Mears, what do you have to say now that Victoria Real Estate Update put in your place? What a jackass!

#234 Ray Vasquez on 06.15.15 at 8:00 am

To Sheane Wallace If you like Norway, Sweden, Germany, China, so much then go live there. We live in Canada.

By the way, they said the same thing about Japan taking over the world economically and look at how that worked out.

It is a crappy economy for 25 years now and real estate, stock markets that are still crap in 25 years with losses for most since 1989.

Interest rates that are one of the lowest in world until Europe’s negative interest rates and QE. It is convenient how you never talk about almost 30 countries with negative interest rates and most of them are socialistic in their policies.

Interest rates will stay low and just look at the bond markets. They are all being controlled for decades and when interest rates get to 6% to 8%, then you can call me stupid. Right now, you guys are the fools!

This if it happens in a in a functioning and growing economy. If it is in a socialist, basket case, hyper inflation economy like what happened many times in Argentina, Chile, Venezuela, U.S.S.R., Greece, Zimbabwe that you want guys love to ignore to mention then you guys are screwed like everyone else.

In the meantime, Alberta will be just like Ontario, a one time NDP huge mistake and people will avoid them like the plague.

#235 Ray Vasquez on 06.15.15 at 8:05 am

You want to be a fee slave and go broke, buy a condo. This is not even including what they would do like putting a $1,500 annual fee like on condos like a poster stated they did already in Winnipeg, Manitoba.