Consequences

TREE modified

Eight years ago, when we thought everything was okay and feisty, Garth-bating Dean Del Mastro was the prime minister’s Parliamentary Secretary, the rate on a 5-year Government of Canada bond was 4.5%. Fixed-rate five-year mortgages were 7% – about 1% below the 10-year average.

This week Mr. Del Mastro was led out of a courtroom in handcuffs and leg shackles after being convicted of electoral diddling (although I don’t like the guy, it was a complete and unnecessary humbling) and the current bond yield is 1.02%. Fixed half-decade mortgages are down to 2.48%, if you deal with a broker and borrow from a food truck, or around 2.74% at the most competitive banks (TD and BeeMo). The only better rates (0%) are available at the bank of Mom.

By the way, in 2007 the average GTA house cost $376,236, and today it’s $650,732. That’s an increase of 72.9%. The median household income in Toronto in 2007 was $61,900, and today it is $73,120. That’s an increase of 18%.

And noodle this: in 2007 a GTA house cost six times what a typical family earned. Today a house is worth almost nine times income. (In urban Vancouver it’s 12 times median income. Yikes.) So the conclusion is obvious – real estate has bloated dramatically as the cost of money collapsed – and not from an explosion in incomes. This is why there’s nothing more important for every homeowner to fixate on than interest rates.

Rates are low, of course, because the economy has sucked since the GFC. Central banks here (the Bank of Canada) and the US (the Federal Reserve) brought in emergency interest rates back in 2009 in order to flood the system with money and solve a credit crisis that threatened to paralyze society. Low rates were also an attempt to get consumers borrowing vast amounts of money, so a burst of spending would stimulate the economy and governments wouldn’t have to do as much.

In the US, it didn’t work. The middle class was so fried by the collapse in house prices that all people wanted to do was get out of debt, no mind what it cost. But here, a different story. We turned into little debt oinkers, snorfling up as much as the bankers would allow, then blowing it on ‘safe’ assets – houses.

You know the rest of the story. Today real estate’s not worth more because it is rare or precious (we’ve actually built too many homes since 2007) with current prices guaranteed to hold. Instead, houses cost what they do because you can borrow bags of money for five years at 2.5%. If mortgages were 7% again, as they were in 2007, the average Toronto house price would be $443,959 – or almost exactly $200,000 less than today (31%).

Now, rates will be rising. So real estate will be worth less. Get ready.

The question is, how much and when?

Last week I told you what the Fed is selling the world. The first US rate hike happens this autumn, and there may be another by December (according to a senior bank official). Fed chair Janet Yellen says we should then expect 1% more in each of the next two years, taking the rate from about one-tenth of one percent to 2.65%. That would arouse the bond market, and likely mean five-year fixed mortgages in the 5% range long before today’s borrowers have to renew.

If incomes remain flat (the likely bet) then we could reasonably expect that average Toronto house to cost about 80% of today’s price, or $520,500. However, real estate is emotional. It will end up costing what people think it should, as well as what they can afford.

Most mainstream economists, like the eggheads at RBC, think the Bank of Canada will start to follow the Fed’s lead after a healthy waiting period – maybe as long as six months. So the central bank rate here will advance, beginning in the Spring of 2016. That will increase the prime, making business loans, your HELOC and all variable rate mortgages cost more. In the meantime, fixed-rates loans, which are priced in the bond market (and which 67% of Canadians have) will start to rise along with the Fed.

Capital Economics’ David Madani, a notable housing bear, disagrees.

“Domestic investment in Canada’s oil sands is still tanking,” he writes. “Governments remain focused on balancing budgets, so there’s little hope for any offset from public sector spending. Meanwhile, the scope for a lift in household consumption seems limited, since they are already heavily indebted. What’s needed is a much firmer US economic expansion buoyed by a far more competitive exchange rate to boost Canada’s exports and growth prospects more generally. This begs the question: will the Bank of Canada cut interest rates again?”

His answer: Yes. Twice. A quarter point on September 25th and another in December.

Is this credible? Beats me, but Madani is the odd guy out right now. If he’s correct, with our bank cutting the cost of money while the Fed increases it, then we should get ready for two things: a sideswiped loonie and an autumn real estate rush. That will likely be followed by a spring massacre.

Talk about criminal behaviour.

198 comments ↓

#1 Victoria Real Estate Update on 06.26.15 at 5:56 pm

From yesterday: # 139 fancy_pants

“Is now the time to listen to the warnings? You would have been hosed doing that 5 years ago when the alarms were first being sounded.”

You may not have seen this information:

From September 2007 to June 2009 house prices in Calgary fell 15%.

. . . . . . . . . . . . .Calgary House Prices. . . . . . . . . . . .
. . . . . . . . . (September 2007 to June 2009). . . . . . . . .
. . . . .(Percent Below September 2007 Price Level). . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . 0%. . . *. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 0.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 1.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 1.5% . . . . . *. . . . . . . . . . . . . . . . . . . . . . . . . . .
– 2.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 2.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 3.0% . . . . . . . . . . . . . . *. . . . . . . . . . . . . . . . . . .
– 3.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 4.0%. . . . . . . . . *. . . . . . . . . . . . . . . . . . . . . . . .
– 4.5% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 5.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 5.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 6.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 6.5%. . . . . . . . . . . . . . . . . . .*. . . . . . . . . . . . . . .
– 7.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 7.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 8.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 8.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 9.0%. . . . . . . . . . . . . . . . . . . . . . .*. . . . . . . . . .
– 9.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-10.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-10.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-11.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-11.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-12.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-12.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-13.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-13.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-14.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-14.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-15.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *. .
——————————————————————————————-
. . . . . . . .Sep. .Dec. .Mar. .Jun. .Sep. .Dec. .Mar. .Jun. .
. . . . . . . . 07. . .07. . 08. . .08. . .08. . 08. . .09. . .09. .

(source: Teranet’s index)

Prices in Calgary would have kept falling if interest rates hadn’t suddenly been slashed from near-normal to emergency levels in early 2009.

In 2008 Garth warned about a price correction in Canadian real estate. He was right about it. Significant price corrections were underway in Vancouver, Victoria, Calgary and Edmonton in 08-09, however, those falling markets were rescued by a major rate drop in 2009. A major rate drop that nobody could have predicted.

Canada’s housing bubble has grown significantly since 2009.

This time rates will be rising as prices fall. Canada’s gasbag will deflate.

Many of those who bought at near-peak prices will be crushed.

#2 Derek R on 06.26.15 at 5:59 pm

I think Madani knows what he’s talking about. There’s an election coming up. The last thing the Conservatives want is a tanking economy. But it looks like that’s what they’re going to get. If pouring more fuel on the housing fire can save them, they’ll do it and deal with the consequences after the election.

#3 Russ L on 06.26.15 at 6:01 pm

It seems pretty clear that a heavier than normal US weighting is a good over-balance… er, position.

If Garth & the like are correct then US keeps getting stronger. If Madani is correct then there is a CDN dollar drop and immediate benefit.

I better pay off the rest of that Honolulu timeshare (I mean factual ownership) that she bought on impulse last year.

Cheers, R L

#4 bill on 06.26.15 at 6:13 pm

RE ‘a sideswiped loonie’
We sacrifice Canada for two real estate markets?
That makes no sense to me.

#5 Corban on 06.26.15 at 6:15 pm

Too bad the tree didn’t put that poor VW out of its misery.

#6 S.Bby on 06.26.15 at 6:19 pm

More interest rate cuts in Canada would be absolute madness. But at this point, I’d believe almost anything is possible.

#7 Paul on 06.26.15 at 6:22 pm

Del Mastro gets the perp walk Murders and Rapest get a hoodie or a coat.

#8 Leo Trollstoy on 06.26.15 at 6:25 pm

I’ll get the popcorn.

#9 Randy Randerson on 06.26.15 at 6:30 pm

Time to expect a 70 cents loonie to USD. Bring on $15 head of lettuce.

#10 Rates on 06.26.15 at 6:36 pm

Rates will go to 0% in canada and remain at 0% in the US.

US House price are back at peak they were in 2007 in some area. They had a housing bubble caused by low rate and when the bubble popped resulting in a great econonic crisis they lower the rate to 0% for 7 years to reinflate the bubble. Now do you think they will raise the rate to pop it again?

What kind of credibility will they have if shit hit the fan again for the same reason. They are better just leave rate at 0% or maybe raise .25 once every 20 years

Average US housing prices are 17% below the peak. There is no bubble there. — Garth

#11 Huzo on 06.26.15 at 6:36 pm

Hi Garth,
Have wealthy Canadians been a big factor in propping up our economy since the GFC? What is their impact on our economy now and in what segments are they spending and investing their money in? What trends do you see in their investing/spending habits in the next year or two?
Thx, Huzo

#12 Willy on 06.26.15 at 6:36 pm

Shouldn’t BOC rate cut delay the crash?

Kind of like china is doing earlier this year?

#13 earthboundmisfit on 06.26.15 at 6:45 pm

Agree completely about the shackles and handcuffs. Totally unnecessary. Police probably took direction from the Harpocrite.

#14 Marco from van on 06.26.15 at 6:45 pm

Leaving SFO for YVR. We had to jack up pay scales to deal with the heating up of business in the area. Here the activity drives industry that employs people with skills and pays them top salaries. Yes there is outsourcing, yes there is off shoring, but there is a lot of innovation that drives that too.

I’m going to my usual Friday BBQ tonigh where 90% (less myself and a couple of really smart folks) of people will talk of real estate, debt and fear. A handful of us talk of vacations, fat investment portfolios, freedom, no debt and choice. I have been asked by a great many, are you a doctor? A lawyer? How do you make you money… My answer is I sold, I invested, I rent (a$3m home for a paltry $3600 per month) and am free.

So I took a job in SFO while I live in YVR and have choice on my side to move and do whatever I want when I want…

Or I could buy and be stuck in huge mortgage and ownership costs and sit with the other group of people at the BBQ… Being popular/conformist is so overrated ;-)

Good luck to all in whatever choice you make…

#15 New guy on 06.26.15 at 6:50 pm

DELETED

#16 Hasbeen Better on 06.26.15 at 6:56 pm

Since nobody in recent memory this side of serial killers and baby diddlers has been led out of the courthouse in shackles we have to assume that we’re seeing a minor ‘justice’ with a ‘Hate for Harper’ make an attempt at scoring political points. Our ‘activist’ justices are on a war path to ‘bring about change’ by denying elected officials the opportunity to act for the people who voted them into office.

#17 totalinvestor.com on 06.26.15 at 6:58 pm

Canadian Real Estate Bubble Nearly 40 %! Ross Kay

http://totalinvestor.blogspot.ca/2015/06/canadian-real-estate-bubble-nearly-40.html

#18 Saskabush on 06.26.15 at 7:03 pm

Here in the flatland, once the thunderstorm passes and the hail stops coming down, I can look around and I don’t see much danger in the air. Sure, house prices have jumped up due to cheap money, even in this tiny village I call home there was a house just sold for $25,000 but then another neighbor wants $150,000 for his. The mayors house went for $250,000 but he had a marble tub (who knew).

I’m just done my time of 35 years in gov’t service, with no defined pension, just a ‘normal’ defined contribution one. It has finally recaptured what it lost in 2008. It took 7 years to do that. Those 7 years were from what was supposed to be the best earning years at the end of my pension when the curve was to be a rocket path to the sky. Too bad for me I guess but I’m a ‘lucky one’ that has contributed to a pension at least. It only took one bad year to take the starch right out of my rising pension. The pension board sent me a nice graph, which shows quite nicely that I’ll be out of money by the time I’m 73 IF I continue working until I’m 65 that is.

But what I have done is started to follow Garths advice a little. Yup, I’m a day trader now! (just kidding). I have actually balanced my stuff out as best I can and have applied for CPP early to stuff that $900 a month into REITs and Preferred (which haven’t been doing so well) and maybe the odd EFT like ERUS (can’t keep a good Putin down)

Thanks Garth for the advice and humor.

#19 Rick on 06.26.15 at 7:03 pm

If one real estate office can track RE sales you can bet that our gov’t knows exactly how much of our total RE is going to non-residents. It’s too profitable to stop.

http://www.macrealty.com/_content/Infographic_-_The_China_Factor_in_Vancouver_Real_Estate.jpg

Macdonald Realty’s methodology is flawed, and they constitute a great example of realtors trying to scare the locals (like you) into buying. Shame on them. — Garth

#20 Brian Ripley on 06.26.15 at 7:11 pm

I updated my Housing Starts chart to include population growth as well.

http://www.chpc.biz/housing-starts.html

If I have done the following math correctly:

In 2014 there were 28,356 residential housing starts in BC (all units, SFD, T-House, Condo)
In May 2015, the annualized number is 28,179 starts in BC (average of May through May x 12) down 4% from last year.

In 2014 there were 4,657,947 people living in BC (assume they all had a roof overhead, although people do inhabit Stanley Park)
In May 2015 there were 4,666,892 people in BC (8,945 more people to shelter than in 2014)

Annualized starts of 28,179 less additional people of 8,945 equals 19,234 starts left over if 1 person lives in 1 housing start completed.

QUESTION will there be another nearly 20,000 people who will be additionally domiciled in BC by the end of 2015?

It looks like Ontario is the preferred destination, not BC (chart link above).

By the way Ontario population is up 19,886 since Dec 31, 2014

#21 r1200c on 06.26.15 at 7:17 pm

I know – I know… now is not the time to buy – but I’m getting a very sweet deal on something I can afford and that won’t cost me more than what I currently rent.

It has been a while since Garth gave his advice with what kind of term to go for now-a-days… With impending hikes… should one still go variable?
I can get a 7 year locked in for 2.99% and a 10 year for 3.65% – a quarter down – no CHMC.

Help Mr Garth!

#22 Ray Vasquez on 06.26.15 at 7:23 pm

Since Median Toronto incomes are only up about 18% since 2007 and Canadian housing prices, even more so with Toronto housing prices should only be about about 20% in 8 years, 2007 to 2015.

So really, a $376,000 house should be $451,000 not $650,000.

Since Toronto real estate prices went much higher than the rest of most parts of Canada, this should mean a 30% correction.

I believe Madani was forecasting a 25% correction across Canada at the minimum.

#23 Rainclouds on 06.26.15 at 7:25 pm

The Deaner. Friends everywhere.

https://www.facebook.com/deandelmastro/posts/10151143214243842

#24 Nemesis on 06.26.15 at 7:28 pm

…”… it was a complete and unnecessary humbling.” – MagnanimousGT

#CouldHaveBeen,Like… #WayWorse…

https://youtu.be/3uX0wjl9PzM

#25 Daisy Mae on 06.26.15 at 7:46 pm

#13 EasyBoundMisfit: “Agree completely about the shackles and handcuffs. Totally unnecessary. Police probably took direction from the Harpocrite.”

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

He lied. And he stole from you and me. A public humiliation is fitting.

#26 james on 06.26.15 at 7:47 pm

Another thing that is criminal is Madani being unaware of the proper usage of the phrase ‘beg the question’. It doesn’t mean what he thinks it does.

Each year that a correction is delayed, the further Canadians get into debt. People assume that if there is no crash, everything is fine. Not so. Ramifications just pop up elsewhere. This will be very very interesting to watch.

#27 what deal on 06.26.15 at 7:48 pm

So if rates go up and house prices go down the affordability doesn’t change. Mortgage payments are the same because the interest is higher. How does that change anything? How is that a correction? How is it better?

#28 VG on 06.26.15 at 8:02 pm

#21

Be wary of such long term lock-ins. If you want to break your mortgage or sell you would have to pay 1000s of dollars.

Banks are sneaky the way calculate your penalty for example is say they are giving you 7yr @2.99% like you said, and the posted 7yr rate is say 6% (most likely). Then you have to pay them 6-2.99=3.01% interest for the rest of your term. On a 100,000 mortgage it amounts to 21,000 penalty if you cancel your mortgage on day one after signing up.

#29 Andrew Woburn on 06.26.15 at 8:06 pm

“‘Tranquil exclusivity’ in the heart of London for just £1.375m

From Redrow’s marketing blurb for their new “Holland Park 205″ development:

For those looking for apartments in central London, this exquisite development enjoys both a prime location in the heart of the city, as well as a tranquil exclusivity renowned within these upmarket neighbourhoods.

This enclave of west London combines elegant leafy streets and squares with the beautiful 54 acre Holland Park, where there is outdoor opera on balmy evenings.”

The author compares reality with the attractive picture painted by artful London realtors for naive Chinese investors. Commenters note that similar apartments can be purchased in the neighbourhood for half as much money and they can be rented for half the £4,000 per month represented to the Chinese.

When, not if, the Chinese realize they have been screwed, the real estate blood bath in London could easily spill over into other Chinese favourite markets.

But not Vancouver, it’s special.

http://ftalphaville.ft.com/2015/06/26/2133080/tranquil-exclusivity-in-the-heart-of-london-for-just-1-375m/

#30 VG on 06.26.15 at 8:10 pm

@ #27

It is better because you can still sell and move on if you want. U like if you are underwater in mortgage you are trapped. Also it is only a 5 yr mortgage, so come renewal it will become insanely unaffordable if you buy now at higher price.

#31 Andrew Woburn on 06.26.15 at 8:11 pm

In case you have decided to drop out of Gender Studies and become a bricklayer, you might want to know about Hadrian.

“Hadrian the robot bricklayer can build a whole house in two days”

http://www.independent.co.uk/life-style/gadgets-and-tech/news/hadrian-the-robot-bricklayer-can-build-a-whole-house-in-two-days-10347229.html

#32 Ray Vasquez on 06.26.15 at 8:24 pm

To #27 What Deal

Interest rates which includes mortgage rates have to normalize or speculation will get more and more out of hand.

There are people that should not of bought a house and should not of qualified for a mortgage just because of very low interest rates.

As for interest rates and real estate prices, if you have a smaller debt upfront, it is better than having that debt be so high when you bought that house.

Also, you have an incentive to pay off the mortgage sooner and save more interest and and you have an incentive to save money and actually getting paid a decent interest rate on your interest bearing savings, investments.

#33 Russ L on 06.26.15 at 8:28 pm

WHAT DEAL on 06.26.15 at 7:48 pm
So if rates go up and house prices go down the affordability doesn’t change. Mortgage payments are the same because the interest is higher. How does that change anything? How is that a correction? How is it better?
++++++++++++++++++++++++++++

Now you have it!

This is Garth’s warning to the masses, the unwashed, the 99% (including Millies).
It is not better. Your payment stays the same and your debt stays the same but the MacMansion becomes worth less.

A correction is does not make things better but they are inevitable. That’s the “prepare” part.

Cheers and good luck, RL

#34 North Burnaby on 06.26.15 at 8:28 pm

The gap between the rich (condo owners) and the poor (condo renters) are widening at an accelerating pace! Yvr condo owners are winning big time from capital appreciation and increasing rent income.

#35 Andrew Woburn on 06.26.15 at 8:38 pm

#20 Brian Ripley on 06.26.15 at 7:11 pm

QUESTION will there be another nearly 20,000 people who will be additionally domiciled in BC by the end of 2015?
========================

Dude, you are so rude! You didn’t even provide a trigger warning before trampling on our cherished beliefs! In BC, we call that microaggression.

Now I will have to assume the full lotus with my fingers in my ears and chant, “A million more people are coming to BC by 2030”. I’m feeling better already.

#36 Smoking Man on 06.26.15 at 8:40 pm

I typically hate people, and I can honestly say I can count all my friends on one finger…

All I can say is the ones I have…the best in the world.

Thanks Yoda…

#37 Smoking Man on 06.26.15 at 8:43 pm

Shit I meant one hand, sorr Pete.

#38 Freedom First on 06.26.15 at 8:48 pm

Yes, let’s talk about criminal behaviour. It is world wide.

I was chatting with a woman that is working in the Financial Industry in Canada, who is from a 3rd world country, but is now a Canadian. She told me that in the 3rd world the corruption and bribery is rampant and out in the open. She also said the corruption in the West is everywhere, but that the west is much more “sophisticated” about it.

#39 AlbertaGuy on 06.26.15 at 8:50 pm

More cuts? Would it be possible to head off a gasbag in RE by linking minimum downpayment required and max amort period to the BOC rate?

This should shake out the week hands and force borrowed money to seek better economic use or if put towards RE provide larger buffer when RE values erode.

eg:

BOC .7% : min dp 20% max amort 25 yr
BOC .6% : min dp 25% max amort 23 yr
BOC .5% : min dp 30% max amort 21 yr
BOC .4% : min dp 35% max amort 19 yr
BOC .3% : min dp 40% max amort 17 yr
BOC .2% : min dp 45% max amort 15 yr
BOC .1% : min dp 50% max amort 13 yr

#40 Smoking Man on 06.26.15 at 8:51 pm

Is this credible? Beats me, but Madani is the odd guy out right now. If he’s correct, with our bank cutting the cost of money while the Fed increases it, then we should get ready for two things: a sideswiped loonie and an autumn real estate rush. That will likely be followed by a spring massacre.

Talk about criminal behaviour.- Garth
……

Not to mention three levels of communism in govt. NDP way a head in the fed polls.

Time for evacuation.

https://m.youtube.com/watch?v=3kcmwXUdDCE

#41 Timmy on 06.26.15 at 9:10 pm

http://www.bbc.com/news/world-asia-pacific-13813688

Chinese officials stole $120 billion, fled mainly to US

#42 eastvan on 06.26.15 at 9:16 pm

http://www.vancouverobserver.com/opinion/how-tell-were-housing-bubble

#43 Smoking Man on 06.26.15 at 9:17 pm

We all know the duck, can’t spell Lonnie, , is going to get crushed, boc will cut, fed might spike. If they do.

It’s a worthy bet, 50k in a forex account. Buy USDCAD On margin, only 50 contracts..

Welcome to the millionaires club. Next year.

#44 Cyclist on 06.26.15 at 9:28 pm

Is it OK to have 0.5% of my net worth in my bicycle?

#45 Jay Currie on 06.26.15 at 9:30 pm

Fall buyers’ rush or listings rush?

From my patio office high above a little resort community, I can see five For Sale signs three of which were not there at the beginning of the month. If you are going to sell recreational lakeside property you try to list in early spring.

At some point this will not be pretty.

#46 AnneK on 06.26.15 at 9:40 pm

” New reports have emerged of global macro hedge funds building short positions in those things they think will be pummeled in the inevitable Canadian housing bust – including subprime lenders and the loonie itself.”

Above is yesterday’s post.
I would like to have info on those global macro hedge funds. If I cannot short the market, then I would like to acquire theses hedge funds.
Why not make some money out of the belief that the bubble is about to burst. Other than ” renting” or “selling your home.”
Why not?

#47 Koshy Alex on 06.26.15 at 9:43 pm

World economy may be slipping into 1930s Great Depression problems: RBI’s Raghuram Rajan

http://economictimes.indiatimes.com/news/economy/indicators/world-economy-may-be-slipping-into-1930s-great-depression-problems-rbis-raghuram-rajan/articleshow/47825044.cms

#48 Mark on 06.26.15 at 9:43 pm

“Now, rates will be rising. So real estate will be worth less. Get ready.”

Rates have come down. RE has already been rendered less expensive in the past few years. Rates do not need to rise for RE prices to continue to come down further. The industry is supplying more housing units than there are buyers. Hence, falling prices. Interest rates have little to do with it.

Of course, more pertinent for buyers is that even if they can continue to borrow for cheap (which probably will be the case), it doesn’t help that they’re sitting on a depreciating asset.

With how slow the economy is, and how deflation is setting in, rates may very well go even lower, especially in Canada where pressure is growing for the next rate cut. But that’s not going to help home borrowers.

#49 Show Me The Money on 06.26.15 at 9:46 pm

I was read a blog househuntvictoria.WordPress.com and someone was saying rate increases have not tended to trigger a decrease in house prices. Thoughts on this Garth.

#50 Millenial on 06.26.15 at 9:51 pm

Hey Garth,

I was surprised by your comment about Del Mastro’s ‘unnecessary’ leg shackles. FYI, that’s how OPP handles the transportation of ALL convicts.

All your talk about being a political outsider, you’re really no different from them all. You think you deserve special treatment cause you were elected once upon a time.

A guy going to jail for a month for fraud is not exactly a violent flight risk. It was simply theatrical, with a picture that will destroy the rest of his life. It’s not about being special. It’s about compassion and reason. You may learn that someday, kid. — Garth

#51 Smoking Man on 06.26.15 at 9:51 pm

Ah man.. It was Friday Oct 17th 2014 and I was hammered and challenging God, taunting him, give me a challenge bitch. It’s in the archives.

My nephews favorite number was 6 , he wore it on his hockey jersey. He was always the captain. Ironically, when you fall off a mountain cliff 500 meters, you got about 6 seconds of thinking before you go splat at terminal velocity. Jesus Christ I pray he wasn’t thinking..uncle smoky you did this.

Been carrying a heavy gilt trip over it. I encouragd his mountain climbing. His wing suit adventures, his quest for Everest.

I really wish there is a God..if he confesses to me, I was just fking with you.. Take it easy on me.

You know I’m grabbing the pruck by the beard, punch him in the face and flinging him across the room into the wall.

So what, he opens the trap door and I got a 6 second free fall to hell.

The 6 second fall , I’ll be thinking.
Did I knock out one of his teeth…yes.bring on the devil.

Rest in peace Mark, we can’t get you out of our mind, and never want too.

You guys on greater fool spend to much time worrying about the small stuff is all I’m saying.

#52 Bodi Pandit on 06.26.15 at 9:52 pm

Obviously there is a need for all this real estate – houses are not stocks that one can stuff in there portfolios. They are for living breathing humans.

Real estate is going up due to simple demand and supply. end of story.

Stop beating a dead horse which is what this blog has been doing for the last 8? 10? years.

#53 Washed Up Lawyer on 06.26.15 at 10:11 pm

With my various psychiatric afflictions and a tawdry lifetime spent in the practice of law, I am conflicted, torn and muddled about whether I should attend the Argos opening regular season game tomorrow in Fort McMurray.

What are the punters and prognosticators in Forest Hill saying about tomorrow’s match?

I might stroll to the stadium tomorrow afternoon and see if the newby scalpers know what they are doing.

I hope they accept VISA.

http://www.thestar.com/sports/argos/2015/06/26/little-buzz-for-argos-home-opener-in-fort-mcmurray.html

#54 Love my Kia on 06.26.15 at 10:22 pm

This week Mr. Del Mastro was led out of a courtroom in handcuffs and leg shackles after being convicted of electoral diddling (although I don’t like the guy, it was a complete and unnecessary humbling)
———————————————–
A convicted felon is transferred according to standard transfer procedures. Are you suggesting he should be transferred in a special way contrary to procedure? White crime, blue crime, etc should not make any difference.

I worked my way through university as a customs agent 25 years back and I actually had the authority to search the Queen if I wanted to! The only people off limits were diplomats. That’s the great thing about this country, NO EXCEPTIONS OR SPECIAL TREATMENT FOR ANYONE.

Where is the deterrent with one night in jail?!? DDM has no shame in what he did, so the fact of him treated as a common criminal (he is) is at least some solace for the rest of us.

DDM was transferred in a private manner, just because over zealous reporters were able to squeeze a camera over a slim opening over an 8′ high fence doesn’t make the situation a public display.

At least the images may serve as a deterrent since all other methods to this point haven’t made an ioda of difference.

#55 Randy Randerson on 06.26.15 at 10:31 pm

#34 North Burnaby on 06.26.15 at 8:28 pm

“Is that a joke?” – Sterling Archer

#56 Ultraman on 06.26.15 at 10:34 pm

Is it OK to have 0.5% of my net worth in my bicycle?

You’re probably spending a lot of money to save a few ounces on the bike but you know a pond of fat on your chunky butt is the same as a pound of metal on the bike.

No better way to spend your money though. Good for the body and good for the soul.

#57 Dean Dumb on 06.26.15 at 10:36 pm

DELETED

#58 Hosè on 06.26.15 at 10:40 pm

JUNE 5th – David Madani says: “Overall, this latest employment report supports the Bank of Canada view that the January rate cut was enough insurance against the oil price shock”.

JUNE 26th – David Madani says: “Will the Bank of Canada cut interest rates again? Yes. Twice. A quarter point on September 25th and another in December”.

DAVID MADANI
CREDIBILITY – NONE
TRACK RECORD ON PROGNOSTICATIONS – LOUSY
REPUTATION WITH FELLOW ECONOMISTS – A JOKE

#59 Smoking Man on 06.26.15 at 10:42 pm

Millennials you figure this out , it’s all you need. Damb your teachers.

33 Years with the same one,, OK the rentals. Prostate cancer prevention, shit, bacon and eggs every day, and bozze every night.. I need to do something.

Still don’t change my feelings. My code

https://m.youtube.com/watch?v=5lRWXHomzF0

#60 Chris on 06.26.15 at 10:44 pm

It is all about the monthly paymENT. I don’t think it even matters what the term is. People are so numb these days. Would you buy a house at 1500 per month for 10 years. Sure. Same amount for 30 years. Why not? 40 years? Well, don’t think I will be dead by then, bring it on. People have gotten so bad at math I guess.

#61 Paul on 06.26.15 at 11:03 pm

54 love my Kia

Are you sure you are in law enforcement ?
You may want to look up the meaning of ‘Felon’

#62 Yup not retired on 06.26.15 at 11:22 pm

Meanwhile in yyc, chevron, transcanada, transalta and encana are all gearing up for significant layoffs…

#63 Smartalox on 06.26.15 at 11:25 pm

I admit that the leg shackles were over the top, but Given all of Dean’s histrionics, and (del) Mastro-baiting, I can’t help but think justice would have been better served if he’d been gagged.

#64 Zed on 06.26.15 at 11:27 pm

GARTH>

REal estate obsession in a country with so many immigrants and a welfare state like Canada is easily explained by a sociologist.

As you remind us, if you rent, you are pressured by society to buy.

Its a way to keep outsiders out of the neighborhood, of your schools, parks, etc. The goal is to make things so expensive that it is so hard for newcomers to move in. Its the same reason rich people are so happy to go to places where there is a steep price to belong, like a private golf club or yatch club or hunting club or a far off Caribbean island.

Rising real estate prices in the second largest country in the world is the lesser of two evils for the collective of society. And guess what, the rich can afford the rising prices. Its the greater fools that will get burned sooner or later.

#65 45north on 06.26.15 at 11:28 pm

Derek: I think Madani knows what he’s talking about. There’s an election coming up. The last thing the Conservatives want is a tanking economy. But it looks like that’s what they’re going to get. If pouring more fuel on the housing fire can save them, they’ll do it and deal with the consequences after the election.

I think you’re right. Unfortunately. Politicians are very very good at what they do – get elected.

#66 prairieboy43 on 06.26.15 at 11:30 pm

In Saskatoon today. Attending Sask Jazzfest. Quiet, maybe 600 attendees. I thought Saskabush was happening. Rather Quiet. Beautiful city, in the heart of the Prairies. Every Canadian should visit Saskatoon.
PB43

#67 Shim Diggins on 06.26.15 at 11:34 pm

Garth,

It looks like there are some other wise elders who share similar views to you.

http://www.marketwatch.com/story/why-jim-rogers-is-buying-what-everyone-else-is-selling-2015-06-26?siteid=yhoof2

One of the best bits from this article could have come from your good self,

“Rogers: What is happening right now is a historical anomaly. Never in the thousands of years of recorded history have we had interest rates at zero or negative. We are destroying the people who save and invest for the future. They are being wiped out at the expense of the people who bought four or five houses with no money down and no job. We are destroying the people that all societies throughout history have needed the most.
When you destroy the investing and saving group, your society, economy, and country has problems. That is what we have been doing. Think of all those people who were saving for the future. They look like fools now, and feel like fools. Their friends who borrowed money are being saved at their expense. …”

#68 young & foolish on 06.26.15 at 11:37 pm

The bigger trend is people are urbanizing (in some places at an unhealthy and alarming rate). A correction will come, as always, and it will come to equities and other paper assets as well. Keep in mind that corrections are more pronounced at the extremities ….. people lose their wings when they fly too close to the sun.

#69 BOBO on 06.27.15 at 12:03 am

Garth
I was totally disappointed with our society when I saw Dean Del Mastro in cuffs walking to a van heading to jail, like a murderer. That’s crazy SHT. Talk about political correctness…

Ok now lets get back to house hunting.

#70 Waterloo Resident on 06.27.15 at 12:20 am

Oh oh, Greece is going to default.
I don’t know if that will have any effect on the stock market come Monday, probably not much.

Here’s the news:
“Greeks announce shock referendum on euro future throwing banking system into turmoil”

http://www.telegraph.co.uk/finance/economics/11702829/Greece-to-hold-referendum-on-bailout-deal-with-Europe.html

#71 Leo Trollstoy on 06.27.15 at 12:29 am

Whatever the BoC/Fed does, it seems that the CAD is destined to fall further. Now that deflation is a distant memory, I feel badly for Canadians who will soon see their food/energy continue to rocket higher.

If the BoC increases rates, hopefully RE prices in the GTA/Van will start to decline. Prices are insane and there seems to be no end in sight.

#72 Suede on 06.27.15 at 12:53 am

Smokey’s right.

NDP win + rate cut in fall + US rate rise = tanking loonie.

Say goodbye to those NYC, Vegas and Scottsdale trips.

Also, the only indicator that matters says housing is not falling yet. Boomer parents still urging their offspring to buy or be priced out forever.

Forever is a long time, ask Larry David when he exchanged wedding vows with his wife.

#73 A Canadian Abroad on 06.27.15 at 1:04 am

Thought I’d add this here and it hasn’t been mentioned yet. It’s more of interest sake than “it’s gonna happen here”.

________________________________________

China’s stock markets continue their free-fall
GenerationalDynamics.com

What’s happening in Chinese markets? (CNN)

As we reported a week ago on Friday, China’s huge stock market bubble began to burst, and the Shanghai stock market index plunged 13% for one horrible week.

This past week has been just as horrible. On Friday alone, the index fell 7.4%. Hundreds of individual stocks fell 10%, the maximum amount permitted, suggesting that the index might have fallen much farther. The index reached its peak on June 12, and has fallen 19% since then.

In the year preceding June 12, the stock market index surged 250%, creating a huge stock market bubble. Individual Chinese, many of them older citizens, poured their life savings into the stock market in search of high returns. As one analyst said, “This is going to end in tears.” Bloomberg

________________________________________

#74 Love my Kia on 06.27.15 at 1:23 am

#61 Paul:

Yes I worked in law enforcement 25 years ago to pay for my education…oversight on the terminology. The Point still remains on the law that I had authority to search the Queen if I felt like it (I believe it still remains as such). Customs is the only agency that has power to search and seize without a warrant.

#75 Mike T. on 06.27.15 at 1:29 am

I bet a lot of people think Greece is insignificant

That’s because it is

But the birthplace of ‘modern democracy’ is symbolic to the Elites

Now a referendum….how will the world react when free-loading pigs choose Russia?

(note: no one that I know is a free loading pig, but they have been portrayed that way)

my guess is poorly

#76 BS on 06.27.15 at 1:37 am

REPUTATION WITH FELLOW ECONOMISTS – A JOKE

You say that like it is a bad thing?

Economists simply draw a trend line and then forecast the trend will continue into the foreseeable future. Most economists are employed by a entity with a vested interest in the trend continuing. Madani actually makes forecasts that do not follow the trend.

#77 Love my Kia on 06.27.15 at 1:37 am

#61 Paul
———–
Yes I did work in law enforcement and will give you a story or two.

I don’t know how many times during my employment with Canada Customs (as it was known at the time) people would give me the ‘do you know who I am?’ line when I searched them. One crown prosecutor blew a gasket for being searched among other people with elite occupations. Arguments of ‘I don’t fit the profile, why are you searching me?’, etc. were commonplace and I always countered with ‘Did you know I have power to search the Queen if I wanted to?’

Fact of the matter is anyone in any occupation can try to snow you. One of my co-workers arrested a priest from Wisconsin for an undeclared handgun. An OPP officer had a big screen tv in open view in the box of his pickup truck and he declared no purchases while flashing his badge at me from the drivers’ seat; and it goes on and on. I of course gave them ‘my opinion’ and followed up by taking their fine money.

I understand Smoking Man’s attitude of hating people in general. Craziness abounds when egos get out of hand.

Cheers!

I often countered

#78 juno on 06.27.15 at 1:42 am

I’m licking my chops 2 rate cuts while the US is about to raise theirs. That would mean a 60 cent dollar. Sweet.

I hope he makes it happen….

#79 Mister Obvious on 06.27.15 at 1:47 am

#67 Shim Diggins

Think of all those people who were saving for the future. They look like fools now, and feel like fools. Their friends who borrowed money are being saved at their expense.
———————————–

I agree that legions of air headed borrowers have made saving passè. Those who once ‘saved’ must now invest. (Hint: It’s not the same thing).

The over-leveraged are still the fools. They will not be let off the hook and will eventuality pay the price for their belief in unicorns and fairy dust.

#80 Exurban on 06.27.15 at 3:27 am

About a year ago Dean Del Mastro removed a post from his Facebook site that had been linked by bourque.com. In that post he yukked it up about how focus groups of Conservative supporters consistently recommended lower levels of immigration, but the leadership of the party, meaning him, had no intention of following their advice. It feels good to see him brought low, and I can only hope his boss is next.

I do agree with Garth that the handcuffs and leg shackles are absurd. How far could the porker run — fifty yards? Paramedics would have to check his heart.

#81 Nagraj on 06.27.15 at 5:01 am

Madani’s Litany of Laments

– Canadians aren’t investing in the oil sands
(wonder why, eh)

– little hope for public sector spending
(like maybe cuz Ontario, e.g., is broke)

– households are heavily indebted
(Dollaranada)

– the US Recovery is too slow
(no kiddin)

So what’s his Balm of Gilead prediction? $15 for a head of lettuce . . .

[Given lower rates there may be another realtor bonanza this Fall – or not; the Canadian economy is too fragile now to invite certainty.]

#82 Llewelyn on 06.27.15 at 7:03 am

Let me see if I have this right. First you push a few keys on a computer to create trillions of dollars of fiat currency.

The rapid increase in money supply lowers ineterest rates.

This additional money is then transferred to your good friends at selected banks with instructions to sprinkle the money around in a few key sectors of the economy.

Then you sit back, wait for the magic to begin and begin patting yourself on the back.

Such a great idea I am surprised every country in the world doesn’t give it a try. What!!! They are!!!

If you think housing in Canada might be a bubble try looking at the insanity passing for monetary policy around the world.

Total money supply is getting a nose bleed, house prices are escalating daily and still no sign of inflation.

Has everyone been blinded by smoke and mirrors and fallen down the same rabbit hole?

#83 Bytor the Snow Dog on 06.27.15 at 9:01 am

Snorfling?

Exceptional!

#84 money talks dogs bark on 06.27.15 at 9:04 am

v43 Smoking Man on 06.26.15 at 9:17 pm

It’s a worthy bet, 50k in a forex account. Buy USDCAD On margin, only 50 contracts..

Welcome to the millionaires club. Next year.

=======

Thank you, Smoking Man. That’s why I come to this site.

I don’t really need to get a daily update about RE as investment. I get the argument after reading about it the fifth time, because I am a slow learner skeptic.

But I am also a curious learner, with the … OK, then what, where do we go from there?

I also have risk tolerance that goes beyond the maximum risk-avoiding balanced index portfolio.

The problem with the balanced portfolio built from ETFs is that there is relatively not much to talk about it – and not very exciting.

#85 Daisy Mae on 06.27.15 at 9:04 am

CBC: “We may have reached peak Vancouver property madness” — $2 million being offered for old houses on 33′ properties.

#86 X on 06.27.15 at 9:08 am

I can’t see the need for the BoC to lower rates if the Fed is raising in the fall…I mean how much more below 80c could a rate cut help manufacturing/exports…and would a lower C $ really help the oil sector here, other countries can produce and be profitable with oil far below $60.

#87 Herb on 06.27.15 at 9:09 am

del Mastro’s maltreatment …

Don’t bother beating up on the judiciary. It’s not the law, only police procedure, to transfer prisoners in handcuffs and shackles, so it could be changed by fiat. Perhaps it will be, in view of the del Mastro video – until the first prisoner escapes.

http://www.thestar.com/news/canada/2015/06/26/former-mp-dean-del-mastro-ordered-released-on-bail.html

#88 Millenial on 06.27.15 at 10:00 am

Hey Garth,

China cut interest rates this morning; also lowered deposit-reserve ratios for banks.

I’m sure you think nothing of it though. That’s okay.

Chinese rates move with the wind. You’ll learn. — Garth

#89 gut check on 06.27.15 at 10:22 am

“A guy going to jail for a month for fraud is not exactly a violent flight risk. It was simply theatrical, with a picture that will destroy the rest of his life. It’s not about being special. It’s about compassion and reason. You may learn that someday, kid. — Garth”

I agree that is was theatrical. HIGHLY disagree that it will destroy the rest of his life. Look at Dominique Strauss Kahn for just one example out of dozens.

He’s probably already got several job offers. We all know the big players love a guy that can do what Del Mastro does.

#90 rosie "moving forward" in the knowledge that, "this won't end well" on 06.27.15 at 10:40 am

Del Mastro did one night, these guys served real time for their corruption and hubris. They were elected to represent the people, not rule over them.

https://www.youtube.com/watch?v=_j9XeibTdRM

#91 hhto on 06.27.15 at 10:42 am

Capital Economics’ David Madani, a notable housing bear, disagrees ….

If he is predicting rate cuts from BoC then he is in the lower for longer camp (Yellen will not rise rates).

#92 hhto on 06.27.15 at 10:46 am

#88 Millenial

Chinese rates move with the wind. You’ll learn. — Garth

China is pegged to the USD. So that cant drop there pants too much. They want into the IMF SDR basket and are on good behavior. Further, no rate hike in September … China’s economy is slowing massively.

#93 Nemesis on 06.27.15 at 10:54 am

#DispiritedPartyHacks… #LittleEncumberedByTheirLegIrons… #DesperatelySeekSafeHaven… #WhileDemonstratingTheirContemptIgnorance… #OfDemocraticProcess… #FollowingCollapseOfHARPERPAC…

https://youtu.be/drvaZz3FWOI

http://www.thestar.com/news/canada/2015/06/25/conservative-officials-angered-by-creation-of-harperpac.html

#94 young & foolish on 06.27.15 at 11:05 am

Greeks as ” free loading pigs” ….

An ignorant remark from someone who drank the “free market” kool-aid. And speaking of aid and free loaders, have you taken a close look at what favourable treatment job-slashing corporations get it the US and Canada?

#95 Herb on 06.27.15 at 11:05 am

And don’t worry about del Mastro’s job prospects. He will just rejoin his brothers in Del Mastro Motors Ltd., Peterborough.

#96 Nemesis on 06.27.15 at 11:06 am

#What?NoLegIrons!… #NiceRedactedThough… #OkanaganFraudsterPlays… #PrivateClinic&OctogenarianForBoobs…

[CBC] – Brandie Bloor jailed, must pay back $17K after defrauding B.C. senior for bigger breasts

…”A B.C. woman who paid for breast implants, a tummy tuck and liposuction through a loan secured using an 83-year-old man’s stolen ID has been sentenced to 270 days in jail, and ordered to pay restitution of over $17,000…

…[Former ‘escort’] Bloor had a prior criminal record that included three fraud convictions, 13 forgeries and three counts of impersonation.”…

http://www.cbc.ca/news/canada/british-columbia/brandie-bloor-jailed-must-pay-back-17k-after-defrauding-b-c-senior-for-bigger-breasts-1.3130001

#97 Here there on 06.27.15 at 11:10 am

Poor Mr. Del Mastro, shameful his treatment. And all for little “peccadillos.” It hurts our masochists’ hearts. However, let’s not despair, there is a silver lining. Don’t be surprised, if his previous bosses name him to the senate. It is obvious the admission bar to it, is set very low.

#98 young & foolish on 06.27.15 at 11:31 am

“Think of all those people who were saving for the future. They look like fools now, and feel like fools. Their friends who borrowed money are being saved at their expense.”

“First you push a few keys on a computer to create trillions of dollars of fiat currency.The rapid increase in money supply lowers interest rates.This additional money is then transferred to your good friends at selected banks with instructions to sprinkle the money around in a few key sectors of the economy.”

And you thought that by playing it smart and following the rules that you would come out ahead …. Well, yes and no … sitting on dead money and expecting to get paid for it? How is that feeding the future economy? And had the Feds not printed money, well then we would have fallen off a cliff by now. If you were prudent and had invested conservatively over the last 30 years, you would have been a millionaire by now. And even if you didn’t, just look around, does our quality of life look worse than 20 years ago?

#99 Godth on 06.27.15 at 11:31 am

China’s Pollution Crisis: Nearly Two-Thirds Of Underground Water Is Graded Unfit For Human Contact, Report Says

http://www.ibtimes.com/chinas-pollution-crisis-nearly-two-thirds-underground-water-graded-unfit-human-1953442

#100 Tuck Tape Tailight on 06.27.15 at 12:08 pm

Interesting article on Vancouver’s stratospheric housing market.

http://www.theglobeandmail.com/news/british-columbia/communism-wont-cure-vancouvers-housing-problems/article25158994/

#101 saskatoon on 06.27.15 at 12:31 pm

#94 young & foolish

corporations are not part of any free market.

corporations are government-created entities.

an ignorant remark from a socialist kool-aid drinker.

#102 Expansion on 06.27.15 at 12:34 pm

Garth,

Have you ever thought about expanding your blog? The Australian market, for one, could do with a voice or reason like yours.

I’m certain youv’e heard about Sydney and Melbourne’s unfolding real estate mess.

BTW – This guy is a great read.

http://m.smh.com.au/comment/politicians-betray-young-while-pandering-to-older-home-owners-20150616-ghoxhn.html

Love your blog.

#103 S.Bby on 06.27.15 at 1:00 pm

#34 North Burnaby on 06.26.15 at 8:28 pm

I have a condo to list. What is your number?

#104 Nemesis on 06.27.15 at 1:01 pm

#StrangerThanFiction… #YouCan’tWriteThisStuff,Or… #TheyDon’tCallEmLooneysForNuthin’… #BankOfCanada/RoyalCanadianMint… #JumpTheShark?…

http://www.mint.ca/store/dyn/looneytunes/index_en.html?lang=en_CA&rcmeid=van_LooneyTunes

(NoteToGT: This was MarkTheCarney’s idea of a parting joke, right?… Never mind, but I’ll raise your Yosemite two Fudds)

#105 Paul on 06.27.15 at 1:04 pm

#77 Love my Kia on 06.27.15 at 1:37 am

#61 Paul
———–
Yes I did work in law enforcement and will give you a story or two.

I don’t know how many times during my employment with Canada Customs (as it was known at the time) people would give me the ‘do you know who I am?’ line when I searched them. One crown prosecutor blew a gasket for being searched among other people with elite occupations. Arguments of ‘I don’t fit the profile, why are you searching me?’, etc. were commonplace and I always countered with ‘Did you know I have power to search the Queen if I wanted to?’

———————————————————-
You have the power to search the Queen!
How to you get your head inside a Kia?
By the Queen I take you meant Freddie Mercury! Lol

#106 bill on 06.27.15 at 2:03 pm

#104 Nemesis on 06.27.15 at 1:01 pm
whoa! got to get me some of those…

#107 Rainclouds on 06.27.15 at 3:08 pm

Yea the perp walk was a tad over the top but so WAS Dean. The weasel from Peterborough has “slimed” many…………..karma, its a bitch

http://warrenkinsella.com/2015/06/my-little-love-letter-to-dean-del-mastro/

#108 espressobob on 06.27.15 at 3:32 pm

#44 Cyclist

It might be interesting to know that cycling in the GTA is not only good for ones health, but can be profitable for certain business models as well.

Reducing our carbon footprints are a positive step moving forward.

Currently reading ‘The undercover economist’ by Tim Harford, a great read. Didn’t know economists think this way. Garths blog started this investigation.

#109 RB on 06.27.15 at 3:56 pm

If the loonie drops, as might be expected if the Fed increases rates and the BOC lowers rates, I will be one guy dancing in the streets. This is because I run an engineering company designing and building export and domestic products for US customers and get paid in $US. This means we are way more competitive against our US and even our Asian competitors. So, we sell more stuff and keep employees employed and families fed and clothed. And then I can sleep at night. Bring it on!

#110 old gringo on 06.27.15 at 4:09 pm

Quote from Jim Rogers

“When you destroy the investing and saving group, your society, economy, and country has problems. That is what we have been doing. Think of all those people who were saving for the future. They look like fools now, and feel like fools. Their friends who borrowed money are being saved at their expense.”

#111 Mark on 06.27.15 at 4:14 pm

“If the loonie drops, as might be expected if the Fed increases rates and the BOC lowers rates”

The opposite might happen as well. Remember that falling rates imply a strong currency, and rising rates imply a weakening currency. Rates generally only rise because a currency is weakening due to inflation.

This is because I run an engineering company designing and building export and domestic products for US customers and get paid in $US. This means we are way more competitive against our US and even our Asian competitors.

I’d suggest that your competitive advantage may very well be access to lower cost capital in the future. Not exchange rates. There’s good reason to believe the CAD$ will go much higher as housing prices continue to decelerate and deflation sets in. The high house price/high borrowing environment has been a significant suppressor of the CAD$ over the past number of years (borrowing is analagous to short-selling a currency!).

It might be a good exercise to also test the financial viability of the business if the CAD$ goes to $1.2-$1.3 USD (with excursions even higher than that) and stays there for a decade or two until the US gets their fiscal house in order. Will a structurally lower cost of borrowing and equity capital make up for such? It might in some sectors where automation can be adopted. And low cost of equity capital certainly should be good for the R&D industry which has basically been starved in Canada. But traditional engineering, traditional labour-intensive manufacturing definitely would not do well in a probable CAD$-high scenario.

So, we sell more stuff and keep employees employed and families fed and clothed. And then I can sleep at night. Bring it on!

Doubtful it will work out that way. Canada is generally a fairly strong net exporter, with only minor periods of being a net importer corresponding with resource sector cyclicality. If Japan is any model for Canada in the future, the competitive advantage for Canadian firms will be cheap borrowing for plant and machinery — not access to cheap labour and a low currency.

#112 Entropic Entity on 06.27.15 at 4:23 pm

@#59 Smoking Man

Thanks for the music video link. Totally agree with your code.

#113 maxx on 06.27.15 at 4:28 pm

#26 james on 06.26.15 at 7:47 pm

“Each year that a correction is delayed, the further Canadians get into debt. People assume that if there is no crash, everything is fine. Not so. Ramifications just pop up elsewhere. This will be very very interesting to watch.”

Agree. What surprises me is that, were interest rates to normalize, there would be a significantly increased, solid and steady river of tax flowing from interest income directly to CRA.
It makes little sense to me that tptb protect the fiscally strongest and most capable (chiefly business, whose strength and gift for survival far exceeds that of the average joe) at the expense of individuals who could be providing additional (and stabilizing) tax revenues to public coffers. Balance appears to be a thing of the past.
Seems like another crap shoot to me.

#114 Smoking Man on 06.27.15 at 4:35 pm

Wow, things kind of slow on GF today. Even in the shit weather we have .

Don’t worry, I’ll liven things up. Just got to Senica, you know what that means.

#115 espressobob on 06.27.15 at 4:36 pm

#110 old gringo

A twisted logic? A bull market since 2009. DUH!

#116 Drunk Actuary on 06.27.15 at 4:38 pm

Mark # 111
“The opposite might happen as well. Remember that falling rates imply a strong currency, and rising rates imply a weakening currency. Rates generally only rise because a currency is weakening due to inflation.”

I still can’t understand how someone who’s understanding of a subject can be that bad but at the same time be so convinced that he is right.

Correlation between interest rate and currency strenght is one of the most basic thing to know about economy. Someone who is posting 10+ posts of hundred words everyday should at least understand how it works.

Haven’t you seen what happened to our loonie in january after the surprise rate cut by the BOC ?

#117 Mark on 06.27.15 at 4:53 pm

“Those who once ‘saved’ must now invest. (Hint: It’s not the same thing).”

So true. This is what I’ve been arguing all along as the reason why rates as applicable to mortgage borrowers will rise, even in the absence of BoC policy action (or even lower BoC rates). There’s clearly an excess of funds “saved” in cash savings, GICs, etc. — funding the RE bubble, but definitely a shortage of capital invested in businesses, R&D, etc.

The (Canadian TSX) stock market trades beneath its long-term averages for P/B, P/E. Dividend yield is currently above average, and actually exceeds the yield on the 30-year GoC T-Bond. Implied returns are in excess of 10%/annum, and the market is still priced at the same index level as over 7 years ago. Once people are tired of seeing those 2% GIC returns and start seeking out more risk, a reflection of the reality that 2% GICs just won’t cut it for retirement — you could see not only decent price returns for Canadian stocks, but also a significant outflow of funds chasing mortgages.

Less funds chasing mortgages obviously means spread expansion and a rising risk premium in mortgages, and I think we can all figure out what that will do to currently falling prices.

The only factor that would counterbalance such is that the non-FIRE private sector, on account of having cheaper access to equity capital and a higher overall stock market, may actually start to be vibrant again. Eventually rising private sector employment will place a floor on the RE market. But its anyone’s guess how far RE will have to drop to shake enough capital out of the sector and into more productive areas of the Canadian economy.

#118 Gulf Breeze on 06.27.15 at 5:20 pm

Garth,

You made very compassionate and gracious statements about your former adversary being taken away in chains (more or less). Thanks for your kindness. You are a gentleman.

#119 Washed Up Lawyer on 06.27.15 at 5:34 pm

I can stifle my HDS* and concede that the handcuffing and shackling of del Mastro was over the top, punitive and retributive. Publishing the photos was reprehensible.

However, I will venture a prediction that neither the Liberal Party nor the NDP will use this perfect raw meat fodder in an attack ad.

I will sit back and see if my prediction is correct and speculate about the shoe being on the other foot.

* Harper Derangement Syndrome

#120 Doug in London on 06.27.15 at 5:39 pm

A falling loonie? That will help exporting industries some, just like it did in the late 1990s and early 2000s. Whether it will be enough to offset our high cost of doing business, brought on by higher cost of living due in part to outrageously high housing costs remains to be seen. Here in London it won’t bring back Kelloggs or Electromotive Diesel, but it will probably keep other businesses like Diamond Aircraft or General Dynamics here.

As for your investment portfolio, now you know why Garth keeps reminding us about international exposure, with a sizeable component in the USA. Even a money market fund, in US dollars, could perform well against a Canadian dollar portfolio.

#121 Leo Trollstoy on 06.27.15 at 5:56 pm

Canada is generally a fairly strong net exporter, with only minor periods of being a net importer…

Wrong.

https://financialpostbusiness.files.wordpress.com/2013/10/fp1009_canada_trade_balance_c_ab.jpeg

It might be a good exercise to also test the financial viability of the business…

Hey Mark, first try and find a better paying job before giving advice to an established entrepreneur. hahaha

#122 Leo Trollstoy on 06.27.15 at 6:04 pm

I still can’t understand how someone who’s understanding of a subject can be that bad but at the same time be so convinced that he is right.

Mark has been wrong about almost everything including gold, mining stocks, Toronto/Vancouver real estate prices, deflation, CAD/USD, interest rates and trade deficit.

His transparent envy of 20-somethings that make 6-figure salaries and/or obtain visas to work in high paying IT jobs in the U.S., reflects his discontent with his underemployed status and his poor investing results.

He convinces no-one, but has to live with the poor life that he’s created for himself due to his delusions.

It’s unfortunate. But c’est la vie.

#123 Balmuto on 06.27.15 at 6:07 pm

#111 Mark

“The opposite might happen as well. Remember that falling rates imply a strong currency, and rising rates imply a weakening currency. Rates generally only rise because a currency is weakening due to inflation.”

Except that the CPI numbers show Canadian inflation has been consistently higher than U.S. inflation over the past few months. In the neighborhood of +50bps on the core rate. So I don’t know how you can be so confident that a negative inflation differential will be boost the CAD, when that condition doesn’t even exist, and the opposite condition currently prevails. The trend is not your friend when it comes to this part of your theory.

#124 Mark on 06.27.15 at 6:16 pm

I still can’t understand how someone who’s understanding of a subject can be that bad but at the same time be so convinced that he is right.

That bad? What are you talking about?


Correlation between interest rate and currency strenght is one of the most basic thing to know about economy. Someone who is posting 10+ posts of hundred words everyday should at least understand how it works.

I understand perfectly how it works. Inflation is the weakening of a currency relative to goods and services. Rates rise to quell inflation by reducing demand for goods and services. But if there’s no inflation, rates do not need to rise, and in fact, will trend towards falling over time as productivity in an economy increases. Deflation is profoundly positive for the value of currency. Relative rates of deflation/inflation between currencies/economies are what determine the equilibrium points between various currencies.

Canada is clearly heading towards a significant deflationary period, as the housing bubble winds down and little else in the Canadian economy exists as a demand driver to replace it. The US has far less of a deflationary path ahead of it (house prices have far less to fall there!) and faces the unwinding of the significant excesses in global USD$ holdings — the so-called “fear trade” that’s been occurring due to European instability.

If a country *needs* to raise rates to quell an inflation problem, that is prima facie evidence of a weakening currency.

In the short term, the traders can try and fight the trend, but over the long term, lower interest rates tend to be associated with strengthening currencies. Not weakening ones.


Haven’t you seen what happened to our loonie in january after the surprise rate cut by the BOC ?

Oil losing over half its price quite rapidly certainly was a significant factor at the time.

#125 Smoking Man on 06.27.15 at 6:21 pm

The meaning of life:

We are plopped out on our birthday. We are bar coded with a birth certificate.
It indicates what country owns your labour.

You go to school, you’re natural instincts to hunt are suppressed, natural thought replaced with obedience training.

You start a job, a career, your goal. Get that precious pat on the head for some meaningless thing you did. They through you a crumb, but your teachers taught you crumbs are good.

Selling just once, 30 acres worth of weed is bad. Ha-ha..

Your a good doggie. You go home and tell your schooled wife.. She’s happy and over the moon.. Bonus crumb was good one.

She’s a bit fatter than your wedding day, she has a thin rival, they pretend to like each other but secretly hate each others guts. But decorum and conditioning via our teachers this meaningless compitition goes on in full fake smiles and make up.

Your wife forces you to buy, a house and go into debt for a ridiculously expensive house.

She invited bone rack Sally for the house warming party, having organisms when ever she sences envoy as Sally touches the counter top.
This is what you are working for men.

Your ready to retire, you’ve drooped most of your freinds, can’t be bothered, Sally now fat is good friends with your wife and are glued to Dr Oz…

You end up in a nursing home not knowing day from night, having others change your diaper’s.

You die, your kids visit the grave a few times but are fighting over your money.

My only point, if your going to do this dance.

Do it in the sunshine…

California here I come. Just one more interviewer I got to bullshit.

Dr Smoking Man
PhD Herdonomics

#126 Andrew Woburn on 06.27.15 at 6:32 pm

It turns out that we do have Chinese investor-immigrants in Nanaimo. One fortyish Mainland couple just bought three houses away from us.

Unfortunately we also seem to have a resident crew of bigots, according to the local Chamber of Commerce.

“Working with our local Multicultural Society and groups representing the Chinese community, we are establishing tools – like workshops, seminars and mentoring – to help welcome our new investors and contribute to their success.

We know there are many ways we can contribute to the benefit of our economy and the community at large.

But. .. in early June we began to see some hints of intolerance. Some of us received what can only be described as ‘hate mail’ at our homes in an unaddressed letter from a previously unheard of group.

Many expressed outrage at this display of ignorance and racism, reported this to authorities and discussed it widely on social media and around the water cooler. This was just the preface to an ugly weekend that saw bus bench posters featuring Asian realtors marketing their services in their own language to potential buyers (target marketing in its simplest form) defaced with messages of hate, ethnic slurs and. .. swastikas (for some weird, irrational reason).

People offered to organize clean up crews, police opened a file, the city sent crews to remove the graffiti and hands reached out to the individual realtors and the Asian community to assure them that these acts did not reflect the feelings of the average Nanaimoite.”

– See more at: http://www.nanaimodailynews.com/entertainment/kim-smythe-community-leaders-stand-against-intolerance-1.1979276#sthash.lNNYNnIg.dpuf

#127 idontneedamillion on 06.27.15 at 6:51 pm

As much as Mr. Turner sometimes deletes the posts regarding the foreign investors similar thing happened to me with the #idonthaveamillion crew on twitter… I posted a tweet with the #giveusdata stating that cmhc and low interest rates are the main factors of housing affordability and it got unlinked from their tag… he he he
Still believe that 5-10% of the price is due to rich foreigners but that is meant to happen after you advertise the city with a winter Olympic event. Btw I know somebody that bought a house 70 km close to Toronto over the internet never seeing the building. Regular immigrant with a 3000$/month additional income from his business back home in eastern Europe. Rich? Not even close, dumb? You bet.
Cmhc? Yes.

#128 Daisy Mae on 06.27.15 at 7:21 pm

#89: “I agree that is was theatrical. HIGHLY disagree that it will destroy the rest of his life.”

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

Agree it was theatrical. It won’t destroy his life. The unfortunate thing is that he’s not sorry for what he’s done — he’s just sorry he was caught.

#129 Chris on 06.27.15 at 7:28 pm

I can’t believe I’m in the process of buying a house. Was happy renting, but then I got my 60 days notice from my landlord, who got tired of renting me his house at a loss and needs to sell before rates go up.

We were looking to rent (in Kitchener-Waterloo), but we took a flyer on a place that needs some cosmetic work, but has good bones. We offered nearly 20% below the original asking price and ended up settling for not much more than that, which positions us nearly 30% below asking prices for comparables in the area. I wonder what impact that deal will have on properties in the area.

I’m a little miffed that I couldn’t just stay in my rental house, but I’ll be able to walk to the office, the gym, and the grocery store – my car will hardly leave my garage. We will also no longer need day care during the school year for my kids, saving hundreds of dollars a month and getting to spend more time with them. My down payment was only about 20% of my net worth and my mortgage will carry (until rates rise) with about 12% of our family’s take home income. And if we fix the place up a bit, who knows what it will be worth. And if the market takes a 30% haircut, I won’t lose sleep over it.

I guess if there’s a good situation to buy a house in these days, this is it.

That was some world-class justifying. — Garth

#130 Squirrel meat on 06.27.15 at 7:34 pm

#125 Smoking Man on 06.27.15 at 6:21 pm
The meaning of life:
————
What took so long? Be sure to surf. Great fun.

#131 Squirrel meat on 06.27.15 at 7:51 pm

#111 Mark on 06.27.15 at 4:14 pm
“If the loonie drops, as might be expected if the Fed increases rates and the BOC lowers rates”

The opposite might happen as well. Remember that falling rates

——–
Only in your whacko universe. Place that bet.., and lose a bundle

#132 Gulf Breeze on 06.27.15 at 7:52 pm

#74 Love My Kia,

You’ve posted twice about being able to search the queen “any time you felt like it.” I suggest a fine salmon dinner and a movie first, though. Some rousing footage of the Canadarm at the international space station might be fitting! Whaddya think?

#133 Smoking Man on 06.27.15 at 8:03 pm

https://youtu.be/R-soyspdwqU

Pride day tomorrow, above link , only man I would ever do.

Rest in peace brother..

Your art , energy and spirt .. UN matched.

#134 Apocalypse2015 on 06.27.15 at 8:07 pm

And so begins the summer of great foreboding, whence the earth begins its plunge into total chaos:

Greece will default within 72 hours. Guaranteed. This will start the Eurozone spiralling downward, and involve Russia and Ukraine in weeks.

Environmental calamities are upon us, huge drought problems in North America. Shark attacks, an outlier of related problems, grip our news coverage right now. (War will be next, if you get tired of such reports)

ISIS and associates have begun a summer of terrorist hell this last two days. More coming soon, to a neighbourhood near you, all over the west. Fear will grip us all by summer’s end.

Economic spinoffs of all this will be huge and the debt bubble fuelling idiocy like our real estate fetish is about to explode.

This is the beginning of the cataclysm folks.

Don’t say you weren’t warned.

#135 Blogbitch on 06.27.15 at 8:17 pm

Garth, maybe you could comment on this in an upcoming post? http://www.vox.com/2014/9/8/6003359/basic-income-negative-income-tax-questions-explain

#136 Millenial on 06.27.15 at 8:41 pm

That was some world-class justifying. — Garth

Garth, I disagree with you often, but sometimes you make me laugh out loud.

#137 nonplused on 06.27.15 at 8:48 pm

Garth, you are the dad I never had.

Don’t get me wrong my dad was good, he told me things like “if you want to marry a virgin you should leave a few around” and “never do business with relatives”. But on money he is a typical boomer.

He also taught me the value of quitting if the coach won’t play you. As a coach myself now I play all the players I am given. I mean if they made the team…. We are in it together. If the coach won’t play you quit and let him sort it out being short players. Fricken a$$hole coaches. And don’t you dare call my kid up for a tourney where you are short players, make me pay for hotels, and then bench my player. You get to do that once and not again.

People, when analyzed objectively, are stupid and self centered. The system only works because there is no better way. The people are the worst components of the system. Bunch of bush men.

#138 Oot der Hoos on 06.27.15 at 8:49 pm

To #94 young & foolish

Free markets are the primary expression of freedom of association.

You calling free markets “kool-aid drinking”, is like calling freedom of association and free speech, kool-aid drinking.

That anti-freedom concept is the basis of all the failed tyrannies; USSR communist, socialist nazi, Mao stalinist, French Jacobin 1793, et cetera. (The Jacobin dictatorship was known for enacting the Reign of Terror, and led to many beheadings.)

Free markets, on the other hand, are not a tyranny. They are not brutal. They are people freely associating with one another, most often through corporations and equally importantly, with their purchase decisions.

How often do we get to speak, if not by free markets?

… not effectively at all, like me on a pathetic blob comment section, and less so, as we are led by the bridle of elected decision makers, more and more, in Canada, instead of by free markets.

I want my free speech and free association back. I want free markets. I hate this semi-communist semi-capitalist version of Canada.

Socialists get to live like communists here and capitalists pretend they won’t be over grown one day, as long as they throw the socialists their free-stuff bone and construct a parallel capitalist system within.

I think we will be overthrown by socialist jealousy of young and ignorant, who hate freedom by free markets and think free speech and association is only when their commie political leaders talk and mob and rule.

#139 Sheane Wallace on 06.27.15 at 8:50 pm

The debt situation and the sheer volume of CMHC guarantees in Canada is horrific.

Yes, they have no choice but to cut rates again, as there is no economy here, except for the gigantic housing bubble and all the financial services and renovations services around it that itself drive whole bunch of other services and consumption.

Lonnie will get creamed, I already said that many times,
but the worse thing is that in an effort to prop up unproductive sectors of the economy, the current government is causing tremendous capital miss-allocations that makes whatever little part of the economy outside of housing hopelessly non-productive and unable to compete on the world markets.

#140 Squirrel meat on 06.27.15 at 8:52 pm

#133 Smoking Man on 06.27.15 at 8:03 pm
https://youtu.be/R-soyspdwqU

Pride day tomorrow, above link , only man I would ever do.

Rest in peace brother..

Your art , energy and spirt .. UN matched.
—————–
Unfortunately he did many. Could he ever belt it out. Would be amazing to see him doing that today.

#141 Sheane Wallace on 06.27.15 at 8:58 pm

Toronto is not New York city, not even comparable, the riches and the wealth of New York are beyond comparison and will always be, BTW there are almost no new constructions (at least I saw almost none these weekend) despite the opportunities. The night life in Toronto is nothing compared to New York’s. And no glass condoes in New York, that is design for the stupid, frozen ‘We the North and proud of it’ brains.

BTW the job market in US is fantastic at the moment, company I worked with is trying to source projects in Toronto from the states (can’t find relevant talent in Toronto) but nobody is willing to relocate.

#142 Obvious Truth on 06.27.15 at 9:07 pm

Greferendum coming.

Media is trying to make it look like there’s panic in Greece.

They print pictures of ten people taking money out for a night on the town.

Greece can’t leave the euro zone unless they want to. Feels like everyone’s best political way out is default and then figure out the rest. Everyone saves face. Syriza says we held our ground. Merkel says the same.

After all don’t you have to default to then work out a deal with creditors. If you’re paying the bills there’s nothing to talk about. Clearly you can’t pay the bills if you have to take money to then give it back.

Politicians can fade away and let bureaucrats take over.

Unfortunate always that regular folks get caught in the middle of all of this.

#143 ANON on 06.27.15 at 9:15 pm

OK, new business plan:
1. Default.
2. Promises disappear.
3. Trust is lost.
4. Rates are rising.
5. Profit?!

Going to invest in two 20lbs bags of beans before Monday, that’s for sure.

#144 kommykim on 06.27.15 at 9:17 pm

RE: #111 Mark on 06.27.15 at 4:14 pm
“If the loonie drops, as might be expected if the Fed increases rates and the BOC lowers rates”
The opposite might happen as well. Remember that falling rates imply a strong currency, and rising rates imply a weakening currency.

There you go, mixing up cause and effect, again. Hopefully you have someone else managing your portfolio for you.

#145 salonist on 06.27.15 at 9:25 pm

“try and find a better paying job before giving advice to an established entrepreneur”

how boring

#146 Squirrel meat on 06.27.15 at 9:27 pm

#134 Apocalypse2015 on 06.27.15 at 8:07 pm

Yeah whatever. You forgot locusts.

#147 johnk on 06.27.15 at 9:28 pm

@Paul #105

When inflated, self-important dweebs ask, “Do you know who I am?” the best response is to get on the P.A. system and very loudly call for assistance…”We have a person who does not know who he is. Please assist.”

#148 Charles on 06.27.15 at 9:38 pm

#54 and #74 Love my Kia
Quelle surpris, a former Canadian customs official displays a stunning level of ignorance about the authority he thought he had when employed as a customs official,
“I had authority to search the Queen if I felt like it.”
Our Queen is the head of state of the UK (and Canada) and has what is termed “sovereign immunity”. She does not use a passport.

#149 Godth on 06.27.15 at 10:07 pm

#126 Andrew Woburn on 06.27.15 at 6:32 pm

So invite them over for a BBQ. Just another ape shape but they might be interesting.

#150 Setting the Record Straight on 06.27.15 at 10:18 pm

@109 RB on 06.27.15 at 3:56 pm
If the loonie drops, as might be expected if the Fed increases rates and the BOC lowers rates, I will be one guy dancing in the streets. This is because I run an engineering company designing and building export and domestic products for US customers and get paid in $US. This means we are way more competitive against our US and even our Asian competitors. So, we sell more stuff and keep employees employed and families fed and clothed. And then I can sleep at night. Bring it on!

&&&&&&&&&

This is the problem. Fiat currencies constantly fluctuate against each other, often as a result of got policy, altering the competitive position of all industries, influencing investments, wage rates, interest rates. This promotes instability. Thinkig of currency exchange rates as a method of adjusting economic activity is the same fallacy as thinking of capital as homogeneous and forgetting the specificity of produced capital goods.

So when country x suffers the effects of country y’s devaluation, they steps to improve their competitive position and often we race to the bottom.

If exchange rates were stable, you would have a clear measure of your competitive position and the worth of particular types of skills.

As people are want to say here. —this won’t end well!

Altering the value of your currency favours some over others.

#151 Godth on 06.27.15 at 10:20 pm

#125 Smoking Man on 06.27.15 at 6:21 pm

Human Resources
https://www.youtube.com/watch?v=J1EvCH8czhk

Queen – Don’t Stop Me Now
https://www.youtube.com/watch?v=HgzGwKwLmgM

#152 Hosè on 06.27.15 at 10:49 pm

Calgary real estate sees hot demand for mid-range homes. Home buyers looking for a deal during the oil price slump in Calgary aren’t having much success because a short supply of mid-range homes is keeping prices high.

http://www.cbc.ca/news/canada/calgary/calgary-real-estate-sees-hot-demand-for-mid-range-homes-1.3129533

#153 Hosè on 06.27.15 at 10:57 pm

If David Madani’s forecast for two more interest rate cuts really do materialize this year, Calgary real estate will get even hotter. Even though he thinks dropping investment in oil country (Alberta) will be the cause. Ironic….

#154 Leo Trollstoy on 06.27.15 at 11:57 pm

#145 salonist

http://www.reactionface.info/sites/default/files/images/1287666826226.png

#155 Leo Trollstoy on 06.27.15 at 11:58 pm

Except that the CPI numbers show Canadian inflation has been consistently higher than U.S. inflation over the past few months.

Damn Mark can’t catch a break.

#156 Steve French on 06.27.15 at 11:58 pm

smoking man #125 the meaning of life…

dude that wuz depressing.

I can see myself in that picture tho.

and my gf is causing me huge amounts of grief. She has gone completely bonkers. everything I say or do is somehow wrong. Christ iM back in the doghouse before brushing my teeth in the morning these days.

need some of smokey’ 10 cent advice on this one…. What do you do with a girlfriend that is gone …. irrational?

#157 Godth on 06.28.15 at 12:05 am

#137 nonplused on 06.27.15 at 8:48 pm

There’s always a better way! Don’t be so cynical.
https://en.wikipedia.org/wiki/Mondragon_Corporation

#158 nonplused on 06.28.15 at 1:16 am

DELETED

#159 John Prine on 06.28.15 at 2:08 am

#9 Randy Randerson on 06.26.15 at 6:30 pm
Time to expect a 70 cents loonie to USD. Bring on $15 head of lettuce.

What a stupid wish…..

#160 John Prine on 06.28.15 at 2:11 am

6 Hasbeen Better on 06.26.15 at 6:56 pm
Since nobody in recent memory this side of serial killers and baby diddlers has been led out of the courthouse in shackles we have to assume that we’re seeing a minor ‘justice’ with a ‘Hate for Harper’ make an attempt at scoring political points. Our ‘activist’ justices are on a war path to ‘bring about change’ by denying elected officials the opportunity to act for the people who voted them into office.

All what, 39% of us?

#161 F Drebin on 06.28.15 at 2:43 am

#148 Charles on 06.27.15 at 9:38 pm
#54 and #74 Love my Kia
Quelle surpris, a former Canadian customs official displays a stunning level of ignorance about the authority he thought he had when employed as a customs official,
“I had authority to search the Queen if I felt like it.”
Our Queen is the head of state of the UK (and Canada) and has what is termed “sovereign immunity”. She does not use a passport.

All this talk of the queen reminded me of the classic Naked Gun movie and Leslie Nielsen,

http://www.yam-mag.com/wp-content/uploads/2011/05/1988thenakedgun.jpg

Fantastic movie with many laughs!

#162 BillyBob on 06.28.15 at 5:04 am

#77 Love my Kia on 06.27.15 at 1:37 am

“‘Did you know I have power to search the Queen if I wanted to?’”

“I understand Smoking Man’s attitude of hating people in general. Craziness abounds when egos get out of hand.”

====================================

Sounds like you have a bit of a problem with your own ego.

With large powers come large responsibilities, one of which is having the wisdom to wield them carefully and with discretion. Not mindlessly “because you can”. It’s that mouth-breather pedantic approach to law enforcement – application of policy without an ounce of critical thought – that has led to the public’s largely contemptuous view of their various law enforcement agencies these days.

In spite of cloning to your mantra, there was never any chance, in any universe, that you were going to “search the Queen”. You need to get over yourself.

My brother – a current CBSA officer, not from 25 years ago – commented that you sound like a giant d-bag. He works with a few folks that are similar. Fortunately your mindset is not that prevalent anymore.

#163 Luc on 06.28.15 at 6:41 am

The bank of Mom at work…
http://www.ctvnews.ca/business/gap-between-canada-s-middle-class-wealthy-starting-to-run-away-report-1.2443742

#164 Honey Dripper on 06.28.15 at 6:46 am

Two rate cuts coming? ZFL and XLB are overweight positions in my RRSP. Volatile yes, but I like them in this environment

#165 Nagraj on 06.28.15 at 7:26 am

Snide and cynical, but quite right, Wolf Richter confirms the perfectly sane idea that they’ll DEFAULT:

” . . . [Canadian] banks are up to the gills into it, though this time it’s different, because when it all implodes, it won’t impact the banks much because Canadian households, despite their dizzying debt-to-income ratio, aren’t going to just let go of their mortgages, like many US borrowers did during the housing bust. They’ll keep making their payments no matter what.”

(“These Three Countries Worry Corporate America The Most” 26/6)

Dizzyland.

#166 Nagraj on 06.28.15 at 8:15 am

To what extent is CHMC comparable to Fannie Mae and Freddie Mac? Especially when homeowners here in Dizzyland start not makin’ the monthly mortgage payment?
The idea that Canadians are different and will sell their kids’ body parts rather than miss a mortgage payment or any other payment – does seem to animate the confidence of our generous lenders, doesn’t it though.

Canada’s working class is impoverished, the middle class is struggling, household debt is thru the roof, the graph for final demand is telling. But our banksters are supposedly profitable heroes.

Come October it’s gonna rain granite counter tops on Conservative heads.

#167 Myrus Cyta on 06.28.15 at 8:26 am

Garth

I think you need to come up with a new nickname to add a little chutzpah to your blog and maybe gain international fame. Let’s face it the name “Garth” just sounds way too civilized….let me get the brainstorming going here….

Garth “Buzz” Turner
Hacksaw Turner
Grapes Turner
Che Turner
Inyaface Turner
Gusto Turner
Tiger Turner
….

Over to fellow bloggers for ideas…of course, Garth may also want a say but let the people have a crack at it as well…

#168 Herb on 06.28.15 at 8:32 am

#160 John Prine,

check the link at # 87 above.

#169 10 cent on 06.28.15 at 8:33 am

#156 Steve French on 06.27.15 at 11:58 pm

need some of smokey’ 10 cent advice on this one…. What do you do with a girlfriend that is gone …. irrational?

====

Stop going long on her.

#170 WallOfWorry on 06.28.15 at 9:26 am

Garth…totally agree with you on real estate. The appreciation of property values is not supported by income appreciation. However, we are in the midst of the greatest wealth transfer in history, so the Ma & Pa subsidizing house horny millennial may be sustainable provided interest rats remain low.

And they will: Janet Yellen is not delaying rate hikes because she is “data dependent”. She is dealing in reality: Over $18 trillion in US debt (and ever growing) a large portion of which needs to be refinanced over the next 5 years. And higher rates will become an ever larger burden on the discretionary budget of the US. And the world, heavily indebted that it is, has the same problem.

I find it curious how you can be so steadfast on the US growth when the reality is that their GDP at 2 – 3 % a year cannot sustain interest rates as you project them. If Greece goes, shortly thereafter the same fate will befall Italy, Spain and Portugal. Contagion will spread through the financial markets, which is why central banks own over 50% of the stock market. You don’t print that kind of money to watch it fall.

Greece is old. Markets will digest it. — Garth

#171 Jeff B on 06.28.15 at 9:43 am

@ #113

“… were interest rates to normalize, there would be a significantly increased, solid and steady river of tax flowing from interest income directly to CRA.”

The net effect on treasury would be negative. Increase in interest payment on the national debt would exceed the increase in tax revenue from interest income. And there are other negative factors, such as reduced consumer spending (a consequence of higher interest rates is higher savings rates) leading to a decrease in GST/HST/PST revenue.

#172 maxx on 06.28.15 at 9:46 am

#48 Mark on 06.26.15 at 9:43 pm

“With how slow the economy is, and how deflation is setting in, rates may very well go even lower, especially in Canada where pressure is growing for the next rate cut. But that’s not going to help home borrowers.”

Precisely. Boldface, incessant wrecking of the economy through suppressed rates will never work- not on any level. It will simply continue wasting time in the vain attempt to coerce viable tax-paying units to part with hard-earned money. Lenders are increasingly picky and with very good reason.

Saving like mad and shopping like a predator has never been more important than it is now.

Hedging for dumb government policy is a critical component of wealth building.

#173 maxx on 06.28.15 at 10:05 am

#60 Chris on 06.26.15 at 10:44 pm

“It is all about the monthly paymENT. I don’t think it even matters what the term is. People are so numb these days. Would you buy a house at 1500 per month for 10 years. Sure. Same amount for 30 years. Why not? 40 years? Well, don’t think I will be dead by then, bring it on. People have gotten so bad at math I guess.”

A few entries in a banker’s calculator, so as to compute the total cost of a mortgage over any given period of time would likely cure many of the hots for borrowing.

By the same token, but paying yourself instead, forced savings pushes that obviated interest on debt into one’s coffers instead of that of the banks.

Retirement, anyone?

#174 Russ L on 06.28.15 at 10:11 am

Steve French on 06.27.15 at 11:58 pm
and my gf is causing me huge amounts of grief. She has gone completely bonkers. everything I say or do is somehow wrong. Christ iM back in the doghouse before brushing my teeth in the morning these days.

What do you do with a girlfriend that is gone …. irrational?
===============================

Hormones eh.
Try to get some Vitamin B into her each morning. That can help sooth the irrational bitchiness.

On the practical side, while she’s in this state (it too will pass) do whatever you want. If you can’t please her then you are an idiot for trying. Consider it an opportunity to do something you haven’t done in a while.

Don’t worry. Be happy.

Oh. And what’s the difference between a hormone and an enzyme?

Cheers, R L

#175 Nemesis on 06.28.15 at 10:11 am

#PagingMr.French… #PaulSimonForMr.French…

http://youtu.be/b5–Sje98jI

#176 Apocalypse2015 on 06.28.15 at 10:14 am

Greece may seem like “old news”, but what it will spin off is not, and the weeks ahead look terrifying.

http://www.businessinsider.com/el-erian-on-how-greece-will-impact-markets-2015-6

Expect all of the PIGS to be involved within weeks and days in similar problems.

Money has been borrowed against assets that are being withdrawn right now by Greeks from their banks. How much will even be left? Will the upcoming referendum on July 5 plunge Greece into further social chaos?

Devaluation of the Euro a certainty.

Investors being told “to wait for further technical shakeouts” before investing.

Except, history teaches that as we wait expecting such calm predictability is exactly when black swan type events overtake us and upset the whole applecart.

Ricochet effects through the other PIGS.
Terrorism and disruption already begun this summer.
Major droughts and effects on food prices.
Canadian economy circling the drain as we speak.
Russia looking to exert itself in the midst of all this.

2015 will be talked about for centuries.

Get liquid NOW! Get out of any real estate you don’t need to own.

Have a plan B, C and D for your family’s survival, sheltering and rebuilding.

#177 digest on 06.28.15 at 10:26 am

Greece is old. Markets will digest it. — Garth

—-

That’s yet to be seen.

Canadian real estate bubble is literally nothing compared to the default of an entire EU member economy.

Greece economy: $242 billion. Ontario economy: $720 billion. — Garth

#178 Jeff B on 06.28.15 at 10:32 am

I should have added to my prior post:

If the economy is becoming more active, the negative effects of rate increases are countered by an increase in consumer spending.

#179 S.Bby on 06.28.15 at 11:10 am

Heard two guys talking on Saturday about a bidding war: The one guy says “I went up $75,000 in 5 minutes.” This is just some local yokel working stiff. Then some lady chimes in: “it’s all so emotional”. Don’t know if they actually won their war though.

#180 ANON on 06.28.15 at 11:34 am

#177 digest on 06.28.15 at 10:26 am
“Canadian real estate bubble is literally nothing compared to the default of an entire EU member economy.”

You should have mentioned that being measured in terms of faith in the promised story/vision of the future. Otherwise, you will predictably be served amounts of promises. :)

#181 ANON on 06.28.15 at 11:50 am

Forgot to add the link to back up comment #180:
https://twitter.com/EdConwaySky/status/614840519475208192

#182 Herb on 06.28.15 at 12:01 pm

Re Greece –

We know nothing except what interested parties want us to know, hence tell us. A few personal observations and fearless predictions –

1. Greece hardly is the self-serving, government-sponging, socialist, public service paradise that regressive wing-nuts like to erect as the source of all evil. “Socialism for the rich” is very much alive there, as is the “capitalism for the poor” (and middle class) that external functionaries would like to intensify.

2. For the Greek Government, the pips are already squeaking under international pressure. It cannot make many more concessions without hanging itself. Hence, it well may default and tough out the consequences. That way it will show that it has acted to protect the population, and rise to lead the resurrection.

3. The EU is “too big” a political construct to let a “pissant little country” (L.B. Johnson on Vietnam) crack the facade of ‘prosperity in unity’ and show that such a “triumph of hope over experience” (Oscar Wilde on remarriage) could fail. It will posture but keep Greece afloat, perhaps quietly under the surface, to discourage other weaker members from ‘going Greek’, and to show that it was not stupid to accept and support all comers just because they happened to be in the neighbourhood (and to show up the Russians).

I am surprised that stock markets react to this “tempest in a teapot” at all. And I promise that, should I be wrong, I will not give up my day-job of full-time retirement to become an economist.

#183 Panhead on 06.28.15 at 12:11 pm

#174 Russ L on 06.28.15 at 10:11 am

Oh. And what’s the difference between a hormone and an enzyme?

———————————————————-
OK, Ill bite … you can make a hormone by not paying her?

#184 Irent on 06.28.15 at 12:14 pm

I guess they who bought homes in the last few years did right. The ones who did not and waited for sanity to return are not necessarily in a better shape. And soon after couple years we will realize that even 2015 was good time to buy. I don’t see any rent deals. Those who buy at mindless price to invest also rent out making sure they get someone to pay their mortgage. The renter has no option but to pay what they would pay as mortgage.

#185 Oot der Hoos on 06.28.15 at 12:36 pm

Free markets and Christian family ethics would heal the Greek problem.

I thought Canada would build unpayable debts under socialism, since over twenty years ago, like Greece.

Most are poorer because of socialism, like Greeks, but debt non-payment did not happen here. So I concede I might be wrong about there being an end point for this system, which is what we fought against in World War II.

Why did we fight them? We are them, now; national socialists; ie. nazi communists, Nationalsozialistische.

Contrary to my doubts, about awaiting semi-communist-capitalist Canada to fail, Gary North thinks this western countries system, since 1936, will end in a crisis and he prepares the alternative:

“The power of ideas alone does not produce revolutions. There has to be a social setting to allow the catalyst of revolutionary ideas to produce a social and political transformation.

This is why the Great Default of all of the Western welfare states is going to create tremendous opportunities for new ideas to come to the forefront. It is going to undermine and ultimately destroy the Keynesian worldview. This is a great opportunity for younger anti-Keynesians to stake their claims to what appears to be a played-out mine. That is why I outlined my Keynes project.

The body of intellectual materials favoring the free market is vastly larger today than it was in 1940, 1950, or 1960.”

http://www.garynorth.com/public/13962.cfm

(Let’s wait and see if the collective central banks succeeded or failed since 2008. Meanwhile, I just live a life, old, retired, and stand clear from a corrupt, shameful no free speech, communistic, C-51 S-7 spying, anti-christ, baby killing, homosexual-psychosis marriage promoting, people, called Canada.)

Gary North is a whackjob. You’re not far behind. — Garth

#186 young & foolish on 06.28.15 at 12:45 pm

“You calling free markets “kool-aid drinking”, is like calling freedom of association and free speech, kool-aid drinking.”

My point was that we DO NOT really have free markets, only made to believe that they are.

#187 Doug in London on 06.28.15 at 1:19 pm

Okay, I confess, I read the Globe and Mail which was called the Mope and Wail recently by one commenter here. Some of what they publish may by rubbish, but the odd gem turns up here and there. In the June 27 edition of the Globe Focus, on page 2 there is an article: China’s middle class dream on shaky ground. There is reference to a couple who, with the help of the bank of mom and dad, bought a condo for 519 grand. Their monthly income is $2000 and monthly payment is $2400 so they rent it out for $940 and live in crowded rooming house and have NO disposable income. I’ve seen the future, it’s what’s coming to markets like Toronto and Vancouver if not here already. Is that the quality of life any sane person would want?

#188 BigM on 06.28.15 at 1:22 pm

Greek banks will not open tomorrow, neither will the Stock Exchange.

No surprise, really.

I’ll bet they stay closed until the referendum comes on July 5.

#189 digest on 06.28.15 at 1:24 pm

Greece economy: $242 billion. Ontario economy: $720 billion. — Garth

—-

Canadian real estate bubble is not the Ontario economy.

The issue was putting Greece in context. Nothing to do with real estate. –Garth

#190 rampant inflation on 06.28.15 at 2:09 pm

The issue was putting Greece in context. Nothing to do with real estate. –Garth
________________________________________

Lehman was pretty small too, but look at what it wrought. everyone knew the Lehman story too, market didn`t digest anything .. you have no idea what will happen tomorrow, nor the next 3 months.

Why don’t you run along and buy some bullion? — Garth

#191 Has anyone seen this? on 06.28.15 at 2:11 pm

DELETED

#192 Squirrel meat on 06.28.15 at 2:24 pm

#185 Oot der Hoos on 06.28.15 at 12:36 pm

I thought Canada would build unpayable debts under socialism, since over twenty years ago, like Greece.

Most are poorer because of socialism, like Greeks, but debt non-payment did not happen here. So I concede I might be wrong about there being an end point for this system, which is what we fought against in World War II.

Why did we fight them? We are them, now; national socialists; ie. nazi communists, Nationalsozialistische.

Contrary to my doubts, about awaiting semi-communist-capitalist Canada to fail, Gary North thinks this western countries system, since 1936, will end in a crisis and he prepares the alternative:

“The power of ideas alone does not produce revolutions. There has to be a social setting to allow the catalyst of revolutionary ideas to produce a social and political transformation.

This is why the Great Default of all of the Western welfare states is going to create tremendous opportunities for new ideas to come to the forefront. It is going to undermine and ultimately destroy the Keynesian worldview. This is a great opportunity for younger anti-Keynesians to stake their claims to what appears to be a played-out mine. That is why I outlined my Keynes project.

The body of intellectual materials favoring the free market is vastly larger today than it was in 1940, 1950, or 1960.”

http://www.garynorth.com/public/13962.cfm

(Let’s wait and see if the collective central banks succeeded or failed since 2008. Meanwhile, I just live a life, old, retired, and stand clear from a corrupt, shameful no free speech, communistic, C-51 S-7 spying, anti-christ, baby killing, homosexual-psychosis marriage promoting, people, called Canada.)

Gary North is a whackjob. You’re not far behind. — Garth


———
Starring role I would say. Front of the Nutjob line for you out of your mind.

#193 Russ L on 06.28.15 at 2:36 pm

Panhead on 06.28.15 at 12:11 pm

#174 Russ L on 06.28.15 at 10:11 am

Oh. And what’s the difference between a hormone and an enzyme?

———————————————————-
OK, Ill bite … you can make a hormone by not paying her?
=============================

not bad but a tad crude.

“You can’t make an enzyme.”

… the conclusion is implied, of course

#194 maxx on 06.28.15 at 5:37 pm

#171 Jeff B on 06.28.15 at 9:43 am

@ #113

“… were interest rates to normalize, there would be a significantly increased, solid and steady river of tax flowing from interest income directly to CRA.”

“And there are other negative factors, such as reduced consumer spending (a consequence of higher interest rates is higher savings rates) leading to a decrease in GST/HST/PST revenue.”

Superficially, it seems sound, so why isn’t it working? Just a little more time? Need to come up with a better plan?

Consumer spending is slowing to a grinding halt in so many areas of the economy. The chief reason is excess debt caused by cheap money that hardly anyone respects anymore, resulting in wrong-headed reasoning that it’s simply not worth saving.

Government waste and misallocation of funds is at the core of public debt and it is beyond belief that low rates are being justified in the vain, silly hope that the economy will “pull out” of its current predicament.

People enjoying normal rates would of course save more, however they’d also spend enough to make a difference in the government’s coffers. Remember 1999?

Consumers are currently spending mainly on debt service, accommodation and food- most of which is not taxable.

Perhaps the tooth fairy will buzz by and fix the economy.

#195 asach on 06.28.15 at 11:52 pm

I am an Asian and have been educated and lived in the West for many years including Canada. Having your own house is a must. It means status and security in Asian society. Logic has no place in such decision making process.

#196 Westcdn on 06.29.15 at 4:27 pm

I have been researching Canadian Preferred shares. Man, I needed a break – the variables were driving me to mental exhaustion. I like to be right but is it worth the effort. Maybe Smokie is right – better to float with the tide than swim to a goal – nahh.
I watched a movie “The Other Guys “. It had some eye opening stats on business compensation in the credits. https://vimeo.com/36644633 It makes me angry when I think of good and honest people being exploited. I have no respect for “lie, cheat or steal” motto.
This article about billionaires makes me jealous: http://www.news.com.au/finance/work/things-billionaires-wont-tell-you/story-e6frfm9r-1226763219563 Interesting read but the chances of me taking a bullet for them is zero. I have others I die for first.
Such as this guy: Big Rock Brewery ® – 2015 Big Rock Eddies: Short Film Festival I thought the important message was being you and continue to grow despite the unknowable future. It sucks to lose but I will not abandon my vision of what could be.
Ps. IMHO, the American is not a dude – treat the lady with respect, you would be lucky to have her on your side. Mind you, I have been wrong before.

#197 Westcdn on 06.29.15 at 4:31 pm

I will try that Big Rock link again

2015 Big Rock Eddies: Short Film Festival

#198 Westcdn on 06.29.15 at 4:35 pm

I think I have it this time. If I don’t, maybe WUL and I are cousins.

https://bigrockbeer.com/events/eddies