What could go wrong?

BIKERS modified

“I’m wondering,” says David, “what your thoughts are on possible catalysts to spark a housing correction in Toronto/Vancouver–especially ones other than rising interest rates.”

This is a good question. Especially because most Canadians have deluded themselves into believing rates will never go up again, that the government ‘would not allow’ mortgages to become more costly, and that (consequently) real estate is safe as your momma’s embrace. (Especially if she holds the down payment.)

“The US experienced imploding subprime mortgages (due to rate reset, poor underwriting and wrong default risk assumptions), leading to massive foreclosures, dumping real estate on the market and a complete freeze on mortgage lending (affecting refinancings)–creating a vicious downward spiral,” David adds. “I can’t see the same thing happening here.

“If/when the BoC raises rates, won’t they do it in a slow enough fashion and use anything in their power (with the housing bubble in mind) to avoid a crash? I really can’t think of anything else that will set off a correction.”

Well, the American real estate crash was not caused by imploding subprimes, because that was actually a consequence. So was the blow-up of Lehman, Bear Stearns etc. The real cause was an economic slowdown brought on in part by rising rates, but really affecting people through an employment slowdown. When families fear job loss, they stop speculating on real estate, buying beyond their means, taking on huge debt, or using their houses like private ATMs.

So, house values fell from an inflated level that had resulted from greed and speculation. Because so many people were highly leveraged (like here), the number of families under water soon exploded, leading to non-performing loans and massive consequences on Wall Street, where mortgages had been packaged as gold-plated securities and sold to greater fools. The dominoes then cascaded, leading to a credit crisis, severe job loss and a 32% decline (national average) in house values.

But that can’t happen here, right?

Well yesterday I showed you it did. In Toronto. A 27% drop in house prices from a speculative high (1989) like the one we’re in now. But the decline was long and relentless, which meant it was called a correction, and continued to attract buyers year after year who thought they were being so clever.

Lesson one: a correction is not a crash. But it hurts just as much. Maybe more, since there’s buying all the way to the bottom.

Another common myth is that Americans were financial subprimates – an entire nation filled to the gills with NINJA loans (no income-no job-no assets), zero-down financing, adjustable-rate debt, jumbo mortgages and with unemployed janitors routinely buying McMansions in Florida and Phoenix. So, they brought all that misery upon themselves.

Untrue. As an interesting Morningstar report outlined, in 2005 America looked disturbingly similar to Canada today. Oops.

Just before the US real estate crash about 70% of Americans owned houses. Ditto for us now. In Canada today homeowners, on average, have 55% equity and 45% debt. That was exactly the same ratio in the States in 2005. Currently 23% of Canadian mortgages are for 80% or more of the value of the homes financed. That is weirdly similar to the number of American loans of similar risk (22%) at the height of their pre-crash bubble.

Lesson two: we’re not immune. Or better. Or wiser. In fact, Canadians have allowed the national economy to become just as dependant on real estate as Americans did before they learned a valuable lesson.

Higher interest rates (inevitable as they are) won’t be the catalyst, David, but they sure won’t help. Instead the thing we need to watch out for is simple economic fear. Perhaps that has already started to mount, and with good reason.

The financial news is dreadful. On Wednesday the dollar sat near 75 and a half cents US, the lowest in over a decade. Oil soundly crashed through the $50-a-barrel mark, putting an end to all that brave talk in Alberta about a quick rebound. Remember, oil is our biggest export. And the world is now swimming in the stuff. All this has dragged down the Canadian market, with the TSX giving up 4% over the past year while US, euro and Asian markers rock. And remember that balanced federal budget we received just two and a half months ago? Well, kiss that sucker goodbye. It’s now a $1 billion deficit, says the Parliamentary Budget Officer.

So the focus will quickly become jobs. They’re being shed in droves in the oil patch. Manufacturing continues to decline. Even the railways and truckers are punting people – a sure sign of economic malaise. Bombardier’s in trouble again and some think GM will be pulling out of Oshawa, taking 30,000 jobs and $5 billion in GDP with it. As you know, the Bank of Canada is so worried it’s cut interest rates twice in the past seven months, even as the US prepares to raise them.

Says Capital Economics, which was spot-on with its rate cut forecast: “The slump in oil prices has already pushed the Canadian economy into a mild recession and things could yet go from bad to worse. Falling energy investment will hit both production and jobs, which will further depress incomes and spending. Meanwhile, housing corrections in oil regions could be followed by busts elsewhere when bond yields rise.”

So, David, I wouldn’t obsess about mortgage rates, nor feel we dodged the Yankee bullet. People are simple. They fear, they freeze. The music stops.

When you read about it, well, too late.

184 comments ↓

#1 canadianinportland on 07.22.15 at 6:17 pm

Aaaaand first!

#2 Randy on 07.22.15 at 6:18 pm

Are things happening in slow motion or should I stop drinking ?

#3 Mr Marco on 07.22.15 at 6:18 pm

Is it not possible we could be like Japan with zero i rates like forever? Look at the US, they have had near zero for about 7 years..maybe longer. Is it not possible?
By the way, Garth i know you hate gold. Fair enough. But eliiott wave analysis sugggests Gold to fall to 1000 per ounce but then the real big advance will happen will ecclipse 2000 to 2011 run.

Western debt aint goin anywhere but up. it will make Greee look like a picnic. I am quite shocked and surprsised a very smart and successful man like you does not acknowledge this fact. So what trillions of dollars of debt and unfunded liabilities means nothing Garth?? Please explain that. I am quite stupid.

Gold’s going nowhere and the Elliott Wave is junk. Invest in the economy. — Garth

#4 Herf on 07.22.15 at 6:21 pm

“When you read about it, well, too late.”

Kind of like thunder – by the time you here the sound, you’ve already been zapped by the lightning.

#5 leslie on 07.22.15 at 6:22 pm

If borrowing stops..party stops for everyone not just housing, it’s all stocks and assets

That seems illogical when 95% of household debt is for houses and stuff, not investment assets. — Garth

#6 badly diversified economy on 07.22.15 at 6:22 pm

Canada has a very badly diversified economy.

That’s actually much bigger and more tragic story than the house horny saga.

#7 ILoveCharts on 07.22.15 at 6:25 pm

I thought I was reading this blog earlier today but it was just CBC News.

http://www.cbc.ca/news/business/canadian-dollar-drops-to-lowest-level-since-2004-1.3163316

The worry about jobs is serious. In tight economic times, people don’t take the risks required to be an entrepreneur and start building new businesses. At the same time, the big corporations scale back on their innovation and growth initiatives. The only solution is stimulus.

#8 economic fear - what's that on 07.22.15 at 6:43 pm

And there you have it:
Garth said the catalyst will be economic fear.

And when will that happen? Sounds like never, except for black swan events… and yet, markets are resilient and governments job will be to protect – and thereby – prop up real-estate markets.

Therefore, it is safe to buy 90% of the time, non Garth?
Other than that 1 year correction and 6 years gradual decrease… hasn’t it always been a good time to buy?

You can’t fear that 1 year in the last 20 years….

#9 Freedom First on 07.22.15 at 6:45 pm

Yes. The average Joe has an incredibly difficult time in staying away from a one asset strategy. Also the average Joe investor, when he does invest in anything, will buy it at too high a price after a long runup in price.

Worse, the average Joe is unable to buy any asset when it is out of favor (cheap), and even worse than that, the average Joe is unable to sell any asset when it is way overpriced and no longer a good value.

This is why the only thing that works over time is being diversified, liquid, and balanced. Re-balancing takes any guesswork out of the picture. No exception.

#10 Greg on 07.22.15 at 6:47 pm

At least the dog has a sissy bar.

#11 gladiator on 07.22.15 at 6:53 pm

It’ll be like sloooooowly peeling a waxing strip.
Wifey says this could be an effective method of torture.

#12 PullingTheChute on 07.22.15 at 6:55 pm

So, where might somebody look to invest OUTSIDE of Canada/U.S. ? Where are the rock solid economies of Europe?

As a Canadian carrying a British passport, I have begun researching potential candidate countries in the EU for a medium term exit from Canada (for my investments, as well as myself and my family).

#13 Bill on 07.22.15 at 6:57 pm

Interest rates are going to stay low for a while….Calling the top of this market has BEEN a losers game..
That said I feel something will take the bottom out in time..I can’t wait. Now that China’s market has CRASHED and its not over there. Their economy WILL collapse. Its going to take a while but you can bank on it. I can’t wait for that to as they invaded countries with their military.
I could only hope it would slow the flow of them coming here..
http://www.theglobeandmail.com/globe-debate/chinas-middle-class-dream-on-shaky-ground/article25142239/

#14 Michael on 07.22.15 at 7:00 pm

Is there even a chance for a happy ending at this point? Canadians are in record levels of debt and the economy is in free-fall with no relief in sight. Seriously, what is even holding this house of cards together?

#15 Former Fool on 07.22.15 at 7:03 pm

Garth, I have a question for you: would you pick up more preferred shares in your TFSA given that they’re on sale right now? All my investments are in TFSAs and RRSPs, I’ve read you are better off to hold preferreds in non-registered accounts. I’m still sitting on that $4k in cash in my TFSA that our government so generously gave us in the last budget, still mulling over what to do with it.

Many thanks for this blog. I’ve even started listening to the conference calls on the Turner Investments website.

#16 Terrier on 07.22.15 at 7:03 pm

I agree Garth … don’t wait for interest rate hike, the housing market will start sinking as soon as the last unemployment cheque is cashed out. From now on, having the job is the name of the game … everything we’ve seen so far points that a lot of people will be out of work force.

#17 John on 07.22.15 at 7:05 pm

So true. Poloz drops the rates from .75 to .50 to .25 and then will eventually raise them from .25 to .50 to .75… Yawn. The key is jobs, us stupids. Bingo Garth. And obviously the poodlettes are in a panic about JOBS. We’re in a recession or maybe going worse, no matter what stats are pumped for whatever agenda. And the job-bath is just picking up. Next wakey-wakey, then fear and then at the least, flat-line housing. Perhaps even waterboarding if somebody doesn’t git religion fast. Good post. JOBS = HAPPY HARLEY TIME. FEAR OF NO JOBS = FROZEN.

#18 Sue Kulak on 07.22.15 at 7:05 pm

Here is a great article from 2006. Note that from the 2006 peak to the 2012 trough, the 20-city Case-Shiller Housing Index fell more than 35%. The damage was much worse in cities such as Las Vegas (-62%), Phoenix (-56%) and Miami (-51%).

No bubble bursting here: the housing market is projected to deflate a bit this year, but economists agree the market will remain strong.

Wood & Wood Products
January 1, 2006

he supposed housing bubble is not going to burst–not in 2006 anyway. If anything, it will deflate slowly to past “healthy levels.”

That is the sentiment among several economists tracking the housing market.

David Seiders, chief economist for the National Association of Home Builders, said the housing sector will undergo a “simmering down” in 2006. This years totals are predicted to return to 2004’s, “which are still excellent,” he added.

In 2004, total housing starts reached 1.95 million units; the NAHB’s 2006 forecast calls for 1.94 million units, a slight decrease from the estimated 2 million units in 2005. Seiders said the dip is not unusual, adding that 2005’s record pace was poised to level out sometime.

“We’ll basically be retracing the increases we saw in 2005, heading back to 2004’s very healthy levels,” Seiders said during a December teleconference with James Glassman, senior economist for JP Morgan Chase.

One of the factors that will allow 2006 housing starts to remain at near-record levels are interest rates.

Interest rates, at their current average of 6.3 percent, will prove beneficial to the housing sector. Glassman and Seiders predicted that the Federal Reserve is about done driving the interest rates higher. Seiders said he sees 2006’s average U.S. interest rate at about 6.6 percent.

“If you think about it, with 10-year treasury yields at 4.5 percent, why would the Fed need to drive short-term interest rates above long-term interest rates, unless they saw a glaring inflation problem?” Glassman asked during the teleconference. “That way, we dose the year with fixed income markets for the third year in a row with relatively stable, low long-term interest rates.”

These low interest rates can be attributed in part to the low inflation rate. While it seemed in 2005 that the economy could experience an uptick in inflation, as a result of the hurricanes, Glassman said that was “quite the opposite.” He said the inflation rate of about 1.75 percent is “at the low end of the Fed’s comfort zone.” And the Fed forecasts it will only rise to about 2 percent.

This bodes well not only for homebuilders, but also for manufacturers of cabinets, millwork, flooring, etc., especially considering that eight of the last 10 economic recessions started with declines in the housing market, according to Anderson Forecast, UCLA’s quarterly economic study. Though a recession is possible, the economists agree the economy is strong enough to elude such an occurrence.

“Historically, [an impending recession has] been true, but I don’t expect any weakening in the economy in 2006,” said Ken Simonson, chief economist for the Associated General Contractors of America.

Simonson said a big problem facing the housing market is the increased price of construction materials; he even issued an alert regarding construction costs outpacing consumer prices. The alert cited “widespread materials inflation” on products across the board, but especially fuel, plastics and cement. Much of the price inflation can be attributed to the 2005 hurricane season, which caused energy costs to skyrocket and destroyed a significant portion of the forestry in the Gulf region.

“For 2006, I expect the cost of fuel asphalt and plastics, such as PVC pipe, to average 10 to 20 percent higher than in 2005, because of high petroleum and natural gas costs,” Simonson said in a release.

But while the costs associated with energy spikes (namely oil-based products and service, such as shipping and the resins for PVC) can be expected to remain more expensive, the timber and lumber markets escaped relatively unscathed. Simonson said he expects wood, as well as steel and gypsum, products costs to be “no higher on average than in 2005, despite a lot of month-to-month volatility.”

In addition, of the 5 million acres–an estimated 19 billion board feet–the USDA Forest Service predicted to be downed, much can be salvaged. That is a potential of an extra 800,000 single-family homes, the Forest Service estimates.

However, compounding the added costs, most of which are expected to be covered by consumers, home price appreciation is predicted to fall this year and into next. In 2007, the pace of appreciation may be down to 4.4 percent as a whole, compared to 2005’s 10.7 percent, according to the OFHEO house price index cited by Seiders during the teleconference.

“It’s pretty obvious at this point that the real estate market is gradually shifting to more of a buyers market,” Glassman added. “It’s clear to me that the rapid gains we’ve seen in the real estate market over the past years is more a story about the real estate catching up to the good fundamentals in the economy–not a bubble. The next several years should present a good backdrop for growth with low inflation.

U.S. Housing Forecast
(thousand units)

2002 2003 2004 2005 * 2006 **

TOTAL STARTS 1,710 1,853 1,950 2,060 1,940
SINGLE-FAMILY 1,363 1,505 1,604 1,710 1,590
MULTI-FAMILY 347 348 345 354 350
EXISTING HOME SALES 5,593 6,098 5,913 6,151 5,796

* = Estimated value

** = Forecast value

#19 Balmuto on 07.22.15 at 7:09 pm

“Canada has a very badly diversified economy.

That’s actually much bigger and more tragic story than the house horny saga.”

This. I was looking at the current weightings of the TSX – when you remove Financials, nearly half the index is Energy and Materials. I remember in the Nortel days that stock alone was 30% of the index. Now the entire Telecom sector is only worth 5%. Info Tech a mere 2.7%. We’re just a commodity play now with a bit of health care, transportation and cheap retail thrown in.

#20 Darren on 07.22.15 at 7:09 pm

So, even under a Conservative government, budgets don’t balance themselves.

#21 Jon on 07.22.15 at 7:12 pm

I don’t follow RE prices too closely..especially outside of my home Province, but for $hits and giggles, I checked out some prices in Vancouver and Toronto. Good God, this is not going end pretty in those markets I’m afraid!

Lately, I’m proud to be Nova Scotian because…I have a 2000 sq foot home, with a big back yard, on a cul de sac, within a 15 minute drive of downtown Halifax, and a Chalet style cottage with 300 feet of waterfront on a popular lake in the midst of beautiful Nova Scotia cottage country (a one hour drive from my house). Both of these for less than half of small bungalow on a postage stamp lot in Toronto or Vancouver.

I heard a rumour that Garth bought a place on the South Shore of Nova Scotia. Wouldn’t surprise me. He’s a smart fella (sometimes).

#22 omg the original on 07.22.15 at 7:18 pm

Well yesterday I showed you it did. In Toronto. A 27% drop in house prices from a speculative high (1989) like the one we’re in now. But the decline was long and relentless,
———————

I think that is nominal dollars – that is not adjusted for inflation?

If its nominal add another 15% or more decline from the 1989 high to the 1996 low, so TO would be down over 40% in real terms.

And Southwest Ontario has NEVER recovered.

A house you would buy in London in the late 1980s is still worth about the same in real terms.

In place like Chatham or Windsor houses are worth about 60% of what they were in 1989 when adjusted for CPI.

#23 Unhinged Loon on 07.22.15 at 7:21 pm

Would it be a prudent decision to shed those Canadian equities weighted heavily in Canadian residential real estate loans, i.e. the chartered banks?

#24 Henry Simpson on 07.22.15 at 7:21 pm

Please tell me when we will see government 4%+ bond yields again?

I am tired of people saying interest rates will rise but they are always lower and lower year after year.

#25 Scu on 07.22.15 at 7:22 pm

So our dollar is very low, and wages have not increased.

If the falling dollar and no wage increase trend continues, Canada could become a magnet for EU and US companies wanting cheap yet highly educated labor.

Maybe Foxconn will open a factory here. Clothing / textile manufacturers could return. Jobs for all.

#26 Gary in Kelowna on 07.22.15 at 7:22 pm

Garth, I am in complete agreement with you. However today the Kelowna Newspaper delivered to my door headline: Okanagan housing: Gangbuster sales! The story is all quotes from Realtors. According to the story there are still lots of buyers still coming from Alberta because everyone want to live here. What can you do? Keep up the message -some of us are listening. Thanks.

#27 omg the original on 07.22.15 at 7:26 pm

Lesson one: a correction is not a crash.
——————–

I believe we are looking at a decade long correction or more, much of it due to inflation slowly eroding the value of the house.

Which is good – if its slow and drawn out most people will not even notice – so they will not crap their pants, stop spending and kill the economy.

In a sudden crash like in the US, people (and companies) get scared and run for cover. This knocks the crap out of the house market and every other market quickly – that’s not going to happen here

Now in the US that resulted in credit market freezing and the entire world economy supposedly going “to the brink”. Canada, being a mere flea on the butt of the world economy will obviously not cause such world wide finainci

#28 Ben Bur on 07.22.15 at 7:33 pm

“US, euro and Asian markets rock” . . . cognitive dissonance

#29 Brian Ripley on 07.22.15 at 7:34 pm

“That is weirdly similar…” Garth

Today I added a Google Trend Search chart to my Toronto, Vancouver, Calgary, TSX Real Estate Index momentum chart page. It’s a dynamic chart that will update automatically over time:
http://www.chpc.biz/housing-price-momentum.html#Google

Toronto house price searches are more than twice that of Vancouver and over 3 times that of Calgary. The relative interest in real estate in all 3 cities looks to have peaked earlier this year which makes sense since the seasonal excitement has already maxed for the year:
http://www.chpc.biz/sales-listings.html

Could be fear building from exhaustion.

#30 Panhead on 07.22.15 at 7:38 pm

#18 Jon on 07.22.15 at 7:12 pm
I heard a rumour that Garth bought a place on the South Shore of Nova Scotia. Wouldn’t surprise me. He’s a smart fella (sometimes).

————————————————————
Well … I heard he was a fart smella …

#31 MF on 07.22.15 at 7:40 pm

#22 Unhinged Loon on 07.22.15 at 7:21 pm

Good question. Actually I don’t have any individual stocks, but on my BMO account all the Canadian bank stocks have a “strong buy and hold” label attached to them. They look to have been going down for about 3 months straight. BMO offers a Canadian bank ETF that has the big five in it. Anyone think this is a good buying opportunity for real?

MF

#32 MF on 07.22.15 at 7:47 pm

Thanks for the comparison to the US circa 2006/7 Garth. It’s clear we are worse off than the US on a number of different metrics, household debt being a big one.

It’s weird though. Here in the GTA no one seems to be worried or care. I read an article on FP website about a week ago titled “the best recession ever” (or something along those lines). The article basically said what I was thinking. House prices at nosebleed levels, people still spending, no one worried. Life going on…yet the financial news is all negative. Poloz lowering interest rates, warning after warning from economic groups around the world. What gives?

MF

#33 Sixtyfourk on 07.22.15 at 7:47 pm

According to IIROC, Canadian margin debt is at an all time high. The latest numbers are from the end of May: $20,330,000,000.

The previous peak was $16,266,000,000 in July 2008. This fell by approximately 50% in December 2008.

I don’t think the numbers reported by IIROC are inflation adjusted.

Canadians are borrowing for more than houses.

Margin debt is not earmarked for investment assets. Often it is merely secured consumer debt. In any case $20 billion is less than $1.8 trillion – current household and mortgage obligations. — Garth

#34 Oceanside on 07.22.15 at 7:56 pm

#25 Gary in Kelowna on 07.22.15 at 7:22 pm
Garth, I am in complete agreement with you. However today the Kelowna Newspaper delivered to my door headline: Okanagan housing: Gangbuster sales! The story is all quotes from Realtors. According to the story there are still lots of buyers still coming from Alberta because everyone want to live here.
_____________________________________________

There is some truth to that, real estate here in mid Vancouver Island has been very busy, even small bidding wars (read small) Hardly any inventory in the popular $350,000 to $450,000 which seems to be what the Albertans and people from the lower mainland desire. High end seems to languish on the market

#35 Yitzhak Rabin on 07.22.15 at 8:02 pm

The catalyst could be anything. Provincial government debt and the related jobs that have spawned from unsustainable government spending are not widely talked about. Rude awakenings are coming for premiers, public sector unions and the citizens about what is possible from the government.

Some changes in net debt from 2009-2010 to 2014-2015

B.C $29.37 billion —> $38.90 billion
AB -$23.74 bil —> -$13.05 bil (reduction in net savings)
SK $3.56 billion —> $5.10 billion
MB $11.64 —> $18.78 billion
ON $193.59 billion —> $284.10 billion
PQ $151.61 —> $190.40 billion
NB $8.63 billion —> $12.55 billion
NS $13.05 billion —> $14.96 billion
PE $1.58 billion —> $2.15 billion
NL $8.22 billion —> $10.26 billion

Don’t fall far standard economist garbage about debt as a function of GDP. When commodity prices are cut in half suddenly GDP does not seem so consistent of a measure. Not to mention how much of the GDP is based on finance, insurance and real estate as it relates to selling each other over-priced housing. Government spending is also a huge component of GDP in a lot of provinces, which due to the debt above will be forced lower.

Of course there are very few places in the world the escape all of these same problems. Massive public and private defaults are inevitable through the entire global economy. The only question is if default comes through the classic debt restructuring or through inflation via QE, bailouts and other “extend and pretend” measures.

#36 Mister Obvious on 07.22.15 at 8:04 pm

#13 Michael

Seriously, what is even holding this house of cards together?
====================

Hypnosis and blind faith, as today’s post makes clear.

Certainly not fundamentals.

#37 Jeff Hodgson on 07.22.15 at 8:04 pm

Harper and Poloz are really going for it with the Nixon strategy.
When I wrote this article http://www.poletical.com/harper-and-interest-rates.php in January of 2014 people were constantly talking about how interest rates were going to go up. I didn’t get much traction being so contrary…but here we are.

#38 family beagle on 07.22.15 at 8:05 pm

Concur. It’s about price support. Who wants to speculate in a neighbourhood full of borrowers? Cash buyers live in the best parts of town.

Yet, interest rates are of dire import to borrowers. There’s no lower scum on the earth than a money borrower. I have more respect for bankers than borrowers, because bankers get the sweet end of the stick. Money borrowing is just another form of begging. Friends tell me they have a mortgage, and they are booted from my influence circle. No time for low lifes. If someone had to borrow money to buy a house, haha I laugh, what a loser. I bought mine cash. An estate. A big estate. Garth, tell your buddy, “do you realize you’ll end up paying double or more if you borrow?” That’s the premium for being a penniless loser. The bank thinks he’s a loser. The insurance company knows he’s a loser. And his money borrowing friends and relatives are thrilled cause there’s one more loser in the crab bucket trying to scratch their way out. That’s why I like foreigners. They are smart. They pay cash. I can understand if a business wants to borrow, or if someone puts a car on visa for the weekend, but to borrow for 25 years on a pos house made of stick spruce, nfg OSB, and vinyl?!? Never pay more than 2.5x annual income for a house. They aren’t worth more. And if you can’t afford it, move further out. I have way more respect for some who owns in Mission and commutes, than I do for a borrower who prances about Vancouver with koolaid stains all over their cheeks. If I knew it wasn’t such a rip off here (604) I would buy. But it is a ripoff. You are paying 5 times the cost to build. My estate is in 250 across from a provincial park and zoned CR-1, residence/farm/small business/bed and breakfast/agriculture. My residence pays me. My expense is a tax writeoff. I rent in 604 for $900/mo. My landlord paid 135k cash in 1989. He gets it. He’s a multiple times a millionaire with 0 debt. Smart man, from India. He rents to a carpenter. Double smart.

Btw, the boys on my crew will frame in 250 for $ 80/sq ft and if you can’t afford that, we’ll build all the way down to $10./hour per subcontract. We’ll ride this to the bottom and undercut anyone. Cash only. I don’t accept financing, iou’s or subjects. You pay cost on material, and material is dropping fast. I get a board for $1. and it takes 20,000 to frame and deck a 2400 sqft house, plus fasteners. Six guys in five days. Do the math. Ask yourself, how can a brand new house with all the fixins build for $150k in Spuzzum? Cause 604 city folk got ripped off in a magical urban land grab. I bought enough room for 18 city lots. Those days will come again for them who stay liquid. There are the haves, and then the borrowers.

One last p/ss off for the masses… My kid is a an industrial electrician who wires towers downtown. Work pays for his school. He is taking 3 mos off to tour Europe, seeing the sights and eating fancy food. When he returns, he will go back to work building towers making scads of cash. His plan: sub renting from me. Count him out of any price support in 604. “I wouldn’t live in one of those pieces of sh” says he.

#39 Smoking Man on 07.22.15 at 8:10 pm

What could go wrong!!!!

It’s going wrong now. It’s called Wynnetario.

She held a press conference to introduce a tax on HOV lanes.

In a classic teacher form she used the B word… Finger nails on a chalk board when I hear it.

We all need to have our Behaviour modified… WHAT!!!!

HOV lanes should be dismissed immediately. Traffic in and out of the city should never be bottle necked. Especially on purpose.

Millions if not Billions of lost productivity cause people are stuck unnecessarily in traffic cause of a wrong and false tree hugging Ideology.

She truly has no business or commerce sense..

She gets off lecturing her minions Behaviour , F-en teachers.

At woodbine slots, a bartender will not serve you two drinks, you need to make two trips if you want to give your wife a wine and one for yourself.

The place is a fire hazard, no room to walk. Machines packed in tight. If it was private sector it would have been shut down.

The irony, that casino makes more money per/machine than any other casino in the world. In other words, we care about you. One drink at a time. But the pay ratios are set for highway robbery…

With this lunatic at the controls, businesses will leave, job will be lost, Toronto housing will crash.

Dwellers go join the liberal party, only way you will ever afford a house. Bad news, you won’t have a job.

#40 alf on 07.22.15 at 8:12 pm

The US economy is strong for the time being. Consumers can afford more because imports are cheaper increasing their buying power. Huge wealth effect from rising stock markets and lots of cheap money to keep failed institutions from having to face reality: BUT

Nearly a quarter of youngsters in the US (22 percent) or around 16.1 million individuals, were classed as living below the poverty line in 2013

In early 2008, the homeownership rate in the U.S. was hovering around 68 percent. Today, it has plunged below 64 percent. Incredibly, it has not been this low in more than 20 years

In 2008, the federal government was spending about 37 billion dollars a year on the federal food stamp program. Today, that number is above 74 billion dollars. If the economy truly is “recovering”, why is government dependence so much higher than it was during the last recession?

U.S. national debt was sitting at about 9 trillion dollars when we entered the last recession. Since that time, the debt of the federal government has doubled; of course adding to GDP

real median household income has actually gone down quite a bit. Just prior to the last recession, it was above $54,000 per year, but now it has dropped to about $52,000 per year; not counting inflation

In a healthy economy, lots of new businesses are opening and not that many are being forced to shut down. But for each of the past six years, more businesses have closed in the United States than have opened. Prior to 2008, this had never happened before in all of U.S. history. [This info from a Gallup Poll]

Labor participation rate down from 66% in 2008 to 63% in 2014. In the male age category 25 -54, males not participating, rate increased from 9% in 2008 to 12% in 2014 [FRED]

I understand the people on the bottom end of the economy contribute very little to the GDP, but if the US economy, which will soon be shedding high paying jobs in the energy sector [Texas] and creating more low paying jobs selling imported consumer goods in the retail sector, keeps heading in that direction the middle class which in the past was seen as the backbone of their economy will shrink. How can that be characteristic of a healthy economy. alf

#41 Investorz on 07.22.15 at 8:13 pm

Rates will be low for a long long time. At least overnight rates in Canada. I wish we could bet money on that.

The stock market is telling us that. Poloz is telling us that. Only Joe Oliver is optimistic saying ‘we are not in a recession’.

On another topic, look at the stock market. Compare ZEB with ZUB. The first is our banks, the second, is US banks. Yeah…

#42 Kreditanstalt on 07.22.15 at 8:16 pm

“So the focus will quickly become jobs.”

Months and months ago I said we NEEDED job losses.

Not kidding. Anyway, most Canadians probably don’t hold “jobs” anyway. They hold instead cheap credit-dependent Keynesian-induced ‘misallocations of capital’…which will vanish in a puff of smoke the minute capital inches upwards.

Or, if it never does, Canada will be buried in fake, zombie jobs…with a currency to match.

#43 family beagle on 07.22.15 at 8:29 pm

#38 smoking man

You can always identify the enemy. They use key phrases, like…
“We (plural) have plans for you (singular).”

#44 Bill on 07.22.15 at 8:32 pm

We are Greece in 15 years

#45 LL on 07.22.15 at 8:34 pm

# 3 – Gold’s going nowhere and the Elliott Wave is junk. Invest in the economy. — Garth

Economy??? There is no economy!

#46 devore on 07.22.15 at 8:36 pm

#9 Freedom First

Worse, the average Joe is unable to buy any asset when it is out of favor (cheap), and even worse than that, the average Joe is unable to sell any asset when it is way overpriced and no longer a good value.

Not just the average Joe, but almost everyone, except analysts whose full time job it is to look for and analyze value buys, and even then, they’re only able to cover a narrow sector.

#47 LL on 07.22.15 at 8:36 pm

# 3 – I am quite shocked and surprsised a very smart and successful man like you does not acknowledge this fact.

Gold is the competitor to fiat money.
Fiat money hate gold!

It’s more to do with pity. — Garth

#48 Chad N Freud on 07.22.15 at 8:39 pm

The loonie dropping like this must really be getting to Mark…best lay off him for a while, while he recalibrates his slide rule, sextant or whatever else has been using to forecast exchange rates.

Meanwhile at K-mart, I saw a flashing blue light special on the loonie….real estate in aisle 3!

#49 gut check on 07.22.15 at 8:52 pm

WOW there are a handful of comments tonight that are just plain hideous.
and NO, I am most definitely NOT referring to Smoking Man.

#50 cramar on 07.22.15 at 8:54 pm

“And remember that balanced federal budget we received just two and a half months ago? Well, kiss that sucker goodbye. It’s now a $1 billion deficit, says the Parliamentary Budget Officer.”

Not so, says Mr. Harper. We will still have a balanced budget!

The PM said so. Has to be true.

#51 Chad N Freud on 07.22.15 at 8:56 pm

#20 Jon on 07.22.15 at 7:12 pm
…..Lately, I’m proud to be Nova Scotian because…I have a 2000 sq foot home, with a big back yard, on a cul de sac, within a 15 minute drive of downtown Halifax, and a Chalet style cottage with 300 feet of waterfront on a popular lake in the midst of beautiful Nova Scotia cottage country (a one hour drive from my house). Both of these for less than half of small bungalow on a postage stamp lot in Toronto or Vancouver.

I heard a rumour that Garth bought a place on the South Shore of Nova Scotia. Wouldn’t surprise me. He’s a smart fella (sometimes).”

Be careful, you might cause an eastward stampede of yoga-clad new age wannabes and HAM from the left coast.
The overcrowding will then cause the entire eastern seaboard to start sinking into the Atlantic….we better get Al Gore on this!
Then due to

#52 Freedom First on 07.22.15 at 8:58 pm

#38 Smoking Man

Bravo. Five star post.

#53 For those about to flop... on 07.22.15 at 9:00 pm

I have been telling my wife for the last 6 months to switch some of her investments out Canada as she has 80% Canadian 20 International .
Well she got her quarterly statement and she lost $1500 ,now she is motivated to make changes.
I can only try to prompt her ,after all it’s her money.
Things don’t look so bright on the home front for the next decade or so.

#54 Andrew Woburn on 07.22.15 at 9:01 pm

LIBOR: History’s Largest Financial Crime that the WSJ and NYT Would Like You to Forget

It’s only money

“Throughout Wednesday’s session, the court was shown dozens of pages of transcripts of exchanges between traders using UBS’s internal messaging system.
The conversations – matey in tone – all related to moving Libor rates, said Mr Hayes, to assist the traders’ and banks’ commercial interests, something he said he found it hard to see as wrong.

In one chat, Mr Hayes suggests the market is rife with dealers attempting to influence rates: “Very, very hard to price stuff with the fixes so manipulated and inconsistent.”

His correspondent replies: “The fixes are manipulated?”

“Yes, of course they are,” says Mr Hayes. “Just give the cash desk a Mars bar and they’ll set wherever you want.”

http://neweconomicperspectives.org/2015/07/libor-historys-largest-financial-crime-that-the-wsj-and-nyt-would-like-you-to-forget.html

#55 Slim on 07.22.15 at 9:04 pm

So what would you call that in the photo? A crash or correction?

Can you say road rash? You gotta feel sorry for the dog.

#56 Jon on 07.22.15 at 9:09 pm

Good lord, Smoking Man, what did that teacher do to you!? You ok Bro?

#57 Conservatives have got to go on 07.22.15 at 9:10 pm

The Harper conservatives are losers who have never ran a balanced budget. In fact the conservatives NEVER balanced a budget ever. Conservatives sell off assets and they still run deficits. Only proud to be uneducated and a closet realtor like smokingman would support conservative vampires. Conservatives arew a cancer to Canada and this October we have to get rid of that cancer before Canada is finished.

#58 Reg Wellman on 07.22.15 at 9:13 pm

Garth, what would be stopping the US Govt or a proxy enterprise from Printing a lot of US Dollars and exchanging them for Canadian Dollars and buying up our Natural Resources on the cheap?

Since the US is Fiat Money Central, and our dollar gets low enough, could much of our economy be essentially bought and lost for good?

#59 Obvious Truth on 07.22.15 at 9:18 pm

#32 sixtyfourk

Margin debt stats mean nothing on their own. That said still feeling the other shoe drops on Bay Street. Won’t be too long.

Tsx is sick.

#60 Andrew Woburn on 07.22.15 at 9:19 pm

#33 Oceanside on 07.22.15 at 7:56 pm
Hardly any inventory in the popular $350,000 to $450,000 which seems to be what the Albertans and people from the lower mainland desire. High end seems to languish on the market.
=========================

In my area of North Nanaimo, SFH are selling steadily at $450-650,000. Turnover this year has been 3 to 4 units per month on an average inventory in that price range of 28-30 units. Most are selling $40-60K over 2014 assessment.

I am starting to see signs some vendors are getting too far ahead of the market and as shown by price drops but units in the $500-600K range seem to be moving steadily especially compared to the really flat market in 2011-2013.

#61 Squirrel meat on 07.22.15 at 9:22 pm

#38 Smoking Man on 07.22.15 at 8:10 pm

What could go wrong!!!!

It’s going wrong now. It’s called Wynnetario.

She held a press conference to introduce a tax on HOV lanes.

In a classic teacher form she used the B word… Finger nails on a chalk board when I hear it.

We all need to have our Behaviour modified… WHAT!!!!

HOV lanes should be dismissed immediately. Traffic in and out of the city should never be bottle necked. Especially on purpose.

Millions if not Billions of lost productivity cause people are stuck unnecessarily in traffic cause of a wrong and false tree hugging Ideology.

She truly has no business or commerce sense.
———————————————–
She’s gonna make Rae Bob look like a neocon.

Gonna be a big spike in sex dolls if that goes through.

#62 Smoking Man on 07.22.15 at 9:28 pm

If you listen to this 4 min clip….

Sit down, wear comfortable clothing and have a few tissues on hand…..

I’ve never laughed this hard, ever….

https://youtu.be/J4JXAG-soFs

#63 observer on 07.22.15 at 9:33 pm

There is a combination of things that can set us off

1) lower dollar, cost of everything goes up
2) we have a real estate economy, which really doesn’t produce anything.
3) We wiped out the manufacturing industry. Higher operating cost doesn’t help when you can rent the same manufacturing space for a fraction of the price in Detroit
4) Its not only oil, all commodities has been hit and lowered, gold copper oil iron etc. So that means jobs from all sectors

However the lower interest rates and can dollars may help spark some industry, but you won’t see that in the bottom line for at least a year, that means there can be quite a few jobless people living and middle class people who will be struggling just to put food on the table

good luck

#64 Nemesis on 07.22.15 at 9:49 pm

#SoLong,Dad…

https://youtu.be/btH3bCJD2wM

https://youtu.be/UuEyMyR-7s0

I am sorry for your loss, and thank you sincerely for sending me several moving, evocative and deeply respectful photographs of this accomplished man. — Garth

#65 Smoking Man on 07.22.15 at 9:50 pm

#43 Jon on 07.22.15 at 9:09 pm
Good lord, Smoking Man, what did that teacher do to you!? You ok Bro?
……

Nothing really, I just hate em.

It’s the un earned arrogance that bugs me the most. No real life experiences, from school to teachers collage. The God in a class.

Back in my day, teachers were hippies, cool, and encouraged rebellion. Especially my drama teacher, he always had the best weed.

But when my kids were going through it, I encountered this force of unwavering riggedity , it’s my way or the highway future slaves.

Something changed, appropriate behaviour became the goal, debate, counter arguments were punished.

Spent many hours with my free Spirit kids in the principles office.. My teachings were in direct conflict with the school masters.

I remember one teacher giving us parents and kids a lecture on an up coming feild trip to NYC.

He spent 30 minutes wasting our time on what the consequences would be for Jr if, this or that happened on the trip.. Rules must be followed..

Yet he gets busted in 2012 leaving the school impaired, and drugs in his car…

Big difference between my Drama teacher, and thus dude.

Drama teacher was real, this guy, a duchbag.

#66 Dr.Dr. on 07.22.15 at 9:58 pm

#50 She hasn’t lost anything. Think like an investor and not a speculator.

#67 TurnerNation on 07.22.15 at 10:06 pm

1B surplus? He’s just not ready. Nice wig though.

Matters not. We, too are to be bankrupted. Global agenda you know.

#68 Retired Boomer - WI on 07.22.15 at 10:08 pm

#65 Smoking Man

Well teachers HAVE changed. Teachers in the late 60’s and early 70’s were looking for creativity, originality.

Today, conformance, behavior.

See: Agenda 21 and Bush’s “No Child’s behind left” or whatever it was called…

Do I think it’s a plot? Dunno…but they seem to have come up with a “new” and “improved” way every few years, yet the product is worse (in my humble opinion). See how many under 30 can think outside of the box, a box, or even define ‘box’ in this context.

This from an old guy who never enjoyed “school” “higher education” at all.

#69 Sosuke Aizen on 07.22.15 at 10:14 pm

#13 Bill:
“I can’t wait for that to [sic] as they [China] invaded countries with their military.”

I feel stupid asking this, as certified nutbars frequent this pathetic blog, but the answer may be hilarious. What countries were invaded by China’s military, and when did that happen?

#70 OttawaMike on 07.22.15 at 10:15 pm

30,000 jobs lost by GM pulling out of Oshawa?

Gee that would turn Oshawa into a seedy little rundown Toronto satellite city where welfare rules. Oh yeah, it’s already like that..

#71 Sid on 07.22.15 at 10:15 pm

Garth’s predictions for a housing correction here may have taken few years to materialize. He may have looked like a broken clock that’s right twice a day for a while. Well if Garth’s a clock, looks like 2016 is where his clock is pointing right now and the chicken will finally come home to roost for those Canadian that saw no risk in gobbling bigger mortgages than they can safely chew.

Comments from the financial analyst in this video is eerily similar to Garth’s.
http://www.bnn.ca/News/2015/7/22/3-currency-headwinds-that-could-push-the-loonie-to-US-065.aspx

#72 LowRent of Arabia on 07.22.15 at 10:23 pm

Shout out to Greater Fools, from a UK newspaper

“Gold is the ultimate greater fool asset”

http://www.independent.co.uk/news/business/news/gold-price-the-one-chart-that-shows-that-gold-may-not-be-as-safe-as-you-think-10404856.html

#73 Leo Trollstoy on 07.22.15 at 10:23 pm

#65 Smoking Man

“When you don’t have a plan, you can end up doing some interesting things.”

#74 pete on 07.22.15 at 10:24 pm

Michael on 07.22.15 at 7:00 pm
Is there even a chance for a happy ending at this point? Canadians are in record levels of debt and the economy is in free-fall with no relief in sight. Seriously, what is even holding this house of cards together?
____________________________________

It’s the conservative economy built on Lies and cheap and easy credit. Yes it’s true the conservatives shouldn’t be allowed to run a lemonade stand and yet here we are in an economic mess . Harper he was never ready and now even his fellow rats are leaving the sinking SS Harper as they quit and join the boards of muti national corporations for the selling out of Canada and Canadians. Time to kick this lunatic and the rest of the conservative vampires out of office once and for all.

#75 Spiltbongwater on 07.22.15 at 10:25 pm

I am sorry for your loss, and thank you sincerely for sending me several moving, evocative and deeply respectful photographs of this accomplished man. — Garth

Is this blog now an online obituary?

You just wrote yours. — Garth

#76 Frank on 07.22.15 at 10:27 pm

What does today’s balanced portfolio look like? Any cheap assets worth ratcheting up?

#77 Leo Trollstoy on 07.22.15 at 10:29 pm

Do I think it’s a plot? Dunno…but they seem to have come up with a “new” and “improved” way every few years, yet the product is worse (in my humble opinion). See how many under 30 can think outside of the box, a box, or even define ‘box’ in this context.

Every generation feels that the generation behind them is worse. It’s been like that for millennia.

“We need to think outside the box. I shit in there.” – Cat

#78 TurnerNation on 07.22.15 at 10:32 pm

That’s right Smoking man we are living in an open air work/re-education camp.

You are free to leave at any time. Just pay your tolls tire tax a/c tax environmental levy gas tax insurance monopoly recycling tax Nafta tax parking permit drivers license licence plate tag annual inspection emissions test plus GST.

#79 John in Mtl on 07.22.15 at 10:32 pm

@ #68 Retired Boomer – WI on 07.22.15 at 10:08 pm
and
@ #65 Smoking Man on 07.22.15 at 9:50 pm

I work in higher ed and I can confirm that yes, “yet the product is worse (in my humble opinion).” as said by Retired Boomer.

Something has changed, and not for the better. Of course, tech addiction and tech slavery also plays a part in this situation. It’s a double-edged sword, humanity just now learning of the consequences on its over-reliance on technology. The obligation to be “politically correct” at all times is also very stifling. I could cite dozens of things wrong with academia now and also the way we parents bring up our children.

#80 TurnerNation on 07.22.15 at 10:36 pm

Next up: devastating carbon goals taxes and fees with sanctions levied by a global body.
No recourse as we all know ItsGoodFortheEnvironment.

Also with the loonie forget your Vacation in the sun. More jet fuel taxes on the way. You are free to travel at any time. Go for it.

#81 Sheane Wallace on 07.22.15 at 11:00 pm

BOC is on its way to significant QE.

Gold could crash, but in USD, in CAD it would likely retain value.

CAD going down today, as usual.

Harper will never have balanced budget despite the debt orgy, subsidised by government guarantees.

#82 Canada’s new wealth-based immigration scheme on 07.22.15 at 11:01 pm

Canada’s new wealth-based immigration scheme has received just six applications worldwide, in stark contrast to the thousands of mostly-Chinese millionaires who flocked to the programme’s defunct predecessor, according to data obtained by the South China Morning Post.

http://www.businessinsider.com/millionaire-chinese-investors-are-snubbing-canada-2015-7

#83 No Debt on 07.22.15 at 11:05 pm

I just heard an interesting point made by one of The Bottom Line panel on CBC where one of the participants mentioned the lower dollar being “a lure to foreign real estate investors” and it’s fear effect on prospective RE players.

My take from the segment?

– The economy is in the crapper with certain bright spots on the horizon, but overall in a boatload of trouble.

– Don’t mention the R word since we don’t want people to act as though the economy is in recession and stop spending money like a bunch of drunken sailors.

– The low dollar could be a good thing, but it’s not.

#84 Leslie on 07.22.15 at 11:08 pm

#5
yes you are correct garth.. no one is willing to give a mortgage for financial assets..
Even if 95 percent of the debt is for real estate. .money is money right.. i can spend more cash if I can borrow more for the house.. it is all related I think

#85 Steve French on 07.22.15 at 11:12 pm

Smoking Man:

Guess what?

I’m a t_e_a_c_h_e_r.

Booo!

#86 No Debt on 07.22.15 at 11:16 pm

#12 PullingTheChute – Canada is the best country in the world to live in. Nothing saying your money has to be working for you here.

If your intent is for you and your family to leave Canada, please do so sooner rather than later. No doubt there is a loyal Canadian that would be only to happy to have your job.

#87 Sheane Wallace on 07.22.15 at 11:21 pm

#71 Sid

it will go to .45 don’t worry

#88 Google Caesar on 07.22.15 at 11:23 pm

#69 Sosuke Aizen on 07.22.15 at 10:14 pm
#13 Bill:
“I can’t wait for that to [sic] as they [China] invaded countries with their military.”

I feel stupid asking this, as certified nutbars frequent this pathetic blog, but the answer may be hilarious. What countries were invaded by China’s military, and when did that happen?”

Don’t feel stupid, just repeat to yourself 100 times, “google is my friend”

Looks like a couple of dozen according to the list of the website below.
http://www.quora.com/How-many-countries-has-China-invaded-in-its-history

Modern period
1 Sino-Vietnamese War: 1979,
2 Sino-Soviet border conflict: on March 2, 1969,
3 Sino-Indian War: 1962,
4 Korean War

Qing Dynasty
5 Sino-Burmese War (1765–1769):

Ming Dynasty
6 Ming–Kotte War:
7 Ming–Hồ War: a military campaign by the Chinese Ming empire to invade and conquer Vietnam,.
8 Fourth Chinese domination of Vietnam: a period of the history of Vietnam, from 1407 to 1427.
8 Ming–Turpan conflict: the Ming Dynasty annexed Hami in 1404 and turned it into Hami Prefecture.

Tang Dynasty
10 Silla–Tang War
11 Goguryeo–Tang War: the Goguryeo–Tang War occurred from 645 to 668
12 Emperor Taizong’s campaign against Xueyantuo 641.
13 Emperor Taizong’s campaign against Xiyu states: in the year 640.
14 Emperor Taizong’s campaign against Tuyuhun: In 634,
15 Emperor Taizong’s campaign against Eastern Tujue:

Sui Dynasty
16 Goguryeo–Sui War: the Goguryeo–Sui War of Korea between 598 and 614.
17 Third Chinese domination of Vietnam

Han Dynasty
18 Han–Nanyue War: a military conflict between the Han empire and Nanyue kingdom. 111 BC.
19 War of the Heavenly Horses: in 102 BC
20 Second Chinese domination of Vietnam: a period when Vietnam fell into Chinese control for a second time, between 43 AD and 544 AD.
21 Gojoseon–Han War: The Gojoseon–Han War 109 and 108 BC.
22 First Chinese domination of Vietnam: In 111 B.C.

Qin Dynasty

23 Qin’s campaign against the Yue tribes: in 214 BC,

#89 will on 07.22.15 at 11:34 pm

To #20 Darren

“So, even under a Conservative government, budgets don’t balance themselves.”

for god’s sake man, the current government is NOT conservative! they call themselves conservative but they are conservative in name only.

they especially do not want YOU to be conservative. they want you to spend ALL of your hard earned money buying a house and lots of stupid stuff.

just be conservative yourself and forget about what the so-called “Conservatives” are doing. when election time comes around, think about voting for a party that truly is conservative. you know the meaning of the word. now act on it at the poll booth.

love, w.

#90 Bottoms_Up on 07.22.15 at 11:41 pm

#15 Former Fool on 07.22.15 at 7:03 pm
——————————————
Preferreds should be in non-registered taxable accounts, not in tax free accounts. Your best growth stocks should be in the tfsa. And rebalancing would be the way to pick up “more” preferreds when they are on sale.

#91 earlybird on 07.22.15 at 11:47 pm

I can’t believe they think the fallout from the “oil shock” will be front loaded…hedges are up…and now we will see the “shock” This is a permanent fundamental change to the oil dynamic. There is a lot of denial in Alberta…

#92 Bottoms_Up on 07.22.15 at 11:55 pm

#14 Michael on 07.22.15 at 7:00 pm
——————————————–
Every market is different. Shelter is not free. It costs more to live in better locations. You can rent your accomodations or buy it. All things being equal, if you had to choose between paying $1800 per month rent or buying the same place for $350k, what would you do? Is this your definition of a house of cards?

#93 Oceanside on 07.23.15 at 12:06 am

#60 Andrew Woburn on 07.22.15 at 9:19 pm
#33 Oceanside on 07.22.15 at 7:56 pm
Hardly any inventory in the popular $350,000 to $450,000 which seems to be what the Albertans and people from the lower mainland desire. High end seems to languish on the market.

Should have been more area specific….Qualicum, Parksville…….. Chartwell and similar..

#94 Munch on 07.23.15 at 12:14 am

Last???

#95 SWL1976 on 07.23.15 at 12:16 am

#68 Retired Boomer – WI

Do I think it’s a plot? Dunno…but they seem to have come up with a “new” and “improved” way every few years, yet the product is worse

Don’t forget common core. Might as well keep all the future slaves as equals.

I agree with SM that most teachers do not have any real world experience and lack critical thinking, most are and have been insitutionalized into the education system. It’s all they know, all they teach, and the system is perfectly happy with that.

I understand that there are those who break the mold. However, like those in politics who break the mold, those in teaching who break the mold too much will find themselves pounding sand, or writing a fantastic blog.

Now take an insitutionalized teacher and mix her with politics and you have the perfect candidate to impliment Agena 21, future Earth or what ever you want to call it.

I’ve been researching SMART meters and the SMART grid

WOW, now that rabbit hole is deep

#96 kommykim on 07.23.15 at 12:43 am

RE: #76 Frank on 07.22.15 at 10:27 pm
What does today’s balanced portfolio look like?

It’s asset mix looks exactly like it did yesterday because you rebalanced it. Right?

#97 research on 07.23.15 at 12:48 am

so as Peter Sullivan says, the music just needs to slow?

https://www.youtube.com/watch?v=UOYi4NzxlhE

#98 Ottawa number one in infedelity on 07.23.15 at 12:52 am

Some 189,810 Ashley Madison users were registered in Ottawa, a city with a population of about 883,000, making the capital No. 1 for philanderers in Canada and potentially the highest globally per capita, according to previously published figures from the Toronto-based company.

he hotbed of infidelity was also the seat of power: The top postal code for new members matched that of Parliament Hill, according to Avid Live chief executive Noel Biderman in a newspaper report published earlier this year.

http://www.reuters.com/article/2015/07/21/us-ashleymadison-hack-ottawa-idUSKCN0PV26H20150721

#99 TheAwakenedOne on 07.23.15 at 1:04 am

@# 88 – Google Ceasar:

Man, that’s helluva lot of times China has tried its grip on those small guys in Vietnam… still they did not successfully conquer and complete assimilation of this one tough Mother**beep**beep**er! They just don’t give up their independence, do they?

=======

@ #44 – Bill: ” We are Greece in 15 years “.

Why wait in 15 years for Canada to become Greece???

I thought we already ARE Greece: … been shafted in the rear quite badly with the greenback and oil… and looks like the Poodles and PM Harpee are lov’ing it…

Looking at PM Harpee at the Stampede with his cowboys hat… my heart yearns for the romantic Broke Back mountain vista…

#100 Blacksnakemoan on 07.23.15 at 1:06 am

The best mother#[email protected]#[email protected]# home price comparison I’ve seen to date. Toronto vs. Chicago. Word up!

I know both cities intimately well. It’s true that Midwest folk love Fox News, which basically sums them up quite nicely. But at least Chicago won the Stanley Cup this year. Toronto will most likely never win a Stanley Cup again….yet they get citizen support with the most expensive tickets in the league, which basically sums up Toronto folk quite nicely.

http://www.thestar.com/business/2015/07/22/toronto-vs-chicago-what-your-real-estate-budget-will-get-you.html

#101 TRT on 07.23.15 at 1:21 am

Garth, are you going to give me credit for being correct? Capital Economics doesn’t even compare to my forecast over the last 4 years. You have my posts.

Whats my prize? A 7 figure job on Bay street?

Oh, the Loonie is going much lower. These guys are not going to raise rates. Trust me. The globe says “The downside could be enormous from here.”

http://www.cbc.ca/news/business/canadian-dollar-drops-to-lowest-level-since-2004-1.3163316

#102 Eternal Optipessimist on 07.23.15 at 1:22 am

Garth,

Now the MSM is trying to see some HAM and sunshine through the storm clouds, so I guess there will be no real estate correction after all.

http://www.theprovince.com/news/Lower+loonie+could+turn+into+good+news+experts/11235040/story.html

Lower loonie could turn into good news, say experts

Economists point to exporters, tourist industry, people selling property to overseas buyers

#103 TRT on 07.23.15 at 1:26 am

@investorz Post #41

“Rates will be low for a long long time. At least overnight rates in Canada. I wish we could bet money on that.”

—> Are you serious?…. and calling yourself ‘Investorz’…haha

I’ve been betting on that for a long time.

#104 TRT on 07.23.15 at 1:28 am

Here’s is another forecast. Conservatives will win the next election. Why? Because the majority are dumb enough to split the rest of the vote.

#105 Edmonton Here on 07.23.15 at 1:37 am

IN Edmonton here, there seems to be a massive glut of empty condos and house throughout the city. Ive seen dozens of houses listed daily for almost a year now, and for fun have been searching on MLS and seeing the houses for rent on MLS too. Thousands of empty condos for rent in Edmonton in addition.

If you click on Kijiji Edmonton Area and real estate, you’ll find that there are over 22,000 listings in the edmonton area between for rents & sales of condos & houses. I never seen it like this before. I think it definitely signals a correction must be following.

The Commercial Real estate market seems to b e hading for a correction as well, and a very steep one at that. Edmonton & Calgary commercial Real Estate has shot up to an 11% vacancy rate, up from 5% last year. They estimate it could hit over 20% by 2018.

In the meantime in Edmonton over 1000 new single family homes and 2000 condos are being built!

#106 Suede on 07.23.15 at 2:04 am

goldbugs read this…

fiat money has been around for a LONG time. Like when gold rose in 1980, then crashed for the next 14 years.

And in the next 4 year spike until Bre-X creamed everyone’s pants.

Then fiat money haters came back and sent gold to $1900 in 2011. Now it’s still crashing and there’s more fiat money than ever in the markets.

Give your heads a shake.

YVR Housing Update:

Madness still ensuing and people talking about MAD (Mom & Dad) Bank giving a downpayment. Borrowing costs are minimal.

And a note of caution…

Don’t wish for a housing correction or crash just so you can buy a house cheaper.

If the correction comes, the landscape and your job might be a totally different scenario. You will NOT want to buy a house then. Your emotions will tell you not to.

Just saying..

#107 cynically on 07.23.15 at 2:12 am

Balmuto @ #19 has got the real problem of the economy quite right – lack of diversification. Little industrial manufacturing for domestic and export use and almost total reliance on resource yields and no research and development. Are all the brains in that country so many in Canada criticize for everything else or are we just too lazy to apply ourselves to improvement and a better life?

#108 millenial1982 on 07.23.15 at 2:15 am

For what it’s worth, I live in an area of Ontario considered a “tourist destination” that was once flocked by droves of US tourists that literally vanished around 2008 and shortly thereafter. Lodges struggled or shut down. Lately however, the US visitors are definitely back, confidence must be up. The roads are clogged with suburbans, kick ass fishing boats, and yanke-doodles declairing our Canadian dollar as monopoly money….. once again. DOH!

#109 betamax on 07.23.15 at 2:16 am

#31 MF: “on my BMO account all the Canadian bank stocks have a “strong buy and hold” label attached”

The label means virtually nothing, nor does it guarantee anything.

Don’t ever buy anything based on such labels.

#110 millenial1982 on 07.23.15 at 2:34 am

The various wood mills in the area have been slowly ramping up to operate at full capacities and those shut down for the past decade or so are starting to fire back up (or planning to) in the near future. Problem before was our strong dollar, weak demand from the US and Ontario’s ridiculous hydro rates. 2 out of 3 improved making a comeback possible. As long as negotiations with First Nations go well for accessing timber the sector should fair well. Question is, are other sectors in a similar situation related to demand and our dollar that will see a big boost in the months to come before end of 2015 and change the picture?

Mining seems to be a joke. There’s a lot of folks counting on the 1,000 plus jobs for the mine that’s spent the past decade exploring, permitting, negotiating, cutting through red tape etc. It’s like a fat guy in a hockey game, always in the wrong end chasing the play. Gold was looking hot but now as it’s starting to sink the mine is just about to enter in the construction faze. It will be interesting to see if this thing even opens up. I’m with Garth, staying clear of investing in things in the ground.

#111 LowRent of Arabia on 07.23.15 at 2:38 am

Re: Chapter nine…on Bernardo voting in elections…

My point exactly. If I calculate my own net contribution in taxes, EI contributions never received, Canadian military service in various world wide sheet holes…I am pretty sure I and many other expats have contributed financially and socially much more than than money pit murderer-rapist Bernardo yet he will cast a vote in the next election and I am disenfranchised.

I paid taxes on income when I was in university. Bernardo raped chicks while he studied.

Guess the Hug-a-Thug mentality in Canada is saying who’s judgment they prefer in selecting Canada’s next PM.

And people wonder why there is a brain drain.

Oh yeah and solitary confinement is cruel…better to let Bernardo pass on his great insights to others.

Gotta run…my banana daiquiri needs a refill.

#112 Sosuke Aizen on 07.23.15 at 2:43 am

#88 Google Caesar:
If you think I was asking a question about the history of China, you weren’t paying attention. To help Bill, you must name countries over which China’s military has control. Bill is one of those nutbars who think there is a China menace, i.e. China is out to conquer the world, and has already conquered some countries with its mighty military. However, Bill has not named those countries. His ilk is why I would rather admit to frequenting porn sites than this pathetic blog. I wouldn’t want to be counted among the nutbars & gold bugs that come here. I urge you not to become another nutbar by joining Bill’s crusade against the evil Chinese Empire. And Google only helps if you understand the question.

#113 jane 24 on 07.23.15 at 3:33 am

What is going on in my home and native land!

Right now back home in England so I hit the computer this morning for the first time in three weeks as my little Italian village doesn’t do internet very well, and do my monthly check on the Cdn $ to UK £ exchange rates. I travel home to Canada every year and so move money there and back frequently.

As of this morning one British pound buys an incredible $2.03 Canadian dollars. At this rate I can buy a house in Leaside soon! What is happening? This is an worrying Canadian confidence collapse! The dollar volatility should be the main topic of conversation not how high can TO house prices go. A house in Toronto has already collapsed in price by 23% for me.

I also read the Toronto Star and Financial Post a couple of times a week online. The perception divergence between them is now frightening. The Star which is consumer focussed is always happy and sunny and the Post which is business based is always black and frightening – both on the same news story. I wouldn’t trust the media in Canada an inch.

#114 BillyBob on 07.23.15 at 3:51 am

As someone parked outside the borders for many years now, I thought I would make a few comments to address the theory of the dropping CAD attracting money into RE in Canada. Basic premise: I don’t see it.

Over the past year or so I’ve watched in awe as the value of my USD holdings and my wage itself has appreciated to the tune of over 20% versus CAD. I’ve been an expat long enough to have also been at the mercy of a CAD that was at one point about $1.09USD so the past year has been gratifying.

I’ve watched the housing market closely in my native 250 area code the entire time. There has definitely been a significant softening of prices (Realtor pumping to the contrary). Yet, even though I would be purchasing with cash, I still wouldn’t touch a property in Canada. Yes, the prices have “dropped” by over 20% for my purchasing power. But it doesn’t change the fundamental fact that the vast majority housing is still overpriced, poorly-built…crap. Located in a non-diverse, slowing economy in a pretty undesirable climate.

I think you would find most “foreign” investors, certainly, people like myself, are not inclined to buy into a delusional market. It’s not about price, it’s about value. And the people with the money to buy property without mortgages have far, far better options. Options which Mr. Turner writes about daily, for which I am eternally grateful. I probably would have bought a four-walled “investment” in Canada if it hadn’t been for this blog.

Anecdotal? Sure. But if people think foreign money will save them because of a devalued CAD, that is not what I see from where I sit here in Dubai.

#115 Smoking Man on 07.23.15 at 5:46 am

#85 Steve French on 07.22.15 at 11:12 pm
Smoking Man:

Guess what?

I’m a t_e_a_c_h_e_r.

Booo!
……
Ha, I would send my kids to your class.. You’re a class act… Plus…. I don’t know anyone else who can resight evey line from the greatest movie ever made..

“The Horror “

#116 Kreditnstalt on 07.23.15 at 6:25 am

#45 LL –

Exactly. What “economy”? And it’s SHRINKING.

Take away resource industry employees and pensioners(protected by government), government jobs and pensioners, and government cheques (pogey, welfare, Indian payouts, etc.)

Ditto government-dependent businesses (lawyers, notaries, driving schools, physiotherapists, even taxi drivers with their business carting postmen around town c/o the taxpayer, and a LOT more).

Take out anyone selling anything frilly and dependent on cheap credit. RVs anyone? Quad bikes? Swimming pool installers?

Remove all those “jobs” which wouldn’t exist were it not for money printing, cheap credit and fake interest rates. Think: entire house-selling “industry”.

You’re left with a VERY small economy of a few greatly overpaid oil, gas and forestry workers. Everyone else is hand-to-mouth and has no net discretionary income to speak of.

Not much left is there…

#117 David on 07.23.15 at 6:30 am

Minor correction they were not “wrong default risk assumptions”, it was criminal activity.

#118 Hickster on 07.23.15 at 7:00 am

Garth, their is a critical difference with the US crash. One hours prices began to fall, people owed more than they the house was worth. In the U.S. when this happens, you can hand the bank the keys and walk, and eat it on the credit score. This was s rational choice for many, which caused the crash to snowball. More people underwater – lower values – more rationale defaults – more people underwater – lower values etc.

In Canada this is it the case. If you leave the house to your bank, they can sell it and then come after you for the difference AND you still lose your credit score. This is a huge factor protecting against a similar decline, as the pain theshold for walking is much higher.

Of course the economic suck of huge numbers of house poor people will still be unavoidable.

Incorrect: Most US states are recourse, just like most Canadian provinces. In fact in those areas where real estate was punched hardest there was no jingle mail. — Garth

#119 Steve French on 07.23.15 at 7:19 am

smokey:

Not only that I am a registered Dudeist Priest of the Church of the Latter Day Dude.

class… Your homework today is to go home, spark one up, and develop a critical interpretation of the Dude’s conception of ethics in relation to the Nihilists who threatened to cut off his chonson, as featured in the ground breaking Cohen Brothers film The Big Lebowski.

#120 David McDonald on 07.23.15 at 7:27 am

#89 I agree,
I vote conservative but not republican.

#121 BMO interest rate increase on 07.23.15 at 7:31 am

BMO has raised interest rate effective April 1, 2016 – for MasterCard customers, missing minimum payment two times in any 12 months period.

The low 24.99% interest will be charged on purchases and fees, and the amazing 27.99% on cash advance for at least 6 months.

#122 Intuitive Missus on 07.23.15 at 8:04 am

Most folks think that the three most important things in real estate are Location Location & Location. While location is important, never underestimate the impact of Jobs Jobs & Jobs.

When people feel financially secure they will continue to buy and trade up houses. When they do not feel so secure, fear takes hold and the market will die faster than a speeding bullet.

I agree with Garth that fear is a big motivator and may be the very thing that kills the real estate market this time around – just like it did in the early 1980’s and then again in the early 1990’s. I lived through both of these.

#123 maxx on 07.23.15 at 8:30 am

Blue collar job prospects not looking good at all. White collar jobs are now solidly on the radar. Bumped into a friend yesterday who had a professional office job and pfffft! Organization “restructured”. Gone baby.
Seen so many good, middle aged, educated and talented people stranded at a time when they should be at their asset-building peaks.
Many believe that dropping interest rates and keeping them low is good for manufacturing and exports. Corporations are simply continuing to shed jobs and sit on mountains of cash and investments which they are loathe to spend. (Apple: $202.9 billion………Wall Street Journal, front page, 22 July 2015)
Sounds a lot like all of those astute savers, but without the societal hate-on for them. N’est-ce pas?
Amazing how savers are characterized as cheap whereas business is labelled “smart” for doing exactly the same thing.

It’s high time tptb took better care of the debt free.

#124 lee on 07.23.15 at 9:17 am

#118,

Frankly, I think non-recourse mortgages make it more likely people will keep paying their mortgages because they have nothing to lose. Someone with a recourse mortgage who sees the sky falling will want out before the slump eats too much of their equity or results in a bigger deficiency to pay the bank. It is probably a good feeling to know that no matter how low the price goes, your losses are limited in a non-recourse mortgage. All the more reason to keep paying as if it is rent, and hope that the equity comes back.

#125 valleyrenter on 07.23.15 at 9:19 am

Sorry for your loss Nem.

#126 Sheane Wallace on 07.23.15 at 9:27 am

There goes the ‘recovery’, down the toilet:

https://ca.finance.yahoo.com/news/loblaw-closing-52-unprofitable-stores-113506444.html

#127 gut check on 07.23.15 at 9:30 am

Some 189,810 Ashley Madison users….

The hotbed of infidelity was also the seat of power: The top postal code for new members matched that of Parliament Hill, *****according to Avid Live chief executive Noel Biderman in a newspaper report published earlier this year.*****

So who needed a hack if the CEO spills the beans?
I mean really – doesn’t this smell fishy to anyone else?

I notice that suddenly they are saying “published earlier this year” when in the story I read it said that a high percentage of NEW memberships were from Parliament Hill.

#128 Holy Crap Wheres The Tylenol on 07.23.15 at 9:39 am

HOV Lanes Could Become Toll Lanes say it aint so Joe!
I knew it was coming, I knew it! Thanks again Wynne for destroying Ontario a bit at a time each day.
The so called Temporary High Occupancy Vehicle lanes set up in the Toronto and Hamilton area for the Pan Am Games will not become permanent. However, pause……………………here it comes …………..Premier Kathleen Wynne said they will likely return in the form of toll lanes. So she can say she didn’t lie the Temporary High Occupancy Lanes are gone but are going to magically reappear as Toll Lanes. Nice job Wynne you screwed all of us over again. Here comes the teacher part of her………Wynne said she wants to apply lessons learned from the 235 kilometers of temporary HOV lanes set up this summer on the QEW, some 400-series highways, Gardiner and DVP to creating toll lanes. Well taught Wynne! A teacher that has never worked a day in her life in the real world with the rest of us who contribute to society in a circadian fashion. She doesn’t understand construction workers, office workers, engineers, factory workers, designers, sole proprietor’s, down to the person that serves us coffee at Tim Hortons. We are the real people of the world that you’re holier than thou attitude will affect. Guess how much congestion this will cause Wynne? The ones that will most affected are the ones who cannot afford to use a toll lane. They will be spending less time with their families as they how the hell would you know or why would you care on your short ride to Queens Park. I thought you wanted to promote more time for people to be with their family. I still cannot believe this sad, sad province elected you and your cohorts. God we must really be stupid here in the once beautiful Ontario. Well I hope you enjoy your time with your family.

https://www.lifesitenews.com/news/the-heartbreaking-sex-ed-premier-wynne-gave-her-own-children

#129 tkid on 07.23.15 at 9:54 am

#123 – most mortgages were non-recourse the last time a goodly number of people couldn’t afford the payments (back when interest rates hit 21%), and it didn’t stop people from walking into the banks and dropping the house keys onto the bank managers’ desks. Just because you and I know the mortgages are non-recourse does not mean Mr and Mrs Overextended knows it or even cares.

I know this because my old man used to walk into the bank manager’s office and ask if his mortgage payments had paid for the redecorating, and the potted plants. To calm him down, one time they told him how others were doing. My parents never ever forgot.

#130 Uh-oh on 07.23.15 at 9:56 am

This doesn’t look good –

http://www.economist.com/news/finance-and-economics/21657817-new-research-suggests-it-debt-not-frothy-asset-prices-should-worry

#131 down and out on 07.23.15 at 10:05 am

Smoky the problem with Wynne is perfectly express by many philosophers,Dawson,Hoffer etc. and repeated through out history .The intellectual’s taste for making history and his penchant for immortality add up to a species of insanity. How strange that both society as a business corporation and society as a school are likely to be tyrannies .We are nothing but playthings as they shape the world into their own vision .

#132 Holy Crap Wheres The Tylenol on 07.23.15 at 10:13 am

Now the commie tree hugging NDP and Leftie Libs are going to get married. First it was same sex marriage! OK no problem! But this type of relationship is just sick and demented.

http://www.680news.com/2015/07/23/ndp-open-to-forming-government-with-liberals-to-topple-conservatives/

#133 Holy Crap Wheres The Tylenol on 07.23.15 at 10:20 am

They do make a nice couple! Couple of [email protected]$!$%@#%@#%
http://www.huffingtonpost.ca/

#134 -=jwk=- on 07.23.15 at 10:24 am

I miss Hawaii. Did the winter surf season there, lived in a shack on the north shore (Mark Foo’s old place) and was in the water every day….sigh…

#135 Rational Optimist on 07.23.15 at 10:25 am

Loblaw’s had an earnings report today that included a release saying it will close 52 stores.
I guess this isn’t surprising: in some markets, operating a Loblaw’s on the same corner as a Shopper’s Drug Mart might not make a lot of sense. 52 seems like a big number, even with 2000 stores. I wonder which communities will see a few dozens or hundreds of jobs lost.

#136 Holy Crap Wheres The Tylenol on 07.23.15 at 10:26 am

Now this is just desperate, gold down so disillusioned hordes are pouring into the coin and bar market?

http://www.24hgold.com/english/contributor.aspx?rss=true&article=7240932382H11690&redirect=false&contributor=Mark+OByrne

#137 Holy Crap Wheres The Tylenol on 07.23.15 at 10:29 am

What the hell does Toronto Hydro know that the rest of us don’t? Jesus the god dam Zombies are on their way. What worse is I can’t even purchase ammo at Canadian Tire anymore. Crap!
http://www.torontohydro.com/sites/electricsystem/poweroutages/pages/beprepared.aspx

#138 Sheane Wallace on 07.23.15 at 10:31 am

Being ruled by Wynne and the Harpo’s governments at the same time.

Is this the definition of a frozen hell (the proverbial when ‘the hell friezes’, considering our winters) ?

#139 Llewelyn on 07.23.15 at 10:53 am

To # 37 Jeff Hodgson

Thank you for sharing a very interesting and somewhat spooky look into the mind of Stephen Harper and his mentor Tricky Dick.

It has always been clear to me Harper was using policy as a tool to win elections but your article made it quite clear that the autonomy of the Bank of Canada was definitely extinguished with the appointment of Stephen Poloz. The latest reduction in the overnight rate was clearly timed to create a positive business based buzz leading into the election.

The Stephen Harper of 1991, and the majority of contributors to this blog, were/are confident that their future well being will be enhanced by private businesses dedicated to profit. Over the past few months I have voiced a concern that the share of Canadian GDP being generated by government expenditures using borrowed funds is increasing while the share generated by private businesses is decreasing.

I understand the importance of private investment to the Canadian economy and do not understand why the Federal government has done so little to stimulate investment. This lack of private investment in the Canadian economy is not enhanced when Canadian citizens are openly encouraged to invest elsewhere.

It would appear to me that Stephen Harper has abandoned his Master’s thesis and reverted to Keynesian stimuli embraced by Pierre Elliot Trudeau. Increasing GOC debt by over $150 billion in five years is no vote of confidence for a business-based economy.

Your cynical and sadly prophetic look into 2015 left no doubt that the future quality of life of Canadian citizens is in the process of being sacrificed to improve Stephen Harper’s chances of re-election in October.

We need a new government prepared to introduce policies designed to redirect the trillions of dollars generated by Canadians since 1867 to expand our economy. This is a great country that deserves much better governments.

#140 Ret on 07.23.15 at 10:54 am

My bad behaviours as an Ontarian will change for sure. I’m done. No more votes for the Wynne government.

The inclusive sounding, “We all need to…,” is really her saying, “I want to … and you will pay,” which doesn’t sound very inclusive at all.

Under her regime, the HOV lanes will come a plaything for the ruling elite and the rich.

#141 Daisy Mae on 07.23.15 at 11:05 am

CBC, Don Pitts: “…Now it is time for even the biggest retailers with the deepest pockets to take the falling loonie seriously. And if retailers expect to keep prices steady in the coming year, they have to take account of the fact that the loonie may have further to fall.

If you buy now, you may get the pre-plunge prices. But Talbot says later this year you can expect to pay prices that take into account a year’s worth of currency adjustments.

In some cases you may already be too late. A colleague tells me he was shopping for an anniversary ring at a major retailer last Sunday.

“You were lucky to get in under the wire,” the clerk told him, “because on Monday, the prices are going up.”

The new prices were already in the display cabinet, and rings in the $500 to $600 range were up by $100.”

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

What’s the point of raising prices if consumers have stopped spending?

#142 Estrella on 07.23.15 at 11:17 am

Moved more out of Canada today. Loblaws closing 52 stores is a good move for the company but pretty bad for the economy. This is going down fellow dawgs.

If anyone thinks Canada is going to survive the housing crisis as well as the US did (albeit after 10 years) well, I think you should start selling your muskoka cottages… I’m waiting for the sales…

#143 Finger in the Dike on 07.23.15 at 11:20 am

I think rate increases are inevitable, just as QE had to end. Rate suppression is killing insurance and pension funds. Look up duration matching.
Don’t worry about the next few years; the big problems come in about 10 years when the flow of funds to the economy from pension income implodes. Cents on the dollar.

#144 Daisy Mae on 07.23.15 at 11:22 am

CBC: “…The last time the loonie was this low, the U.S. economy was in dire shape as well. This time around, Button says, Canada is likely headed into recession at a time when the U.S.economy and dollar is doing well — a volatile situation.

“Higher interest rates in the U.S. in 2015 will be a stark reminder of just how advanced the recovery is south of the border,” CIBC said in a recent note on the loonie’s outlook. “More of the same lies ahead.”

“The U.S is thriving, while Canada is at best treading water,” Button said.”

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

Garth is correct again, as usual.

#145 Westcdn on 07.23.15 at 11:25 am

I found this story about the unintended consequences of raising minimum wages. There is some evidence that minimum wage workers are asking for fewer work hours so don’t lose any income support subsidies. Many small businesses, particularly restaurants, are struggling with the change. I was surprised that some restaurants are coping by raising their menu prices and telling the customer not to tip. Are you listening Rachel?
http://www.foxnews.com/politics/2015/07/22/seattle-sees-fallout-from-15-minimum-wage-as-other-cities-follow-suit/

Calgary real estate prices for detached family houses are holding up well. I sense Garth is right that we will see a slow monthly melt to the bottom and that could be several years into the future of Alberta. Hopefully, the rest of Canada fairs better as it (IMO) depends mainly on future private employment income.

#146 JimH on 07.23.15 at 11:43 am

US Mortgage rates (National average) now look like this:
30 year fixed; 4.14%
15 year fixed; 3.13%
5/1 year ARM; 3.24%

Of course, this wll never happen in Canada, eh?

#147 Bob Santarossa on 07.23.15 at 11:45 am

51% of Canadians are living paycheque to paycheque:

http://www.cbc.ca/news/business/more-canadians-say-they-re-living-paycheque-to-paycheque-1.2761708

If job losses, the end result will be the same as in the USA 2009:

-underwater mortgages, and/or
-people vacating homes/mortgages

and that will happen quickly if we believe the Canadian Payroll Association report in Sept. of last year.

#148 Desmond Wright on 07.23.15 at 11:55 am

The TSX is down again today, 14,229. It will be below 14,000 in the next couple of days, maybe next week.

#149 Dee on 07.23.15 at 12:07 pm

Seriously? HOV lanes? That’s the hill y’all want to die on?

If you want to get angry at the OLP government, why not start with $2.5 billion burned on the games — for no economic or even civic benefit? Or the billions planned to be wasted on a subway for Scarborough that even the city admits there aren’t enough riders for–just to buy votes?

But that’d require you to also blame other levels of government and realize it isn’t some partisan thing, but federal Tories and provincial Liberals both wasting your money for their gain…

So yeah, tell me all about those HOV lanes and how they’re destroying society by letting ambulances and 60-person GO buses get through traffic while lowering priority on people too uncreative to figure out a better way to get around.

No wonder Garth encourages people not to take the comments seriously.

#150 Samantha on 07.23.15 at 12:13 pm

#167 LOL Canada on 07.22.15 at 10:21 pm

#121 Samantha – Nice blog promoting affiliate links by the way. Take a minute and look!
http://www.realtor.ca/Residential/Single-Family/15922676/2—152-CASTLEFIELD-AVE-Toronto-Ontario-M4R1G7-Yonge-Eglinton

Comparable houses for similar rental prices.

———————————————–

Nice try my friend but fail on all counts. The listing you posted is for the upper apartment of the duplex, not the entire house. This only confirms what I said you get half a house for $2.5K and if you want the entire house well…do the math.

#151 chapter 9 on 07.23.15 at 12:39 pm

#95 SWL1976

The idea behind a “smart meter” is that the utility company can remotely turn off the power to a customer that is delinquent paying their bill. This new technology has created a new and frightening vulnerability. Each meter has an off switch and all a hacker has to do is to take control of the head-end that controls thousands of meters and send out a command to the meter, change the cryto keys to some code only known to the hacker. Now you have rolling black outs to total darkness. Makes the “Ashley Madison” hack pretty insignificant.

#152 Broke Dick on 07.23.15 at 12:43 pm

#85 Steve French on 07.22.15 at 11:12 pm
Smoking Man:

Guess what?

I’m a t_e_a_c_h_e_r.

Booo!
+++++++++++++++++++++++++++++++++++

Phys Ed?

#153 IHCTD9 on 07.23.15 at 1:02 pm

Garth is on the money with this I think.

Manufacturing is dying, and will never be coming back like it used to be

Oil is dying, and it is going to be a while

Commodities are dying, hopefully US economic expansion might save this one

Retail is dying, or shifting: Saks 5th Avenue for the rich, Dollarama for the poor.

The Loonie is mid 70’s and it’s really only the start.
Cost of food and energy is really starting to take off.
Consumer debt is big, and almost no one has any solid savings.

The lone upside of the sliding Loonie (for Ontario anyway) is the potential for exports to increase. I doubt it, – a .75 Loonie when coupled with $34.50/hr Union Auto workers, Hydro prices higher than just about anywhere in the world, heavy environmental regulations, Unions and the MOL to deal with, Carbon taxes on the way, a second new provincial pension to pay for – is STILL out to lunch compared to our biggest auto competitor: Mexico (3.50/hr and none of the other crap)

Layoff announcements, and bad press will eventually create the fear necessary to get folks thinking about their own personal finances, and how they might mitigate their various liabilities. A slide in consumer spending will probably follow this event (50+% of our GDP right there), construction will slow and good jobs will be lost here as well.

I think we’ve really sown the wind in the last decade. It will probably unfold slowly over a period of several years, but it looks like it won’t be very long before the vast majority of folks in Canada will not feel very rich anymore, the consequences thereof will be no good at all.

At some point, everyone is going to have to come to grips with Globalization in an honest way. We’re lucky to have options in Canada (Nat Resources) because we’re going to need them. The age of high paid unskilled labour is dead, these jobs are going to developing nations where they belong, and they are never coming back once the infrastructure is established. We need to start figuring out how we’re going to save the tax base – we can’t all be miners, lumberjacks, Oil workers and government employees.

#154 jess on 07.23.15 at 1:44 pm

…”At each showing, “Nastya” first pretends to fall in love with the space. Next, “Boris” pulls the estate agent aside to say that he would like to purchase the property, but needs the deal to proceed anonymously. Boris explains that he will be buying the property with money pilfered from the state budget and doesn’t want anyone in Moscow connecting a hole in the budget with the purchase. “Every [Health Ministry] contract brings a little bit to my pocket,” Boris tells each estate agent, following the planned script. “Needless to say, the money for this flat comes out of the government budget. [Therefore] discretion is the absolute priority.”

In every instance filmed, the estate agents appear willing to continue with the sales, which could net them commissions ranging from $100,000 to $500,000. Some of the agents even recommend law firms that specialize in hiding a buyer’s identity and coach “Boris” on how to avoid potential legal problems. In the U.K., estate agents are required by law to submit “suspicious activity reports” to the National Crime Agency if they have concerns that the money being used to purchase properties might have been obtained through criminal means.

British journalist Ben Judah, one of the people behind the film, spoke to RuNet Echo about the project. “I came up with the idea for [From Russia With Cash] on a London night bus with producer Tom Costello. We were sadly not surprised [to find not even one clean estate agent]: we’d been researching money laundering in London property for months. With at least £57 billion ($88.7 billion) worth of money laundering taking place in London and the U.K. a year—or 3.6% of GDP—dusty Victorian bricks have become the reserve currency of global corruption.”

http://globalvoicesonline.org/2015/07/21/laundering-russian-money-in-london-undercover-reporters-show-you-how-its-done/

========

Return to a Floating Rate
(June 1970-present)
page 77 of 113

http://www.bankofcanada.ca/wp-content/uploads/2010/07/dollar_book.pdf

#155 Holy Crap Wheres The Tylenol on 07.23.15 at 1:56 pm

#151 Broke Dick on 07.23.15 at 12:43 pm
#85 Steve French on 07.22.15 at 11:12 pm
Smoking Man:
Guess what?

I’m a t_e_a_c_h_e_r.

Booo!
+++++++++++++++++++++++++++++++++++

Phys Ed?
___________________________________________
Substitute! When not serving Lattes!

#156 MF on 07.23.15 at 2:09 pm

#149 Samantha on 07.23.15 at 12:13 pm

“Nice try my friend but fail on all counts. The listing you posted is for the upper apartment of the duplex, not the entire house. This only confirms what I said you get half a house for $2.5K and if you want the entire house well…do the math.And you lose the whole house”

Yeah and you lose the whole house when this gas bag goes down. Slow burn.

Nothing in the GTA has any value whatsoever. Laughable market. Buyer beware.

MF

#157 Chris on 07.23.15 at 2:16 pm

@Dee, 148

In the abstract, the HOV thing seems minor in comparison to all the rest of the scandals and misspending, but I think it will be more significant in practice.

The reason most people aren’t that up in arms about all the fee and tax increases is because much of it is taken out of our paycheques and we don’t see it on a daily basis. But having to spend another half hour to an hour in traffic everyday (unless you have the money to spend on tolls) is the sort of thing that’s in your face every single day. I don’t commute every day, but I can’t fathom the rage that will create among those who do.

#158 TurnerNation on 07.23.15 at 2:19 pm

Treasury Blondes are confirming this rout.

#159 TRT on 07.23.15 at 2:30 pm

Very BEARISH day for Canada.

US Dollar index down AND Oil down. Wow!!!

This sucker is going down.

#160 MF on 07.23.15 at 2:30 pm

#152 IHCTD9 on 07.23.15 at 1:02 pm

Yup but here in the GTA no one seems to notice this?

Even though the economic news is consistently negative and everyone in the online world is worried, no one around here notices. The wealth effect of our bloated real estate is masking everything I think. No one wonder why the morons at the BoC lowered the rate before the election.

#109 betamax on 07.23.15 at 2:16 am

Thanks for the response. Yup. No value whatsoever. The bank stocks are trading at low PE’s though. The ETF could be a good buy at some point in the future.

MF

#161 gut check on 07.23.15 at 2:39 pm

@Dee #148

Oh yes, please – let’s ask people to use up MORE energy figuring out ‘creative ways’ to get to and from the tax farm. Let’s also get them to be more ‘creative’ about their homes … I think 250 sqft tinyhouses are the bomb, don’t you? And garbage picking is all the rage, too! Maybe they could WALK home, pulling their baby house behind them, looking through dumpsters on the way! yipee! paradise!

Why not just let the poor working stiff drive in comfort without lecturing them, huh?

#162 cramar - Leamington, ON on 07.23.15 at 2:54 pm

Well this might be a first! Never seen this before. Local paper has a large ad for WFCU (Windsor Family Credit Union). The caption on their ad:

“Name your mortgage rate!”

Huh!?

“Tired of being told what you’ll pay for a mortgage? Bring us your rate, meet with us, and learn why WFCU’s mortgage is right for you.”

Okay, I’m tempted to go in and say I want a 1% mortgage! Probably tell me no way and they will slightly beat the competition since their website is advertising 5 yr rates at 2.98%. Hey it’s your ad! It says bring us your rate, but doesn’t say they will go for it. Bait and switch.

But in reality, it would be a great time for youngins to buy in my area if they have a steady job. There are 2BR detached bungalow starter homes with garage for under $150k. Why would any young person rent here?

#163 Steve on 07.23.15 at 2:58 pm

Garth can you provide a link to this Morningstar article you referenced, cant find it anywhere

#164 Samantha on 07.23.15 at 3:11 pm

#155 MF on 07.23.15 at 2:09 pm

Yeah and you lose the whole house when this gas bag goes down. Slow burn.

Nothing in the GTA has any value whatsoever. Laughable market. Buyer beware.

MF

———————————————

I was simply pointing out what is the current rental price in the area, nothing more. I do not make the market rents, I just observe them.

I recognize we are in a giant real estate bubble, but saying “Nothing in the GTA has any value whatsoever.” is laughable. Try skipping your rent or mortgage payment next time and see what happens.

This market will correct sooner or later, however the question is by how much and for how long?
Would you be able to afford a house in 416 with current value of $2M after a 20-25% correction? If the best properties in the best 416 neighborhoods correct by 25%, what will be the correction in GTA suburbs, 40-50% maybe? Do you think your employment and income are stable enough to withstand such a real estate crash?

Just something to ponder…

#165 Holy Crap Wheres The Tylenol on 07.23.15 at 3:12 pm

Well it would appear that not every sector of the market is down! Yippee ki yay…………….Mo%^& [email protected]#$*ers

http://www.businessinsider.com/us-gun-manufacturing-atf-report-2015-7

#166 saskatoon on 07.23.15 at 3:24 pm

the irony is:

30-40% of the traffic is “housing-industry” related.

scrap CMHC.

boom !

traffic problem solved.

#167 gladiator on 07.23.15 at 3:38 pm

Hey folks, don’t be so pissed-off at Wynne.
Thanks to her progressive views, our schoolkids will now be taught about anal play (you can play yourself, or someone can play with your anus) and how to make plans for their sexual activity.
Now, look at the bright side – our kids’ future is so much richer!

#168 Dave fitzsimmons on 07.23.15 at 3:39 pm

U.S. 30 year treasury bond rates are below 3.00% again, 2.97%, 10 years are 2.27%.

Canada’s bond rates are falling hard too, 2.17% 30 year, 1.49%, Yikes!

Down they go and new lows are a coming so. Interest rates are now about trading and not about interest payments anymore.

#169 gladiator on 07.23.15 at 3:39 pm

Oh yeah – I am not inventing it – read the new sex-ed curriculum.

#170 Jake Hamilton on 07.23.15 at 3:53 pm

TSX is getting hammered again today.It is now below 14,200, 14,190. Ouch!

#171 saskatoon on 07.23.15 at 4:09 pm

#166 gladiator

strangers teaching children about sexual predilections/insertions/touching/pleasure is simply pedophilia.

“state-sanctioned” does not make pedophilia morally just.

#172 Alex Swanson on 07.23.15 at 4:11 pm

DELETED

#173 MF on 07.23.15 at 4:13 pm

#163 Samantha on 07.23.15 at 3:11 pm

I stand by what I said. When the market corrects all these condos are going to tumble in value. No one will want to touch them. The same hysteria that caused the market to reach these joke heights will turn against it.

Who said anything about skipping payments? Paying rent is is still cheaper than owning plus all the flexibility.

My employment and income? This millennial is not attached to any one area. I go where the money is, and it’s becoming quite clear that is not here.

MF

#174 Holy Crap Wheres The Tylenol on 07.23.15 at 4:19 pm

#166 gladiator on 07.23.15 at 3:38 pm

Hey folks, don’t be so pissed-off at Wynne.
Thanks to her progressive views, our schoolkids will now be taught about anal play (you can play yourself, or someone can play with your anus) and how to make plans for their sexual activity.
Now, look at the bright side – our kids’ future is so much richer!
___________________________________________

Now where did this strange theme come from???????????? Oh yes the woman who had an affair on her husband with another woman who was in love with her secretly for twenty years. Holy shit I could write a god dam soap opera on our goofy assed province and its leader. Smoking Man move over a real writer is moving in. Or should I say taking over as I don’t actually want to move in with you. That ones already been done!

#175 Holy Crap Wheres The Tylenol on 07.23.15 at 4:22 pm

By the way where the hell are all of the hilarious antics of Smoking Man at his Niagara Falls Casino of late. Has the dollar hit you harder than we know about Smokie? Miss the adventures of Smoking Man on the prowl while feeding his wife C-notes for her machines. Come on!

#176 Bottoms_Up on 07.23.15 at 4:35 pm

#168 gladiator on 07.23.15 at 3:39 pm
——————————-
You did such a good job reading it you were able to cut and paste word for word, as well as post a link right? You are a laughing stock to intelligent discussion. I have actually read the ontario sex ex curriculum, and it is about acceptance and building confidencebin oneself. You speak gibberish.

#177 Bottoms_Up on 07.23.15 at 4:46 pm

#126 gut check on 07.23.15 at 9:30 am
————————————
I already posted this. Look at the canada post website. Postal codes for parliment hill include tall rise apartments of 20 and 30-somethings. Not hard to see why a single 30- something might be on ashley madison.

#178 Ott Observer on 07.23.15 at 5:32 pm

The housing market correction is in full force in Ottawa. It’s been a buyers market here for some time.

Neighbour across the street just sold his home. Bought four years ago for $360,000, but this was before Harper decided to cut back the federal public service. This was a new build home and new build homes are like new born babies, they need lots of stuff.

So, tack on the hardwood, ceramic, eavestrough, garage door opener, fence, deck, landscaping, appliances, A/C, fancy glass inserts in the front door, window coverings…..easily another $45 grand. All in, about $405K.

After 9 months on the market, finally sold for $385K. Less realtor fees and a few grand for the lawyer, and he is netting $361K. The local real estate board will record it as an increase in price from $360K – $385K in 3 years, or about 2.26% a year. The homeowner, who didn’t keep track of how much he actually spent, told me he thinks he lost about $10K.

The truth is that the homeowner paid around $6K in closing fees when he bought the house. So now we are at $411K. Another $4K to break the mortgage. So now we are at $415K for 3 years with a net of $361K. Delusional? You bet.

But even that is all smoke and mirrors. He also paid about $4500 a year in property taxes for another $13,500, bringing the total to a loss of about $67,500, and that isn’t considering the monthly interest payments that he made on his mortgage.

There must be a little pill that you can take to help you with this disorder?

#179 Smoking Man on 07.23.15 at 5:41 pm

#173 Holy Crap Wheres The Tylenol on 07.23.15 at 4:22 pm
By the way where the hell are all of the hilarious antics of Smoking Man at his Niagara Falls Casino of late. Has the dollar hit you harder than we know about Smokie? Miss the adventures of Smoking Man on the prowl while feeding his wife C-notes for her machines. Come on!
……

Dude it’s boating season.. I go on Tues nights, crab legs. Don’t drink that much mid week hence no story.

I check out your link on Wynne.. One word cones to mind.

Wyneebag

I can totally beilive she did that to her family… It’s all over wild Woman’s face…

Revolting atcully, wish I never read it now..

This Province is doomed… Bus driven by a blind stupid, heading for a cliff.

P’s, I am booked for Saturday night at Senica, will I see you there.

#180 espressobob on 07.23.15 at 6:02 pm

TSX composite tumbling? As Mr. Burns would say…”Excellent”.

#181 Bottoms_Up on 07.23.15 at 6:40 pm

#178 Ott Observer on 07.23.15 at 5:32 pm
—————————————
That isn’t a story of a crashing ottawa real estate market. At best it highlights a market that has advanced 2% per year for the past 3 years.

Anyone buying a new home and then selling 3 yrs later while breaking a 5 yr mortgage must have been in dire straights. And i bet they paid way more than 4k to break the mortgage.

The statistics on the ottawa housing market shows it is in better condition than this time last year, and prices are advancing roughly 1-2% per year.

#182 Bottoms_Up on 07.23.15 at 6:45 pm

#171 saskatoon on 07.23.15 at 4:09 pm
——————————————
Instead of rhyming off nonsense that shows your ignorance, why don’t you become educated on what the curriculum really teaches?

#183 Wynned at our back on 07.23.15 at 10:22 pm

Good going Ontario, way to reward the Liberals with a majority. Now we are enjoying the fruits of that mistake!

Let’s tally up the score folks:

1) HOT lanes
2) Gas plant
3) Orange
4) G20 security
5) Declining economy
6) Failure to Ensure an Effective Disability Accessibility Legacy for the 2015 Toronto Pan/ParaPan American Games
7) Teacher Strikes

I could go on. Let’s not talk about the 41% debt-to-GDP, The people of Ontario deserve better than being dictated by this home wrecker.
2018 cannot come sooner.

#184 Balamut on 07.24.15 at 10:01 am

Mr Turner, thank you for that awesome info. Been searching for that a long time. However I have a question: as I know (came to Canada only two years ago, so I don’t know much..) another difference between Canada and US is that in Canada most of the people have bought the… CMHC insurance?.. And I might be wrong but, in US if the family goes bankrupt and could not pay the mortgage anymore, they just return the keys to the house for the bank to sell it, right? So for example if the bank gave 500k to a house buyer, after three years the guy payed 100k, and he went bankrupt, the bank is selling the house for 300k… then the bank is short 100k. The bankrupted guy doesn’t own anything to the bank (was it like this in 2008 crisis?). But in Canada, as I heard, for the same scenario, the CMHC will pay the bank, and then will hunt the guy all his life for returning the remaining 100k, right? So, maybe this is another reason the home owners will try to work their life out but remain with the house and with not owning the CMHC anything anytime…
P.S. One good thing I learned at the classes of “Theory of economic policy” is that the people in the government will do stupid things before elections, to try to keep their warm seats. Never thought I would see something like this in Canada… Seems like they are working for the bubble, and keep growing it, as they are afraid of not getting re-elected if they “touch” it.