Throttled

GOOSE1

China devalues its currency. Oil slams down to forty-three bucks. The dollar slides to 76 cents and markets wobble. Another Fed official confirms US interest rates will rise in five weeks, and we’re all talking about little Norway.

Every day this summer there are more reasons to believe those people buying real estate (there were 9,880 of them in Toronto last month) are absorbing epic risk. As detailed here, the average price of a detached shack in 416 has declined $120,000 over the past five months, and yet the meme is that the market’s on fire.

Pfft. Maybe not. Vancouver, either. The flames and smoke may be more in the eyes of the beholders, based on data the real estate boards would rather you don’t see.

For example, YVR. As housing consultant and excommunicated realtor Ross Kay tells me, there have been 47,796 homes listed so far in 2015. Just over 46% of those have failed to sell, which means the “average price” number published by the industry reflects only the best five in ten houses that hit the market. The other five that languish are not counted, and did not pull the index down.

The average is now $865,071, but Kay’s analysis shows it’s bogus. Three-quarters of all properties can be purchased for less than the average, and 57% of all detached houses are sitting at values under the average for detached listings. So, how ethical is it to tell the public only about average sale prices, without adding the average price of all houses for sale at any one time (as in the US)?

You’re right. It’s not. This creates a false impression, especially among naïve buyers who end up getting their tails shot off in a needless bidding war.

Also interesting is that of the 114,659 properties hitting the Toronto market this year, 44% haven’t found buyers, also skewing the average sale higher (since it’s based on only 56%). Kay also says the Toronto Real Estate Board has fibbed about how long sellers need to find buyers. Instead of the reported 20 days, it’s actually 67 – or more than three times longer. This results from properties being relisted or repriced, which is important information never shared with MLS porn addicts.

Now, let’s yak about housing starts. The numbers CMHC fed us yesterday were unremarkable on the surface, but some people are seeing a massive supply glut on the horizon, even as condo sales to hapless, unsuspecting virgins rebound.

“The number of housing units under construction has risen to unprecedented levels, mainly in the multi-unit market,” says economist David Madani. “Many of those are condo projects that will soon be completed. Although most of these have already been purchased by investors, the 81% absorption rate suggests that as many as an annualized 325,000 units will be added over time to the growing glut of newly completed unoccupied units. This oversupply continues to suggest that the economy is vulnerable to a sudden shift in investor sentiment that could trigger a potentially severe market correction.”

And why would sentiment change?

Simple. Next year 2.4% fixed-rate, five-year mortgages will be nothing but a memory. Worse, oil and other commodity prices could still be in the ditch, which begets higher unemployment and swampy growth. Household debt continues to ratchet higher every month, so any new hit – higher mortgage service charges or maybe one of the tax increases all the people who read this blog want – will throttle consumer spending. Says Madani: “We expect housing demand to soften considerably next year in response to rising long-term interest rates and souring investor sentiment in the condo market.”

Is your daughter about to buy that condo? Bad idea. Here are a few more things to consider, from the dudes at Urbanation, in Toronto:

The number of new condo starts this year has increased an astonishing 78%. There are now 50,540 units under construction. New condo sales are up 11% year/year and, for the first time, the average resale values pushed passed the $400,000 mark.

How much more evidence do you need that public sentiment is scarily divorced from reality? Beyond this blog, I mean.

245 comments ↓

#1 That other guy on 08.11.15 at 5:51 pm

Better.

#2 That other guy on 08.11.15 at 5:51 pm

Much better.

#3 Nick on 08.11.15 at 5:54 pm

NDP / Liberal Majority (or coalition) here we come!

#4 FitBitKid on 08.11.15 at 6:02 pm

“Another Fed official confirms US interest rates will rise in five weeks”…

Ha Ha Ha…. Not happening. China just shut that door.
It was a no-go even before that… It just posturing.

Its early stages of currency war…. Rate rise is not helping.

The Fed will move. — Garth

#5 Ponzius Pilatus on 08.11.15 at 6:03 pm

That kid is chocking a Black Swan.
Harbinger?

#6 Len Filworth on 08.11.15 at 6:04 pm

Garth, with currencies being devalued, could Gold make up the SDR basket meaning holding a bit in your portfolio will add diversification and safety instead of holding too many Canadian dollars which will fall very heavily with the decline of Oil to about $35 bbl USD?

#7 Trendy on 08.11.15 at 6:07 pm

Fed accidentally leaked a report, US interest rates to go up 0.35% September 17th/2015.

Doesn’t sound too bad does it?
Flat out, this is going to cause a massive derivative crisis. The big banks are going to have big losses.

Wonder why the big hedgies are shorting the banks?

#8 MEANWHILE IN FRANCE on 08.11.15 at 6:09 pm

How good it is not to be there. Not that Europe is perfect .

#9 FitBitKid on 08.11.15 at 6:13 pm

The Fed will move. — Garth

I agree that Fed should move, but they will not.
No back bone, and they have been searching for reasons not to raise since the beginning. They found one.

In any case , it will be a similar to Canada…. end up cutting rates pretty soon.

#10 Darren on 08.11.15 at 6:13 pm

The Fed will move. — Garth

Maybe in 2017

September 17th. — Garth

#11 ETFs or MFs? on 08.11.15 at 6:16 pm

Woof woof blog dawgs!

If you would indulge me…

– I’m 36. Married. No savings. No investments. No assets.
– Finally, I have my initial 5K to invest.
– and I will contribute $300/mo, $150 every 2 weeks.

Considering I have zero experience investing, would it be best to:

a) Buy Tangerine “Balanced Portfolio – INI220” MF (40% Canadian Bonds, 20% Canadian Stocks, 20% US Stocks and 20% international stocks)? It has MER of 1.07% but is diversified, rebalanced yearly and no fees upon buying it.
b) OR Buy 2 or 3 ETFs to emulate similar diversification and percentages as “Balanced Portfolio – INI220”? Ticker suggestions?
and) Should this money be invested inside a TFSA or RRSP for maximum benefit? – I have contribution room in both

At first I was leaning towards INI220 because it is diversified, simple and because I thought I’d have to pay commission fees everytime when buying ETFs.

Even though INI220’s MER is on the higher side (1.07%), there is the benefit of it being re-balanced yearly.

I’ve recently learned that ETFs can be bought and sold for free at Questrade(?) and now I am intrigued and wondering if at this stage it would be best to try out some ETFs right away. What would you do to grow this money?

Thank you kindly in advance!

#12 Victor V on 08.11.15 at 6:22 pm

Harper attacks Ontario Premier Wynne’s plan for an Ontario Pension Plan today in Markham

http://www.cbc.ca/m/news/stephen-harper-attacks-ontario-pension-plan-1.3187328

#13 Lower Loonie on 08.11.15 at 6:22 pm

Maybe the Fed raises once in the near future, maybe not. No one knows at this point, not even Garth. The bigger question is whether they can keep raising in the face of a weaker and weaker global economy, I don’t think they can.

It just doesn’t seem likely the Fed will be able to raise rates 2% over the next 2 years, so it seems highly unlikely that Canadian mortgage rates are going to double over the next 2-3 years because that would create such a disaster the BoC would just have to lower rates again. If doing something is going to destroy the Canadian economy, then chances are it won’t get done.

The BoC can simply allow the Loonie to fall, perhaps they could start buying mortgage bonds, act as a buyer of last resort for all kinds of Canadian debt which would keep interest rates low. This would tank the Loonie but it could keep rates low and prevent large numbers of defaults.

That doesn’t mean it won’t get bad for those with too much debt as purchasing power erodes due to inflation caused by a lower loonie.

Also, I do agree, that there is a significant risk of a quick shift in market sentiment, and this, more than raising rates could doom the RE market.

#14 Sign of the Times on 08.11.15 at 6:24 pm

Walking through Capilano Mall in North Vancouver today and couldn’t help but notice a half dozen, or more, “For Lease” signs. Compare that with my experience at Bellisfair Mall in Bellingham (USA) last weekend where the mall was packed well into the evening on a Saturday. I guess we should never bet against America….(or the cross-border shopper Canadians like myself that keep them in business)…

#15 neo on 08.11.15 at 6:29 pm

The 10 year should be over 4% if rates were rising. It has been going the opposite direction lately. The Fed will find another excuse not to raise. But even if they do. It will be lowered right back down. It’s not called a liquidity trap for nothing.

#16 Van real on 08.11.15 at 6:33 pm

Hey Garth. You’ve been singing the same song about housing for how many years now. Too many to count is my guess. I agree with you about diversification in assets but not about housing tanking. Interest rates are going to stay low for years. The economy sucks and yes that includes the U.S. As soon as Yellen raises the rate, and she will to save face, that will be the end of increases for a long while.

#17 Mocha on 08.11.15 at 6:34 pm

“Is your daughter about to buy that condo?”

Oh no! You didn’t use gender neutral language. You can expect a call from the CBC any time now!

“Although most of these have already been purchased by investors…”

Dare I say it? H…. A….

#18 Van real on 08.11.15 at 6:34 pm

Capilano Mall? What a joke. Try looking in a real mall like pacific centre or Oakridge.

#19 Alberta Ed on 08.11.15 at 6:39 pm

I would send this post to the pointy heads masquerading as business reporters at the CBC, except they probably would explode.

#20 nonplused on 08.11.15 at 6:39 pm

I’ve always thought it was weird how tear-downs generally get priced pretty close to nicer homes in their neighborhood. They don’t sell very often, but they usually carry a similar list.

I’ve looked at a lot of houses in my time and it’s always the same. One house has a developed basement and all the maintenance and upgrades done and the house beside it is a $hit hole and the owners both want the same price. I guess if they can get it more power too them but for me I always make an estimate of how much I’m going to spend fixing the place before I bid. Usually the owner will not come down that far as obviously they don’t do maintenance so therefore it is not an expense they consider. Oh well it’s kept me from buying such a place.

#21 lurker on 08.11.15 at 6:41 pm

Bought 15k of gold today, to bring my allocation up to 5% of my total portfolio. Currencies are doing crazy things these days. Don’t be stupid about it (buying more than 5-10%) but best to have some insurance.

#22 LJ on 08.11.15 at 6:44 pm

Just a quick question: If housing starts in Calgary are down 30.5% (as reported today), what are all the construction workers who moved here in the last couple of years going to do for work?

#23 Jdoedoe on 08.11.15 at 6:44 pm

Garth, what about all those people coming back to Toronto from Alberta and Saskatchewan filling those condos? I have apartments in midtown and I am getting a lot of calls from out west with people looking for a place to live in good old TO.

#24 espressobob on 08.11.15 at 6:45 pm

#10 ETFs or MFs

“What would you do to grow this money”
…………………………………………………………………….

I would take advice from the “comment section” with a grain of salt! Keep studying. Comb through Garths archives. That’s good advice.

#25 Second Class on 08.11.15 at 6:48 pm

Meanwhile housing starts in calgary dropped dramatically. First the oilfield construction, rig workers, and services guys got cut. Engineers and other office flks. Then maintenance guys got laid off. Now there will be a significant drop in home construction with commercial property having high vacancies.

When nobody has any money realtors, banks and customer service people are all going to be waiting for dollars.

The dominos are falling in alberta.

#26 Mister Obvious on 08.11.15 at 6:48 pm

#5 Ponzius Pilatus

“That kid is chocking a Black Swan. Harbinger?”
——————————–

Actually, that kid is choking a Canada Goose.

Most unwise.

Although they’re marvel to behold flying in formation overhead, one-on-one they can be nasty. Vancouver is filled with them right now. I give them a wide berth.

#27 S.Bby on 08.11.15 at 6:55 pm

#18 Van real:
or Metrotown malls (booming!).

#28 Ray Skunk on 08.11.15 at 6:55 pm

Loving the rather vague “not sure how much it will cost yet, not sure what the exemption limits are, but we’re still going to legislate this and rip you off blind” Wynne ORPP announcement today.

I’m thinking I should be able to dodge the theft until 2020… assuming the 8% private sector minimum is a total of both employer and employee contributions. Perhaps. I’m capped at $4k employer contribution though so maybe not. Who knows?

What an absolute farce. The Ontario Liberals’ most daring and blatant boondoggle to date… Harper is 100% spot on to be wanting nothing to do with it.

Fingers crossed something approaching parity between the USD and CAD will be achieved again within the next five years. As soon as that flag drops I’ll be getting the F out of this sinking, corrupt, socialist-experiment-gone-wrong province.

Either than or the Ontario Paid-off Police finally bite the hand that feeds, forcing a change of government to one with some inkling of fiscal competence.

#29 Unhappy Camper on 08.11.15 at 6:58 pm

North American stock markets in a tumble. Real estate market is overpriced. Interest rate is low. Unemployment rate is high. We are all doomed! Time to move to Norway!

#30 Unhappy Camper on 08.11.15 at 6:59 pm

Stock markets are in a tumble. Our currency is dropping. Real estate market is overpriced. Oil price is in a tumble. Unemployment rate is high. Where should we invest in?

#31 crowdedelevatorfartz on 08.11.15 at 7:02 pm

@#26 Mister Obvious
Actually I’d say the kid is choking a dead Canada goose.
If it was alive, the kid would be needing therapy for his broken bones and years of nightmares of the “attacking bird”…….
Canada geese are not friendly or nice.
And they poop green……..

#32 Loonies Watcher on 08.11.15 at 7:05 pm

The lack of data availability about Canadian real estate markets is absolutely criminal, especially in the 21st century where everybody has availability to advanced stats on everything. Why isn’t there a movement afoot to allow Canadian consumers access to these much needed data?!?

#33 lala on 08.11.15 at 7:07 pm

@8 yeah it is so good not to be there….where MC Donald claim is the Canadian cusine.

#34 Economy like Japan circa 1990s on 08.11.15 at 7:07 pm

With ZIRP, as soon as you raise rates, growth slows and unemployment rises again.. this is what happened in Japan in the 90s. Why will it be different in the USA in 2010s?

#35 Samrtalox on 08.11.15 at 7:07 pm

@Van Real: Capilano is located near lower income neighbourhoods, compared to Oakridge mall, or Pacific centre. It’s the canary in the coal mine, signalling that lower income families are curtailing regular spending, because their credit is tapped out.

#36 Victoria Real Estate Update on 08.11.15 at 7:13 pm

Canadian 5-year fixed mortgage rates will begin moving higher this fall, as Garth has said. Rates will increase approximately 1% per year.

This will make it more difficult for first-time buyers to qualify for mortgages. Those that do qualify will do so for less and less money as rates climb.

There are plenty of realtors who post comments on Garth’s blog saying that today’s interest rates are permanent. This of course is false.

Many recent buyers bought thinking that rates will always be this low, making it safe to buy.

They were wrong with that assumption. Even if rates didn’t rise (they will), but if they didn’t, prices would still correct. This is what happened in Japan. House prices there went through a complete correction from bubble levels, despite emergency rates.

Many Canadians will be shocked when rates begin moving higher. This could change buyer sentiment in Canada and it could have a chilling effect on housing markets from coast to coast.

That chilling effect would be on top of the natural consequence of rising rates – lower house prices.

#37 espressobob on 08.11.15 at 7:13 pm

#21 lurker

Bought 15k of gold today
………………………………………..

What do you hope to accomplish owning a pure commodity, when comparing it to a world equity index?

The major indices already own the mining sector.

#38 Still Waiting... on 08.11.15 at 7:14 pm

How much more evidence do you need that public sentiment is scarily divorced from reality? Beyond this blog, I mean.

When the numbers from realtors show a price decline. That’s what I’m waiting for.

#39 Daisy Mae on 08.11.15 at 7:15 pm

“….and we’re all talking about little Norway.”

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

Pathetic, isn’t it?

We don’t ‘get it’….and probably never will.

#40 Steve French on 08.11.15 at 7:16 pm

Yeah lets keep the discussion focused on Canada’s epic housing meltdown … and less about Norway and Father Mulcahey or Mr. Lahey or whatever that NDP bearded one’s name is.

[I’m still voting NDP though]

#41 Smoking Man on 08.11.15 at 7:17 pm

#10 Darren on 08.11.15 at 6:13 pm
The Fed will move. — Garth

Maybe in 2017

September 17th. — Garth
………

I can’t see the justification for it, other than preserving some credibility for the Fed. And attempting to create a an illusion of yes the economy is back. Starbucks jobs don’t count in my book.

I’ve floated a few resumes today, and yesterday in USA for some contract work. Got to get out if the house.. We are driving each other crazy.

No bites. My resume and skills are solid… Job market not as hot as you think. Mostly resume collection.

But If foolishness and egos at the Fed are prevalent I stand to make another 300k on my big Forex Bet.

If they don’t, I get to rub it in here everyday…

I hope you’re right Garth…

#42 Samrtalox on 08.11.15 at 7:18 pm

Thanks to Ross K for pointing out how the real estate boards polish their statistics, by only reporting half the story.

It reminds me of the story of the statistician brought in by the USAAF to assess the damage to bombers that returned from missions in WWII. Asked to indicate where heavier armour would be of the greatest benefit, he studied the damaged planes and said:

“put the extra armour where these planes AREN’T damaged”

The Generals thought that he had made a mistake, but he stood by his recommendation, pointing out that the damaged planes still managed to return to base – obviously the damaged bits weren’t critical for flight.

The planes that DIDN’T make it back, however, must have had critical components damaged, and it was those components that would benefit from the additional armour.

For Real Estate, I’d love to see the ratio between listed prices, and sold prices. Even as a grouped metric, it could be an effective indicator.

#43 pwn3d on 08.11.15 at 7:18 pm

#12 Victor V on 08.11.15 at 6:22 pm
Harper attacks Ontario Premier Wynne’s plan for an Ontario Pension Plan today in Markham

http://www.cbc.ca/m/news/stephen-harper-attacks-ontario-pension-plan-1.3187328
————–
He has disappointed me on a number of things over the years, but sometimes it takes a bully to stand up to a bully and I’m so happy to see Harper throw it back in Wynnes face it’s awesome. If I had any doubts to vote for him they are gone.

#44 Jesse Salas on 08.11.15 at 7:19 pm

The Chinese government will devalue the Yuan to the U.S. dollar at least another 5%.

This will push down U.S. and world bond yields down even more.

The U.S. Federal Reserve move is pushing up shorter term bond yields, 2-4 years but not much more then that.

Actually, U.S., Canada and other world government bond yields are dropping fast, Canada 5 year, 10, 30 year is 0.57%, 1.39%, 2.08%, U.S. 5,10, 30 year yields are now 1.52%, 2.14%, 2.81%.

This is probably going to bring below 1.25% 10 year, 1.95%, 30 year Canada bond yields and below 1.95% 10 year U.S. bond yields, below 2.55% 30 year U.S. bond yields.

Equities are going down another 6% to 10% over coming months.

#45 Steve French on 08.11.15 at 7:25 pm

By the way– Smoking Man:

If you want to learn the best novel ever written…

The best novel written by a drunk for other drunks….

“Under the Volcano” by Malcolm Lowry.

——

“How, unless you drink as I do, could you hope to understand the beauty of an old Indian woman playing dominoes with a chicken?”

“Far above him a few white clouds were racing windily after a pale gibbous moon. Drink all morning, they said to him, drink all day. This is life!”

“Hugh put one foot up on the parapet and regarded his cigarette that seemed bent, like humanity, on consuming itself as quickly as possible.”

—–

But be careful of being consumed by the devil liquor. It’s far better to read about a drunk, than to actually be one.

#46 Steve French on 08.11.15 at 7:27 pm

“But those who desire to be rich fall into temptation, into a snare, into many senseless and harmful desires that plunge people into ruin and destruction.”

– Jesus

#47 joblo on 08.11.15 at 7:28 pm

“China devalues its currency. Oil slams down to forty-three bucks. The dollar slides to 76 cents and markets wobble. Another Fed official confirms US interest rates will rise in five weeks, and we’re all talking about little Norway.”

Chinese buyers of YVR real estate just got 3.34% more expensive, Fed raises rates this inverts yield curve, but today 10 year yields fall, CDN $ heads lower to .60? Norway WHO CARES!
I’m beginning to wobble

#48 Brian on 08.11.15 at 7:34 pm

Here’s my uneducated theory: Over time the opportunities for money to make more money diminish, as the global economy becomes more ‘steady state’. Interest rates will remain very low, and that will be the new norm.

Those that quote the crazy interest rates from the 80’s are living in the past. It’s a different era now. Past performance is no indicator of the future.
And just as Garth states that a balanced diversified portfolio wont crash long term, neither will the CAD RE market.

Too many people have drunk the cool aid and have financing options available to extend their mortgages. Plus they’ll fight tooth and nail to not sell at a loss.

#49 bb on 08.11.15 at 7:36 pm

Does that mean there will be more renters than house/condo buyers? Say goodbye to basement “suites” and landlords subsidizing our rents as demand for rental properties go up, so do their rental prices. =(

#50 TRT Evidence on 08.11.15 at 7:38 pm

Here is some Vancouver housing evidence.

My buddy’s relative just bought a 55 x 145 foot tear down in Vancouver backing into the ocean. Price?

$16 Million.

He is going to build a new house. Guess who the target market is?

#51 Fred on 08.11.15 at 7:41 pm

I would love to see the math on Ontariowes ORPP scheme. Garth, how about it?

#52 -=jwk=- on 08.11.15 at 7:44 pm

Who cares, my 2.05% 5yr is based on Canadian prime, which isn’t going anywhere anytime soon. That’s prim minus 0.7% for a 5yr fixed. If you are not in Toronto or Vancouver, why not buy?

I was in LA in 2005 when things started to go south. Not pretty. Happy to be far from Toronto when the SHTF this time…

#53 OttawaGuyRenting on 08.11.15 at 7:45 pm

67 Days in TDot!

Must be 120 days in Ottawa!

Every street around me is flooded with 4Sale Signs

#54 jess on 08.11.15 at 7:52 pm

1974 ….30 years later 2002?

lookback ….“Herstatt risk”

1974 Herstatt Bank german bank failed – 30 years later CLS created 2002? —->BIS basel committee
…”As the volume of foreign exchange traded each day soared into the trillions in the 1990s, central banks grew ever more worried that Herstatt risk was still around, and on an even bigger scale. The foreign-exchange market is largely unregulated. There are, for example, no regulatory capital constraints on the volume of foreign exchange that a bank may trade. In 1996, regulators warned banks that if they did not find their own way of reducing Herstatt risk, a capital charge would follow.”

Read more at

http://www.economist.com/node/574236

continuous linked settlement (CLS) protocol

http://www.riksbank.se/en/Financial-stability/Financial-infrastructure/Systems-in-the-Swedish-infrastructure/CLS/
https://en.wikipedia.org/wiki/Herstatt_Bank
===========

Bank of England to examine whether financial reforms have held back growth
Governor Mark Carney tells George Osborne that City traders and bankers will be asked for their views on effect of financial stability policies
http://www.theguardian.com/business/2015/aug/11/bank-of-england-carney-examine-whether-financial-reforms-held-back-growth

#55 Tremblant110 on 08.11.15 at 7:53 pm

Contribute to a RRSP or TFSA and if you die young these funds or contributions are part of your estate. With CPP and Ontario’s new pension plan if you die young government keeps your contributions . Our sustainability model is based on some of us dying young and we keep your money.

#56 Steerage bilge on 08.11.15 at 7:55 pm

#46 Steve French on 08.11.15 at 7:27 pm
“But those who desire to be rich fall into temptation, into a snare, into many senseless and harmful desires that plunge people into ruin and destruction.”

– Jesus

———–

Yeah but look how he ended up.

#57 JG on 08.11.15 at 7:55 pm

#14 Sign of the Times on 08.11.15 at 6:24 pm

” I guess we should never bet against America….”

That philosophy has always worked for me.

#58 bigtown on 08.11.15 at 7:57 pm

Chrysler ads in the Toronto Star show financing over 96 months. My dear that is 8 human years of hard labour to pay for your new Jeep.

God Bless Garth and all the blognoscenti The United Church has put the kybosh to FOSSIL FUEL investments. My Word plastic can not exist without oil. Auto parts; shampoo bottles; orange juice containers; kid’s toys; motorcycles; hair accessories; furniture…all of these items require oil to manufacture plastic parts.

I read the bestseller (the Bible) and I have yet to discover any mention of crude products.

My Word dear good Canadians we feel your pain and remorse and wish this election had somebody to vote for. Praise the Good One and hope someone with nice hair gets the prize.

#59 Jesse Salas on 08.11.15 at 7:57 pm

The Ontario’s new pension plan, ORPP, Ontario Retirement Pension Plan is really not going to help workers that much.

This is especially true with lower income individuals. A full time worker making $25,000 a year will get around $300 a month in 40 years.

This could also be taken all away because of OAS and GIS clawbacks that currently exist. Also, $300 a month in 40 years is really only worth about $110 to $120 a month in today’s dollars.

This is if they don’t change the qualified age of currently 65 years old. We all know that it is going up, probably to 70 to 72 years old in the next 10 to 15 years or so, maybe sooner.

It is all hype with no real substance and is really more bureaucracy and jobs for the Ontario government.

#60 Rainclouds on 08.11.15 at 8:00 pm

#32 Loonies

“Why isn’t there a movement afoot to allow Canadian consumers access to these much needed data?!?”

Actually there is: Several years behind the States mind you………(Zillow has been in place for over a decade. Viewpoint Realty in NS also does this in their jurisdiction) Nothing National, YET.

My understanding, Competition Board picked TREB as it is the largest Board and as GT has shown, rather creative with their “data”

http://www.mortgagebrokernews.ca/news/key-development-in-treb-tribunal-hearing-190189.aspx

#61 Chaddywack on 08.11.15 at 8:06 pm

Hey Garth, speaking of the “eye of the beholder”

http://www.cbc.ca/news/canada/british-columbia/vancouver-real-estate-a-bargain-for-chinese-investors-says-china-based-agent-1.3186900

Didn’t China just DEvalue it’s currency? I wish the media would stop printing these fear mongering articles.

#62 Confused millenial on 08.11.15 at 8:07 pm

Ok real talk here: so let’s say the fed lifts rates mid-september, oil goes down a little bit… What kind of effect is it going to have on CAD? What about Canadian banking system? Any possibility of emergency bail-in?

Not a chance. — Garth

#63 Tony on 08.11.15 at 8:08 pm

Re: #11 ETFs or MFs? on 08.11.15 at 6:16 pm

Open a TFSA with the 5 grand. Short the Canadian dollar at the start of October against either the U.S. dollar or the Aussie dollar. Cover about two business days after the election is over in Canada. Questrade charges commission to sell an ETF but not to buy one.

#64 Ret on 08.11.15 at 8:10 pm

I just heard the Donald do a press conference at Birch Run MI.

Sure beats the Curly, Larry and Moe show here.

#65 tundra pete on 08.11.15 at 8:11 pm

No worries of pesky tax increases from the future NDP, worry of the CMHC bailout the “middle class” will be funding soon.

#66 saskatoon on 08.11.15 at 8:13 pm

teeth are coming out for the big government loving boot lickers in canada.

as evidenced by the recent swelling of statist blog comments.

fear is growing among them, and the desire to substitute government for self is becoming stronger; they will use governmental force to steal from others in order to maintain state assistance and mitigate their own bad decisions:

like garth says: insane debt, lack of skills, useless degrees, no savings, bad jobs, etc. etc..

these are the most dangerous people.

they will rationalize, throw insults, regurgitate propaganda, quip, retort, and SNARK.

oh, the snark!!!!

but this is all they really have–it is a daily struggle for them to keep reality at bay, and avoid personal responsibility.

this is not trolling; nor is it rudeness; it is observation; it is empirical evidence.

for them, violence is loving, theft is charity, force is compassion, taxation is voluntary, and government (i.e., them) is a proxy for personal aggression and unresolved (often severe) psychological issues.

they are not interested in truth; consequently, they are not interested in real argumentation, logic, dialogue, historical facts, etc..

THEY MUST BE IDENTIFIED AND EXPOSED.

bringing the true nature of these propagandized hollowed-out humans into the light of day is the greatest function of this blog.

it serves as a catalyst for those not fully indoctrinated–those still sane: who are still somehow capable of self-reflection and self-awareness.

#67 Suede on 08.11.15 at 8:15 pm

Many of us love massaging stats. But most of the public don’t care about the steak, they get sold on the sizzle.

Yvr market on fire, speculative froth, whatever you want to call it. It’s working and people are duped. Wifey has a buyers itch. Have to tell her the portfolio is down or some other story to keep her at bay.

#68 Canada's Ducked on 08.11.15 at 8:19 pm

#5 Ponzius Pilatus

That kid is chocking a Black Swan.
Harbinger?

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

Actually it looks like a Canada Goose to me. I just wonder if the little nipper with the choke hold was born in Toronto and raised in Calgary ?

#69 Investorz on 08.11.15 at 8:21 pm

There’s 1 very good reason why people buy condos, as evidenced this week with 2 coworkers…

NOT GETTING KICKED OUT OF YOUR HOME.

If you rent a condo, you can get kicked out. That is not cool. Some people have this happen more than once. They then buy. Sure, there could be a paper loss to a 400k condo in Toronto, but to most people, that’s more tolerable than getting booted. Especially when you have a baby/toddler.

#70 purdy on 08.11.15 at 8:24 pm

#11

those tangerine funds are kind of neat. my only complaint is thats heavy on canadian equity. however, you’re only in with 5k. Save yourself the hassle of placing buy orders with etfs for the time being. Once you’re up to around 25k then i’d start considering. but as it stands, with only 5k you’re paying an extra 50 cents in MER compared to ETFs with low fees. Don’t sweat it.

#71 Confused millenial on 08.11.15 at 8:30 pm

>Not a chance. — Garth

Is it a response to the last question? If you’re too lazy you don’t have to answer, Garth. Now where’s Smoking Man?

I don’t owe you any answers. You are my guest. Behave as one. — Garth

#72 What happens when currencies on 08.11.15 at 8:31 pm

Hard assets move higher.
And what is the biggest hard asset class in canada………………………..that right…..REAL ESTATE !!

#73 What happens when currencies on 08.11.15 at 8:32 pm

Hard asset prices move higher.
And what is the biggest hard asset class in canada………………………..that right…..REAL ESTATE !!

#74 Tony on 08.11.15 at 8:33 pm

Re: #23 Jdoedoe on 08.11.15 at 6:44 pm

The people from Alberta would faint when they found out what the land transfer tax is on a Toronto condo. Not to mention there’s literally no jobs in southern Ontario. The people from Alberta are all landlocked now that all the surrounding cities in other provinces have gone up in price while their own houses fell for the past 7 or 8 years.

#75 Mark on 08.11.15 at 8:37 pm

“Ok real talk here: so let’s say the fed lifts rates mid-september, oil goes down a little bit… What kind of effect is it going to have on CAD? What about Canadian banking system? Any possibility of emergency bail-in?”

Canadian bail-ins of the big chartered institutions are practically impossible. Retail interest rate as applicable to adjustable rate borrowers would first rise through the ceiling (as the banks are entitled to do, since they control the ‘Prime’ rate). The distress such would induce would cause the BoC to engage in significant policy action to prevent the economy from melting down.

That’s not to say that its not possible to lose value in Canadian currency deposited/lent to a Canadian bank over the long term. But short-term bail-ins are practically impossible for such reason in the insured Canadian institutions.

Certain Canadian Credit Unions, IMHO, are a different story.

As far as the Fed raising rates, if it actually happens, it might cause the CAD$ to rise. I know it sounds counter-intuitive, but the only reason why the Fed would raise rates is a fear of future inflation. Historically by the time the Fed actually fears future inflation, inflation is already a problem, and inflation almost always means a lower currency.

Likewise, a rising Fed Funds rate may actually push oil up, as a function of the US oil sector being starved of capital and an increasing hurdle rate to investment. The shale oil supply ‘revolution’ has only been possible due to a fairly low cost of capital to the sector.

#76 My Life is a Pile of Shit on 08.11.15 at 8:39 pm

#11 ETFs or MFs?
Why do you and other people with specific investment questions ask them here? People in financial services don’t work for free, especially the snarkiest advisor at Raymond James. Besides, Garth may not be able to give specific advice in this blog for legal/regulatory reasons. If you want Garth’s almighty expertise, you have to become his client, and then have a private conversation with him. Posting that type of question here is a waste of time.

#77 SWL1976 on 08.11.15 at 8:39 pm

I’m with Garth on the Fed raising rates. However, I don’t think they are doing it because market fundamentals exist to raise rates. Real estate boards fudge numbers and so does the Fed. I have a feeling they will do it just to throw another wrench in the gears of a sputtering global economy.

The real crazies (the ruling class) love chaos, they will create chaos and surprise surprise they will have a ‘solution’ that suits their agenda.

Remember the take down of America has happened from within, and is almost complete. The coming months should prove to be interesting…

People need to understand and free ourselves from this corporatocracy we call democracy

#78 Cowtown non virgin on 08.11.15 at 8:40 pm

If you’re running for PM Garth, I will vote for you! Seeing as you are not, I certainly won’t be voting for a man to run a country who can’t even handle his own life with 11 re-finances on his home! (NDP) I’m biding my time paying off debts and investing in a TFSA so once the final axe falls, I will buy a house in washed up Calgary! Thx once again for all you write and share!

#79 eddy on 08.11.15 at 8:43 pm

If you need another reason to not vote, here’s one,
you may ask ‘where did all the MPs go’?

‘Money Creation & Society’ Debate in UK Parliament

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

#80 Oceanside on 08.11.15 at 8:44 pm

#14 Sign of the Times on 08.11.15 at 6:24 pm
Walking through Capilano Mall in North Vancouver today and couldn’t help but notice a half dozen, or more, “For Lease” signs. Compare that with my experience at Bellisfair Mall

Capilano Mall has been dead for years..Not a good example of what is happening to today’s economy

#81 Mf on 08.11.15 at 8:44 pm

# 41 Smoking Man

What do you mean you don’t see the justification. The justification is that the age of super cheap money has to end at some point. We are at near zero and have been for almost a decade (in the U.S.). It’s going to be painful, but it has to come at some point. Short term pain long term gain.

That is what Garth has been saying time and time again. Prepare yourself or be left behind. Here in Canada that means less debt, diversified portfolio etc.

Mf

#82 Dave on 08.11.15 at 8:47 pm

Chinese Dominate Vancovuer Housing
http://www.theglobeandmail.com/report-on-business/economy/housing/the-real-estate-beat/data-reveals-chinese-buyers-making-mark-on-vancouvers-luxury-housing/article25932534/

That is not what it says. — Garth

#83 greyhound on 08.11.15 at 8:49 pm

The side of the boat with folks long US dollar, short loonie-and-commodities is really crowded. What happens if the Fed raises 25 bp and/or the S&P corrects? With no QE in the States for months and no 10% correction in stocks for 4 years, does anyone really think that the US central bank would allow a big break in the market without restarting QE? And if QE resumes, what happens to the US dollar? The “strong dollar” may not be as permanent as some are apparently assuming.

#84 IHCTD9 on 08.11.15 at 8:50 pm

IMHO, the RE market is probably going to be close to normal across Canada in any area outside of the usual suspects by next summer. Out my way, anything listed over 375K this spring has sat there, more than one 50K plus price hack has transpired, still no sale. When RE finally does give up it’s last gasp, and the realtors can no longer sugar coat the situation, it will not be a big shock to the smaller, but much more numerous communities throughout Canada. It’s going to boil down to a steady grinding loss of equity in TO and Van, and the fallout thereof.

The economy in Canada is where we all need to be concerned. As well as massive, record breaking and widespread personal and governmental debt.

As true now as it ever was (if not more so):

The rich rule over the poor, and the borrower is the slave of the lender.

Proverbs 22:7

#85 Mf on 08.11.15 at 8:51 pm

#71 SWL1976 on 08.11.15 at 8:39 pm

“Free ourselves” and go where exactly?

And as for the ruling class liking chaos, history has shown quite the opposite. Our democracy (yes it still is a democracy) was born out of the ruling class being forcefully overthrown hundreds of years ago.

Those monarchy’s had total control as well.

Seems like you are just looking for a scapegoat.

Mf

#86 cramar on 08.11.15 at 8:54 pm

Last evening on the Windsor news, they were saying that the demand for Windsor RE is outstripping the supply. Hence bidding wars and sales above listing price. One fellow from Waterloo said that he had to go in with an above list bid to obtain the property. Still much cheaper than the equivalent in Waterloo, he said.

I suspect when the economic dirt hits the RE fan, a lot of Boomers will wake up and sell their GTA house and look to buy cheaper in SW Ontario. Then RE values around here will trend up. We’ll see if I’m right on this.

#87 chapter 9 on 08.11.15 at 8:54 pm

#64 Ret
I just watched the Donald do a press conference at Birch Run MI.
Sure beats the Curly,Larry, Moe show here.

Watched it as well, the only other person that has come close to the personality and the “walk the walk,talk the talk in this country was Ralph Klein. Balance the books, pay off the deficit and debt. What do we hear, tax, spend, and take away. We need a Ralph Klein!!

#88 Shawn on 08.11.15 at 8:56 pm

On the Flip Side…

#330 family beagle on 08.11.15 at 6:29 pm lamented:

“We had joy, we had fun, we had seasons in the sun…” Terry Jacks.

************************************
You may also recall the flip side of that 45 rpm single, “Put the Bone In”.

#89 alex on 08.11.15 at 8:57 pm

The only thing holding up the stock market is interest rates. With Yuan being devalued we have no chance of interest rate hike in Swptember.

The S&P is trading at 18 times earnings, which is below the historic norm of 20. It is way south the point at which bull markets approach peak levels. It is supported by the US recovery, labour market gains, and corporate profits. In the latest reporting period 74% of S&P corporations beat earnings estimates and 50% topped sales projections. Rates are rising because they must normalize for the long-term health of the economy. The Fed has telegraphed this clearly and unequivocally. Get used to it. — Garth

#90 Nagraj on 08.11.15 at 8:57 pm

Yes, this is a very educational type blog.

First I had to find NORWAY on a map. I knew it was on that thing that hangs down Florida-like on the map of Europe, but I can never remember which part of that is NORWAY and which is SWEDEN. (And I’ve already forgotten again.)
Then I had to go and google LUTEFISK.
Then I checked out the pants on the NORWEGIAN national curling team. Wow.
But then I got really involved: ninety minutes of videos about the Trollpark, troll museums, troll legends, troll classifications, did you know there’s a teeny tiny sort of troll that lives in children’s teeth and causes cavities?
(I did not bother with Grieg cuz I already knew all that.)
I deliberately decided not to get into the Viking stuff, life is short.
So thanks.
Love, Trollo L. Fisk

NOW ALLOFASUDDEN it’s HELLO, CONDORONTO! and bye bye NORWAY.
Well, I did think that “Throttled” would be about the Chinese yuan (renminbi), or oil prices, or the Loonie, or the DEATH CROSS on the DJIA ( – nunc et in hora mortis nostrae), or Fedheads and rates, but ALL of that was dealt with just in the first paragraph of “Throttled”. (Wasn’t the Duchess of Malfi throttled? Or garrotted?)

Sufficient unto the day is the evil thereof.

What if Laureeny Harper’s two pet bats get out and slowly suck the lifeblood out of Steve while he’s sleeping? The 50,540 condo “units” under construction in Condoronto today are actually a front, they’re really building 50,540 bat nests.

#91 april on 08.11.15 at 8:59 pm

#69 – they got booted out for a reason – noisy? I know a number of people who’ve rented for yrs in a commercial building [managers onsite] and never been booted out.

#92 My Life is a Pile of Shit on 08.11.15 at 9:01 pm

DELETED (language)

#93 Freedom First on 08.11.15 at 9:04 pm

Reminds me of something. Wasn’t it a Rockefeller who said something about how it is so easy to make a fortune off of the stupidity of the American public. That reminds me of the financial de-balling of the Americans from their recent housing fiasco.

Also, there has never been a “soft landing” RE crash.

#94 Smoking Man on 08.11.15 at 9:05 pm

#80 Mf on 08.11.15 at 8:44 pm
# 41 Smoking Man

What do you mean you don’t see the justification. The justification is that the age of super cheap money has to end at some point. We are at near zero and have been for almost a decade (in the U.S.). It’s going to be painful, but it has to come at some point. Short term pain long term gain.

That is what Garth has been saying time and time again. Prepare yourself or be left behind. Here in Canada that means less debt, diversified portfolio etc.

Mf
…….

Please tell me you don’t make a living investing in the markets.

I for one do…

And I have for the last ten years.

Jesus, you sound like a celebrity worshipper. Garth said this and Garth said that.

The world economy is fkd. We make too much stuff, many are servicing debts they will never pay off and get into trouble if they can’t get GDP up.

The only way for countries to increase GDP is to export, they are all artificiality lowering rates to kill there currency so they can export.

I say the FED stays put other wise watch Airbus kick Boeing’s ass.

#95 Ray Skunk on 08.11.15 at 9:06 pm

#58

Wow – Chrysler make vehicles that last 96 months?

The more you know!

#96 Izzo on 08.11.15 at 9:11 pm

Garth,

I love your work but again you seem to be hell bent on the idea of interest rates going up and unfortunately its not my opinion but the market is srongly disagreeing with you and ignore the market at your own peril. The yields have been collapsing for the last couple of days, and the fact that the commodity market is getting destroyed removes any inflationary pressures. The FED might raise the 0.25 or 0.35 or whatever to save face and send a message that things are alright but the absence of inflation in the face of economic recovery is a big warning sign that something needs to change.

Again thank you for your effort….

#97 Harbour on 08.11.15 at 9:12 pm

Interesting read a Calgary friend pasted on FB

Saudi Arabia faces existential crisis after its misjudged gamble on oil
Ambrose Evans Pritchard,
The Telegraph | August 7, 2015
If the oil futures market is correct, Saudi Arabia will run into trouble within two years. It will be in existential crisis by the end of the decade.
After slashing spending by US$180 billion to deal with one of the worst industry downturns in decades, oil companies are still bleeding cash and slipping further into debt to maintain dividends to shareholders.
The contract price of U.S. crude for delivery in December 2020 is currently US$62.05, implying a drastic change in the economic landscape for the Middle East and petro-states.
The Saudis took a huge gamble last November when they stopped supporting prices and opted instead to flood the market to drive out rivals, boosting output to 10.6m barrels a day (b/d) into the teeth of the downturn. Bank of America says the Organization of the Petroleum Exporting Countries (OPEC) is now “effectively dissolved.”
If the aim was to choke the U.S. shale industry, the Saudis have misjudged badly.
“It is becoming apparent that non-OPEC producers are not as responsive to low oil prices as had been thought, at least in the short run,” said the Saudi central bank in its latest stability report.
One Saudi expert was more blunt. “The policy hasn’t worked and it will never work,” he said.
By causing the oil price to crash, the Saudis and their Gulf allies have certainly killed off prospects for a raft of high-cost ventures in the Arctic, the Gulf of Mexico, the waters of the mid-Atlantic and the Canadian oilsands.
Consultants Wood Mackenzie said the major oil and gas companies have shelved 46 large projects, deferring US$200 billion of investments.
The policy hasn’t worked and it will never work
The problem for the Saudis is that U.S. shale frackers are not high cost. They are mostly mid cost, and as I reported from the CERAWeek energy forum in Houston in April, experts at IHS think shale companies may be able to shave those costs by 45 per cent this year — and not only by switching tactically to high-yielding wells.
Advanced pad drilling techniques allow frackers to launch five or 10 wells from the same site. Smart drill-bits with computer chips can seek out cracks in the rock.
“We’ve driven down drilling costs by 50 per cent, and we can see another 30 per cent ahead,” said John Hess, head of the Hess Corporation.
The North American rig count has dropped to 664 from 1,608 in October, but U.S. output rose to a 43-year high of 9.6 million b/d in June. It has only just begun to roll over. “The freight train of North American tight oil has just kept on coming,” said Rex Tillerson, head of Exxon Mobil.
The stress test for frackers will come in the next few months as hedge contracts expire. But even if scores of over-leveraged wild-catters go bankrupt, it will not do OPEC any good.
The wells are still there. The technology and infrastructure are still there. Stronger companies will mop up on the cheap, taking over the operations. Once oil climbs back to US$60 or even US$55 — since the threshold keeps falling — they will crank up production almost instantly.
OPEC now faces a permanent headwind. Each rise in price will be capped by a surge in U.S. output. The only constraint is the scale of U.S. reserves that can be extracted at mid-cost, and these may be huge. Scott Sheffield, from Pioneer Natural Resources, said the Permian Basin in Texas could alone produce 5 million to 6 million b/d in the long term, more than Saudi Arabia’s giant Ghawar field.
Saudi Arabia is effectively beached. It relies on oil for 90 per cent of its budget revenues. Citizens pay no tax on income, interest or stock dividends. Subsidized petrol costs 12 cents a litre. Spending on patronage exploded after the Arab Spring as the kingdom sought to smother dissent.
The International Monetary Fund estimates that the budget deficit will reach 20 per cent of GDP this year, or roughly US$140 billion. The “fiscal break-even price” for oil is US$106.
Far from retrenching, King Salman has given away US$32 billion in a coronation bonus for all workers and pensioners. He has launched a costly war against the Houthis in Yemen and is engaged in a massive military build-up.
The Saudi royal family sees itself as leader of the Sunni cause against a resurgent Iran, battling for dominance in a struggle across the Middle East.
“Right now, the Saudis have only one thing on their mind and that is the Iranians,” said Jim Woolsey, former head of the U.S. Central Intelligence Agency.
Money began to leak out of Saudi Arabia after the Arab Spring, with net capital outflows reaching 8 per cent of GDP annually even before the oil price crash. The country has since been burning through foreign reserves at a vertiginous pace. The reserves peaked at US$737 billion in August of 2014. They dropped to US$672 billion in May. At current oil prices they are falling by at least US$12 billion a month.
Khalid Alsweilem, a former official at the Saudi central bank and now at Harvard, said the fiscal deficit must be covered almost dollar for dollar by drawing down reserves.
The Saudi buffer is not large. Qatar, Kuwait and Abu Dhabi all have three times greater reserves per capita.
“We are much more vulnerable. That is why we are the fourth rated sovereign in the Gulf at AA-. We cannot afford to lose our cushion over the next two years,” Alsweilem said. “We were lucky before because the oil price recovered in time. But we can’t count on that again.”
OPEC has left matters too late. It was a strategic error to hold prices so high for so long, allowing shale frackers — and the solar industry — to come of age.
The Saudis are now trapped. Even if they could do a deal with Russia and orchestrate a cut in output to boost prices, they would merely gain a few more years of high income at the cost of more shale breakthroughs. Yet on the current course their reserves may be down to US$200 billion by late 2018. The markets will react long before this.
The government can slash investment spending as it did in the mid-1980s, but in the end it must face draconian austerity. It cannot afford to prop up Egypt and maintain an exorbitant political patronage machine.
Social spending is the glue that holds together a medieval Wahhabi regime at a time of fermenting unrest among the Shia minority of the Eastern Province, pin-prick terrorist attacks from Isis, and blowback from the invasion of Yemen.
Diplomatic spending is what underpins the Saudi sphere of influence in a region still reeling from the aftershocks of a crushed democratic revolt. We may yet find that the U.S. oil industry has greater staying power than the rickety political edifice of the Gulf.

#98 anotherstabbinginsaskatoon on 08.11.15 at 9:12 pm

Rent or die.

#99 Shawn on 08.11.15 at 9:13 pm

Western Canadian Select crude is trading at about USD 23.33/barrel today per data from the CME. Disastrous.

#100 Smoking Man on 08.11.15 at 9:19 pm

For you MF

http://mobile.news.com.au/travel/travel-advice/boeing-v-airbus-who-dominated-at-the-2015-paris-air-show/story-fn6yjmoc-1227412242481

Airbus kicked ass at Paris airshow, fed spike… Will make Boeing’s a hell of alot more expensive? And this will resonate in all other us based mfgs.

Starbucks job growth ain’t going to do it.

#101 S.Bby on 08.11.15 at 9:20 pm

#69 Investorz
Sure, there could be a paper loss to a 400k condo in Toronto, but to most people, that’s more tolerable than getting booted. Especially when you have a baby/toddler.
————
It’s a lot cheaper to pay the movers a few times than it is to spend $400k on a condo.

#102 Brian Ripley on 08.11.15 at 9:21 pm

I updated my housing starts chart with the July data:

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

MONTHLY Housing Starts JUL 2015
Canada -4% M/M
ON -13% M/M
AB -12% M/M
QC +4% M/M
BC +56% M/M

ANNUALIZED Starts JUL 2015
Canada -13% Y/Y
ON -20% Y/Y
AB -1% Y/Y
QC -7% Y/Y
BC +3% Y/Y

(Annualized is the past 12 months average x12)

#103 OttawaMike on 08.11.15 at 9:23 pm

Bought this at a thrift store today:
http://www.motherjones.com/files/imagecache/top-of-content-main/trumpgame_0.jpg

$4. Mint condition. Great Collector’s item for when he gets elected Prez or somebody finally kills him.

#104 45north on 08.11.15 at 9:25 pm

there have been 47,796 homes listed so far in 2015. Just over 46% of those have failed to sell, which means the “average price” number published by the industry reflects only the best five in ten houses that hit the market.

it sure makes things look better when you can throw away the bottom half

I posted about a family in Ottawa that was moving to BC:

http://www.greaterfool.ca/2015/06/15/bewildered/#comment-378869

they still haven’t sold!

#105 OttawaMike on 08.11.15 at 9:26 pm

Harbour #96

Good piece but already posted here yesterday.

#106 IKnow on 08.11.15 at 9:28 pm

Vancouver house prices will not tank, unless of course there are aliens attacking both China and Vancouver, same time.

Just read news that in Hong Kong, tiny micro 330 soft low end 2 bedroom flat in faraway suburb has selling price lowered from hkd 4.2M to 4.1M, a shopping $100k drop.
This is due to the devaluation news thus morning.

So for a bargain $690k Cad a office lady can be a proud owner of a micro condo.

By North American standard Vancouver real estates ought to be cheaper by at least 50%, but that way of thinking is absolute archaic.
Prices here track Hong Kong.
No aliens attacking there, no worry here.

The pride of ownership among ethnic Chinese is a huge deal, I am ethnic Chinese.
Canadians have not experienced that magnitude of house last before.
And as Garth often say, “deal with it”.

Vancouver more likely sees average Sfh at $2M than back to $800k, I don’t think that is good or “right”, but I’m dealing with it.

#107 omg the original on 08.11.15 at 9:30 pm

Confused millenial on 08.11.15 at 8:07 pm
Ok real talk here: so let’s say the fed lifts rates mid-september, oil goes down a little bit… What kind of effect is it going to have on CAD? What about Canadian banking system? Any possibility of emergency bail-in?
————————-

Do not be freaked out by the wacko’s on the comments section (of course, myself excluded – I am rational and sage).

The Canadian backs are in good shape – light years away from any type of bail out.

Indeed the Canadian bank “bailout” during the GFC was more about the banks taking advantage of super cheap money offered by the Canadian taxpayer than any fear of liquidity freeze-up.

And a “bail-in” is not even in the same universe as the Canadian banks.

Actually it may be a good time to buy some CND bank stocks or bank ETF.

Remember what old uncle OMG says
…….Canadian banks never lose money
……they just raise fees.

#108 IKnow on 08.11.15 at 9:31 pm

Pardon my typo, partly due to stupid auto correction on my cell

#109 OttawaMike on 08.11.15 at 9:32 pm

September rate hike?

My money is on Smoking Man’s square. Ain’t happening other than a symbolic fashion.

No relentless rate rise.

#110 Sheane Wallace on 08.11.15 at 9:41 pm

#37 espressobob

miners have potential to explode 5+ times in very short time frame. Indexes won’t.

Buy when there is blood on the street. J. D. Rockefeller

#111 Yuus bin Haad on 08.11.15 at 9:46 pm

Fed throws a curve – sets new target to upper limit of current range – effective rate inches up – everybody’s happy.

Now, back to the debate about when.

#112 Shortymac on 08.11.15 at 9:49 pm

I already know a couple of people who can’t sell their condos, at Sheppard and Yonge no less!

Hell, I know a couple with a good million in mortgage debt do to the inability to sell their condo and buying a pre-built (now built) rowhome in Aurora for 600k. AURORA!

There are new sites in Alliston going for 300k to 500k, WTF.

#113 Wheredaboeuf on 08.11.15 at 9:53 pm

#192 jane 24 on 08.11.15 at 1:49 am
…. Some London suburbs are now very French indeed with their own French private schools and we English don’t even like anything French!!”

Perhaps this is why the French refer to “you” English as “les rosbifs”….always beefing/whingeing aobut something….

#114 MSM-Free Zone on 08.11.15 at 10:03 pm

#66 saskatoon on 08.11.15 at 8:13 pm
_________________________

You haven’t recently acquired an arsenal of restricted weapons, have you?

Inquiring minds need to know….

#115 sean on 08.11.15 at 10:10 pm

We’re constantly told that in developed countries “consumer spending represents the majority of GDP” (true???) and that when economies slow, interest rates need to be kept ultra low to stimulate borrowing, spending, and thus economic growth.

The seeming global failure of ZIRP policies makes we wonder if this is still true, or if it’s just hold-over thinking from the 60s/70s/80s? Back then we had a huge bulge of younger people starting households, buying vehicles and consumer goods, having children, and basically spending every cent they could lay their hands on. Cheaper money allowed businesses to ramp up production and allowed consumers to borrow and buy more, and they did.

In the 90s and 00s the boomer generation switched over to saving as houses were paid off and children left home. This generation are now in the early stages of retirement and are healthy; they are reluctant to spend large chunks of their saving in case they live longer than expected, and are having trouble generating sufficient income from interest bearing products in the current rate environment (not everyone has been listening to Garth’s diversification mantra :-).

For these people, low rates reduce incomes and thus spending on vacations, cars, and grandkids – a complete reversal of the earlier situation.

The 65+ cohort started smaller in earlier generations and died off rapidly, but the huge boomer numbers and their longer life spans mean that they will remain a key factor in the economy for a long time to come.

Other societal issues (global competition, technology, “trickle down” economics, income inequality, etc., etc.) have prevented later generations from earning and spending like the boomers did, and bank/government policies have caused resulted in borrowing being channeled (uselessly) into more expensive housing. Banks 1, younger consumers and the economy 0.

Is there any merit to this argument? Could it be that in today’s demographic environment increasing rates will result in higher retiree incomes, more spending, and thus more economic activity?? Could the central bankers have it all wrong? We’ve had almost a decade of ZIRP without much economic improvement – perhaps it’s time to raise rates not despite a lackluster economy, but because of it.

#116 james on 08.11.15 at 10:11 pm

Preview of coming attractions:

http://www.todayonline.com/singapore/property-prices-must-drop-another-30-make-residential-investments-attractive-again

#117 Bottoms_Up on 08.11.15 at 10:12 pm

#75 My Life is a Pile of Shit on 08.11.15 at 8:39 pm
——————————————-
Garth won’t take someone of that net worth. Not worth his time. But, he will take a phone call. Also, he has blogged recently about how to create a balanced port.

#118 Shawn on 08.11.15 at 10:15 pm

Oil Prices

Harbour at 96 posted a long article that included:

Bank of America says the Organization of the Petroleum Exporting Countries (OPEC) is now “effectively dissolved.”

************************************
I believe I posted here a couple of weeks ago that the reason oil prices are low is that the OPEC price-fixing cartel of the last 45 years or so has fallen apart. Saudi Arabia got tired of being the only OPEN member that was adhering to production quotas (limiting production) to keep the price high. So same thing Bank of America is saying.

Saudi may have taken its finger out of the dike to show the other OPEC members what happens when production quotas are not adhered to. Or OPEC is simply too small a part of the global oil supply to fix the price. Clearly Saudi did not do this simply to gain market share as that makes no sense when it involves selling 5% extra product but pushing the price down over 40%.

#119 Bottoms_Up on 08.11.15 at 10:20 pm

#60 Rainclouds on 08.11.15 at 8:00 pm
————————————–
The stance of the TREB is disgusting. We can find out how many times mulcair mortgaged his house yet we are “not allowed to know what he originally paid as this is personal information”. I’m calling bs.

#120 Shawn on 08.11.15 at 10:20 pm

#98 Shawn on 08.11.15 at 9:13 pm said:

Western Canadian Select crude is trading at about USD 23.33/barrel today per data from the CME. Disastrous.

*****************************************
Hey, I have dibs on the name Shawn on this blog….

Also how much Alberta production is sold as Western Canadian Select?

I believe that is basically bitumen? or at least is a very heavy oil?

Syncrude Synthetic was recently selling at a small premium to West Texas Intermediate so let’s not jump to conclusions here.

Which companies are primarily selling this Western Select? (and not much else). Those are the companies that may face disaster.

#121 Cyclist on 08.11.15 at 10:21 pm

Ah yes, norway

http://www.bloomberg.com/news/articles/2015-08-10/for-norway-oil-at-50-is-worse-than-the-global-financial-crisis

it’s not like they didnt know it was coming

http://www.nytimes.com/2009/05/14/business/global/14frugal.html?_r=0

So whats the prob? they saved a poo load of $$, then lose some income. isnt that what they were supposed to be doing?

#122 lee on 08.11.15 at 10:22 pm

Dent says it’s all over for the S&P.

Again? Dent is over. — Garth

#123 Doug in London on 08.11.15 at 10:23 pm

@Unhappy camper, post #30:
Where should we invest you ask? Stuff that’s on sale now like CPD and XPF.

#124 TurnerNation on 08.11.15 at 10:23 pm

#11 Etf congrats on your release from prison. Now you can earn and save like the rest of us

#125 gut check on 08.11.15 at 10:26 pm

@ #32 Loonies Watcher on 08.11.15 at 7:05 pm
The lack of data availability about Canadian real estate markets is absolutely criminal,
***********************************

I was just thinking about this again today. In fact.. I’m wondering by what authority, exactly, some self appointed organizations get to hoard information?

Real estate as an investment class, or a commodity class or whatever/however you want to think about it is not protected, it’s not proprietary.. is it?

How have the cartels gotten away with this?

anyone?

#126 Bill Gable on 08.11.15 at 10:28 pm

**FLASH**

China devalued the Yuan – AGAIN – just in the last hour or so – Holy cow – watch what happens now!

Details: http://www. bbc.com

#127 45north on 08.11.15 at 10:28 pm

Harbour: We may yet find that the U.S. oil industry has greater staying power than the rickety political edifice of the Gulf.

thanks for the information. You should have condensed it down and provided the link:

http://calgaryherald.com/storyline/saudi-arabia-may-go-broke-before-the-north-american-oil-industry-buckles

#128 Cyclist on 08.11.15 at 10:32 pm

garth – it seems you disapprove of every stat the RE boards put out. How is the average sale price not valid? Of course a few extremely high sales skew it. My board gives the median too, so a large diff between the two sets off the alarm. And the sale price reflects the
market value, so the conclusion it skews reality is
invalid. List price counts for squat, and is normally
higher than the sale price, excpet those instances
where it is deliberately low in hopes of a bidding war, in which case it still doesnt reflect market value.

#129 Shawn on 08.11.15 at 10:32 pm

Consumer Spending and GDP

#109 sean on 08.11.15 at 10:10 pm asked:

We’re constantly told that in developed countries “consumer spending represents the majority of GDP” (true???)

******************************************
Business and (yes) government create the GDP.

Consumers are the biggest consumers of GDP. Why else would stuff be produced but for consumption? So, it is true that consumption drives GDP.

Some GDP is also consumed by government used to reinvest in productive assets and sent abroad as net exports (if there are net exports).

Demographics do suggest slower growth as the Canadian population ages.

Not sure about the argument that higher interest rates will drive up spending. In any case, basically there are not enough young people to pay that tab. Interest rates are low because there are more old people with savings than there are young borrowers. Simple supply and demand.

People think we are awash in debt. We are equally awash in savings. In fact the price of borrowing (interest rates) was driven down precisely due to “excess” savings. We had to have “excess” borrowing in order to sop up all the savings.

The FED really has little control over interest rates. They just reacted to the glut of savings that occurs with an aging population.

#130 gut check on 08.11.15 at 10:45 pm

dow futures?

#131 45north on 08.11.15 at 10:47 pm

saskatoon: fear is growing among them, and the desire to substitute government for self is becoming stronger

“substitute government for self” that’s deep

#132 G on 08.11.15 at 10:47 pm

Garth- the Fed will NOT move. If you read fed minutes and yellen testimony, the increase is data dependent. The data stinks and deflation is setting in. The Fed will not raise rates in a deflationary environment. Zero bound for years to come. Get ready for QE4!

#133 Cyclist on 08.11.15 at 10:57 pm

114 Sean – agreed. There are at least 3 ways ZIRP affects the economy negatively, counteracting the hope of increased spending.

You have mentioned two of them – Super low IRs can actually cause people to save more (ie spend less), as their interest bearing investments dont grow as quickly and two, those relying heavily on fixed income simply dont have as much to spend.

Third, it sends the message the economy is very bad, so cautious consumers reconsider large purchases and businesses curtail capital investments.

For many of us, we can remember better times when interest rates were higher.

#134 Admirer on 08.11.15 at 11:10 pm

Great post Sir Garth

#135 Salutations Sally on 08.11.15 at 11:15 pm

The only store that is busy in Pacific Center Mall, is the Apple Store. Every other store is dead.

#136 luminescent sesquipedalian on 08.11.15 at 11:16 pm

“As detailed here, the average price of a detached shack in 416 has declined $120,000 over the past five months, and yet the meme is that the market’s on fire.”

How does that affect overpriced bungalows in longbranch?

#137 Nosty, etc. on 08.11.15 at 11:29 pm

Politics don’t matter. Politicos are merely window dressing.

SMan, Spectacle etc. — Remember the saying, The higher one is, the harder one falls? At least he had a blast.

Plus — Currency – Oil wars and a very interesting 11 min. clip of TTIP, TISA and TPP, how it excludes govts., the public and many others, but includes large multi-national corporations. The key word is sovereignty, as it is only the corporations which will have sovereignty, no one else will.

This includes the New Axis of Evil, but remember the first link — The Higher One Is, etc.

#138 Admirer on 08.11.15 at 11:35 pm

It’s your blog Garth. But just wondering why you post my comments when I agree about good things you write about but don’t publish artcles or comments about how Vancouver real estate could go even higher or when other top advisors are calling for the US economy to stagnate and there might be a major stock market correction on the horizon?

Because (a) Berman is an idiot and (b) it’s been posted already. — Garth

#139 Admirer on 08.11.15 at 11:42 pm

#134 Salutations Sally said: “The only store that is busy in Pacific Center Mall, is the Apple Store. Every other store is dead.”
————————-

That’s funny because there was a recent artcle saying that Pacific Center has the highest sales per square foot out of any mall in Canada.

http://www.retail-insider.com/retail-insider/2015/5/most-productive

#140 Admirer on 08.11.15 at 11:46 pm

Garth said: “Because (a) Berman is an idiot and (b) it’s been posted already. — Garth”
——————
Fair enough. I’ll try to keep up. Thanks for the response.

#141 TB33 on 08.11.15 at 11:49 pm

#18 Van real on 08.11.15 at 6:34 pm
Capilano Mall? What a joke. Try looking in a real mall like pacific centre or Oakridge.

————————————-

I live in Coal Harbour and find myself driving across the bridge just to get fried fish and noodles from the Thai place in Capilano’s food court… man that’s good stuff.

Too bad they’re not in a decent mall like Pacific Centre or Park Royal.

#142 liquidincalgary on 08.11.15 at 11:51 pm

and less about Norway and Father Mulcahey or Mr. Lahey or whatever that NDP bearded one’s name is.

[I’m still voting NDP though]

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

are you the ‘randy’ to this ‘mr lahey’??

#143 Metro Van Observer on 08.12.15 at 12:01 am

If the Fed does raise it’s likely to be one & done. The bond market has been showing yields trending downwards lately and China’s seemingly dire situation confirms the global economy is weak. Ditto commodities.

Deflationary indicators seem to be firmly entrenched.

The party may continue even longer than currently anticipated in TO and Van. Party on kids.

#144 MF on 08.12.15 at 12:03 am

#99 Smoking Man on 08.11.15 at 9:19 pm

Remember how everyone here said the same thing about QE ending down south?

The Fed has said the increase is going to be very gradual.

As for Boeing and Airbus, they wouldn’t have any customers or any business anywhere if no one could afford to fly -the results of destructive ZIRP that has gone on too long.

Rising rates means normalization. It’s the consumer who is driving everything at the end of the day for all companies.

MF

#145 MF on 08.12.15 at 12:10 am

#136 Nosty, etc. on 08.11.15 at 11:29 pm

Lol you can’t stand anyone who is successful eh

How typical.

I read some of your links. You seem to hate: successful bankers, successful corporations, successful countries, successful people.

Notice a trend here?

Go vote NDP.

MF

#146 BUY MY VOTE on 08.12.15 at 12:35 am

A financial transaction tax will cool down Hot Money somewhat, and cut all other taxes to 0

http://thetransactiontax.org/faqs/

#147 kommykim on 08.12.15 at 12:36 am

RE: #74 Mark on 08.11.15 at 8:37 pm
As far as the Fed raising rates, if it actually happens, it might cause the CAD$ to rise

The CAD will sink unless we raise in lockstep.

#148 Obvious Truth on 08.12.15 at 12:45 am

Oil looks broken.

They’ll put a 3 on it. Question is can they get a 2 in front.

Calgary RE looks like it’s coming unglued.

#149 MF on 08.12.15 at 12:52 am

#93 Smoking Man on 08.11.15 at 9:05 pm

haha celeb worshiper.

Garth’s advice is spot on in my eyes. I could care less about this joke housing market here in the GTA, but what I care about and why I come here is for investing advice. Everyone I know (early 30’s) is financially illiterate. The overall goal is to do as you do and earn a living in the markets. Therefore I see the value in what Garth does.

I’m too young to have amassed that kind of wealth yet. I’m assuming you are around 60 since you recently retired? It takes money to make money. So i’m working as hard as I can in whatever job I can get to get to that point.

As for interest rates, my bet is that they are going up in September. Your bet is that they are not. None of us know for sure. Because you have more money riding on your bet doesn’t mean yours is automatically correct. Because you have more experience in the market doesn’t mean you are correct either. Analysts, economists and the like always get it wrong anyways.

One thing is clear, if I am lucky to live a long and prosperous life, the era of low interest rates will come to an end at some point and I need to be prepared to benefit from it.

Oh, and as for the world economy, everyone will always be saying we are screwed. Forever. All the time. Maybe I should curl up in a little ball? What you see in the comments section here is lots people blaming everyone but themselves for any shortcomings. Successful people/corporations/countries are the usual targets. There’s tons of fear and it’s lame and tiresome.

I don’t want to be like that.

Garth’s blog is but one way to learn. Call me a celebrity worshiper.. don’t care.

MF

#150 kommykim on 08.12.15 at 12:54 am

RE: #124 gut check on 08.11.15 at 10:26 pm
Real estate as an investment class, or a commodity class or whatever/however you want to think about it is not protected, it’s not proprietary.. is it?
How have the cartels gotten away with this?

Easy. Businesses own the data that they collect. They don’t have to share it with anyone if they don’t want to. This is exactly what small government, lightly regulated capitalism looks like. Enjoy.

#151 SWL1976 on 08.12.15 at 1:07 am

#84 Mf

“Free ourselves” and go where exactly?

We don’t need to go anywhere. We need to understand the corporate takeover that has happened, and is happening both south of the border, here in Canada and world wide.

Perhaps you should read some of Nosty’s notes on the TPP and its ugly cousins the TTIP and the TISA

Seems like you are just looking for a scapegoat.

If you think I am simply looking for a scapegoat and that I fail to understand and see the bigger picture you are sadly mistaken. People who fail to understand what is really going on in the world are themselves looking for their own escape from reality.

If one does not acknowledge there is a problem then one does not feel obligated to do anything about said problem…

That’s where I feel we are as a society right now. Most people are simply looking the other way while we are about to get steam rolled by these unjust trade deals.

Ignorance is bliss… But it’s still ignorant

I don’t know exactly what to do, but I do know that being part of the problem is not being part of the solution

#152 liquidincalgary on 08.12.15 at 1:26 am

on 08.11.15 at 7:55 pm
#46 Steve French on 08.11.15 at 7:27 pm
“But those who desire to be rich fall into temptation, into a snare, into many senseless and harmful desires that plunge people into ruin and destruction.”

– Jesus

———–

Yeah but look how he ended up.

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

i have often found that the easiest way to get rid of temptation…is to give in to it!

#153 liquidincalgary on 08.12.15 at 1:28 am

#46 Steve French on 08.11.15 at 7:27 pm

“But those who desire to be rich fall into temptation, into a snare, into many senseless and harmful desires that plunge people into ruin and destruction.”

– Jesus

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

is Jesus really the best example to follow?

after all, he couldn’t even cut it in the family biz, as a carpenter.

#154 NewToETFs on 08.12.15 at 1:32 am

@#11 ETFs:

I recommend opening a Scotia iTrade account as they have a nice selection of ETFs that are commission free, and would be good for someone like you who is just starting out with a small amount. They also have a practise account you can play with to figure things out before you commit real money. And an ETFs screener so you can sift through all the ETFs to look for things like foreign vs domestic, dividend payout, stock vs bonds, risk rating, and assets under management.

Things to watch out for that burned me:
1) always use a limit order (not market). Spikes in prices happen and you dont want to mysteriously pay $28 for something that was posted as $26.
2) ETFs with low assets under management are at greater risk of being terminated, and I was forced to crystallize a loss. I now look at assets under management when I buy.
3) some ETFs were priced in US dollars and I paid higher fees and took on an exchange rate risk I wasn’t expecting. It was also more confusing to know when to sell. I like everything priced in CAD and hedged.

Things that pleasantly surprised me:
1) when I made my first dividends. I now look for dividend payouts in ETFs I buy.
2) you can set quite a long limit time – about 30 days – so you can place an order to buy your desired fund at your desired price, and if the market dips your order will be filled without you having to constantly be checking.

Congratulations on starting to invest. It’s the best thing I ever forced myself to learn to do, and I hope you find it rewarding too.

#155 Herf on 08.12.15 at 1:33 am

#30 Unhappy Camper

“Where should we invest in?”

How about funeral homes, cemeteries and mausoleums? Recession proof, especially with the aging demographic and newly approved doctor-assisted end-of-life. But if business does slow down, you can do something about it to help things along! And, your customers won’t (can’t) complain!

#156 Herf on 08.12.15 at 1:37 am

#30 Unhappy Camper

Regarding my suggestion to invest in funeral homes, cemeteries and mausoleums, on second thought forget what I said. I just realized, it’s still all “real estate”.

#157 Mukadi on 08.12.15 at 1:38 am

#131 – The Fed’s move will be more political and doesn’t reflect the economic fundamentals.

1 – The economic participation rate is at all time low of 62-63%. Meaning that 93+millions Americans are out of the economic loop. That’s more than the population of Germany!!!!

2- The Unemployment rate is NOT 5.3%. It’s above 23% if you count people who have given up looking for a job after one year!

http://www.paulcraigroberts.org/2015/08/10/us-economy-continues-collapse-paul-craig-roberts/

This is economic illusionism at its best.

#158 Herf on 08.12.15 at 2:02 am

#28 Ray Skunk

I see the whole Ontario pension plan as Wynne’s attempt to grab more tax money out of Ontarians’ pockets to fund their out-of-control spending and previous economic screw-ups. They’re selling it as a “pension” since it sounds like a good worthwhile thing and that the government cares about its citizens. Then in 20, 30 or 40 years or whenever it comes time for retirees to collect, the present day government will be long gone and the pension fund will likely be in the red after this and successive governments raid it for other unrelated purposes and/or “forget” to keep it topped up. I spoke to one local small Burlington business owner about the pension plan last year and he wasn’t looking forward to having to fork over more loot to the government through another payroll deduction or however it gets implemented. Anyway, my 2 cents on the whole matter.

#159 Another Albertan on 08.12.15 at 2:20 am

There is no one price for oil. There are many prices for oil.

Western Canadian Select is a benchmark blended crude composed of bitumen and various lights and diluents. There are two dozen streams that feed into it. Over 250,000 bbl/day are typically shipped on any given day, but sometimes much more. There are other competing crude in western Canada and in the US.

Imagine a food processor trying to keep batches consistent – wine, ketchup, etc. Traders and refiners want a reasonably consistent oil feedstock.

If you want to know the companies affected by WCS pricing, it is easier to do it by exclusion. Companies NOT affected by WCS pricing will have tooted this horn for a long time – they will be major oil sands producers with on-site upgrading and who are marketing a synthetic crude oil (SCO) or they will be a company with light conventional production. They will have wanted the markets to know they have a pricing premium over WCS and their press releases and filings will reflect this.

It is difficult for any conventional producer to have exclusively light production. There will be a mix. WCS will be a drag on any light production.

In short, if you have quickly determine if a producer’s numbers reflect light production, this producer will be “less worse” off. If you cannot, then this producer probably has a lot of heavier production and will be more exposed to WCS pricing. WCS will be a drag on any of their light yields.

Everyone else’s mileage may vary.

#160 Van real on 08.12.15 at 2:42 am

#134 salutations Sally. Liar liar pants on fire. Lol.

#161 jane 24 on 08.12.15 at 3:16 am

Garth

Although all these causal factors you pointed out will indeed happen, the main back swan that will bring RE down will be a sudden and absolute change in consumer sentiment. As you have said a 1000 times, everyone wants to buy what is going up and no one wants what is
coming down. And Cdn RE is facing a very long slide down. Buyers will come in encouraged by small value drops but will be catching a falling knife. Been there and got the t-shirt.

The morning that sees the Cdn dollar break .75 cents American will be the final black swan. Currency fall is so in your face, so understandable and so very terrifying to the average person. They literally see their net worth going down. This will happen within 2 weeks.

If you wanted out and to sell your house, you are too late. There will be no Fall boom in the RE market, this goose is cooked.

#162 Bob Santarossa on 08.12.15 at 3:26 am

YVR mall observers…

Yours are statistically insignificant observations and at that, the Retail sector amounts to 5.5% or so of Canada’s GDP.

On the other hand, Garth provides significant observations about the macro economy in YVR and 416 kept hidden by the CREA et al “spin Doctors” of real estate – 12.5% of GDP.

Add to that he speaks about negative commodities or 8% of GDP.

Add to that again his previous posts about the unmoving Manufacturing sector, 10% of GDP, and you should get his concern.

We are now seeing 25% of our GDP, in essence, tanking or shows signs of tanking (i.e., real estate in YVR and 416 – the rest of Canada has already tanked).

If he is correct, then September’s GDP numbers (2 reports that month) will be negative and as he points out, if sentiment swings the other way (pessimistic), then we will experience job losses and a harsher recession than to date.

The last Jobs report was ala CREA “creative statistics” because it included 40,000 more “self-employed” – in reality the bulk of these are people that have been laid off, receiving severance/in outplacement and the like. The EI indicator in a few months will tell the truth about this (e.g., when the severance runs out and EI kicks in); hence, and probably there were some very large job losses last month.

Creative statistics brought to you by Government Agencies not wanting to upset the election applecart with bad news.

The above all points to a reckoning probably in mid to late September or early October which will result in news, all day long, about recession and during the election that will create more negative sentiment that Garth is warning about now (and has done for quite some time now, within the last year especially).

Then in mid to late October, go oiut and conduct your informal YVR Retail statistical sample at the malls and report back here. I look forward to your findings, statistically biased as they are.

#163 pacificmall on 08.12.15 at 3:46 am

I confirm that Pacific mall has most of the stores with big sale & 50% off signs since end of last year, food court is not that busy either, feels like 2012 a mini recession before qe4…
RE Inventory is low though, market is broken low end doesn’t sell, high end is nuts and nothing decent in between

#164 observer on 08.12.15 at 6:36 am

I notice Fort mcmurray house prices are slowly inching downwards. I also notice more listing and lots of houses which were listed in december are still un sold

http://www.realtor.ca/Map.aspx#CultureId=1&ApplicationId=1&RecordsPerPage=9&MaximumResults=9&PropertyTypeId=300&TransactionTypeId=2&SortOrder=A&SortBy=1&LongitudeMin=-111.5136062353841&LongitudeMax=-111.2418662756673&LatitudeMin=56.707841076239575&LatitudeMax=56.78700204200719&PriceMin=0&PriceMax=0&BedRange=0-0&BathRange=0-0&ParkingSpaceRange=0-0&viewState=m&Longitude=-111.38031117618&Latitude=56.7271996145368&ZoomLevel=9&CurrentPage=1

#165 };-) aka Devil's Advocate on 08.12.15 at 7:08 am

The unreported and large percentage of homes that do not sell are so offered by unrealistic sellers who want more for their property than the market is prepared to bear. Why ever would we report statistics that includes this unrealistic lot? To do so would skew the story to that absurdity so many falsely accuse “The Cartel” of manipulating.

Seriously; organized real estate wants nothing more than for buyers and sellers to understand the “REALITY” of the market. The reality of the market is that neither Sellers nor REALTORS® set prices – the MARKET sets prices and the market is dictated largely by what ready, willing and able Buyers are prepared to pay ready, willing and able Sellers who understand the reality of the market and set a REALTISTIC price for their property to attract the market to it. If a Seller is not so realistic they become not a statistic relevant to be counted in The Market but rather one to be counted in some other place far, far removed from The Market.

#166 Yuan a currency war? Yucant handle a currency war!!! on 08.12.15 at 7:10 am

Looking to be much tougher for commodities and the Canadian Harper economy of resource extraction and to hell with everything else.

Plus, sorry to say, Garth, your idea of a Fed rate increase will likely be toast within a couple weeks – just watch.

http://business.financialpost.com/investing/global-investor/china-just-fired-a-bazooka-in-the-global-currency-war-that-might-even-make-the-fed-flinch

#167 Centre-ville on 08.12.15 at 7:44 am

OMG. That picture. I’m playing Witcher 3 this summer, and that kid could easily be one of my contracts. Wow.

#168 Julia on 08.12.15 at 7:57 am

#42 Samrtalox
“For Real Estate, I’d love to see the ratio between listed prices, and sold prices. Even as a grouped metric, it could be an effective indicator.”

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

I would love for listings to include all prices changes and dates instead of relisting and restarting the clock. It should also include previous sale prices.

There is a house near us, a neighborhood, where houses usually sell within days, a house that used to be a TCHC houses, bought by a contractor who did a quick update and put it up for sale. It was repriced and resisted 3 times and then up for lease. All that since April and it is still sitting.

When we bought our house in 2003, we were given the listing by our agent and we set it aside: price was above budget and it had been on the market for over 45 days if I recall. A few weeks later, the agent gave us the listing again as price had been lowered. We noticed that days on the market had restarted. We don’t know if that was the first reduction or not and we ended up buying below asking – and oddly when we made our offer the selling agent suddenly had another offer so we needed to come up. We refused. Phantom offer?

#169 OttawaMike on 08.12.15 at 8:11 am

#164 };-) aka Devil’s Advocate on 08.12.15 at 7:08 am

Shut the F**k Up.

That pap is such canned realtor speak. Can’t you think of anything original to say Mr. Used House Salesman?

#170 gut check on 08.12.15 at 8:34 am

@ #144 MF on 08.12.15 at 12:10 am
———————

and you seem to have a death wish

you know how Ontario Hydro handles people? Well the TPP makes sure that every major corporation can do the same – from all over the planet.

#171 gut check on 08.12.15 at 8:44 am

#149 kommykim on 08.12.15 at 12:54 am
RE: #124 gut check on 08.11.15 at 10:26 pm
Real estate as an investment class, or a commodity class or whatever/however you want to think about it is not protected, it’s not proprietary.. is it?
How have the cartels gotten away with this?

Easy. Businesses own the data that they collect. They don’t have to share it with anyone if they don’t want to. This is exactly what small government, lightly regulated capitalism looks like. Enjoy.
—————————————————

well I thought of that, but that’s not entirely correct, since much of the data would be public domain.
the government should publish what it can – independently of realtors.

Also – the real estate cartel’s ability to scrub the net – even cached pages and including most images is astonishing. Who do you call to get that done so efficiently?

#172 Smoking Man on 08.12.15 at 8:51 am

#165 Yuan a currency war? Yucant handle a currency war!!! on 08.12.15 at 7:10 am
Looking to be much tougher for commodities and the Canadian Harper economy of resource extraction and to hell with everything else.

Plus, sorry to say, Garth, your idea of a Fed rate increase will likely be toast within a couple weeks – just watch.

http://business.financialpost.com/investing/global-investor/china-just-fired-a-bazooka-in-the-global-currency-war-that-might-even-make-the-fed-flinch
……..

The art is to see it before anyone else, then bet on the outcome. Hello!!!!!

I see it now. Smokeys Herdonomics news letter. Only sold to top economist at a massive premium.

Then they can go on to be Rock Star’s in there own light. No need to post calls with back door escape phrases.

Or.

Keep drinking having fan and sharing with you un great full dogs.

#173 };-) aka Devil's Advocate on 08.12.15 at 8:56 am

#168 OttawaMike on 08.12.15 at 8:11 am
#164 };-) aka Devil’s Advocate on 08.12.15 at 7:08 am

Shut the F**k Up.

That pap is such canned realtor speak. Can’t you think of anything original to say Mr. Used House Salesman?

Let me guess…

You didn’t get the overinflated price you were asking for your POS property.

};-)

#174 };-) aka Devil's Advocate on 08.12.15 at 9:41 am

Housing starts on the rise

It always goes up before it comes down and when it does come down it never comes down so much as it went up.

#175 Mike T. on 08.12.15 at 10:07 am

Law of Allowance

allowing other to freely express themselves without repercussion

there are lots of ways to phrase this, but the message is just let others express themselves, unless they are doing real, unjustified harm to someone or themselves

man made rules change (see China)
Universal Rules stay the same, forever

the sun is changing and there will be increasingly strange events to distract people away from this

I am going to allow everyone to do as they please because that’s what the Universe calls for…no one has to listen to me, or anyone

#176 Llewelyn on 08.12.15 at 10:15 am

I assume that the proposal to establish a separate Ontario Pension Plan was based on actuarial tables that combines; the amount invested each year, the number of years funds were invested, a number of interest rate scenarios and the average life expectancy of investors to arrive at an annual pension benefit.

While I don’t pretend to be an actuary it seems very obvious that the rate of return on investment used to project a maximum annual pension of $12,800 per year is substantially lower that the 7.0% per annum ROI on investments being achieved in 2015.

I have assumed that average life expectancy will increase to 85 years by 2055. An investor depositing $4.50 per day or $1,640 per year for 40 years at 5.0% would realize over $220,000.

An investment of $220,000 earning 5.0% per annum and providing a maximum pension of $12,800 per year as proposed by the Ontario government would not be depleted for 35 years.

The Ontario government is proposing that a combined payment of $9.00 per day or $3,285 per year would result in a pension of $12,800 per year for an average of 20 years. It is not clear to me whether pensions will be increased if investment income exceeds current projections or whether any surplus will become transferrable.

Clearly a pension fund with billions of dollars to play with and managed by the brightest minds money can buy should be able to generate a better pension than the Ontario government is predicting even if current ROI is cut in half.

MAYBE the brightest minds money can buy have looked into their crystal balls and concluded that the ROI being achieved in 2015 is not sustainable and decided to base their calculations on a substantially lower ROI. If that is the case I for one would know what rate will be applied.

Before introducing another compulsory reduction in the income of Ontario workers might I suggest that the formulae being used to project pension benefits be publically disclosed in advance so that the ROI being used to project pension benefits becomes transparent.

My $5.00 calculator tells me something may be rotten and it isn’t in Denmark..

You forgot the cost of the massive bureaucracy required to administer this, estimated to consume 10-20% of all contributions. This may end up being Ontario’s greatest tax increase. — Garth

#177 Grantmi on 08.12.15 at 10:19 am

oh.. Sherry Cooper cheerleading on BNN this morning about Real E. & Mortgages (ha ha .. No subprime in Canada.. no Fraud in lending….. Right Sherry!!! No bubble!)

But the question is.. Has she had a new makeover?? Botox and new Doo!! lol

#178 maxx on 08.12.15 at 10:20 am

#13 Lower Loonie on 08.11.15 at 6:22 pm

“The BoC can simply allow the Loonie to fall, perhaps they could start buying mortgage bonds, act as a buyer of last resort for all kinds of Canadian debt which would keep interest rates low. This would tank the Loonie but it could keep rates low and prevent large numbers of defaults.”

This is simply the sort of wrong-headed thinking that has forced the economy into the doldrums.
It is also precisely the perfect method for maintaining it there. Compensatory behaviour by consumers, whether massive reduction in spending, or continued accumulation of bad debt for day-to-day expenses is the path this economy’s on and pushes it further down deeper to continued globally uncompetitive levels.
What government has done is pander to the wailing and gnashing of corporate teeth whilst ignoring business’s almost limitless imagination and survival skill at the expense of the real economy.

#179 lee on 08.12.15 at 10:53 am

I don’t see how not reporting unsold properties as sales is an issue. When they sell they will be brought into sales. Presumably, this month’s sales totals include properties that were listed but unsold last month. I think this is a non-issue. What am I missing? Anyone?

#180 Julia on 08.12.15 at 10:58 am

A friend of mine is trying without luck to sell her older well built Etobecoke condo on the lake. Thirty-five people came to the open house but since her unit does not have a lake view so they said, no bites. I think a lot of people over estimate the ease with which they will be able to sell their condos, especially since most condos do not have a great view of anything except their neighbours or the highway.

#181 BS on 08.12.15 at 11:06 am

Easy. Businesses own the data that they collect. They don’t have to share it with anyone if they don’t want to. This is exactly what small government, lightly regulated capitalism looks like. Enjoy.

If only we could be like big government states like China, the former USSR or North Korea where all relevant data is honestly and openly shared by the government with its citizens.

Last time I checked all the “data” I want is available in Canada. For those wearing tin foil hats, sorry there will never be enough data for you.

#182 bad day for the denier on 08.12.15 at 11:38 am

DELETED (anti-Chinese)

#183 steerage steward on 08.12.15 at 11:59 am

What to make of the story in the Province today showing mainland Chinese buyers are indeed a factor in the Vancouver SFH market?

http://www.theprovince.com/business/Vancouver+realtor+points+emerging+normal+single+family/11282589/story.html

In 2014, MacDonald Realty offices sold 1,500 homes in Vancouver. Among homes that sold for $3-million or more, 70 per cent went to Mainland China buyers. In homes priced between $1 and $3-million, 21 per cent went to Mainland China buyers. In properties costing under $1-million, 11 per cent of buyers were from Mainland China.

You believe what MacDonald Realty tells you? Good luck. — Garth

#184 Gulf Breeze on 08.12.15 at 12:01 pm

I am a huge fan of hedging against your own best judgement. A 10% allotment in gold right now will offset the follow on effects of China’s own race to the bottom, currency wise.

The U.S. govt has every excuse it needs now to leave rates where they are and we will follow suit or lower more.

And what could possibly be buoying the Cabadian dollar this morning? I haven’t read all the news yet but look at the gold lift off in the past couple if days. Could it be? Hmmm… Our dollar is hedged a little by the metal as we are a gold producing nation.

Owning the TSX through an ETF is all the gold exposure anyone should have. — Garth

#185 Steven on 08.12.15 at 12:04 pm

#36 Victoria Real Estate Update on 08.11.15 at 7:13 pm

Yes fixed rates will rise if US rate hike happens, but what is to prevent Canadian homebuyers and homeowners to use a variable rate mortgage instead which is only correlated to bank prime rates that are unlikely to rise due to the poor economic climate in Canada? Nothing.

#186 young & foolish on 08.12.15 at 12:12 pm

There are no “moats” and black swans are everywhere …
where lies value?

#187 IKnow on 08.12.15 at 12:29 pm

#182 steerage steward on 08.12.15 at 11:59 am
What to make of the story in the Province today showing mainland Chinese buyers are indeed a factor in the Vancouver SFH market?

http://www.theprovince.com/business/Vancouver+realtor+points+emerging+normal+single+family/11282589/story.html

In 2014, MacDonald Realty offices sold 1,500 homes in Vancouver. Among homes that sold for $3-million or more, 70 per cent went to Mainland China buyers. In homes priced between $1 and $3-million, 21 per cent went to Mainland China buyers. In properties costing under $1-million, 11 per cent of buyers were from Mainland China.

You believe what MacDonald Realty tells you? Good luck. — Garth

———————————————————–

Why not believe in MacDonald realty’s own research report?
They use buyer’s last name to make inference.
Those buyers may have been around for decades or more recent immigrants from China, or also can be foreign investors.
No matter, their presence is a potent catalyst.
First affecting the local ethnic Chinese to react, awaking a slumbering dragon so to speak, arousing the latent intense desire to be bigger or mini land barons.

Then other YVRers add fuel to force the paradigm shift.

Counting real estate by race is despicable. — Garth

#188 CJBob on 08.12.15 at 12:34 pm

For some of us a decision on the next election is about more than the economy. A strong disagreement with our recent foreign policy for example.

It’s also interesting that in virtually every election of the past 30 years the governing partner says the opposition will wreck the economy. It rarely happens, economies expand and contract no matter who is in charge. And the only group to run surpluses? The Liberals.

#189 dontcallmeshirley on 08.12.15 at 12:38 pm

Blackrock fixed income head says QE is on the table now for the BofC’s consideration. Read’em and weep.

http://business.financialpost.com/news/economy/smart-money-says-bank-of-canada-needs-to-pull-out-the-big-guns-to-rescue-economy?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+FP_TopStories+%28Financial+Post+-+Top+Stories%29#xtor=&utm_source=ExtensionFactory.com&utm_medium=extension&utm_campaign=extension&utm_content=popup

#190 economictsunami on 08.12.15 at 12:39 pm

The Fed may very well move, in either September or December, 2015.

Just as easily though, they may also re introduce additional QE measures.

When used to prevent a sudden collapse (from frozen credit markets) it can be very effective, coupled with government stimulus.

But, the hubris found when used to simply squeeze out private investment from USTs or MBS, you can expect expect inefficient malinvestment for those simply trying to make a quick buck.

Also you need ever increasing amounts of QE for steadily depreciating (ROI) results (think Japan’s many start/stop QE cycles ) and much of the redirected capital is funneled into an awful lot of pure shite; for those frantically over reaching for yield.

Perhaps you can’t get blood from a stone but those early to the junk party tend to get wine from water.

Just not many of us Muppets…

The Sweet, Sickly Stench of (QE) Success:

http://ttmygh.com/the-sweet-sickly-stench-of-success/

#191 rainclouds on 08.12.15 at 12:46 pm

#149 Kommie
“Easy. Businesses own the data that they collect. They don’t have to share it with anyone if they don’t want to.”

Partially correct, sales/tax/ownership data is actually public record. MLS is governed by the RE Boards. In the US the “ownership” of MLS was delinked from RE control. Which makes sense since consumers are actually footing the bill for MLS with their commission payments.

Delinking also helps foster competition by enabling RE agents/companies who wish to unyoke themselves from the pricing schemes RE Cartels have imposed unilaterally.

Another benefit is allowing consumers to make informed decisions unfettered by RE agents/companies screening of the “data” in some cases omitting relevant information to make a sale.

I know the RE industry is squeaky clean and would NEVER abuse their current position of holding statistically important data away from the prying eyes of consumers paying in excess of $30,000 for a 2 hour bidding war on a falling down dump semi in DT TO.

#192 Spectacle on 08.12.15 at 12:54 pm

MSM-Free Zone on 08.11.15 at 10:03 pm
#66 saskatoon on 08.11.15 at 8:13 pm
_________________________

You haven’t recently acquired an arsenal of restricted weapons, have you?

Inquiring minds need to know….
——————————————
Actually disregarding the content, he wrote very well of the fanaticism of belief. I was wondering when someone might comment….thanx MSM.

——————- Nosty ——————
Nosty, etc. on 08.11.15 at 11:29 pm

SMan, Spectacle etc. — Remember the saying, The higher one is,………

This includes the New Axis of Evil, but remember the first link — The Higher One Is, etc.
big Thanks Nosty, I’ve been waiting for exactly that detail !

Regards again,

#193 AB Boxster on 08.12.15 at 1:01 pm

Counting real estate by race is despicable. — Garth

——————————————–
Garth,
You place far too much emphasis on race than you do on the possible affect of foreign money and its impacts.

It matters nothing as to whether external funds come from China, Russia, or wherever.

The issue is whether funds from wealthy offshore buyers is affecting affordability of housing for Canadian citizens.
And if so, is this acceptable?

Every country has the right to control its borders, immigration levels, immigrant type (wealthy, refugee, etc). Many other countries have controls of foreign ownership.

If an issue exists that is having problematic effects on the population of a nation, who cares what the ethnicity is?

If the issue exists, describe it, understand it (data not anecdote) and address it.

The race discussion just deflects from the conversation.

The report I commented on is race-based. Despicable. — Garth

#194 iRent on 08.12.15 at 1:11 pm

IN case anyone missed.. source Globe and Mail

Canadians piling up ‘good debt,’ report says

Of the Canadians surveyed, 80 per cent said they are in debt. While the percentage stayed the same as last year, so-called “smart purchases” such as home purchases, home repairs/renovations and education expenses topped the list of debt sources for Canadians.

#195 Rational Optimist on 08.12.15 at 1:14 pm

http://www.cbc.ca/news/canada/hamilton/news/21-year-old-caught-driving-172km-h-on-linc-in-kia-1.3188214

Thank God the police pulled this guy over before the car disintegrated.

#196 young & foolish on 08.12.15 at 1:25 pm

“You forgot the cost of the massive bureaucracy required to administer this, estimated to consume 10-20% of all contributions. This may end up being Ontario’s greatest tax increase. — Garth”

the “law of unintended consequences” comes to mind here ….

#197 IM in C on 08.12.15 at 1:28 pm

#164 };-) aka Devil’s Advocate
At first glance, you appear to be correct. On further consideration, the Market is not a separate entity. It consists of -all- the sellers and -all- the buyers. If a seller prices his home at a set point and refuses to lower the price when it doesn’t sell, or a buyer refuses to raise his offer ***then those buyers and sellers ARE the Market.

#198 Randy Randerson on 08.12.15 at 1:31 pm

http://www.cbc.ca/news/business/canadian-house-prices-up-1-2-in-july-but-calgary-drops-1.3188314

Oh snap! I thought RE in Canada can only go up in a rocket-like trajectory. I guess realturds are just liars.

“But in Calgary, house prices are down 2.3 per cent since last year, reflecting the economic slowdown that has followed the advent of cheap oil.

The drop in the past month indicates a hit from the worsening job situation and many people putting their homes up for sale in the face of economic uncertainty.

Prices also dropped year-over-year in Montreal and Halifax, down 0.6 per cent in both cities.”

#199 Estrella on 08.12.15 at 1:38 pm

Only 195 comments? Your losing your touch garth.

Anywho look at this…Check out

@CBCAlerts’s Tweet: https://twitter.com/CBCAlerts/status/631508450166489088?s=09

#200 Vundo on 08.12.15 at 1:47 pm

http://www.conservative.ca/cpc/help-for-aspiring-homeowners/

This is insane.

On top of the reno tax credit, the government is determined to inflate real estate to the highest level of risk. — Garth

#201 Spiltbongwater on 08.12.15 at 1:57 pm

Harper will raise RRSP FTHBP to $35,000. Wonder if that would still be needed to be paid back in 15 years as well?

#202 S.Bby on 08.12.15 at 1:58 pm

#199 Vundo

Look at this part of that link…
Real estate commentators have suggested that speculative foreign buyers are a significant factor in driving homes out of the price range of average families in some parts of the country. We need to ensure we have the necessary information to assess the situation and take action.

We’re announcing that our government will commit to collecting data on foreign buyer activity in Canada’s housing market. We will take action in coordination with provinces, as necessary, to ensure foreign investment in Canada’s housing sector increases the availability and affordability of homes for Canadians.

With these two measures, we will continue to support Canadian families in achieving the pride and stability of home ownership.

#203 Bottoms_Up on 08.12.15 at 2:01 pm

#188 dontcallmeshirley on 08.12.15 at 12:38 pm
————————————————————
One person’s opinion….versus 3 others that are presented in the article, including the MoF and the BoC gov, both basically indicating it is not on the table (4th/5th option on list…forward guidance would be used first).

But the article is an indication that (variable mortgage) rates may stay low in Canada for quite awhile.

#204 young & foolish on 08.12.15 at 2:02 pm

“We need to understand the corporate takeover that has happened, and is happening both south of the border, here in Canada and world wide.”

Careful, on this blog you will be marked as a tin-foil hat wearer. The market is transparent and there are no 1% conspiracies.

#205 Sonny on 08.12.15 at 2:03 pm

“Flight simulator-maker CAE planning 350 layoffs, mostly in Montreal”

http://www.ctvnews.ca/business/flight-simulator-maker-cae-planning-350-layoffs-mostly-in-montreal-1.2513644

#206 Chris on 08.12.15 at 2:10 pm

@Estrella 198

Finally one political party is willing to propose tracking foreign non-resident (offshore) real estate purchases.

That combined with the Conservatives’ opposition to the ORPP is warming me up to Harper again.

#207 Victoria Real Estate Update on 08.12.15 at 2:11 pm

# 184 Steven

The strength/weakness of a housing market is determined by the ability of first-time buyers to enter the market.

In Canada, first-time buyers must qualify under the 5-year fixed rate or under the mortgage qualifying rate (which is higher).

As Canadian 5-year fixed mortgage rates climb, less and less first-time buyers will qualify for mortgages and those that do will qualify for less money. This will pull prices down from top to bottom since move-up buyers rely on first-time buyers to buy their properties.

You should have been able to get that from what I wrote. Try reading more carefully next time.

#208 Sonny on 08.12.15 at 2:15 pm

“Stephen Harper pledges higher RRSP withdrawal limit for 1st time homebuyers”

http://www.cbc.ca/news/politics/stephen-harper-pledges-higher-rrsp-withdrawal-limit-for-1st-time-homebuyers-1.3188580

Sonny shakes his head in disbelief!

#209 Admirer on 08.12.15 at 2:17 pm

“Harper pledges to guard Canadians from foreign home speculators”

http://www.bnn.ca/News/2015/8/12/Harper-pledges-to-guard-Canadians-from-foreign-home-speculators.aspx

#210 young & foolish on 08.12.15 at 2:17 pm

We’re in a global economy now … and governments are there to serve capital and appease you. Your currency is in greater and greater flux … will it purchase what you want when you need it?

#211 Shawn on 08.12.15 at 2:23 pm

Racism versus Nationalism

The report I commented on is race-based. Despicable. — Garth

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

Agreed. Is Nationalism also despicable? If not, why not?

#212 OttawaMike on 08.12.15 at 2:37 pm

Driving to work this morning at 7, the reporters were spilling onto Laurier Ave. as they raised their satellite antennas and set up their mobile press booths for the star witness Nigel Wright.

One block away was our beady eyed leader thinking,
Hey everybody look here, never mind that commotion at the court house:
http://www.cbc.ca/news/politics/stephen-harper-pledges-higher-rrsp-withdrawal-limit-for-1st-time-homebuyers-1.3188580

#213 Rainclouds on 08.12.15 at 2:39 pm

Cant imagine why Steve is so reviled, impressive track record………….. for a gulag.

http://thetyee.ca/Opinion/2015/08/10/Harper-Abuses-of-Power-Final/?utm_source=mondayheadlines&utm_medium=email&utm_campaign=100815

#214 Gulf Breeze on 08.12.15 at 2:56 pm

Garth, gold exposure through a broad based TSX etf, forces you to buy sure money losers, like energy stocks. I believe energy stocks will continue to plummet, so buying gold through the TSX, is not hedging against my belief. I will just avoid the tsx altogether.

A better hedging strategy would be to use gold as a hedge against something you believe is going to go up. Buying American shares (which I believe will go up,after taking a breather,) while hedged in gold, makes more sense.

They could both go up together, actually. But it is unlikely that gold nominated in Canadian dollars, will synchronize downward in any kind of global bond or share correction. In Canuck bucks, gold continues to shine, just not as brightly.

#215 Randy Randerson on 08.12.15 at 2:59 pm

#199 Vundo on 08.12.15 at 1:47 pm

What? And no “Help for Aspiring Millionaires”? The Cons are finally losing it. It should be the government’s job to help as many citizens as possible to be wealthy and well off, and not leech the public trough. Instead all Harper cares about are “home-owers” digging deeper and deeper into debt, propping up the image of the Socialist Republic of Canukstan, that everyone has a home and is successful in life.

To borrow GT’s wise words: “You can rent a roof, but you can’t rent financial security.”

#216 gut check on 08.12.15 at 3:03 pm

@ #180 BS on 08.12.15 at 11:06 am

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

tin foil hats? you make me laugh.
Where will the playground bullying get to next, I wonder?

You know, I think you’re right! it’s CRAZY to want data on the value of the single largest purchase of your life. For that matter why do we allow the accused to sit in court when s/he is being tried? WTF is THAT? Paranoid, much?

#217 young & foolish on 08.12.15 at 3:04 pm

… nobody should own rental units …. only REITs ….
… leave the land-lording to the professionals

#218 MF on 08.12.15 at 3:07 pm

#150 SWL1976 on 08.12.15 at 1:07 am

I get your point and I think you are correct things are changing and not for the better. Was life better in the 1950’s and 60’s here in Canada for my parents? Probably. But that doesn’t help us now. People under 35 like myself know we are all screwed and no one cares. The goal I think is to find out how to survive and succeed in the new environment. Garth gives good advice in that regard (staying out of debt, mobility, liquidity etc.) and that is why I come here. We can complain all we want but no one cares.

As for Nosty’s notes. They are just a bunch of fringe websites purporting to tell the “truth” only because they are different than the main stream. There is always an alternative explanation to anything. Maybe evolution didn’t happen and we were put on here by an alien spaceship. Possible sure, but credible not so much. The majority of facts point to evolution over spaceships so that is what we go with in this point in time. The same can be applied to the theories put forth on those sites. To me they just sound like conspiracy theories conjured up by frustrated people looking for others to blame.

Oh and btw, sorry I’ll be honest but I think there is often anti religious undertones in the posts on those sites. They are not helpful and they spread hatred to the unsuspecting. New axis of evil? lol get real.

MF

#219 Holy Crap Wheres The Tylenol on 08.12.15 at 3:16 pm

Isn’t it cool how the world is connected.
Let me see how this works.
China is slumping and bleeding on exports every month further killing their economy. OK!
The Chinese gave the yuan a haircut to lower it even more than the previous devaluations to jump start the bleeding economy. OK!
China is the world’s biggest oil consumer after the United States right? OK!
The Saudis and their idea of driving the Shale Industry into the dust has backfired causing all oil everywhere to go down (BTW here comes $35 oil Prince Salman) The sheik’s may have to put off the new Bentleys for another couple of years. OK!
The Iranians could be back in the export business soon further adding to the bloat of oil and further weakening the value of the market! OK!
The Shale industry and many others are on their knees right now eating a living hand to mouth and definitely at the precipice. OK!
Getting back to China a weaker yuan eats away at Chinese purchasing power for US dollar-denominated imports like oil! OK!
Chinese exports initially cost less with a haircut but now may be awash with the US$ when purchasing oil. So Status Quo! OK!
Saudi Arabia’s main imports are: machinery, mechanical appliances and electrical equipment (27 percent of total imports), transport equipment and parts thereof (16 percent), base metals (13 percent), chemicals and related products (9 percent) and vegetables (6 percent). Main import partners are: China (13 percent of total imports), United States (12.6 percent), Germany (7 percent) and Japan (6 percent). Others include: South Korea, United Arab Emirates, France and Italy. As per Trading Economics.com
So the Suadi’s imports are down and their purchasing power is going to be lower with less exports. OK!

Oil prices were down early today, but the International Energy Agency reports that global demand for crude is increasing as the price has dropped! OK
Wow this is definitely the butterfly effect in motion!

#220 entropic entity on 08.12.15 at 3:19 pm

#45 and Smoking Man
Re: “Under the Volcano” by Malcolm Lowry.

John Huston, who was an expert on carousing, directed a 1984 film adaptation of Lowry’s novel. Albert Finney convincingly portrays the drunk. Finney has a natural tendency to slur that makes him perfect for the role. Interesting that a drunk should be fortunate enough to have Jacqueline Bisset as a love interest.

#221 Drill Baby Drill on 08.12.15 at 3:32 pm

#199 Vundo

The reno tax credit is the only card left to play by the gov’nt until natural resources rebound.

#222 Bcgvrd on 08.12.15 at 3:42 pm

Conservatives promising to collect data to determine foreign ownership and increase first time buyer to 35000….. You had me at data

#223 just a dude on 08.12.15 at 3:54 pm

Garth, photo is a poor choice today. Just sayin’.

#224 chapter 9 on 08.12.15 at 4:05 pm

#175 Llewelyn
You forgot the cost of a massive bureaucracy to administer this,estimated to consume 10-20% of all contribution. This may end up being Ontario’s greatest tax increase—-Garth

Garth is correct, the cost to run CPP has gone from $600 million to over $2 billion,2006-07 to 2012-13
We are now spending $490 million on operations,$782 million on external management fee’s,$177 million on transaction fee’s,$586 million for the federal government to collect and pay benefits. That’s over $2 billion a year. And for every dollar that is spent to run this program is one more dollar that has to be paid into the plan and not being received by pensioners. The Ontario governments venture into a provincial pension system is nothing more than another nail in the financial coffin of this province.

#225 Jim B on 08.12.15 at 4:14 pm

As of market close yesterday, the TSX Composite is down 1.49% and the S&P 500 is up 1.22% year-to-date. My modest diversified retirement portfolio is up 8.72% year-to-date. What’s going on?

Well, part of the reason is the loonie’s decline (10.8% YTD according to the BoC website calculator) but that only benefits you if you hold a substantial portion of your assets outside Canada (which I do). Certainly dividends play a large part, but of course you have to own dividend-paying stocks or ETFs (which I do) plus preferreds, utilities, REITs, etc. (which I do). No magic, no particular investing acumen. Just diversification.

In other words, listen to Garth’s investing wisdom! And imagine how you’ll benefit when the equity markets start to go up (probably when Prime Minister Mulcair is sworn in…).

#226 Broke Dick on 08.12.15 at 4:15 pm

You forgot the cost of the massive bureaucracy required to administer this, estimated to consume 10-20% of all contributions. This may end up being Ontario’s greatest tax increase. — Garth
==================================
10-20% would be right in line with what a financial adviser would charge.
Let us assume a 8% roi and the financial adviser charging 1.25% on the amount invested.

$1,000,000 account returns $80,000 per year.
$1,000,000 account has a $12,500 per year management fee.

$12,500 is 15.6% of $80,000.

#227 Sheane Wallace on 08.12.15 at 4:22 pm

I said today:

#109 Sheane Wallace on 08.11.15 at 9:41 pm
–#37 espressobob

miners have potential to explode 5+ times in very short time frame. Indexes won’t.

Buy when there is blood on the street. J. D. Rockefeller

——————–
Up 7-8 % et the end of the day.

#228 Jim B on 08.12.15 at 4:23 pm

Just read the entry from a few days ago, and what caught my eye but “45,300 more public-sector workers were hired in Alberta in the last year.” Hmm, can’t blame that on the evil NDP, who only got voted in three months ago. Perhaps they’re not the only politicos who love so-called big government?

#229 Nagraj on 08.12.15 at 4:28 pm

Evidently there are Cons in Ottawa who lie awake at night dreaming up ways to further inflate house prices. Now why would they do that?

Put another way: are there are Cons in Ottawa who are scared? Of what?

Afer all, there is no “housing bubble”, folks is borrowin’ like crazy only so’s they can DISPLAY their “confidence in the economy”, and , hey!, if yas can’t find a job why don’t yas “work free for a year?”

“Everything is tickety-boo, tickety-boo, tickety-boo
Everything is tickety-boo on such a dreamy day dilly-ootely-ay
Bless mankind including my attackers,
I’m inclined – the feeling is oh so jolly, well, oh, it’s crackers!
Incidentally how about you? How do you do?
Oh everything is tickety-boo on such a dreamy peaches and creamy day.”

(Danny Kaye, “Merry Andrew”)
(Or the Harper campaign theme song.)

#230 Sheane Wallace on 08.12.15 at 4:45 pm

Sir GT.

Any comments on the increase of the RRSP withdrawals for house purchases for first time buyers from 25 k to 35 k?

With sub-prime insurance from CMHC, no practical income verification and 5 % down this additional 10 k per person, 20 k per couple translates to additional 100-150 k from the bank, right?

What is this guy smoking? Is he that delusional or just plain stupid?

#231 Sheane Wallace on 08.12.15 at 4:48 pm

#217 Drill Baby Drill

natural resources rebound? Oil so going to under $ 40. somebody please flush the toilet once the dear leader is gone.

#232 Rob on 08.12.15 at 4:51 pm

Re: #199

See? It’s stuff like this that makes this whole election thing so depressing. Who the f–k to vote for? A pox on all their houses! Every one you listen to in politics (in any country of the world) will tell you anything just so as to get elected. Most (but not all, mind you) can’t be trusted as far as you can toss them. Can’t vote for the “none of the above” candidate so you’re damned if you do and damned if you don’t. Obviously none of these clowns are historians but are all hellbent to repeat the same mistakes as in past generations.

#233 Jim Stanley on 08.12.15 at 4:59 pm

In today’s financial post, Blackrock is saying QE in Canada, bond buying will push longer term bond yields lower.

I see it already with all rates, 3 months to 30 years. They are all going down, down, down.

The Fed raises rates or not, interest are lower now and it is all about ganging on up on savers, fixed interest investors.

Corporations need more interest rate cuts according to Blackrock, why doesn’t the government and banks, lenders give free money to them.

#234 IKnow on 08.12.15 at 5:04 pm

Garth, Statistics Canada take data about mother tongues and self-identified ethnic ancestry, must that be very terrible?

Just shutting up any discussion of foreign (race) influence on Vancouver real estates affordability is too extreme in my opinion.

Unfortunately you see China issue is a race issue.
In a way I cannot dispute against that, there are far too many bigots among us.
Have first-hand experience: a few folks made comments to me and my family that we must be rich because we are Chinese; whether malicious or not that’s frustrating.

But to my mind the cultural/socio/economic background that have caused YVR very expensive is very real.

Typical example:
A young ethnic Chinese nephew just coughed up $1.4M plus to buy a mediocre sub-standard piece of land in Burnaby.
Rationale: look at how expensive a flat is selling in Hong Kong and Guangzhou, more of those people will be coming, soon we will be priced out forever if not act now.

Ethnic Chinese or not, every YVR’ers see or experience the above constantly.
See nothing say nothing will not solve any problem.

#235 jess on 08.12.15 at 5:07 pm

Who is counted as employed?

….
Garrett is 16 years old, and he has no job from which he receives any pay or profit. However, Garrett does help with the regular chores around his parents’ farm and spends about 20 hours each week doing so.

Lisa spends most of her time taking care of her home and children, but she helps in her husband’s computer software business all day Friday and Saturday.
Who is counted as employed?
Both Garrett and Lisa are considered employed. They fall into a group called unpaid family workers, which includes any person who worked without pay for 15 hours or more per week in a business or farm operated by a family member with whom they live..”

http://www.bls.gov/cps/cps_htgm.htm

job losses
Top U.S. State Exporters to China (Graph Courtesy of US-China Business Council
http://wallstreetonparade.com/

#236 Saskatchewanite on 08.12.15 at 5:09 pm

TO: #11 ETFs or MFs?

Congratulations on starting your journey to financial freedom! We opened do-it-yourself index funds accounts a year ago with Questrade (TFSAs, RESP, RRSPs). I consider myself a newbie so I won’t pretend to give you any advice, but this might help you along:
– Questrade charges a $9.95CDN commission fee every time we sell a fund. Buying is free.
– Questrade also offers managed investing at an MER of 0.7% for portfolios less than $100,000.
– We have a DIY account and our total fees are 0.232%.
– Most pple recommend rebalancing once or twice a year but my spreadsheet genius brother did the analysis and discovered that rebalancing monthly is way more awesome! Bi-weekly is even better but not by very much.
May the Force be with you!

#237 Milla on 08.12.15 at 5:16 pm

Where is the mother of this kid? This kid is going to be a monster.

#238 Bytor the Snow Dog on 08.12.15 at 5:31 pm

RUSH has a song for every situation.

For you MF…

“Freewill”

There are those who think that life
has nothing left to chance
A host of holy horrors to direct our aimless dance

A planet of play things
We dance on the strings
Of powers we cannot perceive
‘The stars aren’t aligned
Or the gods are malign…’
Blame is better to give than receive

[Chorus:]
You can choose a ready guide in some celestial voice
If you choose not to decide, you still have made a choice
You can choose from phantom fears and kindness that can kill
I will choose a path that’s clear
I will choose freewill

There are those who think
That they were dealt a losing hand
The cards were stacked against them
They weren’t born in Lotusland

All preordained
A prisoner in chains
A victim of venomous fate
Kicked in the face
You can’t pray for a place
In heaven’s unearthly estate

[Chorus]

Each of us
A cell of awareness
Imperfect and incomplete
Genetic blends
With uncertain ends
On a fortune hunt that’s far too fleet

#239 Shawn on 08.12.15 at 5:44 pm

Ah the 50’s and 60’s…

MF at 217 asked:

Was life better in the 1950’s and 60’s here in Canada for my parents? Probably.

*************************************
Well, I can’t speak for MF’s parents but I do know that the typical standard of living in Canada was quite a bit lower back then as compared to now.

People may have been more satisfied as they were relieved that the world war was over and the depression was gone and the economy was strong. But the standard of living was clearly lower then on average as compared to now.

Color television was not yet available. A good number of rural people still had outhouses (probably some nice two-holers though).

Sewage in the ditch was not an uncommon sight.

For T.V. some areas only had access to CBC.

Don Cherry had not yet been invited.

Having two cars was rare.

Mom didn’t usually “work”, well other than round the clock cooking, cleaning, washing, mending, and general child rearing as labour saving devices for the home were not widespread.

Refrigerators were popular but not universal in the 1950’s Same for electricity.

Coal and wood stoves still abounded in the 1950’s and into the 1960’s

If you could visit the 1950’s and 1960’s and live as they did you would not want to stay long.

#240 Entrepreneur on 08.12.15 at 6:03 pm

Now that Harper has to find the votes he is coming down to reality & is speaking to the people. What is wrong with the village, oh dear, what can we do to help. BC Liberal Christy Clark could care less of collecting data but now Harper will collect data if elected.

I did notice from the video at the beginning the young man said that if the NDP was in power the housing bubble would not happen. I like Tom Mulcair & believe that he is sincere for Canada. Your head is buried in the sand if you vote otherwise.

#152 liquidincalgary…ah, you survived. I laughed at the carpentry joke, but with seriousness, I think the Bible should be used as a guide for us not to be misused (like it has for a long time). #192 AB Baxster…I agree that the name-calling on race only deflects the real issue. Let us get to the bottom of this.

Do not the people of their own country/province deserve answers? Are not politicians of our ridings there to serve us, the citizens, to comply with complaints?

#241 cramar on 08.12.15 at 6:29 pm

#193 iRent on 08.12.15 at 1:11 pm
IN case anyone missed.. source Globe and Mail

Canadians piling up ‘good debt,’ report says

Of the Canadians surveyed, 80 per cent said they are in debt. While the percentage stayed the same as last year, so-called “smart purchases” such as home purchases, home repairs/renovations and education expenses topped the list of debt sources for Canadians.

———————
Actual link:

http://www.theglobeandmail.com/report-on-business/canadians-piling-up-good-debt-report-says/article25932624/

“The average amount of debt Canadians now hold rose significantly to about $93,000 in June from $76,140 a year earlier…”

#242 @ Sheane Wallace on 08.12.15 at 6:37 pm

It was the Rothschild Baron who said “Buy when there’s blood on the street, even if the blood is your own” (NOT John D Rockafeller). Just sayin’.

#243 ETFs or MFs? on 08.12.15 at 7:13 pm

Just a quick THANK YOU to all of those who responded to my question and encouraged me.

I appreciate that you took the time to read and respond.

All the best and I hope we will all have some gains with GT’s diversified strategy! Good luck!

#244 maxx on 08.12.15 at 7:45 pm

#48 Brian on 08.11.15 at 7:34 pm

“Here’s my uneducated theory:

…..Plus they’ll fight tooth and nail to not sell at a loss.”

Teeth and nails don’t come into it. Not in a heroic way, at any rate. I’ve seen many a kitchen cupboard of those “fighting tooth and nail to not sell at a loss.” Pasta, cheap cooking oil by the plastic gallon and dollar store spices aplenty. Teeth don’t look so good on that sort of diet- and the manicure? Fuggedaboudit.
Options, though, are many: wait, get a reverse mortgage- yikes, wait some more, take on a renter- double yikes, keep on waiting, cut the holidays and enjoy our wonderful winters- mmmmmmm, such fun!, reminisce about the gloaty heydays of re over a large bowl of spaghetti al leftovers, wait again, stamp ones little seller feet, wait, complain about useless, overpaid realtards, wail…….eeeeeeeeeeeeeeeeee……….
Time’s up. Fought “tooth and nail” for a loss. Smart.

#245 AckNack on 08.13.15 at 10:37 am

Dear Garth, I always appreciate the facts you present about the recent past. I thank you for the information gathering you do that no one pays you for. Thank you.