Fresh thinking

BONELESS1

Over the last few days, because reading this blog is easier than doing research, the mainstream media has discovered (a) this election could really screw up investing with a TFSA gut and (b) the political parties all want a housing bubble. Now that it seems certain interest rates will be higher in the months and years ahead, and Canadians’ personal finances suck, these are big issues.

As you know, the Cons will bring in a permanent home reno tax credit so every residence in the country eventually has a hot tub. They’ll also jack the amount kids can steal from an RRSP for a downpayment. The Libs will diddle with RRSPs, too, making it legal to move money to buy a house whenever you have a ‘life event.’ The Big Dipper has caved to CREA demands and will let amateur landlords escape capital gains tax, and Trudeau says he’ll give them $125 million for renovations. It just never ends.

On top of this, we have CMHC now allowing 100% of the rent from your mouldy basement suite as allowable income for a mortgage (double the old amount), and no political leader has thus far had the stones to stand up and tell people they’re borrowing too much. You can only assume air will continue to be pumped into the property gas bag until it rips.

Of course, there’s one other important issue when it comes to politics and housing – appealing to the lowest common denominator of xenophobia. We all know they really meant ‘Chinese’ when Harper and Trudeau pledged to study the impact of ‘foreign buyers’ on markets like Vancouver. It’s what the locals want. This is how you get elected. It’s called followership.

By the way, a new survey finds 69% of YVR dwellers think stupid high prices are the result of offshore (Chinese) buyers while 60% want to see limits put on foreign ownership. This despite the fact the real estate industry itself pegs the number of buyers at 5% of total deals, and the Victoria board (the only one which counts) reports non-Canadian buyers at 1.6% of the market.

Naturally, facts don’t matter when you have Twitter and Global television. So expect this to be a meme that carries through to e-day.

Now, let’s look at the real reason real estate in Vancouver or the GTA is a self-propelling, risk-laden phenom. Last month sales slowed in Toronto, but detached 416 prices jumped year/year by more than 12%. In YVR the benchmark price for a detached home is higher on an annual basis by 17.5%. This is the stuff of nosebleeds, at a time when our largest export industry is crippled, household incomes have stalled and the country’s in technical recession. How on earth could this be? What do the leaders have to say about cities average people can’t live in anymore?

You bet. Nothing. Except find new ways to shovel more buyers in, further augment values while building extra consumer debt. And ignore the elephant in the room.

Back to the survey, conducted by industry magazine REW. This is all about the Bank of Mom.

  • 75% of the Millennials surveyed say they will need (and expect) a loan from their parents in order to make a downpayment.
  • Another 33% said they are looking forward to an inheritance in order to buy.
  • Among those ‘adult children’ between the ages of 41 and 50, a stunning 64% state they will be asking family for money in order to upsize their house.
  • Over half the buyers under 30 years old earn less than $70,000 but are buying houses averaging $400,000.
  • 74% think houses are overvalued, but…
  • 77% believe this is a good time to buy.

Well, there ya go. The real estate illusion. Boomer parents see a windfall increase in their equity so they borrow against it to give cash to their children to buy into the same market, creating more demand and putting further upward pressure on property values. The word ‘ponzi’ floats to mind. If this thing ever stops rolling, and starts reversing (it will), illusory equity will have turned into real debt.

It’s a mystery how smart, uber-educated kids who generally believe their parents are fossilized, if lovable, dorks can fall for this. How can 77% accept that buying something when it has never before cost this much, and involves unrepayable debt, be wise? Can’t they Google? After all, every boom in history has ended in a bust. Where there is an expansion, there is a contraction. The greater the increase, the more painful the decrease. And it’s always exacerbated by debt.

So, stop worrying about the Chinese and reflect more on the irresponsibility of parents. It’s also worth remembering that government policies – from 5% down insured mortgages which strip away lender risk to first-time buyer tax credits to free capital gains on houses – have created a nation steeped in house porn and now pickled in debt.

Somebody said this election was about change. Funny.

217 comments ↓

#1 Lester McMann on 09.15.15 at 4:41 pm

It turns out a new study shows that subprime isn’t to blame for the US housing crash. Could there be lessons for Canadian homeowners here?

“When we talk about the past decade’s housing crisis, it’s natural to talk about subprime loans.

Subprime loans give us a convenient, conventional story: predatory lenders charging people unconscionable interest rates, forcing innocent people into foreclosure and the rest of us into the worst financial crisis since the Great Depression.

There is only one small problem with this story, which is that lots of prime borrowers defaulted too. In fact, according to a new paper by Fernando Ferreira and Joseph Gyourko, subprime loans accounted for only a bare majority of defaults at the beginning of the housing crisis. Between the third quarter of 2006 and the third quarter of 2012, twice as many prime borrowers lost their homes as subprime borrowers.

This is not a phenomenon that can be simply explained by liar loans, predatory lenders, or any other narrative that neatly loads all the blame onto a few greedy and heedless lenders, or a somewhat larger number of hubristic and speculative borrowers. Subprime loans certainly caused a lot of problems, but they did not cause all the problems by any means. They could not have driven us into crisis if the rest of us had not so eagerly gone along.

So what role did they play? I think we can tell a very plausible story that still assigns subprime loans a central role:

Once upon a time, there was a country with a housing market that started to rise. As the market started to rise, housing defaults started to fall. They fell not because people had gotten wiser about borrowing, or better at managing their money, but because borrowers in a rising housing market virtually never need to default; they can always simply sell the house, walking away with whatever equity is left over after paying off the mortgage.

Lenders loved this. “Splendid! If default has become less likely,” the lenders said, “we do not need to worry so much about things like down payments or credit histories. Who cares if they can’t pay the mortgage each month; if they get into trouble, they’ll just sell the house and pay us.”

Now, a housing market is sort of like a room with two doors. On the one side people are entering; on the other side of the room, people are exiting. The more people there are in the room, the more valuable your little patch of ground to stand on becomes. The effect of expanding subprime loans was to make the entrance door wider, allowing a lot of people in who had not previously been able to secure a spot inside. This made spots inside even more valuable, and drove defaults even lower, encouraging the bankers to make even riskier loans.

Unfortunately, there were only so many people in the waiting room who wanted to get in. Once they’d all passed through, two things happened: The number of people bidding for spots fell, and people started to notice that it was getting kind of crowded in there. Prices stopped rising inside.

Once that happened, the risk of those subprime loans became apparent. They’d always been bad credit risks, but that risk had been masked by the rising prices. Defaults started going up. The folks in the waiting room decided maybe they’d wait a little while to see how it settled out. Lenders didn’t have money to make new risky loans.

The subprime borrowers were the first to go, and the hardest hit. But without those subprime borrowers to fuel the bidding, prime borrowers suddenly found they’d overbid on their own slots.

They had, in the dread banker’s parlance, “negative equity.”

In other words, had we not been making risky loans to so many new borrowers, the bubble would probably not have expanded as rapidly as it did. But the subprime borrowers were not the only people, or even the majority of people, bidding on homes. Most of the bidding was done by better credit risks, with perfectly conventional loans.

The buyers and the banks simply underestimated the risk that the prices of these homes would fall. And when prices fell, prime borrowers caught in bad situations — deteriorating neighborhoods or deteriorating finances — had little alternative but to default. Which is why your risk of default is best predicted, not by the type of loan you got or how much you put down, but by whether you had negative equity.

So while initial down payments may not have done much to predict default in individual cases, we could argue that requiring 20 percent down would still have done a lot to prevent so many people in the market from going into default. The down payment is the biggest obstacle most people face to getting into a house.

Closing the door to anyone who couldn’t get that much cash together would have kept houses much more closely tied to incomes, meaning that the bubble simply could not have inflated as large as it did — and therefore, would not have had the same catastrophic effects coming down.

That doesn’t mean that tightening up lending standards would have prevented the bubble. But it could have kept the bubble smaller, and the fallout less vicious.

Of course, it’s easy to say this in hindsight. It was a lot harder to develop insight at the time. When prices had been in a long, gentle rise for decades, high down payments looked like expensive and unnecessary insurance against something that rarely happened. They looked like a barrier keeping historically disadvantaged groups, like minorities and immigrants, from accumulating wealth the way that prosperous native white families had.

They looked like something that regulators and bankers had needed to require before they got so darn smart about managing credit risks, and credit markets.

Everyone, from buyers to regulators, had reams of data telling them this. Who are you going to believe: years and years of statistics, or some crabby dude muttering about the Great Depression? The Great Depression was so long ago that men wore hats and the Beatles were not even gleams in their fathers’ eyes.

Bubbles are not fundamentally about evil people doing evil things. They are not even about stupid people doing stupid things. No, the problem with bubbles is worse: It’s quite ordinary people, doing stupid things that a trick of the light has made appear very smart.

Thanks. But next time use a link. — Garth

#2 batt519 on 09.15.15 at 4:46 pm

Best blog post by far from my perspective.
Americans still will not be raising rates this week and I’m still safe in $ilver.
:)

#3 Homeless in Canada on 09.15.15 at 4:51 pm

In a “normalized” economy the Feds Fund rate is a moving target but generally in the 5% range. People keep asking “should or shouldn’t interest rates be raised?” Rates are 1/20th of normal! The question should be, “does the economy require the Federal reserve to maintain these EMERGENCY RATES? The answer is no. The financial CRISIS which brought these rates ended in early 2010. The US economy had/has not fully recovered but continuing of the ZIRP (zero interest rate) goes on unjustified. Rates may need to be low but certainly much higher than the 0 to .25 rate. Maybe 2 or 3+%.

Some fools keep drinking the Kool-aid which states “the only time to raise interest rates is when inflation goes above 2%. Really? Given how complex economies are, it is amazing that the ONLY time to rates is when the “inflation metric” justifies it. In reality, rates need to be adjusted to help maintain a BALANCED economy. Balanced Economy is a term the experts seem to have forgotten.

It is also fascinating that Canada has seen its currency decline by 25% in 3 years but amazingly, inflation is still under 2%.

The people who actually believe this, must believe Harper is awesome!

How much more BS are these “experts” going to keep pushing onto the masses.

#4 Paully on 09.15.15 at 4:53 pm

Year-over-year rices up 12% in YYZ and 17% in YVR. Is this finally the leading edge of “The Hockey Stick” price chart that Smoking Man has so often mentioned?

#5 SWL1976 on 09.15.15 at 5:12 pm

Not sure where I’m going to put my new hot tub, but I got a chuckle out of that one

Every sigle one of those bullet points hurt my head to think about especially the 41 to 50 year old ‘children’

Good post Garth, you’re a writing and reading machine. I sometimes wonder how you put up with us all

#6 HD on 09.15.15 at 5:17 pm

RE: TFSA

Does anyone have any insight on what would happen if the liberals/NDP gets elected regarding the TFSA?

Would they reduce the limit right away or would they give a grace period and wait until 2017 to impose the change?

That would be great to shelter another 10K for 2016 but I am not holding my breath…

@MF

I have enjoyed reading your posts lately.

Here’s a short article I read the other day I think you would enjoy.

http://www.dividendmantra.com/2015/08/time-in-the-market-trumps-timing-the-market-for-the-long-term-investor/

Best,

HD

#7 Panhead on 09.15.15 at 5:19 pm

Somebody said this election was about change. Funny.

———————————————————-
It’s about change all right … getting the last of it out of our pockets …

#8 espressobob on 09.15.15 at 5:21 pm

Thanks for your recent insight Garth. Two sleeps from now should prove interesting!

#9 VoteABC on 09.15.15 at 5:21 pm

This election is indeed about change. Its about undoing Harper’s damage. Restoring the long form census. Not meddling with scientists. The list is long.

#10 David McDonald on 09.15.15 at 5:25 pm

I don’t necessarily agree that Canadian society would be better of if more adults were successful market investors. I do agree Canadians need to manage their finances better. I have seen 20% interest rates and debt scares me.

Garth is right about the “followership” of all our candidate leaders. A promise of granite in every kitchen is poor economic policy.

#11 zedgt87 on 09.15.15 at 5:39 pm

Garth is correct that debt fueled bubbles collapse violently.

Remember that when considering Equities and where we currently at. Current valuations are no different than 2007/2008 and will end with much pain.

Don’t believe me? Check out margin debt. Its no different this time, and that includes Financial markets.

More of your nonsense. S&P valuations are well within historic norms. Go worry about bungalows in Etobicoke. — Garth

#12 Mocha on 09.15.15 at 5:41 pm

It pains me to write it but for the first time ever I am considering giving my vote to Harper, and for the sole reason that he doesn’t want to flood the country with a bunch of unscreened “migrants”. I can’t believe the other guys are taking such a foolish stance.

Btw, as always, HAM is 100% real.

I guess I’m a far right, nazi, xenophobe, racist, and all the other shame labels…

No, just heartless. — Garth

#13 Londoner on 09.15.15 at 5:42 pm

#134 MF on 09.15.15 at 2:05 pm

I think the pressure comes from realizing that the consequences of a prolonged ultra low rates policy is more disastrous than what happens when they are raised (slowly). We hear almost daily on this blog (and everywhere else) how the economy is not improving as it should despite zero bound interest rates.

We can see the consequences (reckless borrowing, massive asset bubbles etc.) everywhere.

Increases in interest rates also signal the bankers think the economy is healthy enough to move forward. the psychology of it is important.

Moreover, I think the FED must be thinking that if another recession hits, and we are already at rock bottom, there are no bullets in the chamber. I also don’t think negative rates are possible here.

MF
____________________________________________

Sounds like you’re talking about the state of the Canadian economy (reckless borrowing and forming asset bubbles) and then linking that to the US Fed’s monetary policy. The US Fed doesn’t care about asset bubbles in Canada and the BoC wouldn’t even consider moving up without the Fed. Or maybe I just didn’t read your post correctly… I’m not sure. But if you’re talking about a weak economic recovery in the US then that’s more reason for the Fed to maintain low rates – not necessarily at 0% but low enough to provide economic stimulus.

Besides there’s no evidence that a long term low interest rate policy is detrimental to an economy while it’s still recovering. For example, have a look at the history of long term interest rates in the US and tell me what you see during the 1930’s great depression. How long did it take before rates bottomed? How long did it take before rates rose to a level that would be considered “normal”? The GFC was arguably a more significant economic disaster considering the global impact however we’ve only had emergency level rates for about 8 years so far. Whilst there are signs of economic recovery in the US and the UK they are anemic at best, especially when you consider the state of the US labour market. Let’s not forget that Europe is still conducting it’s QE program. I’m not saying the Fed won’t raise rates a little but don’t underestimate the length of interest rate cycles – they can go on for far longer then you think.

#14 JRH on 09.15.15 at 5:56 pm

Where do you find bananas for .47/lb ?

#15 smartalox on 09.15.15 at 5:57 pm

How can CMHC accept 100% of rental income when calculating a potential buyer’s ability to service a mortgage?

Shouldn’t the figure be closer to 80% in order to offset and account for the additional income taxes, maintenance and other rental-related overhead?

If a buyer of a rental property requires 100% of the income from that property to service the mortgage, how sustainable is that? Taxes and maintenance would be expected to come from where, exactly? A part-time job?

Looking back, this might be the ‘TSN Turning Point’ in this whole real estate gasbag.

#16 Pierce G on 09.15.15 at 5:58 pm

My parents tried to get me to take a $25k-no interest loan off them to buy a small house, so I wouldn’t have to pay rent (I’m 25).

I told them I wouldn’t take $25k for a house but I would take it and invest in a simple portfolio of stocks. They told me I was insane to do something like that and I told them it was equally insane to buy a house right now.

#17 Mean Gene on 09.15.15 at 6:00 pm

Spotted this on Huffington Post… I am sure Mr. T (whatcha looking at greaterfool) has seen it.

http://www.huffingtonpost.ca/2015/09/15/global-debt-crisis-federal-reserve_n_8135266.html?utm_hp_ref=canada

#18 MillenialRenter on 09.15.15 at 6:05 pm

There’s something inherently morbid about “looking forward to an inheritance.”

#19 John on 09.15.15 at 6:07 pm

Idenitfy and explain 5 things which will happen (good or bad) when Janet hikes rates. I’d be interested to learn a thing or five….

#20 Oceanside on 09.15.15 at 6:09 pm

Interesting, all the concern of the Chinese influence on the Vancouver market. The latest is that they are buying homes in Victoria and housing their children going to school there as without a large Chinese population it is being treated as better English “immersion” They are keeping their vancouver properties. Don’t know how much truth there is to this but some Victoria realtors are positively giddy about it…..

#21 Brydle604 on 09.15.15 at 6:10 pm

#1 You fail to mention that many prime borrowers took HELOC s out based on the rising equity of their homes , and then got caught with negative equity when the prices fell. This would explain why so many prime borrowers got into trouble and lost their homes.
The same thing is going to happen in Canada, as interest rates rise, and the real estate bubble unwinds.

#22 Entrepreneur on 09.15.15 at 6:17 pm

Could it be that the Bank of Mom buyers (with credit) in Vancouver/Toronto “wishing” the 5% foreign buyer (or illegal money) buys their house? Whatever “what” has been happening over the years we know that prices have risen up and beyond reason but the Bank of Mom, beyond reason, helps her offspring (and the Banks allow this, beyond reason).

So, because of housing is “beyond reason” to buy so what is the motive? When did this irrational buying start? Insider tip to buy (at a certain time) then the message spreads like wildfire creating mass hysteria, a bubble?

The savers didn’t get the message, deposited their money waiting for the downturn as it is beyond reason to pay to much. Small business did not get the message; they would have saved a lot of time and money if they bought a house in Vancouver/Toronto.

What other reason would one buy a house “beyond reason” other than expecting a windfall. Maybe we have been hoodwinked to look like 5% foreign buyers? Or is it now just the Bank of Mom hoping (or now hoping for another Bank of Mom)? Will never know as detailed facts and figures are not kept or not brought forward.

#23 Rory on 09.15.15 at 6:19 pm

The US tracks foreign purchases better via the National Association of Realtors. Foreigners make up less than 5% of California purchases, of which just over a quarter are from China, HK or Taiwan. San Fran looks like the favorite destination.

On Interest rates its one and done. The Fed may raise (from .15 to .25) but indicate that it will not raise for a long time. None of this 2 % by the end of 2016.

#24 zedgt87 on 09.15.15 at 6:20 pm

“More of your nonsense. S&P valuations are well within historic norms. Go worry about bungalows in Etobicoke. — Garth”

Depends on what valuations you look at. Many are screaming bubble. Even with the earnings side at cyclical highs fueled by historically low rates and QE.

People with their headplanted in their sand in 2008 (just like you are now) were saying the same thing. That valuations were within historic norms.

Here is some info to back up my ‘nonsene’

PE Ratio of the S&P 500 at the market peak in
Oct 1, 2007 20.68

PE Ratio today (Even after a significant ‘corection’!)
Sept 1st 19.9

Yea you are right Garth. Its totally different this time!!! We can have multiple housing bubbles across the globe fueled by zero percent loans and SOMEHOW this is isolated from financial markets! Makes total logical sense to me.

And i’m the one speaking nonsense lol.

Take a look at this chart. Now go away. — Garth

#25 Mr. Reality on 09.15.15 at 6:27 pm

Sounds like a self induced ponzi scheme doesn’t it?

Funny thing is when your expendable income is diminished to nothing because of high debt servicing costs, the corresponding impact on an economy reliant on consumption (ours) gets hit hard and for a long long time. Then assets get hit too, same old song.

Welcome to Canada.

Mr. R

#26 John on 09.15.15 at 6:27 pm

Savers have been fleeced for many years now and its about time to start the journey back to normalized rates. If you were Mr. Silly enough to pretend that you deserve massive debt for ‘free’ ‘forever.’ Mythology 101 is now over………

#27 nnso on 09.15.15 at 6:30 pm

uber educated and ponzi scheme
I have seen many tuition services for elementary and secondary students starting at alarming rate in GTA and Vancouver. It goes like this in a vicious cycle.
Recently graduated unemployed young people start the tutoring business(sorry they are business people not unemployed) They tutor to high school students who want to secure a seat in a good uni. Finally they go to one of the uni and would graduate without a job then they would start a tutoring business in the hope the coming high schoolers or their parents have the same mind set. It repeat again and again. Because everybody believe education always pay in the long term.It is same as houses always goes up.

#28 MSM-Free Zone on 09.15.15 at 6:32 pm

Perhaps, someday, the Nobel Foundation could offer a new Prize to anyone for their investigation (and subsequent cure) of the cyclical, suicidal, lemming-like, nesting urges of human beings and their offspring.

A truly debilitating condition that affects over 70% of Canadians, with often horrendously far-reaching and painful effects on society, much worse than those of gonorrhea, bi-polar, and Harper omnibus bills combined.

#29 Cici on 09.15.15 at 6:35 pm

“Somebody said this election was about change. Funny.”

It will be if everyone votes Rhino…or even Bloc Québecois (give Gilles Duceppe a few extra points for good hair!)

C’mon guys, it’s the polite way of saying “FU” to the current political establishment/mainstream political parties. I guarantee something would change if we as a majority did.

But, Canadians are too damn polite and well-schooled. Smokey is right on that one…unfortuntately!

#30 BG on 09.15.15 at 6:38 pm

It pains me to write it but for the first time ever I am considering giving my vote to Harper, and for the sole reason that he doesn’t want to flood the country with a bunch of unscreened “migrants”. I can’t believe the other guys are taking such a foolish stance.

Btw, as always, HAM is 100% real.

I guess I’m a far right, nazi, xenophobe, racist, and all the other shame labels…

No, just heartless. — Garth
————————————————————

Garth, how many of these “migrants” are you ready to host in your house?

How are they war refugees and not economical immigrants when they are snobbing perfectly stable European countries just to get registered in richer countries.

As a recent immigrant here – from Europe – I’m telling you this smells bad. So does the Niqab allowed at the Citizenship ceremonies.

If I tried to attend my own ceremony in a couple of months dressed as a clown or wearing a bike helmet because it’s my religious belief, would they let me? How can you prove I don’t really BELIEVE it as being part of my religion.

The liberal and helpful ways of western countries are being used against them.

#31 Llewelyn on 09.15.15 at 6:51 pm

Lets be honest about the Canadian housing market and admit that 70% of all households have a vested interest in prolonging the perception that market values will continue to increase year after year.

The small minority of households that examined market fundamentals and concluded that current market values cannot be maintained are branded as ‘Chicken Littles’.

Every trick in the book is utilized by a wide range of parties dedicated to pleasing the majority. Each trick prolongs the inevitable reduction market values but at some point the bag of tricks will become empty.

What concerns me most is that millions of households across Canada will be affected by a decline in market values, including households that currently rent. If you think a decline in the market price of oil slowed economic growth in Canada you are in for a real shock when a decline in real estate values kicks in.

The current market value of 9,500,000 dwellings owned by Canadians is well over $3.5 trillion. Even a 5.0% corrrection will eliminate $166 billion in the perceived net worth of Canadian homeowners. This represents an average of $17,500 per household. This will definitely be noticed.

The sky may not be falling but those storm clouds in the horizon sure look threatening!!

#32 LH on 09.15.15 at 6:52 pm

Tis better to have an economic interest in eleven houses than it is to remortgage one house eleven times. Vote accordingly.

#33 Guestimate on 09.15.15 at 6:53 pm

Girls and boys,
if FED raises rates on Thursday, what do you think will be the number of comments for the daily blog? My bet is 500 minimum.

#34 JG on 09.15.15 at 7:03 pm

I am not a big fan of what I read on Yahoo finance, but this one rings true for me….”Analysts said an interest rate hike – the first since 2006 -would remove the uncertainty that has dogged the market for several weeks.

“The debate around the Fed continues but the Fed will do more damage waiting for December to raise rather than start the normalization process,” said Art Hogan, chief market strategist at Wunderlich Securities.

“If they don’t raise rates this week, it’s a bad signal.”

besides with a name like Wunderlich they gotta be right. :)

source:https://ca.finance.yahoo.com/news/futures-little-changed-investors-await-fed-113902179–finance.html

#35 McFly604 on 09.15.15 at 7:06 pm

Anyone else dying to know who Garth will vote for??

#36 BC Guy on 09.15.15 at 7:06 pm

I am currently house-free, mortgage-free, debt-free, sitting 60% in cash, 40% in losing equities and preferreds, waiting for the housing bubble to burst so I can jump back in at discount prices.

Crash, baby, crash.

#37 Brian Ripley on 09.15.15 at 7:13 pm

“…every boom in history has ended in a bust.” Garth

In the 2008-2009 crash into the pit of gloom average SF Housing prices dropped (*Median):

Vancouver down 15.9% in 8 mos
Calgary down 18.3% in 18 mos
Edmonton down 18.5% in 21 mos
Toronto down 13% in 13 mos
Ottawa down 8.6% in 6 mos
Montreal* down 2.6% in 6 mos

But since the March 2009 low, price increases have been historic especially in Vancouver & Toronto.
Chart: http://www.chpc.biz/6-canadian-metros.html

A 20% correction this time around would only bring the average SF Housing prices in Vancouver and Toronto down to $927,680 and $633,689 respectively.

The downside risk appears greater than the upside potential until earnings (corporate and household) increases become a headline.

If Trump gets his way, its a 35% tariff on Mexican car imports to the U.S. Will the Canadian auto sector be excluded? Canada needs a foreign policy, or if there is no will to go up against The Art of The Deal, then we might as well join a Pan America union and then everyone can be compensated on a level playing field.

Time to start learning Spanish.

#38 Nora Lenderby on 09.15.15 at 7:16 pm

#18 MillenialRenter on 09.15.15 at 6:05 pm
There’s something inherently morbid about “looking forward to an inheritance.”

You mean I should watch for that ol’ tripwire at the top of the stairs? (Or perhaps a new rash of murders for inheritance?)

Mr. T’s use of the term “followership” is spot on. Led by mental midgets, we (as a society) stand under the cliff at Head-Smashed-In Buffalo Jump.

I just hope the next guys have plans to maintain a flexible attitude. They are going to have to adopt new and interesting policies.

#39 bb on 09.15.15 at 7:17 pm

How sure are we that Bank of Mom & Dad are playing banks to their kids? They could be giving their kids $$ for a down payment or a house/condo paid in cash. They have the $$ and excess savings + expected retirement pensions. Especially the rich families with multiple income sources like businesses here and businesses outside Canada.

Its a cultural thing to some people especially Asians to pay for their kids’ college, cars, houses, etc… Rich people from 3rd world countries do this. What more here in the 1st world?

Tough to conclude if Mom & Dad are taking risks via loans if they have the $$$.

#40 Nora Lenderby on 09.15.15 at 7:19 pm

#29 BG on 09.15.15 at 6:38 pm

If I tried to attend my own ceremony in a couple of months dressed as a clown or wearing a bike helmet because it’s my religious belief, would they let me? How can you prove I don’t really BELIEVE it as being part of my religion.

If you respond to a dog whistle, what does that make you? Hmm?

#41 Nora Lenderby on 09.15.15 at 7:21 pm

#32 Guestimate on 09.15.15 at 6:53 pm
Girls and boys,
if FED raises rates on Thursday, what do you think will be the number of comments for the daily blog? My bet is 500 minimum.

Well I plan on at least 25 of my own…I got the old steam ‘puter cranked up and standing by…

#42 Paul on 09.15.15 at 7:25 pm

34 McFly604 on 09.15.15 at 7:06 pm

Anyone else dying to know who Garth will vote for??
————————————————————-
NO! It’s obvious.
But he is smarter than Most.

#43 Love my Kia on 09.15.15 at 7:32 pm

#14 JRH on 09.15.15 at 5:56 pm

Where do you find bananas for .47/lb ?
—————————————————–
I saw them last week for .57/lb @ Walmart

#44 Julia on 09.15.15 at 7:34 pm

“75% of the Millennials surveyed say they will need (and expect) a loan from their parents in order to make a downpayment.”

Expect? How entitled is that?

“Among those ‘adult children’ between the ages of 41 and 50, a stunning 64% state they will be asking family for money in order to upsize their house.”

I can almost understand asking mom and dad for a loan for a downpayment on a 1st house but upsizing?

“Over half the buyers under 30 years old earn less than $70,000 but are buying houses averaging $400,000.”

How does THAT math work?

Isn’t this similar to 25% of the population having winning the lottery as their retirement plan?

#MindBlown

#45 zedgt87 on 09.15.15 at 7:38 pm

Garth! I’d expect better from you. Your response shows a clear lack of understanding about what happened. You need to check your time axis there. Valuations at peak equity price were around 20, right where we are at now.

You realize that the valuations spiked well after the onset of the meltdown and equity price correction right? At their peak price valautions were similar to what they are today. After prices started going down so did the earnings resulting in a sharp spike in valuatoons evident in that chart you showed me.

Keep an eye out for earnings. If they start going down then we will start to see another spiking of PE ratios just like in 09.

Oh well. You can lead an old blog dog to water, but you can’t make him drink!

#46 Kilby on 09.15.15 at 7:45 pm

34 McFly604 on 09.15.15 at 7:06 pm
Anyone else dying to know who Garth will vote for??

Ha Ha ha Ha Ha ………………

#47 Brian on 09.15.15 at 7:49 pm

Garth why are you against collecting data on foreign ownership? We need the truth. In 5 years time when finally get data, you may be eating your words big time re YVR.

#48 Sluggo8 on 09.15.15 at 7:52 pm

Just saw this

http://emptyhomz.com/

#49 secret vote on 09.15.15 at 7:53 pm

#34 McFly604
Anyone else dying to know who Garth will vote for??

—-

For Yellen’s TFSA party.

#50 Slim on 09.15.15 at 7:53 pm

I say let’s keep this gas bag going, at least until this Saturday. Once my place sells, I’m outta here!

#51 diolch yn fawr on 09.15.15 at 7:54 pm

An old friend visiting from US of A decided to play a round of golf at Glen Abbey on a Monday morning. He saw a group of young Chinese golfers Being Chinese himself asked whazzup in Cantonese . Turns out they were retired Chinese military living the good life. New Canadians. Texas tea. Kin folk said move away from here. Said Canada was the place they aught to be. So they loaded up the truck and moved across the sea. Not racist . Modern world Garth. Deal with it. Face it square. Money flows . Everyone has a price. World of finance World of real estate . Assets , cash , yin and yang . Rich and poor. One side defines the other creates the other . NDP conservative. Joy and sorrow . Thanks for the forum.

#52 But what else? on 09.15.15 at 7:54 pm

It is easy to critique the approach of the political parties to keep tye housing huble from bursting. But what else can they do? Do you have suggestions for alternative (types of) political policies that would not result in a major recession? Rebuilding our manufacturing base will take many years, if possible at all in light of global competition, and encouraging innovation and foreign investment to make us competitiv again will also take time. Might it be that the plan is to encourage these while trying to keep the housing bubble from bursting in the meanwhile?

#53 SunShowers on 09.15.15 at 8:04 pm

The only way that the Chinese inflate Canadian housing prices is when they immigrate to Canada and participate in bidding wars with the rest of us.

Take a walk around Home Depot or Rona on a Saturday. New immigrants want granite countertops and hardwood floors just like us born and raised Canadians. We’re not so different after all!

If anything maybe we should be more reverse-xenophobic and tell Chinese immigrants to stop acting so darn Canadian and digging themselves into debt!

#54 Harbour on 09.15.15 at 8:06 pm

On top of this, we have CMHC now allowing 100% of the rent from your mouldy basement suite as allowable income for a mortgage (double the old amount)

………………………………………………………………………

I wonder how many debt burden home owners will now finally divulge they’ve had a basement suite rented for $800 a month that they’ve never mention to the tax man before.

#55 Retired Boomer - WI on 09.15.15 at 8:16 pm

Frankly, I hope RE in the two “HOT” Canadian cities explodes by 100% over the next two years!!

It would serve well to then see the ‘shrink’ by the same amount devastate looney Boomers and the kids, or grandkids when they final see there is no “there” there.

I’m just a throwback retro-grade knuckledragger who LOVES to sees the fiscally unfit starve & squirm while eating drywall. Long live the RE bubble – NOT!!!

No Exceptions, to quote the great “Freedom First.”

#56 crowdedelevatorfartz on 09.15.15 at 8:16 pm

Hey!
Penny Ballem just got “severanced” .
$566k to go away.
Not a bad gig.
Musta peed in Gregors’ cup one too many times….

#57 Ron B on 09.15.15 at 8:16 pm

Argh, not sure who to vote for anymore with all this crazy crap. Followership, huh? I always wondered if there was a word for what the politicians always seem to do. They are too scared to be tough with us.

I do hope the Canadian economy will be fixed sooner than later.

#58 Freedom First on 09.15.15 at 8:19 pm

Enjoyed today’s Post on the insanity of the Herd. Yes, Garth is right, every boom in history has ended in a bust. Pigs at the debt trough who are unaware of their coming slaughter. Fear, greed, stupidity and ego. Any combination of the 4 can be deadly. Even only 1 of them by itself can ruin your life. And in the Herd, they are all like a virus.

#59 I am the Babblemaster on 09.15.15 at 8:21 pm

“Now, let’s look at the real reason real estate in Vancouver or the GTA is a self-propelling, risk-laden phenom.” – Garth

—————————————————

I just have to point out the blatantly obvious that this same commentary has been the meme for the last eight years. And what’s happened in that time? RE has only skyrocketed. Obviously, the people in charge are doing everything they can to keep the party going as illustrated by the new tax breaks. As I see it, this party is still young and can go on for quite awhile longer.

The higher prices go, the greater the risk becomes and the more indentured are the buyers. You are buying Nortel at $120. — Garth

#60 Americans are buying on 09.15.15 at 8:22 pm

News from YVR: a colleague at work stated that now with the strong USD americans are buying in downtown YVR. I have seen HAM but it is max 5% of the market, but really, this is the next marketing lie? Talked to 2 mortgage brokers: they hD their best year and beAt their quot already.one is working for vancity the otherone first capital.
Note: dont fight the FED! How convenient is that thursday is a meeting followed by press conference?

#61 Doug in London on 09.15.15 at 8:29 pm

I don’t get it. Why would any political party, especially the Cons, want to keep this housing bubble going? Wasn’t it the Cons who said that we need more labour mobility so people can go to where the jobs are? Correct me if I’m wrong, but aren’t renters more likely to relocate to find employment? Aren’t the Cons also the ones who bitch, whine, and bellyache the most of the 3 parties about how our cost of doing business is too high? Could someone PLEASE explain how ever increasing housing costs are going to solve that problem?

#62 Lea on 09.15.15 at 8:31 pm

#1 Lester McMann

#21 Brydle604

These were my observations in Los Angeles 2006-2008. People would trade up and take money out to buy a car or electronic or both.

#22 Entrepreneur

It like the tulip investors in the Netherlands. Who would take a loan out to buy a tulip bulb? It is irrational speculation.

Now, a question: why is everything so expensive in Canada? Even before the C$ fell, almost everything was more expensive than in the U.S. My guess is monopolies, but please help me understand. Not to mention 12% taxes on almost everything but food here in British Columbia.

#63 canadian on 09.15.15 at 8:35 pm

Surplus this close to election day?

Congratulations once again……Prime Minister Harper…..

#64 Granite_counters on 09.15.15 at 8:35 pm

I wonder if a lot of younger people also leverage their bank of mom and dad to fill their home with furniture etc. I see a lot of younger people in new homes with nice curb appeal but inside its empty. I guess the don’t pay for x amount of months furniture places also love this market.

#65 Lea on 09.15.15 at 8:45 pm

#58 Doug in London

I think the politicians are terrified of what will happen if it not a soft landing. It was brutal in Los Angeles in 2008. The fallout in loss of revenues for the schools caused a brain drain that has not rebounded. Just one example of the fallout.

From what I have seen here in Vancouver a crash hurt the local economy since so many are involved in construction and real estate.

If there was a crash would the taxpayers be on the hook for CMHC?

#66 Nora Lenderby on 09.15.15 at 8:52 pm

#27 MSM-Free Zone on 09.15.15 at 6:32 pm
Perhaps, someday, the Nobel Foundation could offer a new Prize to anyone for their investigation (and subsequent cure) of the cyclical, suicidal, lemming-like, nesting urges of human beings and their offspring.

Cure? Probably not possible to get totally rational behaviour from the majority of humans. Otherwise they wouldn’t be human.

There is a heck of a lot of investigation in the Social Sciences though, all those PhDs keep coming:

You’re not irrational, you’re just quantum probabilistic.

#67 Roy Turkstra on 09.15.15 at 9:03 pm

” How can 77% accept that buying something when it has never before cost this much, and involves unrepayable debt, be wise? Can’t they Google”?

Garth…today’s millineals don’t expect to pay off their house. They live for the day and not for the future. The concept of home ownership now just means life long payments and hopefully building equity. It’s called the herd mentality…..critical thought is dead.

#68 Keith in Calgary on 09.15.15 at 9:05 pm

If the property wasold to a Canadian registered corporation controlled by an individual with PR status who set it up specifically for the purpose of “investing” funds in Canada under the immigrant investor program did the RE industry count that as a “non-resident” sale ?

I say no because they’d have no way to know.

None of them want to explain the empty lights in Coal Harbour or any other district of the lower mainland, but they all want to exploit it.

Not that I care…….it was smart of them to exploit this loophole, I would have done the same.

#69 Victor V on 09.15.15 at 9:06 pm

http://angusreid.org/election-2015-economic-promises/

Canadians are icy towards another LPC and New Democratic (NDP) vow to halve the current $10,000 yearly tax free savings account contribution to $5,500: two-thirds (67%) oppose it

#70 Aaron - Melbourne on 09.15.15 at 9:06 pm

“This despite the fact the real estate industry itself pegs the number of buyers at 5% of total deals, and the Victoria board (the only one which counts) reports non-Canadian buyers at 1.6% of the market.”

If the stats on this are anything like the stats kept on foreign ownership in Australia then that number is rubbery.

In Oz, it was a total joke and responsibility was stripped from the Foreign Investment Review Board and handed over to the Australian Taxation Office which has significant powers and data-matching with other agencies. An amnesty was announced which ends soon. We expect the prosecutions and divestment orders to flow soon after and then we will know the true extent of unlawful foreign ownership that assisted to push the median house prices to extremes.

#71 paul a on 09.15.15 at 9:07 pm

well garth love your blog, nothing like down home common sense , que the record screech sound effects , oops, what happened ,did we park our common sense at the door during sunday dinner while trying to convince the bank of mom to get on board? plenty of folks should be searching there souls on this one, history plots a clear path of and where this is heading, if your old enough you can claim the been there done that card and are still lamenting, and annoyed as hell that our kids just don’t get it well hears a flash history has a habit of repeating beware period , old saying comes to mind: you can lead a horse to water but you can not make it drink.

#72 cynically on 09.15.15 at 9:13 pm

To #51 SunShowers – I can assure you that the Chinese buying the HIGH priced homes in Vancouver are not and never will “dig themselves” into debt like many of the locals because they have the money and plenty of it! They are mostly buyers at the high end.

How many do you know who have shared their finances with you? — Garth

#73 james on 09.15.15 at 9:13 pm

“government policies – from 5% down insured mortgages which strip away lender risk to first-time buyer tax credits to free capital gains on houses – have created a nation steeped in house porn and now pickled in debt.”

This is the real issue, not foreign ownership. The bank of mom and dad creates a positive feedback loop in home prices. Price rises make mom and dad feel rich, so they take out Helocs to provide young Johnny with his downpayment. And so the market continues to rise.

I still can’t believe that people in Canada are so obsessed with housing. The job prospects must be dismal, as where I live people talk more about careers and retirement. And that’s with two years of 11% gains in real estate.

#74 Tony on 09.15.15 at 9:20 pm

Re: #19 John on 09.15.15 at 6:07 pm

I think by the time America raises rates most people won’t even remember Janet’s name.

If rates ever rise”

1) The stock market will fall short term
2) The U.S. dollar will strengthen
3) Commodities will probably fall in price short term
4) Bonds especially long term bonds will fall in price
5) Mortgage rates will rise especially short term mortgage rates initially.
6) Borderline bankrupt companies will go chapter 11 after rates increases
7) Gold and to a lesser extent silver should fall (percentage wise) in a normal economy (this economy isn’t normal)
8) Student loans: More defaults
9) Car sales: Less sales

#75 Terry on 09.15.15 at 9:22 pm

We’re going down the tubes in this country that’s for sure, were just not broke yet. It will come apart soon enough Garth…………..slowly at first………..then all of a sudden!

#76 Snowy on 09.15.15 at 9:22 pm

With all this interest rate talk: 4yr fixed @ 2.69% or variable at prime less 0.35% so 2.35% for now?
Thoughts appreciated!

How is a 30 basis point spread possibly worth debating? Do you owe a million? — Garth

#77 Palebird on 09.15.15 at 9:34 pm

It sounds like China may be cracking down on capital outflows as their economy begins to crack.. not good for real estate on the west coast..

#78 Pass the KCl on 09.15.15 at 9:34 pm

Doctor assisted suicides may be available just in time for millennials to get their granite countertops.

#79 Scott in Gibsons on 09.15.15 at 9:36 pm

The reason 60% of Vancouverites think foreign buyers are driving RE is because they are seeing it with their own eyes. The industry numbers are way low because they don’t include property bought via a Canadian entity like a numbered company. If you lived in Vancouver Garth you would have a better feel for what is actually going on. Don’t rely on Realtor data!

I’m in YVR often. Lots of Asian folks. Doesn’t make them Mainland Chinese buyer/speculators. I think most were born in Richmond. — Garth

#80 BG on 09.15.15 at 9:36 pm

#39 Nora Lenderby on 09.15.15 at 7:19 pm

There’s a saying in french: “Point the moon to a foul, he stares at your finger”.

If you choose to ignore a problem just because some party you dislike brought it on the table to gain some votes, you will never address the problem.

#81 Estrella on 09.15.15 at 9:40 pm

“live with in your means” . This commercial quote comes from someone who supposedly refinanced his mortgage (presumed same mortgage) 11 times?

Can’t stand the arrogance….

http://bcove.me/e5fjivu7

#82 TRT on 09.15.15 at 9:43 pm

No FED hike this week.

Chatter on Wall Street blogs say there was a leak. That’s why markets up strongly today.

Unbelievable. Rigged.

#83 Mocha skin does not =iranian money on 09.15.15 at 9:43 pm

#12 Mocha on 09.15.15 at 5:41 pm

It pains me to write it but for the first time ever I am considering giving my vote to Harper, and for the sole reason that he doesn’t want to flood the country with a bunch of unscreened “migrants”. I can’t believe the other guys are taking such a foolish stance.

Btw, as always, HAM is 100% real.

I guess I’m a far right, nazi, xenophobe, racist, and all the other shame labels…

harpo is a proven liar and a racist
he is appealing to your lower instincts to fool you into voting for him

where other peoples money comes from is none of your business
count your own not theirs
the difference between the candidates in this election
is like coke vs pepsi vs canada dry

#84 Obvious Truth on 09.15.15 at 9:43 pm

Doesn’t matter what the crazy politicians have planned.

They really don’t control that much.

And nobody has any money left in an rrsp they can use for a house.

There is nothing that can be done to boost housing. It’s all been done already and rates which are the most powerful weapon in house prices are going the wrong way.

Houses are boring.

Treasuries were fun today!

Nagraj. Tell me about those pennants and perhaps the juicy reversal patterns we see.

If Janet were a two sport lady similar to one time jay, Danny Ainge she would likely win a pennant. She can go yard when needed.

But this one will be more like Dr J going hard to the hoop.

It’s a slam dunk!

#85 TRT on 09.15.15 at 9:44 pm

And to the author of this blog,

Check CMHC stats. Almost no one carries a million dollar mortgage.

You need to get out more. — Garth

#86 Stupesing in Cabbagetown on 09.15.15 at 9:44 pm

“It’s also worth remembering that government policies – from 5% down insured mortgages which strip away lender risk to first-time buyer tax credits to free capital gains on houses – have created a nation steeped in house porn and now pickled in debt.”

And let’s not forget the contribution made by the Ontario provincial government.

#87 meslippery on 09.15.15 at 9:47 pm

As a 10 year old boy we moved to Markham, when I was 50 a Asian Doctor saved my life.
To say there is no connection to house price or demand
would be really silly.

#88 Obvious Truth on 09.15.15 at 9:49 pm

Calgary is about to go six months inventory.

Look out below!

#89 Freedom First on 09.15.15 at 9:55 pm

#39 Noralenderby

Makes him married.

#90 Leo Trollstoy on 09.15.15 at 9:55 pm

#69 cynically on 09.15.15 at 9:13 pm

How many do you know who have shared their finances with you? — Garth

‘selectively cynical’ :D

#91 Shakespeare on 09.15.15 at 9:57 pm

DELETED

#92 Snowy on 09.15.15 at 10:01 pm

Thanks for your answer Garth. Very much appreciated.
We should discuss.

#93 TurnerNation on 09.15.15 at 10:04 pm

Indeed veracity is the smother of intention

#94 AlbertaGuy on 09.15.15 at 10:06 pm

#83 ? creb says average days on market is 41

#95 Linda on 09.15.15 at 10:09 pm

It was interesting to watch the CBC National news tonight, and the Bottom Line panel on economics.

It was a unanimous sentiment that the TFSA needs to be reined in, dramatically.

Either cut it back immediately to $5500, or reduce lifetime contributions to $75,000 – $100,000, said the panelists.

To suggest that we should favour only the wealthiest and let it grow from the current level is clearly seen as an irresponsible, extremist view by most Canadians, it appears.

The TFSA is a good idea. Using it to create even more class warfare, as is being done today, is simply stupid and backwards economics and politics.

#96 Smoking Man on 09.15.15 at 10:09 pm

Kathleen Wynne has a great escape clause in her contract, disagree with her policies. Your a homophob.

What a luxury if you think about it. 3 OPP investigations yet nothing, can you blame them..

Who in his right mind will want to upset the LGBT community. There is a reason, notice the L comes first.

Im not afraid of gays, transgenders BI sexuals. But lesbians scare the living shit out of me..

And rember, back in the day when I played JR hockey I was the goon.

So I dig deep into my mind, I realize what it is that really, really bugs me about Wynee.

Old Lesbians..who is not going to be cool with young girl on girl action. No one I know.

But after a certain age, granny and granny. Ive figured out Im definitely old o phobic more than anything else.

But damn it. Subconsiously Im doing everything possible not to become old..

Perhaps its time to visit and mind fk a shrink.

#97 lee on 09.15.15 at 10:10 pm

How does waiving capital gain tax on rentals jive with Dipper beliefs?

And by the way Mr. Turner, is this all you do at night: sit around and answer blogger comments?

#98 Nora Lenderby on 09.15.15 at 10:21 pm

#76 BG on 09.15.15 at 9:36 pm
If you choose to ignore a problem just because some party you dislike brought it on the table to gain some votes, you will never address the problem.

I don’t ignore the problem for one minute (people wanting to wear bags on their heads). I just don’t think it’s worth making a fuss about it at all, not to mention going to court about it.

Tweet! Now, roll over, boy!

#99 debtified on 09.15.15 at 10:26 pm

A little off topic…

Are millennials really that underpaid? US data.

http://cnb.cx/1MiX2PZ

#100 Nora Lenderby on 09.15.15 at 10:30 pm

#91 Smoking Man on 09.15.15 at 10:09 pm
So I dig deep into my mind, I realize what it is that really, really bugs me about Wynee.
Old Lesbians..who is not going to be cool with young girl on girl action. No one I know.
But after a certain age, granny and granny. Ive figured out Im definitely old o phobic more than anything else.

Hey, who put the sex into sexagenarian? ;-)

#101 Toronto - the Best City in Canada on 09.15.15 at 10:30 pm

Or so says Muclair.

http://www.ctvnews.ca/politics/election/mulcair-under-fire-for-calling-toronto-canada-s-most-important-city-1.2563810

#102 Retired Boomer - WI on 09.15.15 at 10:33 pm

“Premium Boneless Bananas just .47 LB?

First off, the picture must be American WE sell in lbs. Canadians sell in KG.

Second off, we rarely get “Boneless Bananas” here,
or Boneless Walleye, or Boneless Trout.

Next up “Boneless Home ownership”? …NO…

With prices where they’re at you WILL get the Bone!

Nice Picture Garth

#103 Cyclist on 09.15.15 at 10:41 pm

Smartalox 15

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2015/07/cmhc-to-allow-100-of-suite-income.html

It appears this is limited to owner occupied two unit
properties, and not all qualify for the full or any amount.
I am also not clear whether 100% of the rent is counted towards the applicants total income (ie treated like employment income). In that case they would then
apply the 32% rule against the debt and related costs.

#104 Smoking Man on 09.15.15 at 10:41 pm

Jesus, I’m on to something, Ive figured out after looking down into an empty bottle of JD the pyramid of LGBT

That is the hiarkey..The L’s speak in the lowest octave, scaring the crap out of the high octave G’s who have no respect for the B’s, think of them as confused. Now the T’s are looked down on, thats why they are last..

They betrayed there bodies.. The rest think they are weak and confused.

But hell, im not going down to young and bloor with a cardboard sign in a black tee shirt screaming find the lord you disgraceful bastards.

Im going to figure out how to make loot on this discovery.

Dr Smoking Man.

#105 AfterTheHouseSold on 09.15.15 at 10:46 pm

#92 lee
“And by the way Mr. Turner, is this all you do at night: sit around and answer blogger comments?”

No. He drinks too. :)

#106 Cyclist on 09.15.15 at 10:51 pm

Further to above – calculation for 32% of rental income
verified here as $1200 rent allows $72k in principal increase

http://www.cbc.ca/news/canada/british-columbia/new-cmhc-rules-make-it-easier-for-some-homebuyers-to-include-rental-income-in-mortgage-application-1.3171813

#107 Strategic Voting? on 09.15.15 at 10:51 pm

So…I’m listening….to Mansbridge and his union economist HATE HARPER cronies and all these guys are barking about is raising taxes across the board and lowering the TFSA contributions. I’m for lower taxes and less government interference.

#108 Leo Trollstoy on 09.15.15 at 10:56 pm

#99 debtified on 09.15.15 at 10:26 pm

I can see that.

Millenials are paid well. I don’t understand why others find it surprising if a 27 y/o is making $100k. Honestly not a big deal.

Common for those in IT/engineering. And still a dearth of viable candidates. Job openings abound!

#109 Alvaro on 09.15.15 at 11:05 pm

“By the way, a new survey finds 69% of YVR dwellers think stupid high prices are the result of offshore (Chinese) buyers while 60% want to see limits put on foreign ownership. This despite the fact the real estate industry itself pegs the number of buyers at 5% of total deals, and the Victoria board (the only one which counts) reports non-Canadian buyers at 1.6% of the market.”

Suckers need scapegoats.

#110 Vanecdotal on 09.15.15 at 11:10 pm

Pic = Banana Republic of Canukistan?

#111 Vanecdotal on 09.15.15 at 11:28 pm

Good post GT, however, you are quoting questionable foreign ownership stats provided by the RE cartel themselves, non? The same private enterprise that simultaneously downplays the percentage of foreign $ in YVR RE, (to deflect objective scrutiny), while also crowing from the rooftops HAM is eating our city, buy now or be priced out forever (to keep driving prices higher)! Their “data” is not credible.

This organization is fighting tooth and nail to preserve their monopoly over housing data. ANY stats they provide are suspect, and why Van City Council is currently doing their own independent study, results due to be released next year I believe.

Clearly there are many variables in play, cheap $, bank of Mom & Dad, and black market income all in play as well. We need objective data first. Only then can we get an accurate picture of what’s driving our housing sky high. Until then “any” estimate of degree of influence of foreign $ is pure conjecture.

#112 Time for a change! on 09.15.15 at 11:29 pm

Hey #96 Smoking Man

Seriously?

I have a gay older brother that is 10x more awesome than you … any day!

He is smarter & cooler than you + he’s not an asshole.

He is probably your age and single.

Since sex, drugs and drinking isn’t his thing. He will survive you when you have lung disease and liver problems.

Since you smoke. He doesn’t stink like you do.

#113 Panhead on 09.15.15 at 11:30 pm

#102 Retired Boomer – WI on 09.15.15 at 10:33 pm
“Premium Boneless Bananas just .47 LB?

First off, the picture must be American WE sell in lbs. Canadians sell in KG.
——————————————————–
Not necessarily so … out here in 604land everything is priced in kilo’s until it goes on sale. Then it’s in pounds, another slippery selling tactic … and … if you cross the border into Point Roberts, gas is in liters. It is different out here you know.

#114 Chris on 09.15.15 at 11:32 pm

Are you implying that Harper is looking better day by day? Sad state of affairs, isn’t it? Moment of truth, who would you vote for?

#115 kommykim on 09.15.15 at 11:40 pm

RE: #35 McFly604 on 09.15.15 at 7:06 pm
Anyone else dying to know who Garth will vote for??

I think it’s highly likely that he is voting for the CONs.

#116 45north on 09.15.15 at 11:42 pm

It’s also worth remembering that government policies have created a nation steeped in house porn and now pickled in debt.

Somebody said this election was about change. Funny.

all three parties dedicated to maintaining the status quo that is high house prices

Lester McMann: who copied and pasted an article :Now, a housing market is sort of like a room with two doors.

here are two points about the US housing bubble:

– half of US mortgages were 30 year fixed! not 30 year amortizations but the interest rates were fixed for 30 years. ( still the case )
– as the housing market collapsed the US Fed reduced interest rates from 5% to 0% thereby providing a huge cushion

after the US Fed increases rates on Thursday, Stephen Poloz, Governor of the Bank of Canada will issue a statement: “Canadians are so screwed”. The LCBO in Woodbridge will sell out in an hour.

Lea: I think the politicians are terrified of what will happen if it not a soft landing. It was brutal in Los Angeles in 2008.

it will be worse in Canada because we have no 30 year mortgages and because we cannot lower interest rates

#117 Mark on 09.15.15 at 11:44 pm

“Common for those in IT/engineering. And still a dearth of viable candidates. Job openings abound!”

(back temporarily from my self-imposed exile to correct obvious nonsense from Trollstoy)

Incredibly uncommon and not supported by salary surveys from the major engineering professional regulators. Also those fields have seen extremely poor job prospects over the past decade, as the result of the collapse of Canada’s ICT industry and a substantial weakening of manufacturing.

The oil and gas and civil engineering-related fields have seen some vibrance, but its largely been at the expense of fields such as IT and other branches of engineering.

Advertised jobs are still pulling so many applications from qualified professionals in the engineering sector that most candidates aren’t even afforded the basic “courtesy of a response”.

Here’s some reading material so nobody actually believes a word ignorant Trollstoy has to say:

http://c.ymcdn.com/sites/www.ospe.on.ca/resource/resmgr/DOC_advocacy/2015_REPORT_Underemployment_.pdf

Take-away points:

1) Nearly all graduating students want to work in engineering at the time of graduation (Figure 1)

2) Only 31% of Canada’s engineering talent are fully employed in engineering-related occupations (Table 1)

3) IT/CS grad employment stats not meaningfully better than engineering (Figure 4).

4) High engineering unemployment/underemployment exists nationwide (Figure 5), although slightly better in Alberta (who knows how long such will last though!).

5) Differences amongst age groups in the engineering profession do not significantly correlate to differing employment outcomes (Figure 6)

6) Women have it substantially worse than men in terms of finding scarce engineering jobs (Figure 7)

7) Engineers earn about the same as firefighters and cops on average (Snapshot 8), despite very substantial investment in their education.

8) Engineers who can’t find jobs in the engineering profession, but can still find a job earn dramatically less (Figure 10). It is a myth that people are leaving the engineering profession for higher pay upon graduation.

9) Engineers who go into the IT sector are on average paid less than those in the engineering sector (Figure 12), meaning that job prospects are likely lower for the IT sector for engineers than other sectors.

10) In many cases, an engineering degree predicts lower compensation in non-engineering fields (Figure 13).

Once again, the Trollstoy just got owned by facts. He needs to actually do some research before spouting off complete nonsense that cannot be substantiated.

#118 [email protected] on 09.15.15 at 11:46 pm

Garth – How about we have a NOTA (None of the above) option on our ballots – forcing a re-election where if NOTA gets majority, none of the candidates can stand in again for the re-election?

#119 kommykim on 09.15.15 at 11:52 pm

RE: #63 canadian on 09.15.15 at 8:35 pm
Surplus this close to election day?
Congratulations once again……Prime Minister Harper…..

Even if it’s true, which it’s not, there won’t be many who believe it.

#120 DisgustMadeMePost on 09.15.15 at 11:53 pm

#56 crowdedelevatorfartz on 09.15.15 at 8:16 pm
Hey!
Penny Ballem just got “severanced” .
$566k to go away.
Not a bad gig.
Musta peed in Gregors’ cup one too many times….

……,,,,

Great news!!

#121 BG on 09.15.15 at 11:54 pm

#98 Nora Lenderby on 09.15.15 at 10:21 pm

I don’t ignore the problem for one minute (people wanting to wear bags on their heads). I just don’t think it’s worth making a fuss about it at all, not to mention going to court about it.

Tweet! Now, roll over, boy!
——————————————————————-

If you think taking the oath to join your country , or treating every citizen (or wannabe so) equally regardless of religion is not serious, I’m afraid you’re a lost cause.

I have heard of this kind of reasoning back home for decades. You know that little country where a full newspaper team was decimated for mocking a religion?

#122 Al on 09.16.15 at 12:08 am

#42 Paul

34 McFly604 on 09.15.15 at 7:06 pm

Anyone else dying to know who Garth will vote for??
————————————————————-
NO! It’s obvious.
But he is smarter than Most.
_________________

Maybe… Unless you factor in spite

#123 Nosty, etc. on 09.16.15 at 12:10 am

c#36 Brian Ripley on 09.15.15 at 7:13 pm — “If Trump gets his way, its a 35% tariff on Mexican car imports to the U.S.”

If Jeremy Corbin (new hard-left leader of Britain’s Labor Party) can win on the first ballot with a 60% or so total, there is no doubt that the Trumpster can do the same, but this is the opposing view.

Unfortunately, TPTB don’t like or want either candidate, so look for ‘accidents’ in the future.
*
And now — The individuals who run the US govt.; To continue with the link I posted Monday, about Germany and France ditching the illegal US-led invasion of various countries, Summit between Putin, Merkel, Hollande and Poroshenko in Oct.; Winston Churchill and WMD “I am strongly in favor of using poisoned gas against uncivilized tribes. The moral effect should be good…and it would spread a lively terror…” — Winston Churchill commenting on the British use of poison gas against the Iraqis after World War I”; Bitcoin lives! A21/30, confiscating private land, etc.; Bail-ins for UK and EU?

#124 Vancouver Homeless on 09.16.15 at 12:15 am

check this out:

http://www.afr.com/real-estate/chinese-retreat-from-australian-property-as-capital-controls-bite-20150914-gjm282

#125 Burnaby Bear on 09.16.15 at 12:22 am

Vancouver Sun changed the title and tone of an article from indicating that a bubble exists in real estate to saying there is no sign of a bursting bubble!

http://vancouvercondo.info/2015/09/no-sign-of-bubble-bursting.html

#126 OXI in GREECE !! on 09.16.15 at 12:34 am

#12 Mocha on 09.15.15 at 5:41 pm
It pains me to write it but for the first time ever I am considering giving my vote to Harper, and for the sole reason that he doesn’t want to flood the country with a bunch of unscreened “migrants”. I can’t believe the other guys are taking such a foolish stance.

Btw, as always, HAM is 100% real.

I guess I’m a far right, nazi, xenophobe, racist, and all the other shame labels…

No, just heartless. — Garth
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

Mocha….thank you for not being heartless and thinking of the millions of "poverty level" Canadians who actually LIVE in Canada. Something people who watch TEEVEE and listen to blowhard career politicians refuse to do.

#127 OXI in GREECE !! on 09.16.15 at 12:39 am

#99 debtified on 09.15.15 at 10:26 pm
A little off topic…

Are millennials really that underpaid? US data.

http://cnb.cx/1MiX2PZ
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

those types of comparisons are bogus because inflation adjusted yeah….we are making more money. But its not 100% more…..unlike the prices of homes. 100% more. Gas 100% more plus the dozens and dozens of fees fees fees and taxes taxes taxes that were not around in the 90s.

#128 JimH on 09.16.15 at 12:47 am

#60 Americans are buying

Not this one…

#129 Hexagon on 09.16.15 at 1:14 am

“This despite the fact the real estate industry itself pegs the number of buyers at 5% of total deals, and the Victoria board (the only one which counts) reports non-Canadian buyers at 1.6% of the market. ”

True? It depends who is asked…

“Jonathan Cooper, vice-president of operations at Macdonald Realty in Vancouver, examined his firm’s sales in 2014 and found that of the homes that sold for more than $3 million, 70 per cent of the buyers came from mainland China. For homes priced between $1 and $3 million, it was 21 per cent.”

http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/financial-post-magazine/canadas-ever-growing-housing-bubble-as-albertas-market-tumbles-the-rest-of-the-country-wonders-whos-next&pubdate=2015-09-15

#130 BC Guy on 09.16.15 at 1:43 am

Analyst is predicting $85 oil by the end of the year:

http://www.bnn.ca/News/2015/9/15/The-bull-case-for-oil-Why-Cornerstone-Analytics-sees-85-by-year-end.aspx

#131 Mister Obvious on 09.16.15 at 2:09 am

#95 Linda

“It was interesting to watch the CBC National news tonight, and the Bottom Line panel on economics….

…The TFSA is a good idea. Using it to create even more class warfare, as is being done today, is simply stupid and backwards economics and politics.”
————————————-

Absolutely bang on! The “Bottom Line” panel disappointed me deeply tonight. All of them.

They all support the idea of a rollback of the new TFSA contribution limit. One of them even thinks a lifetime cap of maybe $75K or $100K would be a swell idea.

They think raising the GST to 7 or 8% is a great plan (even though they admit no party would ever touch that) and they claim that consumption taxes are the way of the future.

Why then do they support the degradation a program like the TFSA when they believe that taxing income is becoming obsolete? Inconsistent and stupid. These people are smarter than that. I just don’t get it.

Mansbridge asked them what was NOT being talked about in the campaign. None of them had squat to say about the nosebleed cost of housing and the thrust by each party to bring policies that promote the huge gas bag even further. Nor was their any mention of the horrifying level of personal debt. Again, smart people missing key points. Sad.

I don’t like the conservatives. Not at all. But the rest of the parties are looking too dumb to pound sand down a rat hole by comparison. I may just have to hold nose and vote Tory.

I’m so very sorry that it might have to come to that. I was hoping for some ‘change’. But honestly, I’m old enough to know better.

#132 Great Canadian Bubble Co. on 09.16.15 at 2:23 am

Anyone ever read ‘The Slight Edge’? Poor decisions that don’t kill us right away but feel good are easy to make. As a nation, this is exactly what we are doing. The problem is, the results are never seen until the end of one’s life (or economic cycle … which can last decades). By then it is too late.

Research shows only about 5% of the population is willing to make those uncomfortable, boring daily choices that lead to greatness. We will have to check back in in 2045 to see if we have been successful going against the herd.

#133 botanica investicum on 09.16.15 at 2:36 am

Premium boneless banana = Unfulfilled TFSA contribution limit.

#134 K. on 09.16.15 at 2:49 am

I agree with Garth on all his economic advice but I still can’t support Harper. He seems like a wanna be GOP American, with xenophobia, voting restrictions and so on. Sorry Garth got to go with the NDP (well at least my husband since I can’t vote here -but still).
Also #68 Keith in Calgary- I see you going on about coal harbour. That’s a very small part of van and everyone knows it’s empty. How do you explain rising costs in Burnaby and east van and south van? Those are places with actual real live people living in them and the costs are absurd.

#135 Chancho on 09.16.15 at 2:55 am

#96 Smoking Man

“And rember, back in the day when I played JR hockey I was the goon.”

What team? I tried hockey db but no smoking man found.

#136 family beagle on 09.16.15 at 3:31 am

What’s that song, ‘We have no bone bananas today’?
Most RE investment I come across are demi-retiring trade moneybags who’ve been buying and landlording since ’80s. From all over, up north, interior. They bought when yvr was 100k. Buy and hold, until now. Coffee shop chat says time to pair down from multiple titles–all the time and effort wears one down. I SuSpecT zoomers will toss a few addresses on the market to reap price support. These will be investment class, no change for tenants except whims of new owners.

http://www.bloomberg.com/news/articles/2015-09-16/goldman-warns-markets-unprepared-for-fed-as-treasuries-seesaw

Above reads status quo ahead. Meaning no clear indication, if I may. Will RE bid up? Enter the casino class. Seems the world is looking to make that eight percent, park capital and find refuge. They try a winter and the pioneers stay. One thing bonds us, as Canadians. Snowshoes. You have yours? I have two pair of fabers. Quiet like borsche.

#137 Ponzi Scheme on 09.16.15 at 3:32 am

Will real estate slow down or collapse eventually, yes. When, no one knows.

Homes are worth what people think they are. It will slow down or collapse when people can no longer or will not pay, for whatever reason.

I thought early 80s real estate in Calgary was nuts, this one in YVR and 416 is worse yet.

What a mess it will be and likely whomever is in government, will bail these greedy/uninformed real estate investors out at the cost of prudent investors that frequent this blog.

Too big to fail? I hope not; otherwise, lessons will not be learned.

#138 Mark on 09.16.15 at 3:32 am

http://talkdigitalnetwork.com/2015/09/housing-bubbles-cause-inaccurate-stats/

Ross Kay talking about some of the nuances of the sales mix, and how Canadian RE prices have been declining in spite of the ‘headline’ numbers apparently showing increases.

(again, sorry for coming out of exile, but its not just Mark that’s been talking about RE price declines on ‘identical’ houses and the shifting sales mix being the proximate cause of the Realtors’ claim of rising house prices despite an economy that obviously is teetering on the edge of deflation.)

#139 grantmi on 09.16.15 at 4:27 am

#18 MillenialRenter on 09.15.15 at 6:05 pm
There’s something inherently morbid about “looking forward to an inheritance.”

I bet it’s actually double that number…

#140 pbrasseur on 09.16.15 at 7:34 am

#1 Lester McMann

Thanks fort the intelligent article.

I’ve always believed suprime loans were not the cause of the bubble but merely one of its symptom. That article explains it very well.

Smart comment about bubbles too, people who participate in them are not crazy not stupid, but over time they have lost perspective.

I feel many people have lost perpective about Canada as a whole…

#141 A Nobody on 09.16.15 at 7:35 am

From Sotheby’s on BNN this morning quote” demand for luxury homes above 4 million continues to soar in the two hottest markets in Canada. Demand primarily from China”

So long as stories like this dominate the media and the political parties , whomever is elected decide to throw kerosene on the housing ‘fire’ with poorly thought out, easy housing policy very supportive of higher prices , than you can bet heavily that housing prices are nowhere near peak.

Stop waiting and hoping housing bears and throw in the towel as I have, at some point you have to admit defeat.

Buy real estate.. Not too late.

Nobody normal watches BNN. — Garth

#142 Carly in Cabbagetown on 09.16.15 at 8:08 am

#96 Smoking Man

Kathleen Wynne has a great escape clause in her contract, disagree with her policies. Your a homophob.
____________________________________________

What a sexist, misogynistic a-hole you are.

And such a pathetic straw man argument to boot – you really have no sense of how to make an argument, do you, you idiot.

Was it the “boneless banana” photo that brought out the REAL Smoking Man today?

I think so, as do most readers here today.

This is my last banana pic. I swear. — Garth

#143 maxx on 09.16.15 at 8:09 am

It’s not like we don’t already have amazing places to park, invest and preserve savings.
RE seems to have become the all-important “proof” of who one is in society. No re? The meme is that you’re nothing then- you don’t even rate.
One reason many young (highly “educated” and stupid are not mutually exclusive) opt for dumb investments is that “proof” of societal standing is instant. Right away. You can “personalize” your space too- just like a colouring book. Then you can “compare” your house and toys to theirs. Enduring creepiness.
It isn’t socially acceptable to wave a bank balance around, but you can certainly brag about the pressed cornflake walls which gently embrace your life!
Never before have there been as many ways to end up rich at retirement, yet most are shoveling equity into debt.

#144 IHCTD9 on 09.16.15 at 8:19 am

#10 David McDonald on 09.15.15 at 5:25 pm

…I have seen 20% interest rates and debt scares me.
___________________________________________

This is probably a more significant statement than most realize. There are two whole generations out there who have never seen rates like that in their borrowing lives, and never learned to fear debt. I might even agree that the most recent of those two generations think that debt is “good”.

A good correction in the overzealous Canadian RE markets combined with a solid recession will teach fear real quick though. Gen X’ers may escape the carnage if they had put their nose to the grindstone on paying down their mortgages, but the millennials will get slaughtered (or their parents will via bailing them out – pretty likely scenario).

#145 maxx on 09.16.15 at 8:20 am

#1 Lester McMann on 09.15.15 at 4:41 pm

One of THE best posts I have ever read. Ever.

#146 Julia on 09.16.15 at 8:32 am

#65 Lea
“If there was a crash would the taxpayers be on the hook for CMHC?”

The CMHC portfolio is stress tested and I believe it would be able to sustain a certain level of losses without requiring Government funding. The statements indicate that they currently could weather a 2008 style downturn without going below their capital requirement.

#85 TRT
“Check CMHC stats. Almost no one carries a million dollar mortgage.”

Maybe because CMHC does not insure individual mortgages for homes purchased for more than $1 million?

#119 kommykim
Wondering what changes were made to the accounting to make such a turnaround in results. I doubt it has been disclosed?

#147 maxx on 09.16.15 at 8:36 am

#10 David McDonald on 09.15.15 at 5:25 pm

“I don’t necessarily agree that Canadian society would be better of if more adults were successful market investors. I do agree Canadians need to manage their finances better. I have seen 20% interest rates and debt scares me.”

Yours is a healthy reaction to debt. People ought to have a healthy respect for it.

#148 Smoking Man on 09.16.15 at 8:37 am

Damn it. Yellen probabaly not spiking.

USA Inflation numbers in.

M over M down.

Y over Y same.

What to rotate my entire FX winfall into crude. Need to wait now.

Damn.

But then again…slight feeling she just might do it.
Play the player.

http://www.tradingeconomics.com/united-states/calendar

#149 Bottoms_Up on 09.16.15 at 8:45 am

#140 pbrasseur on 09.16.15 at 7:34 am
——————————————–
I wish people would stop talking in generalities. What is an average home? What should the average home be worth?
For example, in Toronto, the average home may in fact be a 2 bedroom apartment condo. This is affordable to the average family income. Just because the average family cannot afford to buy a single in the 416 does not mean something is wrong with housing. 6+ million people, with 100k moving in every year, and a land mass restricted by a giant lake to the south a ginormous highway to the north, slums to the east and richies in the west.

#150 Buffalo Springfield on 09.16.15 at 8:49 am

‘…how smart, uber-educated kids…’

As my late father once remarked about Bob Rae – perhaps they’ve been educated beyond their intelligence.

#151 fancy_pants on 09.16.15 at 8:52 am

DELETED

#152 A Nobody on 09.16.15 at 8:54 am

#141 A Nobody.
15 at 7:35 am
From Sotheby’s on BNN this morning quote” demand for luxury homes above 4 million continues to soar in the two hottest markets in Canada. Demand primarily from China”

So long as stories like this dominate the media and the political parties , whomever is elected decide to throw kerosene on the housing ‘fire’ with poorly thought out, easy housing policy very supportive of higher prices , than you can bet heavily that housing prices are nowhere near peak.

Stop waiting and hoping housing bears and throw in the towel as I have, at some point you have to admit defeat.

Buy real estate.. Not too late.

Nobody normal watches BNN. — Garth
——

Then we have a country full of crazies because EVERYONE watches BNN especially on the red arrow days.

#153 Nora Lenderby on 09.16.15 at 9:10 am

#121 BG on 09.15.15 at 11:54 pm
If you think taking the oath to join your country , or treating every citizen (or wannabe so) equally regardless of religion is not serious, I’m afraid you’re a lost cause./i>

I was serious, after all, I swore an oath to My Queen, Her Heirs and Successors.

As far as Her Majesty’s present local administration, I am a lost cause, in that I mightily object to the kinds of nastiness, gamesmanship, obfuscation, pandering and PR manipulation that go on. I think it’s shameful.

I have heard of this kind of reasoning back home for decades. You know that little country where a full newspaper team was decimated for mocking a religion?

Wherever you go, there you are.

Personally I think people should struggle to be kinder to one another. I have no idea about the case you mention, but I presume it was making jokes at the expense of a minority group, which is tricky territory.

It’s too easy, as I mention above, to pander to the worst instincts of the populace. And that brings us back to the topic of Real Estate :-)

#154 earlybird on 09.16.15 at 9:14 am

#1 Lester…great comment! As long as we have new buyers, we can keep this party going! Maybe that explains all of the incentives that are being offered to get into the RE market….Great post Garth (again)

#155 Holy Crap Wheres The Tylenol on 09.16.15 at 9:18 am

Holy shit smoking Man you really rang the LGBT bell on this one. Better start waving your rainbow colors and dancing naked on the next float along Wellsley. That is one subject you should leave alone, personally I don’t give a shit what you do with your life as long as you don’t hurt anyone or create terror. Let em be homosexual, bi-sexual or transgender. However Wynne is an affront to his/her community by playing out the I’m gay card. What his/her party has done and will do to this province is criminal. Straight or whatever criminal is criminal.

#156 SWL1976 on 09.16.15 at 9:24 am

#140 pbrasseur

I feel many people have lost perpective about Canada as a whole…

Ahhh… Let us not forget about America and the shell game of the Federal Reserve.

It’s almost like they are crazy enough to bring this whole system down and watch it crumble. The US should be delighted that the majority of the world uses their currency to settle their debts to each other and make business transactions. They export inflation.

However, they are not. In true fashion of acting like a spoiled brat they continue to bully everyone on the block demanding that they get their way and the lion’s share of all business transactions.

Change is happening. All be it slowly. Time will tell who is working with who, and who will be left swimming naked. I know how the saying goes never bet against America; however the days of the US petrol dollar are coming to an end.

Remember all booms end with a bust

Don’t get me wrong. I love the old true America and the principles that it was founded on, but this new corrupt corporate America that is run by lies, deception, propaganda and central bankers is getting hard to take.

I think that the real crazies are indeed crazy enough to bring it all down, either intentionally or simply by losing control of something they thought they had control of.

Like overvalued Canadian RE who knows just how long this will last

#157 Daisy Mae on 09.16.15 at 9:31 am

“What do the leaders have to say about cities average people can’t live in anymore?

You bet. Nothing. Except find new ways to shovel more buyers in, further augment values while building extra consumer debt. And ignore the elephant in the room.”

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

And the electorate is expected to make an intelligent decision come election day? Based on the fact none of the three are deserving or even really care?

#158 Daisy Mae on 09.16.15 at 9:38 am

“It’s also worth remembering that government policies – from 5% down insured mortgages which strip away lender risk to first-time buyer tax credits to free capital gains on houses – have created a nation steeped in house porn and now pickled in debt.”

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

Progressive Conservative policies brought in by none other than Harper, the economist…

#159 Doug in London on 09.16.15 at 9:38 am

@David McDonald, post #10 and max, post #147:
Canadian society would be far better off if more adults were better market investors. If we were better market investors, we wouldn’t have the crisis we have now of people not having enough money for retirement, and thus we wouldn’t have a perceived “need” for this Ontario Pension Plan which is really a tax on jobs. If we were better investors there wouldn’t be such wide swings in the stock market. Last, but certainly not least, if more Canadian were better market investors you wouldn’t have so many people frantically piling money into that already grossly overvalued asset of housing, and ultimately setting themselves up for trouble when the correction comes.

That brings me to another point. I see, right here on this blog among other places, fear about investing in the stock market, even though prices are good. I wouldn’t say they are dirt cheap, but they are not outrageous either. Meanwhile, a lot of people don’t seem to mind piling money into already overpriced markets like Toronto and Vancouver, driving prices even higher. Shouldn’t the opposite be true, where everyone should be avoiding overpriced housing and piling money into much cheaper stocks or ETFs?

#160 Holy Crap Wheres The Tylenol on 09.16.15 at 9:42 am

Somebody said this election was about change. Funny.
_____________________________________________
Garth you are about the same age I believe as I am so you know there is no change in an election just a new boss same as the old boss.

https://www.youtube.com/watch?v=zYMD_W_r3Fg

#161 Daisy Mae on 09.16.15 at 9:47 am

#5: “Good post Garth, you’re a writing and reading machine. I sometimes wonder how you put up with us all…”

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

Garth is an the consummate optimist. He keeps hoping something — anything — will eventually sink in. ;-)

#162 Llewelyn on 09.16.15 at 9:50 am

Don’t you just love a world where one expert earning $350,000 per year confidently predicts that the price of oil could decline to as low as $20.00/barrel while another expert earning $350,000 per year confidently predicts oil will hit $85.00/barrel within a year. A world where thousands of experts collectively earning billions of dollars cannot agree whether an increase in interest rates would be a good or bad for the economy.

A monkey working for one of those $0.47/pound bananas would seem to have a 50/50 chance of being right in this topsy-turvy environment.

In Canada so many people have a vested interest in maintaining the value of their dwelling unit that they have collectively convinced themselves that the Emperor is not only the best dressed man in town but that the cheques he is handing out to all homeowners can actually be cashed.

Experts with a vested interest in the housing market are no better than shills at an auction. Foreign buyers, historical averages, shortage of supply, immigration, historically low interest rates, etc. it is all just so much hype.

All confidence games or pyramid schemes require a steady stream of new customers to survive. The belief that the customers required to support the housing market in Canada have sufficient income to maintain current market values is beyond foolish. The 280,000 immigrants arriving in Canada each year are not arriving with suitcases full of cash nor are all students who borrowed hundreds of millions of dollars to obtain an education able to ask Mom and Dad to cover their down payment.

A dwelling unit selling for $300,000 in 2015 will require a minimum of $20,000 in cash to close the deal and an absolute minimum of $22,000/year to cover the cost of accommodation. Even if 40% of disposable income could be applied to secure accommodation customers for a $300,000 home would have to earn a minimum of $78,000 per year to qualify. Run the numbers on the average annual income of the 200,000 new jobs created in Canada over the past 12 months and see how close to $78,000 you get.

The scenario above is based on minimum requirements so any increase in interest rates, tightening of credit conditions, or a reduction in employment opportunities will only make a decline in current market values more severe.

Unlike oil a deliberate reduction in supply to increase market value will actually make the situation worse as thousands of citizens employed in the housing sector become unemployed.

Folks it is time to admit the Emperor is naked!!!

#163 Clay on 09.16.15 at 9:51 am

How is it that in this curriculum, English is mandatory until grade 12, but basic financial education is not even present ? This is why year after year we graduate educated kids with diplomas and degrees who don’t have a clue about household finances or basic budgets. Until that changes and we start teaching kids, the rich will get richer and the dumb will get poorer.

#164 Investorz on 09.16.15 at 10:07 am

I bet the U.S. Fed raises rates by 0.15% on Thursday.

#165 crossbordershopper on 09.16.15 at 10:09 am

come to stoney creek, all the stores and doctors etc. 5 minute drive to qew for a one bedroom 650, and only 850 for a 2 bedroom all included.
its best to be a senior because its a small quiet apartment building.
why would anyone work ? why are you working? to make money and pay taxes and stuff. listen, everyone in the whole stoney creek area have no money, why do you need money, the goverment gives you a cheque and you live in an apartment. if your younger you work for cash. you never have any money in the bank, why would you leave it with them.
in terms of after 65, you get your goverment cheque, and you actually live in the old country, italy, croatia, or down south in cuba for about 1000 a month on the goverment of canada working back. the azores are wonderfull, 1200 a month all included, food, apartment etc, i know a guy who does that for 6 months less a day. then comes back to canada to restock his free drugs, and live with his sister for free.
canada is the greatest country in the world not for the suckers who go to work but for the millions who dont.
please vote ndp, not because i like them, or anything, but they will gladly have you do nothing and give you money and extort it from the hard working canadians.
liberals are pretty close, justin is a real ndp in drag, his policy pretty much overlaps the ndp.
so whatever you do, sell your house when your 65, and rent for cheap, and spend months in a nice safe place around the world.
if you dont have any money when your 65, same plan without the cash in the bank, basically lifestyle.
why i see old ladies living in paid off houses worth 500k and live the last 10 years of their life in poverty paying the bills for a house they dont need and the kids are just tapping their feet waiting for them to die.
she should of traveled and spent her money. no one cares after 10 years of your death, we all die alone. dont forget that.
interest rates and house prices are irrelevent for the bumbs of our society., i am glad to be one of them. niagara on the lake trip on a wednesday, while your too busy working.

#166 Herf on 09.16.15 at 10:51 am

#117 Mark

From the official source, plus one anecdotal story:

http://www.ospe.on.ca/news/211331/New-OSPE-report-on-the-crisis-of-underemployment-among-Ontarios-engineers.htm

http://www.ospe.on.ca/resource/resmgr/DOC_advocacy/2015_REPORT_Underemployment_.pdf

http://www.ediweekly.com/ontario-engineers-facing-crisis-employment/

http://www.northernlife.ca/news/localNews/2015/04/12-engineer.aspx

From what I’ve researched, the story in the U.S. isn’t much better, particularly if you’re an EE. The half-life of a software engineer was reported back in the mid to late 2000’s to be ~ 2.5 years, and if that’s your specialty you’re considered over the hill and undesireable by employers by age 30-35.

#167 Craig on 09.16.15 at 11:08 am

There is no reason to raise rate for the Fed. They’ve said it will be data dependant. Is the economy better? Sure. But there is no inflation and is nowhere near redhot. Therefore not hike this year.

#168 Centurion on 09.16.15 at 11:12 am

This is good to hear at least. 2/3rds against TFSA rollback:

http://www.theglobeandmail.com/globe-investor/personal-finance/retirement-rrsps/two-thirds-of-canadians-oppose-rollback-of-tfsa-limit-poll/article26374122/

#169 Retired Boomer - WI on 09.16.15 at 11:14 am

#163 Clay

Financial Education -to my knowledge- has never been taught in most public schools. Back in the dark ages (1956-69) when I was there they did teach one how to balance a checkbook, make change, and some cursory data on interest rates. On saving, or investing nothing.

There are private programs geared for middle and high school students today. Some (produced by Citicorp) are none too great. One course, by Dave Ramsey is quite good, and is in some public schools here in the US.

It is changing the paradigm on debt, to savings and investing that changes how people view a great many things -including politics!

#170 Herf on 09.16.15 at 11:22 am

Here’s an article about the Alberta oil patch debt and cash flow situation, but also provides some food for thought regarding lending standards to the oil patch vs. consumers. Presumably the banks are more discriminating when lending to the oil patch, because there’s no oil industry equivalent of CMHC for them to fall back on. Makes me wonder just how much debt each of the Big Six banks has tied up in the oil patch.

http://oilprice.com/Energy/Oil-Prices/Oil-Price-Increase-Will-Not-Come-Fast-Enough-To-Save-Alberta.html

#171 Keith in Calgary on 09.16.15 at 11:29 am

I am leaving YVR today and heading to Nanaimo for 5 days, and then Victoria for 2, and Seattle for 3.

Four cities in two weeks, each separated by no more than a hundred miles or so, yet with totally different RE markets.

#172 Disclosure on 09.16.15 at 11:42 am

Is anyone here benefiting from incoming Chinese ‘HOT’ money?

It is coming into Vancouver Real Estate.

The Chinese government says so. Gov.cn

#173 Matt on 09.16.15 at 11:56 am

Read in the Globe today that NDP will NOT eliminate the capital gains tax exemption. I was not even aware that was on the table for the NDP. That is a scary proposition. How will it impact both investing on market and housing?

Elect Mulcair and you could have many surprises. — Garth

#174 Edward on 09.16.15 at 12:01 pm

Maybe this story has already been posted, but here it is anyways. 67% of Canadians opposed to rolling back TFSA.

http://www.bnn.ca/News/2015/9/16/Two-thirds-of-Canadians-oppose-rollback-of-TFSA-limit-poll.aspx

#175 Tony on 09.16.15 at 12:16 pm

Re: #164 Investorz on 09.16.15 at 10:07 am

All the insiders already are pocketing a fortune by shorting the volatility index. They waited until yesterday to tell all their friends. Betting against an insider is like throwing your money into the fireplace. Most think some day a quarter point increase followed by QE4 a month or two later.

Your insiders are idiots. The Fed will not tighten monetary policy only to ease it a month later. — Garth

#176 45north on 09.16.15 at 12:27 pm

KommyKim: Surplus this close to election day?
Congratulations once again……Prime Minister Harper…..

Even if it’s true, which it’s not, there won’t be many who believe it.

I believe it

http://ottawacitizen.com/news/politics/conservative-budgets-at-a-glance

#177 chapter 9 on 09.16.15 at 12:47 pm

If you happen to be a union member in this country and contribute to a TFSA, the question that you have to ask yourself. Why are my union dues going to fund the NDP and the Liberals who want to make changes to this savings vehicle which will provide a greater source of financial security for my self or my family.,Engage Canada is a joint partnership between the NDP and Liberal back room strategists and funded by unions.
Food for thought!!

#178 realisttrader on 09.16.15 at 12:48 pm

A new monetary system will be implemented after the mega crash. It’s guaranteed and just that simple.

Look at where we are and look at history.

Then there’s war..

#179 Jim B on 09.16.15 at 12:54 pm

Garth, correct me if I’m wrong, but didn’t you used to support tax deductibility of mortgage interest (as they do in the States)? But whether or not you did support it at some point in time, do you favor this policy now?

No. — Garth

#180 Stickler on 09.16.15 at 12:58 pm

So because the NDP would adjust income tax rules to reduce capital gains if those already invested in rental housing put their money back into affordable rental housing.

gets translated to:

“will let amateur landlords escape capital gains tax”

Come on now.

#181 DUI on Money Road on 09.16.15 at 1:17 pm

Elect Mulcair and you could have many surprises. — Garth
=============================
Heard a good one the other day, “Mulch Air”.

Mulch Air = Surprise. I like that equation.

#182 Ponzius Pilatus on 09.16.15 at 1:37 pm

Harper the Magician pulls a balanced budget out of a hat.
Next he will cut the National debt in half in front of a live audience.
Pepal, wake up. Don’t buy this crap!

#183 jess on 09.16.15 at 1:40 pm

Lester who rated those securities?who rated Enron investment grade just weeks before it went bust
or assigned triple A rating to subprime mortgage-backed securities … As the FCIC report pointed out “The three credit rating agencies were key enablers of the financial meltdown. The mortgage-related securities at the heart of the crisis could not have been marketed and sold without their seal of approval.” (FCIC 2011)

http://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf

https://projects.propublica.org/bailout/list/index
https://projects.propublica.org/bailout/list/losses

sept 2015
http://projects.propublica.org/bailout/main/summary

#184 Sheane Wallace on 09.16.15 at 1:47 pm

#164 Investorz on 09.16.15 at 10:07 am
I bet the U.S. Fed raises rates by 0.15% on Thursday.

I agree, I said the same thing few weeks ago.
They will surprise us by raising but with lower value than expected as to sustain stability in the markets.

Their raise however has nothing to do with reality in Canada, we are at such peak debt that there is no way to prevent severe decline in the economic activity with any form of tightening.

It is very sneaky and absolutely cunningly ridiculous to propose balanced budget at this point in time and it would be very funny if it was not tragic that the Conservatives after running years of deficit through debt creation accomplishing 3 times peak debt thanks in part largely by CMHC guarantees (as no bank would lend 90 % of the loans in the last 7-8 years) now is proposing balanced budget for somebody else to carry (so they can attach whiel in oposition pointing out to their ‘record of success’ and ‘experience’) knowing perfectly that this is not possible.

Whoever is next in power has to run huge deficit and directly print money. There is no way around it. QE in US was to mitigate the debt they had which is nothing compared to ours, we need 3 times their QE.

Canadian dollar reflects nothing of this mess in it’s current valuations (it only reflects the oil decline). When this baby blows all the savers and retirerees as well as the CAD would be obliterated.

I give it 35-40 cents US max. Maybe less.

#185 pbrasseur on 09.16.15 at 1:48 pm

#174 Matt

Read in the Globe today that NDP will NOT eliminate the capital gains tax exemption.

I feel it’s only a matter of time before some idiot Canadian politician tackles this one, even if removing the 50% of gains exemption is the stupidest thing any government could do, capital would leave this country so fast those morons wouldn’t know what hit them!

Already there was a close call in Quebec last time the PQ was elected, not only they wanted to do it, they wanted to do it retroactively! Fortunately it was a minority government. Today the local Liberals in power have a recommendation to do it from a report on fiscal reform they ordered (the Godbout report). I doubt they’d implement that particular policy but you never know, especially if the feds would do it.

If the left (and now that includes the liberals) get elected we should expect nasty surprises like this, no wonder Canada is so screwed!

#186 saskatoon on 09.16.15 at 1:54 pm

#164 Investorz

even if they “raise” to .25…

it isn’t really raising…

it is just narrowing the range rate that already exists.

i.e., 0 to .25.

for many (*cough*garth*cough*) this will be celebrated as evidence of excellent prognostication.

in reality, it is a red herring.

Backsliding already, I see. — Garth

#187 Derek R on 09.16.15 at 2:07 pm

#118 [email protected] on 09.15.15 at 11:46 pm wrote:
How about we have a NOTA (None of the above) option on our ballots – forcing a re-election where if NOTA gets majority, none of the candidates can stand in again for the re-election?

You could get one like this without any change in our current system…

1) Register the NOTA Party.
2) In each riding or constituency select a random citizen to be the NOTA candidate. If they refuse to stand, select another one.
3) Put them on the ballot.

At best you will get proportional(ish) representation and a reduction in the power of the party elites, if everybody votes NOTA. And at worst a None Of The Above option on the ballot paper, if nobody does.

#188 pbrasseur on 09.16.15 at 2:11 pm

# 184 Sheane Wallace

Canadian dollar reflects nothing of this mess in it’s current valuations (it only reflects the oil decline).

I think this is a pretty valid assumption, so it should be since both consumption and RE have not been truly hit yet. When they do we shall see the second leg of the CAD decline. I wouldn’t dare predict à low of 35-40 cents but I wouldn’t be surprised if we revisit our 2002 low of 62 cents.

Also there is absolutely no way the market will allow Canada to use QE to the level the US did. First the CAD is no reserve currency, second the context does not permit it as the US entering an opposite cycle prevents it, the discrepancy would be too important and the CAD would just get hammered.

In other words the BoC does not have that much margin. The provinces have none. The reasonable healthy finances of the federal government does a bit more, but even that could change in a hurry.

#189 Sheane Wallace on 09.16.15 at 2:11 pm

#185 pbrasseur

If you don’t have already a ticket out in your pocket, what are you waiting for?

I will trust politicians when they start calculating capital gains on primary residences and tax housing gains correspondingly as they tax capital gains.

A country where housing is subsidized by:
– lack of capital gains tax
– home renovation tax deduction program (they want to make it permanent)
– ability to use pension funds to pay for a house (and they want to increase that)
– generous ‘insurance’ at taxpayers expense on ridiculous mortgage valuations. (now they want to include potential rent from basement ‘apartment’ in the mortgage insurance, next they will be including potential rent of the garage and rooftop to potential Syrian refugees)
– lack of any trustworthy market and sales information
– glass condos with falling windows and cardboard houses with decorative bricks at a cost of $ 600 per sqf.
– humongous maintenance fees comparable to rents ($ 2000 per month quoted in some cases)
– ‘Investment’ in parking spaces that cost more than a villa or apartment in Spain, where apartments have no maintenance fees.
– Ridiculous property taxes

is f…ed.

There is no way of fixing this and the more it goes the more the whole artificial economy becomes less and less competitive and leaves only prospects for menial jobs for our kids (they need to compete with foreign workers for that…) and no retirement for us.

I am sure Herr H would be fine.

#190 The Other Chris on 09.16.15 at 2:14 pm

If the provincial Liberals in Quebec are thinking of eliminating the capital gains tax rate and taxing them 100% as income, I’d imagine that’s something being discussed behind closed doors with the Ontario Liberals as well, given how desperate for money they are.

Which means it’s probably at least on the table for the Federal Liberals as well. Crazy.

#191 pbrasseur on 09.16.15 at 2:14 pm

#164 Investorz

I bet the U.S. Fed raises rates by 0.15% on Thursday.

Hope they do. That would be smart, and the FED is.

#192 Sheane Wallace on 09.16.15 at 2:26 pm

And I forgot the ridiculous over-leveraging, people with no money for down-payment live in million dollar houses. It is not sub-prime, it is ridiculously sub-sub-sub prime crises.

Noted on the road today advertisements for second mortgage – private funds, unlimited amounts available. Is CMHC ‘insuring’ there as well. Would it bail out all the condo speculators with multiple condos bought with almost no money down for ‘investment’ in hope of endless price appreciation?

And if not, who is going to pay the bill?

If they could continue to bail out speculators and promote irresponsible behaviour , this could go for a little while longer until the whole house of cards collapses catastrophically.

The question is: how long would savers tolerate the shrinkage of their savings and the idiots at BOC promoting 2% inflation (in reality 5+) with zero nominal interest rates on their deposits?

#193 Mr Max on 09.16.15 at 2:28 pm

“By the way, a new survey finds 69% of YVR dwellers think stupid high prices are the result of offshore (Chinese) buyers while 60% want to see limits put on foreign ownership. This despite the fact the real estate industry itself pegs the number of buyers at 5% of total deals, and the Victoria board (the only one which counts) reports non-Canadian buyers at 1.6% of the market.”

So…you call the people of Vancouver liars….and say that real estate agents representatives spew gospel? You may as well ask the fox if chicken tastes like fish.

#194 Holy Crap Wheres The Tylenol on 09.16.15 at 2:45 pm

The twelve disciples are at the last supper in Washington DC right now. Jesus (Janet) is about to raise the glass of wine and toast to all of mankind! Liberty to all and up the rates will go. She will change the lives of everyone in the world.
Tomorrow US interest rates, which have been held at near-zero since the 2008 financial crisis shall raise like a phoenix from this burnt out financial crisis.
Get ready!
Burn baby burn!

https://www.youtube.com/watch?v=o3Z8NU5ImK0

#195 Holy Crap Wheres The Tylenol on 09.16.15 at 2:47 pm

#186 saskatoon on 09.16.15 at 1:54 pm

#164 Investorz

even if they “raise” to .25…

it isn’t really raising…

it is just narrowing the range rate that already exists.

i.e., 0 to .25.

for many (*cough*garth*cough*) this will be celebrated as evidence of excellent prognostication.
in reality, it is a red herring.

Backsliding already, I see. — Garth
___________________________________________
Every journey starts with the first step!

#196 Kreditanstalt on 09.16.15 at 2:51 pm

Everyone knows that central bank rigging of interest rates – “cheap money” – is the REAL reason YVR house prices are so high.

But no one wants to do anything about it.

#197 Smoking Man on 09.16.15 at 2:54 pm

#155 Holy Crap Wheres The Tylenol on 09.16.15 at 9:18 am
Holy shit smoking Man you really rang the LGBT bell on this one. Better start waving your rainbow colors and dancing naked on the next float along Wellsley. That is one subject you should leave alone, personally I don’t give a shit what you do with your life as long as you don’t hurt anyone or create terror. Let em be homosexual, bi-sexual or transgender. However Wynne is an affront to his/her community by playing out the I’m gay card. What his/her party has done and will do to this province is criminal. Straight or whatever criminal is criminal.
……

I dont think I wrote anything offensive..

If so, just posted my mug shot on my blog. Come get me.

Just beautiful on the water today.

Finally talked the wife into going to usa
Woo Hoo

#198 Calgary Rip off on 09.16.15 at 2:58 pm

“74% think houses are overvalued, but…
77% believe this is a good time to buy.”

As a baby boomer maybe it is easy to forget the reality of costs.

Pre-2005: Old Calgary
Post-2005: New Calgary

Guess what? In New Calgary housing costs have skyrocketed. This is for rent and mortgage.

So you are working for the next 30 years? Still think the best option is to rent? Really? At those prices? Let’s see if I hadnt gotten the mortgage in 2011….$77,315 gone in rent….forever…

But the rates may go up….yes. Do I make enough to requalify or did I buy something too expensive? No, it was the same as my rent at the time and in basically the same location.

So unless interest rates skyrocket to 12% I’m not worried. Additionally if that happens I wont have a job anyway, so it wont matter.

#199 saskatoon on 09.16.15 at 3:00 pm

#186 saskatoon

not backsliding…

just clarifying.

to actually raise rates…

janet will have to push above .25

#200 jess on 09.16.15 at 3:34 pm

Former United Commercial Bank Chief Credit Officer Convicted of Securities and Other Corporate Fraud After Trial

The Fraud Caused the Ninth Largest Bank Failure with Estimated Losses in Excess Of $677 Million
http://www.justice.gov/opa/pr/former-united-commercial-bank-chief-credit-officer-convicted-securities-and-other-corporate

#201 Tommunist Manifesto on 09.16.15 at 3:54 pm

Hi y’all

Just coming in to tell y’all about our new policies, many of you have been left in the dark per say and we are here to help, we are advocating taking away personal property such as RE, cars and anything of value from those greedy rich, we are also looking to introduce a 70% income tax as per one of our great party members lil Linda Mcquak. Sooner then later you will all have your own apartment just like they used to in eastern European block. Please vote for me and I will make sure the sun rises everyday, everyone will be equal and nobody will ever have to work again. Sincerely, Tommunist

#202 AfterTheHouseSold on 09.16.15 at 3:58 pm

#143 maxx
“It isn’t socially acceptable to wave a bank balance around, but you can certainly brag about the pressed cornflake walls…

To the question “Do you own?”, my kids answer “I’m building a financial portfolio with all the money I save by renting.”

They say this with a big smile on their faces. Shuts down the SS&G bragging pretty quick.

#203 Almost A Boomer on 09.16.15 at 4:00 pm

Hi Garth

Thanks for continuing to bang your head against the wall.

Where does pension income fit in to the equation when calculating the amount of money you should have in real estate? Can a retired couple with pension income of $90,000 yearly safely have a larger percentage of assets in their home?

Thank you for your comments.

#204 Vanecdotal on 09.16.15 at 4:01 pm

#164 Investorz on 09.16.15 at 10:07 am
I bet the U.S. Fed raises rates by 0.15% on Thursday.

I’m thinking the same. Yellen saves face, remains “credible”, markets adjust accordingly with ultra dovish move. They could slow the rate climb yet still raise at regular intervals this way. Guess we’ll see… Armchair economists place your bets.

#205 Stoopid Idiot on 09.16.15 at 4:01 pm

#34 Smartalox

You’ve got the cart before the horse. Most cases your Realtard will want you to provide a letter of pre-approval. Simply put, it’s the amount your qualified to borrow to the max. The real state person in not interested in showing you what you should buy say for practicality reasons but to optimize their pay check in commissions. The mortgage broker does receive their bonuses for sales but at the end of the day no one holds a gun to your head and say’s sign here….. we do that all on our own regardless of how it was presented to us. Nice try but no one’s to blame but ourselves

#206 Nemesis on 09.16.15 at 4:24 pm

“I think most were born in Richmond.” — HonNunchakuGarth

#InTheSeventies… #GrowingUpInRichmond… #WasWayTougher…

https://youtu.be/0VJnFDz4VP0

#207 waiting on the westcoast on 09.16.15 at 4:34 pm

Still waiting for a rate hike… excited to see it happen tomorrow. What our own leaders are unable to do/allow, the US fed will begin to accomplish starting this fall.

The increase in the cost of money will hinder all the “housing cannot go down” stories. I hope that it is slow for the sake of many people who have bought over the past few years and may not be in a solid position to weather the increased costs.

My bet is still .25 hike tomorrow. Although more nervous since all of the fallout the past month.

#208 jess on 09.16.15 at 4:38 pm

Its high-risk lending nearly doubled the bank’s loan portfolio between 2004 and 2007, to more than $8 billion, and made a rising star of chief executive Thomas Shiu-Kit (“Tommy”) Wu, who in 2006 was named auditing giant Ernst & Young’s financial-services Entrepreneur of the Year.

The platform ?
https://www.linkedin.com/pub/thomas-wu/21/b7/598

On Oct. 7, 2014, the bank’s Senior Vice President, Thomas Yu, pleaded guilty to charges of conspiracy to commit false bank entries, reports and transactions related to his preparation of false and misleading reports. Both On and Yu await sentencing.

#209 RayofLight on 09.16.15 at 4:51 pm

#17 Mean Gene on 09.15.15 at 6:00 pm
Spotted this on Huffington Post… I am sure Mr. T (whatcha looking at greaterfool) has seen it.
http://www.huffingtonpost.ca/2015/09/15/global-debt-crisis-federal-reserve_n_8135266.html?utm_hp_ref=canada

—————

I once compared the “Huffington Post” to toilet paper. When I thought about some more, I realized I was being disrespectful. So I apologized to the toilet paper, and said I wouldn’t do it again.

#210 Bob Santarossa on 09.16.15 at 4:59 pm

#198 Calgary Rip off

Yes it will matter if you have a mortgage and default.

The bank will foreclose (as they did in pre 2005 Calgary – courts in early 80s backed up 6 months with foreclosures) and they will find you.

Then job or no job, you get an RSVP to the courts. You can always declare bankruptcy and that will probably cost you your home and no credit for at least 5 years.

You cannot walk away if you lose your job from those legal obligations.

And in “pre-2005” Calgary, rates were higher than 12% and with the bust came a +20% devaluation. So if the average home price is $500,000 in “post 2005 Calgary”, you lose $100,000 in equity and or mortgage value.

Post or Pre, that devaluation will come.

That $77,315 will seem a bargain to you then.

#211 Sheane Wallace on 09.16.15 at 5:07 pm

#188 pbrasseur

Agree. We are boxed in a worse place as we are NOT the reserve currency, our credit bubble looks actually much worse and we have not even start to reduce the speed at which we are blowing it up.

We need to stop the credit growth and to mitigate the impact from it (or else we face the most severe depression we could imagine) initiate massive QE. Which will destroy the CAD. This actually could be the easier and the most likely path. Just destroy the CAD and the savings. and everyone with fixed income in the process.

We might face as an alternative combination of moderate QE, severe inflation and moderate depression (inflationary depression’) all at the same time which as combination would be horrific.

We have to accept as a given that there is no way for BOC to even think about following the Fed with following the direction of increasing the rates. There is no chance in hell for that before massive QE, it would literally bankrupt the economy and drive us into severe depression.

Or I could be totally wrong, live could go on, CMCH will insure everything under the sun, we will get rates of 0.00001 %, interest only mortgages for 100 years (for those with grandchildren, against their potential future income) , house prices will climb to 10 million dollars and will be affordable as that payment would be still 4 k per month. Entirely possible in the coo coo land.

#212 Sheane Wallace on 09.16.15 at 5:20 pm

intentionally written coo coo instead of cuckoo

#213 Tony on 09.16.15 at 5:31 pm

Re: #207 waiting on the westcoast on 09.16.15 at 4:34 pm

From all the insider trading seen the last two days the odds of a rate hike are zero as in not one in a million but zilch.

#214 Tony on 09.16.15 at 5:35 pm

Re: #204 Vanecdotal on 09.16.15 at 4:01 pm

No one on planet Earth except a few on this blog are betting the FED will increase interest rates. The odds of an interest rate increase are “zero”.

#215 Jerry on 09.16.15 at 10:25 pm

“and are far less volatile than common stocks”

Better run that one through the abacus again – stocks are off about 9% over the last year and preferreds are more like 18%.

Not by way of disagreeing – I am about 10% of total holdings in preferreds – but hyperbole is out of place if you are trying to convince others of their worth.

You do not understand volatility. It is not simply price. — Garth

#216 Ozy - Garth - the KIDS know it on 09.17.15 at 12:24 am

Garth – the KIDS know it

But since they do not pay for it….

and what’s the alternative…? laundry with all renters, bed bugs + cockroaches….

U TELL ME

#217 jane 24 on 09.17.15 at 2:45 am

Garth the reason it is still going is that no-one every thinks of the total price/debt any more. The question is never ‘how much is it?’

The question and the answer is just ‘how much month?’ if that is doable then they are in.

Rates have been so low for so long that absolute numbers have no relevance for people.

Here in the UK you see so much month adverts for leased cars but NEVER for houses. Numbers are always absolute ones. Maybe it is coming.