To the limit

GROWTH modified

Another day, another Brad. This one in Saskatoon where two years ago there were bidding wars, flippers and a meme that it’s different here, thanks to booming commodity prices. The oil biz was great and big ag land-owing guys drove their new Silverados to town and strutted like gods.

Brad sat in his rented condo. “Couldn’t bring myself to sign on the dotted line,” he says. “Been a tough go listening to my 8 year old wishing daily for a back yard to play in, but I think things are finally starting to happen. So much for bidding wars…. “

You bet.

Calgary – once the hottest real estate market in the land – is not alone in its residential misery. Sales in Saskabush have tumbled 15% this month from the same time a year ago. Listings are rising – up about 13%. In a city of 220,000 people there are almost 700 condos sitting for sale – a year/year increase of 50%. And as a local realtor points out, of the 96 houses that sold last week eighty – or about 85% – went for less than the list price.

This is what happens when commodity values tank, even when interest rates sit at record-low levels. As I’ve said before, mortgages can migrate to zero but as people start to understand what the real economy’s doing, real estate risk grows. Most won’t agree, but I think regional markets like this (and Calgary) are harbingers of what’s to come.

Too bad your brother-in-law pays no attention, and the debt snorfling continues, largely in southern Ontario and the Lower Mainland. The last report, published Monday, gives us this:

“…Residential mortgage debt jumped 7.5 per cent annualized in the month, raising the three-month pace to 7 per cent, its fastest since April, 2012. On a year-over-year basis, mortgage growth was 5.9 per cent, a 32-month high….”

Interesting juxtaposition, isn’t it? Oil collapses to $44 a barrel, our dollar tumbles below 75 cents US, financial markets shed blood over collapsing commodity values, our economy’s been in recession yet mortgage debt grows at three times the rate of inflation and five times the pace of income growth. Just. Wow.

If you think things are normal, contemplate Shell. The giant energy company has flushed $7 billion into a hole in the Arctic. Now it’s walking away. The announcement yesterday was a shocker, and helped to underscore what’s been happening on the markets, and here.

By abandoning this well – maybe the most expensive useless hole ever punched into the earth – Shell said simply that it probably can’t make any money pumping liquid crude out of this thing for the next 15 years, given where oil prices are headed. So just imagine the futility of producing oil by scooping tons of frozen dirt out of the tundra, cooking it in billion-dollar ovens then sending it thousands of miles to market, the way we do it.

This is why we’re a little screwed at the moment. I hope you heeded this pathetic blog’s advice to seriously lighten up on maple in your portfolio. This is the latest installment in a global commodity rout which has been gathering steam all years. Given what’s coming it makes you wonder why anybody would want to be prime minister next month, own a Canadian equity mutual fund with a nosebleed MER, or sign up for an $800,000 mortgage in Mississauga.

A smart guy I work with, Ross the trader, says markets will probably retest the lows they hit in August (we’re not far off), then rebound for the remainder of the year if corporate earnings come in strongly, or the US Fed pulls the trigger on rates. Makes sense, at least to Charles Goodhart, a top dude at the London School of Economics and former big whiz at the Bank of England. He says rates are going from zero to their historic norm around 3%, and that this will help change the world.

Goodhart sees inflation returning, cheap money ending (for at least a generation) and asset bubbles popping. After all, the price of things like houses is negatively correlated with the cost of funds. And one of the most significant bubbles in the world these days is Canadian residential real estate – at least in the two markets which are left in delusional territory.

How do the country’s political leaders help to prepare citizens for the inevitable? You bet. Harper increases the RRSP-for-downpayment plan and brings in a permanent hot tub tax credit. Mulcair backs CREA to eliminate capital gains taxes for guys buying rental suites. Trudeau will let people drain retirement savings, tax-free, to purchase a house every time you have a life event.

Such old thinking, pitted against such global change.

No wonder we’re not ready.

191 comments ↓

#1 Edward on 09.28.15 at 6:07 pm

http://www.bnn.ca/News/2015/9/28/NDPs-proposed-corporate-tax-hike-would-be-a-huge-problem-Linamar-CEO.aspx

#2 Small_Town_Steve on 09.28.15 at 6:09 pm

Haha love the Picture of the growth chart Garth!

#3 TRT on 09.28.15 at 6:12 pm

Agree Garth. Except for one thing.

TSX will go down with the economy.

Plot a graph of the TSX vs Time in U.S. dollars. You will then get it.

#4 Don on 09.28.15 at 6:13 pm

How about a year-and-a-half of three non-working minorities? We can clear the deck of this terrible leadership while things come apart, then have an election with three fresh, and hopefully more trustworthy, faces who will have to look at the mess straight in the eyes and come up with clearer and smarter solutions.

#5 Nomen Nescio on 09.28.15 at 6:16 pm

Charles Goodhart’s “Why the world economy as we know it is about to be turned on its head”:

http://business.financialpost.com/investing/global-investor/why-world-economy-as-we-know-it-is-about-to-be-turned-on-its-head

#6 JB on 09.28.15 at 6:16 pm

Liverwurst makes you go first!

Sigh… Listings are up, Sales are down, prices are still up. Know a few couples who were on the fence for the last 4 or 5 years and bit the bullet.

Sincerely,

Lonely Saskatoon Hold Out.

#7 common sense on 09.28.15 at 6:17 pm

And the markets too are not in Bubble territory?

Bio tech especially?

I’m curious to see how much the markets recover after testing the lows….I’m thinking not much this time..people are tired, fed up and most confidence is lost. It will take a while….

Happily shorting the markets…Also grateful no debt and living in a house in small town Ontario that will always hold it’s value….

#8 TRT on 09.28.15 at 6:20 pm

Was the run up in commodities from 1999 onwards due to speculation (artificial) or real demand?

If the former, then it’s great that we are getting back to fundamentals.

Now to figure out where the next bubble is going to appear. And jump in.

#9 Nosty, etc. on 09.28.15 at 6:23 pm

“Interesting juxtaposition, isn’t it? This is why we’re a little screwed at the moment.”

Screwed, only if mortgages. HELOC’s and LOC are involved which covers about 75% of the population. The rest are fine.
*
#291 TurnerNation on 09.27.15 at 1:35 pm — “Carbon taxes: this was the pope’s message. He’s a NWO salesman.”Absolutely right.

#141 Smoking Man on 09.28.15 at 12:48 pm — “AL Gore goes on the road with a new power point presentation.”Cold Blob in the Atlantic and PDF warning on Atlantic Ocean (and we have an El Nino heading for the Pacific NWest.

As the mini-maunder (Little Ice Age) is upon us now, I suggest a six-month holiday, lying on top of Ayers Rock (dead centre of Oz). Pope St. Al of the Gorgonzolas will be looking really smug when his power bills run rampant, and he can no longer pay them.

Of course, the simple fact that there is still snow from early 2015 won’t have any effect on these carbo nazis.

It is commonly known that things happen in threes. Napoleon and Hitler both made the same mistake — invading Russia in the fall. By the time their soldiers were there, it was winter and both lost. If Obama follows suit (orders from the CFR), he will be #3.

#115 Edward on 09.28.15 at 8:58 am — “He says a looming catastrophe is brewing.”
— and —
#150 Doug T. on 09.28.15 at 2:35 pm — “The day will come when we are taken into a scenario not unlike the EU – where the USA, Canada and Mexico have a common currency and are slaves to the U.S. […]”

Not necessarily slaves, but both correct and I have long said CANAMEX would eventually be one country.

#10 Retired Boomer - WI on 09.28.15 at 6:24 pm

The old guy decided it is time to lighten up on the equities. We shall just ‘idle’ for a while. There is NO safe haven I see.
We can switch stuff around with a mouse click these days. OK, so I was up in one account, down in the other.
So, I can “afford” to idle. If we retest those August lows, then I rethink the plan, if we break through those lows I’ll be glad I have some dough in idle mode.
Hey, you don’t lose idled cash now do we? You CAN and HAVE lost invested money.
As for my RE the only stuff I own besides my home is a REIT that is doing better than the markets, so are the utilities, and some of those dividend paying stocks, but not all of them.
This is called a correction, not a panic oh shit moment-at least NOT yet. One NEVER can tell.
So, are we going to have a dead cat bounce tomorrow? This almost dead cat wonders where this bottom might be?

#11 zee on 09.28.15 at 6:35 pm

Garth,

Housing in Alberta and Saskatoon, are not down for the reasons you have been saying for so many years. Higher interest rates, high debt level, inflated prices and so on.

You never predicted oil collapse which is the reason for the weak housing market.

Housing will remain strong for the simple reason that govt wants it to stay strong. The govt has no other way for pushing GDP here.

#12 Paul on 09.28.15 at 6:35 pm

“Mulcair backs CREA to eliminate capital gains taxes for guys buying rental suites”.

Where can I find out more about this? TIA.

#13 Linda on 09.28.15 at 6:36 pm

So – if people do lose their marbles & purchase before prices plummet (or maybe slowly sink) would it help at all if they lock in long term for the lowest rates? And if prices only sink slowly, does it matter in the long term if people are determined to buy? Presumably any price drop will be offset by a rate increase…..

I don’t see how anyone who doesn’t already actually own a house (I mean, paid in full – not mortgaged) being able to win at this stacked deck of a housing game. Even if house prices drop, mortgage rates will likely rise & thus wipe out any advantage from a price drop. Meanwhile, anyone who has purchased at these nosebleed prices will likely see their equity vanish like snow during a Chinook, especially if an increasing number of Boomers start trying to sell in order to free up the equity to fund their retirements. Because like it or not, they will be retiring, because some at least won’t be mentally or physically able to keep on working. Depending on whether they had the forethought to set aside funds for the future (or have a pension other than CPP/OAS/GIS) they may be looking to ‘the house’ to provide for their needs come the day they can’t work or can’t find work that pays enough to cover the expenses…..

#14 Chancho on 09.28.15 at 6:36 pm

Saskatoon house prices have definitely been coming down a bit. There are lots of properties on the market and I’ve noticed some have dropped their prices by quite a bit. That being said, most areas are still expensive. Maybe not compared to Van or TO but for the average working class family they are. There are still a few decent houses for under $250,000. If i find the right one i might pounce, but i really don’t mind renting for now so no hurry.

Crude oil rail traffic has been picking up in the last little while here too compared to earlier this year. Maybe it has something to do with storage capacity in Alberta but it’s definitely moving lots now, earlier in the year it just stopped completely.

#15 EarlySpring on 09.28.15 at 6:43 pm

#6 LB,
you aren’t alone, i too live in saskatoon and rent, my truck i bought used over 6 years ago and have 220km on it now, i am 28 and the co-workers around my age whether its 8 years older or 8 years younger and all between amaze me with the debt that they take on with toys, trucks and houses, although they are nice its crazy, looks like our waiting may pay off.

This spring will be interesting here

#16 Jay on 09.28.15 at 6:44 pm

http://m.huffpost.com/ca/entry/8197210

#17 Porsche on 09.28.15 at 6:52 pm

Are stocks suddenly rooting for a rate hike?

http://finance.yahoo.com/news/stocks-suddenly-rooting-rate-hike-100000355.html

#18 For those about to flop... on 09.28.15 at 6:53 pm

My portfolio is 17% maple with most of that in large companies . Roughly 12% equities .
Couldn’t hurt to buy some small cap exposure since its on sale could it?

#19 Charles on 09.28.15 at 6:53 pm

I don’t know this Charles Goodhart guy Garth is talking about but based on his believe that the historic norm for interest rates is around 3% I will have to assume that his kindergarten graduation happened no earlier than 2012.

#20 LH on 09.28.15 at 6:54 pm

Climate change is like the poor… It will always be with us. Earth has been getting warmer and colder since the beginning of time. No need for Comintern to inform us so, let along hucksters in for a buck like Al Gore.

#21 Shell vd Brad on 09.28.15 at 6:58 pm

If times are such that Shell can screw up to the tune of 7B, (cheap money?) why would Brad navigate any better?

Neither of them could see the future and the price of oil in it.

Pretty much none of us, actually.

#22 zedgt87 on 09.28.15 at 7:04 pm

Garth Said:
“Goodhart sees inflation returning, cheap money ending (for at least a generation) and asset bubbles popping”

Well that speculation makes about as much sense as taking a mortgage in calgary today.

you can bet asset bubbles will be popping though (including stocks), and i’m certain central banks will respond with more of the same, more negative real rates, money creation etc etc.

#23 Qatar vs Brad on 09.28.15 at 7:05 pm

Qatar’s $256 billion sovereign wealth fund — the ninth largest in the world — is a big investor in Volkswagen and commodities company Glencore.

Those two stocks have plummeted in recent weeks, potentially leaving the fund with a paper loss of $5.9 billion, according to Bloomberg’s Charles Stein.

And you pedestrians are complaining about some drops in house prices.

#24 rock beats paper on 09.28.15 at 7:06 pm

In 2000 it was a tech crash, 2009 the banks went down, and now the commodities. Each was an excellent buying opportunity. Lightening up on Maple was so 2014. Commodities will go up as the US$ goes down because all assets are cyclical, regardless of interest rate differentials. This is the perfect set-up going into tax loss selling season.

#25 TurnerNation on 09.28.15 at 7:12 pm

Stocks are “on sale” har har. Beep beep?

VRX – VALEANT PHARMACEUTICALS is the next Nortel moment, too large of Index.

#26 lala on 09.28.15 at 7:13 pm

As long as people have jobs they will work 1,2,3 jobs and they will not sell their house for less. In Canada, house is the life, Canadians have no life so I guess all they have is the house. Only a meteor it will crush the housing market in this wasteland full of wasters.

#27 conan on 09.28.15 at 7:16 pm

Anyone know the oil business? Could I go to this 7 billion dollar hole and claim salvage rights?

#28 lala on 09.28.15 at 7:17 pm

And I’m not smoking men, no offense SM, I think you are one of few sane people on this blog.

#29 Freedom First on 09.28.15 at 7:17 pm

Another Brad. Among the many house lusting moist virgins Garth has done a story on. Got me thinking today. being a free single man who never had kids, I have been afforded the luxury of being able to travel to different countries, ski and golf my brains out in world class places, and investigate the world. My travels have allowed me to see people who live in 3rd world poverty, with little or no chance of improving their lifestyle.

Sooooo, being born in Canada, and seeing what I have seen, it is disturbingly shocking to witness the entitlement/poor me attitude of so many Canadians who are obviously extremely ungrateful degenerates that are out of touch with the reality of the world.

A grateful attitude=Happiness. Simply follow the Principles of sound financial management and life will be fine. Kill your expectations and your wants or they will destroy you.

#30 betamax on 09.28.15 at 7:20 pm

#5 Nomen Nescio: “Charles Goodhart’s “Why the world economy as we know it is about to be turned on its head”

From the article: “Prof Goodhart says the coming era of labour scarcity will shift the balance of power from employers to workers, pushing up wages.”

Bwahahahaha. Good luck with that. Offshore, anyone?

#31 Jerry Bance, Future Conservative MPee on 09.28.15 at 7:23 pm

Don’t get too excited about this Mars news, blogdogs.

I’m a little embarrassed to admit it, but the salty water found on the red planet was mine. Let me explain.

I was there twenty years ago doing some contracting work for the Russians, redoing kitchens and the like for their cosmonaut apartments (Yes, they have been there since the 1970s – don’t be duped by the Western MSM!)

Anyway, the astro-toilet wasn’t working when I was there, so for a few months I had to pee in a cup and then throw it out onto the Martian soil, which is not very porous. So no wonder the stuff stays there for a long time.

Trust me, there’s no water on Mars.

Just a little bit of Jerry :)

#32 nonplused on 09.28.15 at 7:23 pm

Ha, ha, “Brad”. In the parlance of the of the millennials a “Brad” is a step dad. It was probably already in use because it fits Irish slang constructions quite well, but Green Day put it permanently in to the parlance in their Alt hit “Jesus of Suburbia”. “While the mom’s and Brad’s are away”. The slang works by rhyming the last word of a phrase. “Step dad” = “Brad”.

PS if you haven’t heard “Jesus of Suburbia” Google it and at least read the lyrics.

#33 Mark on 09.28.15 at 7:29 pm

“Goodhart sees inflation returning, cheap money ending (for at least a generation) and asset bubbles popping.”

How does inflation return if asset bubbles pop and cheap money subsides? These seem to be quite contradictory, at least in the short term, as the recession of cheap money would certainly truncate a large amount of consumer demand.

Of course, over the long term, if investment falls, inflation will return. But no sign of that. In Canada, the TSX constituents have been aggressive investors over the past 10-15 years, retaining 2/3rds of their earnings for that purpose.

“And you pedestrians are complaining about some drops in house prices.”

Glencore is a glorified middle-man. Their value-add in the whole scheme of things is minimal, and the markets are reverting the company to fair value.

Your other point, about picking up long-term infrastructure critical to the world economy at cheap prices is certainly well stated.

#34 So do what then in this Environment on 09.28.15 at 7:29 pm

#24 Rock Beats Paper

Tell us what your market bet is then and we’ll keep track of it if you are are so sure! Then we can all be rich like you!!

#35 BS on 09.28.15 at 7:33 pm

New Liberal ads on the radio today. Trudeau bragging he is the only leader that will run a deficit in coming years. The cornerstones of the Liberals plan are cutting the TFSA, increasing taxes and running a deficit. Last time I checked none of those things are popular with voters.

Jr. Trudeau is saving Harper a ton of money on attack ads. He is running them on himself.

#36 Keith on 09.28.15 at 7:36 pm

Garth, what’s your prediction for vancouver real estate in the coming year?

http://www.vancitybuzz.com/2015/09/vancouver-to-lead-all-canadian-cities-in-economic-growth/

#37 BS on 09.28.15 at 7:38 pm

Qatar’s $256 billion sovereign wealth fund — the ninth largest in the world — is a big investor in Volkswagen and commodities company Glencore.

Those two stocks have plummeted in recent weeks, potentially leaving the fund with a paper loss of $5.9 billion, according to Bloomberg’s Charles Stein.

And you pedestrians are complaining about some drops in house prices.

A loss of 5.9 billion on a 256 billion fund is nothing. The TSX 60 and S&P 500 lost close to that percentage today alone.

#38 common sense on 09.28.15 at 7:40 pm

Mr. Flop # 18

The sale on stocks has yet to begin…

#39 Bby604 on 09.28.15 at 7:43 pm

What does $44 oil or low potash and coal prices have to do with vancouver ? Or Toronto for that matter, I haven’t seen to many oil wells down on Granville, I’m fact an industry you fail to ever mention is actually resurging and breaking ground/ hiring on new projects is the forestry sector, it’s a huge driver in bc. You never talk about it. It’s not all about oil. Thanks for the post

#40 I am the Babblemaster on 09.28.15 at 7:43 pm

“He says rates are going from zero to their historic norm around 3%, and that this will help change the world.” – Garth

—————————————————–

All things considered, I just don’t know what to say. Except that I wish it were true.

#41 nonplused on 09.28.15 at 7:51 pm

PS don’t watch the video for Jesus of Suburbia if you are a boomer. The millennials and and Y’s and X’s have all seen it but the boomers will freak and forget to listen to the message. if you can find the song without the video it might be ok, find the song with lyrics but not the video. The video says too much about what the young think of the situations they find themselves in.

Green Day themselves are Gen-X, the prophet generation right now according to the book “The 4th Turning”.

“In a land of make believe, they don’t believe in me”

#42 common sense on 09.28.15 at 7:56 pm

Someone please help me with this. After all I only took Economics 101 my first year at Ryerson in 1980 and got a C..

Easy money and low interest rates have currently inflated markets to bubble heights…the bubbles burst and deflation “may” take place as supply exceeds demand and has to be sold…to the point that few are making investments, building creating less supply which in turn creates inflation…

#43 BS on 09.28.15 at 7:59 pm

As long as people have jobs they will work 1,2,3 jobs and they will not sell their house for less.

I guess your realtor didn’t tell you about job loss, job transfers, death, divorce or foreclosures all of which give people no choice but to sell. People in Japan, the US, Spain and every other RE bubble tried to hold on too with 3 jobs. There are always people that must sell and those properties are what sets the market price lower when there are few buyers.

#44 Nestor on 09.28.15 at 8:02 pm

Garth, what’s your take on this

http://www.canadianrealestatemagazine.ca/market-update/heres-why-calgary-should-escape-a-housing-market-crash-197051.aspx#.VgmwtbhENP8.facebook

It’s a real estate magazine. Duh. — Garth

#45 Mike T. on 09.28.15 at 8:02 pm

I promise that I’m right, I promise

the next time the central banks wreck the economy (looks like soon) people will be bailed out

it’s a trick

we have been set up and backed into a situation where people will pretty much gladly accept the conditions of the bailout, you won’t have another choice, or at least no other good choice will seem available

there might even be a magic show in the sky and EMF that makes people feel good

it’s a trick

pay attention to the sun, it’s evolving life in our solar system, ask me how I know!

#46 Rainmaker on 09.28.15 at 8:03 pm

Tried watching the Leader’s debate tonight, but only able to watch the first 30 minutes or so then the system got hung up. Tried rebooting my computer but still unable to reconnect.

Maybe too much interest and not enough bandwidth or maybe there is a problem with my service. No worries, likely not going to miss much anyway.

#47 Dominoes Lining Up on 09.28.15 at 8:03 pm

I’m not so sure at all about Goodhart, Garth.

Demographics arguments like his have been around for a long time. I remember well, how in the late 1980s, early 1990s, David Foot (Boom, Bust and Echo) promised Gen Xers that the day was coming soon when due to labour shortage they would finally get lots of upwardly mobile good jobs and be able to drive up their pay demands.

It never happened. Only some general ‘growth’ and explansion in the economy in the 1990s created any jobs, but they were already worse ones than the boomers lucked into in the 1970s and 1980s, and much less stable. The demographic candy store never opened up for the younger set, and many boomers have essentially been squatting on their upper tier positions since the 1980s.

Goodhart seems to presuppose that every other factor remains neutral, except for an ageing population.

But even this blog points out how many seniors will be struggling to stay employed to pay off debts, confounding his very thesis.

It’s worth keeping his views in mind for small sectors of the economy perhaps, but they don’t really tackle the issues of automation, outsourcing, immigration and climate change that will likely be much more dominant, nor does his scholarship rise to the level of Piketty’s when it comes to analysing the social forces behind wealth concentration.

As one critic of Goodhart puts it,

“The people who would most like Mr Goodhart to be right are probably mainstream politicians.”

http://www.economist.com/news/finance-and-economics/21667928-demographic-change-will-have-big-economic-impacts-greys-elegy

#48 Nagraj on 09.28.15 at 8:04 pm

#17 PORSCHE asks if stocks are suddenly rooting for a rate hike.

Old Money in the US, for example folks who live in homes inherited from their great great grandparents on Cape Cod or in Virginia’s horse counties . . . look at the yield on US paper and think these lower-than-a-snake-in-the-grass rates are somewhere between ridiculous and stupid.

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

GT: ” … our economy’s been in recession yet mortgage debt grows at three times the rate of inflation and five times the pace of income growth”
Obviously our own little “zombie apocalypse” proceedeth apace.
I don’t see how this collective insanity would morph into anything other than a socioeconomic (and political) crisis.

#49 Good Reads for troubled times on 09.28.15 at 8:05 pm

Everyone should read these two books:

Code Red by John Mauldin

The Demographic Cliff by Harry Dent

I think they have a lot in common with what Garth has been discussing the last few years.

#50 Bill on 09.28.15 at 8:05 pm

Hi Garth
You called me Naive! I laughed… I said keep lots of cash these markets are not done blowing out. Possibly a bear brewing and most likely. When she bottoms I will know.
Fasten seat belts folks! Wipe outs are great as it lowers risk…

#51 45north on 09.28.15 at 8:06 pm

Interesting juxtaposition, isn’t it? Oil collapses to $44 a barrel, our dollar tumbles below 75 cents US, financial markets shed blood over collapsing commodity values, our economy’s been in recession yet mortgage debt grows at three times the rate of inflation and five times the pace of income growth.

very frightening

so the Government will let you raid your RRSP to buy a house! And then the value of houses collapses. So what is the Government going to do? When you don’t pay back your RRSP in the allowed time, it’ll send you a tax bill. Or maybe it won’t send you a bill. You still don’t get your money back.

#52 For those about to flop... on 09.28.15 at 8:09 pm

#38 common sense on 09.28.15 at 7:40 pm
Mr. Flop # 18

The sale on stocks has yet to begin…

—————————
Point taken ,I was more thinking about next year.
I don’t do any quick fire purchases and so I miss out on a lot of bargains but I am not educated enough to rush into things and so for now slow and steady will have to do

#53 Smartalox on 09.28.15 at 8:13 pm

@Linda,

Having been through a few real estate corrections, I’ve seen how quickly fear can turn greed to panic. Much faster than the quarterly raising of rates, that’s for sure.

#54 Smoking Man on 09.28.15 at 8:15 pm

Quite a show down at the UN.

Obama looking Rediculos with his Barral bomb statement about Assad. Putin says, the entire refugee problem is your doing.

Now you need to read between the lines.

Obamas mentor, Kissinger has been publicly critical of US foreign policy of late. Especially when it comes to Russia.

Perhaps the old bastard realizes NutAndYahoo and his minions have gone to far. Pushed the limits to fast, to hard in the world of Internet fat checking.

I think regime change is about to happen to men behind the curtains that control the puppet strings.

If I’m wrong, ww3

#55 omg the original on 09.28.15 at 8:18 pm

This one in Saskatoon where two years ago there were bidding wars, flippers and a meme that it’s different here
——————–

OMG yes let talk about the mass delusion that has happened in Sask over the past 8 years.

I grew up in S’toon, and spent a few work years in Regina – let’s be cleaner – both cities are great, the people are great, and everyone is good at making a great time. But they ain’t San Diego or Victoria for that matter.

Both these cities have had the hottest small town RE market in Canada over the past decade.

Prices in and around these cities have doubled or tripled in the last decade.

I have twenty something nephews and nieces that consider $450-$550k a reasonable prices for a three bedroom starter home. $450-$550k!!!!!!!!! All of course with $40-50K of seed capital from Mom and Dad. And every last one of them works for government or organization funded by government.

Prices on new build condos in these prairie towns rival condos in the ‘burbs of Victoria. You can buy a cheaper house in Victoria’s Bear Mountain than in the new subdivisions of Regina/S’toon (ok the prairie homes will have an unfinished basement, Bear Mountain homes will be on a slab).

Let’s not even bother to compare Regina S’toon prices to say London Ontario, Austin Texas, Sacremento, Portland……….the list goes on.

And these crazy prices in cities where the only building constraint is the bureaucracy of converting another few hundred acres of farmland to subdivision.

The kicker was when I had heard one of my nephews bought a place in the mid $400 30 minutes from the edge of S’toon in a town of 800. Corner Gas livin’.

The answer I always got in the past as to what was driving this was
– Saskatchewan is where the jobs are.
– Expat Saskachewanians are returning for the cheaper housing and better job prospects.

So the housing ain’t so cheap anymore (actually hasn’t been for 8 years now)……

……..and about those job prospects??

But maybe I am missing something, I sure hopes for the sake of my relative there.

#56 For those about to flop... on 09.28.15 at 8:26 pm

#39 Bby604 on 09.28.15 at 7:43 pm
What does $44 oil or low potash and coal prices have to do with vancouver ? Or Toronto for that matter, I haven’t seen to many oil wells down on Granville, I’m fact an industry you fail to ever mention is actually resurging and breaking ground/ hiring on new projects is the forestry sector, it’s a huge driver in bc. You never talk about it. It’s not all about oil. Thanks for the post

———————————————–
Don’t forget about tourism,we just had a record summer and also the milder winter weather is making the Couv more livable.
I don’t see any cooling in the r.e market here any time soon.
My wife would have strangled me to death before I will be able to afford a house here.

#57 John on 09.28.15 at 8:50 pm

Nobody escapes. And that means all debt, for whatever reason, especially debt payable in US dollars, is gonna hurt real bad. About the $800,000 mortgages in Mississauga. Greater fools are still piling in…….try $1.2 million down the street. And the other way…. the love it or list it truck was parked for weeks in July. Looks like the Wyle E.s will stay nuts until they hit the canyon floor. Before or after we get to vote.

#58 Tim on 09.28.15 at 8:52 pm

You can blame all this on Stephen Harper. As well as our diminished international reputation:

“Leaked internal report warns of Canada’s declining world influence.” Globe & Mail.
http://www.theglobeandmail.com/news/national/leaked-document-says-canadas-world-influence-has-declined/article26556418/

“Foreign Posturing: How does Harper’s foreign policy stack up?” The Harper Decade
http://www.theharperdecade.com/blog/2015/9/27/foreign-posturing-how-does-harpers-foreign-policy-stack-up

#59 Leebow on 09.28.15 at 8:52 pm

They say Mr. H burns candles fixing and rehearsing his speeches. Do you really think he’d utter something stupid? Who wants to hold the hot pomme de terre?

#60 Fiendish thingy on 09.28.15 at 8:54 pm

Should Harper win, I predict he will not serve his full term, as the economic chickens will come home to roost, and he’ll have no one to point the finger at but himself.

#61 Suede on 09.28.15 at 8:56 pm

Wages are rising people.

Public sector wage freezes have been lifted in BC. Let the good times roll and catch up to asset prices.

Going to have to recalculate the house price to income ratios.

Everyone assumed the prices would come down… Incomes are going up, sad to say.

#62 David W on 09.28.15 at 8:56 pm

Hey everyone, any insight on the Ottawa market? Is it overpriced or a safe bet?

#63 Leebow on 09.28.15 at 8:56 pm

Smoker, Putin doesn’t have vision and has no end game. In one (a few in reality) swift move he created more problems than he really had to. Now it’s all firefighting. From Kissinger’s perspective, you gotta let Putin play and he’s gonna do your job better than you could dream of.

#64 Kurt on 09.28.15 at 9:04 pm

“So just imagine the futility of producing oil by scooping tons of frozen dirt out of the tundra, cooking it in billion-dollar ovens…”

Garth, stick to things you know. The “scooping” operations are in the best shape, and they don’t put it in ovens, they stir it with warm water and surfactants and scoop the froth off of the broth.

What is really getting kicked is all the SAGD stuff. These are also the operations that are most at risk of whatever comes out of December’s chin-wag in Paris, which if China and the US come to some sort of agreement will torpedo Alberta’s economy for the foreseeable future – no socialism required!

Actually I know how the stuff is produced. But my description was funner. — Garth

#65 Lea on 09.28.15 at 9:05 pm

#61 Suede

Here in Vancouver it is a 10:1 ratio, even if incomes increase a 9:1 ratio is still way out of whack for house prices.

#66 GeorgeSoonToBeRetired on 09.28.15 at 9:10 pm

Prairie house prices will have a long way to drop, I think.

I remember friends who bought in the 1990s there.

One bought an older condo, midtown Winnipeg in 1992. It was $25,000.

Another bought a house in Saskatoon, just a few blocks from the Delta hotel, 1998. It was $40,000. Lovely and liveable fixer upper.

Anything in these areas over $200,000 today has to be at risk for a major correction. The long term price trends just don’t support such valuations. And it sure ain’t Toronto or Vancouver there.

#67 Another Albertan on 09.28.15 at 9:11 pm

For what it’s worth…

A year ago, I had a contract field tech refuse work from me because $105/hr plus uplifts and expenses was not enough to be competitive.

I just found out the same contract field tech hasn’t worked since May and is willing to work for $35/hr plus uplifts and expenses.

That’s right. One-third of last year’s rate.

Everyone else’s mileage may vary.

#68 Ronaldo on 09.28.15 at 9:15 pm

Here is an example of what real estate has done in North Vancouver over the past 45 years and in particular over the last couple of years. This unit is identical to the one I purchased in this complex in December 1969 for grand total of $20,800. Two years ago an exact unit was listed for $459,000 and now $685,000, a gain of $226,000 of 49%. Is that a bubble or what?

http://www.northshorerealty.ca/listing/v1137697-837-old-lillooet-road-north-vancouver-bc-v7j-2h6/

#69 MF on 09.28.15 at 9:30 pm

#10 Retired Boomer – WI on 09.28.15 at 6:24 pm

“Hey, you don’t lose idled cash now do we? You CAN and HAVE lost invested money.
As for my RE the only stuff I own besides my home is a REIT that is doing better than the markets, so are the utilities, and some of those dividend paying stocks, but not all of them.”

Yeah it hurts to be down so much but I take comfort in knowing you only technically lose the money if you sell.

Which REITs and utilities do you have if you don’t mind me asking? My REIT (ZRE) is down since April along with everything else.

#17 Porsche on 09.28.15 at 6:52 pm

Yeah bizarre isn’t it? Large of articles on Bloomberg, CNBC etc. about the market waiting for rate hikes.

Can’t come fast enough. So tired of seeing red red red on my iphone. Been months since anything has been green.

#25 TurnerNation on 09.28.15 at 7:12 pm

I know individual stocks are a bit of a no no according to Garth, but what are your thoughts on TCK? Looks beaten down with huge upside potential if the commodity market improves.

What about Suncor? It’s down but not as down as the others. Also some decent upside potential if oil recovers.

MF

#70 To the limit | Realties.ca on 09.28.15 at 9:34 pm

[…] Source: http://www.greaterfool.ca/2015/09/28/to-the-limit/ […]

#71 Bill on 09.28.15 at 9:43 pm

I don’t get to the blog much but when I do I enjoy reading a lot of comments.
Is it me or we pushing on a string on almost everything!!? Even the Black Swans are landing. (Volkswagon)
The regime doesn’t not want things to change. The system is a pozi scheme. If we are not burning gobs of oil, spending ourselves into oblivion taking on debt the system starts to implode…Its a mad world..
Speculators running around like mad men bidding up houses…NUTS!
Bring on a major crash…Id love to see it. We CANNOT fix the problems today with the tools we used to create them. Things need to change BIG TIME….
I can change! I bought and electric and love it!
http://jugglingdynamite.com/2015/09/28/even-more-reasons-to-move-to-electric-cars-as-if-we-needed-more/

#72 SWL1976 on 09.28.15 at 9:48 pm

How do the country’s political leaders help to prepare citizens for the inevitable? You bet. Harper increases the RRSP-for-downpayment plan and brings in a permanent hot tub tax credit. Mulcair backs CREA to eliminate capital gains taxes for guys buying rental suites. Trudeau will let people drain retirement savings, tax-free, to purchase a house every time you have a life event.

Sad isn’t it?

But just goes to show who’s side they’re really on. I know not the politics you know Garth, but sadly what I see is good people like yourself getting punted, while the slippery one’s keep on, keeping on.

Perpetuating their existence to an unjust system.

Without major change on many levels things are destined to get worse.

Much worse.

#9 Nosty, etc.

Not necessarily slaves, but both correct and I have long said CANAMEX would eventually be one country.

Ahhh, and then alongs comes thee… Amero. What I like to call the Camaro of money. It just seems to have that no respect sort of appeal.

Much like a Camaro driving thief

disclaimer, not all people who drive Camaro’s are thieves, nor do all thieves drive Camaro’s.

While there is no shortage of interesting things happening in the world these past few days; I have been much more concerned with one footed tables and crabapple hits.

It was a nice needed break from the madness that is or modern world, but time to check back in, to see just how this demented plan is unfolding.

Thanks all for your contributions

#73 Investorz on 09.28.15 at 9:49 pm

Today the stock market reminds us once more that owning a mortgage is better for the many, because they can’t stomach paper losses.

Charts are broken. The number of TSX stocks below their 200 day moving averages is stunning.

Valeant, the biggest holding in your TSX index ETF is down 16% today.

Concordia, the second biggest pharma, is down to $57 from a high of $110.

Margin calls are definitely happening, many are panic selling. Some stocks get no bids, like CXR which fell hard again today (-25%).

Now watch out for systemic risk that will come out of all those material companies getting murdered.

Drama queen, much? Corrections are normal and healthy, and coming to some houses near you. — Garth

#74 Prairiedog on 09.28.15 at 9:52 pm

If the rule is buy fear, shouldn’t we be buying maple all the way down? Assuming a long holding period.

#75 dramaqueens on 09.28.15 at 10:03 pm

#73 Investors

Drama queen, much? Corrections are normal and healthy, and coming to some houses near you. — Garth

—–

Alright.

Why is the daily drama about one particular asset class then?

#76 eddy on 09.28.15 at 10:07 pm

Now here is a politician with guts!

https://www.youtube.com/watch?t=1046&v=MQ9lLUuU6i4

#77 Brad on 09.28.15 at 10:11 pm

Freedom First – maybe you should share some of that travel, ski and golf money with the 3rd world. Or would that cut into your expectations and wants?

Waiting for the right time to purchase is sound financial management as is teaching my child that we are not intitled to anything.

Enjoy your world class travels!

#78 MF on 09.28.15 at 10:16 pm

#34 So do what then in this Environment on 09.28.15 at 7:29 pm

Two weeks ago I added a commodity index since I thought commodities wouldn’t go lower than 2009 lows. I was wrong lol but yeah that was my strategy.

#35 BS on 09.28.15 at 7:33 pm

It’s hilarious. I actually think the con attack ads have slowed down because of this.

#54 Smoking Man on 09.28.15 at 8:15 pm’

“Perhaps the old bastard realizes NutAndYahoo and his minions have gone to far. Pushed the limits to fast, to hard in the world of Internet fat checking.”

Tired logic.

What about the Saudi’s? Think they are happy about Obama getting cozy with Iran? No strings being pulled there though according to you though eh?

Maybe Kissinger is echoing the sentiment of a lot of Americans who are unhappy watching other countries walk all over them diplomatically.

MF

#79 MF on 09.28.15 at 10:17 pm

#58 Tim on 09.28.15 at 8:52 pm

Then if our “reputation” is so tarnished why is the “international community” still asking us for foreign aid at every stop and why are there thousands of refugees dying to come here from all over the world?

Please. It’s just like the US, who everyone always criticizes – and then always runs to as fast as they can in times of economic stress or threats to their security. The US realizes this and doesn’t care. They are smart.

As for that article, nothing but a political attempt to erode at Harper’s support. It mentioned Canada’s reduced peace keeping. I agree with this policy TBH. Peace keeping does not work (Remember Rowanda?). We got criticized and blamed for the horrible genocide that occurred there. We got more flak than thanks for trying to help.

Lol and even after years of that good will, we lose the attempt at a seat simply because of our support for Israel. Goes to show you how pathetic the UN really is (and who the majority of the countries there are). Good. I’m glad we didn’t stoop and pander to a bunch of third world dictatorships that hate the west anyways. Should we really care what they think? No.

My GF had two countries as her ultimate goal to come to: Canada and the US. She said everyone she knew is like that as well. She’s from the Philippines. She is like millions and millions of people around the world.

Doesn’t seem like our reputation is too tarnished to me.

Bottom line is we have the resources that everyone needs. I think they should be worried about being on our good side, not the other way around.

MF

#80 Tony on 09.28.15 at 10:22 pm

Re: #26 lala on 09.28.15 at 7:13 pm

All it takes is a mere handful of idiots to sewer an entire real estate market in a given city. Hundreds of houses condos and townhouses in Edmonton are already listed 20 to 30 percent below what they were at the start of THIS year

#81 dudlerona on 09.28.15 at 10:22 pm

Garth

This is a public service announcement….quartz is the new marble……somehow I think the realturds will still somehow convince the great unwashed sheeple why they should pay more for it….

http://www.popsugar.com/home/Why-Quartz-Countertops-Hottest-Kitchen-Trend-37147246

#82 Bill on 09.28.15 at 10:23 pm

There’s not a whole hellava lot to be bullish on Canada. Better to buy the sell off in the US.
Garth When does a correction become a bear market for you?!
Cash is King and I mentioned that a few times.
Reits and good Quality DIV payers holding up the best. Thats all I’m owning dees daze

#83 Suede on 09.28.15 at 10:31 pm

#65 Lea

Ask anyone that just bought real estate in Vancouver if they heard of or considered that ratio before buying.

Find me anyone that’s meets that criteria and I’ll give you a link to a secret money making article on greaterfool.ca

#84 Edward on 09.28.15 at 10:35 pm

“Liberals release budget plan – now they need to hope no one reads it.”

http://news.nationalpost.com/full-comment/kelly-mcparland-liberal-release-budget-plan-now-they-need-to-hope-no-one-reads-it

#85 Doug in London on 09.28.15 at 10:40 pm

@Investorz, post #73:
Owning a mortgage is better for the many, because they can’t stomach paper losses you say? What rubbish! Yes, my stocks, REITs, and ETFs are down (although some are still above what I bought them for when ON SALE) but none the less they hum along night and day, 365 days a year and 366 days in a leap year, paying out dividends and distributions. You don’t really lose any money unless you sell in this cheap environment. So what do you do? You hold, or better yet, buy even more! I’ll take having stocks, REITs, and ETFs any day over the ball and chain of a mortgage. Oh, that reminds me, more dividends and distributions are coming my way on Sept. 30!

#86 dudlerona on 09.28.15 at 10:41 pm

Garth,

I notice the electric socket beside the pooch is crooked…such shoddy workmanship…..

#87 Mark on 09.28.15 at 10:45 pm

“All it takes is a mere handful of idiots to sewer an entire real estate market in a given city. Hundreds of houses condos and townhouses in Edmonton are already listed 20 to 30 percent below what they were at the start of THIS year”

“idiots”? How so? Wanting to price their houses for rapid liquidation, so one can take advantage of less expensive assets in the marketplace is ‘idiocy’?

Seriously…

Just like as with stocks in margin accounts, if one is so highly dependant on the price of an asset being high – perhaps artificially high, to maintain the debt — one is already in serious financial trouble. Even if they are, at least for the short term, oblivious to such. The thing about houses, as opposed to those stock margin accounts, is that it is almost impossible to have negative equity in the latter, while the former can trap one in a debt spiral for which the only realistic extrication is filing for personal bankruptcy.

#88 Freedom First on 09.28.15 at 10:50 pm

#77 Brad

Brad. I guess you don’t know who I am. Everybody know I live by 2 rules. 1) Look after myself. 2) Help others.

Brad. Show some respect, you idiot.

#89 Freedom First on 09.28.15 at 10:51 pm

Freedom First-last Post

knows

#90 Russ on 09.28.15 at 10:57 pm

#41 nonplused on 09.28.15 at 7:51 pm

PS don’t watch the video for Jesus of Suburbia if you are a boomer. The millennials and and Y’s and X’s have all seen it but the boomers will freak and forget to listen to the message. if you can find the song without the video it might be ok, find the song with lyrics but not the video. The video says too much about what the young think of the situations they find themselves in.

Green Day themselves are Gen-X, the prophet generation right now according to the book “The 4th Turning”.
“In a land of make believe, they don’t believe in me”
==============================

Hey non,

I didn’t take your advice and went looking for the video.

Cool. It’s sorta like the 70s but with more black makeup.

Check out ” A Clockwork Orange”, one of my fave Kubrich movies.

Link to vid so other old guys don’t need to go looking:
https://www.youtube.com/watch?v=SA8v3B1SxR0

#91 squidly77 on 09.28.15 at 10:57 pm

Now that I’m completely healed from a near fatal car accident in July of 2012, I feel like posting again. New blog coming soon soon.

So, here we are in the free province of Alberta or what was a free province stuck with a NDP/Saskatchewan government.

The CCF, Social Credit or what ever you choose to label socialism. Its not the Alberta way. Or the Canadian way. Google left out, see what they are all about.

http://www.amazon.ca/Left-Out-Saskatchewans-Relentless-Mediocrity-ebook/dp/B004CLYO96

Then read where some Pigs are more equal than other Pigs.

https://en.wikipedia.org/wiki/Animal_Farm

#92 common sense on 09.28.15 at 11:03 pm

S&P within only 14 points of it’s Aug 24 low as of today..

China down another 1.5% as of this post…

Cash IS king or enjoy buying Bear ETF funds….

Down goes Frazier!

#93 The American on 09.28.15 at 11:06 pm

I’ve never seen so many people full of conspiracy theories and idiotic predictions about the North American markets, currencies, and state of their own economy and real estate. Instead, everyone chill the f*ck out. Mow your damn lawns, and sit the hell down. Get on a moped and head toward downtown for a little ride. Listen to Macklemore’s and Ryan Lewis’ Downtown. Peace out. Imma head to bed now. Splitting headache and nasty cold.

https://www.youtube.com/watch?v=JGhoLcsr8GA

#94 Retired Boomer - WI on 09.28.15 at 11:10 pm

#69 MF

I think you might have mis-read my post. I stated my REIT and utilities are not down as far as the market (true).

For the record the REIT is VNQ off about 4.3% YTD, utilities is a bit more complex,. the ETF is VPU but my initial position was bought for the low $80’s added to it when it was in the higher 80’s earlier this year this year it is down about 7.5% if you bought in in early 2015.

Overall, wish it was all better news here. This is temporary no matter how long it lasts…

#95 Plunging markets and neckline on 09.28.15 at 11:12 pm

My friend owns a condo in Edmonton. She’s considered selling it many times since moving to Toronto but she can’t get what she paid for it five years ago so she rents it out. Well the latest is bedbugs. The building is infested, tenant saw one in her unit and skipped out immediately. Now she has no tenant and it will be even harder to sell. Good thing she just bought a house in Oakville.

#96 Bottoms_Up on 09.28.15 at 11:27 pm

Inflation good, makes debts easier to pay.
Inflation bad, increased rates will lower house prices.
What is the balance of these two…can they co-exist?

ps. Garth, as an investment guy I understand your viewpoint on oil. But low oil prices are perhaps THE BEST thing that could have happened for allowing Canada to reduce carbon emissions. Now if the conservatives had only focussed on climate change initiatives, then yes the low oil prices could be seen as a disaster. But there is a golden lining in this low oil cloud, it is time we stop robbing our future generations of the climate they deserve.

#97 TurnerNation on 09.28.15 at 11:30 pm

Fortress…fortress. Where have I heard that name before.

http://www.cbc.ca/news/canada/manitoba/skycity-developer-s-attempt-to-save-a-troubled-condo-project-in-barrie-fails-1.3247921

While Fortress Real Developments was busy pre-selling suites for its SkyCity condo development in Winnipeg last week, it was also struggling with a financing deal that was falling apart in Barrie, Ont.

Fortress ran out of time to complete a deal with Laurentian Bank of Canada for the purchase of the partially-built Collier Centre in Barrie

​Fortress lost its deposit of $1.7 million when the sale fell through

#98 TurnerNation on 09.28.15 at 11:31 pm

Oooh. Same web site branding.

http://fortressrealdevelopments.com/the-team/

http://fortressrealcapital.com/why-fortress/

Ahh.

#99 Leo Trollstoy on 09.28.15 at 11:36 pm

Goodhart sees inflation returning, cheap money ending (for at least a generation)…

Inflation is definitely going to be the issue going forward.

Especially in Canada.

http://wolfstreet.com/2015/09/23/retail-prices-in-canada-jump-the-most-in-over-10-years/

#100 Bottoms_Up on 09.28.15 at 11:44 pm

#62 David W on 09.28.15 at 8:56 pm
———————————
Type in CMHC housing statistics and you will find all sorts of information.

Ottawa is a fairly stable market. There are 150k+ government jobs (municipal,provincial,federal) and approximately 540k employed. Housing is a little expensive, but it is hard to envisage a hard correction here unless we get severe austerity. And as always, housing type and location is important. I would avoid condos unless you get something reasonable relative to rent. Rents are high here.

#101 Nosty, etc. on 09.28.15 at 11:54 pm

#45 Mike T. on 09.28.15 at 8:02 pm — “pay attention to the sun, it’s evolving life in our solar system, ask me how I know!”

Hey Mike. Most here (not the funnymenalists) realize the sun and life is evolving, the sun is withdrawing but please tell us more!
*
SMan, exc. link. It appears these psychos are running the world (into the ground). Not sure if there will be much to pick up later. New role for women?
*
What CBS edited out of Putin’s interview; More A21-30 stuff Can’t camp on one’s own property; Secessionists Looks as if Spain will have a messy divorce from Catalonia.

#102 whitehorn on 09.28.15 at 11:56 pm

#80 Tony, “All it takes is a mere handful of idiots to sewer an entire real estate market in a given city. Hundreds of houses condos and townhouses in Edmonton are already listed 20 to 30 percent below what they were at the start of THIS year|”

Yes, I agree the massive correction in oil with all the spinoffs will have big implications in AB. I also believe house prices rose to quickly in a short period of time. You could buy a well built detached house in Edmonton for 140ish in 2000, now the same house is 400k. The “known” layoffs of 35000 people in the province oil related has only started. This probably does not include many small companies that let people go and are not counted in those numbers. I’ve seen some oil towns i.e. Drayton Valley area where 2/3 of some companies equipment are not working, and have talked to several business that are facing “tough times”. In fact, it is becoming a rarity to see heavy equipment being hauled on the highways, which was extremely common a year ago. The oil industry will eventually turn but the outcome will look a lot different and investment will noticeably tighten. It has been noted that the oil sands downturn in 1987 took at least a decade for investment to return. I can’t see this time being any different i.e. Shell pulling out of the Artic after sinking 7 billion in the hole. I just can’t see real estate increasing in price and prices will have to decrease noticeably. The one thing I see as a positive afterwards, more people will be able to afford and this will fuel the next oil boom in AB similar to 2003-2007. This is likely to be at least 10 years down the road, unless other industries in AB i.e. agriculture, forestry fill the void.

#103 betamax on 09.28.15 at 11:58 pm

#62 David W: “Hey everyone, any insight on the Ottawa market? Is it overpriced or a safe bet?”

Seems a safe bet compared to other Can cities. Didn’t go as high, won’t fall as low. I’ve heard that the rental situation there is dismal (lot of old buildings w/ minimal amenities), so anyone who wants a decent place should consider buying. YMMV.

#104 Bill on 09.29.15 at 12:00 am

A good piece from a trusted source. A bear it shall be..
http://www.mcoscillator.com/learning_center/weekly_chart/bund_spread_gives_permission_for_bear_market/

#105 Vundo on 09.29.15 at 12:20 am

#75 dramaqueens: because the obsession is so pervasive. It is one of those weird things that you don’t notice when you are not looking out for it, but suddenly when you are paying attention it is everywhere. People talking about their houses nonstop. Clinging for dear life to jobs they hate just to make the mortgage payment. Disastrous levels of stress during a divorce. If this blog was just about a bunch of finance mitutiae that nobody else other than professionals in that field cared about I would not follow it or care. But it is not just about investment returns. The RE bubble distorts lifestyles and culture. I care not because I am rich and take pride in the maximisation of my huge wealth. I care because I want to live a good life and not be enslaved by debt. When I put it that way it sounds easy, but it’s hard when you see so many of your peers bragging about their condos and getting congratulated on their “good investment.” It takes energy to swim against this current. Reading this blog helps.

#106 china backed developments on 09.29.15 at 1:02 am

http://www.vancouversun.com/business/real-estate/real+estate+developers+shrug+flood+chinese+cash/11357100/story.html

lots of money from asia

#107 cynically on 09.29.15 at 1:11 am

#s 58 and 79 — Canada’s diminished reputation and declining world influence are a figment of your imaginations. Are you living in the real world? Apart from and since the heroic efforts of Canadians in the second world war, Canada has always been propped up by its mother country, Britain, and its good neighbour, the U.S. We only appear at Groups of Seven or whatever because they want us there for support. We don’t deservedly belong with the big boys but the optics of it fools the masses and helps the politicians in power. Had we opened our immigration at the turn of the 19th century like the Americans did we would be a far different and stronger country today and what you say would have some merit but we were British and the rest is history.

#108 Nagraj on 09.29.15 at 1:11 am

#95 PLUNGING MARKETS AND NECKLINE: may I suggest that the (presumably enormous) bedbug your friend’s tenant actually saw – wasn’t a bedbug per se but a Franz Kafka? So no wonder she went skidaddling outa there screaming at the top of her lungs! (She was still screaming mindlessly when apprehended by police on the outskirts of Edmonton.)
And of course that bug-infested fifty-five year old condo is even harder to sell now, because where there’s one Franz Kafka, there’s . . . [If Franz Kafka don’t ring a bell, ask GODTH.]
But how did Oakville get into your drama? She shoulda bought a house in Herkimer, NY, and enjoyed the historic cheese they have there.

– the discussion re drama – re #73 and #75 – is utterly meaningless, eh, in the light of the talent of #95, couldn’t have done better m’self

By the way, #95, is it true we have a bearish downward sloping neckline on one of the major indices? [Do you also, like me, enjoy Buster Keaton and Fatty Arbuckle movies?]

#109 Charles Ponzi on 09.29.15 at 2:43 am

The real estate bubble is a reaction to a problem created by the government. Bailing out banks and transferring the debt to the taxpayer will no doubt be the forced ‘solution’ should house prices crash. Our psychopathic politicians are only too eager to betray us for personal power and wealth.

The government’s sole purpose is to serve itself. There is very little evidence as far as I can discern that any government on this planet gives a shit what happens to its own citizens. One only has to look with horror at what is happening in Europe at the moment with the uncontrolled massive invasion of refugees and migrants. There are no winners here apart from unelected EU leaders who will probably declare a State of Emergency once the inevitable violence and rioting escalates.

Those who seek absolute power have created this global refugee crisis with their endless wars. These are the same people who have created the global debt crisis and environmental degradation of the planet through a fixation on endless growth and low interest rates. By constantly meddling, governments have prevented recessions and necessary corrections at the risk of destroying the whole financial system.

As we become traumatized by one crisis after another we lose the ability to think clearly and critically about global events. When we see everything in isolation and focus solely on micro details we seem to lose the ability to state with any confidence that two plus two is four.

The real estate bubble makes me feel confused, angry and hurt. I am grateful, however, that I am not personally involved in any war. While housing is expensive, I do have safe shelter. I can walk the streets where I live with little fear of violence. I have clean water to drink and more than enough food to keep me healthy and fit. I have no debts nor pending financial worries.

For the moment I can bury my head and pretend that two plus two does not equal four and that the current global debt crisis will resolve itself peacefully without causing any harm to me or my loved ones. Unfortunately, reality has a nasty habit of catching up to us.

#110 Londoner on 09.29.15 at 4:09 am

“Makes sense, at least to Charles Goodhart, a top dude at the London School of Economics and former big whiz at the Bank of England”

And the current big whiz at the Bank of England, Andy Haldane, says that the UK should consider radical action including further rate cuts and additional quantitative easing. But only one of these two people gets to vote at the MPC meetings and therefore only one of their opinions matter.

#111 I'd Rather Not Say on 09.29.15 at 6:07 am

Your RSS feed stopped updating last week. Just FYI.

#112 Great Canadian Bubble Co. on 09.29.15 at 6:14 am

Assuming all three parties are happy to keep the party going, what is there to stop them? We seem to be living in a Canada where Canadians are willing to eat in soup kitchens so long as their ‘home equity’ keeps going up.

#113 ANON on 09.29.15 at 7:02 am

#71 Bill on 09.28.15 at 9:43 pm
Bring on a major crash…Id love to see it.
Trust me, Bill, you won’t love it, your feelings about it will be quite the opposite of love.

We CANNOT fix the problems today with the tools we used to create them. Things need to change BIG TIME….
We cannot fix the “problems”, period. The “problems” are simply human nature, which is by definition what created the “problems” in the first place. The most obvious evidence no one could fix them, now or in the past, is that they would have fixed the “problems” if the “problems” were fixable. You can only accept the ways of the world, and surf the wave down.
Things WILL change big time, just not in the direction most are hoping.

#114 westcdn on 09.29.15 at 7:13 am

Yeah, I hear it all the time, put your money offshore and bet against Canada. I am not leaving and, in my own way, will try to make Canada better than most. I put most of my investments in Cdn companies and screw the rest of the world. As long as I have not to depend on handouts, I am happy.

Remember, I am a contrarian and an introvert. I am not out to make my ass bigger – I want Canada to be more equal but come to Canada be prepared to live with lousy winters. I came from Vancouver to live in Calgary. It is not a move I regret. You want a tough winter – come to the prairies. The land makes the people. So SM – fu.

#115 Charles Ponzi on 09.29.15 at 7:33 am

Destroying the world is perhaps easier than you think, but it takes a lot of patience. We’ve been on this road to destruction for a long time.

http://www.fdrpodcasts.com/#/3085/how-to-destroy-the-world-a-recipe-for-disaster

#116 Chris on 09.29.15 at 8:05 am

In Canada, we are already slaves of big corporations, which are becoming more and more American owned, and the public servants (including crown corporations) that we hire to serve us supposedly. Everybody is out to gouge as much as they can and tax is too high. That is why Kijiji is popular and there is significant amount of underground economy.

#117 TurnerNation on 09.29.15 at 8:14 am

As I always say. First World Countries get economically bombed.

Germany – a favored target, if not war reparations or communism bringing to knees – Largest car manufacturer in the world destroyed now; communism and loss of property taking over. They used migrants for this: just search google news:
germany + migrants property

Japan got nuked – again – using a “Tsunami” this time.

Canada? All oiled out. Combined with an attack on our culture and values. Anything goes now. It’s become law. You protest it, you will lose your job and place in society.

If you remember one thing, there is a plan and there is a timeline. Iceland was first. Economy destroyed, a nice homogenous test bed. All simulated by super computer.

There is a plan and there is a timeline.
It’s FAST moving now. Daily our world leaders/actors are on stage telling us how it will be.

#118 TurnerNation on 09.29.15 at 8:17 am

Our culture…

http://www.cbc.ca/news/canada/edmonton/edmonton-police-see-sharp-rise-in-violent-crime-chief-says-1.3247515

“With oil prices down and unemployment on rise, Edmonton has seen a sharp increase in property crimes and violence, says police Chief Rod Knecht.

So far this year, violent crimes are up 12 per cent and property crimes up 18 per cent, the chief said.

“We almost saw a switch being thrown. In November of 2014, we saw a spike occur, and it has continued on since then.

“When oil is up, we’re busy. And when oil is down, we’re really busy.”

Assault numbers are up and so are cases of domestic violence.”

#119 avenirv on 09.29.15 at 8:33 am

@nosty
“It is commonly known that things happen in threes. Napoleon and Hitler both made the same mistake — invading Russia in the fall. By the time their soldiers were there, it was winter and both lost. If Obama follows suit (orders from the CFR), he will be #3.”

some very small corrections:

even in 1941 the day of 22 June was not in the fall.
even in 1812 the day of 24 June was not in the fall.

BUT, if russia is considered to be near Australia then the month of June, MAYBE, may be considered as a fall month.

#120 Catalyst on 09.29.15 at 8:41 am

Listening to traders and financial market experts is like going to your bookie to get some insight on the upcoming football games. They will tell you what they think will happen based on logical reasons but they don’t know anything for sure.

#121 Bottoms_Up on 09.29.15 at 8:49 am

#117 TurnerNation on 09.29.15 at 8:14 am
—————————————
Allowing a religious person to wear a piece of clothing, thus allowing them to practise their religion, is not an attack on our values. In fact, that is one of the unique and defining characteristics of Canada and being Canadian, we welcome and celebrate diversity.

#122 NoName on 09.29.15 at 8:57 am

Interview with a guy who “invented” batman ears and camel toe. 25min ted talk.

https://www.youtube.com/watch?v=U5kIdtMJGc8

#123 Luc on 09.29.15 at 9:09 am

Economist Mariana Mazzucato, author of The Entrepreneurial State, supports a Trudeau approach. Check out the interview on TVO… http://tvo.org/video/programs/the-agenda-with-steve-paikin/mariana-mazzucato-elections-and-economics
What do you think?

#124 Edward on 09.29.15 at 9:18 am

http://www.bnn.ca/News/2015/9/29/Household-debt-rises-at-fastest-pace-in-nearly-three-years.aspx

#125 Godth on 09.29.15 at 9:20 am

Patrick Wood: Technocracy Rising Interview (Part 1 of 3)
https://www.youtube.com/watch?v=wNkDiBOO4H0

#126 Mf on 09.29.15 at 9:35 am

#107 cynically on 09.29.15 at 1:11 am

I don’t think you read my post.

#94 Retired Boomer – WI on 09.28.15 at

Yeah I know it is temporary. This is my first correction. It’s amazing how paranoid everyone is. You can see it here, lots of folks talking about the end of the world lol.

There is some fear that the recovery is not real and that market evaluations are all false, artificially driven up by QE and ZIRP.

I too, think this will pass.

Mf

#127 Edward on 09.29.15 at 9:42 am

“Goldman lowers S&P forecast for year end and us gdp growth for next year.”

http://www.cnbc.com/2015/09/29/going-down-goldman-cuts-forecasts-for-sp-500.html

#128 Daisy Mae on 09.29.15 at 9:52 am

#4: Three fresh faces? Might work for awhile, but, as always….”Power tends to corrupt, and absolute power corrupts absolutely.”

#129 Mf on 09.29.15 at 9:56 am

#94 Retired Boomer – WI on 09.28.15 at

If you buy a US reit like VNQ and live in Canada, do you get the interest payments in USD?

Mf

#130 Calgary Rip Off on 09.29.15 at 10:03 am

Last time I checked, houses in the NW where I live are now valued $100K over what I paid in 2011. That was a ripoff then and still is now. It’s all pathetic really. Renting and mortgage owning-all a ripoff. The only reason to live in Calgary is good place to raise a family and nice mountains to look at. Between the housing cost and revenue collecting cops, taxes, stupid people, its all a virtual colonoscopy, from start to finish.

And here this blog is saying that Calgary is experiencing a decline. Where? Are prices corrected to 2004 levels? No? Then shut up. I dont want to hear it because some realtors arent selling as much. Calgary is not the place to be if you want to sell real estate. Go to Los Angeles or New York City.

It isnt as bad a Vancouver-yet. Still you can get a place for about the same as rent. So the factors are job stability and whether you are retiring soon.

Nice to see Squidly back in the NE of Rundle. Yet to hear that Calgary prices will now drop to 2004 levels in his blog.

#131 AZ_xdisciple on 09.29.15 at 10:06 am

TurnerNation: “Daily our world leaders/actors are on stage telling us how it will be.”

You don’t know the half of it. Or maybe you do. Saudi king is played by James Lipton, and the prince is Harvey Keitel.

Garth, it’s time for you to fess up on what you know.

#132 fancy_pants on 09.29.15 at 10:11 am

Time is coming when you say the wrong thing or think the wrong way they will take your house anyways. Many countries already experience such. We are a few of the last holdouts. Freedom and liberty is becoming a facade. As Henry Ford once said,” you can have any color you wish as long as it is black”.

For now the global train is bumping along but when it derails no squirrel soup recipes, bunkers, or portfolios will save you.

#133 maxx on 09.29.15 at 10:20 am

Most sellers, if and when they do sell, will be dropping their prices and then be paid in a rapidly declining currency. Enormous lost opportunity.
The smart ones got out a few years ago and bought US$. On an average Canadian house price, that would have added at least 130K to their coffers.
This is probably one of the worst times to buy re in Canadian history.
And dropping interest rates further is just stupid beyond belief on more than just the re front. It doesn’t just shred the real economy, it goes far beyond that, shredding the future real economy by additionally knee-capping consumers drowning in debt.
Climbing out of the debt pit will be even steeper and longer.
Those who broke it, can’t fix it and now nearly everyone knows it.

#134 Ralph Cramdown on 09.29.15 at 10:27 am

#110 Londoner — [re Goodhart] “But only one of these two people gets to vote at the MPC meetings and therefore only one of their opinions matter.”

That’s true, in the short run. In the long run, who’s right probably matters more than who votes. I spend a lot of time examining unpopular opinions.

My initial take on Goodhart is that he points out that a rising dependency ratio means a smaller workforce, so infers that pressure on wages goes up. But the decline comes from more retired people (past demand), not more children too young to work (future demand). Goodhart seems to believe that demand for stuff will remain constant, so labour becomes the limiting factor as its supply shrinks. But retired people (most of ’em) spend less than when they were working. So demand decreases. A rising dependency ratio in a time of already depressed demand doesn’t strike me as wage-inflationary. It wasn’t in Japan.

#135 Mark on 09.29.15 at 10:33 am

“Assuming all three parties are happy to keep the party going, what is there to stop them?”

Overcapacity. A glut. A deterioration in credit quality amongst the borrowing public. All of which are factors that have driven the decline in Canadian housing prices over the past 2 and a half years since the 2013 apex of the Canadian housing market coinciding with Flaherty’s crackdown on CMHC subprime mortgage insurance expansion.

It took roughly 2-2.5 years (ie: 2006 to mid 2008) to see a visible panic in the US housing market after its statistical peak in 2006. So Canada has roughly obeyed the same timeframe between peak and panic, ie: about 2-2.5 years.

#136 Woke To The Sounds Of Horking on 09.29.15 at 10:45 am

What if you’re a Canadian expat and you live in a Third-World — oops, I mean, Developing — Country, and your expenses are wayyyyy below your cost of living, and you’ve no debt, and you’ve got a very modest (not enough to live off) diversified portfolio containing 18% Canadian kindling. What do you do then? Do you eat the scorpion on the bamboo skewer? Garth has no answers for guys like me.

#137 Mark on 09.29.15 at 11:04 am

“What if you’re a Canadian expat and you live in a Third-World — oops, I mean, Developing — Country, and your expenses are wayyyyy below your cost of living, and you’ve no debt, and you’ve got a very modest (not enough to live off) diversified portfolio containing 18% Canadian kindling. What do you do then? Do you eat the scorpion on the bamboo skewer? Garth has no answers for guys like me.”

Not really sure what your question is. If you have a diversified/balanced portfolio, you should keep contributing to it, and perhaps rebalance to your target allocations. Since Canada has obviously underperformed, the implication is that your future purchases include more Canada than you ordinarily would, so as to rebalance your portfolio to target.

Canada is home to a multitude of solid companies. The currency is significantly undervalued at this point on account of the domestic deflation that is dead straight ahead due to consumer austerity. Many Canadian companies in key industries are trading significantly below replacement cost, and some are even trading at below stated book value. History has shown that Canada can keep up with the big-boys over the very long term, and provides an important element of diversification in a global portfolio.

#138 Smoking Man on 09.29.15 at 11:12 am

#114 westcdn on 09.29.15 at 7:13 am
Yeah, I hear it all the time, put your money offshore and bet against Canada. I am not leaving and, in my own way, will try to make Canada better than most. I put most of my investments in Cdn companies and screw the rest of the world. As long as I have not to depend on handouts, I am happy.

Remember, I am a contrarian and an introvert. I am not out to make my ass bigger – I want Canada to be more equal but come to Canada be prepared to live with lousy winters. I came from Vancouver to live in Calgary. It is not a move I regret. You want a tough winter – come to the prairies. The land makes the people. So SM – fu.
…….

Where the hell did that come from, moments before I read this I was considering becoming a philanthropist.

Going through life, un challenge, puzzles are easy for me.

I thought philanthropy might be next phase of my evolution.

But the FU comment at the end of a not bad Tarzan post just snaped me out of this insane thought.

#139 Alberta Ed on 09.29.15 at 11:13 am

It is clear that Mulcair and Trudeau are ready for Student Council.

#140 saskatoon on 09.29.15 at 11:24 am

for all the green dogs:

WHY YOU SHOULD LOVE FOSSIL FUEL:

https://www.youtube.com/watch?v=zw-1ohbRDrE

#141 Sheane Wallace on 09.29.15 at 11:29 am

Our peso is having another rough day – down against all major currencies.

No inflation of course, BOC looking to cut in October.

Have you checked grocery prices (specially imported food) lately ?

#142 Sheane Wallace on 09.29.15 at 11:32 am

CAD down despite oil being up 2 % today.

#143 Mark on 09.29.15 at 11:33 am

“Have you checked grocery prices (specially imported food) lately ?”

Yup. Stable. A good chunk of the cost of imports of food commodities to Canada is in transportation costs, and those are falling like a rock on account of the decline in fuel prices and the significant capacity slack that exists in the transportation industry on account of the slowing economy. As are export prices from the USA itself. So the shelf price is fairly stable.

Perhaps try shopping at a supermarket that doesn’t gouge?

#144 Bytor the Snow Dog on 09.29.15 at 11:45 am

119 avenirv-

It was a lot cooler then. Global warming, doncha know?

#145 Bytor the Snow Dog on 09.29.15 at 11:54 am

#143 Mark

Really Mark, I have a serious question- What colour is the sky in your world?

#146 The Other Chris on 09.29.15 at 11:55 am

@Mark, 143

It doesn’t matter where I shop… fruit, vegetable, and meat prices seem to have gone up a lot.

#147 saskatoon on 09.29.15 at 11:57 am

#143 Mark

if food prices are “stable” as you say–which i doubt:

this is only the result of lower quality food consistently taking the place of higher quality food.

additionally, it is the result of shrinking quantities of food represented through the same packaging.

smaller portions (disguised via “same-size” packaging) together with general food degradation function to mask an undeniable inflationary effect.

in other words, to calculate the REAL inflationary pressure on food today, one must compare organic apples to “conventional” apples.

in many case, even “organic” food is not entirely comparable to the food of “antiquity”.

#148 Leo Trollstoy on 09.29.15 at 11:58 am

I don’t know what’s in Toronto drinking water but the city’s real estate prices continue to increase across the sales mix. This defies the rest of the county (Vancouver excluded) as well as logic.

http://www.theglobeandmail.com/life/home-and-garden/real-estate/housing-sales-in-toronto-strong-in-all-market-segments/article26505741/

As I also posted before, economists have also started to notice retail prices spiking to a 10 year high, which signals the coming of inflation due to the continued destruction of the CAD (over $1.34 CAD to each $1 USD right now)

We live in dangerous times. Torontonians live in ludicrous times.

#149 bbysktrn on 09.29.15 at 12:21 pm

this cat won’t bounce.

correction continues

#150 Balmuto on 09.29.15 at 12:29 pm

#143 Mark

According to StatsCan, food prices were up 3.6% year over year in August, including a 6.3% increase for meat:

http://www.bloomberg.com/news/articles/2015-09-18/higher-food-prices-hold-canada-s-annual-inflation-rate-at-1-3-

#151 Freeman on 09.29.15 at 12:29 pm

Well, at least that dog has a faster growth rate than the Canadian economy does.

#152 IHCTD9 on 09.29.15 at 12:31 pm

#8 TRT on 09.28.15 at 6:20 pm
Was the run up in commodities from 1999 onwards due to speculation (artificial) or real demand?

If the former, then it’s great that we are getting back to fundamentals.

Now to figure out where the next bubble is going to appear. And jump in.
___________________________________________

Real demand primarily from China’s construction boom. Scrap steel went to record highs ($800+/ton prepared delivered USD), Nickel went from below the trigger price (which they reset) all the way to about $28.00 on the LME. China was out paying what they were asking, and everyone wanted on the gravy train.

I was buying 304L stainless steel plates in 1999 for .95/lb in the door no surcharge. By 2006 I had quotes over $3.00/lb, and no one was holding their price for more than 24 hrs.

In fact, I once had a vendor flat refuse to sell me any of their high nickel alloys as it was going to be worth more the next day!

I don’t think there will ever be a boom like there was 99-06 due to this being China’s heyday. Mining projects, Global Oil supply strained (remember all the peak oil talk?), Steel mills being built, potash and scrap steel, you name it – all through the roof.

There will need to be another billion plus people nation rising out of the third world at a record pace for that kind of boom to happen again…

#153 Sheane Wallace on 09.29.15 at 12:35 pm

148 Leo Trollstoy on 09.29.15 at 11:58 am
I don’t know what’s in Toronto drinking water

Fluoride, it impacts the brain functions. Stop drinking tap water, drink distilled or spring water and you will start feeling normal again.

Not that it is a great feeling to be surrounded by half-idiots (kind if) … but you know, in the kingdom of the blind the one eyed is a king.

#147 saskatoon

absolutely,

both degradation of quality and shrinking packaging that are made to look the same as the original, larger packages.

Healthy food is way up, it is enough just to go to Whole Foods and witness the price inflation of the real stuff, not the GMO crap that we are fed with. ‘Nutritional’ with nitrites.

#154 Woke To The Sounds Of Horking on 09.29.15 at 12:36 pm

#137 Mark

Frankly Mr Mark, I don’t know what the hell kind of drugs you are on. Last time I was in Kanaduh — two yrs ago — a 12-pk of beer cost $29 plus tax and a testicle. A head of iceberg lettuce was like $8. I daresn’t believe it’s cheaper now. Last time I checked — that is when I have time to check, in between massages and coconut smoothies — Kanaduh’s economy was in the crapper, one flush away from being something even more repellent than a wake mist from a Bangkok river canal. Who the Sam Hill wants Kanuck bucks now? I’m going to maintain my position, holding KanuckBuckz at 17% of my portfolio. And I’m going to eat the deep-fried scorpion on the bamboo skewer. With me eyes closed!
Also, and unrelated, how can I get some love from all the conspiracy wackos on this dreck board? Agenda 2030 ain’t no joke!

#155 Mark on 09.29.15 at 12:36 pm

“this is only the result of lower quality food consistently taking the place of higher quality food. “

Don’t think so. Okay, some weeks, the romaine lettuce looks a bit better than other weeks at the supermarket. But those weekly/seasonal variations have existed for as long as I can remember, and such is not a function of anything inflationary happening in the economy. Fruits and vegetables really can’t have their size manipulated in quite the same way as packaging sizes on other goods.

Beef, yes, it has gone up quite noticeably, but chicken and pork has gone down. I guess if your “meat mix” is overwhelmingly weighted towards beef, then the sky is falling, but most people eat a mix of a variety of different meats.

The only noticeable packaging/serving size adjustment I’ve seen at the grocery store has been in the soft drink segment. And this is largely a function of the soft drink companies attempting to cater to a desire by consumers to reduce their consumption through portion management.

“with general food degradation function to mask an undeniable inflationary effect. “

Not sure what this is supposed to mean, perhaps you could elaborate further. Substitution of more natural sugars with HFCS in processed foods took place a long time ago. Same with oils; even store-bought olives are packed in canola or soybean oil, not a small amount of olive oil. I haven’t noticed any other differences in overall food quality. My medical problems basically preclude me from eating processed/pre-made food, so if your claim is that processed food quality is deteriorating rapidly, then I personally have no basis to dispute such. But on the raw foods I buy, I have noticed little difference whatsoever in the grocery bill over the past few years except for beef. Which is largely counterbalanced by reductions in chicken prices.

#156 Jas on 09.29.15 at 12:40 pm

#147 Saskatoon

I agree with you. I am not sure where Mark #143 lives.
Food prices are up by as much as 50% for items over the last year.

Mark, if oil price decline is making transportation cheaper what does a weaker CAN $ do to the purchasing power.

As for quality, have you seen that Dollar stores now stock grocery too!! Go figure the quality… we as a nation are not quite there but we are headed into poverty…. and those who talk about the 1% here are they implying that only the 1% of the nation is hardworking and the rest are just lazy, ‘good for nothing?’. I don’t buy it.
People want to work there are no jobs or very poorly paying jobs.
Where is manufacturing? You can’t expect all of us to become IT nerds.

#157 Mark on 09.29.15 at 12:42 pm

<b"According to StatsCan, food prices were up 3.6% year over year "

Sounds about right. Not the double-digits (and beyond) price increases claimed by some around here, or the people who run around claiming that everything is “priced in USD$”, and therefore, with the CAD$/USD$ pair dropping 25%, that prices should have risen 25%. They didn’t. I set forth why they didn’t. Demand is weak. Transportation costs are deflating. There is no meaningful retail inflation in the pipeline because the Canadian consumer is now entering a period of severe austerity on account of falling house prices, limited access to incremental consumer debt, deteriorating employment prospects, and disfavourable demographics. Highly deflationary easily over-whelming the ordinarily inflationary impact of 0.5% (and soon to be 0%) policy rates.

#158 Family on 09.29.15 at 12:48 pm

It’s not just that there is a demographic shift taking place – which there is. But it’s so damn expensive for young people to have children. It takes two working parents to afford even a small home and child care even it is available is ridiculously expensive. Society in Canada will feel this change and there will be pain to go along with it.

Who’s going to fund your retirement?

http://www.bnn.ca/News/2015/9/29/For-first-time-Canadian-seniors-outnumber-children-Statistics-Canada.aspx

#159 Mark on 09.29.15 at 12:48 pm

“Frankly Mr Mark, I don’t know what the hell kind of drugs you are on. Last time I was in Kanaduh — two yrs ago — a 12-pk of beer cost $29 plus tax and a testicle. A head of iceberg lettuce was like $8. “

A 12 pack of beer can be bought for under $12 pre-tax pretty much everywhere in Canada, and a head of iceberg lettuce is a couple bucks at the most. Unless you visited some remote outpost somewhere with everything being shipped in by air, I’m not sure where you came to those numbers.

Where exactly in “Kanaduh” did you visit?

#160 saskatoon on 09.29.15 at 12:55 pm

#155 Mark

“I haven’t noticed any other differences in overall food quality.”

problem solved.

carry on.

#161 Sheane Wallace on 09.29.15 at 12:56 pm

Substitution of more natural sugars with HFCS in processed foods took place a long time ago

– the above is # 1 cause of diabetes type 2

– GMO, nitrites and pesticide – # 1 cause of cancer

– impact from usage of growth hormones is evident on the streets

– fluoride in the water. every third or fourth child with some sort of mental illness or deviations in mental development. Majority of the people with food allergies (normally to non organic food)

And you are tracking the price of that crap that you are fed with?

Watch the organic food, the real stuff that the rich eat – pound of tomatoes – 4.99 $.

#162 saskatoon on 09.29.15 at 12:59 pm

#153 Sheane Wallace

let’s be precise here:

SODIUM FLUORIDE is added to the tap water–a hazardous waste by-product of the agro-chem. industry.

“fluoride” is naturally occurring.

#163 Family on 09.29.15 at 1:05 pm

It was a good recommendation to lighten up on “maple” and buy US. But now what?

Let’s say you cash out of your one asset strategy (real estate) and have a pile of Canadian dollars to invest in a balanced, diversified portfolio. Do you sell your CAD now to buy US$ to do so? Doesn’t seem that wise especially when the market and commodities are in turmoil. And the glowbal economy looks shaky.

It’s always nice to look in the rear view mirror, but advice for the future might be a topic for a blog.

#164 Retired Boomer - WI on 09.29.15 at 1:10 pm

#129 MF

I do not know the definitive answer. I would “assume” so, as to is a US fund, paid in US dollars.

I will further “assume” the fund company likely has a Canadian equivalent priced, and paid in Canadian funds.

Further, I do not know the TAX implications of such a transaction. (being foreign owned from a Canadian viewpoint).

I see another ‘fun’ day shaping up in the US markets!

#165 A Canadian Abroad on 09.29.15 at 1:27 pm

#91 squidly77

Welcome back!

#166 Sheane Wallace on 09.29.15 at 1:28 pm

#156 Mark on 09.29.15 at 12:48 pm
“Frankly Mr Mark, I don’t know what the hell kind of drugs you are on. Last time I was in Kanaduh — two yrs ago — a 12-pk of beer cost $29 plus tax and a testicle. A head of iceberg lettuce was like $8. “

A 12 pack of beer can be bought for under $12 pre-tax pretty much everywhere in Canada
—————————-
Are you insane?

6 pack Stella – 15.25 $

#167 TheLaughingCon on 09.29.15 at 1:31 pm

Ouch… for the housing bears!

“Harper sets target for 700,000 new homeowners by 2020”

http://www.theglobeandmail.com/news/politics/harper-seeks-to-put-home-ownership-in-reach-for-700000-more-canadians/article26582427/

#168 Ottawan on 09.29.15 at 1:32 pm

“Conservative Party Leader Stephen Harper announced a plan Tuesday to create 700,000 new homeowners by 2020, even as housing prices continue to soar in Canada’s largest markets.

Harper appeared at a half-built, high-end subdivision in Vaughan, Ontario the morning after a bruising foreign policy debate in Toronto. There he declared a new goal to have 72.5 per cent of Canadians own their homes by the end of the decade.”

http://www.ottawacitizen.com/news/national/stephen+harper+cent+canadians+will+homeowners+2020/11399811/story.html

#169 Sheane Wallace on 09.29.15 at 1:32 pm

https://ca.finance.yahoo.com/news/canadas-dollar-remains-near-11-low-u-index-125337440.html

TORONTO – The Toronto market stabilized with a modest gain at midday after plunging almost three per cent the previous session, while New York markets were back in the red after similarly big losses on Monday.
Meanwhile the loonie continued its slide, losing another 0.26 of a U.S. cent to 74.40 cents US, its lowest point since June 2004.

Poloz and BOC in action, you have no idea what these people are capable of.

#170 Mark on 09.29.15 at 1:36 pm

“Mark, if oil price decline is making transportation cheaper what does a weaker CAN $ do to the purchasing power.”

CPI has only minimally changed during the past year, so purchasing power is nearly identical.

Some factors in the CPI basket are obviously offsetting others.

The fact that the CAD$/USD$ pair can drop 30% of its value in a year without setting off inflation is a testament to how much demand has been stripped out of the Canadian economy on account of falling access to credit, falling housing prices, and falling employment prospects.

#171 MF on 09.29.15 at 1:44 pm

#164 Retired Boomer – WI on 09.29.15 at 1:10 pm

Ah okay. Thanks anyways.

Every day is fun when you are in the red!

#152 IHCTD9 on 09.29.15 at 12:31 pm

India?

I’m just hoping to break even with my commodity etf purchase at this point lol

MF

#172 Mark on 09.29.15 at 1:50 pm

“Let’s say you cash out of your one asset strategy (real estate) and have a pile of Canadian dollars to invest in a balanced, diversified portfolio.”

Yes, that’s what Garth et al advocate, and I tend to agree.

Do you sell your CAD now to buy US$ to do so?

For part of your portfolio, yes, you probably would be well advised to use the services of US-based fund managers which sell ETF units in USD$. However, this should not be confused with the actual currency of business for a particular ETF.

For instance, Vanguard has an Emerging Markets fund known as VWO. To put this fund in your portfolio, you would sell Canadian dollars, buy US dollars, and then buy VWO units.

However, the act of buying VWO units means that you’re selling USD$, and then buying shares of an ETF which have holdings in various foreign countries and earn in various foreign currencies including the Brazilian Real, the Chinese Yuan, the Taiwanese Dollar, etc.

So the USD$ in such instance is just an intermediary currency. If you convert to USD$ and buy VWO; you are not making an investment in US dollars! You will receive a USD$ dividend stream from such an investment, but such dividend stream is the product of the dividends of the underlying investment being converted from the various source currencies into USD$.

I think the key here is to have a rational asset allocation which is balanced, and to minimize transactional and on-going expenses in management. The services of a professional advisor such as Garth, for a nominal fee, can be very useful in coming to a plan which reflects proper diversification within the framework of your acceptable risk tolerance.

#173 Mark on 09.29.15 at 1:55 pm

“There he [PM Candidate Stephen Harper] declared a new goal to have 72.5 per cent of Canadians own their homes by the end of the decade.””

Oh good lord, is this even possible? What kind of damage will this do to labour market flexibility in the unlikely chance the government actually succeeds?

I think this pretty much tells you all you need to know about who owns the “Conservative” Party in Canada. Realtors and bankers. No wonder the non-FIRE economy has performed quite poorly under the “Tories”.

#174 old gringo on 09.29.15 at 2:12 pm

Down south of the border , when housing gets insanely over priced we call it “the ostrich effect”.
Thats because you can’t see reality with your head in the sand.
Watch out for the markets these next few weeks, could be a wild ride.

#175 Sheane Wallace on 09.29.15 at 2:13 pm

I don’t feel really entirely qualified to comment on Mr H. ideas to further boost housing considering that his government is solely responsible for the biggest housing bubble in history will all the implication to the currency, people on fixed income and the economy.

The bare fact that he insist on continuing with this housing non-sense is alarming.

He either understands what he is talking about and is reckless and totally irresponsible in pushing for further guarantees and debt (despite the record household debt)
or
He is totally incompetent

The guy actually said that housing is a great success story in Canada!

Garth, I know you are advocating to vote for this guy, but you of course do realize what that would mean to the real estate market, house prices, debt and the Canadian dollar?

Houses at 2 millions in Toronto and Vancouver, food up 2-3 times in the next 5 years with fixed pensions, 0 (-1,-2 -5?%) interest rates that will never rise, CAD in the 0.40-ish or even 0.30-ish range?

It is good for me, I am looking at a year, max two before moving, but for the rest?

#176 salonist on 09.29.15 at 2:41 pm

“shrinking packaging that are made to look the same as the original, larger packages”

design manipulation
known as a back end price increase
also = more shelf space,that can be bought

#177 Sheane Wallace on 09.29.15 at 2:53 pm

#173 Mark

I don’t want to give ideas here but why don’t we insure housing/mortgages in the US as well, and then why not then all the mortgages in the entire world?

If it is that safe, risk-less and profitable?

The Canadian revolution in world housing (feeling big as for me H.’s ego/wet dreams)?

#178 Dual Citizen In Canada on 09.29.15 at 3:00 pm

#175 Sheane Wallace on 09.29.15 at 2:13 pm
The guy actually said that housing is a great success story in Canada!

Ha! He must be referring to those, “Old Stock Canadians”. As for the new immigrants, they are surely experiencing sticker shock while the banks are rubbing their hands together doing a, “Mr. Burns”!

#179 Holy Crap Wheres The Tylenol on 09.29.15 at 3:02 pm

#139 Alberta Ed on 09.29.15 at 11:13 am

It is clear that Mulcair and Trudeau are ready for Student Council.
_____________________________________________
Barely ready for preschool.
During the Munk debate on foreign policy was an exchange between Liberal Leader Justin Trudeau and Conservative Leader Stephen Harper on revoking Canadian citizenship for convicted terrorists. Zakaria Amara, the convicted mastermind of a plot to bomb Parliament and buildings in Toronto, last week became the first person to have his citizenship revoked under Bill-24. During Monday night’s Munk debate, Harper confronted Trudeau on his opposition to the move. “Why would we not revoke the citizenship of people convicted of terrorist offences against this country?” Harper asked.
Trudeau said revoking citizenship affects every Canadian. “A Canadian, is a Canadian, is a Canadian. You devalue the citizenship of every Canadian in this place and in this country when you break down and make it conditional for anyone,” he said.
Horse shit!
This is where Trudeau is really out of touch with reality. “A Canadian, is a Canadian, is a Canadian.” When you’re an invited Canadian, welcome to share our wonderful country peacefully it is a privilege. Not a right! Jesus Helmut Oberlander was a dam Nazi for god’s sake! His involvement with a Nazi death squad responsible for the murder of 1 million civilians in the occupied Soviet Union. Should we keep him and let him still be a Canadian? As you say Mr Trudeau A Canadian is a Canadian is an Ex Nazi death squad killing Canadian. Trudeau you’re a real piece of work! I would love to call you what I think of you but I’m not going to.
I hope you loose the election and go back to teaching. At least you can feed the students your load of crap and they will believe your stupidity.

http://www.friendsofsimonwiesenthalcenter.com/war_criminals.aspx

#180 Mf on 09.29.15 at 3:20 pm

#179 Holy Crap Wheres The Tylenol

Exactly. And like BS mentioned yesterday, and I commented further on, this guy is a gift to H. It’s hilarious that the cons probably don’t have to run any attack ads anymore since this guy puts his foot his in his mouth all day.

“A Canadian is a Canadian.” What a joke.

Mf

#181 Chris in Nanaimo on 09.29.15 at 3:20 pm

Wow 72.5%.

I think its famtastic Stevo wants to pay off everyone’s mortgages so they can own their on home….:-)

#182 Ralph Cramdown on 09.29.15 at 3:28 pm

[Harper on increasing homeownership] “He either understands what he is talking about and is reckless and totally irresponsible in pushing for further guarantees and debt (despite the record household debt) or He is totally incompetent”

Or maybe it polls well with undecideds in ridings that are in play? At this stage of the campaign, I wouldn’t expect ‘sound policy’ to be the primary reason for any Conservative announcements. Look at Kenney announcing more special forces… but only of they get re-elected. If that was a good idea, they could have implemented it two months ago.

#183 Sheane Wallace on 09.29.15 at 3:33 pm

If the ‘pleasure’ of being screwed by ridiculous policies is added to the GDP measures we would be the richest nation in the whole world. By far.

#184 Leo Trollstoy on 09.29.15 at 4:12 pm

#150 Balmuto on 09.29.15 at 12:29 pm

Just the tip of the inflation iceberg.

Will likely get worse as those who went against the fall of the CAD got crushed by the USD currency train.

Sorry gold bugs.

Sucks to be you.

#185 Smoking Man on 09.29.15 at 4:14 pm

#179 Holy Crap Wheres The Tylenol on 09.29.15 at 3:02 pm

NICE

#186 joe calgary on 09.29.15 at 4:25 pm

Looks like lots of sellers in Calgary are still living in fantasia, asking boomtime prices and holding out. Reductions are minimal.

#187 Mark on 09.29.15 at 4:35 pm

“Just the tip of the inflation iceberg.

Will likely get worse as those who went against the fall of the CAD got crushed by the USD currency train.

Sorry gold bugs.

Sucks to be you.

There is no inflation in Canada, and if inflation showed up, that actually would be very positive for the Canadian dollar as Canada is massively invested in various inflation hedges, particularly the oil and gas industry, food production industry, etc.

The CAD$ weakness is precisely because there is no inflation, hence, minimal pricing power for those sectors of Canada’s economy that are incented by inflation.

Not sure why you bring up gold, but in CAD$, gold has actually done quite well over the past year or two. Miners of gold should start to rise shortly as the impact on falling energy, mining equipment, and labour prices shows up on the income statements.

#188 TurnerNation on 09.29.15 at 5:05 pm

Bottoms up I’m not talking about headgear or religion.

#189 Bill on 09.29.15 at 8:53 pm

#113 ANON on 09.29.15 at 7:02 am
My point was people only change thier way of thinking in the minst of crisis. Even for a little bit.
Maybe for the better. The system is rot with issues.
As for me it wouldnt bother me a bit. No debt houses paid for and a fair pile of cash.
I dont care what my realeste is worth. Not like most. Cheers

#190 Nomad on 09.29.15 at 9:24 pm

Unfortunately:

1- governments please voters.
2- people don’t care about the long game, they want what they want now.

TSX at 13,000.
Big holes getting punched in more stocks every day.
Preferred shares still falling.

The worst time to be a saver.

#191 Peter on 09.29.15 at 10:00 pm

While I think the Fed *will* raise rates, I am not confident it will happen before the election in the US. Nobody will want to be in the seat of power, inheriting “raising the rates”. The parties will happily dump it on their opponents, however.