Sane choices

HELP WANTED modified

A single share in the Royal Bank, at $74 and a half bucks (down 3% in the last year, but with a 4.3% dividend) costs the same no matter where you live. But a house? Well, that’s a hugely different story. Now more than ever.

No national Canadian real estate market exists. Those who come here to yell at me because I was ‘wrong’ on a housing prediction look at things solely through their own local lens. That’s usually clouded with emotion – greed or fear. My view hasn’t changed – that immense risk is contained in a few markets, while others are nearing the point where an investment in property makes sense.

Remember, there’s nothing inherently nuts about wanting to own the pile you live in. But when you commit the bulk of your net worth to a single house, or take on elephantine debt to do so, risk runs rampant. Nobody should be without balance and diversification in their financial lives. The fact a majority of Canadians don’t, should scare you. It scares me. The obvious conclusion, given what your fellow beavers have done since 2010, is that this will not end well.

“Ha,” says Sean, citing the Mattamy Homes ad below, “check this out – condo towns starting from $822,000!”

MATTAMY modified

That’s a big number for a sliver of a row house sitting in a former field an hour’s drive from downtown Toronto in the soulless exburb of north Oakville. But, they’re selling. Lineups, even. It’s the hot zone these days – anything between eight and one-point-three. But does this make any economic sense?

“Meanwhile down the street,” says Sean, “I just signed a lease on a great 3 bed, 3.5 bath, 4 year-old-semi, ironically by same builder: hard wood throughout, big rooms, dining room + living room, gas range stove, backyard, deck, 2 car parking, finished basement, blah blah blah for $1775/month for 1800 square feet.”

This unit would sell, he estimates, for about $650,000. That equals a price-to-rent ratio of about 32 which, by the way, is insane. According to conventional wisdom, when a P/R ratio is 15 or less, you should buy. When it’s 16 to 20, renting has a slight edge. Above 21, only fools would not be a tenant. And north of 30, you should giggle every time you write a rent cheque and offer to date and marry your landlord’s unfortunate spawn in profound, unbridled gratitude.

“Good call Garth, renting is a winners game right now,” says Sean.

See what I mean? Buying a particle board palace in the burbs may be a hot thing to do, but the logic behind it is flawed. The only way anyone can justify buying over renting is the potential piling on of big capital gains in the years ahead. But with a slow economy, rates that’ll move in the wrong direction and scads of new inventory hitting the market every few months, how is this not a gamble?

Of course, risk rises in a place like Alberta, now home to a government that has embraced endless deficits and swelling taxes.

“Every time I read someone on your blog tell you that housing is a for sure thing and it is a great investment, I get soooo angry,” says Dan. “My wife and I bought our house in the suburbs of Edmonton in 2007 for $325,000. Today, the house behind us, which is pretty much an exact comparison, sold for $300,000. That’s nearly ten years and we still can’t sell our house for what we bought it for! How can people keep saying it’s a sane investment?

“We have these facts for our boomer parents and they still won’t say it was a bad idea. ‘Housing is a good investment,’ as my Dad always, and still, says.  It was the biggest mistake of our lives and we can’t wait to sell it—if only prices would go up a bit more. Love your blog—wish I read it before we bought. Ha ha.”

Down the road in Calgary, by the way, March sucked. Sales of 1,588 units were 11% lower than last March (it sucked, too) and almost 30% under the ten-year average. In a classic development, the number of units on the market is bloating as activity shrinks – the highest inventory now in more than two years. Prices stay sticky (also classic) down just 3.5% in the last 12 months, although condos values have toppled by 7%. Things are expected to deteriorate this year as severance packages peter out along with hope for an oil & gas revival.

“We were definitely anticipating another down month. There were no economic indicators that we would be seeing any kind of improvement,” says local realtor boss Cliff Stevenson. “We are still dealing with buyers who are trying to time the bottom. They’re taking that wait and see approach and expecting further declines,” he said.

Go further west, of course, and you get headlines like this, “Buying frenzy reaches Saanich real estate.” Ditto in Victoria. And the Fraser Valley. Realtors now in Port Coquitlam, Squamish and Nanaimo claim cash-rich Van sellers are forcing hinterland prices higher every month. In other words, real estate values are climbing on the back of speculation, cheap rates and non-local capital, not the economy. Easy to see how that could come off the rails real fast.

This pathetic blog often reminds you there’s no competition between houses and financial assets. You need both, in balance. The goal of life is the enjoyment of our limited time. That always takes life-long income, but it doesn’t always mean owning. In fact, sometimes, in some places, in some years of your life, that’s plain reckless.

200 comments ↓

#1 Brazil ex-pat on 04.03.16 at 5:02 pm

http://www.bbc.com/news/world-35918844

The Panama Papers…..

Conspiracy fiction is becoming conspiracy fact more and more everyday. It’s getting so bad that conspiratards are “inventing” stuff as they go along now.

#2 fancy_pants on 04.03.16 at 5:03 pm

True. One size does not fit all. I wonder if Dan is still happy with the truck nutz purchase? Surely that was a good buy

#3 common sense on 04.03.16 at 5:09 pm

“Why have over priced houses sold, long time passing
why have over priced houses sold, for too long a time
where has all the money went
young moist one’s a buying
oh will they ever learn?
oh will they ever learn?”

Sing to “Where have all the flowers went” Pete Seeger

#4 Victoria Real Estate Update on 04.03.16 at 5:13 pm

# 150 prairie person

1121 properties sold across Greater Victoria in March beating the old record of 1083 set in May 1991.

Real estate “professionals” probably think that comparing last month’s sales performance to that of May 1991 is a fair comparison.

It isn’t.

5-year fixed mortgage rates in May 1991 were 11.5%. Today they’re a fraction of that.

In typical house pumping fashion, Victoria’s R/E board intentionally chose not to mention that, with significant population growth since 1991, a fair comparison would have accounted for that population growth by stating that we should have seen significantly more sales in March 2016 than 25 years ago,in May 1991,

The local board also intentionally chose not to mention that, with today’s interest rates much lower than in May 1991 (11.5%), there should have been far more sales last month than 25 years ago.

In order for a fair comparison to be made, these two factors would have to accounted for.

25 years is a long time and Victoria’s population has grown significantly since then. More population = more sales.

Also, much lower interest rates = much higher sales.

Real estate boards always ignore these factors because they make current sales totals look weaker.

In this case, it would be impossible for the local board to pump last month’s sales performance if they had included population growth and today’s much lower rates in their comparison.

Population adjustment is an important statistical consideration and is used in statistics all the time.

In what situation is population adjustment more important that in this situation?

If last month’s sales had been 2 to 3 times higher than in May 1991 I would say sales last month could be considered comparable to sales in May 1991. However, this is simply not the case.

Comparing to 25 years ago without adjusting for significant population growth – that’s comical.

Not considering today’s much lower rates – that’s ridiculous.

#5 Luc on 04.03.16 at 5:16 pm

Garth, what do you think about the Ottawa RE market? Or even the Gatineau RE market if you have an opinion on this.

Thanks

#6 Debtfree on 04.03.16 at 5:34 pm

#3 common sense ? You owe Pete an apology . Where have all the looking up lyrics went . Long time passing .

#7 Michael King on 04.03.16 at 5:35 pm

Just a thank you note today. I hope your recent warning re: nasty posts will be heeded. I read the blog every day and look forward to your comments about the Vancouver market when it inevitably unwinds. It’s going to be brutal. Readers, please treat Garth with the respect he deserves.

#8 Victoria Real Estate Update on 04.03.16 at 5:38 pm

# 150 prairie person

It isn’t just the performance of Vancouver’s housing market since 2008 that makes Victoria’s market performance look weak – it’s the rest of Canada!

Here’s a chart for you.

. . . . . . . . . . . House Prices. . . . . . . . . . . .
. .Percent Above/Below June 2008 Price Level.
. . . . . . . x = Canada, * = Victoria . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+35%. . . . . . . . . . . . . . . . . . . . . . . x . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+30% . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+25%. . . . . . . . . . . . . . . . . . .x . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+20% . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+15%. . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+10% . . . . . . . . . . x. . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ 5%. . . . . . . . . . . . . . . . . . . . . . . .*. . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
….0%. . . x*. . . . . . *. . . . . . .*. . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 5%. . . . . . . . . . . . . . . . . . . . . . . . . . . .
————————————————————————–
. . . . . . June. . . . .June. . . . .Aug . . Feb. . .
. . . . . . 2008. . . . 2011. . . . 2014. . 2016. . .

(source: Teranet’s index)

From June 2008 to February 2016, house prices in Canada had increased 34.5%, based on Teranet’s data. It’s absolutely shocking that house prices in Victoria had increased by only 6% over the same period of time, based on the same data.

Perhaps I’ll post more charts showing how individual Canadian markets have performed in comparison to Victoria’s market.

That you’ve written that you think I’m the individual who you say you saw downtown Victoria making nut bar predictions in the past makes you look bad.

Perhaps you could approach your posts with more maturity.

For those who have accused me of not being able to afford a house or houses: you have no idea about my personal financial situation. Not everyone who can afford to buy a house or many houses will buy one. Some of us consider important factors such as: house prices in Victoria are not supported by incomes and rents and that interest rates are at emergency levels and set to rise significantly. Prices fall as rates rise.

From the chart above, it’s easy to see that many of those who bought properties in Victoria in 2008 have done poorly in terms of return on investment. Taking into account mortgage interest paid, property taxes, maintenance, the costs associated with selling a property (realtor commission, legal fees, etc), etc. , makes it even worse.

Many of those who bought in Victoria in 2008, 2010, etc., and sold after prices fell would have lost significant amounts of money.

All housing markets turn around and correct. Victoria’s has done this in the past and will do it again.

Last month’s performance can’t be used to predict this month’s performance. The market can turn on a dime at any time. There’s always that threat as many Victoria families have learned the hard way in recent years.

#9 Millennial Realist on 04.03.16 at 5:44 pm

And more and millennials are increasingly willing to bail on YVR and YYZ rather than be on the outside looking in. That cannot help this bubble stay inflated.

Here’s an amusing but very sober take on this – a “Dear John” letter to Vancouver:

http://www.cbc.ca/radio/the180/assisted-suicide-and-mental-illness-breaking-up-with-vancouver-and-gender-parity-in-the-public-service-1.3516363/breaking-up-with-vancouver-a-dramatic-reading-1.3517167

#10 common sense on 04.03.16 at 5:46 pm

#6 Debtfree

Changed the lyrics to match the mode of the post…

Sometimes it’s easier to set a message to music for a different impact and the words of Pete Seeger’s song were changed for this reason..it’s called a parody.

After reading the post, the lyrics “When will they ever learn?” came into my head.

Sorry, I wasn’t trying to ever be as wise and clever as Pete seeger…

#11 E Richard on 04.03.16 at 5:48 pm

From the land of the ownership cult, this is the most hysterical article I have read from Vancouver ever, double standards means they do not have a problem with ripping off someone like myself as long as they make more than they paid.

http://www.msn.com/en-ca/money/news/north-vancouver-condo-sold-for-dollar500k-below-value-in-double-ending-sale/ar-BBrhcBX?ocid=spartandhp

#12 For those about to flop... on 04.03.16 at 5:49 pm

I’m going to go out on a limb and guess that VREU’s favourite board game growing up was Battleships…

M41BC

#13 Squish on 04.03.16 at 5:52 pm

“Go further west, of course, and you get headlines like this, “Buying frenzy reaches Saanich real estate.” Ditto in Victoria. And the Fraser Valley. Realtors now in Port Coquitlam, Squamish and Nanaimo claim cash-rich Van sellers are forcing hinterland prices higher every month. In other words, real estate values are climbing on the back of speculation, cheap rates and non-local capital, not the economy.”
———-

This is so very true, not to mention a simple lack of inventory pushing up prices. Squamish is in an inventory bottleneck, even the realtors are admitting that. There’s little available now, but there are a huge number of developments slated for the next few years. The town is just caught playing serious catch up as people spill here from the city.

Of note is what we witnessed following the 2008 crunch. Several large developments either stalled before they started, or died out mid-build, some foreclosed on, as the market tanked. Now those same developments are going ahead again, along with a slew of giant new ones.

Forget the condo buildings, weird dense clumps of “masterplanned community” townhouses squeezed into older neighborhoods, etc. Instead, behold the sprawling, wordclass resort style glory planned for our redneck mountain town:

http://www.squamishchief.com/news/local-news/400-million-all-season-resort-in-works-1.2220168

http://www.squamishoceanfront.com/plan

I’m sure it’ll all work out well, this time around.

#14 common sense on 04.03.16 at 5:55 pm

#12 Flopper

Now THAT’S funny…

I’ll take blue and say G-7.

#15 van guy on 04.03.16 at 5:57 pm

Have you provided an analysis on how housing prices and housing investment has done in Toronto and Vancouver, since you started advising people not to buy? Would you care to?

The only people I advise not to buy are those who can’t afford it, or are absorbing excessive risk. Besides, the GTA and YVR do not constitute all of Canada. — Garth

#16 IKnow on 04.03.16 at 6:00 pm

DELETED

#17 For those about to flop... on 04.03.16 at 6:08 pm

#14 common sense on 04.03.16 at 5:55 pm
#12 Flopper

Now THAT’S funny…

I’ll take blue and say G-7.

/////////////////////////////

Hey Common,and here I was wondering if anyone would get my Southern Hemisphere sense of humour…

M41BC

#18 hope & ruin on 04.03.16 at 6:14 pm

@ flopper: battleship, lol.

Garth, I think we know the same Sean, he was just telling me about these places the other day. Ginger-kid with a gap-tooth? about 5’9″ and looks Irish?

I like the Price/Rent ratio rule. Makes a lot more sense in this dangerous low-rate enviro. Is it just a general rule of thumb?

#19 Nice post #9 Millennial Realist on 04.03.16 at 6:18 pm

Good listen to Goodbye Vancouver and thanks for that.

Once YVR RE crashes or prices drop as rates go up, undoubtedly Jenn will be back after a few winters of frostbite, shoveling show/dressing like the Michelin Man to do so and plugging her car into an electrical socket to keep the oil from becoming anthracite…she’ll be back.

BTW, it wasn’t 90s Vancouver that made her move there, it was late 70s/80s Vancouver. Early 90s is when prices started to increase, stall for the rest of the decade and then skyrocket in the early 2000s.

For me as a kid, it was watching those annoying Supernatural BC commercials from Edmonton with a blizzard blowing outside.

She’ll be back…

#20 The American on 04.03.16 at 6:19 pm

At #4: Victoria Real Estate Update, you make excellent points. Also, let’s not forget the greater Victoria area has grown over 1/3 in population since 1991, meaning a lot more people out there today than 25 years ago. So, whatever the agents are reporting up there as a “win,” they should be very embarrassed to have trumped the old record by only a few sales.

#21 Entrepreneur on 04.03.16 at 6:19 pm

My house value has been going down for years now (middle of Vancouver Island), but it is not Vancouver. When/if Vancouver/Toronto prices go down then the slide. Other places are relying on the overflow.

Heard from a good source that a friend in Victoria lost his house to foreclosure because he had to come up with the difference. He couldn’t, lost the house.

T2 is just giving away borrowed money like there is no tomorrow. India wants T2 to come visit; I wonder why!?! Wonder how many millions/billions he will give away next?

Just wondering if the Senate will have to use the Free Quick Books/Fresh Books (whatever advertised on T.V.) like Small Businesses. They need Quick/Fresh Books to keep track of their expenses/income so they can concentrate on matters that are more important to them and not get into trouble like the last scandal. Save time, money, and reliable.

#22 The American on 04.03.16 at 6:20 pm

At #4: Victoria Real Estate Update, here are my references from my previous post…

http://www.citypopulation.de/Canada-BritishColumbia.html

http://www.bcstats.gov.bc.ca/StatisticsBySubject/Demography/PopulationEstimates.aspx

#23 Rube Goldberg on 04.03.16 at 6:22 pm

#13 Squish

Right on Howe sound. One of the most polluted bodies of water on the face of the planet thanks to pulp mills and copper mines.

#24 waiting on the westcoast on 04.03.16 at 6:23 pm

Our next door neighbour (close to retirement) in beautiful Langley, BC is considering selling to take advantage of the market but is worried about getting in somewhere further east (east of Abbotsford). I told them to rent for a year and see what happens… crickets. Nope – need to buy in case the market keeps moving up…

Even when people recognize the irrationality and want to take advantage of it… they cannot see that it cannot continue.

#25 Move on VREU on 04.03.16 at 6:27 pm

Still waiting VREU…

Are you going to tell us EXACTLY why prices and sales are going up in Victoria and the surrounding bedroom communities? You know, to establish credibility…

#26 Arfmooocat on 04.03.16 at 6:32 pm

4 years of University in Bio gets my niece $20 an hour

#27 The American on 04.03.16 at 6:33 pm

At #15: Van Guy, here’s some great resources to check out how much people have lost, been lied to, or are buying into the false notion of “wealth” as their homes aren’t really what they are believed to be worth. These links also includes how much of a b.s. game and scam the RE market is in Vancouver due to the fact Canadian government leaves this industry largely unregulated (especially by American standards). Additionally, there is incredibly little transparency and freely available information for buyers to make an informed decision. This is by design, and is aimed at keeping values falsely propped.

http://www.zerohedge.com/news/2016-02-05/these-vancouver-homes-sold-millions-2011-and-have-been-vacant-and-rotting-heres-why

http://www.vancouversun.com/touch/vancouver+realtor+licence+cancelled+lies+deceptive+practices/11647471/story.html?rel=11647443

http://www.whichmortgage.ca/article/5-biggest-lies-in-real-estate-118332.aspx

http://www.vancouverobserver.com/news/obscure-legal-loophole-lies-heart-shadow-flipping

http://www.vancitybuzz.com/2016/02/bc-government-real-estate-market-regulation/

http://www.bnn.ca/News/2015/3/25/Real-estate-regulator-aims-to-crack-down-on-dubious-practices.aspx

http://www.canadianbusiness.com/companies-and-industries/real-estates-little-white-lies/

http://globalnews.ca/news/1860605/sturdy-as-a-house-of-cards-a-look-at-canadas-property-boom/

#28 Andrew Woburn on 04.03.16 at 6:34 pm

Realtors now in Port Coquitlam, Squamish and Nanaimo claim cash-rich Van sellers are forcing hinterland prices higher every month. In other words, real estate values are climbing on the back of speculation, cheap rates and non-local capital, not the economy.
———————————

These realtors may be right. When we bought in North Nanaimo in 2012, our realtor provided an online list in our target area which usually showed 40-45 SF houses in the $400-650 range. Many of these had been relisted several times over many months.

I still get this same list on my email. Last year, the average number of properties was about 25 and in any month, about three would show as sold. Last week I looked and there were 23 SFH of which 10 were sold including 4 new-builds. Prices moved up here two years ago and, if this shortage of inventory continues, they will bump again.

I don’t think speculation has much to do with activity in our area. Once you have sold in Vancouver, if you want to preserve retirement cash, your choices are pretty much to downsize, move to Chilliwack or go to the Island. For us it was a no-brainer. Nanaimo is a convenient and pleasant place to retire and already has about 20% of the population over 65.

#29 Teulon on 04.03.16 at 6:35 pm

Garth…Presume you mean Price/Rent ratio, not the inverse.

And VREU, give it up – we really don’t care!

#30 Brian on 04.03.16 at 6:41 pm

Someone I know got a job promotion taking a job in Toronto. She lived in a 1200 sq foot 2 bed plus den condo on the 33rd floor at the foot of Richards Street in Yale Town Vancouver. Bought in 2000 as a pre-build for 380 grand. Moved in 2003 and did a hundred grand reno in 2014.

Last month it was put on the market for 1.8 mil and sold in two hours way over ask with mulitple bids. All cash deal not off shore money.

She goes to Port Credit finds a 2200 sq foot sub penthouse condo right on the lake for 900 grand. Twice the sq feet for less than half the price.

She texts me sayin ‘Vancouver Real Estate is insane’

Moral of story…There really are times when condos make good investments.

#31 TRUMP on 04.03.16 at 6:55 pm

Dude says to me “Hey man you still renting, I thought you were smarter than that”. Says to me “I only put 5% down over 30 years”.

After a quick explanation of what it really costs over 30 years, plus his hands are tied down by the banks guess what he does?

Hops in his brand new Dodge Ram ($600 monthly), lights up a BIG GREEN ONE and yells out “GO LEAFS” as he speeds away.

MY GOSH…..THIS IS CANADIAN MAINSTREAM MENTALITY AT ITS BEST!!!

#32 Tony on 04.03.16 at 6:56 pm

I think Edmonton real estate peaked way back in May 2007. Houses have mostly retained their value up until two years ago while condos, townhouses and apartments today are selling for about half of their 2007 peak price.

#33 Big Dipper on 04.03.16 at 6:57 pm

“Of course, risk rises in a place like Alberta, now home to a government that has embraced endless deficits and swelling taxes.”

——————————————

Message: Can’t sell your house – Notley’s fault!

Your articles are rife with this sort of ideologically driven garbage statements. You can’t help yourself? Hooked on Neocon?

Yeah….

More like higher taxes, more regs, big deficit and poorer investment climate = downward price pressure. More to come, it appears. — Garth

#34 Andrew Woburn on 04.03.16 at 6:58 pm

# 150 prairie person

1121 properties sold across Greater Victoria in March beating the old record of 1083 set in May 1991.

Real estate “professionals” probably think that comparing last month’s sales performance to that of May 1991 is a fair comparison.

It isn’t.

5-year fixed mortgage rates in May 1991 were 11.5%. Today they’re a fraction of that.
——————————–

While I agree that one needs to take the Victoria population increase into account, I disagree that today’s lower interest rates should have increased sales that substantially. Most buy decisions are driven by the monthly carry and most Canadians will carry as much as they can. Whether you have low prices and high rates or low rates and high prices, the average mortgage carry will always be about the same relative to average income.

This is why boomers did so well on houses. Although they had to deal with crazy interest rates, prices were much lower and they won big time when the drop in rates drove up house prices. Now as Garth points out, millennials are facing the reverse process, i.e. disaster.

#35 Van real on 04.03.16 at 7:07 pm

#30 Brian

Sorry bro, but your comparison doesn’t hold water. She went from downtown Vancouver to a distant suburb of 416. Of course the downtown place will be way more. Duh!

#36 "Would sell" vs "bought for" on 04.03.16 at 7:10 pm

This unit would sell, he estimates, for about $650,000. That equals a price-to-rent ratio of about 32 which, by the way, is insane. According to conventional wisdom, when a P/R ratio is 15 or less, you should buy. When it’s 16 to 20, renting has a slight edge. Above 21, only fools would not be a tenant. And north of 30, you should giggle every time you write a rent cheque and offer to date an marry your landlord’s disagreeable spawn in profound, unbridled gratitude.

—-

I guess the true picture is not how much the “unit would sell”, but how much it was purchased for.

I bought my house for $270K 15 years ago and it would sell for over 1 million, if I cleared $1.6K per month for rent, the story was different.

Irrelevant. He said it is a relative new build. — Garth

#37 ed on 04.03.16 at 7:15 pm

Now the Asians are the cause of prices going too low! If you’re going to find a scapegoat at least be consistent: (I can’t wait for the next piece of real reporting: “Vancouver city asks the province to legislate minimum prices in bid to keep RE high”

http://www.vancouversun.com/business/north+vancouver+condo+sold+500k+below+value+double+ending+sale/11826617/story.html

#38 prairie person on 04.03.16 at 7:23 pm

Someone I know had her husband die, then a year later, lost her job, no fault of her own. Since then she’s only been able to find part time work. The bank has started the process of foreclosing on her house. Houses in the rural prairie communities are dirt cheap compared to Vancouver and Toronto. Doesn’t matter. As Garth has pointed out a number of times (endlessly), if you lose your job and don’t have an income, you are going to lose your house–and probably your truck, boat, RV and everything else. The Great Depression wasn’t caused by ordinary people. They were just the victims. The drop in the price of oil with its impact on ancillary areas is just beginning. Neither the provincial Conservatives nor the NDP caused what is happening in Alberta. One can rant and rave and blame locally but the price of oil isn’t set here. Drilling companies are shutting down. What is more worrying is that companies that have always been considered the safest investments–pipelines–are now facing the possibility that the companies shipping oil can’t pay them. A year ago that would have seemed unbelievable. But then so would the idea of a driller taking a minimum wage job. Or Encana not getting paid. The question is not what will happen locally in Alberta but how big will the impact be directly and indirectly outside of Alberta. Pipelines have always been widows and orphans stocks. Safe, reliable, regulated. Good for pensions. As for Victoria, it is seeing an upsurge, from where? No one is sure. That upsurge does not extend to many other parts of VI and certainly not to the Gulf Islands. Our governments, provincial and federal, are seriously remiss. Knowing what is happening is critical to decision making. And asking the RE business to voluntarily provide information is both cynical and dishonest.

#39 Cloudy on 04.03.16 at 7:25 pm

If Vancouver/Toronto housing costs go down (I’m beginning to watch the market with incredulous eyes and wonder if it ever will end), what will happen to Victoria/Vancouver Island housing costs? Similar reductions compared to previous gains (%)? Maybe not go down? Maybe go up? We’ve seen pretty steady increases in activity and prices and in the last few months things have really heated up even getting into bidding wars.

#40 paul on 04.03.16 at 7:26 pm

Hey Garth
Were you leading this bunch of Sunday schooler’s?

https://www.youtube.com/watch?v=-Fzo9rJSJiQ

#41 Brent Firth on 04.03.16 at 7:28 pm

Garth, How do property taxes/condo fees/utilities factor into the Price to Rent Calculations?

For instance, our rent is all inclusive of Utilities, but they would have to be paid for under a property ownership consideration. I’m having trouble finding out information in this area. Much Thanks!

#42 the problem - impossible balance on 04.03.16 at 7:30 pm

Garth,
How do you propose balance, if e.g. you have 200K and housing costs 800K-1.3m?

So it’s either or – you plunk 100% in a balanced portfolio, or 100% (plus a mortgage) into housing.

Is there another way?
Are you advocating people should find, e.g. a place to buy (a 200K rental property in timbuktoo, with 100K down) and 100K in a balanced portfolio?

#43 Victoria Real Estate Update on 04.03.16 at 7:41 pm

# 25 Move on VREU

Your post makes no sense at all. My credibility is fine and nothing you could say would tarnish it.

I don’t need to do anything to establish my credibility – it’s fine the way it is.

You on the other hand have no credibility and have no ability to gain any. Your situation sucks.

Again, last month’s sales and price performance can’t be used to predict this month’s market performance.

As Garth has pointed out, recent market activity in Victoria isn’t based on the local economy, etc. , which makes it unsustainable.

Was March the last month before prices head lower again in Victoria?

A future month will prove to be the point where Victoria’s market turns downward again. It’s inevitable.

#44 Mark on 04.03.16 at 7:43 pm

Have a friend who, in the mid 1980s, built a warehouse near Milton to sell and maintain a certain product. Did that for 15 years, the business (but not the RE holding company his accountant structured) nearly went bankrupt twice, wasn’t a particularly good businessman and never made much of a profit in all that time.

He walked away with about $20M though, on account of being able to sell the real estate that his otherwise failed business had owned on a mortgage, to a housing development.

How can we have and encourage business operational excellence when an entire generation of businesspeople have, on account of conditions in the financial system, earned more through ownership of real estate, than they did through operating an active business? How many largely worthless businesses continue to persist in Canada merely off of the avails of real estate gains, rather than operational efficiency?

The shakeout from the RE crash is going to be epic. Canadian firms are going to need to actually roll up their sleeves and figure out how to make money without being de facto real estate speculators.

#45 David W on 04.03.16 at 7:51 pm

So…what markets are ripe foe buying now Garth?

#46 BallsofSteel on 04.03.16 at 7:53 pm

I don’t often post but I gotta say Garth, this is one of the most illustrative and informative articles I have come across.
You are the man!, and if you save but one from jumping in the big end, then you have done your service to Canukistan.

#47 "Would sell" vs "bought for" on 04.03.16 at 7:59 pm

#33 “Would sell” vs “bought for” on 04.03.16 at 7:10 pm
This unit would sell, he estimates, for about $650,000. That equals a price-to-rent ratio of about 32 which, by the way, is insane. According to conventional wisdom, when a P/R ratio is 15 or less, you should buy. When it’s 16 to 20, renting has a slight edge. Above 21, only fools would not be a tenant. And north of 30, you should giggle every time you write a rent cheque and offer to date an marry your landlord’s disagreeable spawn in profound, unbridled gratitude.

—-

I guess the true picture is not how much the “unit would sell”, but how much it was purchased for.

I bought my house for $270K 15 years ago and it would sell for over 1 million, if I cleared $1.6K per month for rent, the story was different.

Irrelevant. He said it is a relative new build. — Garth

Maybe in this particular case, depending on whatever a “relative new build” may mean, but in general plenty of the rented homes, units are not “relative new built”, so the P/R ratio would have to be individually determined, not with a blanket calculation, based on the current cost of the property.

He said it’s four years old. Just apologize. — Garth

#48 "Would sell" vs "bought for" on 04.03.16 at 8:03 pm

#42 the problem – impossible balance

Garth’s answer would be that your “all-in” balanced ETF portfolio would have the proper amount of real estate exposure.

#49 Turtle on 04.03.16 at 8:04 pm

Re: Dan

If you buy a house with 5-10% downpayment than you won’t be able to survive any downturn. When you put 50% of your own money in a house than who cares for how much the house behind yours is selling.

House is not an investment, but strategic purchase. You buy when it makes sense, and you rent when it makes sense. Both times you win. Stubborn a** (donkey) looses.

#50 Bram on 04.03.16 at 8:10 pm

That’s a big number for a sliver of a row house

Hmm, 3000 ft² is a sliver now?
Sounds like quite a large townhouse to me.
Not smaller than a typical detached house by any means.

Almost twice the size of Sean’s 1800ft² rental.
So how can you use his $1775/mo as comparison?

Your point is valid, but your example exaggerates.

Bram

Read harder. That was not the example. Plus a row house is not a semi. — Garth

#51 Move on VREU on 04.03.16 at 8:12 pm

#43 VREU

Lets break this down:

“Again, last month’s sales and price performance can’t be used to predict this month’s market performance.”

Just as last months sales and price performance can’t be used to predict this months market performance, nor can previous stagnant month performance be used to predict next months. So when you pull out your models of past performance (2008 to 2016), you cannot assume that going forward prices will be muted and lacklustre like the last 8 years.

“As Garth has pointed out, recent market activity in Victoria isn’t based on the local economy, etc. , which makes it unsustainable.

– “Vancouvers recent market activity isn’t based on the local economy and it is apparently unstable. Of course, that has been the case for 12 years and the apparent ‘instability’ has simply lead to higher prices. Again, the Vancouverization of Victoria means prices become detached from local incomes. Just as foreign capital drives Vancouver prices up, cashed out Vancouver capital drives prices up elsewhere. Its a simple domino that has been proved over and over.

“Was March the last month before prices head lower again in Victoria?A future month will prove to be the point where Victoria’s market turns downward again. It’s inevitable.”

I have already conceded that the new down payment rules may have impacted prices, as the market has really been on fire since December to now.

I would like nothing more than prices to go back down and stabilized after March – but I suspect the constant inflow of foreign capital is creating Vancouver capital flight, and that will continue until the foreign capital is cut. And given that the current governments view houses as a commodity and not a common good, the chance of any meaningful action to curb the flow of foreign capital is non-existent. Ergo, Vancouver capital flight will continue…

#52 Notorious on 04.03.16 at 8:13 pm

Garth,
Thanks for all the education!

Now, once a renter sees the dividends coming in, what a greater fool would he ne to buy!

IOW: turn cash flow in debt, taxes and endless maintenance?

#53 jay on 04.03.16 at 8:17 pm

#44 Mark ,come to Vancouver and you’ll see dozens of business that aren’t making money, but banking on real estate prices increasing.

#54 Graeme on 04.03.16 at 8:18 pm

Victoria real estate guy,

Local economic conditions can’t sustain real estate upswing? There are hordes of people moving to Victoria and the Gulf islands from all over Canada. Americans, not so much presently. But all of those boomers who took stay-cations last year and expected to find similar prices in Vic as Van are packing up and leaving the frozen East. Techie types who can telecommute are relocating individually or packing up their companies and leaving Vancouver.
This is just the beginning of a tsunami. And you are staring at local puddles of traditional business activity?

The best time to buy was the past, is the present and near future. After that many will be out of luck.

#55 james on 04.03.16 at 8:18 pm

“Of course, risk rises in a place like Alberta, now home to a government that has embraced endless deficits and swelling taxes.”

C’mon Garth, seriously, you are better than this!

I know you’re not an economist who would understand how long it takes for a new government to really have an impact, but this is really such shorthand for the fact that you hate ‘lefties’, isn’t it?.

But you have been an editor…..so here, let me edit that comment for you, more factually and take out the shorthand:

“Of course, risk rises in a place like Alberta, home for over 40 years to breathtakingly stupid neo-con governments that have embraced short term resource plays and temporary price surges as if they were endless norms, when in fact they fluctuate and require wise leaders to save and plan for the future. Alas, instead, these idiotic conservatives, as usual, played games with the truth and the balance sheets of Alberta, giving unnecessary tax cuts for the sake of nothing but ideology, not saving nearly enough from their God-given resource gifts, and in the process squandering virtually all of the heritage fund savings that had been put aside at the beginning. This has led to the current deficits and swelling taxes, as well as the usual old lame neo-con game of blaming everyone but themselves for their failed ideology. Whatever Notley may be able to do, it will at least not be half as stupid as what her conservative predecessors bungled for the province. Because nobody but conservatives are such completely predictable fools when it comes to financial mismanagement, as history has shown repeatedly in Canada, the U.S.A and elsewhere.”

There you go Garth – your comment put through a little fact checking and truth-detecting.

Free of charge, of course :)

And worth every sous of it. — Garth

#56 Big Dipper on 04.03.16 at 8:24 pm

“More like higher taxes, more regs, big deficit and poorer investment climate = downward price pressure. More to come, it appears. — Garth”

——————————————————-

Ideological claptrap – unrelated to the issue – from beginning to end.

-The deficit is caused by the same Con ideologies you admire so much. Living on the edge from O&G income, while cutting taxes to the bone. Guess what happened when O&G income plummeted?

Senior O&G Execs who, unlike you, actually run large operating businesses, applauded to steps taken by Notley.

-Corporate taxes right-sized to be in line with the rest of Canada. Why, did your corporate buddies complained to you? Income taxes progressive again- as they should be.

-Downward price pressure??? Of what, oil? Or is this just another right wing brain fart?

-What regs are you talking about?

-What “appearances” do you have about more to come?

Granted, this conservative caused disaster may require the implementation of an Alberta sale tax. No doubt you and your minions will blame the NDP for that.

Just as I said. It gets worse. — Garth

#57 My Wife Loves Garth on 04.03.16 at 8:25 pm

Happily renting a 4 bedroom detached in Richmond Hill for $2300. The identical house next door sold for 1.2 million last month.

I did the calculations if I had bought with 200k down and a million dollar mortgage amortized over 25 years at today’s rates, with closing costs, real estate fees, land transfer tax.

I laugh every month and I truly love my landlord!

#58 acdel on 04.03.16 at 8:29 pm

#38 prairie person

What’s really concerning are the many Juniors that are about to fail that many do not hear about.

#59 "Would sell" vs "bought for" on 04.03.16 at 8:35 pm

Maybe in this particular case, depending on whatever a “relative new build” may mean, but in general plenty of the rented homes, units are not “relative new built”, so the P/R ratio would have to be individually determined, not with a blanket calculation, based on the current cost of the property.

He said it’s four years old. Just apologize. — Garth

—–

As soon when you calculate the P/R ratio considering the purchase price of the property, whether it was 4 years ago or 15.

Or at least acknowledge that P/R based on anecdotal “would sell” value gives the possible best ratio to support what you want to see, but it’s only one way to look at and interpret the numbers.

#60 My Wife Loves Garth on 04.03.16 at 8:44 pm

Happily renting a 4 bedroom detached in Richmond Hill for $2300. The identical house next door sold for 1.2 million last month.

I did the calculations if I had bought with 200k down and a million dollar mortgage amortized over 25 years at today’s rates, with closing costs, real estate fees, land transfer tax. Would be over 5k a month.

I laugh every month and I truly love my landlord!

#61 hope & ruin on 04.03.16 at 8:54 pm

#56 Big Dipper on 04.03.16 at 8:24 pm

@ big dipshit

You think the Cons screwed up because they made Alberta the economic engine of the country for the last 10 years? Everybody is hurting in the current downturn. All stripes of govts.

Notley did screwed up because she enforced her ideology in a downturn, which was dumb. Companies pulled the plug on capital projects which may have kept Alberta humming along for a while. If she got elected in good times, sure, make the changes, see what happens but not in the current environment. That reeks of ideology over pragmatism.

It makes sense to let the oil companies spend more investment dollars in the province rather than start deficit spending to keep it humming along. Notley doesn’t want more oil investment. She wants more “green” investments. Again, ideology > pragmatism.

#62 Charlie Sheen on 04.03.16 at 8:54 pm

WooHoo, my PTR ratio is 36! *WINNING*

#63 jess on 04.03.16 at 9:04 pm

BREAKING….the panama papers

…”The files are part of an unprecedented leak of millions of papers from the database of Mossack Fonseca, the world’s fourth biggest offshore law firm. They show how the rich and powerful are able to exploit secret offshore tax regimes in myriad ways.”

http://www.theguardian.com/news/2016/apr/03/panama-papers-money-hidden-offshore
Panama Papers: ATO investigating more than 800 Australian clients of Mossack Fonseca

Date April 4, 2016 – 10:10AM
“More than 11.5 million documents have been leaked from Mossack Fonseca’s files, revealing the secrets of hundreds of thousands of clients – including several thousand Australians – covering a period over almost 40 years, from 1977 until as recently as last December.The release of the documents on Monday follows a 12-month investigation by media groups including The Australian Financial Review, led by the International Consortium of Investigative Journalists (ICIJ) in Washington.”

Read more: http://www.smh.com.au/business/banking-and-finance/panama-papers-ato-investigating-more-than-800-australian-clients-of-mossack-fonseca-20160403-gnxgu8.html#ixzz44oc8Z9QC
Follow us: @smh on Twitter | sydneymorningherald on Facebook
http://www.smh.com.au/business/banking-and-finance/panama-papers-ato-investigating-more-than-800-australian-clients-of-mossack-fonseca-20160403-gnxgu8.html#ixzz44oaTCHNv

http://rijock.blogspot.ca/

companies response:
http://www.theguardian.com/news/2016/apr/03/panama-papers-money-hidden-offshore

#64 Love my Kia on 04.03.16 at 9:05 pm

Just as I said. It gets worse. — Garth
********************************
REALLY?!?

http://www.theglobeandmail.com/report-on-business/economy/growth/canadian-economic-growth-jumps-dimming-chances-of-rate-cut/article29469477/

In AB? I expect so. — Garth

#65 NotAGreaterFool on 04.03.16 at 9:12 pm

In my central Toronto hood, this was listed for $under $1.0M , I think sold for $1.2M

http://www.carollome.com/SoldListings.php/Details/257/596-oriole-parkway-toronto-on#viewdetail

Here were about 2 years later, and it’s listed for $2.5M. No one has lived here. They knocked it down and build it.

https://www.realtor.ca/Residential/Single-Family/16772288/596-ORIOLE-PKWY-Toronto-Ontario-M4R2C3-Yonge-Eglinton

Just rotten. Happy renting for now.

#66 common sense on 04.03.16 at 9:18 pm

#61 hope and ruin

Nice comment.

Sadly every politician who runs on one platform and changes course once elected logically due to new information and current conditions is fried by the media and public for “flip flopping” vs. being pragmatic and flexible. Thus hell or high water 90% of the time they stick to what got them there…

#67 timmy on 04.03.16 at 9:18 pm

I am curious as to what the price to rent ratio is based on. I’m also curious as to when the last time homes in Vancouver were at a ratio of 15 or less. Maybe once in the 80s when they had the worst recession in decades? And that was 30 years ago.

#68 Marc in Montréal on 04.03.16 at 9:23 pm

Europe : migrants in, millionaires out

(where to…)

“…according to the report. Melbourne and Perth had 3,000 and 1,000 new millionaires in 2015, respectively. Tel Aviv, Dubai, San Francisco, Vancouver and Seattle also featured among the top eight cities with millionaire inflows.”

http://www.ibtimes.co.uk/france-sees-millionaire-exodus-religious-tensions-rise-1552423

#69 Fanky Nabob on 04.03.16 at 9:24 pm

DELETED

#70 Greg on 04.03.16 at 9:33 pm

#56 Big Dipper

Bringing taxes in line with other places kills the Alberta Advantage. There are (or were) reasons why businesses chose Alberta to grow their businesses. Now they are moving away, and their taxes payable to Alberta are going to zero. This is harmful to Alberta.

If the business climate worsens, there is a direct impact. What don’t you understand about that? Have you ever run a business?

#71 lee on 04.03.16 at 9:40 pm

Since there is probably only one unit priced at the “from” price of $821000 which will likely go to the owners friend, the prices probably range from $880000 and up, and that’s if you go with zero upgrades. Modest upgrades gets you to about $920000 if your wife can control herself in a fully decked out model unit. So low end you’re at closer to $950000 and if she’s from Woodbridge it’ll be closer to $1M. All for the privilege of hearing your neighbours have sex at night.

#72 Chris on 04.03.16 at 9:48 pm

Garth says – But when you commit the bulk of your net worth to a single house, or take on elephantine debt to do so, risk runs rampant. Nobody should be without balance and diversification in their financial lives. The fact a majority of Canadians don’t, should scare you.

You keep saying a majority of Canadians commit the bulk of their wealth to a single house….. please provide some stats to back this up. I call BS. If 20 % of houses sell every 5 years, then over 25 years, every home in a neighborhood will sell. This means at any time, there are some new buyers, as well as some who have owned for decades and own their home outright. Some will have only a few years of payments left, some will be 50% paid and some will owe more. Therefore, only people who have bought recently and also need to sell for some reason are actually at risk if prices dive.

I think the majority have far more balance than you like to portray. Do some buy overpriced houses and vehicles and lose – sure. But the majority….thats just drama.

When close to half of people say they’d be pooched missing one paycheque, I think not. — Garth

#73 Believe it when I see it on 04.03.16 at 9:48 pm

-0 down 40 year mortgages banned, no correction
-Flaherty takes further steps to stop the monster that he and Harper created, no correction
-no CHMC over $1,000,000, no correction
-Canadian economy stalls and actually enters a technical recession, no correction
-New Liberal government enacts higher down payment requirements and stricter lending regulations, no correction
-Canadian dollar crashes, no correction
-personal and government debt at all time highs warranting constant warnings by IMF and World Bank, no correction
-Oil and commodities crash to multi-year lows, no correction

Actually most markets rocketed higher during all of the above.

After 200,300 and 400% gains in most major markets in the past 10 years, a correction would have to be at least 35% to mean anything (more like 50 to 70%). None of the examples in today’s excellent post come anywhere close to that in any market in our great country. Stagnant or “sticky” or -3.5% is not a correction unless that went on for the next 25 or 30 years. Many of us won’t be around by then to say “I told you so”, even if those unlikely scenarios actually played out. I certainly wish that the prices of my preferred shares were “sticky” or stagnant.

We all know that if stock markets shot up that high and fast, the correction or crash would be beyond swift and severe.

I’m on the side of Garth and everyone else on this blog when comes to making sense of all this madness, but let’s face it, house humpers have been tuning us, the contrarians, out and have been correct in doing just that so far.

I often feel like we cherry pick and exaggerate our data and examples to defend our position, as much or more than CREA does. The difference is that most of their clients are way up after leveraging as little as 5% and our portfolios have been sucking wind for nearly 5 years and weren’t exactly shooting the lights out for the prior 10 before that.

Should this continue? Absolutely not. Will it stop and take a nasty turn for the worst? Will responsible savers and investors be rewarded for their infinite patience? I will believe it when I see it.

You’d feel a lot better if you invested properly. — Garth

#74 Linda on 04.03.16 at 9:50 pm

http://gawker.com/biggest-leak-in-history-reveals-corruption-in-world-lea-1768788422

Anyone who has offshored their money like this and thinks they can stay in Canada should receive the death penalty. Same for their lawyers and financial advisors.
You like Panama or the Isle of Man? Then go live there. Enjoy the third world diseases and violence.

Period.

This is the ultimate in undermining the stability of our societies, paid for through collective democratic taxation and goodwill.

People who don’t participate in that, and in fact set up elaborate schemes to avoid their due shares, must be eliminated.

They are worse than the scum at the Nuremberg trials. In fact, we need a new set of Nuremberg trials to deal with the global .1% who participate in this kind of world-destroying garbage.

Then off to the hangman for each and every one of them.

War against the rich is coming. They have already declared war against the rest of us, but we just have not realized it yet.

This will change that.

That was ugly. I pity you. — Garth

#75 Believe it when I see it on 04.03.16 at 9:55 pm

#60 My Wife Loves Garth on 04.03.16 at 8:44 pm

Happily renting a 4 bedroom detached in Richmond Hill for $2300. The identical house next door sold for 1.2 million last month.

I did the calculations if I had bought with 200k down and a million dollar mortgage amortized over 25 years at today’s rates, with closing costs, real estate fees, land transfer tax. Would be over 5k a month.

I laugh every month and I truly love my landlord!
—————————————————————————————-

Your landlord owns a $1.2 million dollar property and collects nearly $30k per year in rent. I’m pretty sure he’s laughing too.

A 2%, fully-taxable, return on the investment? I wouldn’t laugh much. — Garth

#76 lee on 04.03.16 at 9:55 pm

#65 Not A Greater Fool

That property is a steal at $2.5 M. Nobody would lose on that.

#77 Vicpaul on 04.03.16 at 9:56 pm

#26. Arfmoocat
4 years of University in Bio gets my niece $20 an hour.

*********
My son – four years out of high school, third year with the company, two stints at school, 48 weeks worked last year, 50k, still 21.
Spidey-sense says specialize in something.
Alliteration is fun!

#78 Believe it when I see it on 04.03.16 at 10:00 pm

You’d feel a lot better if you invested properly. — Garth

——————————————————————————-

I have been and I am, trust me.

#79 West Coast on 04.03.16 at 10:02 pm

“The goal of life is the enjoyment of our limited time, which always takes life-long income, but doesn’t always mean owning” and yes, if you can’t afford to buy it – rent it! – you’ll be happier and probably better housed.

It seems to me that the under 30’s have moved into a ‘virtual’ world anyway……….don’t see the ‘bricks and mortar’ and long term debt being top of their list. Most under 30’s I meet these days in YVR don’t even want to own a car let alone a house……….

#80 JOSEPH on 04.03.16 at 10:05 pm

If Sean had provided a few extra prepayments per year on the house he was sitting on for 10 years in Edmonton, the house would practically be paid for, and he would be sitting on $300K in equity right now. A little discipline is all it takes. Even Garth has readily admitted he first purchased (and likely paid off) his house before diversifying. His rule of 90 wasn’t in play until he first purchased his house. The best diversification plan is to purchase a home , make extra payments and be mortgage free in 10-13 years. After that delve in all the financials you want as you’re a free man at that point.

Wrong. Those are the old rules. With inflated and dangerous prices, they no longer apply. — Garth

#81 Big Dipper on 04.03.16 at 10:07 pm

#61 hope & ruin on 04.03.16 at 8:54 pm

#56 Big Dipper on 04.03.16 at 8:24 pm

@ big dipshit

“You think the Cons screwed up because they made Alberta the economic engine of the country for the last 10 years? Everybody is hurting in the current downturn. All stripes of govts”

————————————————-

In your wet dreams ruin. The “economic engine” was the price of oil. This made the lame-brained Cons the accidental, and temporary, beneficiaries. They could have react wisely, but instead, as Cons always do, they went blew their brains out by indiscriminately lowering taxes, cutting back on infrastructure spending, increase military spending (how’s that navy ship building project going, eh) and spending money on self -promoting TV ads.

Your buddy GT claims that the Alta recession has nothing to with the oil price and everything with Notley. You agree?

The rest of your comment are convoluted BS. Notley has removed Alberta from the environmental pariah list. She’s widely supported by the industry. Any ideological agenda only exists in your feeble brain.

Like I said Turner, your foamy mouth minions are easily riled up.

#82 Chris on 04.03.16 at 10:10 pm

When close to half of people say they’d be pooched missing one paycheque, I think not. — Garth

That is a statement, not a statistic. Do you have any real accurate data to back up the claims, or just these self-reports. Im not just being ornery, I would really like to know what the stats are…..well a little ornery, as I hate unsubstantiated statements from people who are respected as knowing about stuff.

Data has been published here (and elsewhere). Don’t be lazy as well as pissy. — Garth

#83 crossbordershopper on 04.03.16 at 10:11 pm

with all this daily talk about real estate and interest rates and the general state of the economy. Garth should devote more time to creating jobs by inspiring new business ventures in canada not 5x leverage real estate investments with zero cash flow positive rental properties.
canada has very poor business people all they want is no competition so they dont have to work too hard.
we need lower taxes, more customers. how does a customer get created, they need income beyond their basic costs, and housing is so high no one has any cash left.
i dont understand how people live in million dollar homes, think they are rich, but dont have 20 bucks in their pocket. its really sad, would love to have no house and million cash.
financial freedom is freedom in which you dont need to have financial assets to make you happy. we sleep 8 hours a day, as long as your bed is comfy, does 1000 sq or a mansion really make a difference. if you got to pee in the middle of the night trust me a little apartment is better than a mansion across the football field of a bedroom.

#84 BOOM! on 04.03.16 at 10:15 pm

I would expect with the US looking at below 3% growth, there will be much to crow about with earnings season here for Q1.

I don’t think we will see most earnings even matching last years results. Stay tuned, but I am not seeing many indicators to make me smile.

We grow, but below “stall speed”…

#85 Believe it when I see it on 04.03.16 at 10:18 pm

#75 Believe it when I see it on 04.03.16 at 9:55 pm

#60 My Wife Loves Garth on 04.03.16 at 8:44 pm

Happily renting a 4 bedroom detached in Richmond Hill for $2300. The identical house next door sold for 1.2 million last month.

I did the calculations if I had bought with 200k down and a million dollar mortgage amortized over 25 years at today’s rates, with closing costs, real estate fees, land transfer tax. Would be over 5k a month.

I laugh every month and I truly love my landlord!
—————————————————————————————-

Your landlord owns a $1.2 million dollar property and collects nearly $30k per year in rent. I’m pretty sure he’s laughing too.

A 2%, fully-taxable, return on the investment? I wouldn’t laugh much. — Garth
——————————————————————————–

And he could sell it with multiple offers in a matter of days after kicking his tenant to the curb. Unless he bought in the last 6 months, the owner is most likely up hundreds of thousands of dollars, if he crystallizes of course.

Jackpot.

Maybe, maybe not. But it has zero to do with the price-rent ratio. I hope your short attention span does not make you feel inadequate. — Garth

#86 TurnerNation on 04.03.16 at 10:21 pm

No chance for rate hike before US election.

____ in May and go ______ :-)

Fun fun till daddy takes the T-Bill away.

(I’d expect TLT.US at under 100 now – as last bull market went.)

#87 ww1 on 04.03.16 at 10:38 pm

#26 Arfmooocat on 04.03.16 at 6:32 pm
4 years of University in Bio gets my niece $20 an hour
===================================
I’m assuming this means she did not get into medical school when she finished her BS in Biology? Just like 98% of her classmates who started four years ago planning to be doctors some day? Well, a professional life just begins when you get a BSci – even in you don’t get into medical school. But you need a Masters in a specialty or further training.

#88 not 1st on 04.03.16 at 10:47 pm

I wish Garth would talk more about we will be facing near the end of these Liberal and NDP terms in the country. Probably a full blown housing meltdown and taxes and austerity in effect because the economy didnt ‘grow’ enough to cover it all.

He will probably be blogging from costa rica by then laughing at us all back here trying to pay for it.

#89 BOOM! on 04.03.16 at 10:50 pm

…error… 3% would be above stall speed IF we stalled deficit growth, otherwise below stall speed as stated.

Thus far, while existing deficit & debt are not being addressed adequately. That may call for putting tax rates back where they were before ‘Shrub’ clipped them. So, it would cost me a BIG 3% more a year on my marginal $$… not really a big deal.

#90 Ronaldo on 04.03.16 at 11:04 pm

Up in Vernon right now and spoke with a local realtor. I said to him that it appears that prices are getting closer to where they were back at the peak in 08. A unit that I’d once owned and which price rose to $328,000 in 2006 is now back on the market at $318,000. That’s 10 years of no gains. He himself stated that the house he owned which climbed to $420,000 in 08 would likely go on the market with same asking price. And this is with interest rates at their lowest ever. Am sure this is the same story in most places across the country.

#91 WalMark of Sadkatoon on 04.03.16 at 11:06 pm

oakville towns often sell for $1 million cuz ppl there are nuts

#92 Star Stuff on 04.03.16 at 11:09 pm

Is that your help wanted ad at the new store? Did smoking man apply?

#93 Milla on 04.03.16 at 11:10 pm

#55 . Yes, that why we voted for NDP in Alberta. I bet we all think so.

#94 Arfmooocat on 04.03.16 at 11:21 pm

You’d feel a lot better if you invested properly. — Garth

Housing has surpassed any Equity investment and we haven’t even taken into account capital gains tax.
Oh ya… you can’t live in a equity either.

Don’t even try and compare the two.

Actually, I stated clearly it is not a competition. But the fact remains financial assets have not been eclipsed by real estate in almost any market since this blog began. — Garth

#95 lee on 04.03.16 at 11:26 pm

For those of you waiting for a crash in Toronto, do you have any good news? Things seem like they just keep sailing along. As I’ve said before, you’ll be on your death beds still saying it’ll happen soon, or this won’t end well. You shoulda bought five years ago. Serves you right trying to make money off of other people’s misery.

As stated, Toronto won’t crash. But neither should anyone expect gains to continue, nor a correction to be avoided. It’s all about risk now. — Garth

#96 My Wife Loves Garth on 04.03.16 at 11:41 pm

#85 Believe it when I see it
The point is I “live” in a million dollar home.
No mortgage, zero debt, and a fat portfolio that kicks off dividends monthly to fully “cover” the rent. Btw..landlord wants to renew the lease for 2 years. Scared that I will want to leave.

#97 Believe it when I see it on 04.03.16 at 11:45 pm

Maybe, maybe not. But it has zero to do with the price-rent ratio. I hope your short attention span does not make you feel inadequate. — Garth
——————————————————————————–

My attention span is just fine and I understand what you are saying. But a.) We don’t know if this house is even carrying a mortgage or was bought 8-15 years ago for a fraction of what it is worth today b.) If the owner doesn’t like his returns and feels like selling, he is most likely up, big time. If investors choose to sell poorly performing stocks, shares or components of their balanced portfolio due to poor returns (ill advised, I know), they cannot unless they wish to crystallize a loss.

My simple point is that it may not be all doom and gloom for the owner in this instance, and in these current market conditions that show no sign of relenting in his area.

The day may come where the opposite is true once again. I’m looking forward to it, believe me.

And I’m not calling it a contest ;)

#98 Ponzius Pilatus on 04.03.16 at 11:49 pm

#6 Debtfree on 04.03.16 at 5:34 pm
#3 common sense ? You owe Pete an apology . Where have all the looking up lyrics went . Long time passing .
———–
You two should be ashamed of your ignorance.
“Sag Mir wo die Blumen sind, wo sind sie geblieben?
Marlene Dittrich

#99 millenial1982 on 04.04.16 at 1:03 am

“#55 james on 04.03.16 at 8:18 pm

, risk rises in a place like Alberta, now home to a government that has embraced endless deficits and swelling taxes.”

C’mon Garth, seriously, you are better than this!

I know you’re not an economist who would understand how long it takes for a new government to really have an impact, but this is really such shorthand for the fact that you hate ‘lefties’, isn’t it?.

But you have been an editor…..so here, let me edit that comment for you, more factually and take out the shorthand:

“Of course, risk rises in a place like Alberta, home for over 40 years to breathtakingly stupid neo-con governments that have embraced short term resource plays and temporary price surges as if they were endless norms, when in fact they fluctuate and require wise leaders to save and plan for the future. Alas, instead, these idiotic conservatives, as usual, played games with the truth and the balance sheets of Alberta, giving unnecessary tax cuts for the sake of nothing but ideology, not saving nearly enough from their God-given resource gifts, and in the process squandering virtually all of the heritage fund savings that had been put aside at the beginning. This has led to the current deficits and swelling taxes, as well as the usual old lame neo-con game of blaming everyone but themselves for their failed ideology. Whatever Notley may be able to do, it will at least not be half as stupid as what her conservative predecessors bungled for the province. Because nobody but conservatives are such completely predictable fools when it comes to financial mismanagement, as history has shown repeatedly in Canada, the U.S.A and elsewhere.”

There you go Garth – your comment put through a little fact checking and truth-detecting.

Free of charge, of course :)

And worth every sous of it. — Garth
________________________________________________________________________

Oh please. Why let me help you and point out how well the liberal government has worked out in Ontario. As of now it’s the most indebted sub sovereign nation in the world. Maybe they only need another 13 years to figure it out? The message here dude is to take control of your life by making your own wise financial decisions. No government will have a bigger impact on your own personal finances than you. For someone in control it’s all just ebb and flow.

#100 Tamsen on 04.04.16 at 1:09 am

The impact of non-local capital in Greater Vancouver and West Van is substantial. All people talk about now is how in hindsight they could have simply owned property in Van or West Van (when they had the chance 10 or 15 years ago) and then could have basically just won the lottery by selling to rich foreigners like so-and-so did … Endless stories of smart/dumb luck. You would have to live here to believe this and understand what’s been happening in the last 15, 20 years.

#101 TRT on 04.04.16 at 1:15 am

No ones yelling at you Garth.

People are upset that you don’t acknowledge foreign money. I’m Asian and can tell you for a fact it’s real. Next time you come to Vancouver, I can take you around and show you how it’s coming into country and lowing into RE.

Of course not my money. I’m 3rd gen Canadian now.

Offer is out.

#102 TRT on 04.04.16 at 1:18 am

And for those gloating how much they earn or their son earns at a job, I got three letters for you:

TPP

After my colleagues are done headhunting for global talent, you’ll be lucky if your son earns 1/3rd of current wages.

Wait. Just wait.

#103 Ratio on 04.04.16 at 1:30 am

Price to rent ratio:
I’m having trouble figuring out these numbers.
650,000 / (1775 X 12) =30.5 (not 32)
How do I figure this out correctly?

Thanks Garth, This seems like a really key ratio to use either for deciding to rent or for buying investing rental real estate

#104 Fortune500 on 04.04.16 at 1:34 am

It amazes me that two Canadians are leading the charge in the US in regards to the frugality ‘new wealth’ movement while their own citizens dig deeper into the abyss back home. I wish more of my Millennial peers would read his blog … and yours Garth. Also read yours :)

http://www.newyorker.com/magazine/2016/02/29/mr-money-mustache-the-frugal-guru

#105 The Dude on 04.04.16 at 2:09 am

This blog should come with a disclaimer.

It does. But we give Air Miles. And free tummy rubs (upon request). — Garth

#106 Metaxa on 04.04.16 at 2:22 am

The best diversification plan is to purchase a home , make extra payments and be mortgage free in 10-13 years.

Yikes!

When one takes out a mortgage you agree to certain terms and conditions that apply to the how and when you make payments and the how and when your payment is assigned to interest or principle reduction.

Making extra payments (or going bi-weekly, etc) just means you are giving the lender more of your after tax dollars under the lender’s terms and conditions.

They tell you you will pay out faster, they show you the math but I have yet to find anyone , in real life, for whom this has actually worked to the tune of paying out a normal amortization in 12-13 years. The lender’s terms and conditions and life events preclude that.

If you truly want to pay out a mortgage fast you have to pay attention to the terms and conditions first and foremost and either modify them to your advantage, remove some altogether or set up your payment method to take the advantage away from the lender and move it over to you. Good luck on the first two, eh?

I have nothing to sell, no philosophy to promote, zero interest in anyone’s financial affairs other than my own but trust me, the core of Manulife’s ManuOne product, the core of a similar Investors program, the core of the Australian Credit Union members mortgage program uses terms and conditions, not extra payments.

The only time to “pay extra” towards your mortgage is at renewal, when 100% of your “extra” goes to principle.

Here is a hint, if you want to pay off your mortgage faster you want lots of renewal opportunities. Lots, like every six months.

Folks who take three, five or longer terms are buying the sizzle, not the steak. Why leave all that principle exposed to the interest for 5 years when you can dramatically reduce principle every six months?

#107 nubbers on 04.04.16 at 2:47 am

We had a P/R ratio of 38 in our previous place. I can’t really blame the landlord for selling up.

#108 Randy Randerson on 04.04.16 at 3:32 am

Greater Fool reporter reporting from HK. According to the local RE authority, our housing index, similar to the HPI in Canada, has declined 8 to 10% since the September 2015 peak. The most likely explanation according to news report is that the price has reached too high too quickly, whilst salary has remained stalled. It is sort of funny, when a few years ago, increased RE price was solely attributed to Chinese officials, yet the decline isn’t due to them pulling out, but due to gravity. I suspect when SHTF in racist Van, it’ll be similar.

#109 Freedom First on 04.04.16 at 3:38 am

#79 West Coast

Yes. And most under 30’s wont even see it coming. Marriage, kids, debt, work work work and 0 free time. Hormones and human nature. The majority live a hard life. As Garth said in the comments today, over half the population is 1 missed payday away from shtf.

Is it worth it? Only each individual can ask themselves if they are happy with their circumstances as they are today, not tomorrow, next year or 20-30-40 years from now, but today.

Short tale. I remember seeing an interview with Arnold Palmer. He was asked if he couldn’t have been a pro golfer for a living, how would he have handled having to do something he didn’t like for a living. His reply was calm and immediate. He said, I would never do anything I didn’t like. My thoughts on that. Be very careful about the hole you dig for yourself.

#110 pBrasseur on 04.04.16 at 7:42 am

As stated, Toronto won’t crash. – Garth

Why not? It was pretty near a crash when the previous bubble popped suddenly in 1989! Why couldn’t it be worse this time? Irrational exuberance is spectacular to say the least, why the consequences couldn’t be the same?

In 1989 even the most favorable demographics ever and years of lowering rates couldn’t prevent a bear market that lasted longer than anyone would have believed. This time population growth is pretty much cancelled out by rapid ageing and no-one can reasonably expect rates to go down to cushion the drop. Yet RE occupies a far bigger portion of the economic pie.

Canada’s main economic engine is public and household debt growth, how does that not lead to some kind a crisis?

Toronto’s market decline started in 1989 and hit the bottom three years later. It then took a dozen years to recover. This is a pattern that could easily repeat. — Garth

#111 Sugarlips on 04.04.16 at 8:04 am

How are rents holding up in the Calgary’s and Ottowa’s? Over here in Perth Australia, where the downturn in iron ore coincided with your oil price slump, rents are significantly down YoY.

First hand anecdote: We rented out our home for $450 a week easily a year or so ago when I took a short term assignment interstate.

A year on and our next door neighbour (comparible house) has reduced the rent to $360 and still no interest.

Good job we have no mortgage and love our home cause We sure are living in interesting times..

Oh and for completeness seeing as everyone is doing the PTR thing today, yes Oz real estate is still as bonkers as Canada our PTR is 34x (assuming it would sell for $600k)

Yes we should cash out but with stable income, no debt and a home we are happy to be carried out in a box from, well sometimes happiness does trump $ (sorry to have inadvertedly used the T word)

#112 TurnerNation on 04.04.16 at 8:05 am

Be a man! Marriage means getting a 20,000 ring, 60,000 wedding and 600,000 mortgage. Plus 50% chance of losing 100% of this when she walks out (I know several cases like this).
Atsa boy.

#113 Ray Skunk on 04.04.16 at 8:09 am

A new moral low point has been reached in the RE madness.

http://news.nationalpost.com/news/canada/judge-slashes-excessive-payout-for-toronto-lawyer-in-malpractice-suit-saying-more-mony-should-go-to-injured-child

Parents of a brain-damaged child want to use part of the negligence settlement to buy a bigger house and use their existing residence as an income property.

#114 crowdedelevatorfartz on 04.04.16 at 8:19 am

@#82 Chris

Will personal observations do?

I have 3 co workers that spend more than they earn. Friends that do the same.
One parks his car blocks from his rented apartment so it wont be repossessed. Contantly behind on bills.
Goes to work when sick because they dont have a “sick day” clause.
So technically. While not a “statistic”…..They are worse than “one pay cheque from living on the street”.

#115 crowdedelevatorfartz on 04.04.16 at 8:34 am

@#74 Linda.

Linda? Can I introduce you to Apocalypse 2016?

#116 Steve French on 04.04.16 at 9:03 am

Garth argues that the poor should not begrudge the wealth of the rich. “You’ll never get ahead my pulling someone else down”, he chides.

—-

“Iceland’s PM faces calls for snap election after offshore revelations”

“David Cameron’s father and senior Tories named in ‘Panama Papers’ leak”

“The Panama Papers: how the world’s rich and famous hide their money offshore”

“How offshore banking is costing Canada billions of dollars a year: An unprecedented leak of secretive offshore tax-haven data contains stunning new revelations about the diversion of wealth from government coffers to hidden bank accounts.”

——

Time to give it up Garth!

The economic system is corrupt, and we’re not in on it!

(and neither are you, so i’m not sure why you defend it so strenuously)

The more people are diverted from improving their own lives, to bitterly envy others, the worse off they will be. I regret seeing that. — Garth

#117 Bytor the Snow Dog on 04.04.16 at 9:12 am

@Linda, @Garth

Linda @ 74 sez:

http://gawker.com/biggest-leak-in-history-reveals-corruption-in-world-lea-1768788422

Anyone who has offshored their money like this and thinks they can stay in Canada should receive the death penalty. Same for their lawyers and financial advisors.
You like Panama or the Isle of Man? Then go live there. Enjoy the third world diseases and violence.

Period.

This is the ultimate in undermining the stability of our societies, paid for through collective democratic taxation and goodwill.

People who don’t participate in that, and in fact set up elaborate schemes to avoid their due shares, must be eliminated.

They are worse than the scum at the Nuremberg trials. In fact, we need a new set of Nuremberg trials to deal with the global .1% who participate in this kind of world-destroying garbage.

Then off to the hangman for each and every one of them.

War against the rich is coming. They have already declared war against the rest of us, but we just have not realized it yet.

This will change that.
————————————————
Garth SEZ:

That was ugly. I pity you. — Garth
————————————————
BYTOR sez:

Let ’em eat cake eh Garth?

Some of the world’s most successful and powerful people have private stores of wealth. Wow. Who’d have thought? — Garth

#118 saskatoon on 04.04.16 at 9:29 am

1775/month?

for a full, nice house rental?

bs.

You’d be surprised. Go Kijiji. — Garth

#119 D.A. aka Devil's Advocate on 04.04.16 at 9:47 am

I’ve had to give notice to vacate to several families over the past few weeks. Landlords are liquidating. The buyers are moving in. Two clear months notice for such in B.C. with the last month rent free. Not much compensation in our tight rental market considering there is practically NOWHERE to rent and that which there is prospect tenants are bidding against one another for.

Doesn’t matter whether you buy or rent there is a cost to keeping a roof over your head and it’s going up. Simple supply and demand.

#120 hope & ruin on 04.04.16 at 9:58 am

#81 Big Dipper on 04.03.16 at 10:07 pm

Your buddy GT claims that the Alta recession has nothing to with the oil price and everything with Notley. You agree?
________________________________________

No, I don’t agree. Oil price is the problem I just don’t think Notley is helping. More investment dollars from oil companies could’ve reduced the impact of the downturn though.

You’re flip-flopping here between the prov. cons and the federal ones. I’m talking about the provincial ones and I’m pretty sure that they don’t build ships. The provincial cons over the last 5 years HAVE been screwing up and that’s why they got ousted. However the replacement is screwing up too.

if you want to talk about ideology, well it was Ralph Klein’s policies that got Alberta the investment it has today. Cutting taxes, reducing debt made AB an attractive investment even if the price of producing there would be higher. So like, common sense said, these parties have a tendency to stick to what got them there, regardless of current conditions. Notley’s plans are the opposite of that.

#121 D.A. aka Devil's Advocate on 04.04.16 at 9:59 am

“Actually, I stated clearly it is not a competition. But the fact remains financial assets have not been eclipsed by real estate in almost any market since this blog began.” — Garth

Maybe on a macro scale but when you drill down to specifics, like Vancouver or my personal experience, not so much. I don’t know financials and apparently neither does my financial advisor. I know dirt.

A successful mentor once told me; “When you are far from your land you are near to your losses.” from my vantage point, I tend to, wholeheartedly, agree. Until the population trend reverses (there are seven times as many bodies on this planet as there were 100 years ago, Kelowna population is growing in leaps and bounds – go figure) I’ll stick to real estate.

#122 saskatoon on 04.04.16 at 10:04 am

#74 Linda

garth is correct: you are pitiable.

“This is the ultimate in undermining the stability of our societies, paid for through collective democratic taxation and goodwill.”

goodwill?

GOODWILL?

ARE YOU FREAKIN’ KIDDING ME?

i’ve got news for you:

millions of canadians pay taxes because of fear and intimidation; they will GO TO PRISON if they don’t.

taxation is violence.

theft is not compassion.

#123 Hope & Change (Canada) on 04.04.16 at 10:06 am

#106 Metaxa on 04.04.16 at 2:22 am
The best diversification plan is to purchase a home , make extra payments and be mortgage free in 10-13 years.

Yikes!

Making extra payments (or going bi-weekly, etc) just means you are giving the lender more of your after tax dollars under the lender’s terms and conditions.

You pay with after tax money but you save hundreds of thousands in interest which is also after tax.

Most lenders allow you to pay off up to 15% of the original amount extra each year.

Each extra payment is like “pressing fast forward” on the time left of your mortgage.

And since the interest on a mortgage is front-loaded (the younger the mortgage, the more of your payment is comprised of interest) the earlier you start making extra payments, the more interest you save.

Get yourself an amortization calculator and figure out, month by month what percentage of a payment is interest and what percentage is capital repayment.

The bank certainly does not want you to start repaying early. This is why they set the 15% maximum limit.

I paid my house off in less than 8 years. Trust me, when you have no mortgage and a paid for house, your whole relationship with money changes.

#124 D.A. aka Devil's Advocate on 04.04.16 at 10:09 am

But, I gotta say…

This feels an awful lot like 2007, (an AWFUL lot like). Gotta wonder what “Black Swan” lays in wait just over the horizon – and we know there is one. There ALWAYS is. We just don’t know what it is.

So… live today like you want tomorrow to be because you just never know…

#125 Sean on 04.04.16 at 10:13 am

Renting makes sense for us. Late 20s living downtown Toronto. Anyone I work with thinks it’s nuts that we rent. The bank just offered us a 900k mortgage if we want it. This wouldn’t even be enough to get a place where I am living now and renting at only 2k a month all in (heat, hydro, water, parking). We travel a lot for our vacation and save the rest. No debt is a pretty sweet way to live.

#126 pwn3d on 04.04.16 at 10:28 am

This spring is not like other springs, it’s crazy out there right now in many GTA areas. So many people looking and so few choices. New homes becoming less of an option as they take 2 years and have a premium price. If you don’t make a good salary but own your home now may be the best time to sell.

Btw for the Dan guy who gets mad from other peoples success, nobody, and I mean nobody would recommend to buy a house in some sh!thole Edmonton suburb. You have to be kidding.

#127 Noel on 04.04.16 at 10:29 am

#110 pBrasseur

Canada’s main economic engine is public and household debt growth, how does that not lead to some kind a crisis?

___________________________

Because its not Canada’s main economic engine. Canada is quite diversified – sectors that are bigger than public admin include resources, healthcare, manufacturing, finance/insurance and construction.

Not sure what you mean by referring to household debt growth as an engine of the economy though.

#128 sockeye sam on 04.04.16 at 10:52 am

#102 TRT
I’ve already offered him the same thing. He’d rather put the blinders on. Careful the rest of the people on this site are going to call you a racist even if you’re Asian. I could tell you about the two open houses I went to on the weekend over here in Dunbar but I’m not going to waist my time.
Now I’ll sit back and watch all the crap come in.Blah, blah, blah.

#129 Bytor the Snow Dog on 04.04.16 at 10:54 am

@Garth- Where did I say I was against the accumulation of wealth?

Are these offshore shell companies set up for tax “evasion” or tax “avoidance”?

Inquiring minds wanna know.

#130 BS on 04.04.16 at 11:05 am

Steve French on 04.04.16 at 9:03 am
Garth argues that the poor should not begrudge the wealth of the rich. “You’ll never get ahead my pulling someone else down”, he chides.

—-

“Iceland’s PM faces calls for snap election after offshore revelations”

“David Cameron’s father and senior Tories named in ‘Panama Papers’ leak”

“The Panama Papers: how the world’s rich and famous hide their money offshore”

“How offshore banking is costing Canada billions of dollars a year: An unprecedented leak of secretive offshore tax-haven data contains stunning new revelations about the diversion of wealth from government coffers to hidden bank accounts.”

——

Time to give it up Garth!

The economic system is corrupt, and we’re not in on it!

(and neither are you, so i’m not sure why you defend it so strenuously)

The examples above prove higher taxation and taxing the rich does not work. The rich have options to avoid excessive taxation. They always have and always will. They will never pay more than 50% to tax. The greedy governments ended up getting nothing in these cases. T2 and his supporters will have to learn the hard way as capital flees Canada and net tax revenues plummet.

#131 Dups on 04.04.16 at 11:23 am

Offshore money scheme exposed….

http://www.ctvnews.ca/video?playlistId=1.2843603

#132 Metaxa on 04.04.16 at 11:28 am

#123 Hope and Change.

I totally understand mortgages
My first one wasn’t even a mortgage…remember when CU’s weren’t allowed in the mortgage game so they used what were called loans on real property?

I’ve paid off multiple mortgages…personally I was in the independent, owner operated restaurant business for just shy of 40 years. Banks don’t finance those so it was mortgage the house any time you moved up or weathered a recession or whatever.

Plus my brother and I had a smallish string of rental homes, again over 30 years of acquiring, moving from the lower end into actual homes you and I would live in.

So…lots of mortgages over decades.
By all means take advantage of the 15% yearly but the rest of what I’m talking about is paying your mortgage off faster using less of your money.

Your method uses more of your money.

Its all about terms, not what you think might work.

#133 IHCTD9 on 04.04.16 at 11:33 am

#123 Hope & Change (Canada) on 04.04.16 at 10:06 am

You pay with after tax money but you save hundreds of thousands in interest which is also after tax.

Most lenders allow you to pay off up to 15% of the original amount extra each year.

Each extra payment is like “pressing fast forward” on the time left of your mortgage.
______________________________________

Not to mention that lump sums come right off the principal immediately with no portion of the payment becoming interest.

When I had a mortgage, we paid weekly, and made small lump sums every month, as our interest rate went from 6.4 in the early 2000’s down to 1.5 (we had a sub-prime variable), we kept making the same payment as we did when we started at 6.4, with the difference being made as a lump sum at the end of the month.

That’s pretty much all we did to speed up our mortgage, and it knocked 11 years off the original amortization.

#134 For those about to flop... on 04.04.16 at 11:37 am

#128 sockeye sam on 04.04.16 at 10:52 am
#102 TRT
I’ve already offered him the same thing. He’d rather put the blinders on. Careful the rest of the people on this site are going to call you a racist even if you’re Asian. I could tell you about the two open houses I went to on the weekend over here in Dunbar but I’m not going to waist my time.
Now I’ll sit back and watch all the crap come in.Blah, blah, blah.

//////////////////////////////////////

Hey sockeye ,what happened to Bitter Much?
You have stated before that you could get 3 million for your house ,but you don’t want to move.

You seem to be having a hard time accepting change ,after all you own one house in a neighborhood where it makes sense for some of your neighbors to cash in,others have no need.

I don’t like to see perfectly good houses get bulldozed either ,but people are free to do as they see fit and with crazy money being thrown around it only increases the activity…do you really think that there would be this much construction if the houses were going for less than a million?

A couple of weeks ago you stated ” I wish I could show you some photos of what’s going on”.
The Beebs gave you instructions ,which I decided to use but I have yet to see any effort from you apart from anger.

Taking photos isn’t going to change anything, but sharing your experience might lower your blood pressure.

You could sell for 3 mill. move over to the dark side of town for 1.5 and invest the rest but there is just as much construction over here,just with lesser margins.

You should probably stay where you are ,why not build new yourself?After all if you can’t beat em join em but by the sounds of it you will be grumpy no matter where you live…

You should do something though or else your house is going to kill you ,when it really should be liberating you…

Good luck, Bitter Much…

M41BC

#135 unbalanced on 04.04.16 at 11:41 am

To # 123—Hope and Change ( Canada). I agree with you 100%. I got 3k square feet of house. Costs me under 800 a month for taxes and utilities. I didn’t buy for an investment. I bought for my future comfort. By the way, I do all building or maintenance myself.

#136 waiting on the westcoast on 04.04.16 at 11:46 am

#128 sockeye sam on 04.04.16 at 10:52 am says… “#102 TRT
I’ve already offered him the same thing. He’d rather put the blinders on. Careful the rest of the people on this site are going to call you a racist even if you’re Asian. I could tell you about the two open houses I went to on the weekend over here in Dunbar but I’m not going to waist my time.
Now I’ll sit back and watch all the crap come in.Blah, blah, blah.”

I think the issue is you are focusing on things you cannot control. If I want to buy some land and Jimmy Pattison decides he wants the same land, not likely I will get the property or the for the price that I want. I can only control what I am willing to pay for the same asset. So I rent and wait for a more reasonable valuation.

I am not sure what you (and the twitter-millennial crowd) think all the cry baby or hateful antics will achieve. Spend time analyzing your locus of control and leverage it.

#137 DW2 on 04.04.16 at 11:46 am

SOULLESS????

As a resident (single and happy owner of a too tall townhouse) of North Oakville since 2006 I can say I love it here and find it to be anything but soulless. My Schnoodle agrees. At one time, for too short a time, we even had the most interesting member of parliament, perhaps you know him.

#138 IHCTD9 on 04.04.16 at 11:52 am

#130 BS on 04.04.16 at 11:05 am

…The greedy governments ended up getting nothing in these cases. T2 and his supporters will have to learn the hard way as capital flees Canada and net tax revenues plummet.

_____________________________

I think T2 knows what’s coming, any half-wit should have a pretty good idea that 2016 is going to be demoralizing on the federal revenue front.

That is probably why T2 structured the budget around some highly unrealistic lowball oil prices – he knows he’ll need the “extra revenue” later on…

The laffer curve is now in effect. I have personally reduced my retail spending by 130.00 a week at this point. Not much else I can cut, – but that is still pretty significant IMHO. No mortgage, no car payment, pounding it into RRSP’s, and utilizing Kijiji wherever I can. Plus more to come.

I’m just one guy, there are thousands more just like me. Some will slow down because they have no choice financially, others may leave Canukistan altogether. This is to say nothing of how manufacturing and NR losses in 2015 are expected to carry on unabated in 2016 – maybe even accelerating.

Now, we could even be staring right down the barrel of an interest rate hike…

T2 may not be the brightest politician we’ve ever had, but how could he be so off base as to think things are looking up in 2016?

(don’t answer that)

#139 waiting on the westcoast on 04.04.16 at 11:52 am

As I keep describing to everyone here, the US is doing well for my bushiness. Looks like it is for others as well. The only worry I have is that I haven’t felt this good since 2007 and we know how that turned out… ;-)

http://www.cnbc.com/2016/04/04/how-glum-are-business-owners-on-economy-youd-be-surprised.html

#140 Stoopid Idiot on 04.04.16 at 11:53 am

Read Page 223 titled Bail-in Regime

http://www.budget.gc.ca/2016/docs/plan/budget2016-en.pdf#page225

Non-event. Read the post. — Garth

#141 Millmech on 04.04.16 at 12:13 pm

#103 TRT
And once their done with the employees they will outsource all the management also,better for the company to not have to pay those excessive contracts,millions of people highly skilled in management who think $40,000/yr with no benifits is great pay.

#142 IHCTD9 on 04.04.16 at 12:19 pm

#103 TRT on 04.04.16 at 1:18 am
And for those gloating how much they earn or their son earns at a job, I got three letters for you:

TPP

After my colleagues are done headhunting for global talent, you’ll be lucky if your son earns 1/3rd of current wages.

Wait. Just wait.

——————————————–

Already been happening for ages. Look at the GTA, chock full of East and South Asians making jack.

Even without any help the TPP may offer, all you really need is more workers than jobs and you’ve got a wage killing environment.

Private sector Unions are losing the battle for wage increases and pensions. Trudeau wants to bring in more migrants, and increase immigration across the board.

You are probably too young to have noticed this. I am just old enough to see it.

The near future for Canada as far as I can see is boatloads of new immigration from developing/3rd world countries in a vain attempt to inject some adrenalin into the economy. This coupled with primarily left leaning governments that seem to be more economically inept with each passing decade.

Wages in the private sector will continue to be pounded down, no escape from this given the current situation in the Global economy. TPP may serve to speed things up in this regard – but it sure won’t be starting any new trends.

#143 pBrasseur on 04.04.16 at 12:33 pm

#127 Noel

«Not sure what you mean by referring to household debt growth as an engine of the economy though.»

Unsustainable debt growth fuels consumptio (including RE) which represents anywhere form 60 to 80% of this economy.

#144 sockeye sam on 04.04.16 at 12:41 pm

#134
#136
Like I said, “blah, blah, blah”. Nothing but FLUFF!!!

Back to your basements, Mommy wants to wash the floor upstairs.

#145 jess on 04.04.16 at 12:49 pm

#74 Linda on 04.03.16 at 9:50 pm

Thats called “feeling the Bern” in the usa ;)

Finally some truth with media
http://visar.csustan.edu/aaba/jerseypage.html

Liquidity will be hopping aboard those private jets?

#146 TRT on 04.04.16 at 12:55 pm

DELETED

#147 For those about to flop... on 04.04.16 at 12:57 pm

#145 sockeye sam on 04.04.16 at 12:41 pm
#134
#136
Like I said, “blah, blah, blah”. Nothing but FLUFF!!!

Back to your basements, Mommy wants to wash the floor upstairs.

/////////////////////////////////

I’ve tried to be sympathetic to a guy that cans sell his house for 3 million and you deride me.

When I work on the house next door I will make as much dust as possible you little prick.

Speaking of fluff,you sound like you need a good fluffing…let it go…

M41BC

#148 jess on 04.04.16 at 12:59 pm

pirate party in iceland
https://en.wikipedia.org/wiki/Pirate_Party_%28Iceland%29

“Sigmundur David Gunnlaugsson walked out amid claims he used secret offshore firm Mossack Fonseca to hide millions of dollars as Iceland’s economy collapsed
Mr Gunnlaugsson came to power in 2013 following a backlash against the banking system.He is now facing a vote of no-confidence following the revelations”.

#149 Vundo on 04.04.16 at 1:02 pm

#131 BS: you are right about them having options, but why do we have to accept that as a forgone conclusion instead of a problem that is yet to be solved? What ensures that they “always will”?

#150 TRT on 04.04.16 at 1:05 pm

And since rents are being mentioned, I can tell you rental properties are skyrocketing in Vancouver as we speak.

2 years ago, you could rent a townhome in suburbs for $1500. Now it’s $2000. A detached home for about $1800. Now it’s $2600.

And this doesn’t even include Vancouver prices.

Foreign students with big money pushing up rental prices.

Prove it. — Garth

#151 BOOM! on 04.04.16 at 1:07 pm

IHCTD9

We better ALL hope TPP and related are relegated to the ‘dust bin’ of history, for our sakes, as well as that of the planet. That piece of wishful thinking by big corporations to further tilt playing field to their advantage is every human’s nightmare.

I have read enough of out to understand it is not in ‘my kind’s’ best interests. My kind by the way is human kind.

Time legislation is developed in the light, where it is disinfected. My elected officials need time to read it, understand it, debate and amend it, then vote for, or against it.

B64WI

#152 Unbalanced on 04.04.16 at 1:11 pm

To suck eye Sam. I feel for your failure!

#153 For those about to flop... on 04.04.16 at 1:17 pm

Well,Boom your state is definitely enjoying your moment in the national spotlight.
The national broadcasters keep called for the candidates to tone it down a bit as the people of Wisconsin don’t like the low blows that are going on.
I see Donny Rump is trying to get Kasich to ” abort” his mission of playing spoiler.
Do me a favour ,take Bernie Sanders to your barber and give him a buzz cut,he’s got more important things to worry about which way his hair is blowing…
Enjoy the carnival tomorrow…

M41BC

#154 IHCTD9 on 04.04.16 at 1:27 pm

#80 JOSEPH on 04.03.16 at 10:05 pm
If Sean had provided a few extra prepayments per year on the house he was sitting on for 10 years in Edmonton, the house would practically be paid for, and he would be sitting on $300K in equity right now. A little discipline is all it takes. Even Garth has readily admitted he first purchased (and likely paid off) his house before diversifying. His rule of 90 wasn’t in play until he first purchased his house. The best diversification plan is to purchase a home , make extra payments and be mortgage free in 10-13 years. After that delve in all the financials you want as you’re a free man at that point.
____________________________________________

That plan throws compound interest out the widow. You need to be off and running with your investments and have your house paid for by 40 or you’re screwed.

How are you going to let your money work for you with only a 25 year horizon?

Bottom line, start investing before you buy a house in your early mid 20’s, you can really pound it in there that way. Then buy a house where you can still save a bit every month, and ensure the mortgage is gone by the time you hit 40, then turn on the saving full blast again.

Yes I realize this is impossible to do for a young couple in GTA/YVR these days. Their life, their choice, no one put a gun to their heads and said move there. No one forced them to dump 50G’s on a degree either.

I did the above (and more) in small town Ontario. A couple making minimum wage could own a decent home in my area before 40 y/o at todays rates. Cheaper to buy than rent if you don’t need a McMansion out here.

#155 spaceman on 04.04.16 at 1:33 pm

The rent price ratio doesn’t work in Victoria, a$450,000 house bought in 2012, rents for $2500/month, as per craigs list. Do the math on that…

My mortgage payment is $1780/month… My Realtor was right, he was going to buy it and rent it out if I didn’t… it would have given him positive cash flow..

Whats my point… its not the same everywhere, there is still a reason to buy for some, not for others…

cheers.

#156 John on 04.04.16 at 1:43 pm

#74 Linda

Wow. That was dark. Unfortunately the 0.1%ers you want to declare war on are also the ones who create and run the businesses that employ people and generate the wealth of a country.

Also, have you ever been to panama? I’m assuming you haven’t. It is quite nice. In fact, I’m planning on moving there because I personally think it’s a better county than canada.

#157 fancy_pants on 04.04.16 at 2:07 pm

feeding frenzy!

http://www.vancouversun.com/business/home+sales+record+march+vancouver+area/11828954/story.html

#158 jess on 04.04.16 at 2:17 pm

But though political corruption is fun and newsy, the document dump also features a leaked memorandum from a Mossack Fonseca partner revealing the more boring truth that “[n]inety-five per cent of our work coincidentally consists in selling vehicles to avoid taxes.”
http://www.vox.com/2016/4/3/11356326/panama-papers

The International Consortium of Investigative Journalists has a full profile of political figures and their relatives named in the Panama Papers for your reading amusement

who did what and how
140 politicans in 50 countries connected to 21 tax havens

https://projects.icij.org/panama-papers/power-players/index.htmlpleasure.

#159 Balmuto on 04.04.16 at 2:24 pm

“According to conventional wisdom, when a P/R ratio is 15 or less, you should buy. When it’s 16 to 20, renting has a slight edge. Above 21, only fools would not be a tenant. And north of 30, you should giggle every time you write a rent cheque and offer to date and marry your landlord’s unfortunate spawn in profound, unbridled gratitude.”

Interesting. I rent a condo in downtown Toronto for $2500 a month. I see similar units in my building listed for $550k-$600k. Which would imply a price to rent ratio of 18-20. Which would give renting a “slight edge” on the above scale. And that sounds about right to me. The downtown rental market is still pretty tight despite all the new condo supply that’s hit the market in recent years. Toronto condos do feel overpriced but it’s not like renting’s a great bargain either. Sounds like the suburbs are a different story.

#160 family beagle on 04.04.16 at 2:28 pm

#11 E Richard on 04.03.16 at 5:48 pm
From the land of the ownership cult, this is the most hysterical article I have read from Vancouver ever, double standards means they do not have a problem with ripping off someone like myself as long as they make more than they paid.

http://www.msn.com/en-ca/money/news/north-vancouver-condo-sold-for-dollar500k-below-value-in-double-ending-sale/ar-BBrhcBX?ocid=spartandhp

Interesting. Seems there will be fuss if sellers undercut neighbours who are banking on equity. Such shallow lives we lead on margin. I like the one coot barking for an investigation.

Garth, to the condo pic, “Preserve”, funny. Looks nothing like our ranch in an actual 3500 hectare ecological preserve. No doubt different priorities are being ‘protected.’

#161 sockeye sam on 04.04.16 at 2:39 pm

#148 For those about to flop.

That’s BIG prick to you. Hey, were you the one that told me to sell a couple of years ago? Good thing I didn’t, just shoved close to another Mil. in my pocket. The 44 foot up the street just flipped for 3.4. mil with no view. Buy the time I get back from Cozumel in a month, mine will have just jumped another 100 grand. Oh, the one up the street sold to people from the other side of the Pacific, like all the others around here. I’m starting to turn this thing around and I’m enjoying my vacant neighborhood. Soon it will be all mine!!!

#162 sockeye sam on 04.04.16 at 2:46 pm

#151 TRT

It’s hard getting the none believers to believe. Do yourself a favor. Don’t even bother anymore it’s not worth the aggravation. Most of them are on the other side of the country and they don’t have a clue what’s going on.Possibly the FLAT EARTH SOCIETY.

#163 TRT on 04.04.16 at 2:50 pm

Canada’s Big 5 banks being implicated in the Panama Papers ….especially RBC.

This is huge. Maybe tie to rewrite bank act and get rid of these too big to fail money launderers and tax evaders.

Zero evidence RBC was engaged in anything illegal. Stop slandering. — Garth

#164 TRT on 04.04.16 at 2:54 pm

Prove it. — Garth

Christy Clark is doubling foreign student numbers…in middle of numbers increase now.

Average private tuition is $30,000 per 8 months.

These students need to live somewhere and not basement suites. Real rental stock hasn’t increased in supply so pressure upwards on rents. Check craigslist.

Can we really prove that the sky is blue on a sunny day?

or that a scientific study with 95% confidence intervals is a fact?

#165 S.Bby on 04.04.16 at 2:56 pm

#151 TRT
Wrong. Just look on Craigslist.

#166 cramar on 04.04.16 at 2:56 pm

#157 John on 04.04.16 at 1:43 pm

Also, have you ever been to panama? I’m assuming you haven’t. It is quite nice. In fact, I’m planning on moving there because I personally think it’s a better county than canada.

————–

Panama is being promoted as a great retirement destination—what Costa Rica was like 20 years ago. It would be my #1 choice to check out as a living destination in Central America. Lots of American retirees there. Be interesting to find out how many Canucks have taken up residence, and what they think of it.

#167 S.Bby on 04.04.16 at 3:01 pm

#145 sockeye sam
That was a weak rebuttal.
You seem to a have thin skin for a bus driver.

#168 Brazil ex-pat on 04.04.16 at 3:04 pm

http://www.cknw.com/2016/04/04/metro-vancouver-sees-record-breaking-home-sales-in-march/

+++++++++++++++++++++++++++++++++++++

It amazes me how far 60K for the average family of 4 gets. Because surely not EVERYONE is selling up. But I digress because there is no data to verify either way.

#169 Big Dipper on 04.04.16 at 3:07 pm

#121 hope & ruin on 04.04.16 at 9:58 am

#81 Big Dipper on 04.03.16 at 10:07 pm

“if you want to talk about ideology, well it was Ralph Klein’s policies that got Alberta the investment it has today. Cutting taxes, reducing debt made AB an attractive investment even if the price of producing there would be higher.”

————————————————

Ah yes, Ralphy, “I didn’t know he was drunk until I saw him sober once”, Klein.

The guy who slashed and burned health care and education, The populist who started sending treasury cheques to the population when it was neither needed or wanted.

Who, like all Cons before and after, (excepts Lougheed), forgot to add to the rainy day Heritage Fund. The only thing that Ralph made attractive to investors was his habit of giving away tax payers subsidized Alberta resources.

Oh yes, that Klein.

You Cons are delusional.

#170 bill on 04.04.16 at 3:07 pm

#74 Linda on 04.03.16 at 9:50 pm
isle of man 3rd world???
not quite….
https://en.wikipedia.org/wiki/Isle_of_Man
http://www.iomtt.com/
for those that may be interested it is a mere 54 days until the TT…

#171 John on 04.04.16 at 3:10 pm

#156 spaceman

I believe you need to do the math. There is absolutely no way you will be cash flow positive carrying a $450,000 mortgage and renting out the property for $2500 per month. You are assuming 100% vacancy and not accounting for repairs/upkeep which is estimated at 1-2% of the properties’ value per year. If you made a down payment, the lost return on that investment needs to be factored in as well. If you are not collecting 10% of value of your property per year in rent, you are wasting your time. In your case, it’s not even close.

#172 Victoria Real Estate Update on 04.04.16 at 3:18 pm

# 54 Graeme

You claim that hordes of Americans and eastern Canadians are moving to Victoria.

Any proof? Facts, numbers…

Another real estate “professional” (you’ll deny it) trying to pump the market without any facts to back your claims.

Again, we saw this situation on 2010 in Victoria. Eastern Canadians, Asians, Americans… were moving to Victoria and buying real estate.

Prices were supposed to keep going higher and those who didn’t get in would be priced out forever.

Then the market turned on a dime. It wasn’t a surprise to those who understood that housing markets correct after making gains.

Fact: house prices fell substantially in Victoria beginning in 2010.

The most important thing to note about Victoria’s recent price decline is that it happened while 5 year mortgage rates were falling.

Of course falling rates create a highly stimulative environment and house prices normally rise in that situation. House prices across the rest of Canada increased substantially while prices in Victoria fell.

You real estate “professionals” don’t understand they the market performance of one month can’t be used to predict the performance of the next month and that housing markets can turn on a dime.

You’re using regency to pump the market. “Professionals” did that in 2010 and were proven wrong by the market.

Victoria’s housing market will turn around again. That’s guaranteed. History has shown that this happens with housing markets.

March could have been the last month before prices turn downward again in Victoria.

It won’t take rising rates for that to happen. However, rising rates will play an important part in pushing house prices down in Victoria in the future.

#173 Brazil ex-pat on 04.04.16 at 3:24 pm

#141 Stoopid Idiot on 04.04.16 at 11:53 am
Read Page 223 titled Bail-in Regime

http://www.budget.gc.ca/2016/docs/plan/budget2016-en.pdf#page225

Non-event. Read the post. — Garth

++++++++++++++++++++++++++++++++++++

Garth is right. The only person it affects the owner of bank shares as the bank that goes belly up has its shares massively diluted and therefore devalued.

No Canadian bank is failing or will fail. Go back to your banana. — Garth

#174 Entrepreneur on 04.04.16 at 3:27 pm

With the above comments looks like both the Conservatives and the Liberals are not cut out for leadership roles.

As for the TPP (Trans Pacific Partnership) does not look good for Canada. Good if want cheap products from another country. So much for the middle class.

Robots, TPP, online shopping, higher taxes, more debt, the only thing we have left is the saying that Canada is strong, the most beautiful place on earth (and that can be disputed).

Our leaders have forgotten the people that live in their nations. Think middle class as the rock of a nation, ours are disappearing.

#175 IHCTD9 on 04.04.16 at 3:33 pm

#56 Big Dipper on 04.03.16 at 8:24 pm

Granted, this conservative caused disaster may require the implementation of an Alberta sale tax. No doubt you and your minions will blame the NDP for that.
______________________________________

I know lefties like to break out the stone tablets to blame every former right wing leader in the history of the universe for their current problems but…

…whoever actually brings in a PST in Alberta will get the blame for it.

As it should be.

When Notley finally does, I will be selling high quality, government approved un-bunched panties for anyone who has the need.

I will also be carrying a premium line of anti-bunching, and bunch resistant panties – for use when Notley raises said PST at least once more before leaving office.

Finally, I offer 6AL-4V heat treated Titanium, Super Duty, Extreme Service bunch-proof panties designed expressly for use directly after we all blame Notley for bringing in a PST in Alberta.

An optional plasma arc applied Silicon Carbide panty coating is available for those NDP’ers that actually live in Alberta.

#176 Westvan on 04.04.16 at 3:33 pm

I know Garth says the main reason for prices in van and t.o. Are cheap money and horny locals. How come Winnipeg has the same rates as van and Toronto but their prices haven’t gone nuclear or Montreal or Ottawa etc… Enlighten us Garth …

I did. Supply and demand. Plus ice and mosquitoes. Oh yeah, and a city whose biggest landscape feature is a ditch. Shall I continue? — Garth

#177 Victoria Real Estate Update on 04.04.16 at 3:37 pm

# 51 Move on VREU

You’ve misunderstood a lot of the points I’ve made about Victoria’s recent price decline (2010-2014).

Not once did I use regency to predict that house prices will begin falling again soon because they fell from 2010-14.

Read carefully.

My point has been made clear many times.

That house prices fell in Victoria while 5 year mortgage rates fell (highly stimulative) shows market weakness. It shows that local incomes and the economy in general (Canadian and local) can no longer support Victoria’s bubbly house prices.

This can’t be fixed by a temporary uptick in construction activity or a temporary uptick in sales due to amateur speculation.

This market weakness indicated that locals are tapped out and can’t support house prices. The only thing that can happen is for prices to fall and that’s what happened.

As Garth wrote, speculation and record low rates are the reason for the increase in sales lately in Victoria. Neither is sustainable and both will disappear.

As I’ve said, locals can’t support prices any longer and it’s only a matter of time before prices begin to fall again.

This could happen without rising rates.

Speculation is a bad thing for the future of house prices in any housing market. In the US those cities that experienced a lot of speculation while the bubble inflated were among those cities that experienced the biggest price declines.

Again, I’m not using recency to predict that house prices in Victoria will fall again as you claim.

#178 TurnerNation on 04.04.16 at 3:41 pm

160 Balmuto also I note closing costs and two land transfer taxes of a 600k condo is a year’s worth of rent at 2500/mo.
My rental kando is 12-15 yrs old they had to redo the lobby and all hallways, and major repair work to underground garage. And more I’m sure. Sinkhole.

Condos suck, and should be rented.

#179 S.Bby on 04.04.16 at 3:41 pm

#165 TRT
These students need to live somewhere and not basement suites. Real rental stock hasn’t increased in supply so pressure upwards on rents. Check craigslist.
——————————————————
A guy I work with who is originally from Taiwan rents out rooms in his house to Asian students to help pay his mortgage.

#180 WalMark of Sadkatoon on 04.04.16 at 3:44 pm

#172 John on 04.04.16 at 3:10 pm

John is right. I would even say 15% per yr.

#181 TurnerNation on 04.04.16 at 3:48 pm

Slander is spoken, defamation is the written libel.
Anyway, defamation is presumed in Canada. Onus on defendant.

(I seem to recall some skeletons here…)

#182 Nemesis on 04.04.16 at 3:49 pm

“Easy to see how that could come off the rails real fast.” – HonGT

#FunnyYouShouldSayThat,Or… #NoCountryForOldDogs?… #&WhiteRockIsNeverHavingToSayYou’reSurrey…

[TimesColonist] – Nanaimo seniors home lays off entire staff [Again]

…“Unfortunately, this is the new normal, with contracting out, contract flipping and ownership changes undermining quality, stable care for seniors across Vancouver Island,” Whiteside said.

“We think enough is enough,” Whiteside said. “The health authority should stop the sale, stop the layoffs and put this facility under direct administration.”…

http://www.timescolonist.com/news/local/nanaimo-seniors-home-lays-off-entire-staff-1.2222930

[CBC] – Community needs to do more to stop shootings according to Surrey acting mayor: There have been 30 shootings in Surrey so far this year

http://www.cbc.ca/news/canada/british-columbia/surrey-shootings-community-needs-to-do-more-1.3519609

#183 S.Bby on 04.04.16 at 3:51 pm

#162 sockeye sam
just shoved close to another Mil. in my pocket.

No you didn’t, unless you just sold out.

You are making the classic amateur investor mistake; hold on because you think the price will go up forever. It’s better to sell a year too early than a day too late.

#184 For those about to flop... on 04.04.16 at 3:55 pm

#162 sockeye sam on 04.04.16 at 2:39 pm
#148 For those about to flop.

That’s BIG prick to you. Hey, were you the one that told me to sell a couple of years ago? Good thing I didn’t, just shoved close to another Mil. in my pocket. The 44 foot up the street just flipped for 3.4. mil with no view. Buy the time I get back from Cozumel in a month, mine will have just jumped another 100 grand. Oh, the one up the street sold to people from the other side of the Pacific, like all the others around here. I’m starting to turn this thing around and I’m enjoying my vacant neighborhood. Soon it will be all mine!!!

///////////////////////////////////////

No I did not tell you to sell a couple of years ago,I haven’t been on the bog that long.
I really don’t care what you do with your” problem” ,I just tried to sympathize with you,but not anymore.

My recommendation now is that you take the extra money from your house and go and see the best psychiatrist on the planet and relize that there are 7.4 Billion people in the world that would love to have your “problem”…

Not gonna waste any more time on you and I regret talking to you earlier…

M41BC

#spoiltbrat

#185 Victoria Real Estate Update on 04.04.16 at 3:59 pm

# 34 Andrew Woburn

Emergency level interest rates are highly stimulative.

This stimulative environment boosts sales because more people can qualify for mortgages at 2.5%, for example, than at 10.5%.

If you say that a low rate environment doesn’t result in more sales then you would also have to say that a lower rate environment doesn’t result in higher house prices compare to a higher rate environment.

That of course is false and logically flawed. More sales brings higher prices, with all else considered constant.

So you are wrong. We must expect significantly more sales this year compared to in 1991 when 5 year rates were 10.5%. Therefore, total sales in March 2016 were not comparable to total sales in May 1991.

Also, you don’t understand the psychological impact of record low rates. It boosts buyer confidence and sales increase as a result.

As I’ve said, it’s unlikely that you’ll find a house pumper who admits that falling rates increase sales and prices because then they would have to admit that rising rates brings fewer sales and lower prices.

That would be like saying lower prices are on the way in Canada and no real estate “professional” would say that.

#186 Brazil ex-pat on 04.04.16 at 4:04 pm

#174 Brazil ex-pat on 04.04.16 at 3:24 pm
#141 Stoopid Idiot on 04.04.16 at 11:53 am
Read Page 223 titled Bail-in Regime

http://www.budget.gc.ca/2016/docs/plan/budget2016-en.pdf#page225

Non-event. Read the post. — Garth

++++++++++++++++++++++++++++++++++++

Garth is right. The only person it affects the owner of bank shares as the bank that goes belly up has its shares massively diluted and therefore devalued.

No Canadian bank is failing or will fail. Go back to your banana. — Garth

+++++++++++++++++++++++++++++++++++

Did I say a bank “would” go belly up? I was merely commenting on the paper. Don’t be so mean all the time.

#187 rainclouds on 04.04.16 at 4:05 pm

#151 TRT “And since rents are being mentioned, I can tell you rental properties are skyrocketing in Vancouver as we speak.”

Having a Hedy Fry moment?

I call BS, Sold house. Renting DT Van. $2150, 2 bed 2 bath, Insuite laundry, Yaletown, been here 3 yrs. Prop Manager sent me a rental increase form, told her “if you raise the rent I’m gone”…….crickets

And no I didn’t miss out on 3 yrs of house increases, the balanced portfolio took care of that.

#188 World Traveller on 04.04.16 at 4:15 pm

LOL $822K for a townhome worth $250K tops. wow, real insanity there.
got these numbers from numbeo:

Index Info Oakville Toronto
Price to Income Ratio: 7.48 9.43
Mortgage as Percentange of Income:49.39% 61.37%
Loan Affordability Index: 2.02 1.63
Price to Rent Ratio – City Centre: 17.81 21.67
Price to Rent Ratio – Outside of Centre: 19.43 25.03
Gross Rental Yield (City Centre): 5.61% 4.61%
Gross Rental Yield (Outside of Centre): 5.15% 3.99%

Where did the 32% rent to own ratio come from?

#189 sockeye sam on 04.04.16 at 4:24 pm

#168 S Bby.

Just when things were starting to improve on this site
you had to go and start talking about my skin.

Might be border line racist?

#190 paul on 04.04.16 at 4:29 pm

My American says:

At 67 I’m one of those boomers who is never going to retire. Although I own everything (including a very nice house on a lake) – there are lots of expenses.

Property taxes are over $7,000 yr. Insurance is $3,000. With taxes and utilities (gas, electric, sewer, water) It costs us $1,400 a month to live in a house we own. This does not count health insurance, which I pay $300 a month (a great discount). To top it off – the state and fed tax our SS that we already paid tax on.

New roof $12,000. Eventually new mechanicals . A little nicer car is $30k, minimum.

They call it the American Dream, cause it’s best experienced when you are asleep.

#191 Siva on 04.04.16 at 4:29 pm

Ctv just reported house prices in some parts of Alberta is down 10%, listings up 20%, condo sales down 12%.

#192 World Traveller on 04.04.16 at 4:32 pm

#71 lee on 04.03.16 at 9:40 pm
Since there is probably only one unit priced at the “from” price of $821000 which will likely go to the owners friend, the prices probably range from $880000 and up, and that’s if you go with zero upgrades. Modest upgrades gets you to about $920000 if your wife can control herself in a fully decked out model unit. So low end you’re at closer to $950000 and if she’s from Woodbridge it’ll be closer to $1M. All for the privilege of hearing your neighbours have sex at night.

uh, that’s not a selling feature??

#193 Soothsayer on 04.04.16 at 4:51 pm

“The Preserve” ….LMFAO!!!

I once looked in that area and it’s overly saturated in EMF pollution from CELL TOWERS and 7 separate 100 story communication towers of unknown origin spewing electromagnetic pollution 24×7. There is another 7 of these in Clarkson east of there (Ford Drive and QEW). I won’t even bother going into the rest…

Oakville north of highway QEW is perhaps one of the worst places in Canada to live! I won’t even let my dogs live in that filth.

#194 sockeye sam on 04.04.16 at 5:24 pm

TRT
Yes that rent price sounds pretty accurate. That 40 year old Vancouver special across the street from me on the 33 wide is going for $6000.00 per month. Now I’ll be honest it has a suite so I don’t know if that’s the whole house or the main floor only. “Still, just sayin”.

Hey TRT, wanna start a tag team and wake some people up? “Over to you”.

#195 Ace Goodheart on 04.04.16 at 5:27 pm

Wife and I were wandering in Roncesvalles village over the weekend. Pretty spot. A bit “kitchy” but also lots of street life, shops and cafes to die for. Reminds me a bit of Queen West before the Condo companies destroyed it.

Thereafter came the usual visit to MLS (now “realtor.com”) and a quick look at the prices of various old piles of brick in this Victorian Wonderland.

Started me thinking, if people go for a wander, decide they like a place, and then subsequently buy property and move in, then perhaps a lot of them are like myself and my better half, in that we would, if we ever moved (not likely, but you never know), not be coming in with CMHC and money borrowed from relatives.

It got me thinking as to whether the rise in real estate prices in certain areas (like Toronto and Vancouver) might also have something to do with an increase in people’s net worth. I mean, quite a few people could just sell off some of their assets and pay cash for a 1.2 million dollar house in a cute, cozy, slightly kitchy neighbourhood in inner City Toronto. That is because people gradually increase their net worth throughout their lives.

So maybe people buying these houses, which some people claim are over priced, are actually paying cash, or mostly cash, and are using money that they have accumulated over the years, rather than borrowing.

Because the assumption seems to be that people are all taking out huge mortgages on multi million dollar houses. But I don’t think that is necessarily the case.

#196 Move on VREU on 04.04.16 at 5:48 pm

VREU wrote:

As Garth wrote, speculation and record low rates are the reason for the increase in sales lately in Victoria. Neither is sustainable and both will disappear.

As I’ve said, locals can’t support prices any longer and it’s only a matter of time before prices begin to fall again.

———–

Also, why EXACTLY are prices rising? I am still waiting for your answer.

You have already pointed out that record low interest rates for years have not garnered increased sales or prices. Are you inferring that somehow now everyone has woken up to low interest rates?

What has changed? I bet you are hoping that March was a rush into the markets to avoid the down payment rules. I hope so too – but this market started gaining traction in 2015 before the new rules were announced.

And again, look to Vancouver as the prime example of where local incomes do not support prices. You are in for a world of shock when Victoria’s prices rise if you think local incomes make a difference in a globalized world were our senior governments openly court foreign capital to purchase homes is only going.

At least in other countries, real estate is viewed as a public good – here, its a commodity to be sold gleefully to the highest bidder. And then the taxpayer has to fund ‘solutions’ to market affordability.

If if you think that speculation and low rates will disappear anytime soon, good luck. Vancouver is on year 14 of a bull run, not counting that prices have been disconnected from the 3x income rule since 1986 and the following waves of migration and immigration from Expo on. Global capital will continue to wreak havoc on Vancouver and the impacts will spread throughout the province.

When your economy is built on buying and selling homes and surviving on property transfer taxes, and teaching ESL as an industry, with no other significant economic drivers, then the good times for homeowners will continue. And no government, whether provincial or federal, and no political party, will ever touch the tools that facilitate this global capital scourge.

More importantly, prices can increase 20% in this so called ‘speculative mania’ in less than a year – heck, they already have gone automatically with all assessments being goosed by 10-15% in 2015 and houses selling for inflated prices over those assessments. It can then take 5 years for the prices to go down back to its baseline as prices are sticky.

You are about it learn what patience is young woman.

The mantra that ‘real estate is local’ died with globalization. Best to start reading the South China Morning Post to get an idea of how your local market is selling overseas.

#197 Montreal Guy on 04.04.16 at 5:53 pm

Montreal prices coming back to earth despite cheap $$$ and loosey goosey banks. One nice home we looked at (downtown/westmount area) Listed $1.8MM+ sat and sat. Relisted with another agent at $1.6 and change. Settled $1.5.

I remember articles saying we were potential targets for HAM not so far back…

#198 Cannot Possibly Happen Here on 04.04.16 at 7:06 pm

@Move on VREU

Garth defines real estate obsessed madness as a type of disease.

You are the poster child dude – you doth spruik too much and no doubt your brain is addled by your affliction.

And yes there is only one cure for such a condition and it is coming your way……

#199 randman on 04.04.16 at 9:56 pm

That graph is parabolic and unsustainable…!!!

!0,9,8,7,6……ignition sequence started……5,4,………

#200 Nocomprende on 04.05.16 at 4:36 pm

When did the world switch from savers to spenders ? We fight to save every dollar we can on a car purchase, whether or not it is for a new or used car – yet act totally stupid and pay too much, even trying and overextending ourselves to outbid other people to be the “lucky” one to seal the deal on a house, no matter how high the price goes, or no matter how lousy the house is. GOTTA LOVE IDIOTS !