Suckered

PLOP modified

So, you’re a trendoid, metrosexual, urban Toronto hipster wanting to upstage your vacuous, vaping social-climbing peers with digs of your own? Gotta have exposed brick, of course. Plus stainless and caesarstone. And in an emerging hood, without too many Audis, of course. Or old people. They sort of smell.

Well, here’s one in the west end of 416. And 12 Herman Avenue is on sale!

Major Price Reduction! Spectacular Renovation In Roncy Village Turned This Solid Semi Into A Gorgeous Open Concept Modern Fam. Home Characterized By High Ceilings, High Baseboards & Decorator Flooring. The Exposed Brick Wall Running The Entire Interior Length Is An Unmatched Stunning Feature.Prop Is Loc On A Popular Street In The Roncy Hub. Beautiful Custom Kit Opens To A Brand New Deck & Bckyrd W/Gate To Loblaws Prking Lot & A Short Walk To All The **** EXTRAS **** Best Rest., Bars & Activities In The Village. New Windows Wiring, Plumbing, Drywall & Much More.* Lovely Lower Level Features A New Quaint Rec Rm & 3 Pce Bathrm All New S/S Fridge, Stove, B/I D/W. Elf’s, White W/D

FOR SALE

So, the house – actually it’s just half a house, on an anorexic 18-foot lot, without parking – is now listed for a bargain-basement price of $1,118,800. Clearly this listing is aimed at the late-Millennial crowd, and here is what a buyer can expect…

Downpayment: $225,000 minimum
Closing costs: $40,000, including $37,000 in land transfer costs
Monthly: $4,400 plus insurance and property tax ($600), plus utilities. So, five grand.
Opportunity cost: Figure on a lost 6% on the down, or $1,125 a month.
Total occupancy load: a tad over $6,100.

Of course, if you had to borrow the down payment (and a whack of people do), the cost of ownership would be even more muscular. And so over the course of five years, this half-a-house would set you back about $360,000, at which time (even given the absurdly low rate of 2.6%, not to be repeated) you would still owe $800,000, after having dropped $225,00 into it. If you were to sell at that point, deduct 5% from the sale price and hope like hell there’s been at least $400,000 in capital appreciation, or you lose.

Or, you could rent it.

FOR RENT

“Here is a direct Price to Rent example in Toronto,” points out blog dog Eric. “Same house is currently listed for rent and for sale (Cash flow problem I guess?). Price to Rent ratio at a 27 before throwing in insurance, property tax, maintenance, hydro/gas, land transfer taxes, and fees.”

Quite so. Even if you ponied up the entire $3,495 a month to be a tenant, you’d be ahead almost three grand, or $180,000 over five years in terms of cash flow. Yes, no equity after that period of time, but no risk, either. No mortgage to renew at a higher rate. No real estate correction to live through. No maintenance issues with an ancient, tarted-up half a house. No property tax increases. No realtors, open houses or people tromping through your space when you need to sell. No panic and despair when prices finally correct. And you still live in the same cool space.

Given the true overhead on this property, the price-to-rent ratio is probably closer to thirty. And remember what that means:

  • P/R ratio is lower than 15 = Listen to your mom. Buy the place.
  • P/R ratio is between 16 and 20 = Nah, better off renting
  • P/R ratio exceeds 21 = Your landlord is a munificent god. Worship him.

Of course, nobody’s listening. Half of the country’s Millennials have already pickled, sautéed and immersed themselves in epic debt and monthly servitude by purchasing residential real estate. According to a Bank of Montreal survey released a day ago, on average these moisters mustered a mere 4% downpayment on their own ($18,000), borrowing three times that amount from their prodding parents. Even so, half of them fear they won’t be able to keep up with mortgage payments.

Scarier, 76% of Millennials who currently rent say they expect to become owners within the next five years. This, despite the absolute certainty mortgage costs will rise, debt fatigue will set in, occupancy costs will increase and (probably) prices will abate – even in Roncy Village where the sexy people go. It continues to amaze that so many are so willing to give up the gifts of youth – mobility, freedom, choice, change and flexibility – so they can turn into their folks.

Helicopter parents, take a bow.

157 comments ↓

#1 TRUMP on 04.14.16 at 6:36 pm

So which stocks should we start shorting?

We gonna make some made money off of some very stupid people!!!

#2 ILoveCharts on 04.14.16 at 6:40 pm

Let’s talk break fees AKA mortgage penalties.

A young lad wants to step into a 5 year fixed rate closed mortgage. The banks are well-known, familiar and treat him well. They offer him a 2.59 and even a secured LOC but the break fees are savage.

Always better to go with a non-bank lender?

#3 But!!! renting means being evicted! on 04.14.16 at 6:43 pm

You are correct in the analysis Garth.
But if they are both listing for sale and rent at the same time

WTF? It means you’ll move in, and in a few months, you’ll get kicked out as they sell their place.

And therein lies the problem. If you want a nice place, the nice place landlords will probably sell. It’s the crappy places where landlords don’t care about.

Maybe you’ve had good renting experience, but I’ll bet many people here don’t.

#4 First on 04.14.16 at 6:45 pm

Who cares about the Toronto/Vancouver housing markets when you are FIRST!!!!!!!!

#5 Pay me on 04.14.16 at 6:46 pm

Garth,

Love your blog. Bombardier will not fail. It will pay me handsomely.
Oh yeah, and I support balanced portfolios.

First!

#6 Bram on 04.14.16 at 6:50 pm

Or:

You are not so riff raff that you have to borrow for it, and buy it outright.

$42K rent/yr, so if we ignore maintenance/utilities, it yields 3.75% plus capital gains.

And guess what? That yields better than your AAPL you now hold instead @ 1.86%

Bonus! Capital gains on the half toronto house are tax free. The capital gains on AAPL are not.

Hmm…. maybe not such a bad deal as you make it out to be, Garth?

Bram

#7 Mr. White on 04.14.16 at 6:55 pm

Same situation in lots of places. Not quite that sort of ratio though.

Apparently millennials are moronic in two ways; they think buying high and selling low and socialism are the road to prosperity.

In a lot of ways I am pretty happy to be old, no need to deal with the fallout here over the next few decades.

I wonder what these goofs will do when interest rates revert to norm. I wonder too what the various levels of socialist governments in Canada will do when the same thing happens to them.

#8 jaybee on 04.14.16 at 7:00 pm

Wow, so glad I moved back to Nova Scotia.

#9 Rexx Rock on 04.14.16 at 7:00 pm

There will be a world of pain for the millienials in the next few years.Heaven forbid if they divorce,its only 50% odds.

#10 Raincoast on 04.14.16 at 7:00 pm

Chinese investors are getting hungrier for real estate in Canada, where foreign demand has fueled record price gains and made million-dollar homes the norm in cities such as Vancouver.

Inquiries for Canadian homes on Juwai.com, a property search engine that lists real estate around the world for Chinese buyers, jumped 134 per cent in the first quarter from a year earlier, according to the Shanghai-based company. The figure tracks the total number of queries sent to the agent, developer, or seller of a Canadian property listed on the website.

The increased interest indicates that Chinese investors may be seeking to move money abroad amid instability in the country’s economy and stock market, even as the government clamps down on capital flight. A Juwai survey of real estate agents who work with mainland Chinese buyers found that 55 per cent expected international property purchases to increase as people sought a safe haven for cash. Canada, particularly the cities of Vancouver and Toronto, has long been among the top targets for property investors from the Asian country.

Obsessed. — Garth

#11 Bonhomme Carnaval on 04.14.16 at 7:01 pm

Crazy cool blog post!

<3 <3 <3

#12 Doug t on 04.14.16 at 7:02 pm

Foist

#13 Frank on 04.14.16 at 7:02 pm

100 year old averages haven’t applied in Vancouver. 10 year averages show more opportunity cost from not owning.

Also rents rose 7% YoY. Factor that in.

#14 Ray Skunk on 04.14.16 at 7:03 pm

Ah, good ol’ Roncy. Home of your blog dog Ray Skunk. Tempting though this unique opportunity is, I’ll keep what I’m renting thanks v much… a 1100sqft level of a nice $1.6m (identical recent sale) house on a quaint leafy side street. Yard, deck, parking spot and garage. $1500/mo with no need to worry about the latest hydro gouge as utils are included.

On another note I’m looking at Atlanta, GA (employer has an office there). Not as shabby as I once thought, very nice suburbs in fact. I was impressed. What $1.1 can buy you there… I’d post links but who’d click ’em?

No snow, no Wynne. It warrants serious consideration.

#15 ROCK BEATS PAPER on 04.14.16 at 7:03 pm

“Helicopter Parents” – LOL

#16 Doug t on 04.14.16 at 7:04 pm

I over heard someone over hearing a realtor saying the new trend shows the Scottish are starting to buy up property in YVR – apparently you can tell them by their kilts

#17 hope & ruin on 04.14.16 at 7:09 pm

. . . . . . . Victoria Real Estate Update. . . . . . . . .
. .Percent Above/Below April 2014 Averages. . .
. . . . . .x = Tinfoil Hat-wearing, * = Credibility. . . . . . .
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+15%. . . . . . . . . . . . . . . .x. . . . . . . . . . . . .
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+ 5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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….0%. . . x*. . . . . . . . . . . . . . . . . . . . . . . .
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– 5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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——————————————————————————
. . . . . . .April . . . . . . . .April. . . . . . . .April. .
. . . . . . .2014. . . . . . .. 2015. . . . . . .2016. . .

#18 Gwynne on 04.14.16 at 7:12 pm

So why do you hate cats Garth? The cruelty behind that photo isn’t funny. It’s just sick. If you want sick, why don’t you post pics of when dogs eat their own poop?

#19 Porsche on 04.14.16 at 7:13 pm

Was he lobbing cotton balls to start and then WHAM !!

#20 Mark on 04.14.16 at 7:13 pm

“So which stocks should we start shorting?”

There might be some shorting opportunities in stocks that are in the business of housing supply or mortgage insurance, but other than that, there’s not a lot of opportunity to short things in the Canadian public markets that are correlated with residential real estate.

If anything, a long position in the stock market has historically been a better performer. Why? Because the Bank of Canada will be forced, probably for the next 5-10 years of housing price declines, to run extraordinarily accommodative policy (ie: further policy rate cuts), and eventually speculative enthusiasm will leave housing and will return to stocks.

The 1990s experience, of course, was that a mere housing downpayment (ie: 25% back then) invested in the TSE index (ie: the TIPS) would have, with dividend re-investment, by the end of the decade, been enough to buy a house outright, in cash. The comibnation of house price drops/stagnation and stock market growth.

This time around, the factors appear to favour even vigorous relative returns. The 4X relative return of stocks vs. RE in the 1990s, could very well be 6X returns this time around on account of the debt bubble being larger, and the TSX having seen such minimal growth in the past 16 years.

#21 JO on 04.14.16 at 7:16 pm

Market appears to be in final stages of a historic phase transition
I can’t believe what I am seeing and I have been lending money for many years. We need a major correction to save our country. This thing is a major joke. The majority of the new buyers are broke and more often than not relying on gifts to help get them in on the Ponzi scheme
Apparently we somehow can get rich by swapping RE among ourselves and a small number of rich foreigners
All of our income will be used to simply pay interest, property taxes, insurances, and fees
When this jig collapses anytime in the next 3-5 years most will blame everyone but themselves for this farce
Say bye bye to your savings and buying power as we “reset” the system
It appears to hand elements of a control fraud
JO

#22 Prairieboy43 on 04.14.16 at 7:18 pm

Scary!”Of course, nobody’s listening. Half of the country’s Millennials have already pickled, sautéed and immersed themselves in epic debt and monthly servitude by purchasing residential real estate”.
God Bless

#23 WalMark of Sadkatoon on 04.14.16 at 7:18 pm

wow YYZ is a hot mess. can’t believe that rat hole is selling for $1m+

but this isn’t news. it’s just a continuation of the insanity known as YYZ real estate prices as they increase across, and despite of, the sales mix for years. something has to give and I’m looking forward to seeing what it will be

http://www.bnn.ca/News/2016/4/14/Three-things-you-wont-learn-about-Torontos-housing-market-on-the-Internet-.aspx

#24 Lee on 04.14.16 at 7:21 pm

Be patient Garth it will sell. Now that u posted it bring on bidding war.

#25 Victoria Real Estate Update on 04.14.16 at 7:21 pm

MORE FEAR MONGERING

You may have read recent comments made by “understood by few” who insists that house prices in Victoria’s core areas are 40% higher than at the peak in 2010.

Of curse this is false. It also appears to be delusional thinking.

If prices in the core were 40% higher than in 2010, the local board’s frankenumber price index would show at least that much of a gain. That is obviously not the case. Not even close in fact.

This individual claims to have obtained recent sales information from a realtor friend, but admits to not having access to any 2010 sales information for these recently sold properties.

More (unsubstantiated) fear mongering from a commenter on an anonymous blog who has given the impression many times in recent weeks that those who haven’t bought already have “missed out”.

Of course the same message was all you would have heard in 2010 in Victoria right before the market turned on a dime.

It was this type of fear mongering that helped convince many local families to buy in 2010 at near-peak prices (similar to today). It’s no secret that many of these 2010 buyers had to sell for 15-20% less than what they paid after prices fell.

Fear mongering is dangerous. Ignore it.

Take Garth’s advice.

#26 WalMark of Sadkatoon on 04.14.16 at 7:22 pm

considering that both P and R have been increasing the fact that we’re even seeing P/R @30 is truly ridiculous. blog dogs will all be dead and buried before the landlord sees a return from that pile

#27 Nuke on 04.14.16 at 7:25 pm

Live in a downtown rental for past 25 years. Rent increase has averaged less than 1% annually. Opportunity cost compared to owning off the charts.

#28 Victoria Real Estate Update on 04.14.16 at 7:26 pm

# 17

What did you hope to accomplish by doing that?

I stated the sources of the price data when I posted that.

You must like my charts.

#29 Crocs on 04.14.16 at 7:29 pm

Is there a posibility that US raises rates but Canada doesn’t follow and the price of everything spikes? The. People will buy less and businesses fail, Bank of Canada recognize the mistake and pops the rates and we end up in a high rates no jobs environment?

#30 understood by few on 04.14.16 at 7:30 pm

#1 TRUMP on 04.14.16 at 6:36 pm
So which stocks should we start shorting?

————
Markets can remain irrational longer than you can remain solvent” – Keynes

#31 For those about to flop... on 04.14.16 at 7:33 pm

Hope and Ruin# 17.

That’s the way to do it ,with a bit of humour.
As you probably know I did the same thing a couple of days ago and was subsequently stalked but if you are going to post the same information every couple of days you are opening yourself up to ridicule.

I can live without much money ,but a life without laughter…you might as well kill me now…

M41BC

#32 Jeff Excaliber on 04.14.16 at 7:36 pm

What’s the realtor’s #? I’m going to text in a $1.3M bid!

#33 Smoking Man on 04.14.16 at 7:36 pm

My millenials renter offspring plan on buying right after a correction.

Don’t have the heart to tell em. You’ll have grey hair before that happens.

#34 crossbordershopper on 04.14.16 at 7:38 pm

why do people live in toronto anyway? there are jobs throughout canada not just in to. and the rent and propery prices are quite a bit lower.
traffic sucks.

#35 understood by few on 04.14.16 at 7:39 pm

#25 Victoria Real Estate Update o

—————

Care to respond to my example I posted on yesterday’s blog? You always seem to ignore actual numbers when I post them (and claim again I’m just going off hearsay).Here’s it is again in brief:

1791 Feltham Rd just went to pending at $825K (asking of 749K). Assessed at 568K (no sales in the past 3 years according to evalue BC).

Think that’s only 6% over what it would have sold for in 2010? Ha. Current assessment is probably close to value in 2010 (can’t see you disagreeing with that, going by your graph). 45% increase. Yikes.

It’s not an outlier. Houses are selling for inflated prices every day. Mind you it’s only certain areas (Saanich East for sure) and only SFD.

Call it fear mongering if you want. Fact is you have 0 clue what is actually happening in Victoria with the current market (yet call yourself VREU).

#36 conan on 04.14.16 at 7:45 pm

Re: #18 Gwynne on 04.14.16 at 7:12 pm

That snowball is all powder and it was tossed not thrown.
The cat looks like it is having a ball and it knows its snow.

It is an outdoor cat.

#37 Ace Goodheart on 04.14.16 at 7:46 pm

RE: “The Exposed Brick Wall Running The Entire Interior Length Is An Unmatched Stunning Feature”

It’s also friggin freezing. On any double brick wall house, it is possible to create an exposed brick wall simply by removing the drywall, studs and insulation. You then have the inner wythe of brickwork exposed to the interior. Problem is you also have a full length uninsulated wall. That living room will be COLD in the winter.

Roncy is nice, but I find it a little kitchy. Also who wants to rely on a street car to get places, especially in the winter.

It is STILL possible to purchase a detached house, with parking, large backyard, 3-4 bedrooms, and all the “exposed brick” you want (as long as you don’t mind removing the drywall and insulation yourself) in my neighbourhood, south of Eglinton Avenue, walking distance to a brand new underground LRT, for under 600K.

And it’s nowhere near as kitchy.

#38 cecilhenry on 04.14.16 at 7:46 pm

$3400/month for rent??

Are these people insane? Who is this rich, or foolish.

Something is seriously wrong.

#39 Meli on 04.14.16 at 7:48 pm

First time posting. Needed to chime in. This property has had three price reductions since being listed in February. I toured it in March. Flip job. Not a great renovation. And certainly not one warranting a $1.118M price tag. The Vendors (a company, i.e. professional flippers) are delusional. 27 Herman, which is an identical house, sold for $692k at the end of November, 2015. The subpar quality of this rehab does not warrant a $400k premium. If this house sells anywhere the listing price we are truly doomed…

#40 Mark on 04.14.16 at 7:50 pm

“Opportunity cost: Figure on a lost 6% on the down, or $1,125 a month.”

With that amount of leverage, that’s way, way too low of an assumed opportunity cost. The TSX and the S&P500, without leverage, return 10%/annum. 5X leverage into housing is certainly riskier than an un-leveraged stock portfolio, hence, the opportunity cost should be at least that of the stock market, and probably significantly higher on account of the likely risk to equity thus presented.

When you re-do the math with such numbers, the example given in the article looks even more absurd!

#41 Star Stuff on 04.14.16 at 7:59 pm

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#42 surfndirt on 04.14.16 at 7:59 pm

G’Day Garth,
Long time reader, first time poster – from your Canadian cousins in the land down under. In the name of commonwealth competition – we have just beaten you guys hands down.
http://www.domain.com.au/news/record-price-for-australian-terrace-as-potts-point-home-sells-for-13-million-20160413-go529u/
How about AUD$13 million for a house…. Wooohooo
Aussie Aussie Aussie oi oi oi. Ha!
On a serious note, love your blog and no holds barred commentary. I think we down here also win the ‘most indebted private sector’ competition too? Geez, we rock. Also, think we win on the following;
$10 a pint or $23 a sixer
$900 a year car rego
$80,000 for a 3 series
47% top rate (not sure on that one)

#43 bubblisious on 04.14.16 at 7:59 pm

our price rent ratio is 68 here on the west side of vancouver. panic buyers all over. overheard a couple ‘moms’ yeaterday talking about how they were looking at places and how stressed they were about buying a place. saying its so expensive and the places are so small. i was thinking why dont you relax and go rent a nice house but they have blinders on. and no they were not chinese. panic buyers. nobody on this city thinks the party will ever end. well….. maybe 5% see that bubbles always pop. always have , always will.

#44 paul on 04.14.16 at 8:00 pm

Rents are about to skyrocket.

Based on what? Evidence? Link? — Garth

#45 paul on 04.14.16 at 8:05 pm

DELETED

#46 Bow valley on 04.14.16 at 8:06 pm

Glad we bought back in mid 90’s Cowtown, the old pile in the inner city was paid for a decade or more ago. This whole housing thing is madness. They are starting to rent these great big lot filling outhouse roofed infill duplexes that are not selling in Calgary. Watched the film The Big Short on the plane yesterday, logical, critical thinking flies out the window when people smell that filthy lucre and will believe any old BS. It will be ugly here too but YYZ and YVR hooboy. P.S If someone did that to my cat they would wake up sans all four limbs.

#47 understood by few on 04.14.16 at 8:14 pm

#25 Victoria Real Estate Update on 04.14.16 at 7:21 pm
MORE FEAR MONGERING

——————

More ad hominem.

I’ve cited a few examples of sales. You have yet to respond to any. Here’s the one from yesterday. Some houses in core are up 40%. For real.

1791 Feltham Rd just went to pending at $825K (asking of 749K). Assessed at 568K (no sales in the past 3 years).

Think that’s only 6% over what it would have sold for in 2010? Ha. Current assessment is probably close to value in 2010 (can’t see you disagreeing with that, going by your graph). 45% increase.

Want more? Pretty much any sale in Gordon Head right now supports my 30-40% from 2010. That place on Kings I gave as an example surely does (750K for that tiny place?).

No fear mongering. Just facts. Feel free to call a realtor to verify the numbers.. or just wait until bc assessment gets updated.

#48 Stephanie McNamara on 04.14.16 at 8:15 pm

Thank you for this article!

I was just talking to fellow millennial friends of mine about this and turned them onto your blog. I talked them out of buying. A post like this was exactly what I was looking for to show them how messed up the market is.

My husband and I would like to buy in 5 years, but:

-After the correction
-After we’ve maxed out our investments
-After we’re completely debt-free (almost there)
-With stable jobs and side gigs
-Only buy at house at 3x our income with 20% down (Around 300k)

How bad do you think the correction would be for Toronto?

I just can’t believe this house would stay above 1mil forever: https://www.realtor.ca/Residential/Single-Family/16705670/27-KRIEGER-CRES-Toronto-Ontario-M6A1K4-Yorkdale-Glen-Park

This is about 2 blocks away from us, we rent the top of a bungalow (3bed) for 1700/mon utilities included. It’s absolutely insane.

#49 Ace Goodheart on 04.14.16 at 8:15 pm

Or you could buy this semi and renovate it:

https://www.realtor.ca/Residential/Single-Family/16805333/26-OLEARY-AVE-Toronto-Ontario-M6E1L4-Oakwood-Vaughan

Why do people only buy houses that are in prime neighbourhoods and have just been “doctored” by wanna be contractors? The kitchen in the Roncy house looks like it’s from Ikea. And really, hardwood up to the door? Is it that hard to install a tile entrance way, for a million dollar house?

#50 SI2K on 04.14.16 at 8:15 pm

“No realtors, open houses or people tromping through your space when you need to sell. ”

I’m with you, except for this part. Currently trending: Gen X and Millennial families being evicted as soon as the landlord flips the house. Average occupancy being reported anecdotally by pissed off renters, who have kids in a particular school and now what are they supposed to do, is two years. I suppose you could get lucky, but we and no one we know with kids has had a long term family rental occupancy in Toronto since about 2002. I personally think it’s one massive hidden reason for the SFH frenzy.

For example, 2002 – 03 we had a hundred people tromping through our rental condo while our preemie slept in the bedroom. He was fresh out of NICU with breathing problems, so we couldn’t take him outside. Germs from a hundred people . . . not so great. Things also went missing from my bookshelves. Like, books. Who the heck nicks books? It sucked. This is a liability when renting in these bubble towns for damn sure.

#51 BS on 04.14.16 at 8:18 pm

Bram on 04.14.16 at 6:50 pm
Or:

You are not so riff raff that you have to borrow for it, and buy it outright.

$42K rent/yr, so if we ignore maintenance/utilities, it yields 3.75% plus capital gains.

And guess what? That yields better than your AAPL you now hold instead @ 1.86%

Bonus! Capital gains on the half toronto house are tax free. The capital gains on AAPL are not.

Hmm…. maybe not such a bad deal as you make it out to be, Garth?

Bram

You should be factoring a capital loss not a gain on the house. This place will be worth less in 5 years, not more.

Apple pays only a portion of it’s earnings as a dividend. Apple’s earnings in 2016 may be triple the 3.75% for the house. Plus you have to maintain the house, pay property tax, etc.

You are correct that capital gains on Apple will be taxed. At least there will be capital gains. Unfortunately the inevitable capital loss, plus transaction costs on the house will not be tax deductible. The other side of the capital gains exemption.

#52 hope & ruin on 04.14.16 at 8:19 pm

#28 Victoria Real Estate Update on 04.14.16 at 7:26 pm

What did you hope to accomplish by doing that?
___________________________________________

I’m hoping to explain that you are a nut job! In a way that you might actually understand.

#53 SI2K on 04.14.16 at 8:20 pm

I could have written this about renting with kids in Toronto. It’s a big problem no one’s really talking about in the mainstream media. Just last week happened again to a family we know in Grimsby. Grimsby! I mean, come on. They left Danforth for Grimsby and still got evicted on a flip.

http://rabble.ca/blogs/bloggers/michael-stewart/2016/03/we-tried-to-escape-vancouvers-housing-nightmare-vancouver-fol

#54 Shortymac on 04.14.16 at 8:35 pm

@CrossBorderShopper

I have been actively looking for a job outside of the GTA for a good year now, actively looking somewhere near the 400 corridor between Newmarket and Barrie. Very few jobs in my field there (Business Analyst/Project Manager in IT). I have been actively looking at all of the government and private positions. Next to Nothing.

I worked in Barrie for a year and a half but my contract was allowed to expired when the project died in committee. :(

Toronto is where all the jobs are sadly.

#55 MilkandVodka on 04.14.16 at 8:46 pm

I love Millennials we should thank God for sending them. At work one boosting how his semi in Maple jumped in price 200k. I love them I get all tingly.

#56 Rebecca on 04.14.16 at 8:48 pm

In Vancouver, renting a 1-bedroom downtown. Similar unit in my building on a lower floor with an inferior layout listed for $500k. I’m paying $1725/month. All hail my munificent god!

#57 Estate4Realz on 04.14.16 at 8:50 pm

&
Bckyrd
Prop
Prking (love this one)
Rm
Kit
Pce
Bathrm

1.1mills pls.kthxbai

#58 WalMark of Sadkatoon on 04.14.16 at 8:58 pm

why do people live in toronto anyway? there are jobs throughout canada not just in to

not throughout Canada

http://m.huffpost.com/ca/entry/9619540

YYZ and YVR are being used as job proxy for ON and BC

especially tech. tech is booming in those 2 provinces

https://www.roberthalf.ca/sites/roberthalf.ca/files/rht-pdfs/robert_half_technology_2016_salary_guide.pdf

#59 WalMark of Sadkatoon on 04.14.16 at 9:00 pm

So which stocks should we start shorting

I would strongly recommend against this. you’re going to lose your shirt trying to stop this freight train

and don’t listen to WalMark for investing advice. his record is really bad. results matter and WalMark just doesn’t have any. pay attention to Gartho and keep it simple. you’re welcome

#60 geofferson on 04.14.16 at 9:02 pm

Even with an acceptable down payment, how are folks getting approved on mortgages this big? My banker told me on average its 5x your line 150. That formula doesn’t seem to be holding…

#61 Ronaldo on 04.14.16 at 9:03 pm

Re: Investigation of real estate firm in Vancouver and letter by David Eby MLS to R.C.M.P.

http://www.theglobeandmail.com/real-estate/vancouver/bc-real-estate/article29621716/

#62 Cici on 04.14.16 at 9:09 pm

#47 BS
#6 Bram

Don’t forget the lost opportunity costs on the $1M too, LOL…Even if your balanced portfolio was only churning out 5% a year in dividends, interest and other appreciation, you’d be way ahead pocketing that extra $50,000 a year and renting a similar place, with the landlord footing the extra maintenance costs and the property bill.

Woohoo, realtors are soooo lucky that the majority of Canadians are more math-challenged than I am…Maybe I should go into real estate!!!

#63 Mark on 04.14.16 at 9:27 pm

“Even with an acceptable down payment, how are folks getting approved on mortgages this big? My banker told me on average its 5x your line 150. That formula doen’t seem to be holding…”

There are lenders who are more aggressive, and as equity approaches certain levels, lenders increasingly care only minimally about the down-payment brought to the table.

After all, mortgage lending is primarily against collateral, not against a person’s income. Incomes come and go. Jobs are gained or lost. But an asset can at least be sold.

and don’t listen to WalMark for investing advice. his record is really bad. results matter and WalMark just doesn’t have any. pay attention to Gartho and keep it simple. you’re welcome

I actually have a pretty good record. Its your record that we should be concentrating on, with your constant claims of rising prices when evidence speaks quite strongly to the opposite.

You should be factoring a capital loss not a gain on the house. This place will be worth less in 5 years, not more.

Very true. Capital losses, not gains, are the likely future outcome for assets that are cashflow negative. So not only are those Vancouver/Toronto housing units burning cash holes in their investors’ pockets, but they’re also suffering capital losses which are likely to continue until such a point that cashflow goes significantly positive on account of price reductions for new investors at the margin.

Garth’s table of P/R ratios are actually quite aggressive. Most long-term landlords would cite the “rule of 100”, in that, one shouldn’t pay more than 100X monthly rent for a house for a return that is historically competitive with other investments of similar risk. This comes out to a P/R closer to 8.

Very few jobs in my field there (Business Analyst/Project Manager in IT).

Yes, this has been the case in Canada for quite a few years, since the Nortel hiring peak pretty much. IT employment has been a disaster in Canada ever since. Don’t let the troll here tell you otherwise.

#64 45north on 04.14.16 at 9:29 pm

According to a Bank of Montreal survey released a day ago

what about the surveys not released? My point is the banks know a lot they don’t say.

JO: Market appears to be in final stages of a historic phase transition I can’t believe what I am seeing and I have been lending money for many years.

that got my attention

Walmark: from your link: three things you won’t learn:
WHAT PRICE DID A HOME PREVIOUSLY SELL FOR?

HISTORICAL PRICES FOR SIMILAR HOMES IN THE AREA

LENGTH OF TIME ON THE MARKET

the Competition Bureau lost in the courts and the politicians have said nothing. Nothing. Steven Harper, Justin Trudeau, Thomas Mulcair: they said nothing.

crossbordershopper: why do people live in Toronto anyway? a conversation in Ottawa: I’m so busy these days, I can’t get away from the office, everybody’s asking me to solve their problems, it’s non-stop. ( the man is an expert on Microsoft Server ). So by living in a big centre, he is recognized and rewarded for his technical skills. You don’t get that in Orillia.

Ace Goodheart: On any double brick wall house, it is possible to create an exposed brick wall simply by removing the drywall, studs and insulation. You then have the inner wythe of brickwork exposed to the interior.

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

#65 Victor on 04.14.16 at 9:34 pm

DELETED

#66 Freeman on 04.14.16 at 9:34 pm

Downpayment: $225,000 minimum !!!

HOLY CRAP !!!!

Ok, now that I’ve picked my jaw up from off of the floor, I guess that house must have got a BIDDING WAR going on it, right? After all, we are Canadian and anything under $1 Billion is a steal, right?

Now on to more important things: Something big is scaring the living piss out of the U.S. government right now, they seem to be literally terrified of a global bank rung starting soon. No kidding, just read this little bit of info:

http://wolfstreet.com/2016/04/12/what-in-the-worlds-going-on-with-banks-this-week-emergency-meetings-summits-crashing-eu-banks/

Quote: “Just about every major banker and finance minister in the world is meeting in Washington, D.C., this week, following two rushed, secretive meetings of the Federal Reserve and another instantaneous and rare meeting between the Fed Chair and the president of the United States. These and other emergency bank meetings around the world cause one to wonder what is going down. ”

And in another bit of news: “The European Union’s new “bail-in” procedures for failing banks was employed for the first time with Austrian bank Heta Asset Resolution AG.”

Yes, you’ve got that right: If the Canadian housing market should ever collapse, you can pretty much kiss away your savings and retirement pension accounts, they will be used to bail out the Canadian banks.

#67 Scully on 04.14.16 at 9:34 pm

#7 Frank – totally not true. I work with property management as well as RE in YVR and no way have rental rates gone up 7% per year. What a laugh. And I can honestly say there are many stable rental opportunities out there – in nice homes too…not the fear mongering nightmares from some doomer dogs on here.

#68 suckered on 04.14.16 at 9:49 pm

Deutche Bank admits to rigging gold and silver, all those who said it wasn’t true now just look like tards.

In the meantime bail ins are beginning to ripple across Europe.

Hurry before it’s too late, sell your only tangible possession…

Quick, sell your home.

Gold nuts and doomers are so amusing. — Garth

#69 Mark on 04.14.16 at 9:50 pm

“lenders increasingly care only minimally about the down-payment brought to the table. ”

Bleh… Gotta make a correction here to such an egregious error. “lenders increasingly care only about the down payment brought to the table”.

{flame suit on!}

#70 Panhead on 04.14.16 at 9:58 pm

Old people. They sort of smell.
Out here in 604land they sort of smell like money. Right now that is …

#71 Caleb on 04.14.16 at 10:02 pm

Bad news Garth, housing in Toronto and Vancouver might be over priced but they aren’t the biggest real estate bubbles in Canada. Take a look at farm land values, P/R ratios where I farm near Goderich ON are at 50. I kid you not, land is selling for over $15000 an acre while average land rent is 300 bucks.

https://www.fcc-fac.ca/fcc/about-fcc/corporate-profile/reports/farmland-values/farmland-values-report-2015.pdf

https://www.fcc-fac.ca/fcc/about-fcc/corporate-profile/reports/farmland-values/farmland-values-historic-2015.pdf

Cheap money, fear of being priced out and everyone thinking corn prices are going to get back to 8 dollars (corn is selling for half that now) is driving this madness. The farms buying and sustaining these land prices are now massively leveraged (I can’t prove this but its an educated guess), margins are getting tight and the outlook for farm commodity prices is bleak. Combined with 40% of the land in ontario being owned by investors or non farmers I don’t see things ending well.

The worst part of this is that as a young farmer everyone is expecting me to go out and buy some land.. Because you know it’ll only go up in value.

#72 Mark on 04.14.16 at 10:04 pm

“Yes, you’ve got that right: If the Canadian housing market should ever collapse, you can pretty much kiss away your savings and retirement pension accounts, they will be used to bail out the Canadian banks.”

The US suffered a collapse of its housing market. Yes, some pension funds suffered losses in their housing-backed bonds, but balanced portfolios did just fine.

If the collapse that you speak of occurs and is global in nature, there’s even reason to believe that the Canadian markets, on their structural over-allocation to gold, would actually end up outperforming the rest of the world (save for perhaps South Africa!).

The proverbial “deck chairs” are almost certain to be re-shuffled in the coming years as excess speculation in houses and the credit backing them is shaken out. But life will go on. People who hold balanced portfolios will do okay. Zealots will experience extreme outcomes, good, but mostly bad. The sun will still rise. Hank Paulson et al will be shown to be lying pieces of crap for claiming that martial law is the inevitable consequence of monetary collapse.

#73 Hicksville Alberta on 04.14.16 at 10:06 pm

The Newfoundland budget today is definitely a big nail in the coffin for real estate in that Province. Yet they only appeared to pay a token to reduction in the number and wages of their employees which probably could ” easily ” be reduced in number by at least a third in and in wages by at least a third for the sunshine list types.
Alberta ain’t much different because they are apparently happy borrowing the Province into the hole and not cutting employees by cost or price. In fact they are still giving out wage and benefit increases. So for the private sector at least, the black hole in front just keeps getting bigger and wider.
This kind of stuff appears to be the Canadian way which will work till it don’t any more.
So from a fundamental point of view it is hard to understand why one would want to keep their dough in the Canadian currency, yet the way things seem in many other places, it’s hard to justify many of them as well.
Try to get your head around all this and think how things could be even five or ten years from now.
Maybe that is where night mares come from.

#74 Bram on 04.14.16 at 10:08 pm

#62 Cici on 04.14.16 at 9:09 pm
Maybe I should go into real estate!!!

Maybe read my post again.
You don’t seem to understand the comparison I made.
BS did understand.

The comparison was a simple investment in a rental vs investment in AAPL.
You don’t get to count the stock market investment twice.

BS made some fair points. Capital gains can of course be capital loss. Both in the case of the house and in the case of AAPL. So far, RE capital gains have been amazing. Will that persist? Not for ever of course. For how long, no one really knows.

Bram

#75 Ontheledge on 04.14.16 at 10:11 pm

Sold my Toronto house this time last year and moved the family to Guelph. Bought a nice century home in the old part of town. Almost mortgage free. Houses here were more costly here than anticipated when we bought. Supply is low if you want a character home here. And prices are rising fast…this place went up around the corner from my place – $759k….

https://rlproyalcity.com/listing/198-glasgow-street-n-guelph-ontario-30515349/

I’ve met lots of people since arriving that used to live in Toronto but their jobs are mobile and they didn’t ‘need’ to live in the city any more. I suspect as our economy shifts and the virtual economy becomes more and more of reality communities like this one will experience increasing demand from ‘urban refugees’. You have to leave the city to see how it can be comparatively cold and lacking in soul.

#76 skyrocket on 04.14.16 at 10:16 pm

#44 paul on 04.14.16 at 8:00 pm

Rents are about to skyrocket.

Based on what? Evidence? Link? — Garth

===

Based on common sense.
Higher cost is passed on if supply/demand allows.
Privately subsidizing renters is economical nonsense.
But you know that, of course.

That was convincing. — Garth

#77 Freeman on 04.14.16 at 10:22 pm

Okay, did a bit of searching around and it appears that over the past 2 weeks there has been the beginnings of what appears to be a global run on the banks, and it seems to be accelerating.

You know that big American bank named ‘J.P. Morgan Chase & Co.’, they own ‘CHASE BANKS’ around the world. Well, last week there was a run on some banks in Kenya that forced the branch to go into receivership, and that then resulted on runs on American Chase ATM machines and that forced Chase to place withdrawal limits on all withdrawals from their ATMs in the U.S. .
Pretty serious stuff going on.

Anyways, this has gotten the Fed and other bank leaders upset / worried at how close to what appears to be a financial collapse of the second biggest bank in the U.S. , that’s why the emergency meetings this week.

http://www.the-star.co.ke/news/2016/04/08/sh76bn-chase-bank-panic-withdrawals-leads-to-its-closure_c1327812

http://www.bbc.com/news/world-africa-35989394

Quote: “One depositor told the BBC that he had $100,000 (£70,000) at Chase, and he had no idea whether he would get the money back. ”

http://www.zerohedge.com/news/2016-04-04/was-there-run-bank-jpm-caps-some-atm-withdrawals

http://www.wsj.com/articles/j-p-morgan-chase-sets-1-000-daily-atm-limit-for-some-big-spenders-1459789762

http://www.talknetwork.com/2016-04-07-peter-schiff-discusses-the-run-on-chase-bank-atms-video.html

Listen, this seems to be isolated right now, but if you have any savings in any RRSP accounts, it might be a wise idea to take a few thousand from them and hide it under your mattress ?

No major US bank will collapse. — Garth

#78 Bat Flipper on 04.14.16 at 10:31 pm

Who can afford this? Well Most people can thanks to the handiwork of banks.

Let’s say you have a couple of 30 somethings making 55K each…not unreasonable.

Mom & Dad made a boatload of cash on the RE market, so the kids deserve some of that loot to buy a place of their own. Mom and Dad should pony up the Down payment. Let’s get a clean 200K, pay off all debts and get this pig.

That gives this couple a 900K mortgage. who would give them an 900k loan? Extended ams, 35 years, rock bottom rates, we can get them payments of 3212/month. 600 for taxes, no debt. This couple is rocking a groovy 42.68% TDSR.

Approved.

This couple hopes houses prices go up forever at a clip of 10%/year. Who cares if they ever pay off the mortgage. 100K/year tax free and a sweet spot to live sounds good.

That’s all well and good until the market binks of course.

If you look at most peoples amortizations, they will never pay off their homes.

#79 joblo on 04.14.16 at 10:38 pm

“It continues to amaze that so many are so willing to give up the gifts of youth – mobility, freedom, choice, change and flexibility – so they can turn into their folks.”

Is this the new normal?
Yikes,
the following quote as well continues to amaze me.

“Normal is getting dressed in clothes that you buy for work and driving through traffic in a car that you are still paying for – in order to get to the job you need to pay for the clothes and the car, and the house you leave vacant all day so you can afford to live in it.”
Ellen Goodman
American journalist (1941 – )

#80 Too Much Debt on 04.14.16 at 10:42 pm

#17 hope & ruin

LOL …That was the best comment of the night…well done…oh VREU!..please keep the commentary coming.

#81 No Mercy on 04.14.16 at 10:51 pm

#58 WalMark of Sadkatoon on 04.14.16 at 8:58 pm

YYZ and YVR are being used as job proxy for ON and BC

especially tech. tech is booming in those 2 provinces

————————————————-
I guess companies need tech folks to automate stuff so people asking too much money don’t in a low growth, oil rich work.

That cycle is not over. IoT, drones, robotics, androids.

People …. better be in health, education, IT, tech, engineering, science (lots of those) or specialists.

OK there is some space for management, finance, lawyers, accounting, sales, etc. But those guys are overrated and will be automated away eventually.

People that don’t go past high school and expect 100K+ in Albert, should re-think their career and education requirments.

Tech will replace all. Especially governments. Those are
run by lawyers and economists and these can also be automated away.

We should live in a paradise that all you do is push a button and you get it. Quatum Physics should provide a few leap in that area.

Go forward, not backward.

#82 Joe2.0 on 04.14.16 at 10:57 pm

China’s going to peg yuan to that silly old gold stuff very soon.

#83 Millmech on 04.14.16 at 10:57 pm

#66
Why would you keep any money in a low interest environment,only keep enough cash in the banks to cover bills till next payday.Go ahead take my $400 for the bail in,LOL,keeping my money in an non bank institution.Back to watching Archer!

#84 George Fung on 04.14.16 at 11:04 pm

DELETED

#85 Ronaldo on 04.14.16 at 11:24 pm

#38 cecilhenry on 04.14.16 at 7:46 pm

” $3400/month for rent??

Are these people insane? Who is this rich, or foolish.

Something is seriously wrong.”

You got that right. Actually, it’s about $4200 before tax and roughly 60% of average family income in Vancouver. Twice what would be considered affordable on that income. Don’t know how they can manage it.

#86 S.Bby on 04.14.16 at 11:39 pm

#76
You maybe be smokin’ some west coast ganja, man …?

#87 drydock on 04.14.16 at 11:39 pm

Anyone smashing my cat in the face with a snowball will spend the rest of their life as a quadripalegic.

#88 jane 24 on 04.14.16 at 11:57 pm

Garth old houses even fully renovated ones need constant repairs so allow $1000 a month for that too. This house will cost about £80,000 a year to own on your figures.

This is absolutely crazy money.

Youth go and see the world and while you are there check out what this house would cost you in cool, English speaking Berlin. The answer is about $200,000 for a real global capital.

#89 Snowboid on 04.15.16 at 12:21 am

#157 understood by few on 04.14.16 at 3:17 pm…

“Inner harbour? So Condo?”

No, it’s a SFH, albeit a mid-century (1957).

The stats I refer to are Victoria core and the release that states March 2016 $ 663,300 is at http://www.vreb.org/current-statistics

I used January stats for 2010 and the Victoria core is $ 711,392 – at http://www.vreb.org/media/attachments/view/doc/mss1001/pdf/January

The Bank of Canada inflation calculator states 2010 to 2016 at 9.95% – adding that to the $ 711, 392 figure shows $ 782,175.

#90 Brazil ex-pat on 04.15.16 at 12:27 am

#58 WalMark of Sadkatoon on 04.14.16 at 8:58 pm
why do people live in toronto anyway? there are jobs throughout canada not just in to

not throughout Canada

http://m.huffpost.com/ca/entry/9619540

YYZ and YVR are being used as job proxy for ON and BC

especially tech. tech is booming in those 2 provinces

https://www.roberthalf.ca/sites/roberthalf.ca/files/rht-pdfs/robert_half_technology_2016_salary_guide.pdf

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

Tech is not “BOOMING” in Bring Cash. It is reason number #17 I left. There are “some” tech jobs in Vancouver. But there are way more jobs in tech outside Bring Cash that pay way more money.

#91 Jeff B on 04.15.16 at 12:45 am

I’d rather live out of my canoe than pay $3,495/m rent.

#92 John on 04.15.16 at 12:46 am

#6 Bram

‘Bonus! Capital gains on the half toronto house are tax free.’

No they are not. Because it won’t be your primary residence. And 3.75% is a pitiful return for being a landlord. And you pay income tax on that as well.

#93 Jacob on 04.15.16 at 1:05 am

I’m sure all your readers here will find this an interesting and compelling story. The real story behind those vacant mansions in the financial post story earlier this year.

http://www.zerohedge.com/news/2016-04-14/curious-story-dismembered-chinese-tycoon-found-dead-vancouver-mansion

#94 family beagle on 04.15.16 at 1:35 am

Re bank meeting conspiracy…

Annual IMF Spring Meeting of bankers in Washington. “Each spring, thousands of government officials, journalists, civil society organizations, and participants from the academia and private sectors, gather in Washington DC for the Spring Meetings of the International Monetary Fund and the World Bank Group.”
There’s an app to follow along… https://www.imf.org/external/spring/2016/

They don’t seem to be too secretive.

@IMFNews Public finances across the world are deteriorating and threaten recovery. Read the #FiscalMonitor blog http://ow.ly/10FS5S

Public finances have had a rough year. A new reality is emerging. Against this backdrop, countries need to act now to boost growth and build resilience. blog-imfdirect.imf.org

@IMFNews Starts Now: Fortifying the Global Financial Safety Net #IMFSafetyNet pmhttp://ow.ly/10zz7K

#95 TRT on 04.15.16 at 1:59 am

Its funny to see the readership here confused about why prices in YVR and YYZ keep going up. Calling others delusional lol. Take a look in mirror. haha.

#96 TRT on 04.15.16 at 2:02 am

Foreign students paying top dollar for rentals.

Buddy opening up a school soon. 100 students. $35,000 tuition. Says 2 years plus 1 year work will get you a PR.

Beats the Immigration Investor program!!

#97 Tony on 04.15.16 at 3:14 am

Re: #77 Freeman on 04.14.16 at 10:22 pm

Forthcoming NIRP in America and oil making new lows after the U.S. election will bury the banking sector and insurance companies.

#98 Tony on 04.15.16 at 3:18 am

Re: #82 Joe2.0 on 04.14.16 at 10:57 pm

That’s why they had to push the price of gold down this week. So they can push the price up 50 bucks an ounce this Monday.

#99 data on 04.15.16 at 3:23 am

Hi Garth,

Please check the math, on the mtg – you are adding the ROC or principle repayment which is $2100. Take that out or add to the rent, you get the same number. It’s the same as saying pay 3500 and put 2100 into a 2.5% GIC a month. So this ratio is actually pointing more to buy side or rent…not much edge in this example. In your example you should explore and reverse engineer it to ask “For that 3500$, how much house can I buy?” In your example it would be 500K (that is the fair value that comes from the rent)…this is the way people think. I know your point. But in a raging bull market, no one will care. Renting is a bad word

Second, you mom is not going to give you 200 grand large to invest in the stock market. So you have think that Bank of mom and dad is only open if you take down some RE.

Also, the blue dots are filling in. Locals/Homeowners are not stupid. Inventory is filling up on mls, maybe not at prices people can afford, but they are available. But all that means they will sell at a stupid price and pay a stupid price. Trades goes on….

Parents have made lots of money on RE, they are already in the trade and feel good about, how do you exepct them to sit with kids and say to do the opposite and invest in markets and pay rent? You have to remember these kids are guided from those parents and direct with cash in hand – “Go buy son”

#100 Koshy Alex on 04.15.16 at 6:38 am

Garth as you said the commodities markets are bouncing back !!!

China Averts a Hard Landing With a Credit-Powered Trampoline

http://bloom.bg/1Seq856 via @business

#101 maxx on 04.15.16 at 7:25 am

“debt fatigue”. Great expression.
What would the opposite be? Wealth vitality? Wealth possibility? Wealth freedom? Wealth mobility?

I choose door number 2 – any day and without question.

#102 Felix on 04.15.16 at 7:31 am

Hmm…

Nice anti-feline RACIST photo, Garth.

You remember how you said to Dorothy that dessert seemed extra chewy last night?

Hairballs.

You’re welcome.

#103 B on 04.15.16 at 7:50 am

30 y.o. millennial here renting at a PE ratio of 27, squirreling away the difference. Watching others around me stress about selling condos, making mortgage patents, and fixing furnaces, all for a stupid deed.

#104 Adam Jenkins on 04.15.16 at 7:52 am

#6 Bram

You’re a dummy.

“If you ignore maintenance/utilities” – I’ll give you utilities, because you can make the renter pay their own, but you can’t ignore maintenance. Something else you can’t ignore – property tax or insurance.

Your 3.75% will come down pretty quickly when you factor in the actual cost, and it will go negative fast for and stay that way for several years if the roof/basement starts to leak.

#105 jess on 04.15.16 at 8:18 am

” not credible ” SIFI’S latest response to living wills

By Donna Borak
Updated April 13, 2016 7:27 p.m. ET
http://www.wsj.com/articles/fed-fdic-watchdogs-probe-living-will-leak-1460588228

Regulators ordered five U.S. banks to make significant revisions to their living wills by Oct. 1 or face potential regulatory sanctions.

#106 busman7 on 04.15.16 at 8:24 am

Sheer insanity!

It´s blatantly obvious that 1) economics courses should be mandatory in all Canuckistan schools and 2) a gap year of travel should also be mandatory after university to expose kids to the real world.

#107 TurnerNation on 04.15.16 at 8:29 am

Some people think a government’s job is redistribution not keeping us in economic slavery.

The have-nots remain.
From IE newsletter:

“We cannot tax our way back to prosperity,” Des Whelan, chairman of the St. John’s Board of Trade, said as the new Liberal government delivered its first fiscal blueprint Thursday.
“In this budget we have seen an increase in every tax, fee and levy that you could possibly do. That’s going to take money out of the hands of small business people and it’s going to hamper our ability to have our province’s economy grow.”

Perhaps the worst part? Despite that dizzying range of tax and fee hikes on everything from gasoline to ferry rides — including a “temporary” deficit-fighting levy of up to $900 a year for top earners — the forecast deficit is still $1.8 billion.
Finance Minister Cathy Bennett blamed 12 years of Progressive Conservative rule that ended when the Liberals won power last fall, promising “a stronger tomorrow.””

#108 Garths Hood is nuts.. on 04.15.16 at 8:38 am

http://www.theglobeandmail.com/real-estate/toronto/bidding-war-erupts-over-leaside-house/article29615698/

Not surprised….

But I don’t live there. — Garth

#109 skyrocket on 04.15.16 at 8:38 am

#76 skyrocket on 04.14.16 at 10:16 pm

#44 paul on 04.14.16 at 8:00 pm

Rents are about to skyrocket.

Based on what? Evidence? Link? — Garth

===

Based on common sense.
Higher cost is passed on if supply/demand allows.
Privately subsidizing renters is economical nonsense.
But you know that, of course.

That was convincing. — Garth

===

It has happened to cities around the world where real estate prices went crazy, from Moscow to San Francisco.

What makes you think Canada is different?
Rent control?

Bay area population, 6.8 million. Moscow, 12 million. YVR, 2 million. — Garth

#110 Siva on 04.15.16 at 8:51 am

“Miami real estate is melting down”

http://www.cnbc.com/2016/04/14/miami-real-estate-is-melting-down.html

#111 241A65 on 04.15.16 at 8:55 am

Garth –

The irony is that, while millennials appear far left-of-centre in their political outlook – witness T2 &c. – they are actually quite conservative in their view of home ownership. What this implies I’m not sure.

#112 Ace Goodheart on 04.15.16 at 8:59 am

Here is an interesting graph for anyone who is thinking of buying a house in Toronto:

http://www.trebhome.com/market_news/market_watch/historic_stats/pdf/treb_historic_statistics.pdf

As you can see, this charts average prices from 1969 all the way through to 2014.

We can see the “crash” of 1991, which resulted in a net decrease in prices for a five year period. Prices didn’t recover to their pre 1991 crash levels until 2001, ten years later. Average decrease during the 5 year “crash” period was around $55,000.00 but this would have to be adjusted for inflation.

The other interesting thing about this price graph is that, over a 45 year period we had an increase in prices of $537,767.00 which again would have to be adjusted for inflation. All of the losses sustained in the 1991 housing price crash, were made up again by 2001 and then things really take off from there.

So, what this seems to mean to me, is the following: If history is any guide, the million dollar house in Toronto is not a temporary thing. It may be that we have a five year period of price declines, and those declines could be in the $100,000 or more range, however, in the long term, it would seem that Toronto houses will be worth north of a million dollars on a permanent basis (ie, there will be a “recovery” to pre-crash price levels, and then prices will continue to increase).

So anyone wanting to buy a house in Toronto, and figuring that prices will soon correct or “crash” may want to, in the four or five year “crash” period when prices are declining, buy a house and hold onto it. Because if history is any guide, once prices recover to pre-crash levels, they will then continue to increase and it will never again be possible to purchase a house at either pre-crash price levels, or price levels seen during the crash.

Actually the price achieved in 1989 was not achieved again until 2002. Factoring in inflation, the average price did not hit pre-crash levels again for 15 years. The last ones in were therefore creamed. Toronto prices corrected by about 30% – akin to the 32% drop which decimated the US middle class. I suggest you buy a new calculator or take off the rose-coloured glasses when you do statistical analysis. — Garth

#113 Ray Skunk on 04.15.16 at 9:09 am

Can’t believe those on here thinking rents are about to “skyrocket”.

Guess what? Rents are in no way tied to the cost of the property. Banks – supported by the government – will fall over themselves to give you a leveraged mortgage and assist in pushing up prices. Banks, however, will not afford the same money-for-nothing luxury to cover one’s rent. Therefore people can only pay in rent what they can afford to pay based on their income. Incomes are stagnant for the most part, and typically rents will top out at $1800/mo for an average condo in a city, and up to $4k/mo for a large house in the burbs.

If you”re thinking of asking $4k/mo for your 500sqft condo because you paid $600k for it, you simply won’t find a tenant. People can’t afford it. That’s all there is to it. The place will sit empty or you’ll lower your price to what the market can support.

Again, for those who have trouble comprehending, high prices DO NOT equal high rents.

The RE media machine have really done a number on you. I feel a little sorry for you, truth be told.

#114 Johnny on 04.15.16 at 9:09 am

Agree on all points, but the opportunity cost. That’s bollocks. Why not consider a -4% return? Which is what my portfolio returned last year. Or the 0% that Garth claims to have managed to obtain in 2015. This “opportunity cost” is a fallacious argument, presenting as a certainty something that is not guaranteed at best and wishful thinking at worst.

A balanced portfolio (60/40) delivered 8.5% in 2014, 0.5% in 2015 and 6.3% over the past six years – which included two declines (2011 and 2105). Use of a 6% figure is realistic. — Garth

#115 Noel on 04.15.16 at 9:10 am

That house will be worth $2 million in 10 years.

They’re not building any more land and people are moving into Toronto at a greater rate than any Canadian city – natural population growth, interprovincial migration and immigration all add to this. Its the financial center of the country and the most diverse economy – that isn’t changing.

The house is right next to a direct line to Pearson and a metro stop. Sure, it might be 10-15% overpriced for a semi right now, but it will sell (probably under list, but whats the difference between that and listing it at $800k and having bidding wars that push it up to $1 million?), and appreciate, and the buyers will be ahead sooner rather than later.

So, do you have an A7 or an A8? — Garth

#116 Ray Skunk on 04.15.16 at 9:21 am

A PS to my above comment:

Given stagnant incomes and an array of new taxes (carbon, cap-and-trade, EnhCPP, ORPP, etc.) I would expect affordability from renters to fall before it rises.

Combine with an absolute glut of rental inventory from all those HGTV “income property” amateur landlords out there hocking their identikit 500sqft shoeboxes in the sky – and I’d expect rents to actually fall before they rise.

#117 IHCTD9 on 04.15.16 at 9:22 am

#6 Bram on 04.14.16 at 6:50 pm
Or:

You are not so riff raff that you have to borrow for it, and buy it outright.

$42K rent/yr, so if we ignore maintenance/utilities, it yields 3.75% plus capital gains.

And guess what? That yields better than your AAPL you now hold instead @ 1.86%

Bonus! Capital gains on the half toronto house are tax free. The capital gains on AAPL are not.

Hmm…. maybe not such a bad deal as you make it out to be, Garth?

Bram
________________________________

Hopefully you have not bought too many properties using that kind of math…

#118 Smoking Man on 04.15.16 at 9:32 am

Un bound to alcohol or tabacco the Smokeys 2016 Alien hunt in the desert begins today.

Agenda friday. Senica to talk to the nataves.
Sat fly to Laughlin search south on jet ski on calorado river..
Wednesday drive to Vegas and Area 51and Area 5

#119 IHCTD9 on 04.15.16 at 9:44 am

#7 Mr. White on 04.14.16 at 6:55 pm
Same situation in lots of places. Not quite that sort of ratio though.

Apparently millennials are moronic in two ways; they think buying high and selling low and socialism are the road to prosperity.

In a lot of ways I am pretty happy to be old, no need to deal with the fallout here over the next few decades.

I wonder what these goofs will do when interest rates revert to norm. I wonder too what the various levels of socialist governments in Canada will do when the same thing happens to them.
___________________________________________

These are big city Millennials we’re talking about here on GF. The rural ones are doing fairly well if they’ve managed to avoid spawning illegitimate children, found themselves a good mate, and both found at least average employment. Houses, Trucks, boats, ATV’s, and Harleys are owned and enjoyed by all – some even save for retirement if you can believe it.

As for future socialist governments in Canada? Look no further than the Newfoundland Budget the Libs just brought in:

Doubling the gasoline tax
Income tax going up
HST going up to 15%
300 fees for licenses, permits, fines and inspections going up
50 brand new fees are being introduced
15% tax to insurance premiums
Corporate taxes are going up
Booze and tobacco taxes going up again
“Deficit reduction” tax being introduced
Even the lowest income earners are being hit hard
Despite all of the above, the Libs will still be running a 2 Billion deficit

http://www.cbc.ca/news/canada/newfoundland-labrador/nl-budget-tax-increases-1.3535716

We’re not going to be too far NL Federally if T2 can’t bring himself to look beyond his 4 years in power as far as incinerating 10’s of billions worth of revenue he don’t own goes…

#120 Noel on 04.15.16 at 9:53 am

So, do you have an A7 or an A8? — Garth

________________________

I take the bus – mortgages are expensive!

#121 Sideshow Rob on 04.15.16 at 10:47 am

#10 Raincoast

Indeed. It’s a poorly kept secret that North American prime real estate is the new Swiss bank account among the global players. Lots of wealthy people in failing debt pickled countries are seeking to go off grid with their fortunes. A few shell corporations set up in lax jurisdictions and “poof”. Money gone. Vancouver and Toronto are considered to be primo. For better or worse this isn’t ending any time soon.

#122 Renter's Revenge! on 04.15.16 at 10:57 am

#111 241A65 on 04.15.16 at 8:55 am
Garth –

The irony is that, while millennials appear far left-of-centre in their political outlook – witness T2 &c. – they are actually quite conservative in their view of home ownership. What this implies I’m not sure.

“What’s mine is mine and what’s yours is mine.”

#123 WalMark of Sadkatoon on 04.15.16 at 11:07 am

don’t be fooled by the unemployed on this blog. tech continues to boom. who are u going to trust? a person who can’t get a job or ppl who work in the industry? exactly.

http://www.montrealgazette.com/business/wanted+developers+coders+canadas+technology+gold+rush/11815137/story.html

#124 WalMark of Sadkatoon on 04.15.16 at 11:13 am

in addition to increasing tech pay we need to address canadas tech shortage sooner rather than later.

http://content.randstad.ca/hubfs/STEM_2015/Randstad_STEM_WP_EN.pdf

#125 Bram on 04.15.16 at 11:39 am


‘Bonus! Capital gains on the half toronto house are tax free.’

No they are not. Because it won’t be your primary residence. And 3.75% is a pitiful return for being a landlord. And you pay income tax on that as well.

Ah, good point. I was wrong.

Never mind then, that deal *is* as bad as Garth makes it out to be then.

Bram

#126 data on 04.15.16 at 11:44 am

The other Vancouver, WA, just south in Seattle

$2.5M for a monster home. 28acres plus mansion. Bring your horses for the stable. How on earth would Vancouver, where Canada has a little land.

http://www.estately.com/listings/info/16320-ne-202nd-ave–2

#127 For those about to flop... on 04.15.16 at 11:50 am

I know the rent my wife and I pay is below market value which is one of the reasons we stay but the whole p/r thing got me thinking about a Canadian phenomenon.

With all the people renting basement/garden suites how would they be able to work out their p/r ratio.

As a ballpark I took similar sq ft on what condos go for in the area but it’s not apples to apples and got something in the 30’s.

My wife used to hassle me about when we are going to buy a condo ,now she hassles me about where we are going on our next holiday.We just got back from one and she is booking another one for May.

It’s amazing how your mindset can change when you stop listening to relatives…

M41BC

#128 Bram on 04.15.16 at 11:50 am

#117
Hopefully you have not bought too many properties using that kind of math…

Zero rental properties fortunately :-)
John pointed out a gaping flaw.

I only own my residence, and my biggest investment is actually AAPL, which is why I used it as comparison.
That has shown capital growth but yield is pathetic.
Price growth on my e van residence has been spectacular though, even though I only have it for 3 yrs now.

Bram

#129 Mark on 04.15.16 at 11:57 am

“in addition to increasing tech pay we need to address canadas tech shortage sooner rather than later.”

I’d take the word of Ontario’s Professional Engineers based on StatsCanada data, over your industry shill nonsense any day of the week.

https://www.ospe.on.ca/public/documents/advocacy/2015-crisis-in-engineering-labour-market.pdf

2/3rds of Canada’s engineering talent either unemployed or underemployed.

Anyways, didn’t Garth tell you to knock spreading nonsense about others off the other day?

#130 IHCTD9 on 04.15.16 at 12:06 pm

#115 Noel on 04.15.16 at 9:10 am
That house will be worth $2 million in 10 years.

They’re not building any more land and people are moving into Toronto at a greater rate than any Canadian city – natural population growth, interprovincial migration and immigration all add to this. Its the financial center of the country and the most diverse economy – that isn’t changing.

_______________________________________

I wouldn’t get too bullish on the GTA economy if I were you. Filling up Toronto with new immigrants means less jobs, and lower wages. This is a process that has been going on for over a decade already. Old well paid folks retire or are let go, new young university educated immigrants take their place for $25.00/hr. (tops).

Everyone is happy with this scenario until the guy decides he wants to buy a house.

New immigrants in Canada average $28,700.00/year, average wage for all immigrants in Canada is $45,000.00/yr. (circa 2005, wages may well have been higher then than now)

The more immigrants that get drawn to the GTA, the worse it is gong to get. I have said nothing of the 300,000+ well paying manufacturing jobs that have already left Ontario in the last 10 years – the majority of which exited the GTA.

#131 Unhinged Loon on 04.15.16 at 12:20 pm

So who makes an income like that to support these thousands of multi-million dollar mortgages popping up in Toronto and the satellites.

I’m guessing these are all people with equity in the game already, upgrading after having found their greater fool to give them the liquidity?

There is no millennial save for someone who runs their own enterprise that could be a first-time buyer.

#132 BS on 04.15.16 at 12:26 pm

Ace Goodheart on 04.15.16 at 8:59 am
Here is an interesting graph for anyone who is thinking of buying a house in Toronto:

http://www.trebhome.com/market_news/market_watch/historic_stats/pdf/treb_historic_statistics.pdf

As you can see, this charts average prices from 1969 all the way through to 2014.

We can see the “crash” of 1991, which resulted in a net decrease in prices for a five year period. Prices didn’t recover to their pre 1991 crash levels until 2001, ten years later. Average decrease during the 5 year “crash” period was around $55,000.00 but this would have to be adjusted for inflation.

Note the period you are citing also included mortgage rates declining from 14% down to 6%, then followed up with a drop down to below 3%. What would have the recovery looked like without rates dropping? That option is not available during the next crash/decline. Even if rates stay low that is a big difference in how any recovery will look.

#133 For those about to flop... on 04.15.16 at 12:49 pm

#129 Mark on 04.15.16 at 11:57 am to Walmark.
“in addition to increasing tech pay we need to address canadas tech shortage sooner rather than later.”

I’d take the word of Ontario’s Professional Engineers based on StatsCanada data, over your industry shill nonsense any day of the week.

https://www.ospe.on.ca/public/documents/advocacy/2015-crisis-in-engineering-labour-market.pdf

2/3rds of Canada’s engineering talent either unemployed or underemployed.

Anyways, didn’t Garth tell you to knock spreading nonsense about others off the other day?

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

I’ve actually been waiting for Walmark to switch back to Trollstoy/ Toiletspray since the boss told him not to make a career out of chirping you.

Time will tell…

M41BC

#134 Snoopy on 04.15.16 at 12:52 pm

I appreciate Garth fighting the war against the mad ascent in house prices, but somedays I wonder if the problem wouldn’t solve itself faster if this blog didn’t exist…

… If instead of warning people, Garth promoted real-estate, then the bubble wouldn’t inflate faster, and like stocks, the more parabolic they go up, the faster they come down.

Maybe I’ll start a blog like that :)

#135 Josh in Calgary on 04.15.16 at 1:07 pm

#128 Bram on 04.15.16 at 11:50 am,

Bram the biggest difference between a house as an investment and a financial portfolio is the liquidity and the transaction cost.

Sure in a hot market you might be able to call up a real estate agent, have the house on the market in a week and then sell it within a week. Maybe even for closing the following month. But you’re paying a real estate commission of around 5%. Maybe you do it yourself (more hassle) for less but you still have to pay the buying agent.

However, if real estate turns sideways you may have to wait several months to sell your house or take a steep discount.

Oh and houses cost you money to maintain and insure and property taxes, etc.

Now compare this to a financial portfolio invested in mainstream ETFs. If I want to sell an ETF for whatever reason I can do it in less than a minute. The cost to do so is generally around $10.

Owning a house is a good idea if you’re in a steady job and are pretty sure you want to stay put for over 5 years and can afford all of the carrying costs. But as a pure investment they’re a lousy idea. The exception to this is some people are really good at buying reasonably priced homes, doing all the maintenance and land lord work themselves and making it a full / part time job … but even then they’re quite exposed to an unbalanced portfolio (although no different than any other small business owner).

#136 Bram on 04.15.16 at 1:17 pm

#112 Ace Goodheart on 04.15.16 at 8:59 am
We can see the “crash” of 1991, which resulted in a net decrease in prices for a five year period. Prices didn’t recover to their pre 1991 crash levels until 2001, ten years later.

On the other hand, the 2008 “crash” took roughly a year to recover to the same level. Some recoveries are slow, some are fast.

#137 james on 04.15.16 at 1:19 pm

#118 Smoking Man on 04.15.16 at 9:32 am
Un bound to alcohol or tabacco the Smokeys 2016 Alien hunt in the desert begins today.
Agenda friday. Senica to talk to the nataves.
Sat fly to Laughlin search south on jet ski on calorado river..
Wednesday drive to Vegas and Area 51and Area 5
…………………………………………………………………….
Well I’m not a gambling sort but lets put $20 that you don’t last one hour in Sin City without a drink and a smoke. Don’t forget to get your self a tattoo while your there. Use a spell checker before you go.
https://www.pinterest.com/bearspops/bad-tattoos/

#138 For those about to flop... on 04.15.16 at 1:43 pm

Yesterday I wrote a post about the most desirable neighborhood said for foreign investment in the Couv and was trying to pinpoint how many houses were there.

This page talks about population amongst other things but the number that jumped out at me was the close to 800k annual household income in this suburb.

I knew they were well off, but damn…

M41BC

https://en.m.wikipedia.org/wiki/Shaughnessy,_Vancouver

#139 understood by few on 04.15.16 at 1:46 pm

#89 Snowboid on 04.15.16 at 12:21 am

———

You’re using a year’s stats vs a month’s and the 2010 report doesn’t have “core” (which is a combo of areas). Also 2016 core doesn’t have mean and median, it has the “benchmark” price.

Comparing March 2010 to March 2016 makes for all of greater vic makes more sense. Apple to Apples. Exact same coverage, should be similar seasonal swing and you can compare mean and median to mean and median.

I’d love to see Saanich East then and now.. but they don’t list Saanich east separately any more, they messed stuff up and don’t give details anymore.
It makes it difficult to compare. MLS holds the data pretty close to its chest. Wish we had something like Zillow (but that’d take some legislation to open up data).

Interesting how only some areas are up. Means there’s some opportunity for cashing in on paper gains but staying within Greater Victoria (which worst case is a commute from Langford.. which compared to Vancouver is nothing). In fact, a realtor friend suggested I should sell my place and buy in Langford (since prices are still flat out there). No thanks. If I can’t afford to move somewhere I want to live I’ll just stay put (as it seems a lot of people are doing).

#140 Ace Goodheart on 04.15.16 at 1:54 pm

RE: Actually the price achieved in 1989 was not achieved again until 2002. Factoring in inflation, the average price did not hit pre-crash levels again for 15 years. The last ones in were therefore creamed. Toronto prices corrected by about 30% – akin to the 32% drop which decimated the US middle class. I suggest you buy a new calculator or take off the rose-coloured glasses when you do statistical analysis. — Garth

This may be true. However my point was that looking at the 1991 crash and the subsequent recovery, anyone who had just kept their house in 1991 (or who had bought a house in 1991 and just decided to keep it) would still, today, be ahead. Yes they had to wait 25 years to get today’s prices, but if they had bought a house in 1991 for $255,000.00 and then still had that house today (and they were looking at retirement as they had put in their obligatory 25 years of slave labour as grist for the mill or fodder for “the man”), they would be cashing out. The “cash out” would likely be north of a million dollars at 2016 prices.

If you look at an equivalent investment in some sort of mutual fund or EFT (if they existed 25 years ago), then the amount available to cash out might not be as much (particularly if 2008 had anything to do with it).

But yes point taken that likely people who are buying houses right now in Toronto and Vancouver are buying at the top of the market and if there is a crash this year or next, it will be a number of years before they are able to sell for any sort of profit (or even break even).

#141 For those about to flop... on 04.15.16 at 2:15 pm

Hey ,Understood by few.
Just wondering the way you talk about Langford,does that make what Langford is to Victoria, what Surrey is to Vancouver?

Also I am liking the way you are handling your discussion with the other people in Victoria.
( No names , don’t want to wake up the pesky princess too early!)

I have lived in Vancouver since 2002, yet I have only been on the island once ( been to the Sunshine Coast a couple of times) as I am allergic to B.C ferries.

I see they are looking at building a bridge to the Sunshine Coast and I hope one day there is a bridge to the Island as well…

M41BC

#142 understood by few on 04.15.16 at 3:31 pm

#141 For those about to flop… on 04.15.16 at 2:15 pm
Hey ,Understood by few.
Just wondering the way you talk about Langford,does that make what Langford is to Victoria, what Surrey is to Vancouver?

———–

Despite having lived on the mainland (Ladner, oh horrors), I’m not the best to compare that. I think so?

It definitely has a stigma like Surrey. At one point it was justified (80s and 90s for sure) but Langford has cleaned up a lot. The old stigma was hicks with cars on blocks on their front lawn, maybe a broken toilet, definitely some old furniture. Now it’s all young families, lots of new build RE (of every sort: condo, town, mini-lot detached, normal detached). That’s where the value is (a lot more for your money). It’s also where all the box stores are (good for young families?).

My problem with Langford twofold:

#1 the commute. I’ve waited longer to get through the Massey tunnel than it’s ever taken me to get from the “West Shore” to Victoria, but there’s something extra hellish about sitting in bumper to bumper in Victoria. I can do it in Van, can’t do it in Vic. I can’t explain it. In Vancouver there are route options. Victoria has basically one bottleneck between the western communities and the rest of greater vic. It irrationally frustrates me.

#2 – It doesn’t have the amenities I want. I like my brew pubs (not sports pubs) and going to breweries for growler fills, I like shopping at Root Cellar, I like being a cheap cab ride to down town (for the previously mentioned brew pubs), I like all the quirky coffee places that are a short bike ride away (on the “goose” and Lochside trails), I like the little beaches tucked away in residential areas.. I could go on, but basically the stuff I like is here, not there. For some, what Langford offers is perfect, with the bonus of being cheaper.

That being said, I would choose Langford over Surrey any day of the week. If I was forced to move back the the mainland I’d rent in Van or North Van.

#143 april on 04.15.16 at 3:34 pm

#136 – The lowering of % rates in 2009 prevented us from having a longer correction.

#144 WalMark of Sadkatoon on 04.15.16 at 3:36 pm

I’d take the word of Ontario’s Professional Engineers based on StatsCanada data

how well has that worked out for you?

I hope u find a job soon. good luck!

#145 WalMark of Sadkatoon on 04.15.16 at 3:40 pm

Canada needs to address the information tech skills shortage sooner than later

http://www.ryerson.ca/content/dam/diversity/academic/Diversity%20and%20the%20Skills%20Shortage%20in%20the%20Canadian%20Information%20and%20Communications%20Technology%20Sector%20A%20Critical%20Interrogation%20of%20Discourse_2009.pdf

#146 WalMark of Sadkatoon on 04.15.16 at 3:45 pm

note that the most important skill that employers are looking for in the Ryerson report are “people skills”. second are the tech skills.

this makes sense since all work is handled in teams and it doesn’t matter how technical u are if you have low bar life skills when it comes to dealing with real people.

always keep this in mind when listening to unemployed tech workers. they’re unemployed for a reason!

tech is booming for those who have people AND tech skills. tech is not booming for ppl who have no ppl skills. thank god for that…

#147 Noel on 04.15.16 at 3:56 pm

#130 IHCTD9

There’s a world of difference between Toronto proper and the rest of the GTA. Very few of the manufacturing jobs you speak of were based in the core of the city. A house in Oakville, Aurora, Orangeville or Milton isn’t going to increase 80% in value over the next decade but one next to Dundas West Station in Toronto has a very good chance to.

Immigrants coming to Canada earn higher salaries on average than people born in Canada, not sure where you got those figures from. Its a selection bias – immigrants have the wherewithal and ambition to move to a different country and often need to have employment in place. Most immigrants coming to Canada come to Toronto, it puts upward pressure on all housing from the core of Toronto to the rest of the GTA.

#148 salonist on 04.15.16 at 4:21 pm

sm

has the exclusive distribution rights for longbranch donation drop off box on his front lawn

http://www.dailymail.co.uk/news/peoplesdaily/article-3173453/Police-investigating-counterfeit-products-shocked-discover-disgusting-secret-factory-branded-facial-tissues-USED-TOILET-PAPER.html

#149 Island Girl on 04.15.16 at 4:52 pm

@#118 Victoria Real Estate Update on 04.12.16 at 2:21 am

Sorry this is a late response, stuck travelling. But yes I do know the house sold for $100,000 more. I am still in contact with the realtor that we used to buy our house and she sent me the details of the sale.

And yes I think it is delusional to think a house on my street should appreciate by 35% in one year, hubby and I joked about selling and renting again briefly because of it. The only thing is we didn’t buy because we wanted to invest in real estate, we bought because the house we were renting was being sold and we couldn’t find another rental that fit our needs. We stuck to our budget and found something that works. I’m honestly thankful we bought when we did, because there is no way I would have paid $100,000 more for the house we’re in and I don’t know what we would have done.

What’s truely sad though, is the friends and neighbours that see this price increase as validation that the housing market can’t go down. We know it will, and it’s just a matter of time, we’re just thankful we got in when we did, I swear it was a bump down to something more reasonable (we bought for $100,000 less than the previous owners paid).

It’s a crazy world here, people I think are just out to lunch when it comes to real estate.

#150 Canadian on 04.15.16 at 5:11 pm

Poor kitty…

#151 Fed-up on 04.15.16 at 5:44 pm

Balanced Portfolio…Use of a 6% figure is realistic
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Is it just me, or does that number just keep coming down every year. I could have sworn that it was close to 10% just a year or 2 ago.

Historically this blog has quoted 7%, which was the actual performance until the oil price collapse. As stated, the six-year historic average is 6.3%. Double-digit returns were never suggested for a portfolio of this relatively conservative nature. So, yes, it’s just you. — Garth

#152 JuliaS on 04.15.16 at 5:49 pm

Friends are selling a $3 mil house that they used to share with 2 relatives one of whom recently passed away. They put close to $1 mil helping pay off the mortgage and how are going to get half of the profit in return. And what are they going to do with it? Put it as a downpayment towards a new home.

I keep telling them: “You morons! Have money in the bank. Rent and be happy!” But it’s pointless. They’re already borrowing money (ahead of the anticipated sale), just to spare them the headache associated with moving. They want to have another place waiting for them before they have to vacate the old premises.

#153 RayofLight on 04.15.16 at 5:51 pm

Ace Goodheart on 04.15.16 at 1:54 pm
RE: Actually the price achieved in 1989 was not achieved again until 2002. Factoring in inflation, the average price did not hit pre-crash levels again for 15 years. The last ones in were therefore creamed. Toronto prices corrected by about 30% – akin to the 32% drop which decimated the US middle class. I suggest you buy a new calculator or take off the rose-coloured glasses when you do statistical analysis. — Garth
This may be true. However my point was that looking at the 1991 crash and the subsequent recovery, anyone who had just kept their house in 1991 (or who had bought a house in 1991 and just decided to keep it) would still, today, be ahead. Yes they had to wait 25 years to get today’s prices, but if they had bought a house in 1991 for $255,000.00 and then still had that house today (and they were looking at retirement as they had put in their obligatory 25 years of slave labour as grist for the mill or fodder for “the man”), they would be cashing out. The “cash out” would likely be north of a million dollars at 2016 prices.
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If $255,000 was invested for 25 yrs @ 6% ,it would be worth about $1.1 M now. If the return was juiced even a bit to 8%, it would be worth about $1.75 M.

#154 Quitter on 04.15.16 at 5:57 pm

Moved from Thornhill, ON to Plano, Texas four years ago. I am an active investor and realtor in Texas, and still holds a day job.

Spouse and I are both (still) in the IT profession. So you can say we contribute to the “Canada to USA brain drain” statitistics.

As an investor for buy and hold properties, I (and many others like me) would not buy any property that has a price to rent ratio greater than 9.0. E.g. a $140,000 property should rent for at least $1400 per month. I do not see how any person who buys a property with unreasonable high price to rent ratio would call themselves INVESTORS. Gambling would be a better word for someone who bets that property price will go up to cover their rental loss.

#155 Ronaldo on 04.15.16 at 5:59 pm

#141 For those about to flop… on 04.15.16 at 2:15 pm

”I see they are looking at building a bridge to the Sunshine Coast and I hope one day there is a bridge to the Island as well…

M41BC”

They still havn’t come up with an answer to the Lion’s Gate problem in 50 years so I doubt very much that a bridge to the island is very high on the priority list. Besides, it’s not justifiable. The Ferry service is excellent contrary to what some may think. I use it regularly. It’s very well run. No complaints.

#156 canuckinusa on 04.15.16 at 10:32 pm

I love this blog, seems so sad yet beautiful watching this from down here in Oregonia … people obsessing about RE … banks making out like bandits … fools willingly shackling themselves with debt … that oil price better be going up soon..

#157 paul on 04.16.16 at 6:13 pm

Oh 911. nothing to see here move along!!
http://www.nytimes.com/2016/04/16/world/middleeast/saudi-arabia-warns-ofeconomic-fallout-if-congress-passes-9-11-bill.html?_r=0