Besides the Globe and Mail, and possibly the weird Vancouver dailies, the biggest house-pushers in the land work for CMHC. No wonder.
These are the guys who let people without any money buy $800,000 houses with 5% down (that they got from their Mom) and enjoy the same interest rate as the 50-year-old dude who has 50% to deposit. It’s a twisted system we have. CHMC institutionalizes risk. By backstopping lenders who make high-ratio loans, it creates a massive moral hazard.
Canada Mortgage and Housing Corp has close to $600 billion on the books. Not all of is it high-risk, high-ratio stuff, but enough to give any accountant the runs. The agency has a vested interest in a residential real estate market that continues to expand and, in fact, gets more expensive. It’s a far cry from the origins of this federal agency, which was to help WW2 soldiers get digs. Now it helps dig the financial graves of Millennials.
This is worth mentioning, since the latest CMHC report paints a somewhat sobering picture of the state of real estate. The feds have concluded that nine of the major 15 markets in Canada are overvalued. In other words, new buyers are paying too much – in Vancouver, Saskatoon, Toronto, Hamilton, Quebec City, Edmonton, Calgary, Regina and Montreal.
There are distinct reasons for this.
First, overvaluation comes because idiot purchasers pay too much when buying from greedy sellers. They engage in bully offers, bidding wars, blind auctions and unconditional deals. This is the result of prices surging past economic fundamentals – when they’re no longer supported by family incomes, population growth, economic expansion or job creation. If you live in Vancouver or hot slices of 905, you know what they mean.
Prices here are based on rank speculation or on FOMO. It’s the fear-of-missing-out that worries everyone the most. That gave us the Nortel bubble and the subsequent collapse. It fueled the US housing gasbag, which blew up and took the middle class with it.
Overvaluation also comes when the economy starts to suck, but real estate values stay sticky. Poor Saskatoon’s a good example. Prices there are down 2% and sales are off 6%, but the economy is unraveling a lot faster, thanks to the commodity slide. Calgary and Edmonton obviously fall into the same category, thanks to oil (despite the recent bounce to $45). Cowtown’s rush hour traffic has thinned out along with energy executives, while the commercial vacancy rate skyrockets. House sales are 11% lower than this time last year, but the average price is up 1.2%. If you need any more evidence of the irrationality of your fellow beavers, there it is.
Then there’s overvaluation because of migration. Like in Hamilton, a grimy but gentrifying city of 520,000 (slightly smaller than Halifax) which has been invaded by alarming numbers of metrosexual, panini-pressing, specialty beverage-sipping, bearded hipsters from the Kingdom of 416, where they have zero chance of ever owning a SFH of their own. You can put Victoria in the same silo, or maybe even PoCo or parts of the Okanagan, where YVR refugees are swelling local prices like a hormonal frog.
Overbuilding is a concern, too. Like in Toronto where the inventory of built but unsold condos continues to escalate. In Saskatoon and Regina the supply of new houses is outpacing demand. And days ago we told you about a giant surplus of unsold houses in Edmonton – enough to threaten average prices with a serious downwards tug.
The point is this: real estate is local. Mortgage rates and regs may be national in nature, but every market is different, constantly changing and influenced by a lot more than just the cost of money. These days the media is playing a big role. Giants like the Globe are feeding a social obsession with housing, running story after story about “what they got” or “Millennials priced out.” Plus, of course, serious column inches on the yellow peril or assignment clauses – that feed our new anti-Chinese, anti-realtor prejudices.
There’s nothing wrong with owning property. I do. But never fall for this fairy tale that prices will continue to rise, without risk of reversal, because things are different this time. They aren’t. House values went up because the cost of money went down and the fear of debt faded. When you see CMHC highlight concerns, pay attention. If you live in one of those nine markets, pay even more attention.
Or, ignore me. See what happens.
163 comments ↓
What’s the deal with this?
R2062992
Original Price $1,225,000
Sale Price $1,225,000
Listed Apr 27/16
Sale Date Apr 27/16
Days on Mrkt 0
Headin to downtown Vancouver tomorrow for couple days – great place to visit but you couldn’t pay me to live there.
You are absolutely right – nobody could dispute that housing prices can continue to go up indefinitely. So now what? You have been warning about this for over 5 years….if people didn’t listen and bought in 2010 or 2011 I assuming that you would agree that even when the correction hits they will still be up over initial purchase price?
While all of this is going on there are other economic headlines that also suggest that the risk factor for those particular assets is high? Why the sole and possibly myopic focus on Canadian real estate? Do you not get bored talking about the same thing for over 5 years?
Bottom line is, there is no room left in the 2nd biggest country on the planet. Buy now, or there will be no space left for you.
MLS R2057540 west 45th ave kerrisdale Vancouver
original price 3,380,000.00
relist price 3,080,000.00
sold price 2,400,000.00
Hmmm
As mentioned before, Cowntown is crumbling.
Was at a soccer game for my 3 year old (who the heck tries to get 3 year olds to play organized sports?) and met a nice couple building a nice home in walking distance to DT.
I lamented the tightening of mortgage lending and one of them piped up with “yeah, RBC is too hard to get a high ratio mortgage from…try a broker”
Sub Prime catastrophe here we come!
Or you ask someone qualified to assess these risks: Economics Professor Nick Rowe.
An older article, but he digs into the numbers, and CMHC seems on solid footing, and actually improving too.
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/01/cmhc-reserves-revisited.html
As you state: RE market is local, thus a few cities crashing will hardly make a dent in their reserves.
Bram Stolk
My parents bought their house in Thornbill for 950k 2 Yeats ago and they sold it for 1.288m last week. Did they sell at the right time? Now they are telling me to buy so they can live with me.
Break a leg tomorrow Garth. Oh, wait a minute, … you already did that. How about “success be with you.” Wish I could be there to play Spot The Blog Dog.
Quelle surprise.
“Unmasking the Men Behind Zero Hedge, Wall Street’s Renegade Blog”
http://www.bloomberg.com/news/articles/2016-04-29/unmasking-the-men-behind-zero-hedge-wall-street-s-renegade-blog
Garth, agreed however like any religion the lie that is believed by all to be real becomes truth. Despite logic leading to declines RE pretty much everywhere in this land actually holds if not increases.
Indeed I’ve stuck my neck out and put offers out to be declined even for a dollar less…
Love not being a mortal slave to the banks mortgage however I don’t see this coming to any conclusion in my limited lifetime. Personally I have my way of investing but the RE heavy side really does have a fair case; now and for the foreseeable future. Vested interests will keep it that way for quite some time.
Afraid to admit ‘the markets can stay irrational longer that I can be solvent’ is more apt. In severely depressed MTL the last 30 years have never seen any sort of ‘correction’ or sudden drop even with two referendums!
Suppose we are special sort of crazy?
Best regards.
When the shoeshine boy starts giving stock advice, you best list
When has there even been a soft Landing in vancouver ? Let alone correction ? Dates ? Prices march in one direction and that is up. If you can afford it, buy and never look back.
When has there even been a soft Landing in vancouver ? Let alone correction ? Dates ? Prices march in one direction and that is up. If you can afford it, buy and never look back. Other than 1989 when there was inflation and actual growth and mortgage rates were 18%. We will never see rates that high in our lifetimes if ever. Mortgage rates are goin nowhere.
I drove by this exquisite piece of property on the way to work…
M41BC
http://www.rew.ca/properties/R2051968/3830-w-16th-avenue-vancouver
Garth said “with risk of reversal”
did you mean “without risk of reversal”
GARTH,
This time I’ll just have to ignore you.
…..Everybody knows that “Trees grow to the sky”
Can you imagine telling moist millenial’s they shouldn’t buy a house? They wouldn’t stand for that. When real estate is on fire, you buy!
I remember vividly my mother telling me not to go down the slide headfirst while at the playground one day. I had other plans. After all, mom’s didn’t really know much anyway, right? I had to do it. The time was right, it just felt right, screw it I’m going. Needless to say I spent the rest of the afternoon in the doctor’s office getting stitches in my chin.
Now every time I look in the mirror, I remember that day. At least my memory isn’t scarred by a million dollar mistake. There will be some sorry asses at some point soon.
I hear things are so bad in Calgary that a lot of oil execs are laying off their mistresses.
I have lived in Hamilton for four years now but the insanity in the local market today is at a feverish pitch not seen before. Everything is selling…everything. All real estate here is being sold at a premium relative to what a grimy, industrial city should be able to command in price.
It’s both breathtaking for those who hold some equity in their property…and unbelievable.
Hamilton…who knew?
Hey WULLY, do you have to work a lot of hours in Fort Mac?
I ask because I just did a 41 hr week and I feel like Mike Tyson in his prime got hold of me for 5 minutes.
I cannot work like I used to.Too many thrills and spills.
I think Mickey Rourke in the Wrestler summed me up pretty good when he stated ” I’m just an old broken down piece of meat.”
Do you guys have to sign contracts to work a certain amount of hours?
When I was working for Paul Allen, the company I was sub contracting for made me sign a contract that I would work a minimum of 60 hours a week.
This was hard physical labour,albeit in the paradise that is the Côte de Azur.
Someone could ask me to do that now with a gun to my head and I would tell them to just shoot me.
I went too hard,too early…
M41BC
People respond to incentives. If you make money cheap by lowering interest rates they will gamble and frankly for the last 5-6 years investing or flipping real estate has paid off. You are right that the RE market is local as shown by declines in Alberta and Saskatchewan but increases in YVR and YYZ. How long it will continue is anyone’s guess but in Toronto for quite a while. Toronto is immigrant central and apparently 30% of people who immigrated to Canada end up in GTA and most of the time these newly arrived are with money. And the first thing that you invest in is the most essential:shelter.
The Amazing Brentwood in North Burnaby is officially sold out now. Cant wait to buy more units in the upcoming towers.
Family income 200k+. Not much. Can’t afford a mere 2 bedroom condo downtown Toronto. Sellers and agents here smoking something…no one outsells a remax agent! Monopoly…
Looking at 500k plus $700/month in maintenance fees. I’d be broke! Agent wants to soup up her Audi…
Trade small…sell high, buy low. Discipline. Invest the house money. 50/50 intelligent investor. No easy money…smart though.
Staying liquid for now. Might head south. Don’t mind what happens – herd might wake up. No difference…
#22 Toronto Dweller on 04.29.16 at 8:21 pm
Where do you get your stats from?
Even if they are true and we assume 300,000 immigrants to Canada, that would be 100,000 to Canada, which is probably 30,000 families. That is a drop in the bucket for the GTA and its 5 million inhabitants. 30,000 families, not all of whom are wealthy. How many million $ homes is that?!!?
Garth has it right, and your immigrant nonsense does not cut mustard!
And these kids wonder why they can’t get reasonable paying jobs, in fact; industry so desperate for competent employees are going for the 50 +
They are all commies, who’s going to hire em. Govt only chance.
https://www.youtube.com/watch?v=W7g3NI59ddw
#15 Dime Head
I love your fine taste! Your all class.
M54ON
#13 Westvan
Vancouver 1980-81. Purchase our house in Point Grey July 1979 for $105,000. Put in 25,000 (Hvac, plumbing, electrical, kitchen bathrooms). Sold November 1980 $254,000 with a vtb mortgage of 180,000 at 20%. The buyer was paying us $2200’monthly. He tried unsuccessfully to flip the house, but had missed the boat. The house sold fall of 1981 for $180,000. Total loss for the flipper: 74k down payment + ca. 22k interest+ selling commission and legal fees. Over 25% loss in one year. Not very soft.
Don’t know how far the prices kept falling, but know they
were stagnant for quite some time. So no, they don’t only go up. They do come down.
http://www.thestar.com/business/2016/04/30/the-high-risk-world-of-syndicated-mortgages.html
It’s starting.
#14 Westvan on 04.29.16 at 7:49 pm
When has there even been a soft Landing in vancouver ? Let alone correction ? Dates ? Prices march in one direction and that is up. If you can afford it, buy and never look back. Other than 1989 when there was inflation and actual growth and mortgage rates were 18%. We will never see rates that high in our lifetimes if ever. Mortgage rates are goin nowhere.
////////////////////////////////////
Hey Westvan,I have told this story before so I will keep it brief.
You are forgetting about the correction in 2009 during the GFC.
Prices went down around 10 % ,there was fear in the air.
I was working on houses that were worth 2 million that could probably get 5 now just for land value and people were freaking out that they were going to be left holding the bag.
When this thing blows up and it will…I was in the soft landing side of things until the last two years I have changed my mind,it is going to talked about for decades.
Yeah I read this blog but I don’t read any of the rags Garth talks about ,I have to live it each day.
Developers have gotten too comfortable now ,they are oblivious to the risk and only see massive gains.
A lot of people have made the easiest money they will ever earn but a lot of people are going to get caught with their hand in the cookie jar…
…”…serious column inches on the yellow peril or assignment clauses – that feed our new anti-Chinese, anti-realtor prejudices.” – HonGT
#InArcadia,CA… #YouGetTwoPrejudices… #ForThePriceOfOne… #NoKidding!..
https://youtu.be/aoeUxzUR4ec
Well, political leaders….grow a pair.
CMHC (backstopped by the Canadian Taxpayers) could be made to demand 10% or 15% for a down payment, and further could lower their coverage to say… $750,000 or even $500,000. Maybe mortgage length should be lessened, or CMHC coverage only applies until the 1st renewal? Get creative here, it won’t be slowed until the price of money rises – that could be soon, or maybe never never land away.
After all, the point is to provide “entry-level” homeowners coverage, not every mom-backed shack-up in the country.
Oh, too harsh? Well, when you are dealing with TAX PAYER dollars, you are dealing with the likes of me, a tax-payer in the US but similar emotions do apply.
If a lender wishes to write you a mortgage for 5% down that’s fine, just don’t expect the tax-payers to backstop you.
Tired of Real Estate Greed.
Can’t we just have another BIGGER crash and stop this nonsense? I would rather hear about starving millennials.
M64WI
yesterday’s post: This week the country’s biggest real estate cartel took a mortal hit. After five years of fighting the inevitable, trying to hold back the digital tide sweeping through all of our lives, it’s the Feds, 1, and TREB, 0. Soon buying a house might be a whole different, and vastly more informed, experience.
Estrella gave the link to the decision:
http://www.cbc.ca/beta/news/business/treb-housing-data-competition-bureau-1.3557504
where are the politicians? MIA ( missing in action ) thank God for the integrity and courage of the civil servants at the Competition Bureau but support from the politicians would be helpful.
my answer: the political parties are scared
because
so much of the Canadian economy depends on real estate they are afraid to do anything.
Less than 1% of our mortgages are over $800,000.
Sorry, but that’s the stats.
2 items:
First I was chatting with [email protected] and she mentioned how just a few years ago a 400k mortgage was a huge deal to most clients and today it’s scoffed at.
Second: buyers remorse after that bidding war? Nope! Says the 50 something now a cool million in debt “it feels better to win.”
This will not end well
The Premier of New Brunswick Brian Gallant was on BNN promoting his province as the best and greenest solution for the east west pipeline from Alberta to Saint John’s Irving refinery.
Premier Gallant is a young buck of 33..lordie that is impressive as his story is Cinderella. His parents worked for minimum wage so no silver spoon there.
He is a liberal Premier but is oil friendly as opposed to Ontario Premier Wynn trying to encourage us all to go “off the grid”.
Andrew Woburn: from your link:
talking about zerohedge: Lokey, who said he wrote much of the site’s political content, claimed there was pressure to frame issues in a way he felt was disingenuous. “Russia=good. Obama=idiot. Bashar al-Assad=benevolent leader. John Kerry= dunce. Vladimir Putin=greatest leader in the history of statecraft,”
thank God for his ( Lokey’s ) courage and integrity
#28 PoltawaDiva on 04.29.16 at 8:45 pm
Don’t know how far the prices kept falling, but know they
were stagnant for quite some time. So no, they don’t only go up. They do come down.
————————
Those good old days in Vancouver, but now we have the China factor.
No major invasion, super bugs, civil war and cultural re-education there, no worry here.
Call me a doomer but everything that has been artificially inflated besides housing will not end well.
Keep partyin’ like it’s 1999 til the music stops!
“Less than 1% of our mortgages are over $800,000.
Sorry, but that’s the stats.
“
Those outsized mortgages aren’t the problem. Its the $400k mortgages to a families whose cyclically adjusted income are $80k/year.
Sure, the mortgage may have had decent metrics when that family was earning $130k/year. But when that family experiences the other side of the cycle and has its income chopped to $50k/year, it becomes a giant problem. CMHC subprime insurance, and its pricing, basically gave the banks little reason to discriminate based on risk. Dentists paid literally the same CMHC insurance premiums as tradespeople. As Garth points out, the 50-year old with a hefty downpayment basically was paying similar rates to someone with dramatically less of a downpayment. To call CMHC’s subprime mortgage insurance, “insurance”, really requires that one suspend the traditional definition of insurance which is that the premium paid reflects the risk associated with the insured event.
CMHC (backstopped by the Canadian Taxpayers) could be made to demand 10% or 15% for a down payment, and further could lower their coverage to say… $750,000 or even $500,000.
IIRC, the CMHC limit in the 1990s was ~$100k or something quite low. Basically for truly entry-level housing. I know when my folks bought their house, CMHC was only considered something that people on welfare or almost on welfare would use. It was almost derogatory to obtain CMHC insurance as there were certain features required as a condition of obtaining CMHC-insurance on new build houses (such as a certain number of windows that open) that were disconnected from what ordinarily would be constructed.
The OSFI is chiming in as well.
http://www.financialpost.com/m/wp/blog.html?b=business.financialpost.com/news/fp-street/osfi-proposes-mortgage-capital-changes-for-banks-to-keep-up-with-soaring-house-prices-and-debt
Garth:
Before I respond to the comment of FLOP (The Tasmanian Devil) I want to extend my best wishes to you for the success of your ice cream parlour. There are two things more important than your cash flow in my mind. Those great young people will benefit greatly from your guidance and you have preserved a heritage site. As you know from your trips to Cowtown, we bulldozed our 136 year sandstone buildings to build hideous shiny glass towers to try and prove Calgary could punch above its weight.
FLOP:
Busy watching three TV screens (Jays/Rays, Raps/Pacersan and Stars/Blues – GO LEICESTER!!).
Will respond tomorrow during Saturday’s free for all which I call the “Baron of Belfoutain’s Real Estate Karaoke Session”.
Cheers,
WUL
Canada Mortgage and Housing Corp has close to $600 billion on the books.
It’s a far cry from the origins of this federal agency, which was to help WW2 soldiers get digs.
it did help WW2 soldiers get houses but there was no off switch
#27 common sense on 04.29.16 at 8:44 pm
#15 Dime Head
I love your fine taste! Your all class.
M54ON
/////////////////////////////////
Hey Common,Dime Head?
I was sure someone was going to call me Bluenose.
Isn’t that the name of the boat on the ten cent piece?
I will have to look back through my citizenship test notes, I will also read the fine print to see if I agreed to marry a girl and live in a city with a bunch of real estate zombies.
I will tell you how sick of it I am here ,with people’s unrealistic deadlines.
The house I am working on has been going on for over a year ,now the owner wants in because their rental got sold , so now they want to do 6 months worth of work in two .
My solution is to go on holidays,I would never normally do this but I am sick of people’s sense of entitlement to making money and using their houses as ATMS,these people take their sweet time because everything is still going up( despite what the sales mix guy says) so they can’t lose.
When this thing goes boom I will have to rely on my savings but I work with guys who live week to week.
Someone light the dynamite and blow this thing up…
M41BC
Bombardier Scores Watershed Win With Delta C Series Order
Delta Air Lines on Thursday confirmed it has placed a large order for the Bombardier C Series, a major boost for the program.
http://aviationweek.com/commercial-aviation/bombardier-scores-watershed-win-delta-c-series-order
this is a huge win.
( I read that Bombardier heavily discounted the planes but this is a fiercely competitive market )
this is a win for Quebec and for Canada
One thing I’ve learned in my 60 years is that planning is prudent and wise, but nothing ever really works out exactly the way a person thinks it will. This is just another reason to be financially balanced and not maxed out.
I am also not ruling out a black swan event – something out of the blue that changes the game radically in an instant. Some examples of that come to mind – an Icelandic volcano erupting or an earthquake or a crazy move from a crazy despot.
Again, the questions persists–what happens to the economy when this gasbag starts to deflate given what oil did (a much smaller piece of the pie than RE……) This seems like something all the Canadian pundits (who didn’t see it coming) will be analyzing in years to come.
http://www.bnn.ca/Video/player.aspx?vid=859440
CMHC suggested new name CTLF Canadian Taxpayers Liability Facilitator …. think about it while pondering ask why these banks are not being required to properly underwrite many of these deals. CHMC should be reducing the amount they are prepared backstop to your friendly big 5 bank and assorted other lenders maybe if these bankers had to shoulder a bigger slice of the risk pie they would tighten there underwriting this would be a partial foot on the proverbial brake peddle and slow down this ridiculous speculation spiral in real estate
#26 Smoking Man on 04.29.16 at 8:44 pm
And these kids wonder why they can’t get reasonable paying jobs, in fact; industry so desperate for competent employees are going for the 50 +
They are all commies, who’s going to hire em. Govt only chance.
https://www.youtube.com/watch?v=W7g3NI59ddw
—-
Feel the Bern……….
#25 ROCK BEATS PAPER on 04.29.16 at 8:35 pm
——————————————
It’s not 30,000 families driving the SFH price—it’s the 6,000,000 people that live in the area that creates that demand. And it goes up by 1,000,000 people every decade…the only larger centres in North America are NYC, LA and Mexico city.
#42 Washed Up Lawyer on 04.29.16 at 9:52 pm
Garth:
Before I respond to the comment of FLOP (The Tasmanian Devil) I want to extend my best wishes to you for the success of your ice cream parlour. There are two things more important than your cash flow in my mind. Those great young people will benefit greatly from your guidance and you have preserved a heritage site. As you know from your trips to Cowtown, we bulldozed our 136 year sandstone buildings to build hideous shiny glass towers to try and prove Calgary could punch above its weight.
FLOP:
Busy watching three TV screens (Jays/Rays, Raps/Pacersan and Stars/Blues – GO LEICESTER!!).
Will respond tomorrow during Saturday’s free for all which I call the “Baron of Belfoutain’s Real Estate Karaoke Session”.
Cheers,
WUL
//////////////////////////////////
O.k WULLY enjoy the games.
A couple of things though, yes Leicester are going to win the title but not before my beloved Red Devils turn them over tomorrow.
Also Garth is not the Baron of Belfountian,he thought that was too pompous and went for the Count of Caledon instead.
The guy moves like Jagger…
M41BC
There is no economy left in the GTA except RE. Its become such a joke. Its one huge house of cards built on cheap debt. Remove CMHC and have the free markets or in this case lenders take all the risk. then you will see interest rates and mortgage loans adjusted to todays risk. Housing would fall by half and every banker and realtor knows this as fact.
BOOM:
I am grateful for the voice of reason from the Badger. Keep it coming.
“I am also not ruling out a black swan event – something out of the blue that changes the game radically in an instant. Some examples of that come to mind – an Icelandic volcano erupting or an earthquake or a crazy move from a crazy despot.”
I kind of suggested this later last year. Vancouver and to a lesser extent Toronto pricing, 3 years into stagnation, may be sustainable in the context of an explosive precious metals miner rally that sees a lot of international capital flow into that sector, and from that sector to the owners of such securities and ultimately into Vancouver/Toronto RE. I do remember that a significant chunk of the Toronto RE marketplace, coming out of the 1990s coma, was re-invigorated by people converting their Nortel and other tech stock gains/options into housing. The precious metals mining sector, by comparison, is starting from a position of utter Canadian dominance of the sector. Something that even Nortel did not have.
Of course, that’s not an argument for going out and buying Toronto/Vancouver RE at this point (its perhaps quite the opposite) or being financially irresponsible by not running a balanced portfolio. Its just an argument for the idea that we might not see the collapse in prices that may be predicted through traditional metrics. And that the deck chairs may very well be shuffled from the current crop of over-leveraged speculators in the housing market, to a new crop of rich people looking to protect their outsized gains in Canada’s precious metals industry.
Not investment advice (even ‘between the lines’), and no reason to get carried away, but maybe this is the sort of ‘black swan’ event that props up (ie: prevents the collapse of) “senior” Canadian RE.
#14 Westvan on 04.29.16 at 7:49 pm
”Other than 1989 when there was inflation and actual growth and mortgage rates were 18%. We will never see rates that high in our lifetimes if ever. Mortgage rates are goin nowhere.”
Interest rates were nowhere near 18% in 1989 and today a 2% increase in mortgage rates would have the same effect as when they hit 23% in the early 80’s given the over inflated housing prices. Even a 1% increase and many will be struggling to pay their bills. It is different this time. It’s much worse. Back then, rates had only one way to go and that was back down. Today, the only way they will be going is up and that is when the problems will begin.
#53 CMHC a house of cards
absolutely Right!!!!
To all you realtors and shills that have stakes in the game, please, Trudeu rid us of CMHC at least as a test to see what this might do.
There are many on here that say, there will be no change, no change, but im thinkin 6 months and it would be clear. no frickin way I want my tax money back stopping banks to profit off of these party now, bail me out tomorrow types.
Got the below txt from a friend that lives on the Island.
So on the way home from work I was waiting [standing] at the lights. I hear a honk behind me, look back and it’s a bus. The driver is looking at me and pointing down, then the bus drives off. I look down and on the ground are two 20 bills. Picked them up and gave them to an older woman a block up.
I mention this to illustrate some places are pretty great to live and worth pay a premium for. Looking forward to retiring there myself.
On a more stoic note over the next few decades you better be living within your means and saving. Err, shouldn’t you always?
http://time.com/money/4309282/mckinsey-dour-investing-forecast/
#37 45 north
This site is not exempt from similar pressures, everybody can name a few, even with no ad revenue pressure.
#10, #37: for g-d sake ppl try to learn to read:
http://www.zerohedge.com/news/2016-04-29/full-story-behind-bloombergs-attempt-unmask-zero-hedge
MAYBE THINGS REALLY ARE DIFFERENT THIS TIME?
1. Since when in history have we ever seen negative interest rates.
2. When in history have we seen such national debt that will never ever be repaid thanks to the magic of Fiat Currency.
3. Why are some countries correcting like Ireland and USA while Countries like Canada , Australia and England are pumping sky high?
4. What is stopping the Feds from continually Quantitatively easing the currency. What harm is there if you inflate to the point whereby you take a bill to the baker with 9 zeros behind the one to get a loaf of bread.
Then one day they say to everyone to trade the old bills and get a new one with no extra zeros and value it the same? What harm is there in that?
The harm is you cheat savers and especially seniors but who really cares.
This is clearly a dog eat dog world with the most aggressive breeds coming out on top.
Our Government has caused serious financial harm to millions of Canadians who are paying for the rest of their life for a little property that should really be cheap.
This is the way the Rentiers of this world dominate the meek and mild.
My most recent visit to a broker. If I put 5-10% down, I could get 2.34%. If I put 20% or more down the rate jumped to 2.69%. Not a huge difference overall, but it is a couple of nice meals out each month.
Gotta love the system where they guy who can’t afford the house gets a better rate than the guy who can.
Kilt.
I notice in recent blogs the use of 2% for inflation.
Come on now! Garth and others.
Clearly inflation is rampaging along at 6 to 8%. Who could possible deny this.
I guess after being lied to by Stats Can for so long that the lies become the truth.
I’ve been reading your blog for 5 years. Thank you for all the great advice as far as being devirsified. Now that I have a good sized portfolio of liquid investments the next step is acquiring rental properties. Anyone that doesn’t believe buying real estate when it makes sense is naive.
Mark on fire tonight!
#14
OK, we know you’re obviously under 30 based on your poor knowledge of local history. The high interest rates that obliterated the Canadian market was in the early eighties. I stopped believing the market was going to correct with a vengeance on the west coast. However, to think it can never happen is naive and immature.
But on the other hand, GT has been warning us since 2008, and I doubt very much prices will correct to those levels, even factoring in average investments in the financial markets.
local my ass
The cause of all this is the CHMC. They remove all risk from the banks so the banks don’t care what they lend on or how much they lend on. The only solution is thus the CHMC. If they changed their rules and said that 25% of any loss belongs to the mortgaging bank, then see how fast banks tighten up and appraised values drop.
Alternately they could if they wished drop their coverage to a max of $500,000 from the current million. Insured starter homes would reduce in price immediately.
No-one in Canada has the guts to prick the bubble, least of all the CHMC and they don’t even have voters to please. T2 should do it while his govt still has 4 years to recover popularity but he won’t. What a wimp!
3 WallOfWorry on 04.29.16 at 7:25 pm
You are absolutely right – nobody could dispute that housing prices can continue to go up indefinitely. So now what? You have been warning about this for over 5 years….if people didn’t listen and bought in 2010 or 2011 I assuming that you would agree that even when the correction hits they will still be up over initial purchase price?
While all of this is going on there are other economic headlines that also suggest that the risk factor for those particular assets is high? Why the sole and possibly myopic focus on Canadian real estate? Do you not get bored talking about the same thing for over 5 years?
******************************
And people still don’t listen!
Money never sits still unless it’s in a GIC. If you’re bored find another blog to read for another 5 years.
When the government decides to just take everybody’s houses to pay down the national debt to foreign creditors, high interest rates will be the least of your worries. In fact, foreign creditors suddenly owning your houses and property as bad as that will be will seem like best times in good old days by comparison to the future realities to follow then.
@47 ed: “Again, the questions persists–what happens to the economy when this gasbag starts to deflate” ……. are you referring to Donald Trump or Kevin O’Leary?
#10, #37,
Thank god for Lokey’s courage and integrity? Maybe you should also consider this?
http://www.zerohedge.com/news/2016-04-29/full-story-behind-bloombergs-attempt-unmask-zero-hedge
Bloomberg article on Zero Hedge. By the way, I think i read all of one article and that was too much.
Unmasking the Men Behind Zero Hedge, Wall Street’s Renegade Blog
http://www.bloomberg.com/news/articles/2016-04-29/unmasking-the-men-behind-zero-hedge-wall-street-s-renegade-blog
#62 Kilt
Probably because the banks prefer the CMHC insured loan. The banks’ cost of capital is higher on the non insured loan.
Not sure what to make of this, in the Markham area. Markham has two major nationalities, Tamil and Asian. Seeing alot of my Tamil friends in Lambos, Bentleys,Ferraris and they are all young. I asked my mechanic(Tamil) what’s going on? He’s informed me most families own more than 2 homes and rent them out and flip them. That might explain why most new home centres sell out(Brock and Steeles just opened 1 month ago and all sold out ). I know for one thing, it sure hurts watching from the sidelines and getting nowhere. However I recall in the late 80’s this same buying frenzy and there was alot of people crying when it was all over. Not sure how it will end this time around..if it does end?
#62 Kilt on 04.30.16 at 12:07 am
——————————
Because it’s a system that ensures the entry of new blood to the game, thus proping up prices, enriching people that have been in the game longer, keeping people’s houses serving as ATMs, and buoying the economy.
Ask anybody that’s made money in real estate if they would have rathered to have their assets worth 50% of current value, or allow people without money into the game. My guess is many would choose the latter.
The problem with low rates and easy credit is two fold:
– it masks unsustainable debt offered to the less credit worthy; even as servicing costs remain lower, more/ larger debts are taken on.
– future consumption that would have been spread out over multiple years, is pulled forward but what about tomorrow? (Think durable goods.)
Canadian Consumer Insolvencies Are Soaring, And Not Just In Alberta
“The number of consumer insolvencies in the country jumped by 9.7 per cent over the past year, according to data from the Office of the Superintendent of Bankruptcy (OSB).
Personal bankruptcies rose 6.3 per cent in February, compared to a year earlier, while “consumer proposals” — an increasingly popular alternative to bankruptcy — soared by 13.2 per cent.
Not surprisingly, oil-producing regions saw the largest increases in insolvencies, but the trend wasn’t limited to those places.
Ontario insolvencies jumped by 8.6 per cent, while in British Columbia they jumped by 8.3 per cent.
That’s a new development: These provinces have been leading employment growth in Canada, and until recently, their insolvency rates were declining, as were the insolvency rates in most non-oil provinces.”
http://www.huffingtonpost.ca/2016/04/29/consumer-insolvencies-bankruptcy-canada_n_9807152.html
Why this (US) Economy Feels Even Lousier than the Lousy GDP Print
http://wolfstreet.com/2016/04/29/per-capita-gdp-falls-in-first-quarter-why-economy-feels-lousier-than-gdp/
Chart of the Day- The Real Story Behind The True Magnitude of The (US) New Home Sales Collapse
http://davidstockmanscontracorner.com/chart-of-the-day-the-real-story-behind-the-true-magnitude-of-the-new-home-sales-collapse/
All of the tired old narratives about an improving economy, (mostly written about in the finance pages) are increasingly wearing thin…
It was funny watching the blog “lefties” attack our forum host’s success in buying and selling real estate.
A US-based sales team I knew years ago always lamented their forays into Kanada for its whining and risk-less populace. I see nothing has changed.
Being “riche” in this country means bragging rights to a “million dollar” home which you sell and “trade up” into a 1.5mill abode – adding the heft of a fat mortgage . Money never seen nor enjoyed.
I’m thinking retirement home REITs in Canada will be a good future proof play. Them and Boardwalk Equites (owning tons of rentals in AB) and Killiam Reit – a big residential player on the Least Coast.
Expect large wards of mumbling, disheveled Kanadians clutching their T2 bills and about their “million dollars” homes.
I am really looking forward to tonight’s Count of Caledon’s karaoke…unusual posts ,or Cock up for short…
M41BC
Still doubting Kanada is a scam country? Ask why we pay 50-60% of our income in taxes yet every hospital holds begging funding drives to the end of basic equipment.
New refugees (part of a global master plan of destabilization – after all the elites bombed Syria to the stone age ) will help overwhelm our system.
(The sooner you realize the world is ruled by violence not democracy the sooner you come off your psychotrophic meds. It all makes sense. Useful idiots like Trump, Lil T and Castro are mere props in this charade).
That is my message of hope and freedom. Free your mind, and the rest will follow. ..
the chief thinks if this keeps going it will be called
the veteran’s land act again .
My Ex wife and I split and one of the first things she said she needed to do was to buy a house. I thought – there is no way she hasn’t worked in 12 years ! She started a small business with her dad (ie. dad does all the work) which brings in 20k a year. Well I ate my words, she bought a house for $315k and found a broker that would lend her the money (banks wouldn’t touch it). Got a mortgage for 3.5% for one year variable (260k mortgage). Oh and the lender sent there appraiser over and had it appraised at $355k after spending 5 minutes in the home – no questions. She will run out of money after the first year ($1400 month payments) which I guess she will borrow from the HLOC and refinance next year. How many more of these types of scenerios are out there.
http://www.torontosun.com/2016/04/29/foreign-buyers-create-real-estate-bubble-risk
@#71 eartboundmisfit
“when this gasbag starts to deflate” ……. are you referring to Donald Trump or Kevin O’Leary?”
********************************************
Good one. :)
I might add , you will be allowed to stay in the house you owned if you can pay the taxes that will likely double with a monthly rent to match or be evicted if you can’t pay the rate.
You can thank the governments in power who intend to triple the national debt in Canada and the US over the next 4 to 8 years and spend like drunken sailors. Have they considered the day of reckoning to follow when all that will be left to satisfy foreign creditors is your house and property. What can you do then when you are forced to hand them over to be rented back out to you or to a nice Chinese family if you can’t pay the rent.
You may want to invest in your future investing in a major tent manufacturer now or even consider moving to good ole deetroit where you’ll be safe. Nobody will be taking your house from you there.
ps…consider this to be just a touch of twisted humor at this point, but don’t laugh too hard as your government begins to entertain this option when this whole ponzi disaster blows up…. they even entertained the idea of giving Detroit to Canada three years ago …no joke !
It will be interesting to come back and read the past comments of the sheep being led to slaughter once the bubble pops.
Wow 2.34% mortgages for those with 5% down. For the interest to double on these mortgages rates only need to go to 4.68% which is still historically super low. Anyone who thinks housing prices are not going back to pre bubble levels is dreaming. This is going to be fun to watch.
I do have one question though. When it does become time to find a fee based advisor (that’s the only one I would opt for personally), is the minimum amount required to trade through them required to be in one account? We have our money split between 2 TFSA and 2 RRSP accounts, so if they are combined to make $150,000 is that enough to start with a fee based advisor? Are there higher fees for the more accounts you have?
Thanks
Aggregate household assets of $150,000 or more are a level at which fee-based advisors are very economical. There should be no additional charge for multiple accounts. — Garth
Chatting with a school mate and he says he and his wife split but not the end of the world, sold the house and he got to keep half the equity. So I’m thinkin well shit brother congrats, get through the rest of school debt free maybe stuff a TFSA that’s one hell of a new lease on life…..then he says ya so I better start looking for a new house before it’s too late…ahhhh no man! You had it! Coulda been riding the fast train to freedom town my friend.
Oh Gartho.. RE is King.. Look at me ..I’m a gazillionaire… and in 8 short months I will rule the world. The Kingdom of Trump .. get on the train… RE will set you free. You need a big sign on that new ice cream parlor TURNER RE
Here’s another article about how truckers are all going to be replaced by robots.
http://techcrunch.com/2016/04/25/the-driverless-truck-is-coming-and-its-going-to-automate-millions-of-jobs/
In our litigious, bureaucratic and special interest driven society, I think we are a long way from seeing entirely driverless trucks ranging from coast to coast. On the other hand, there are now almost no technical reasons to prevent driverless trucks operating in a metropolitan area over predetermined roadways. After all, they have been operating successfully on private mining lands like the oil sands for some years.
The media focus on driverless trucks has been the impact on employment but there is also a potential significant change in land use. Driverless trucks should be significantly cheaper to operate, not only because they remove the driver but also because they can run 24/7 and at lower average speeds to conserve energy. Running at night in an urban area can save a lot of time and fuel.
On balance, this should reduce the demand for urban industrial land. There is always a trade-off point where it is cheaper to pay the annual fixed cost of land closer to customers than the marginal per unit cost of trucking in from a greater distance. Automated trucking will push that trade-off point further away from expensive city cores and could see industrial/service companies moving out of suburbs to smaller outlying communities where both employer and employee could benefit from cheaper land costs.
Driverless trucking will also affect rail transportation. The majority of goods delivered by rail begin and end their journey on a truck to or from the rail yard. This requires the expensive and time consuming task of transloading the goods at each end. Today the rule of thumb is it is cheaper to simply deliver direct by truck if the journey is under 1,000 miles and even further if goods are needed urgently. Soon the trade-off point could be 2,000 miles or more.
Another foreseeable impact is on the marketability of our natural resources. In Canada our ability to export resources at a competitive price often depends the cost of delivering them to a port or to a connecting railhead. Driverless trucks should make it possible to exploit resources that would now cost too much to get to ports.
You can make up your own list of changes. Cheaper regional commuter buses are obviously coming. The big question will be where are all those unemployed truck drivers going to move to. It won’t be Yonge and Eglinton.
Finally a legit research study pointing out the obvious HAM invasion in Vancouver:
“about 70 per cent of all detached homes sold on Vancouver’s west side were purchased by Mainland China buyers, an academic case study shows.”
“Eby said the study fills a data gap in Vancouver and bears out the anecdotal feelings that people have about Mainland China buyers.”
“The study also showed that five of eight homes owned by “students” were bought outright with cash at an average value of $3.2 million. ”
“Even more stunning, the study shows that of all self-declared occupations among owners — on homes worth an average $3.05 million — 36 per cent were housewives or students with little income. ”
Now put this together with the Quebec back door – foreigners using Quebec as a portal into Canada, then heading straight for the coast
http://www.nationalpost.com/m/wp/blog.html?b=news.nationalpost.com%2Fnews%2Fcanada%2Fin-a-six-month-period-70-of-detached-homes-sold-in-vancouvers-west-side-went-to-mainland-china-buyers
Doberman does it again.
#61 NEVER GIVE UP
4. What is stopping the Feds from continually Quantitatively easing the currency. What harm is there if you inflate to the point whereby you take a bill to the baker with 9 zeros behind the one to get a loaf of bread.
——————————————————
This is the magic of technology and former Fed Chairman Ben Bernanke invented it. All he did was push the printing press button and the GFC of 2008 was averted.
At the time it was an experiment and most called for hyperinflation, but it did not happen. Now everyone in the world is using this model going forward. This is why it’s time to get into stocks, QE greatly benefits equities.
Last night I was with my millennial friends, they were waiting on a RE agent call as they had just put in a bid for a $450,000 downtown TO loft. They’re marrying in september at the reasonable cost of $60K, he’s unemployed (photographer…), she wants kids right after marriage and just started a new job, they plan to move to Vancouver in 2 years, rent the loft here and buy another house with friends to eventually flip. I tried to repeat some of your paragraphs, but they don’t know what ETFs or TFSAs are, so starting from scratch (after a few wines) isn’t popular dinner conversation.
Garth, these are the types of situations your millennial readers are constantly being thrust in to. I bite my tongue and try to be polite but your advice isn’t as powerful as a mom’s assurance that RE is the best investment you’ll ever make. My wife and I make modest incomes, have our TFSAs stuffed, contribute a bit to RSPs, keep a little in savings for every day use, travel as much as we can, and rent a one bedder. In other words (according to my 24 year old BIL), wasting our money. Real estate is sexy and everybody knows you’re now an investor. We can’t flaunt our dividends or throw a party in a REIT.
But, we sit quietly, without debt, on a pile of growing liquidity, listening to the speckers and enjoying the same party as the indebted around us.
First, demand dries up, slowly at first and then faster…
Second, with buyers either our of credit or on strike, sellers go into denial…
Third, sales plunge and listings soar…
Fourth, the layoffs and job losses begin.
This is happening in Burlington.
“Craziness at the Sundial – New Home Sales office this morning. Did prices scare buyers away?? Time will tell
https://www.facebook.com/BurlingtonLifestyle/videos/997204247034717/“
#91 Andrew Woburn on 04.30.16 at 12:49 pm
Here’s another article about how truckers are all going to be replaced by robots.
I believe you will see driver-less trains before trucks. The large US rail carriers are already driving by satellite to conserve fuel. Every grade is calculated and the throttle adjusted automatically to conserve the precious fuel. The train crew (2 man now) is just there in case of an emergency. Everything is now monitored and accountable … as it should be. People got used to driver-less sky train out here in 604land from the get go. But still accidents happen … remember the human error tragedy at Lac Megantic …
“On the other hand, there are now almost no technical reasons to prevent driverless trucks operating in a metropolitan area over predetermined roadways. “
Actually there’s lots of reasons why driverless vehicles on real-world conditions are a far ways off. First off, LIDAR, the navigational instrumentation system of choice, basically stops working in the rain. Secondly, the regulatory requirements in terms of system redundancy are likely to be dramatically greater than on driver-ed vehicles, meaning that a lot of systems will need to be replicated. Thirdly, maintenance will need to be done to a much, much higher level which will impose significant fixed base costs in excess of what we see now with driver-ed vehicles. Its the failure modes which have not been thoroughly tested that are also highly problematic. A stone chip going around a corner on a mountain pass for a driver-vehicle is just a minor nuisance requiring a visit to a glass shop at one’s convenience. A stone chip to a driverless vehicle at the wrong time might mean that vehicle goes right off the cliff or causes a giant accident.
Additionally, both GPS and cell signals are highly susceptible to jamming ($100 worth of parts from China and anyone can build a decent jammer!). The driverless car proponents have put forth these as requirements for the overall navigational package. The chance of this technology either receiving a ‘social license’, or being engineered to a level that’s affordable (a driverless car will probably cost in excess of $1M if engineered properly) is practically nil.
IMHO, “driverless vehicles” are not much more than fantasy at this point put forth by certain inexperienced tech companies as a way to hype their otherwise failing (or utterly dependant on advertising) stocks.
My tinfoil was telling me before Friday that gold was going to bust through the 1300$ mark next week and continue its ascent, but it almost did yesterday. The facade of the true value of the US dollarette is soon to become an ugly reality. Their printing press is running out of steam and lost credibility to anyone willing to take an honest look long ago.
It’s not going to be pretty, but much like to housing bubble in Canada something has got to give.
On another note I am finally getting settled in to my new gig close to home after jumping ship from the oil patch a little over a month ago. Its nice to be home every night, and be able to enjoy this early summer weather we are experiencing here on the coast. Yeah life on Island really does suck, don’t even bother.
Between dealing with a full kitchen reno in my own little shack here (no I don’t worship granite) and dealing with getting gold mining equipment built to float up the coast to the Yukon, there has been no shortage of things to do. Perhaps I may even find some time to post on my own blog again.
Just trying to survive in a mixed up world
We live in interesting times, filled with less interesting people
CMHC may be permitted to backstop mountains of re debt, but they can’t backstop the entire Canadian, let alone global economy.
Nor can it whitewash, talk up or outlaw all of the consumer proposal and money lending advertising during prime time TV.
I don’t think this weblog’s dawg-ian inhabitants have ever been the same since its reference to Atsa the Boy.
This, unleashed a pent up maelstrom of armenian interest. Likely in a local diaspora bent on things going uppa. That must be it! ;-)
We are miners, hard rock miners
To the shaft house we must go
Pour your bottles on our shoulders
We are marching to the slow
On the line boys, on the line boys
Drill your holes and stand in line
’til the shift boss comes to tell you
You must drill her out on top
Can’t you feel the rock dust in your lungs?
It’ll cut down a miner when he is still young
Two years and the silicosis takes hold
and I feel like I’m dying from mining for gold
Yes, I feel like I’m dying from mining for gold
— #99 SWL1976 on 04.30.16 at 2:39 pm
My tinfoil was telling me before Friday that gold was going to bust through the 1300$ mark next week and continue its ascent, but it almost did yesterday. The facade of the true value of the US dollarette is soon to become an ugly reality. Their printing press is running out of steam and lost credibility to anyone willing to take an honest look long ago.
It’s not going to be pretty, but much like to housing bubble in Canada something has got to give.
On another note I am finally getting settled in to my new gig close to home after jumping ship from the oil patch a little over a month ago. Its nice to be home every night, and be able to enjoy this early summer weather we are experiencing here on the coast. Yeah life on Island really does suck, don’t even bother.
Between dealing with a full kitchen reno in my own little shack here (no I don’t worship granite) and dealing with getting gold mining equipment built to float up the coast to the Yukon, there has been no shortage of things to do. Perhaps I may even find some time to post on my own blog again.
Just trying to survive in a mixed up world
We live in interesting times, filled with less interesting people
Have a look at the ETF VFV on the TSX. Food for thought.
Garth. Hope you’re having a great day!
Andrew Woburn on 04.29.16 at 7:43 pm
page clicks or terminals ?
“Smith exposed that some managing directors at Goldman call their clients “muppets” and openly speak about “ripping their clients off
http://wallstreetonparade.com/2016/04/bloomberg-outs-zero-hedge-today-zero-hedge-strikes-back/
http://wallstreetonparade.com/2016/04/bloomberg-outs-zero-hedge-today-zero-hedge-strikes-back/
It is natural that we fret. We fret about the economy, taxation, the dollar, the CMHC and real estate etc.
I am more concerned about an event that will take place over the next few hours that has the potential to thrust Canada asunder. If the Edm Oilers win the first overall pick in the draft for the fifth time in seven years, Alberta will be chased out of Confederation.
For the sake of unity, I hope the Leafs finally win something, even if it is just a raffle.
‘variable interest entity’ (VIE) grey zone
http://www.taxjustice.net/wp-content/uploads/2013/04/Fichtner_The_Anatomy_of_the_Cayman_Islands_OFC.pdf
#98 Mark on 04.30.16 at 2:35 pm
Actually there’s lots of reasons why driverless vehicles on real-world conditions are a far ways off.
========================
If you are referring to fully automated vehicles that can go anywhere, I’ve already agreed with you. I think automated vehicles will appear in stages and the easiest way will be on fixed routes or in driver-led convoys. Given the progress that has already been made, I am reluctant to believe that tech companies will give up over rain or stone chips and there are other ways to mark position on a predetermined route.
Development is also being driven in other countries where “social licence” and legal issues are of less concern. For example, Singapore is introducing automated people movers and is pushing hard for self-driving cars.
http://www.architecturaldigest.com/story/singapore-driverless-pods-for-public-transportation
There is one potential example that comes to mind in Vancouver. Storage of empty ocean containers is a continual headache for shipping companies given the limited amount of high cost land near the ports. It might make sense to move them out to Chilliwack for unloading and reloading but trucking costs would be too high. Potentially containers could be hauled in a road train of automated trucks led by a human driver which might save enough to make Chilliwack a feasible base of operations.
dead dog buried in backyard
do you disclose to the buyer
do buried pets in the yard convey with the property
When I was in the bank today ,the senior in front of me asked the teller if they had a High Risk Savings Account and the teller preceded to correct the senior and say that it is actually called a High Rate Savings Account.
I was going to pipe up and say that the senior had it right in the first place but stayed out of it ,as the senior had made it further along in life than me…
M41BC
Re: Driverless vehicles.
Sounds like fantasy. Will some come out? Sure. Will it be cars first? Definately. But they will all be connected to the web. That means they can be hacked into. Add in some potatohead on the planet hacking into these systems, say, on a Tues morning rush hour causing 200,000 vehicles to turn left and accelerate at the same time in a major metropolis and you get carnage on a mass scale. Never mind the damage an 80,000 pound driverless truck could do.
#102 Supernova Star Stuff
Not entirely sure what you meant by all that, but I will say this…
The value of gold has remained relatively static for thousands of years, while paper currencies tend to experience wild swings in their value over time… And until history proves otherwise, they eventually become worthless.
I don’t own any gold or even really admire it for any reason, other than the quality it has, that it will not tarnish. Being a metal guy, I just have to admire it for that. I do however, pay attention to who mines the stuff and the profits they stand to make or lose on its relative value to the currency it is traded in.
Gold has proven to be quite static in value over the years, while other benchmarks it is measured against… Mmmmm, not so much.
Time will tell, I’m just along for the ride
Andrew Woburn: Here’s another article about how truckers are all going to be replaced by robots.
GPS has put truck drivers on a short leash. I mean it used to be the driver had a fair bit of leeway. Not any more.
“…the result of prices surging past economic fundamentals…” Garth
I updated my FDI-FDO chart with the 2015 data that was released earlier this week:
http://www.chpc.biz/history-readings/capital-flight1
The spread between Foreign Direct Investment In and Out has widened dramatically such that for every $1 of investment coming into Canada, $1.31 is leaving for jurisdictions that provide greater tax incentives, better yields or cheaper labour.
That is a fundamental trend that has been growing steadily for the last 19 years, and as you can see on the chart is accelerating.
If it has not already started, the effects of capital flight out of Canada will trickle down to employment earnings and as we can see in real time in Alberta, earnings affect housing prices.
There are strange things done in the midnight sun
By the men who moil for gold;
The Arctic trails have their secret tales
That would make your blood run cold;
The Northern Lights have seen queer sights,
But the queerest they ever did see
Was that night on the marge of Lake Lebarge
I cremated Sam McGee.
—
#111 SWL1976 on 04.30.16 at 6:33 pm
#102 Supernova Star Stuff
Not entirely sure what you meant by all that, but I will say this…
The value of gold has remained relatively static for thousands of years, while paper currencies tend to experience wild swings in their value over time… And until history proves otherwise, they eventually become worthless.
I don’t own any gold or even really admire it for any reason, other than the quality it has, that it will not tarnish. Being a metal guy, I just have to admire it for that. I do however, pay attention to who mines the stuff and the profits they stand to make or lose on its relative value to the currency it is traded in.
Gold has proven to be quite static in value over the years, while other benchmarks it is measured against… Mmmmm, not so much.
Time will tell, I’m just along for the ride
The Laughs will now show the Oilers they were but amateurs at destroying the careers of young hockey lads.
—
#105 WUL on 04.30.16 at 4:59 pm
It is natural that we fret. We fret about the economy, taxation, the dollar, the CMHC and real estate etc.
I am more concerned about an event that will take place over the next few hours that has the potential to thrust Canada asunder. If the Edm Oilers win the first overall pick in the draft for the fifth time in seven years, Alberta will be chased out of Confederation.
For the sake of unity, I hope the Leafs finally win something, even if it is just a raffle.
#99 SWL1976
Congrats on the new gig closer to home! Miss seeing new entries on your blog, too.
you give a perspective on things only a Gen X member can convey.
Still see Canada is dunk on the spirit of the ever lifting house price. Maybe, it will never end – in time.
We here in the US are still… fed by a concentrated media, many are debt ensnared, and all are tired of political theatre.
Me, I’m just tired. I’ve seen too many parades, too many speeches, too many promises. I just smile politely now.
My parents bought their house in Thornbill for 950k 2 Yeats ago and they sold it for 1.288m last week. Did they sell at the right time?
it’s the right time to sell in YVR or YYZ. prices keep going up. in YVR and YYZ it’s always the right time, until it’s not
Time and again we hear about the looming real estate holocaust, a retired high school graduate couple selling their 60 yr old 1200 sq ft bungalows for $1 million and driving their Winnebago’s off to Florida with their lottery winnings while young professional couples who buy into the circus hoping to make the same returns when they eventually sell in 50 years. They don’t, the market since tanks, as none of them had any time to stop and have kids, which would have been buying their houses back. Today’s retirees from Vancouver are living off of the backs of tomorrows generations, not to mention the Government deficits they’re saddling them with. Lets hope expected life spans DO reach an average of 100, they’re going to need to be just to be able to pay off their mortgages before they die. Who’s really to blame?
He’s informed me most families own more than 2 homes and rent them out and flip them. That might explain why most new home centres sell out(Brock and Steeles just opened 1 month ago and all sold out ). I know for one thing, it sure hurts watching from the sidelines and getting nowhere.
welcome to YYZ real estate over the last decade
There is no economy left in the GTA except RE. Its become such a joke.
BC and Ontario are Canada’s job engines now and YVR and YYZ are their respective epicentre. There’s tons of jobs, especially in tech and healthcare.
http://www.financialpost.com/m/wp/blog.html?b=business.financialpost.com/entrepreneur/fp-startups/how-canadas-tech-talent-shortage-means-post-secondary-education-is-no-longer-a-requirement
And these kids wonder why they can’t get reasonable paying jobs, in fact; industry so desperate for competent employees are going for the 50 +
the kids can get jobs quite easily. it’s the low bar low life skill unemployables who are making noise about the lack of jobs. high paying jobs everywhere today. especially STEM. STEM is hot. I have a group of friends who say that work and opportunity is so plentiful in STEM that they’ll never work permanent again. 2 years and it’s time to do the next exciting thing! it’s a great time!
http://content.randstad.ca/hubfs/STEM_2015/Randstad_STEM_WP_EN.pdf
http://www.businessinsider.com/stripe-offers-team-hiring-2016-4
even the great Warren Buffett is giving Jeff Bezos and Amazon props! high praise indeed! Amazon is crushing it!
http://money.cnn.com/2016/04/30/investing/warren-buffett-berkshire-hathaway-shareholder-meeting-amazon/
What to do??? Victoria real estate
The RE market in our neighborhood is SO HOT that on our block 3 families of renters are facing 2 months notice to move. The house I live in with my child and another family of 4 children downstairs just got put on the market. Family down the street renting with 4 young kids just got their notice as owners want to sell. Today showing of house I live in that is on the market for $900k, potential buyers were family with 2 young kids, who were renting and just got their notice to move… Vacant rate in Victoria less than 1% (.6%). House next block that sold couple of months ago still vacant…
where do people and families live??? Gotta move out of here!!
#68 Jane24
The cause of all this is the CHMC. They remove all risk from the banks so the banks don’t care what they lend on or how much they lend on. The only solution is thus the CHMC. If they changed their rules and said that 25% of any loss belongs to the mortgaging bank, then see how fast banks tighten up and appraised values drop.
Alternately they could if they wished drop their coverage to a max of $500,000 from the current million. Insured starter homes would reduce in price immediately.
No-one in Canada has the guts to prick the bubble, least of all the CHMC and they don’t even have voters to please. T2 should do it while his govt still has 4 years to recover popularity but he won’t. What a wimp!
……..
Great ideas…..wonder when something like this will be done??
#120 WalMark of Sadkatoon on 04.30.16 at 9:20 pm
There is no economy left in the GTA except RE. Its become such a joke.
BC and Ontario are Canada’s job engines now and YVR and YYZ are their respective epicentre. There’s tons of jobs, especially in tech and healthcare.
http://www.financialpost.com/m/wp/blog.html?b=business.financialpost.com/entrepreneur/fp-startups/how-canadas-tech-talent-shortage-means-post-secondary-education-is-no-longer-a-requirement
……………………….
In the world of Code Smithing. Education means nothing. Unless it’s a govt gig, degree required. In the private sector that pays the big bucks, you either can do it or you can’t. They don’t care about degrees.
Been a pro since 2000. I know of what I speak.
#75 Concerned on 04.30.16 at 8:26 am
Not sure what to make of this, in the Markham area. Markham has two major nationalities, Tamil and Asian.
—-
Aren’t Tamils Asians?
India, Sri Lanka. China, Japan and MANY more countries are Asian countries.
“STEM is hot.”
Not true at all troll. 2/3rds of STEM workers can’t find jobs in STEM. That doesn’t speak to a ‘hot’ profession at all, on either side of the border. Please, for the sake of whatever little reputation you have, only stick to what you have a clue about. Which in the practical sense means that you really shouldn’t say much of anything since you’re spectacularly wrong on just about everything.
I live in vancouver we have had several people at work last couple months early fifties retiring, basically selling houses for 1.8 to 2.5 mill cashing in and retiring. When someone can retire 15 years early with no savings its pretty clear house prices are nuts. There is literally broken down vacant houses selling 1.5 mil in burnaby lol.
“My parents bought their house in Thornbill for 950k 2 Yeats ago and they sold it for 1.288m last week. Did they sell at the right time? “
Obviously there are a lot of variables you haven’t disclosed. For instance, did they put any improvements into it or not. Etc. However, with 5% Realtor fees, and what, a balanced portfolio kicking off 6-7%/year for the past 2 years, they broke even. They did a bit better than the average GTA area home which was basically flat over that same interval, if we make the assumption that they didn’t invest in any improvements.
As for the ‘right time’, with any asset class, almost nobody ever hits the true long-term bottom or the true long-term top. Garth’s “rule of 90” provides a framework for how much percent a house should be in a balanced portfolio. Although the direction of Toronto RE is likely either continued stagnation, or downwards, there is always the possibility of some unforeseen scenario. That’s why Garth et al advocate portfolio balance rather than trying to ‘trade’ assets at what a person might (but most often wrongly) perceives as a bottom or top.
“In the world of Code Smithing. Education means nothing. Unless it’s a govt gig, degree required. In the private sector that pays the big bucks, you either can do it or you can’t. They don’t care about degrees. “
The private (and public) sector employers are overwhelmed with people. They don’t really care about the people who can do it or can’t. They have such a huge supply of people who can do it that they have the luxury of picking resumes at random and throwing the other hundreds straight into the trash can without the basic courtesies usually accorded to professionals. Even minorly advertised jobs in software, IT , and various fields of engineering are receiving hundreds of resumes from qualified individuals. Salaries have stagnated accordingly and are now substantially lower than most other similarly educated professionals.
You are right though, the guys who graduate from 2-year tech programs tend to do better than the people with the higher-end degrees simply because there’s the perception that they ‘work cheap’. $35k/year starting salaries versus $60-$70k that the 4-year degree holders demand. More education just drives employer perception of higher cost. Its really an unfortunate state of affairs which does not bode well for the country’s future productivity, when higher education is actually punished by the employers.
#129 Mark on 04.30.16 at 10:49 pm
“My parents bought their house in Thornbill for 950k 2 Yeats ago and they sold it for 1.288m last week. Did they sell at the right time? “
Obviously there are a lot of variables you haven’t disclosed. For instance, did they put any improvements into it or not. Etc. However, with 5% Realtor fees, and what, a balanced portfolio kicking off 6-7%/year for the past 2 years, they broke even. They did a bit better than the average GTA area home which was basically flat over that same interval, if we make the assumption that they didn’t invest in any improvements.
——————————————–
You’re such a piece of garbage and a flat out liar about the Toronto real estate market.
They sold their house for $338,000 more than they paid for it 2 years earlier and you say they “basically broke even”.
What is wrong with you?
And since you’re making assumptions about how much money they put into a renovation why not also ahead and assume they only put down a 20% down payment and therefore their return on their down payment is over 100%.
2 years @ 6% in the equity markets even on the full 950k doesn’t return you anywhere near 338k, and that’s not even counting the fact that there are capital gains and dividend taxes to pay.
You’re just a straight up liar when you say the Toronto market has been stagnant for the past 3 years …. please stop lying.
#99 SWL1976 on 04.30.16 at 2:39 pm
My tinfoil was telling me before Friday that gold was going to bust through the 1300$ mark next week and continue its ascent, but it almost did yesterday. The facade of the true value of the US dollarette is soon to become an ugly reality. Their printing press is running out of steam and lost credibility to anyone willing to take an honest look long ago.
It’s not going to be pretty, but much like to housing bubble in Canada something has got to give.
On another note I am finally getting settled in to my new gig close to home after jumping ship from the oil patch a little over a month ago. Its nice to be home every night, and be able to enjoy this early summer weather we are experiencing here on the coast. Yeah life on Island really does suck, don’t even bother.
Between dealing with a full kitchen reno in my own little shack here (no I don’t worship granite) and dealing with getting gold mining equipment built to float up the coast to the Yukon, there has been no shortage of things to do. Perhaps I may even find some time to post on my own blog again.
Just trying to survive in a mixed up world
We live in interesting times, filled with less interesting people
*******************
Welcome home… From one Islander to another.
To the Yukon…Nice plan.
I am unsure about how much “immigrants” are fuelling the prices in BC overall, but, I do know how much “immigrants” from VCR are changing the prices in my small town in the Fraser Valley.
Only a few months ago there was a bit of stagnation in the local prices. Right now I can check the MLS page and find many examples of houses, in my town, listed with prices 100K (or more) than they would have been a few months ago.
Some of them are double what they were.
DELETED
#123 Vic gal on 04.30.16 at 9:58 pm
What to do??? Victoria real estate
The RE market in our neighborhood is SO HOT that on our block 3 families of renters are facing 2 months notice to move. The house I live in with my child and another family of 4 children downstairs just got put on the market. Family down the street renting with 4 young kids just got their notice as owners want to sell. Today showing of house I live in that is on the market for $900k, potential buyers were family with 2 young kids, who were renting and just got their notice to move… Vacant rate in Victoria less than 1% (.6%). House next block that sold couple of months ago still vacant…
where do people and families live??? Gotta move out of here!!
…
I don’t know your area, but at 900k, after 60k or so to get in, the buyer is out $4200/mo on a 3 yr closed before expenses, so I’m curious about business environment and average household income in your area. Seems a little steep, yet people bid it up even though there’s room and we can factory build fairly cheap. You’ll need a developer and some land from the province to build affordable housing… but if we start kicking out houses for $65/sqft on $1000 lots the scheme crashes.
In the private sector that pays the big bucks, you either can do it or you can’t. They don’t care about degrees.
Been a pro since 2000. I know of what I speak.
totally agree. STEM is rockin the high pay and they still can’t find enough qualified candidates! u have the credibility of being a pro since the tech crash. high level of life skills right there! only low bar life skills can’t find work in STEM!
http://www.businessinsider.com/it-jobs-that-pay-over-120000-in-2016-2016-4
https://www.roberthalf.ca/sites/roberthalf.ca/files/rht-pdfs/robert_half_technology_2016_salary_guide.pdf
my code monkey friends are rockin 6 figures easily. it’s a great time to be in STEM!
#15 For those about to flop… on 04.29.16 at 7:52 pm
“I drove by this exquisite piece of property on the way to work…
M41BC
http://www.rew.ca/properties/R2051968/3830-w-16th-avenue-vancouver
Stencilled mold – yummy.
In most other parts of Canada, you could, if you wished, get a detached bung, and a cottage, plus a beachfront condo in the Caribbean, with a maxed-out TFSA and a residual million dollars for pumping out income for the price of that, um, exquisite palace.
Or, create your own special combo.
Bears considering, n’est-ce pas?
Interesting times we live in. When this bubble finally pops, and say drops 30-40% or more, the effect on everybody’s balanced portfolio will be sour as well! Oil did it, RE will do it even worse! Such lovely choices, I think I’ll just start investing in scotch….
I all comes done to this…
Governments with no integrity,
promoting moral hazard.
#40 Mark on 04.29.16 at 9:49 pm
” “Less than 1% of our mortgages are over $800,000.
Sorry, but that’s the stats.
“
Those outsized mortgages aren’t the problem. Its the $400k mortgages to a families whose cyclically adjusted income are $80k/year.”
Thank you Mark, quite right.
If you han hour to spare, Yanis Varoufakis @google.
https://youtu.be/P2Zpkz7lK-s
—
Yanis Varoufakis is a Greek economist who was a member of the Parliament of Greece between January and September 2015. He represented the ruling Syriza party and held the position of Minister of Finance for seven months. (wiki)
—
Awesome analysis:
http://www.businessinsider.com/canada-oil-industry-might-never-be-the-same-2016-4
… “alarming numbers of metrosexual, panini-pressing, specialty beverage-sipping, bearded hipsters … ”
Omg that’s hilarious. In Vancouver you can add” craft brewery lingering ” to the list
#130 Mark on 04.30.16 at 10:56 pm
“In the world of Code Smithing. Education means nothing. Unless it’s a govt gig, degree required. In the private sector that pays the big bucks, you either can do it or you can’t. They don’t care about degrees. “
The private (and public) sector employers are overwhelmed with people. They don’t really care about the people who can do it or can’t. They have such a huge supply of people who can do it that they have the luxury of picking resumes at random and throwing the other hundreds straight into the trash can without the basic courtesies usually accorded to professionals. Even minorly advertised jobs in software, IT , and various fields of engineering are receiving hundreds of resumes from qualified individuals. Salaries have stagnated accordingly and are now substantially lower than most other similarly educated professionals.
You are right though, the guys who graduate from 2-year tech programs tend to do better than the people with the higher-end degrees simply because there’s the perception that they ‘work cheap’. $35k/year starting salaries versus $60-$70k that the 4-year degree holders demand. More education just drives employer perception of higher cost. Its really an unfortunate state of affairs which does not bode well for the country’s future productivity, when higher education is actually punished by the employers.
…………….
When your a pro, and have a great reputation, you never need to send out a single resume. Always have corps in the wings waiting to scope you.
Been on projects where I wasn’t enough, had to hire some code smiths. I look for key words of skill sets. Then phone interview. If all good, let me see samples of your work. Why did you do it this way.
Hired.
Never looked at the obedience certificate on the resumes. If a hiring corp shortlists candidates based on certificates, it means the hiring manager don’t know shit.
The New Bank For Hipsters:
http://www.blogto.com/city/2016/04/this_toronto_shop_is_actually_the_citys_coolest_bank/
Tune in turn on and drop out?
The company slung this slang into the comments. Section. Everything old is new again. Groovy.
Free money/loan to all:
“When you sign up for a free MogoAccount, you get tools to help you check and improve your financial health, first dibs on our upcoming Platinum Prepaid Visa Card, and a pre-approval for MogoMoney loan (totally no obligation, if you don’t need one, just don’t take it)!
And then there are the Adulting events and awesome financial content, obvs. Oh yeah and we’ve got stuff like mortgages and an app coming out later this year too.”
Anyone know where to find a chart of Vancouver RE trends/valuations over the long term (as in 75-100 years)?
Chatting with a buddy who is a mortgage broker. He is looking for guys to provide bridge financing for buyers that are putting 25% down in Vancouver but are at risk of losing deposits because they cannot close financing. The reason they cannot close financing is that they are not able to fulfill bank covenants/hurdles on the properties ( like inspections) fast enough for the closing. He said we could do well with a predatory financing model.
Mark – sometimes you just need to fold…
#149 waiting on the westcoast on 05.01.16 at 12:34 pm
Mark – sometimes you just need to fold…
Laundry?…
M41BC
Burlington realtor speaks to pandemonium and chaos at new home sales office, then explains how prospects are disgusted at seeing high prices and walking out.
https://www.facebook.com/BurlingtonLifestyle/videos/997204247034717/
#144 smoking man – What you are talking about is that regardless of what the resume or paper says, the key element is..”Is this a fit?”. It is …or it’s not. You just know if you have the experience behind you. Mark doesn’t get this because he pontificates multiple times on this blog every day. I’m sure he is a nice enough person to know, but self awareness is not his strong suit.
Langley bc open house update on search with no hope it seems.
Sat so busy at this one home 749k asking to goof to be true got me hooked. Could not walk through to Jamed so we made one of ten private showing for this morning.
We show up 10mins early for our showing. Backing into parking spot and I get hit from behind. Wtf….. guy gets out with his wife.. sorry old Dawgs but they were 60ish dad says gunny you have to deal with this I have to go see the house with the kids… I am about to loose it… my wife said I did. They claim this is my fault
.. House horn Iust is messed up I am 33 have my own money and there seems to be no hope in this yvr until hell I don’t know… 12 lunch here off to my best friends daughters communion and I have already drank three beers. I am not catholic but I will be drinking that wine today….. things are f up real good.
#150 For those about to flop… on 05.01.16 at 1:15 pm
#149 waiting on the westcoast on 05.01.16 at 12:34 pm
Mark – sometimes you just need to fold…
Laundry?…
LOL – meant he should “fold” his sales mix, Vancouver RE stagnating, STEM jobs drought “card hand”… ;-)
Although I do the laundry at my place and definitely feel very productive folding (definitely a task in engineering/theory as I have spent significant time pondering best fold patterns, which items first, and even the odd quantum sock theory)
#151 – Good! About time people started waking up.
Marius Koh is this guy for real? sounds like a robo stamper or a speed reader
http://uti.is/2016/04/
“When your a pro, and have a great reputation, you never need to send out a single resume. Always have corps in the wings waiting to scope you.”
Nice theory, but when firms are overwhelmed with great people, that’s not a sign of any sort of shortage or overwhelming demand for STEM talent. That’s more characteristic of a profession (or set of professions) for which there is a giant glut, if gimmickry is required to find decent and stable employment.
The evidence is clear that Canada’s (and the USA’s) STEM workforce is substantially unemployed/underemployed. A body of Professional Engineers in Canada based on public StatsCan research data found 2/3rds of Canada’s engineering talent was underemployed (with the remaining earning average compensation similar to that of police officers). Similar results have been found by the NSF in the United States. This points to a giant glut. If one can leverage their contacts as a senior person in the industry, great. But the sheer volume of talent available out there is going to limit compensation even for those highly connected people.
#140 maxx on 05.01.16 at 9:36 am
#40 Mark on 04.29.16 at 9:49 pm
” “Less than 1% of our mortgages are over $800,000.
Sorry, but that’s the stats.
“
Those outsized mortgages aren’t the problem. Its the $400k mortgages to a families whose cyclically adjusted income are $80k/year.”
Thank you Mark, quite right
————-
Even 400K + mortgages a small portion of overall mortgages. Plus people with 80K income or the vast majority don’t take on mortgages that large. The stats at CMHC don’t lie. They’re available to public.
And that Mark guy…,
Delusional or a troll.
#151 Victor V on 05.01.16 at 2:08 pm
Burlington realtor speaks to pandemonium and chaos at new home sales office, then explains how prospects are disgusted at seeing high prices and walking out.
https://www.facebook.com/BurlingtonLifestyle/videos/997204247034717/
——————————————————————————
The powers that be have won. Read the comments below the video. As outraged as the posters are, most claim that $930,000 piles of crap on 30′ lots in North Burlington are $100-$200k over priced. So I guess $750-$800k would make them a veritable bargain.
OK then.
Anybody catch the program on Van R/E on Sunday Morning CBC. Feel pretty good being vindicated by Mother Corp herself. Prices now don’t matter because Canada has rule of law & property rights (safety for offshore money). Money is being parked in dirt. In 10-15 years the dirt will be worth more. Its real, like in “real” estate. Lowest interest on bonds in history & the contamination spreads.
Us west side boys are now pretty well out of the game. We still may have commercial & residential, but cashing out is the only option. Its too far gone & the numbers don’t make any sense to develop or build or buy (only one group of players making the market now). Take the money & run: far away from the lower mainland. You can run but you can’t hide (in B.C. anyways) & soon the ROC,( if you own quality don’t sell, & if you can swing it, buy quality throwing off cash). The only thing stopping this invasion will be political. Trouble is political solutions work the same as going to court or going to war: the results don’t always turn out like you want & expect.
There’s always change & usually for the good. Out here on the beachhead the rate of change is accelerating. Too fast, troubling.
#154 waiting on the westcoast on 05.01.16 at 3:34 pm
#150 For those about to flop… on 05.01.16 at 1:15 pm
#149 waiting on the westcoast on 05.01.16 at 12:34 pm
Mark – sometimes you just need to fold…
Laundry?…
LOL – meant he should “fold” his sales mix, Vancouver RE stagnating, STEM jobs drought “card hand”… ;-)
Although I do the laundry at my place and definitely feel very productive folding (definitely a task in engineering/theory as I have spent significant time pondering best fold patterns, which items first, and even the odd quantum sock theory)
////////////////////////////////
Hey Waiting, it was actually a dig at Mark because he has been all over the shop this weekend.
I’ve told the guy not to wash his car in the garage with the door down,with the engine running…
M41BC
M41BC says… “Hey Waiting, it was actually a dig at Mark because he has been all over the shop this weekend.
I’ve told the guy not to wash his car in the garage with the door down,with the engine running…”
Looks like we are both being helpful… Too bad Mark’s not into solving problems…