Surprise!

SURPRISE modified

For some time this pathetic blog has  warned you to get ready for higher interest rates. Lock into a five-year mortgage at a cheapo 2.4%. Buy some preferreds because they’ll reward you as the cost of money rises. And be careful about peak house, since there’s an inverse relationship between prices and rates.

Of course, everyone ignores me. Nobody believes it’ll happen. Especially the Millennials who were back-stroking down the birth canal the last time mortgages cost double-digits. The universal refrain goes something like this: the government will never let it happen since we’d all be screwed. Nobody can afford to pay more. It’d be a disaster. No way Justin’s allowing it. Grow up.

Well, here’s the truth.

Interest rates are going to rise. First in the US, and then here. Not immediately, and not severely. But enough to rattle a few million complacent Canadians who have driven household debt to historic levels without increasing their incomes. Oops.

Any lingering doubt was erased this week when the American central bank released its latest set of internal minutes showing most decision-makers there was to raise rates in June or July. This comes after the last increase in December, and means there’ll be at least two rounds in 2016. Big news.

The bond market was caught off guard, so yields spiked and prices dropped. The stock market was flummoxed, too. Prices fell to six-week lows. Forex guys were jolted. The greenback surged in value and our loonie sank to almost 76 cents US. Commodities slumped. Like the moist Millennials, financial guys had talked themselves into a status-quo-forever mindset in which cheap money keeps fueling asset values.

That’s exactly why it’s going to end. The Fed has a lot of smart people in it, determined to take away the punch bowl before we all get too pissed to walk. (Vancouver’s already hammered.) Besides, the US is doing great despite weak first quarter growth numbers  – already starting to be reversed (April consumer spending rebounded sharply).

Inflation’s returned to exactly the level the central bankers want (around 2%). Unemployment’s plunged by half from post-recession levels and at 5% is considered to be right on target. Stock markets are just a hair off record levels, and lots of resiliency there. Car, house and retail sales are robust. Over 2.5 million new jobs were created in the last year alone. So the Fed document said it “would likely be appropriate” that the next increase happen in June. In fact it used the word “June” six times – just to hammer the point.

That doesn’t mean an increase on Wednesday June 15th is a slam-dunk. It ain’t. If the jobs numbers coming out in the meantime (or the trade data or consumer spending stats) suck, the increase will happen in July. But it seems evident now a summer rate hike is a done deal, which means there’ll be at least one more in the autumn and possibly another come winter.

Here, look at the latest odds after the release of this week’s doc. They went from 4% to 30% for a rate rise in June, while the odds for another later this year are touching 80%.

ODDS

So, the Fed has achieved its mandates of (a) restoring inflation plus growth and (b) achieving what it calls ‘full employment’. Whether you agree with this or not is moot. Up she goes. Any doubt of that was removed by key Fed official William Dudley. “If I’m convinced that my own forecast is on track, then I think a tightening in the summer, the June-July time frame, is a reasonable expectation,” he told reporters.

So what does it mean here?

Likely higher five-year mortgage rates later this summer and into the autumn, whether the Bank of Canada follows suit or not (and it won’t in 2016). That’s because lenders set those rates in the bond market, based on five-year Government of Canada bond yields, which certainly follow the US debt market. So, get used to that idea.

Second, the Fed never moves once and stops. The ‘one-and-done’ chorus we’ve heard from the macroeconomists in the steerage section of this blog is just as credible as their former cry that QE (government stimulus spending) would never end. It did. And now rates will rise for the next couple of years. Get used to that, too.

Third, history shows us that 92% of the time the Bank of Canada eventually follows US monetary policy because not to do so whacks the dollar, fosters trade issues and fuels inflation. This time it’s a sure thing, since we have a new T2 government committed to massive deficit spending for at least the next four years, which is as stimulative as, say, the Trivago guy. Especially if oil stabilizes (Goldman is calling for $50 average this year) and the PM stops hitting people.

So, there it is. I told you. And you scoffed. Bad dogs.

142 comments ↓

#1 bdwy sktrn on 05.19.16 at 6:49 pm

maybe one , maybe none.

i will eat my hat if there is more than one in 2016.

#2 Jimmy on 05.19.16 at 6:51 pm

What’s in your driveway?

#3 IKnow on 05.19.16 at 6:53 pm

Real Estates YVR on the street reporting: an agent friend told me he is seeing a bit less bidding war because prices having been rising so fast.
Houses over $2M are taking longer to sell, people show more contemplation.
But houses under $2M are still going very quickly.

#4 Mr. Nirp on 05.19.16 at 6:53 pm

Then again Auntie Yellen might go the other way.

http://www.wsj.com/articles/yellen-in-letter-does-not-rule-out-negative-interest-rates-1463089914

http://fortune.com/2016/05/13/fed-yellen-negative-interest-rates/

http://www.businessinsider.in/JANET-YELLEN-I-wont-completely-rule-out-negative-interest-rates/articleshow/52247226.cms

#5 Jasmine on 05.19.16 at 6:54 pm

Read the latest study by Ross Kay, brilliant scheme exposed:
http://www.rosskay.com/vancouvers-ponzi-scheme.html

#6 Mr. Nirp on 05.19.16 at 6:56 pm

Borrow money from bank, get paid (PAID) interest for the loan
wow!

http://www.news.com.au/finance/economy/world-economy/mortgage-borrower-to-be-paid-by-bank/news-story/c8c6697a488e981c5c523a995185b28f

Will canucks get the same deal? :)))

http://www.huffingtonpost.ca/2016/04/18/negative-mortgage-rates_n_9722138.html

#7 AK on 05.19.16 at 6:57 pm

“get ready for higher interest rates.”
==================================

It’s about time…

#8 mitzerboy aka queencitykid on 05.19.16 at 7:02 pm

thankz for the update garth
im havin a beer while i read your words

happy may 24 weekend all u dogz

#9 common sense on 05.19.16 at 7:10 pm

PLEASE…

The severely manipulated FED chairwoman Janet Planet is just teasing us for the 198048264 time.

I will believe it when I see it.

Only and if only Donald is heading for victory will I believe interest rates will raise…got to dump the problem to the next leader.

Same as it ever was, same as it ever was.

Interest rate rise? Please.

#10 bdwy sktrn on 05.19.16 at 7:11 pm

neighbours place, my kids friend, comm dr 604, ask 1.4 sold 1.6 – time to sell – one weekend

2273 graveley, van

this was worth 800k when i started reading this blog.

#11 The Great Gazoo on 05.19.16 at 7:14 pm

“For some time this pathetic warned you to get ready for higher interest rates. Lock into a five-year mortgage at a cheapo 2.4%. Buy some preferreds because they’ll reward you as the cost of money rises”

“Of course, everyone ignores me.”

Not everyone Garth. Been steadily adding to ZPR and renting. This increase in rates has been painfully slow – bring it on already!

Plus, can’t bare to listen to family members and others much longer talk about how buying real estate in Toronto is such a no-brainer.

#12 Toothless Measures on 05.19.16 at 7:15 pm

Jinx!

Garth, you just jinxed yourself with this all but confirmed interest rate hike.

You built in the usual ‘maybe’ caveat but like all of 2016, this hike potential will be wiped out with market volatility in the weeks and days before the.

And once the feds tease us with another minor increase, that two year plan for normalization will turn into a 4 or 5 year.

Plenty of more years for price increases, albeit moderated ones, as the 13 year bull run becomes at least a 17 year bull run. Then all those that cashed out early and renting, or those still renting on the sidelines, will have to wait another 2 decades for those sticky price declines to materialize and yield ‘affordable house prices.’

#13 Lulu on 05.19.16 at 7:16 pm

Mother Yellen, Please raise your magic finger…Ding!
Viola!!! Home owners must have lots of sleepless night from now on, plus Waynne wants to fade out natural gas and use electricity instead, meaning more money spend coming for each household…. OMG!!!

Hang tight renters…. your chance is here VERY soon!!!

#14 Just in on 05.19.16 at 7:18 pm

President Donald J. Trump to Janet Yellen: “you’re FIRED!”

#15 Mark M. on 05.19.16 at 7:25 pm

Four months ago you and all the other “experts” thought four hikes were a lock for 2016. Now it’s 2. What happened?

Remember saying the Fed rate would be “north of 3% in 2017? What happened?

How is it bad data will delay a June rate hike to July? Who in their right mind even thinks that makes sense? Seriously, what do you expect will be different enough in one month to justify a hike? This is all fantasy.

Garth, you and CNBC and the WSJ are wedded to this US recovery notion. You can’t see that it’s just a Fed induced bubble like last time. You dismiss any bad data as an aberration, cheerlead the creation of part-time jobs, and praise a group of central planners (the Fed) when time and again they’ve proven themselves to be either clueless or liars. Look up what they said about the health of the economy in 2007.

If you believe in free markets, then it, not a group of wealthy geriatrics, should decide the interest rate. The free market would NEVER of had it at 0%.

#16 Balmuto on 05.19.16 at 7:27 pm

The big number to focus on between now and the June fed meeting is the May payrolls number. If it’s a strong number the Fed hike is on like Donkey Kong.

#17 13 year bull run? on 05.19.16 at 7:32 pm

Were you in a coma in 2009?

Saw my YVR condo value then go from $500K to $450K in a few months. 15% drop the minimum then.

#18 Cottingham a bargain on 05.19.16 at 7:34 pm

Just the thought of higher interest rates again and financial markets get rattled. When they finally do start raising them look out below portfolios .

meanwhile RE prices continue to climb in the GTA unabated and unphased.

Buy hard assets regular people . Leave the paper ones for the experts like our host.

#19 Al on 05.19.16 at 7:35 pm

In my little neighbourhood of Mississauga, I’m seeing houses go up each week and they’re gone within 3-4 days. Crazy overpriced SFH’s selling between $800k and $1M, in areas where average household incomes are about $120k. Clearly these people don’t really give two hoots about the bond market, nor do they even know what that is. It’s party time in sauga! Not sure how this will end, if ever. I’m priced out for sure, so I’ll just keep renting.

#20 james on 05.19.16 at 7:38 pm

” The Fed has a lot of smart people in it”

I disagree.

Smart people do not believe that a group of humans can manage an economy. Top down, command and control models do not work in complex adaptive systems.

Instead, the Fed is full of people drawn from PhD programs that all subscribe to the same theory of economics, and the same bias against distributed decision making in monetary policy. The idea of competing currencies, for instance, is verboten in these circles.

The Fed suffers from both hubris and groupthink. It is a shame there isn’t a control group so we could see what an alternative monetary system could have accomplished.

#21 Pierre on 05.19.16 at 7:40 pm

Lulu – sleepless nights? Why? Because the odds of the fed raising from koo-loo low to extremely low just went from impossible to super unlikely? I lose more sleep over ice cream preference. And seriously, if you’re a renter, be happy renting. Your chance to buy is not coming soon.

#22 F on 05.19.16 at 7:47 pm

Okay enough about millennials please. Yes some of my peers are debt hogs but just as many are living frugally. My husband and I, for example. Our combined income is almost 200k, yet we drive modest cars (2007 Honda and thrice used 2006 Toyota), are close to owning our home and have savings, tfsas and pensions. We have been lured by the siren song of a mini mansion and a mortgage to match… particularly when our friends (whose combined income is now maybe 90k) have a newly leased luxury SUV and top of the line everything in their home… along with two loc’s and a second mortgage (at least allegedly)

We’ve remained steadfast in our relative frugality. So stop stereotyping a generation, geez… if only because it makes you lose credibility.

#23 For those about to flop... on 05.19.16 at 7:48 pm

So the Fed document said it “would likely be appropriate” that the next increase happen in June. In fact it used the word “June” six times – just to hammer the point.-Garth
///////////////////////////////////////////////
Um boss, I hope your right, but I think the real reason the Fed used the word “June” six times is because that’s when I’m due to change my GAP code.

At least something will happen in June…

M41BC

#24 JOSEPH on 05.19.16 at 7:48 pm

Garth says, ” Besides, the US is doing great despite weak first quarter growth numbers”.

The news says different:

http://www.nbcnews.com/business/business-news/two-thirds-u-s-would-struggle-cover-1-000-crisis-n576736

#25 Brian Ripley on 05.19.16 at 7:51 pm

If my memory is correct, at the beginning of 2016 when the CAD started its latest rally, Canadian housing was some 24% cheaper if valued in USD vs CAD

http://www.chpc.biz/canadian-housing-in-usd.html

Now, on the April housing data, the spread is 22%. In March 2009 (the Pit of Gloom) the spread was 21%

I suspect we will see the spread widen beyond 24% on this next USD rally. A lot of global debt is priced in USD, hence demand.

#26 Porsche on 05.19.16 at 7:53 pm

Seems to be the melons concerned about interest rates… Boomers couldn’t give a shit, they haven’t been gorging at the debt smorg

#27 For those about to flop... on 05.19.16 at 7:57 pm

DELETED

#28 Freedom First on 05.19.16 at 7:58 pm

Yes. Oil&Gas, Preferred’s, REIT”S, Real Return Bonds, etc.
I shared here when I bought and sold my ETF’s and Bonds
right here on this not pathetic Blog. High rates, or low rates, I always profit. Listen to Garth very very closely. For sure I know he is a lot smarter than me. And a lot of the dogs too. I know. I read the comments. The herd has been brainwashed in a very very very bad way. Garth and a few of the dogs prove it here all the time.

#29 For those about to flop... on 05.19.16 at 8:14 pm

#24 For those about to flop… on 05.19.16 at 7:57 pm
DELETED

Next time I will use the word “nipple”

I thought it was o.k after “Sally big boobs” was used on here…

M41BC

#30 JP on 05.19.16 at 8:14 pm

2 or 3 more US fed rate hikes coming this year, you can count on that.

#31 tundra pete on 05.19.16 at 8:19 pm

That’s right we are still at emergency interest rate levels. Well for sure it will end at some point. Kind of like when you were a bad kid and mom said “just wait till your father get’s home”. You knew it was coming, you just didn’t know when.

And be sure of the fact that your government or banks won’t give a rat’s ass about delinquency or solvency when your payment increases dramatically and you can’t make it anymore. It will just be business as usual.

#32 Gonkman on 05.19.16 at 8:20 pm

As Garth would put it don’t bet against the USA …AMERICA FCK YEAH!!

Yellen Yo go Girl! Show these idiotic YVR and YYZ Fools what a real mortgage rate looks like!

Raise it up… Raise it up!

I will have absolutely no sympathy for any of the fools who have been purchasing at these foolish prices.

Seriously 2.6 Million for a shtshack in YVR? If you are that stupid you deserve to lose.

And if it was “Foreign” purchased… even better if some sucker from another “Country” is losing money. I just hope some lucky Canadian Cashed out in the process.

What’s that? Your 800K Mortgage is gonna cost you 25K more in interest a year when you renew? Suck it up buttercup.

I hear Drywall tastes good with Ketchup.

Your “Investment” dropped 30%+ in value… boo hoo.

Can’t wait for the “show” to officially start and we see the Prices begin to drop in YVR/YYZ LA LA Land..

Gotta go order a few cases of popcorn to watch the show..

#33 For those about to flop... on 05.19.16 at 8:22 pm

Apparently voter registration is up 35% in the U.S.

Maybe because they are preparing to do what Garth dosen’t recommend ,and that is vote against something as opposed to finding something to vote for…

M41BC

#34 TheUnhealthy on 05.19.16 at 8:32 pm

Re: Freedom First
“Listen to Garth very very closely. For sure I know he is a lot smarter than me. And a lot of the dogs too.”

I second that, Freedom First.

Thank you very much for everything, Garth. I have transformed from knowing absolutely nothing about anything finance related into an emotionless, chicken little deflecting, self-managed, balanced, ETF portfolio having beast! The beast part might be due to my stinky pits and crusty beard, though?

I wouldn’t be here if you were a fence sitter, Garth. It’s gotta be tough to make interest rates interesting. Man, really could have used this blog in high school.

Thank you

#35 For those about to flop... on 05.19.16 at 8:32 pm

*Over the school P.A system*

” Flopper to the Headmaster’s office ….that is Flopper please report to the Headmaster’s office,Thankyou for your attention”…
M41BC

#36 Andrew Woburn on 05.19.16 at 8:32 pm

#25 Brydle604 on 05.18.16 at 7:29 pm
Interesting article, however I doubt that many existing Trucks will be retrofitted for autonomous driving as most are manual transmissions. Only automatic transmissions will work to be autonomously operated as well as electric steering
======================

An excellent point, thank you. I have contacted the company for their comment. If they come up with anything surprising, I will report back.

#37 Heisenberg on 05.19.16 at 8:38 pm

Interest policy works best when it’s sprung on the unsuspecting population as a surprise. Otherwise, if people see it coming, then they adjust their economic behaviours in advance of the coming rate change, weakening the effect of the policy change.
In other words, if everyone expects an interest rate change, and we keep being told that it’s coming…it means it’s not coming. I predict no interest rate increases…for a looooooong time.

#38 Joe2.0 on 05.19.16 at 8:42 pm

Bad dog Bad dog what cha gonna do, what cha gonna do when the mortgage is due.

#39 gladiator on 05.19.16 at 8:44 pm

I concur with #21 Pierre.
Indeed, renters in Van and TO should forget about buying real estate anytime soon. Hikes or no hikes, nowadays the mania drives the crowds more than cheap money. A half percentage point hike will have such a small effect that it will hardly even slow down the buying orgy in these two locations.
I personally have four friends who in the last half-year upgraded to over 1.5 million dollar digs in the GTA. Sold their smaller houses from which they extracted at least 400k equity each and plopped it into their next property. Sure, they also got bigger mortgages, but they definitely enjoy the daily gains in value.
No end in sight to this madness and the renters, including myself, who hoped to buy sometime when this stops are so far behind, that they should put these hopes away for at least 5 years, if not more. The losers are now loserers. Even those who are invested and diversified are way behind in terms of returns versus home owners who put down say 100k and enjoy 2k weekly increase in their house equity. You might say that houses are illiquid and when the tide turns it will be hard to sell them. Uh-huh. Put your house on the market and hope that the buyers don’t destroy your doors trying to take it off your hands.
I think that even the oracle Smoking Man must be amazed at how long this is going on, as he correctly predicted that this bubble still has some way to go.
End of rant.

#40 Andrew Woburn on 05.19.16 at 8:47 pm

#22 F on 05.19.16 at 7:47 pm
Okay enough about millennials please.

We’ve remained steadfast in our relative frugality. So stop stereotyping a generation, geez… if only because it makes you lose credibility.
===================

You have my sympathy but you can’t really escape lazy media stereotypes. No generation has been more stereotyped than the “Boomers” and it is still going on.

#41 Mosey Potter on 05.19.16 at 8:51 pm

Ex-pat Canuck living in Oregon…love it when you talk about how rosy things are here in the lower 48 Garth. But, ‘taint so, not by a long shot. You’ll see soon, methinks. Thankfully my house will be paid off this year, bought her for one oh six nine in ’98. Bend Oregon is getting too crowded, but it’s still awful nice, and this year we got nhl sized ice!!! Living the dream…anyone else think PM mistakenly thought Brazeau was in the house yesterday? lol

#42 GeorgeU. on 05.19.16 at 8:59 pm

#63 Ontheledge on 05.18.16 at 9:04 pm

I disagree with Garths “don’t buy penny stocks”.

Over the last couple of decades I have had the opportunity to see how thousand of Canadians invest in both at retail (advice driven) and discount (self directed) environment. I have the misfortune of working in this business for a long time as a manager, executive and advisor. This has been a very valuable education into what works and what doesn’t.
———————
Neat to see someone on here with guts, Should tell us more. – just usually empty words about creativity and entrepreneurship then a bunch of drunk ramblings.

#43 Olive on 05.19.16 at 9:04 pm

God Bless You Garth !!!!!

I love your blog and all your sound financial advise !!

#44 Corduroy Cowboy's wife on 05.19.16 at 9:09 pm

So Garth and blog dogs, what’s everyone loading up on? I own xpf, and zpr. I’m looking for fixed income products. Should I add to these two or are there others worth considering? I am buying for the yield and intend to hold them for many years. Also looking for some good REITs, intend on holding them for the yield as well. Any suggestions?

#45 BOOM! on 05.19.16 at 9:09 pm

There is a very old 45 I own, titled “It’s June in January”
can’t even recall the R&B group that did it just now.

So, if Yellin is calling for a rate hike in June, think next January… maybe… if the stars align, and she is still employed then.

I would LOVE to see a normalization of interest rates -whatever the hell that means today?

It’s just that, well, the FED has the same level of forthrightness & integrity as a used car peddler, a commission based investment advisor, and a medium down at Madaam Guessright’s Fortune Service.
In other words -NONE!!

I’m cool with that, own stocks, stock ETF, preferreds, some Bonds, and CASH. A well diversified (I hope) mix that has weathered the poop storms before, and probably will again. Bring on the higher rates, the higher the better, as long as we don’t go 3% over inflation, please.

I can deal with a fair return on (invested) money.
Debtors, will have to deal with it, not so much me.

M64WI

#46 Millmech on 05.19.16 at 9:14 pm

#21 Pierre
As a renter I’m not concerned about buying back into the market that will cost me an extra $600,000 over 25yrs to be owned by the bank.I’m taking that amount($2000) and investing it every month,observing my house captive coworkers enjoying their staycations,part time weekend jobs all to own a house.
I have nothing against home ownership and have owned before,but the numbers make way more sense to rent unless housing drops at least 60% for me anyways.
I much prefer a life over a house right now,and stress free time(which is the most precious asset that you have which goes up in value as you get older)

#47 BOOM! on 05.19.16 at 9:18 pm

#24 Joseph

The article you quote has no references. Sure, a family making “Less than 50,000” in the US might have an issue, few above that should EVER have an issue, unless we’ve turned into a nation of total fiscal morons.

While I will concede that possibility, I have my doubts it would be very widespread.

Anybody 25 or older, that does NOT keep at least a $1,000 emergency fund is not fiscally literate.

My opinion only!

#48 Jasmine on 05.19.16 at 9:19 pm

The Lynda Steele Show: Vancouver’s real estate market a Ponzi Scheme

http://www.cknw.com/2016/05/17/is-vancouvers-real-estate-market-a-ponzi-scheme/

#49 conan on 05.19.16 at 9:19 pm

When I was young my parents used to read to me before I went to bed at night. My favorite story was “The Yellen that cried wolf”.

The Fed wants the benefit of higher interest rates, but without actually having to raise them in any meaningful way. They have been doing this ” Cry Wolf” for years….Garth…….years.

#50 Andrew Woburn on 05.19.16 at 9:27 pm

Michael Crichton describes the Gell-Mann Amnesia Effect.

If you value your sanity … Fuggedaboutit.

“Briefly stated, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on some subject you know well. In Murray’s case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward—reversing cause and effect. I call these the “wet streets cause rain” stories. Paper’s full of them.

In any case, you read with exasperation or amusement the multiple errors in a story, and then turn the page to national or international affairs, and read as if the rest of the newspaper was somehow more accurate about Palestine than the baloney you just read. You turn the page, and forget what you know.”

#51 BOOM! on 05.19.16 at 9:30 pm

Flopper gets DELETED.

Going for Smoking Man’s record are we?…..

#52 bubu on 05.19.16 at 9:33 pm

And? The interest rate will go up 1% over the next 2 years and then stop for another 5. Is this a problem? No… for a $500k mortgage that is $400 a month… considering inflation is coming also with salary increases that is not an issue…. 5% increase over 2-3 years on income should easily cover this…

You bet. Up is down, too, if you really work at it. — Garth

#53 Felix on 05.19.16 at 9:42 pm

Interesting pic.

But seriously, if you should find a large, stupid looking chunk of excrement like this in your toilet, you really should speak to your doctor.

You might have something contagious.

#54 Doug in London on 05.19.16 at 9:48 pm

I’m eagerly looking forward to my shares of CPD and XPF going up in value as interest rates rise. I expect to see that happen before I see the $20 a barrel oil the “experts” predicted last year.

#55 Sheane Wallace on 05.19.16 at 9:53 pm

If and when the FED start raises rates again it would be over either for Canadian housing or the CAD. Or both.

So I am short both.

I think that the Fed can safely rates at least 3-4 more times. Or they may not raise rates at all, just stop buying bonds.

There is limit to monetary policies and that limit is now.
Or maybe 0.5-1.0 point down on 10 years treasuries, who knows?

But it seems game over for debt. Pay back time.

Either way short of ‘helicopter’ money is game over for the Canadian housing.

As for the safety of CA banks wit 0 (zero) loan reserves I would simply pass.

#56 For those about to flop... on 05.19.16 at 9:53 pm

#51 BOOM! on 05.19.16 at 9:30 pm
Flopper gets DELETED.

Going for Smoking Man’s record are we?…..

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

I think that was my 5th or 6th deleted in about a year and a half.

The most annoying thing for me is that most of them have been about the Metrosexual Messiah.

Luckily he is much more responsible than me.
You don’t see the leader of Canada manhandling his co workers and swearing at them.

What’s that? He did? Well never mind…

M41BC

#57 Brazil ex-pat on 05.19.16 at 9:55 pm

bdwy sktrn on 05.19.16 at 6:49 pm
maybe one , maybe none.

i will eat my hat if there is more than one in 2016.

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

…..times 2

#58 Sheane Wallace on 05.19.16 at 9:57 pm

#52 bubu

When interest rates start going up you will be surprised on how fast that will be.

Imperative number one for the FED is to PROTECT THE USD! This is what matters not the stock market!

Housing matter matters as not to kill the banks and it won’t in US. As for the canadian banks…

Just watch out the fireworks.

#59 Sheane Wallace on 05.19.16 at 10:07 pm

#19 Al

There are no places in Mississauga with 120 k income.

It is a cheap bottom 20 % workers ‘paradise’ where houses where worth 200 k 12 years ago.

Cheap bottom 10 % workers ‘paradise’ is Brampton where new detached are coming these days up at 850 k. I almost laughed my behind out when I saw the advertisement there a month ago.

This is twice the price of a large luxury apartment in the very hearth of Vienna, the number one city to live in in the (whole wild) world several years in a row.

The ‘good’ news is the Vaughan is even 50 % more expensive than Brampton!

I am not really sure what kind of crazy idiots (to put it mildly) I am living with but fluoride in the water is far from explaining it alone. It is probably combination of that + the GMO food + the humidity + the brain freeze effect + the education system. Looked from aside it really looks surreal.

#60 Bottoms_Up on 05.19.16 at 10:09 pm

#39 gladiator on 05.19.16 at 8:44 pm
—————————
True right? That is the reality on the ground. What will cause the TO market (for SFHs) to slow down? Significant job loss…significant increase in interest rates….massively crimping access to credit. This train just ain’t gunna stop (much like that home heating fuel tanker that just rear-ended a school bus on Steeles).

#61 Bottoms_Up on 05.19.16 at 10:14 pm

#19 Al on 05.19.16 at 7:35 pm
————————–
The spill-over effect is occurring too…prices being pushed higher even an hour north of the GTA.

#62 WalMark of Sadkatoon on 05.19.16 at 10:15 pm

the US economy is killin it. sucks to have missed out! lol

closing on more properties batches

US dolla dolla bills yo

#63 CHINA money on 05.19.16 at 10:16 pm

Lower cdn means lower prices for real estate for people from china.
Can’t you just apologize about your real estate forecast and move on already.

#64 Bottoms_Up on 05.19.16 at 10:17 pm

#1 bdwy sktrn on 05.19.16 at 6:49 pm
———————–
Given it is an election year, it will be 1 and done. Hilary et al won’t allow economic buffering to jeopordize their shot.

#65 Sheane Wallace on 05.19.16 at 10:17 pm

Did you see Trudeau’s ‘incident’ in the parliament?

It was complete idiocy and real manifestation of how stupid pour ‘leaders’ really are. I won’t interview him for a job that pays 45 k!

#66 WalMark of Sadkatoon on 05.19.16 at 10:20 pm

I think that even the oracle Smoking Man must be amazed at how long this is going on, as he correctly predicted that this bubble still has some way to go.

SM has been bang on as the awesome trans gender super prescient alien that he is! esp YVR and YYZ where real estate prices continue to hockey stick straight up into the sky! the end will be glorious I tell u! glorious!

#67 Sheane Wallace on 05.19.16 at 10:20 pm

And the cherry on the cake was the new that CMHC will spend 500 k to monitor the house prices!

That us correct folks, they are ‘insuring’ mortgages for 600 billions + alone and don;t; have reliable price information!

#68 Toothless Measures on 05.19.16 at 10:20 pm

Were you in a coma in 2009?

Saw my YVR condo value then go from $500K to $450K in a few months. 15% drop the minimum then.
———-

And where does your condo sit now after an initial 10 month decline? Much higher than 500K? I thought so….

#69 Raptors getting ANNIHILATED tonight! Toronto TOTALLY SUCKS!!! on 05.19.16 at 10:22 pm

Delusional Toronto idiots, your team is toast and it’s only halftime!!

Just like your insanely overpriced real estate market, which will correct by at least 50% in the next five years.

And your deplorable, uncultured, violent 905 suburban wastelands? They will see plunge of 70% in value over the same time period.

Toronto, you are a fourth rate wannabe who dreams you’re second rate.

Pathetic losers. An economy built on real estate bs. Sports teams that are the most gutless and unintelligent on the planet. And idiots who lap up both, spending all their dough and borrowing more to support such crap.

#70 WalMark of Sadkatoon on 05.19.16 at 10:23 pm

personally hope jellen raises the rates and tanks the CAD glorious

#71 Sheane Wallace on 05.19.16 at 10:37 pm

The ONLY thing I am praying for is to be able to transfer my funds safely abroad. Starting this summer. Ending in the fall. arrivederci.

#72 Sheane Wallace on 05.19.16 at 10:38 pm

#69 Raptors getting ANNIHILATED tonight! Toronto TOTALLY SUCKS!!!
—————————–
It will be 80 + % in real terms (for 905 area). in nominal nobody cares.

#73 ROCK BEATS PAPER on 05.19.16 at 10:40 pm

Garth breaking out the rose coloured glasses. Time to sell. When Garth was breaking out the Goldman $20 oil nonsense, it was time to buy.

Garth, I love this bit of cool aid, “The Fed has a lot of smart people in it, determined to take away the punch bowl before we all get too pissed to walk.”

5% unemployment, and 2% inflation, rates should have risen to normal long long ago. The US economy is trudging along despite these insane rates that have causd massive misallocation of capital. To say these radicals are a lot of smart people is rich indeed, after they have blown three monstrous bubbles in the last decade and a half.

#74 Make RE great again! on 05.19.16 at 10:40 pm

I’ve said it before, there is no solution to the RE boom unless it’s traded in a form of a benchmark on a public exchange like other commodities but the rotten status quo feudal lords that infiltrated the government will never allow an honest market in the sake of “stability”. The masses are doomed to pay the rent FOREVER outright or in the form of a “mortgage”.

The interest rate will never rise. The “helicopter money” is the next stage and will be implemented in the form of the “basic income” to keep the masses barely fed and sheltered after losing their jobs to robots and prevent an uprising

They are deadly afraid of an honest market where they stand to lose EVERYTHING in a crash as everyone owes them loans with “interest”

#75 NorthOf49 on 05.19.16 at 10:50 pm

No scoffer here Garth, I bleated out updated US CPI stats as soon as they hit the press Tuesday morning. The Fed will have to move to halt inflation. We’ll be doing the same in short order. Something has to end this madness, it’s not sustainble. Over here in Ancaster, things have gotten beyond stupid. Old 60’s bungalows are being snapped up for $500K and knocked down for $1.5-$2M McMansions. One of the larger lots with an old bung on it around the corner from me went for asking $2.2M. When one of Hamilton’s largest roofing companies starts their own “luxury homebuilding” division, you know the gig has to be up soon. Meanwhile I’m at the Esso filling up and a tow truck rolls by pulling a 30′ camper trailer. Odd I thought as I never see tow trucks pulling these things. As it rolls by me, I see a sticker in the rear windows that says “Seized by Bailiff”. In Hamilton/Ancaster I see these two worlds collide everyday.

#76 JSS on 05.19.16 at 11:08 pm

Since the early 1980’s, interest rates have been dropping. It’s been 35 years now of decreasing interest rates. It’s due time for them to steadily rise for the next 35 years. Peak-to-peak, interest rates should resemble a bathtub. And we’re at the bottom of the tub.

#77 Buddy O' Pal on 05.19.16 at 11:12 pm

#69

Sucks to be you.

#78 Pierre on 05.19.16 at 11:35 pm

Gonkman 32:

“Gotta go order a few cases of popcorn to watch the show..”

He said in 2007…

Stale popcorn is a real favorite in these parts. Maybe ketchup?

#79 John Barber on 05.19.16 at 11:36 pm

DELETED

#80 Pierre on 05.19.16 at 11:46 pm

JSS:
“Since the early 1980’s, interest rates have been dropping. It’s been 35 years now of decreasing interest rates. It’s due time for them to steadily rise for the next 35 years. Peak-to-peak, interest rates should resemble a bathtub. And we’re at the bottom of the tub.”

Fascinating. How is it I have never heard of this 70 year bath tub-shaped interest rate imperative?

#81 Make RE great again! on 05.19.16 at 11:59 pm

A tsunami that razes the condos and sinks half of Vancouver in the ocean could definitely prick the bubble though. That or a nuclear war with China. The latter is actually doubtful as the hordes of survivors will sweep across the border.

On a serious note, it would be helpful if the government negotiated with China a quid pro quo deal so that poor Canadians are allowed to emigrate to rural China and buy some affordable housing there.. Maybe make Chinese lessons mandatory in school too.. that will make the kids more competitive in the only respectful career left after all the oil sands are burnt down – the one of the RE agent or prepare them for emigration to China

#82 bubu on 05.19.16 at 11:59 pm

@ #58 Sheane Wallace

It took them 8 years to raise the rate by 0.25% and then they stopped because of the panic… they delay every month to increase by another 0.25% .. to me that means they test the waters but in reality the economy is not so great….and it will never be… manufacturing is almost gone from US or Canada… everybody can produce cheaper than North America so the only option is to spend most of the money on a house here and leave a small portion of your income for what is imported… the other countries will lower the currency enough to be able to continue to sell in NA and this way the USD will stay strong enough… As I said… interest will go up 1% over the next 5 years which will not impact any real estate market… many people said the same in 2008-9…. 8 years later the interest rates are low…. and they will be…. 30y mortgage in US is around 3%.. there is a reason for that…

#83 RayofLight on 05.20.16 at 12:00 am

Canada is already suffering from manufacturing allocations to Mexico. If I was a CEO of a major manufacturing company, I also would not hesitate to “reduce my exposure” from the uncertainties of risks in manufacturing in Ontario. I get the feeling the Liberals just don’t get it. I get the feeling they are clueless about what the long term certainty of costs and regulations a manufacturing decision maker requires in deciding where the future production allocations will go. Why is this issue not ringing loud alarm bells? Ontario will be alone in this, the US and Mexico are not going here. The playing field is/will be tilted against Ontario forever.

http://www.theglobeandmail.com/news/national/ontario-to-create-agency-to-oversee-climate-change-goals-draft-plan-shows/article29781337/

#84 bubu on 05.20.16 at 12:07 am

@ #58 Sheane Wallace

forgot to mention…. you also don’t consider the corruption in the system…. nobody will give up the nice profits… look how the cities are playing stupid “affordable housing”… they approve infills, speculator buy an old house for $350k, build 2 tiny houses and they sell them for $700k… really affordable:)…. taxes for the old house $3500 a year, taxes for the new 2 houses $14k in total….

#85 cramar on 05.20.16 at 12:11 am

#22 F on 05.19.16 at 7:47 pm

Two thumbs up! Good you you! But you must realize that you are an exception, both in income and in prudence.

#86 Marco Polo on 05.20.16 at 12:13 am

Amen, Garth.

There’s a massive financial crisis building in this country, and I see no way out if it for most people.

Ontario particularly, is pickled in debt. Green Energy, Green Bonds, ice cream and unicorns for everyone!

The continued economic existence of the province makes little sense. Gone are the pre-NAFTA branch plants in many towns and cities. Those plants moved to China and Mexico. They won’t move back because of green energy and expensive housing.

The provincial and federal governments cannot continue to afford such reckless spending either. Not with fort mcmurray burning for weeks now. Liberals might hate oil, but they don’t pay their budgets with money from organic honey exports either.

We’re really setup well for a Greek – style crisis. We have no way out, those steps should have been taken a decade ago.

#87 Freedom First on 05.20.16 at 12:48 am

#58 Sheane Wallace

Canadian Banks would be protected at all cost. Canadian homeowners would have to fend for themselves. As I do. The onus is always on the healthy individual to look after their own financial affairs. Need proof. Look world wide.

#88 Larry1 on 05.20.16 at 12:55 am

— Garth, regarding preferred shares: If rates rise and the terms aren’t favorable to the offerer won’t they just call them?

#89 BillyBob on 05.20.16 at 1:19 am

#59 Sheane Wallace on 05.19.16 at 10:07 pm
#19 Al

There are no places in Mississauga with 120 k income.

It is a cheap bottom 20 % workers ‘paradise’ where houses where worth 200 k 12 years ago.

Cheap bottom 10 % workers ‘paradise’ is Brampton where new detached are coming these days up at 850 k. I almost laughed my behind out when I saw the advertisement there a month ago.

This is twice the price of a large luxury apartment in the very hearth of Vienna, the number one city to live in in the (whole wild) world several years in a row.

The ‘good’ news is the Vaughan is even 50 % more expensive than Brampton!

I am not really sure what kind of crazy idiots (to put it mildly) I am living with but fluoride in the water is far from explaining it alone. It is probably combination of that + the GMO food + the humidity + the brain freeze effect + the education system. Looked from aside it really looks surreal.

====================================

I would rather move to somewhere in the Prairies before I’d live in Mississauga or Brampton. Having spent some in Winnipeg, that isn’t intended as a compliment.

Funny you should mention Vienna. Couldn’t agree more. Me and Ms. BillyBob (who is of Czech descent) currently looking to buy a nice apartment in Prague, where the same metrics are at play, and the city is similarly beautiful (same period architecture, Austro-Hungarian empire etc).

She visited Canada and was trying to be polite but couldn’t contain her incredulity at the housing prices out west. Her comment: “but…aren’t the houses made out of wood? How do they last in a rainforest?”

I had no answer. To Canadians, 100 years old is a heritage property. To a European, that’s a new build. How to explain the obsession with overpaying for shelter in Canada?

For 300,000 to 400,000 CAD you can purchase an immaculately restored heritage apartment in Prague. A city infinitely more beautiful and cultured than anything in Canada.

Of course moving to Prague, or Vienna, or Costa Rica isn’t a viable option for most Canadians and I don’t pretend it is. But when you contrast it with those cheap hipster joints that people were lining up for a few days ago in Yaletown – in Vancouver, Canada – to purchase for 5x the cost, it certainly brings home how profoundly dysfunctional Canadian RE is. It has to be one of the most stupendously misallocated use of capital I can think of. You truly cannot fix stupid.

#90 TRT on 05.20.16 at 1:26 am

Car leasing vs buying (I know ..I’m behind a day)

From an Asian perspective, you must drive a current model year vehicle (<4 yrs old) always.

Otherwise, you will be looked down upon. Lost business, won't get the girl, etc. Very important.

In Asia, if you have no money, you are less than human. Been there and saw it first hand in India and China.

That's why Vancouver has the highest per capita luxury car sales in North America.

#91 trumper on 05.20.16 at 1:30 am

Got to love Canada for many reasons.

One of which being our head of government took time out of his day for being too agersive in the House.

#92 That's the way it is on 05.20.16 at 2:20 am

You keep doing the right thing eventually you will be right.

Interest rates double in 48 months.

Over done kids draw again on there parents. That keeps them above water for a few years.

Now your parents just have CPP left. It is your fault they now qualify for OAS.

You hope your kids won’t make the same mistake

#93 macroman on 05.20.16 at 2:22 am

Huh, I read a whole Mark piece (for once), #15 and it made sense.

Oh Mark M.

Sneaky smart

#94 macroman on 05.20.16 at 2:29 am

hey flopper, #23,

June used six times…those hacks are guilty by omission, they left out the year…2025

#95 Give us this Blog our daily Garth on 05.20.16 at 2:56 am

#22 F
And I thought this Blog was pathetic. I guess you just needed to brag. You’ll cave and buy the house soon.

#96 So jealous on 05.20.16 at 3:08 am

#69 you must be living juuust beneath Toronto. Lol!

#97 DON on 05.20.16 at 3:29 am

Chinese the catalyst – cheap money, recency and greed/fear the causes. But can this really continue before it becomes a problem. At this rate billionaires will be priced out of Vancouver. A city sold to the hilt yet so many houses sit empty.

http://www.scmp.com/comment/insight-opinion/article/1947333/chinese-buyers-property-canada-and-us-must-stop-flaunting

“The phenomenon has raised eyebrows not just in Canada and the US but also in China. The Canadian media recently reported that a Chinese overseas student had acquired a mansion in Vancouver for C$31.1 million. The student owned 99 per cent of the title and managed to secure a mortgage of C$9.9 million. The Canadian press branded the mansion the most luxurious student boarding house in history. The deal has also triggered heated online exchanges in China focusing on how a student could have that kind of money at his disposal. It was suggested that the princeling in question was the grandchild of a Chinese national leader.

The wealthy in China are eager to transfer their money out of the mainland, exploiting every means, legitimate or otherwise, to do so, in case of any policy change or because they find themselves the subject of anti-fraud investigations. Sending their offspring overseas is one such insurance policy.

Property agents are keen to exploit Chinese buyers’ compulsion to close a deal quickly, often talking mainlanders into paying between 30 and 200 per cent more than the asking price. As a result, genuine local home buyers have been driven out of the market. A decent house in a popular residential area in Vancouver is beyond the reach of average Canadian salary earners.

In the 1980s, there was a flood of Hong Kong immigrants into North America because of political uncertainty. Canada, in particular, became a preferred destination for Hongkongers. To the chagrin of the local communities, some early Hong Kong immigrants dismantled heritage premises to make way for so-called “monster houses” of up to 10,000 sq ft in size. Students from Hong Kong drove flashy Mercedes-Benzes and BMWs to school and adorned themselves with designer labels.

Today, mainland Chinese have taken over as the main influx from East Asia. And the mainlanders are now outshining Hong Kong immigrants. New drivers from the mainland can be seen in Ferraris, Maseratis and Lamborghinis. New Yorkers, Londoners and Parisians may have taken such arrogance for granted. In the eyes of the easy-going Canadians, however, showing off one’s wealth is offensive.”…to read more follow link

#98 earthboundmisfit on 05.20.16 at 6:23 am

OK, had some of your koolaid today. 20K GIC matured and replaced with ZPR. Cojones of steel, ’cause I’m still sitting on a 24% hit on a PF holding.

#99 Zen Headspace on 05.20.16 at 6:32 am

Trivago Guy! Ha – that’s priceless! That dude has always creeped me out.

#100 fancy_pants on 05.20.16 at 7:28 am

$hite! who makes Depends? I’m going all in.
my grandpapa once told me that the 75th time is the charm so surely this is not a peter crying wolf move.
and if not, somebody please elbow her in the boob and trash talk her into submission.

#101 fancy_pants on 05.20.16 at 7:38 am

“where’s the cat?”
— “huh?, no nothing to see here. need privacy please”
“gurgl .. gurl .. meow”

#102 Raptors DESTROYED AGAIN!! Toronto SUCKS!!! on 05.20.16 at 7:50 am

Your city is living a delusion, Toronto!

Take a look at all the lovely homes, near the waterfront, that you can buy in Cleveland, for UNDER $100,000, even $50,000!!

And in Cleveland, Lake Erie is warmer and nice than Lake Ontario.

Unlike Toronto and the GTA, gun violence is on the decline in Cleveland.

Prices in Cleveland are REASONABLE.

Toronto’s prices are DEMENTED.

There is NO justification for your real estate inflation, Toronto.

Get out NOW!!!!!

MASSIVE BUBBLE DEFLATION COMING!!!!

Cavs in 4 :) :) :) :)

#103 Grey Dog on 05.20.16 at 8:04 am

Prague and Vienna are beautiful. However, I have a real problems with the locals in Vienna; Mr. Grey Dog and I were referred to as 9 11s! Attitude of shopkeepers throughout were really RUDE.

We’ve done a lot of world business travel, I really don’t care if I ever see Vienna again.

#104 Lewis on 05.20.16 at 8:18 am

Garth, Great blog been a daily reader for years, living in Alberta I’m so glad I headed your warnings. While everyone I knew have been buying and many becoming speculative landlords most are now under water often on multiple properties. Rental sites show well over 500+ in a town of 90,000! I have great selection!
Can you speak (as you have before) to the correlation between the bond market and mortgage rates? Should we be looking to take some gains in the bond market with the eventual rise of rates? Keep up the good fight, there are many of us loyal readers that just don’t get involved being FIRST!

#105 maxx on 05.20.16 at 8:23 am

#12 Toothless Measures on 05.19.16 at 7:15 pm

“……Then all those that cashed out early and renting, or those still renting on the sidelines, will have to wait another 2 decades for those sticky price declines to materialize and yield ‘affordable house prices.’”

Why is it that those who take on excess debt vocalize the grossly erroneous assumption ad nauseum that those who’ve already crystallized profit have had no growth in their gains and no benefit from that profit?
Kinda like the conundrum of taking CPP earlier or later. Take it now for more years, enjoy it and be grandfathered or take it later for fewer years with potential risk of change.

With the way the world is unfolding, I wouldn’t want to be trying to sell a rat box to multimillionaires going forward. Better opportunities for those with money will re-scope re.

Risk on.

#106 maxx on 05.20.16 at 8:44 am

#20 james on 05.19.16 at 7:38 pm

“The Fed suffers from both hubris and groupthink. It is a shame there isn’t a control group so we could see what an alternative monetary system could have accomplished.”

If there’s no App for that, there ought to be. My view is that the economy would be far more boring, with income from many more types of investment (gasp! even fixed income like GICs!) distributed far more evenly across all demographics. This would provide robust support for all sectors of the economy – service, hospitality, retail and even re. Wealth would not be as skewed to the 1% and with increased tax revenue due to more stable jobs, hey presto! employment would not be so transitory, precarious and illusory.

Many seniors, savers and users of social programs would not feel ripped off, there would be nearly no inter-generational warfare and the whole mindset of society would be much more conducive to getting on with life rather than obsessing about bloody money.

Society is so malfocussed now.

Stupid, egotistical, experiment-crazy central bankers are the true bad dogs and if we’re not careful, too many of us will pi$$ our lives away, waiting for these dummies to act sensibly.

Tick tock.

#107 Prairieboy43 on 05.20.16 at 8:44 am

18mm Rain last night, Edmonton district. Rain forecast all weekend.
Interest Rate hike, I hope so. Need to shaking up economy and get moving.
PB43

#108 economictsunami on 05.20.16 at 9:00 am

The FOMC is miffed that markets are fighting the Fed.

Afterall, central banks worldwide are fighting a credibility problem.

So let’s take a stroll down memory lane and seem what a “data dependent” Fed is missing.

The Fed Has Something to Prove to Wall Street

http://www.bloomberg.com/news/articles/2016-05-19/fed-has-something-to-prove-to-dubious-traders-across-wall-street

Your morning Mish: Hikes Data Dependent Says NY Fed: So, Let’s Look at the Data

https://mishtalk.com/2016/05/19/hikes-data-dependent-says-ny-fed-so-lets-look-at-the-data/

When the mystique is lost in a relationship, it’s tough rekindling that old (in the) black magic…

#109 rateNutz on 05.20.16 at 9:10 am

rates? what rates? look ma, what cute canaries in ther coalmine
http://www.dw.com/en/alarming-rise-in-mass-animal-deaths/g-19055528
http://www.cbsnews.com/news/mass-animal-deaths-on-the-rise-worldwide/

#110 Smoking Man on 05.20.16 at 9:11 am

Fed is full of Hot Air.

Probably enough for BOC to sit on it’s ass on Wednesday. But don’t be SURPRISED if BOC cuts. Those export numbers where brutal, and we ain’t pumping oil in Alberta.

If the BOC cuts, it will follow with a statement like, It’s only temporary due to Fort Mac.

Bottom line is Canada needs a USDCAD at 1.4 to have a balanced or positive trade balance.

Now who all bought USDCAD when I called the bottom on April 28th?

I did, 4 lots of 50 Contracts at an average buy in of 1.28407 + 500K so far.

#111 Hugo Fargotomo on 05.20.16 at 9:16 am

Garth, gold equities have doubled since November, both on the GDX and the GDXJ, more is expected, much more, another doubling and more, what say you to another group of investors that you have convinced to stay out of the market.

Following your advice for the past few years has cost potential estate investors hundreds of thousands even millions. And now the gold stocks have doubled since November.

Is 5% really the best you can do?

http://business.financialpost.com/midas-letter/rate-hike-anxiety-driving-gold-higher-is-no-dead-cat-bounce

#112 Gonkman on 05.20.16 at 9:22 am

Yeah… No way rates are raising. Garth it totally on drugs. He’s been saying this for too long.

HA… Wait you will see IT IS DIFFERENT THIS TIME!

My YVR Shack is going to go to $15,000,000 by 2020. No way they will raise rates. They CAN’T!

You know how many fools like me would be up shittscreek without a paddle if they raise rates.. HA! Won’t Happen.

I can’t wait for negative rates. The bank will pay me $5,000 a month for having a mortgage because I am so smart.

My Awesome 30 year old YVR Shack is totally worth $3,000,000+.

My BFF in YYZ has a similar shack worth $1.5 Million. I am so winning over him. He said he might get a 2nd Shack to try and keep up.

Hmmm maybe I should leverage this shack to get another one. I got some more BFF’s who can live in the basement.

Garth.. stop posting silly things like rates raising. You are wrong you know. LOL.

It is different this time you know!! JT Says its SUNNY WAYS from now on!

/END Greater Fool posting.

……Insert Facepalm Here…….

#113 That one guy on 05.20.16 at 9:31 am

Still crying about how interest rates will go up? Never gonna happen in your lifetime. One-and-done is the most you’ll ever see, like south of the border. As much as you claim young people want “freedom” and “flexibility”, what they really want is the same thing humanity has wanted since before they found the cave: stability and comfort. Nobody wants to be a disposable piece of trash cycling through many employers all over the country on a whim, getting paid whatever they as a single person can negotiate against a large and uncaring corporation who would rather hire a TFW anyway. No, people want stability, they want to own something even if it’s just a box in the sky condo. Nothing will change that.

Yea, the Bank of Canada is gonna follow the Fed alright. Towards negative rates.

It’s funny how after you’ve lived so long and witnessed so many transformation of society, from technological to moral to legal, you still deny that any further systemic changes can come. You say whatever remains of the social contract is not up for renegotiation, that so called free trade and globalization is inevitable and unstoppable and a good thing anyway, and that nothing will ever change ever. The only thing you think will change is human nature, because in your fantasy increasing-rates scenario housing might lose some value and then all of a sudden people will value living in hotels as they pursue a journey-man lifestyle of precarious work.

What’s worse is you seem to make implied promises to grammas about the stock market by asking them to cash out their guaranteed pensions and (in exchange for a small cut, of course) put their money into casino stocks. Oh yea, and bonds that pay less than inflation. You know, for “balance”. All because somehow a single gramma with a paid for house, living on an indexed and guaranteed 60k annual income is somehow living in unacceptable poverty, but you’re perfectly ok with an 11 dollar minimum wage and ever more outsourcing because somehow that’s not poverty for younger Canadians. How strange.

#114 doom on 05.20.16 at 9:35 am

population control will curb demand
http://www.globalresearch.ca/chemtrails-the-consequences-of-toxic-metals-and-chemical-aerosols-on-human-health/19047

#115 Dono on 05.20.16 at 9:36 am

Rising rates will devastate the stock market – many speculative buyers on credit and margin will flee stocks like rats from a sinking ship.

Same with real estate but to a lesser extent, sorry Garth people need houses to live in, not the same as financial assets.

Rates rise with economic growth, inflation and corporate well-being. So do markets. You need to learn more. — Garth

#116 maxx on 05.20.16 at 9:42 am

#45 BOOM! on 05.19.16 at 9:09 pm

“….I would LOVE to see a normalization of interest rates -whatever the hell that means today?”

Some possible definitions:

The cost of money, forcing its redistribution more equitably amongst all strata of society;
The cost of money which benefits all sectors of the economy;
The cost of money, which, by its cost, helps regulate the investment industry by polarizing a measure of itself to fixed income, thereby balancing capital investment;
The cost of money, which obviates the most pain to (for all practical purposes) forced users of fiat currency through greater efficiency in collecting tax;
The cost of money which, by its cost, prevents significant moral hazard.

#117 james on 05.20.16 at 10:01 am

#66 WalMark of Sadkatoon on 05.19.16 at 10:20 pm
I think that even the oracle Smoking Man must be amazed at how long this is going on, as he correctly predicted that this bubble still has some way to go.

SM has been bang on as the awesome trans gender super prescient alien that he is! esp YVR and YYZ where real estate prices continue to hockey stick straight up into the sky! the end will be glorious I tell u! glorious!
…………………………………………………………..
Really guys, a chicken with its head cut off could have predicted the YVR and YYZ debacle. It is unadulterated voracious insanity that has prevailed for the home horny covetousness masses. My five year old daughter could perceive this approaching. It will endure until WW3 erupts due partially to the swell in home pricing.

#118 Smoking Man on 05.20.16 at 11:00 am

How mind fking works

http://www.breitbart.com/london/2016/05/20/yougov-masculine-poll/

Young men terrified to appear masculine, the radical lesbians in the UK win.

It’s time to pull a Ronald Reagan on educators. Show them what it feels like to be an air traffic control back in the day.

#119 cramar on 05.20.16 at 11:15 am

“All RE is local!” says the blog host. Our local situation will show this.

Neighbours of ours, who like us, retired from Kitchener to buy in Leamington. They just sold their house to move into an apartment. The husband (76), just had bypass surgery and the wife said no more yard/house work. So they put the house on the market. On a Tues. evening the sign went up. On Wed. they asked to hang out in our yard with their dog (we have the best yard in the area), since 2 families were coming to view. On Thurs. they were back for 5 hours and 5 more viewings. Two more were lined up on Friday, but by Thurs. evening there were 4 offers on the table. They accept one for $185,100 ($1,200 over list). All viewers were renters looking for their first home, mostly young couples.

This house is a brick bungalow, with attached garage, new roof, new modern kitchen with stainless, new bathroom, modern basement with 2 bedrooms (4 total), and the house inspector said it is the only house he has seen where there was nothing wrong! All for under $200k! With even 5% down, mortgage payments should be under $1000. The sellers (who love the area) are going into a new luxury apartment for $1700/mn, covered parking extra! It is cheaper to buy than rent here!

The house was bought by an Indonesian family with 3 kids, whose extended family was wiped out in the tsunami. They are thrilled about being able to afford their dream home in the land of opportunity. I’m sure they are also thrilled about not ending up in Toronto.

It’s incredible that the Millennials in the GTA have not figured out the key is getting out of Dodge!

#120 Centre Wing on 05.20.16 at 11:15 am

Saw this from a “financial consultant” on a Globe and Mail real estate thread on Facebook and had to share:

“The smart ones bought their property at the right time.

Owning my home quadrupled my net worth in less than a decade. Don’t have to pay a single penny of tax on this ” investment”

The rent and invest crowd is the same crowd that pays 18% in credit card debt and opens up a savings account in bank to get 1% interest rate

There is no bubble – let’s talk about some facts shall we ?

There is tremendous amount of money in growing economies : China, India, Brazil etc & commodity rich countries like Middle East. That money is filtered into safe havens such as Canada primarily through immigration and on a smaller scale via foreign investment rules.

So unless one fine day the world becomes a peaceful place across the globe, the government puts a capital gains tax on principal property, immigration stops, people stop having kids, kids stop growing up: there is no bubble to be burst. Infact I can easily see the prices go up atleast 20-30% over the next 3 years.

You can either complain about the situation or know the rules and take advantage of it – Good luck !”

Just. Wow.

#121 cramar on 05.20.16 at 11:16 am

Related to my above post, I told a RE broker friend in Windsor about the heating up of the market where I live. He said Windsor RE is real hot!

He said he brings up the new listing in the morning and was shocked one day to see 5 properties had sold the previous evening—all OVER LIST! Never seen that before.

It is HOM — Hot Ontario Money! People are coming in from the GTA and other cities. His buddy realtors in the GTA are telling boomers to sell and buy in Windsor/Essex and pocket $600k! They of course pass on leads to him.

He said this site is partially (if not fully) funded by the RE industry:

http://www.retirehere.ca/

If the herd ever catches on, prices will rocket. Boomers will dodge the retirement income bullet. But only if you own in the GTA.

#122 Edward Elobows on 05.20.16 at 11:47 am

Stock markets are just a hair off record levels, ..”

Garth any view on the death cross technical pattern….S&P 500’s 50-week moving average broke below its 100-week moving average….” Usually a harbinger of pending doom..

NB Would have loved to see you drop the gloves on the floor of the house and go toe to toe with T2….a classic handbags at dawn duel, but I am sure you would have prevailed

#123 Smoking Man on 05.20.16 at 11:59 am

#116 james on 05.20.16 at 10:01 am
#66 WalMark of Sadkatoon on 05.19.16 at 10:20 pm
I think that even the oracle Smoking Man must be amazed at how long this is going on, as he correctly predicted that this bubble still has some way to go.

SM has been bang on as the awesome trans gender super prescient alien that he is! esp YVR and YYZ where real estate prices continue to hockey stick straight up into the sky! the end will be glorious I tell u! glorious!
…………………………………………………………..
Really guys, a chicken with its head cut off could have predicted the YVR and YYZ debacle. It is unadulterated voracious insanity that has prevailed for the home horny covetousness masses. My five year old daughter could perceive this approaching. It will endure until WW3 erupts due partially to the swell in home pricing.
…………..
James;

Under day light conditions I have no problem which bathroom the confused and mind fkd use.

What I do have an issue with is at night when we are all drinking and drunk who will go in a bathroom our wives and daughters are in.

You communist liberals never think things through.

I do, that’s why I’m rich.

#124 Denise#1 on 05.20.16 at 12:09 pm

To “F” #22:
Welcome to the world of stereotyping, we boomers have dealt with it for years & it will continue for years. Just let it “roll off, like water off a duck’s back”.
Anyone with 1/2 a brain knows not all millennials are the same, likewise boomers; don’t let it get to you.
Have a great weekend!

#125 BOOM! on 05.20.16 at 12:12 pm

#115 MAXX

Good descriptions, Maxx on the “normalization” of interest rates.

What I find interesting is the high rate of C&I loans deemed as delinquent (30 days or more) in the Federal Reserve’s data. In a recovery, with lower interest rates, why is the delinquency rate UP since Q4 2014.

Perhaps the cost of money wasn’t quite high enough to discourage borrowers, or someone is afraid to flush the crap from the old pipes.

I don’t know, but I smell…. what do we call it? Bullshit!

#126 IHCTD9 on 05.20.16 at 12:13 pm

Slowly being forced to heat with electricity.

Highest hydro rates in North America.

Public hydro distribution assets (a monopoly) being sold to Private sector ensuring accelerated hydro rate insanity – enforced by government.

Major heavy industry (Stelco, Algoma, GM) in Ontario has one foot in the grave.

Cap and Trade Taxes (gas tax 4.5/L etc..) en route.

Largest sub-sovereign debt on the planet.

Billions to be spent trying to get folks to buy electric cars the grid can’t accommodate, and which won’t work for anyone living outside a metropolis.

Wynne – a horror show soon to visit the rest of Canada via our elbow dropping Prime Minister.

Bring on the rate hikes – sanity in major parts of Canada evidently need outside enforcement.

#127 Dogman01 on 05.20.16 at 12:23 pm

DELETED

#128 Trey on 05.20.16 at 12:35 pm

Fed has to raise rates to save pension plans, millions of boomers coming up for retirement and public pension are going bankrupt left, right and center.

Rising rates will flee big money from bonds to gold, and maybe equities a little bit.

#129 IHCTD9 on 05.20.16 at 12:40 pm

#171 Bottoms_Up on 05.19.16 at 4:49 pm
#155 IHCTD9 on 05.19.16 at 1:52 pm
——————————–
To be fair I was making a point about Harper’s bully tactics over a decade. Definitely not about condoning physically abusive behaviour.

But, I have seen the video (from one angle) and it is definitely not clear whether there was intent (he had to reach between two people to help guide the man past, and his back was toward the elbowee). Trudeau immediately walked over to find her to aplogize, and Elizabeth May has called it an accident.

__________________________________________

I don’t think the hit on the ndp’er was intentional. But then again, when someone is seething with rage, and lashing out in righteous anger, there tends to be some collateral damage.

When someone is that mad – they get tunnel vision, or target fixation, they could be knocking out folks left and right and not even realize it.

That’s what happens when anger conquers the frontal lobe and folks lose it and go caveman on other folks.

Here’s a great article from the Star (!) for you to read:

https://www.thestar.com/news/canada/2016/05/19/liberals-had-been-elbows-up-before-justin-trudeau-got-physical-tim-harper.html

“The Justin Trudeau Liberals have been treating the Commons as an annoyance, an inconvenient necessity that merely gets in the way of the Liberal show and its ever-burgeoning approval rating.

This is the place where they stack committees on electoral reform, limit debate because they have mismanaged their legislative agenda, and almost — incredibly — lose a vote to an old parliamentary trick when too few Liberals bothered to show up for work.”

Have a read, but take your Harper anxiety pills first, you’ll be meeting the real Trudeau. Democracy is really getting in the way of the Federal Libs, and the occasional elbow drop, or rag-dolling of the opposition members is of no concern when the T2 agenda needs expediting.

Honestly, I don’t really even care that T2 felt getting a little ass kicking party on the go across the floor was a good idea. Just so long as he’s ok with a couple Cons/Dips strolling over and delivering a few elbow drops themselves…

#130 Dan on 05.20.16 at 1:02 pm

Russians and Chinese will come before rising interest rates. All of you will be socialists with steady jobs and houses built with bricks and reinforced concrete.

#131 jess on 05.20.16 at 1:39 pm

Largest FINRA Fine Relating to Variable Annuities

WASHINGTON —
http://www.finra.org/newsroom/2016/finra-sanctions-metlife-securities-inc-25-million-negligent-misrepresentations-and

May 3, 2016
FINRA Sanctions MetLife Securities, Inc. $25 Million for Negligent Misrepresentations and Omissions in Connection With Variable Annuity Replacements

http://www.finra.org/newsroom/2016/finra-fines-raymond-james-17-million-systemic-anti-money-laundering-compliance

#132 Dups on 05.20.16 at 1:40 pm

Did you watch our Canadian politicians behave like elementary school kids in the country’s parliament trying to frame Trudeau.
When are these charlatans going to understand that they are there to work for the people that elected them, they are there to pass legislation, they are there to represent the country as a whole. This is how tax payers money gets spend. If we wanted to watch theatre we would not want to watch your ignorant behaviour in parliament. Shame on all of you!

#133 Smoking Man on 05.20.16 at 2:07 pm

So hilarious and predictable.

I google Trudeau looking for Toronto Star stories on the assaulter.

They don’t show up until the 5th page on google. When Rob ford had a similar outburst even the real estate reports where doing editorials on the evil man. Zillions of Stories.

Guess the Toronto Star is waiting for the story to die.

Bloody Communists is all I’m saying.

#134 Capt. Serious on 05.20.16 at 2:27 pm

@ #113 That one guy

You should probably get the longest data series you can get for interest rates and examine it. If you think interest rates will never rise appreciably, well, I guess you’ll be sorely disappointed. If you looked at equity returns from the late 60s to early 1982, you would have said “stocks are dead as an investment class”. Of course what followed was an outstanding twenty year period for the asset class. (And long bonds for that matter, after having been devastated in the 1970s.) Another fun fact is that interest rate trends tend to last 20-30 years. Things change.

#135 For those about to flop... on 05.20.16 at 2:31 pm

Just on my way back to Vancouver…..I always dread it as I struggle to see what all the fuss is about and why people are so stuck up.
So the bank lent you 800k…I would feel humbled,not snooty.

My week in Virginia will be remembered for the friendliest people you could wish for.
People would get on the bus and say good morning to the whole bus and all classes from the suits to the poor, at minimum dip their heads and nod at you when walking by to at least acknowledge your presence.

If I carry on like that on the Skytrain back from the airport there is a good chance someone will stab me in the eye with a spork and ask why I’m worrying about small talk and just skip to the main event….real estate.

I would not rule out a return to another part of Virginia as the people want you to visit and have a good time and they have a wicked sense of humour.

The state motto is after all….Virginia,it’s for lovers…

M41BC

#136 Dono on 05.20.16 at 2:49 pm

Rates rise with economic growth, inflation and corporate well-being. So do markets. You need to learn more. — Garth

———————————————————-
If that’s true why would Canada be following the US Fed, If things are on the decline here.

#137 Haunted by Tulips on 05.20.16 at 3:32 pm

#119 Centre Wing on 05.20.16 at 11:15 am

“The rent and invest crowd is the same crowd that pays 18% in credit card debt and opens up a savings account in bank to get 1% interest rate”

You seem to suggest that the rent and invest crowd is not smart and cannot do basic math. I think you got it completely backwards. If anyone is choosing to rent and has money to invest, then they are likely mathematically inclined and financially literate. They decided to go that route rather than doing what the vast majority is doing which would be easier to do in a lot of ways. To buy real estate takes no smarts. If you have a meagre down payment available and can sign your name on a piece of paper, you’re good to go. Why then do renters with money invest rather than buy real estate?

I personally choose to rent a nicer home than I would currently buy and enjoy a better lifestyle, cash flow, and no financial stress with a solid and sustainable long term financial plan. Housing has certainly been on a great run in some markets, but do you really believe the increases are sustainable? I hear many comments from smart home owners that you can’t go wrong buying as prices will just keep increasing. Consider a million dollar house appreciating at an average of 7.5% per year (much cooler than recent YVR gains) for 25 years while a 100k income inflates by 2.5% per year (hotter than recent YVR incomes). In 25 years the house would be over $6M while the income would be about $185k. Does that sound sustainable? Try run the numbers for 30 years or 35 years and see what happens.

I’m not generalizing that it is always not smart to buy a house as there are valuable benefits to owning a house in the right situations. But to expect these gains to continue as the basis for buying is not smart.

#138 For those about to flop... on 05.20.16 at 3:49 pm

Also there has been a lot of car talk this week ,so I will just chuck this one in for the Petrolheads.

In Dallas/Fort Worth airport terminal D there is a newish bar and restaurant named Gas Monkey after the same show on t.v,with souvenirs form the show for sale as well.

I didn’t feel qualified to eat there as I don’t do my own oil changes…

M41BC

#139 Euphoria on 05.20.16 at 5:08 pm

I will just leave this here, read credentials of the guy

https://www.youtube.com/watch?v=h0-1jgPmB_0

Rumours of a Vancouver housing bubble have persisted for years, but what does a housing bubble actually look like? Vice President and Portfolio Manager at Canaccord Genuity Bob Thompson takes a closer look at Vancouver’s red-hot housing market.

#140 Armando on 05.20.16 at 5:50 pm

“The Fed has a lot of smart people in it”.

No it doesn’t! The Fed apparatchiks are as dumb as central bankers everywhere. What they all have is a lot of technocratic idiots who think they can centrally manage the economy by underpricing credit and manipulating the monetary base. The bubble has been blown, the loans that will never be paid back have been made, and the only question is who will end up with the short end of the stick when all hell breaks loose. Certainly a lot of Canadians with obscene mortgages will be in that group. But the USA will taken to the cleaners as well.

#141 Pascal Bergeron on 05.20.16 at 6:08 pm

I really wonder if the US will finally raise their interest rate. It seems like the recovery isn’t strong enough yet, but maybe I’m wrong… Anywho, thank you, Garth. I have been reading your blog for a year or so and I always like to read your humorous perspective.

#142 JohnInOttawa on 05.20.16 at 10:04 pm

Dear Wander and FIREcracker;

THANK YOU. I have sent this along to my (millenial) kids for their education (they are not too far off the mark already, but more info never hurts…)