“I couldn’t stop laughing,” says Jason. That was walking out of the local bank in Burlington, Ontario, after [email protected] said he & the wife were pre-approved to buy a $1.3 million house.
“When I asked what financial documents were required the banker just said ‘you could just tell me that you’re ok.’ I was floored, every time I asked the bank for money before it resembled a prostate exam but now we get this? I further inquired as to what that meant and the banker explained that ‘sometimes couples are able to raise money from families to finance their homes?’”
Jason’s point: with two kids and a workmanlike job as a security consultant, who recently sold their home (“which for the record was horribly built”) and are renting a 4-bedroom house for two grand (“rents are ridiculously low”), where’s all this house horny money coming from?
“My question is essentially, is anyone researching how much money the Bank of Mom and Dad are investing is our current real estate climate? I’m not saying that no one has ever got help in buying a home, certainly not myself as my parents gave me and my wife $10K for part of the downpayment on our first house. My parents received $2K from their parents, etc. Our first home did not have granite or heated tiles or anything resembling a house on income property or property brothers. Now things are INSANE!!”
Well, this weekend faithful readers will know I profiled two insufferable, snippy Millennial over-achievers who eschewed the house thing in favour of amassing a seven-figure investment portfolio, with my help. It’s doubtful they’ll ever own real estate, at least not in this crazy country. Part of their message: helo parents do their spawn a huge disservice by pushing them into the property game. No freedom. No flexibility. Limited liquidity. Max debt. All to end up just like mom & dad.
How much family money’s fueling this unhealthy and risk-filled bubble? No reliable stats. But surveys suggest more than half of all first-timers and four in ten mover-uppers are counting on parental support to get here.
And who do we all – politicians, the media, the envious – blame for unaffordable houses, bidding wars and price-jumping speculation?
Right. Foreign dudes.
Well, here’s an interesting set of numbers. Quietly each month the Vancouver Real Estate Board surveys its members and asks them about who just bought houses. You might believe realtors, or consider them pathological liars, but it’s unlikely a survey on the nature of people who have already purchased would qualify for creative jigging. Anyway, who bought in YVR last month?
Virginal first-time buyers (presumably Bank of Mom borrowers)
24%
Mover-uppers who sold, then bought again (greater fools)
24%
Speculators and investors (locals)
22%
Condo refugees moving up to a detached house
11%
Downsizers, cashing in the SFH for a condo
6%
Foreign dudes
4%
Here’s the summary graph. It looks astonishingly similar to the where-are-buyers-from results of similar surveys done by the Victoria board, plus the best estimates of the BC Real Estate Association, the Province of British Columbia and the Greater Vancouver Real Estate Board. So, come to your own conclusions.
There are four reasons a detached house in Vancouver costs $1.8 million and $1.2 million in Toronto. First, mortgage rates are ridiculously low and, at 2.49% for a bank five-year loan, are an aberration of nature. Second, supply has withered while demand (because of low rates) has increased. Most owners think their houses are gold and, besides, they can’t afford to move. Third, speculation. When almost a quarter of all trades in Van were made to ‘investors’, for example, you can see why bubbles invariably burst. Finally, mom money. By all accounts, it’s now a torrent. So many families are getting 100% invested in real estate through inter-generational transfers that the true extent of the risk is unknown. But scary. Funds that should be sitting in TFSAs and retirement accounts for pension-starved Boomers are now being gambled through their kids’ condos.
Well, the fallout will not be pleasant. Rest assured, it will come. Maybe not this year, or next, or next. But the outcome will be similar to that of every other social mania. It’s just a shame that it will take so many kids down with it.
Except my brood, of course.
159 comments ↓
I do mortgages, and almost all first time buyers are getting money from mom and dad…. very few can come up with their own downpayment
First, mortgage rates are ridiculously low and, at 2.49% for a bank five-year loan, are an aberration of nature.
Interest rates follow no laws of nature.
Well, the fallout will not be pleasant. Rest assured, it will come. Maybe not this year, or next, or next.
And a great earthquake is coming to Vancouver. I’ve been hearing both since the late 90’s. Live for today.
I bet ‘investors’ are a much higher percent of the market. Many of the mover uppers and condo refugees are keeping their original house or condo when they buy the new one to live in. Technically the new house or condo is not an investment but by keeping the old one as an investment it is essentially the same thing. They use the equity as a down payment. This is a big factor in the lack of inventory right now and will be a big factor when the bubble pops and everyone has multiple properties. What will the banks do when that equity used as a downpayment evaporates and the people are underwater on 2 or more mortgages with no more HELOC room to support the payments they can’t afford?
I see homes on West Side sell for 3.5 mil. We need more buyers. This is going to be good. Our university textbooks will be discussing Vancouver for years to come.
Here we go again. Another $10,000.00 Gold prediction. I’ve been hearing it since 1980. Some things will never change.
Finally!
Solo Firecracker was too much!
Housing bubbles are only one of the huge changes we are about to experience.
This video is an absolute must see, to get a picture of the huge disruptive technologies which are about to impact our future way of daily life within the next four years.
This involves
Energy Storage
Electric Vehicles
Self Driving Cars
Solar
This seminar by Tony Seba could be the most informative presentation you will see this year.
https://www.youtube.com/watch?yv2XrnqM&feature=youtu.be
If the first time buyer couldn’t afford to save a downpayment while renting or living at home how are they going to afford the mortgage payments which will surely be 50% or more higher than they were previously paying for rent? Plus all the other expenses to owning. I guess they are hoping their budget will just balance itself.
Iterant potty-mouthed snowflake day is over :)
Still as Birdman said recently: You gotta put some respec on my [balanced portfolio].
Don’t trust anyone under 30?
The blog on your B store is hard to find unless you know to press the 3 horizontal line thingy.
Garth
You are an excellent writer. We’ll informed in finance world yet your ignorance (I actually think you know the truth nut to stubborn to change position) on yvr foreign investment is stunning.
Every other reason you mentioned there regarding low interest rare, bank of mom and dad is 100% true.
A lot of real estate bought as foreign money safety deposit box and NOT investment particularly at the very high end luxury market and mass condo market downtown
Why is Vancouver such an attractive place for foreign capital?
-Canada has the weakest AML procedures in the developed world
-BC let’s the real estate industry self regulate. There is widespread fraud which is unpunished / unregulated.
-The provincial government is deeply corrupt and unwilling to take action because their key donors are profiting handsomely from illicit overseas capital flow.
Vancouver has become an unwinnable game for young families, the exodus is just beginning. While it’s taken a while to get to this point, it’s plainly obvious that there is no one more culpable than Christy Clark for lack of meaningful action to protect Vancouver’s future.
Enough of profiling women who are confident and self assured. How about highlighting the life of Sally Sloth? Just give me the word and I’ll get you her contact info.
007 of course.
Ross Kay on This Week in Money
http://talkdigitalnetwork.com/2016/05/this-week-in-money-47/
“When I asked what financial documents were required the banker just said ‘you could just tell me that you’re ok.’ I was floored, every time I asked the bank for money before it resembled a prostate exam but now we get this? I further inquired as to what that meant and the banker explained that ‘sometimes couples are able to raise money from families to finance their homes?’”
-the post.
////////////////////////////////////////
When it’s the other way around, thanks to Cmhc it is the taxpayer that gets the finger…
M41BC
What will the banks do when that equity used as a downpayment evaporates and the people are underwater on 2 or more mortgages with no more HELOC room to support the payments they can’t afford?
Ever heard of Stockton Ca?
Is there any criteria that will ever get you to admit you’re wrong?
If a $1M house bought today is worth $2M in 5 years but down from $3M the year before… is that a bad investment? It’s a 33% ‘correction’ but still a 100% ROI over those 5 years. Will you claim that 33% as a victory to show how right you are?
You’ve never offered anything up that is falsifiable (like your ideas about interest rates rising — look at Japan) and so I wonder what it will take while those that listen to you sit on the sidelines.
#8 Correction on link
Disruptive Technologies
https://www.youtube.com/watch?v=Kxryv2XrnqM&feature=youtu.be
Multiple sources of similar stats on who is buying. Clearly credible.
But as many people see what the believe rather than believing what they see, the ‘foreign buyers’ will be blamed anyway.
Well, here’s an interesting set of numbers. Quietly each month the Vancouver Real Estate Board surveys its members and asks them about who just bought houses. You might believe realtors, or consider them pathological liars, but it’s unlikely a survey on the nature of people who have already purchased would qualify for creative jigging. Anyway, who bought in YVR last month?-Garth.
///////////////////////////////
It’s kind of convoluted when you have a student listed as the buyer of a 33 million dollar property…
M41BC
Garth
Quite surprised you haven’t written a piece counseling RE “millionaires” to sell off their stakes and legally relocate overseas in a low tax jurisdiction….
They pay my CPP. — Garth
We contributed to the first time home buyer numbers in Victoria in 2014, except that we are Americans who had been living here/renting for 2 years prior to purchase. We are not Canadian citizens and had owned a house in the states prior to moving here. Just a reminder that the data isn’t perfect.
Ok. You’ve been calling for a correction for years, sometimes you say Yvr will crash other times you say it will just correct. It has been increasing steadily for 16 years with no sign of it stopping. Money is definitely coming into the market from overseas. It might not technically be foreign buyers driving the market but foreign money is sure involved. I agree that Toronto may be driven by overzealous local buyers but Yvr is different. I don’t care what you say. Yvr is a high demand city from buyers across the globe.
Keep telling yourself that. The higher the market, the more consequential the fall. — Garth
Part of the problem with the designation of “foreign dudes” is that many are citizens of convenience. Lots of my friends in HK who bought their Canadian passport years back and never lived in Canada. Wouldnt it be more insightful to know the numbers of houses bought by foreign residents, Canadian or not?
Permanent residents are Canadians. They get health care, TFSAs and drivers licenses. — Garth
BOOM! Yeah ,regarding Firecracker getting her own blog Dad it was only satire.
I thought you would have worked that out when I told her to move on to Joking Man and to buy him a new toothbrush for Father’s Day…
M41BC
2 bed townhomes are selling for 900k+ in burnaby
1M+ in Vancouver.
Things are different here. Home inspectors are all out of work. No one dares put subjects in an offer.
Long USD btw. Next stop 1.40
see more red flags
Asset Rental
Asset rental is the rental of bank deposits or other assets, which are temporarily placed in a borrower’s
account, in order for a borrower to qualify for a loan. The borrower usually pays some fee, such as a
rental fee, for the temporary “use” of the asset. Asset rental programs have been generally described
as tools to help borrowers whose financial condition poses a roadblock to being approved for a loan.
Most often, the rental involves deposits or credit histories. Asset rental is a tool that can be used to
commit mortgage fraud.
Deposit rental is a means to inflate an individual’s assets. An individual typically pays an origination
fee of 5 percent of the amount of the deposit to be rented and a monthly fee of 1 percent to
1¾ percent of the deposit amount. The rented deposit can be owned by a third party that purports to be a
financial institution or adds the borrower’s name to a real deposit account without granting access. The third party agrees to verify the deposit to any party authorized by the borrower. Written statements and verifications of deposit are available for an extra fee.
Credit histories are rented in an effort to raise an individual’s credit score. An individual typically pays a fee and is added to another individual’s credit card account as a non-user. The borrower has no access to or use of the credit card but benefits from the actual credit card holder’s timely payments. In addition to asset rental, some companies also have advertised verification of employment and income services. Individuals fill out a form listing annual and monthly income and sources. Upon receipt of fees, the company verifies income and employment to lenders or others as authorized by the borrower. ”
https://www.ffiec.gov/exam/mtg_fraud_wp_feb2010.pdf
”It’s just a shame that it will take so many kids down with it.”
———————————————–
And many of the parents along with them.
#3 Frank on 05.22.16 at 3:19 pm
”Live for today.”
Hear this a lot. Probably the reason most of the people in this country are in the financial shape they are in. ‘Forget about tomorrow, it will look after itself’, right?
That lending practice!
Is the Barbaric Cultural Practices tip line still open?
shell companies
Example: Several individuals with the intent of committing fraud formed a shell company as a way of disguising their identities. The individuals purchased properties in the name of the shell company and at the same time recruited straw borrowers to purchase the properties from the shell company at inflated prices. Owners of the shell company provided the straw borrowers with fake documents in order to qualify for the loans. The shell company owners profited from
the difference between the original purchase price and the mortgage loan proceeds, less the fee paid to the straw borrower. The straw borrower defaulted on the loan, forcing the financial institutions to foreclose on the houses”
https://www.ffiec.gov/exam/mtg_fraud_wp_feb2010.pdf
#9 BS
”If the first time buyer couldn’t afford to save a downpayment while renting or living at home how are they going to afford the mortgage payments which will surely be 50% or more higher than they were previously paying for rent? Plus all the other expenses to owning. I guess they are hoping their budget will just balance itself.”
Not to mention the increase in mortgage payments when they come up for renewal. Even a 1% increase will be disastrous.
“Most owners think their houses are gold”
So we’re finally admitting gold is far better than an ‘investment portfolio’ or fiat in the current climate?
My sister in Maple Ridge recently had to update personal information for the line of credit for their family business. The bank rep told her that the bank now routinely assesses the family residence at BC Assessment value plus 35% for net worth statements. The assumption being, I guess, that house prices always go up, because, dontcha know, It’s Different This Time……….
The bank rep had also just sold his own residence in Langley, and funnily enough was renting and not planning on buying anything for at least a year.
Denial. It’s not just a river.
A 1% “all inclusive” property tax rate will solve all the over priced real estate problems. Yes that means the student owner of a 31M residence in Vancouver will pay a lot of $$. The proud owner of a 400K one bedroom strata unit will pay $4K per annum.
In one year – or less, the market will correct accordingly.
And then interest rate increases will further temper the stragglers.
But of course our visionary municipal politicians will not …….
“When I asked what financial documents were required the banker just said ‘you could just tell me that you’re ok.’”
I certainly would like to know what bank that is, because my big red bank requires documentation out the wazoo. I have several mortgages, two in the last 18 months. In every instance not an eyelash was batted at our request… A+ customers of 20 years.
Documentation, however, was required to verify personal income (2 years NOA, T4s). Rental income verification on existing properties (leases, including letter from tenant that had “yeared” out on lease and was month to month, and rental schedules for taxes). Finally, verification of where the downpayment was coming from (insurance policy documents, cashing in childhood mini-policy).
[email protected] knows where we’re at (long-term relationship) and never expressed disbelief in data we provided, but did express that the bank required all documentation.
#16 MikeS on 05.22.16 at 4:05 pm
Is there any criteria that will ever get you to admit you’re wrong?
If a $1M house bought today is worth $2M in 5 years but down from $3M the year before… is that a bad investment? It’s a 33% ‘correction’ but still a 100% ROI over those 5 years. Will you claim that 33% as a victory to show how right you are?
You’ve never offered anything up that is falsifiable (like your ideas about interest rates rising — look at Japan) and so I wonder what it will take while those that listen to you sit on the sidelines.
—————————————————-
WRONG. Interest rates ARE going up in the U.S. this year and next. U.S. banks will be be force to pay higher interest when they issue bonds.
That means Canadian banks competing with them for capital will need to offer higher interest for the bonds used to finance their capital and that means higher fixed rate mortgage and HELOC rates in order to turn a profit on the higher bond interest that they’re all forced to pay.
Even someone getting a variable rate mortgage still has to qualify at the rate of the 5 year fixed so higher rates it will continue to get harder and harder for those who barely qualify to do so no matter what kind of mortgage they want.
Rules should be in place to keep everyone in place from illegal activity. The one-account of a bank manager saying what he said could be a cover-up from what is really going?!? We don’t know but we should have rules and regulations for foreign investors, self-regulated real estate association, and looks like bankers with the above example.
Times are getting tougher and with that comes ruthless people that will do anything to help themselves.
One banker example is just a start of dialogue but many bloggers here stated what they saw is another dialogue but more of them. I believe both and both should be treated lawfully with rules in place.
Same with the millennial, FireCracker, that is one person and can nitpick her but when you have a mass of people then something is wrong as a whole.
The bank of mom and dad is a huge influence in the GTA. There are large number of very wealthy families helping their kids out, but there are exponentially more people who are sacrificing their own retirement to provide their children with a home including all the bells and whistles that they have not earned or have any business owning. I have one friend who I know for a fact bought without any assistance in the last 5 years, thats all.
Personally as an able bodied and employed adult, I would be embarrassed to take money from my parents and would never think to ask.
what does this do economically – huge hit to consumption which drives GDP. Parents give money to kids to buy home, they tighten the wallet b/c of this – consumption goes down. Kids – downpayment got them into the property and are likely over their heads with the pmts or will be shortly – they tighten the wallet and consumption goes down.
multiply this over thousands of households and we are heading for a sharp decrease in consumption, and we know where that takes us. The kids will have to pay the piper – the car lease and keeping up with the joneses will bite them in the ass, and the parents are left with a constraint on their budget in perpetuity.
All say it again – make no mistake anyone with a heartbeat can get a mtg in this country through a big five bank, tier 2 lender, the off-off bay street options or any of your friendly credit unions. Jason’s experience is not an isolated incident.
We have a system rife with abuse, and anyone thinking Canada is not full of subprime loans is naive or just plain dumb.
Lending standards have dropped dramatically in the last 15 years, and CMHC is putting gas on the fire. This is the complete inverse to what has happened with american lending standards post GFC.
The question is not if, it is when. We are screwed.
For a lot of reasons, main one being interest rates on the rise, real estate will drop in value even if no bursting bubble happens. We all accept and agree with that.
What I can’t get my head around is why do we accept and agree it’s good to keep 40% of our portfolio in investments that we know will go down as interest rates rise? Things like bonds and preferreds. It costs less then 8 bucks to buy and the same to sell. Isn’t that as silly as holding on to real estate at this point? Are we any better then those we mock and call stupid?
#160 Metaxa on 05.13.16 at 6:05 pm
.
You know, Smoking Man, I’ve only been reading and posting here a short time and I have to say your intellectually bereft imitation of Hunter Thompson is growing old, even for the short time I’ve been subject to it.
the problem is, when you are called out or disagreed with you revert to being a bully. Like some 12 year old kid in middle school.
Sad, it is, helpful it isn’t
====================
Ya, not much here, call every a commie and then go down to the hospital for some socialized health care.
That FIRECracker person is interesting.
Parents do weird things to their kids with money. Personally I’m glad I didn’t need money from the bank of mom because it doesn’t come “no strings attached”. My experience would be that once you take money from mom and dad, there is a 3rd person exercising veto rights over family decisions that should be made by just you and your spouse. Where to live, when to visit, when to have kids, etc. It’s not inherently evil, I think it’s just human nature. Mom and dad want grandkids and assume that they know what’s best. As they old saying goes, “he who pays the fiddler calls the tune.”
This phenomena occurs even without money being involved. Parents have an enormous influence over their children in every area from attitudes towards education, religious beliefs, work attitudes, money attitudes, heck they even decide which sports you play. It wasn’t until I was in my 30’s that I started to realize I wasn’t really all that much like them and my 40’s until I understood just how stark the differences were but by then it was too late, my lifestyle still looks considerably like what they were wrangling for the whole way along.
The biggest decision young adults face is if/when to have children. It’s bigger than any of the decisions Garth talks about. If you buy a house you can always sell it again (perhaps at a loss but you can sell it). If you own a car you can sell that too and get a lease. If you have stocks you can bring title to them with you wherever you go. But once you have kids there you go, the next 20 years or so of your life are pretty much committed. Yet when do parents ever advise their kids to see the world and establish a career first? Nope. Grandkids please and thank you.
In a way I can understand it from a biological point of view. Darwin has no patience for creatures who do not reproduce. Mom doesn’t want to see all her hard work become one of nature’s “dead ends”. But here in the modern world, people don’t owe Darwin anything and should make the decision that is right for them.
UK
A year-long study by the Transparency Task Force (TTF) uncovered more than 100 charges being levied on pensions.
It was thought that undisclosed costs could combine with the annual management charges declared on pension statements to consume a third of the value of a pension fund over its lifetime…But the TTF research has now suggested the losses could be even higher, because it has allegedly discovered yet more hidden charges.
Andy Haldane chief bank economist b of e
“Conversations with countless experts and independent financial advisers have confirmed for me only one thing – that they have no clue either. That is a desperately poor basis for sound financial planning.”
The findings – the result of co-operation between pension industry professionals, academics and legal analysts who started investigating after encountering an alleged lack of transparency from asset managers –
Some cracks starting to appear!
The mortgage broker I use Told me a client that he pre.approved for financing based on income bid on a place with multiple offers 200k over firm.The appraisal came in at asking now he is scrambling to find the money.
Two deals that i know of that were to close last Friday bounced both did not appraise.
True story. I am unemployed. The only income I am making today is from EI. I am buying a house (more than 20% down payment) and intend rent it out but I need to find tenants. I was given a significant mortgage from the bank. No other name on the title or mortgage. No one else is a guarantor. No other properties are listed on the mortgage. Nice and clean. Mortgage worth hundreds of thousands of dollars being given to an unemployed dude. When the bank wants to close a deal, they will make it happen. Garth – you’ve got my e-mail address. I can share my documents with you for proof if you are interested. I was very surprised they made this work for me.
The bureaucrats even know the truth. http://www.cbc.ca/news/canada/british-columbia/foreign-real-estate-ownership-vote-1.3591839
Garth: you forget that there is a “duality” going on here that changes the game. You see half of it. Lots of people selling their souls, their parents’ retirement funds, and their futures so they can own where they live. But you have to ask why? And don’t be satisfied with the answer “they are all lemings, we are smarter”. That is not good enough.
We are sitting on the brink of a massive currency devaluation. People are flocking to real estate because everything else is screwed (not the word I wanted, but this is a polite blog).
What do you do, when your money is about to be worth a lot less ?
Buy real estate.
Remember, interest rates rise,and first world governments MUST start printing money. They are going to need to print a lot of it.
Because house horney twenty something’s aren’t the only ones who have been taking on debt like drunken sailors.
Governments, always eager to buy elections, have also been borrowing. Ontario has 300 billion in debt. We borrow more every year, just to pay the interest.
Raise interest rates even by one percent, and the money printing begins. By the time it is done, a dollar will be worth maybe ten cents.
It’s coming. All of the mess ups. All of the bankruptcies. All of the ” too big to fails” all got put on the public debt roll. The bandits made off and we are stuck with their bills.
Things will be different this time. This is not a “correction” that you or I or anyone else is used to.
#41 BobC on 05.22.16 at 6:51 pm
For a lot of reasons, main one being interest rates on the rise, real estate will drop in value even if no bursting bubble happens. We all accept and agree with that.
What I can’t get my head around is why do we accept and agree it’s good to keep 40% of our portfolio in investments that we know will go down as interest rates rise? Things like bonds and preferreds. It costs less then 8 bucks to buy and the same to sell. Isn’t that as silly as holding on to real estate at this point? Are we any better then those we mock and call stupid?
////////////////////////////////////
Hey Bob,firstly as always I must declare that I am an investment hack.
I found your post interesting because last year I set up my Canadian portfolio to be 60/40 but after watching was was going on decided to switch to a70/30.
I figure there will be at least 4 or 5 financial collapses before I retire and will take it on the chin but maybe real estate will continue on its merry way in Van and T.O until the U.S blows up again.
Everything is so interconnected nowadays when someone in Finland sneezes I catch a cold…
M41BC
Yes rates will rise before I die , housing and market prices will lower and democracy will come to the USA some day. Glad your giving a 3 year lea way on rates rising Mr. Turner.
Happy Victoria Day fellow Canadians and a wonderful Memorial Day in advance for BOOM!
M54ON
#39 mathman on 05.22.16 at 6:39 pm
The bank of mom and dad is a huge influence in the GTA. There are large number of very wealthy families helping their kids out, but there are exponentially more people who are sacrificing their own retirement to provide their children with a home including all the bells and whistles that they have not earned or have any business owning. I have one friend who I know for a fact bought without any assistance in the last 5 years, thats all.
——————
Large number of very wealthy families in Toronto?
And also in Mississauga and Brapton to justify 1 million and 850 k prices for detached SFH?
This is complete idiocy, the prices in Vaughan are twice than those in long Island and higher then the prices in Hamptons, where the really wealthy form NY live.
And NY is where the money of the world are, not To.
It is the criminal activity of BOC and CMHC that is causing these destrotion at the expense of savers and retirees on fixed income.
Make no mistake, the CAD is going to be obliterated.
#3 Frank on 05.22.16 at 3:19 pm
“Well, the fallout will not be pleasant. Rest assured, it will come. Maybe not this year, or next, or next.”
“And a great earthquake is coming to Vancouver. I’ve been hearing both since the late 90’s. Live for today.”
—–
Not a wise comparison. The earthquake might not happen this century, but a housing correction certainly will.
Garth ,in this article it states that interest rates are at a 240 year low . Is this true? http://www.macleans.ca/economy/economicanalysis/the-anatomy-of-a-housing-bubble/
We all know real estate continues to go up but so does servicing a high mortgage plus property taxes and insurance.There’ll be a time when the average couple making $150,000 in Vancouver and Toronto can’t afford the mortgage payments and will not buy even if the yearly profits continue to rise.The millienals will need to move to the USA to fulfill the Canadian dream of owning a home.
#12 MoneyDriven
This is precisely why YVR will collapse…
The “rule” in my family was that, when young, if you wanted a new 3 speed CCM bike to replace the old fashioned single speed you had to come up with 50%.
Birthday, Christmas money from grandpa, cutting lawns, doing errands for whatever you could finagle out of Mom…didn’t matter. You needed to come up with half.
My sibs took advantage of that when it came time to purchase houses…I didn’t have to but its a tradition I carried forward with my kids.
Three (4?) years ago we gifted them 50% of a 20% down payment on a back to front duplex with a suite under the owners side.
They are cash flow positive from tenants, that includes property tax, insurances, PI and upkeep.
Did we do something wrong?
Or is it not black or white, right or wrong…perhaps there is nuance, different strokes for different folks.
I’ll tell you this…that 50% was easy enough for us and I will never climb on my roof to clean gutters or get on my knees to stain the deck again, eh?
#17 Brydle604
Very interesting, thanks for the link!
Last time I got a mortgage, I almost had to give the bank my left nut.
DELETED
#25 Suede
2 bed townhomes are selling for 900k+ in burnaby
—————————————————-
No they are not even close:
$479,900
https://www.realtor.ca/Residential/Single-Family/16963700/7339-MAGNOLIA-TERRACE-Burnaby-British-Columbia-V5E4M3
The money that mom and dad give to kids for a mortgage is basically an advanced inheritance. Kids can either get the money before mom and dad pass away, or after. Many parents are choosing to give the money now. Due to marital pressures resulting from Facebook pics of friend’s beautiful houses along with perpetually low interest rates, kids need the money NOW for the house. The banks and government at all levels are in on this.
This freight train can’t be stopped so easily. And which government would want to risk stopping the music.
Man o man, what a mess this is…
#50 common sense on 05.22.16 at 7:44 pm
Yes rates will rise before I die , housing and market prices will lower and democracy will come to the USA some day. Glad your giving a 3 year lea way on rates rising Mr. Turner.
Happy Victoria Day fellow Canadians and a wonderful Memorial Day in advance for BOOM!
M54ON
///////////////////////////////
Yes me too,I am glad that Ottawa recognized Victoria Real Estate Update and gave her a holiday in her honour.
I think it was the charts that took her over the line…
M41BC
So Garth, the crux of the matter is can two moist millenials with 1M in stocks live off $40k dividends in Canada for the rest of their lives? I say no way. I say a family needs 6 figures in this country.
Have you counseled them that they can do this? Maybe if you move to Timmins or Nanaimo.
#42 Frans on 05.22.16 at 7:04 pm
#160 Metaxa on 05.13.16 at 6:05 pm
.
You know, Smoking Man, I’ve only been reading and posting here a short time and I have to say your intellectually bereft imitation of Hunter Thompson is growing old, even for the short time I’ve been subject to it.
the problem is, when you are called out or disagreed with you revert to being a bully. Like some 12 year old kid in middle school.
Sad, it is, helpful it isn’t
====================
Ya, not much here, call every a commie and then go down to the hospital for some socialized health care.
That FIRECracker person is interesting.
…………………….
Immaturity is so under rated and I do enjoy it. But where do you get bully from.
Seriously. I joyfully attack stupid Ideas, not Stupid people.
This blog is a textbook example of how markets that exhibit irrational exuberance cannot be timed with accuracy. I think this blog has been predicting the end to the RE bull market in Canada for 5+ years. The end will certainly come but it’s a fools game to guess when…
It’s over in 70% of markets. — Garth
Went to gawk at some new developments in Innisfil (south of Barrie) today, almost got hit by a bunch of kids stealing pallets (the expensive kind).
New developments have jacked up the prices here, the lowest in one of them is just under 500k! (http://www.sandiego-homes.ca/) This is insanity!
Also heard they aren’t going to put in that go train station, so you are in for a hell of a commute.
Makes me happy that I keep on renting my 1700/mon all inclusive 3 bed right by Yorkdale Mall.
I wish Garth would adopt Smoking Man and FF.
Smoking man, tell me all about the aliens landing but for the love of god do not post any more links to fossil rock.
“But the outcome will be similar to that of every other social mania.” Garth
I updated my household & mortgage debt chart that also includes GDP, Net Trade and FDI-FDO
http://www.chpc.biz/household-debt.html
…and the “social mania” is not limited to inter-generational money transfers.
Apart from the big spike on the plot of Foreign Direct Investment In & Out ($1.31 of investment money leaves Canada for every $1 of FDI that comes in AND it’s a trend that has been growing for the last nearly 20 years)… the net trade numbers are crashing deeper into new lows, ie: we buy way more stuff than we sell as a nation.
All of this is saying that Canadians are maintaining lifestyle by borrowing not producing. We should be ashamed.
Households are acting on willful ignorance and governments at every level are complicit in destroying the value of money with experimental ZIRP & NIRP and giving up on production goals for windfall taxes on consumption.
The social mania is destroying what little social contract we had.
great topic, have to wounder whom will be the biggest looser here ,when the inevitable correction and reality check hits our “real – estate Casino” will it be the tax payer whom has honor the markers the CHMC issues to banks to cover there questionable underwriting of these mortgages? or will the bank of Mom get burned in addition to the kid they brow beat in to the greater fools game, even if in doing so she may very well have mortgaged her retirement and future security or will it be both? remember in casinos the house always wins in the end ,the only losers are the players, house will still be standing mortgagees (players) not necessarily so.
if you are a bank of mom think carefully before before you buy into this game
#67 not 1st on 05.22.16 at 9:06 pm
I wish Garth would adopt Smoking Man and FF.
Smoking man, tell me all about the aliens landing but for the love of god do not post any more links to fossil rock.
……
Fossil Rock happens when I’m a few drinks over the line. They sound really good on a buzz. You should know that when I do post those I only discover them the next day. Many times I’m convinced it’s a slime bag imposter. Only to check my browsing history and the post is published with the same time stamp.
Going out tomorrow sometime to check out Garthos new store near orangevilla. Who’s in?
Liberals decide that the best place for Junior is Japan.
http://www.vancouversun.com/news/world/trudeau+heads+japan+begin+efforts+expand+economic+ties+with+asia/11936433/story.html
Like when pregnant teens got sent away to visit and ‘aunty’, Junior T is being hidden away until the Libs think it’s safe to return. Wait for a big campaign to start that tries to make you forget about his HOC thuggery, are we that studid, I don’t know, look at Ontario.
#70 Smoking Man on 05.22.16 at 9:38 pm
#67 not 1st on 05.22.16 at 9:06 pm
I wish Garth would adopt Smoking Man and FF.
Smoking man, tell me all about the aliens landing but for the love of god do not post any more links to fossil rock.
……
Fossil Rock happens when I’m a few drinks over the line. They sound really good on a buzz. You should know that when I do post those I only discover them the next day. Many times I’m convinced it’s a slime bag imposter. Only to check my browsing history and the post is published with the same time stamp.
Going out tomorrow sometime to check out Garthos new store near orangevilla. Who’s in?
—
We need a pic of SM and Gartho together to prove that SM is not Gartho’s online alter-ego
#67 not 1st
not 1st. #13 Freedom First is a member of the Freedom First fan club impersonators. To clarify, not 1st, as I can tell you are a little slow on the uptake, there is a lot of posts under the handle “Freedom First” that are not written by me, but members of my fan club.
Also, if I may be so bold, you are not worthy of carrying either my or Smoking Man’s jockstrap. When I played hockey, I would throw guys like you over the boards. Fact. However, I am glad I am much more of a kind and loving sensitive man today.
@ not 1st
Just look up old Art Bell coast to coast episode or Midnight in the Desert (with his protege Heather Wade) for your “weird paranoid happenings” fix.
#25 Suede on 05.22.16 at 5:02 pm
“2 bed townhomes are selling for 900k+ in burnaby
1M+ in Vancouver.
Things are different here. Home inspectors are all out of work. No one dares put subjects in an offer.”
You’re right, things are different here. People effin’ stupid here. I have a co-worker who bought into the Canada Way townhouse complex. She’s single (plus size and all-around weird) and doesn’t make that much as she’s an assistant to a Director. Why does she need a townhouse? Why are her parents helping her with such a large down payment? One word: stupidity.
On the bright side, I have a friend who checked the same complex out with his wife (who are planning to start a family next year) and they thought it was terribly laid out and over-priced. So not everyone is stupid.
Yes because the Real Estate board would never lie. And all locals do IS lie apparently.
Smokie
Nice you gave fair warning to Gartho about your visit tomorrow.
Hope you will be given to the opportunity to create a new ice cream flavour – Smokey’s Delight… a fine mixture of Milk, cigarettes, bourbon, cream, tin foil, testosterone, shredded school text books ideally marketed to the over 50 male that’s not politically correct.
RIP Nick Menza
Another musician dead
C’mon Garth, stop the sham about HAM. Read and learn
http://vancouversun.com/opinion/columnists/douglas-todd-mixed-motives-fuel-rise-of-foreign-students
More China-bashing from a known xenophobe. Yawn. Square that with the stats posted above. You can’t. — Garth
Last week, Mme Shellacque walked into a bank armed with nothing more than her 2015 T4, and walked out pre-approved for a mortgage amount that’s 5x the average of her 2015 T4 amount and her recollection of what she’d grossed in 2014. No credit check, no verification of current income, no budget.
#80 JacqueShellacque on 05.22.16 at 10:29 pm
Last week, Mme Shellacque walked into a bank armed with nothing more than her 2015 T4, and walked out pre-approved for a mortgage amount that’s 5x the average of her 2015 T4 amount and her recollection of what she’d grossed in 2014. No credit check, no verification of current income, no budget.
————————————————
Why does nobody ever mention the name of the bank?
Do you really think they have internet ninjas reading the comment section to hunt you down and take back their money?
#62 Flopper….
Didn’t equate your reference to Joking Man…. sometimes these brain cells are in their own world…. old age, Alzheimers?, Allis-Chalmers?, the old brain-phart?
Thanks for the way-ahead “Memorial Day” wishes. Our usual day before (Sunday) will be shared with our friends, watching their towns magnificent parade, eating, and enjoying cold adult beverages.
I see the usual BIG foreign buyer influence at 4% in Garth’s charts… even assuming that chart’s foreign number is WAY low by a 100%… then that means only 8% on YVR buyers are foreigners. Hard to explain that it is locals doing the dirty deeds isn’t it? Some time down the road there will be that ‘Oh-Shit’ moment, when the flippers all hit the exits at one time… right after prices merely stall… Film at 11…
“It ain’t over till its over,” said…somebody famous
After reading todays blog… Where’s the harm in buying a $1m house in VAN then selling it a year later for $1.3m.
Apparently we could have 3 more years of this insanity!!
That’s a lot more profit than my portfolio could ever make in a year…. or 10….
Sorry Garth, off topic again.
Buddy in Calgary informs me his rent on the edge of downtown Calgary was reduced over $200 dollars. Says DT office occupancy is down 20%. Thought you might like to know the anecdotal info
BC needs this attitude
https://youtu.be/yUudubg6rMY
#75 Karma on 05.22.16 at 9:56 pm
She’s single (plus size and all-around weird) and doesn’t make that much as she’s an assistant to a Director.
================================
What the @*!# does her weight got to do with anything?
Misogynist.
#73 Freedom First on 05.22.16 at 9:53 pm
Also, if I may be so bold, you are not worthy of carrying either my or Smoking Man’s jockstrap.
================================
Just threw up in my mouth a bit after reading that. That’s punishment not an honour. Gross.
BS: What will the banks do when that equity used as a downpayment evaporates and the people are underwater on 2 or more mortgages with no more HELOC room to support the payments they can’t afford?
talking about a hypothetical borrower: the banks won’t do anything until he misses a payment. when he does the banks already know the market has turned. I suspect they will call the loan ( if it’s a HELOC ), if it’s the mortgage then they’ll send him a letter.
the banks will turn from being the friendly “you’re richer than you think” to the decidedly unfriendly “you better be richer than we think”.
MoneyDriven: Vancouver has become an unwinnable game for young families, the exodus is just beginning.
that’s what I hear
ScarySituation: True story. I am unemployed. The only income I am making today is from EI. I am buying a house (more than 20% down payment) and intend rent it out but I need to find tenants.
you could lose your down payment. I’d say probably.
black sheep # 43,
Dude….as I’ve already, politely shared with you, the Blacksheep handle is mine and has been since this blogs inception.
Please find your own.
——————————————
Brydle604 # 8,
Excellent link, thanks.
Part of the problem with the designation of “foreign dudes” is that many are citizens of convenience. Lots of my friends in HK who bought their Canadian passport years back and never lived in Canada. Wouldnt it be more insightful to know the numbers of houses bought by foreign residents, Canadian or not?
Permanent residents are Canadians. They get health care, TFSAs and drivers licenses. — Garth
====================================
I expect this kind of pedantry from an Australian, not a respected financial advisor and the person who popularized the term “Canadians of Convenience”.
A family member of mine is in the CBSA and another is a veteran CRA employee, so the things I learn about the way the very weak Canadian system work – if you can call it that – are pretty accurate, if firsthand knowledge is to be believed. Entities set up solely to facilitate the obtaining of Canadian citizenship without meeting the residency requirements and the like. Illicit foreign inflows by a myriad of the most ingenious methods. Just like narcotics and contraband, they are quite aware that they are only intercepting a minuscule fraction of what enters.
Whenever the horrible spectre of the suggestion of foreign influence is raised, the government and RE boards plead lac of data, and beg for time and money to conduct studies to measure the problem. Yet, a casual survey of realtors is to be given full credibility? We can’t have it both ways.
The argument isn’t binary. No one is saying that fear and greed combined with low interest rates and lax lending practices aren’t major factors in fuelling the real estate conflagration. But this constant distortion and downplaying of the impact of foreign capital as a catalyst is worrisome, because without actually acknowledging the problem there is no chance of even beginning to seek a solution.
I speak only from my perspective as someone who has lived both in the Middle East and R.O.C., both major sources of said capital and watched it move firsthand. But, of course, people are free to believe what they will.
Canada is considered one of the softest targets in the world for capital flight and easy citizenship. Some of the side effects of that are pretty easy to see, even for those who choose not to.
Any comment on the inability of first-time buyers to save up their own down payment? I’m a single 33-year-old who has worked a mid-income job for 6 years and have saved up $100,000. I currently rent, but could pretty easily put down 25% or more on a house (I live in Winnipeg, which helps, but this also this appears to be more than a lot of Vancouver and Toronto buyers save on their own).
Even in Winnipeg, I see friends borrowing from family or not being able to save up more than 5%.
What is up with my generation that they can’t save some money?! I certainly don’t deprive myself, and yet I’ve managed to save up a reasonable amount…
Yes imagine all those fools in Japan who sat out the real estate market thinking interest rates would rise. They could have enjoyed those low rates all they way through the 70% price crash.
http://www.oftwominds.com/blogoct06/japan-bubble.html
Bank of Mom and Dad?
You got to be kidding me. Barely anyone has $500,000 to give their kids for a down payment here in YVR. Here, it IS Chinese money inflows that are propelling the market.
Bank of Mom and Dad?? What’s the next media storyline to deflect the people from the truth?
Adding to my above post, here is what happened to northern India farmland prices over the last 20 years or so.
Prices rose from about $5000 per acre to around $180,000 per acre until about 5 years ago. All corrupt money from within India was going into real estate. The state took charge and closed all the loopholes. They acknowledged the corrupt money (something our gov and this blog refuses to acknowledge regarding HAM).
Fast forward 5 years and farmland prices are around $40,000 per acre. I got to look at the newspapers from 10 years ago and maybe just maybe I’ll read a story saying Indian kids are buying farmland with help from the Bank of Mom and Dad.
Bayer is buying Monsanto.
We will never buy another product made with a BAYER chemical or drug ever again. Time to go look up a list of what they make and spread the news through Social Media.
One only has to look from afar when there’s an open house in Vancouver, Richmond Hill. Markham, Stouffville et al every last person at the open house is Chinese. Your own eyes don’t lie.
Asian people live everywhere, including here. Chinese people comes from China. Bigot. — Garth
Permanent residents are Canadians. They get health care, TFSAs and drivers licenses.
Of course they are. That’s why foreign ownership laws won’t do anything. The owners are all local, what’s foreign is the money. It’s not coming from earnings or business in Vancouver (there’s only one business in town). It’s coming from overseas, which is ironic because people rail against companies like Apple and Google for hoarding cash off-shore or in Panama but when individuals bring it to Canada and pay PTT, property tax, etc they’re ruining the local economy. You can’t win with some people.
The more sluggish the rest of the global economy looks, the better a place that’s appreciating 30% YoY looks to park your money.
Garth – you give great advice and I generally agree with what you have to say, including that Canadians are nuts. Such a massive country with such a small population should have low property prices, not unaffordable ones.
But you too often understate the influence of foreign investment in house prices by (i) ignoring the impact of unsuccessful foreign under-bidders on house “auctions” in pushing up selling prices (ii) assuming that “the bank of mom and dad” are not moms and dads based in other countries, funding their new Canadian offspring and (iii) assuming that specers are not financed by foreign capital (foreign family or otherwise).
The impact of these in Toronto and Vancouver (the biggest hotspots for immigrants) is higher than you present it.
But, as noted, born and bred Canadians are also nuts, and none of the mania is helpful in the long-term.
DELETED
“And a great earthquake is coming to Vancouver. I’ve been hearing both since the late 90’s. Live for today.”
Considering that the earthquake in question is a scientific certainty, you’re basically proving the point.
If the high mortgage payment doesn’t kill you, the electricity bill will:
” … could save hydro customers $5.2 billion by terminating the agreement”.
” … electricity projects that Ontario didn’t even need anymore”.
Kathy’s new campaign slogan:
“Bend over Ontario”
http://www.ctvnews.ca/canada/ontario-gov-t-ignored-chance-to-cut-1-5b-in-hydro-bills-documents-1.2912611
RE # 48
1) You give the average moron buyer too much credit – they have no idea about the things you mention
2) if this were to come to pass, they still have to service the mortgage – hard to do without employment income , cause what you describe will cause massive unemployment
the US rocks. inflation. full employment. strong USD. all predicted. your welcome
http://www.cnbc.com/id/103656869
This whole thread reminds of an anecdote of other things that are unsolvable:
CSI hates investigating redneck murders. Why? Because there’s no dental records and the DNA is all the same.
Carry on.
DELETED
#51 Sheane Wallace – we see eye to eye on the CMHC issued but you missed the point on my comment. For every wealthy family giving their kids the housing layup there are many multiples of non-weathly families, sacrificing their own retirement to do this. Lets call it a ratio of 1:7.
Which means Mom and Dad – no pension, (other than CPPC or OAS) home paid off with $500k in assets(both 70 years old) – give Junior $250k because he needs a house, poor junior. This cuts their discretionary income in half and the poor brat can’t realize the impact this has on his parents, who have zero potential of recouping that asset. Junior then takes the 250k, and bids up a house in Miss/Bramp/Milton(whatever hell of a suburb you choose) from 600k to 750 k because he is playing with house money.
The sad reality is, people taking this money re probably going to double dip once rates rise or at the first sign of trouble. Mom and Dad could also end of living another 20 years easily. They with the best intentions have created a perpetual dependant.
A downpayment is a sign of willingness and ability to be financially responsible. The incentive has been stripped away and that is why we are where we are today.
#81 Hotdogs from Heaven:
Why does nobody ever mention the name of the bank?
—————————————————————–
If only the name of the bank mattered.
I’m also not saying the parental help is a new phenomenon. The difference in my parents generation is the help was to get into a starter home, and they were on their own from there. There was also onus on the kids to come up with a good chunk of the money. You had to make a responsible downpayment, which kept prices in check. The cost of carry was also high, which also anchored prices.
Today the children have saved squat, and instead of a starter home they are looking for the hardcore HGTV porn special, which their incomes may never justify. So instead of helping out, the parents are basically buying the home. What may have been 10k 25 years ago has turned into 150-250k today, which is 7-10x the 10k from 25 years ago inflation adjusted.
Nobody knows how to grind it out anymore, it is instant gratification, need this now. I must have a new kitchen and bathroom, with two leased low end luxury cars in the driveway to portray success. When the cost of carry is at all time lows aspirations become reality. Nobody looks at the sticker price just the pmts.
Ouch phase 1 of eliminating free speech in Canada. Incriminatal steps.
Eventually any harsh words toward present day cultral marxism and communists will lead to jail time.
Liberals following the doctrine of Stalin and Hitler.
http://dailycaller.com/2016/05/18/canada-prepares-nationwide-ban-on-anti-transgender-propaganda/
Garth,
This should be your new mantra….
https://ca.style.yahoo.com/post/144602948055/i-got-rid-of-everything-i-owned-and-ive-never
#90 Billybob is dead on.
A non resident of Canada, i.e not a permanent resident of Canada can purchase a house here and get a mortgage from a Canadian bank. They can do it with minimal disclosure of the financial particulars.
Just like Canadians can buy houses in the US? Your point? — Garth
The Japanese better be careful not to piss off Justin on his trade trip. They might get elbowed right in their sushi!
And their women will weak-kneed with adoration.
This is why we need Justin in power. Wait and see. Major Canadian trade victory coming out of this trip.
Afterwards he can apologize all he wants – to Japan :)
“Funds that should be sitting in TFSAs and retirement accounts for pension-starved Boomers are now being gambled through their kids’ condos.”
——————-
Not entirely true. The Boomers’ kids are Generation X, not Millennials buying condos now!
Many Boomers did help their kids, the Gen X, with downpayments and help to buy their first home. But that was decades ago! If Boomers are helping anyone now, it could be grandkids. The first bank of resource for grandkids are their parents. Boomers play a minor roll, compared to Gen Xs.
Those youngsters buying condos today certainly have help from parents. Maybe a few later Boomers, but the majority have helped in the past.
I see what you’re saying. But why are there only really big bubbles in Van and 416? Aren’t their dingbat moms and low interest rates in the rest of Canada? Why doesn’t Muncton have a bubble? It can’t just be because they don’t have Love It or List It (i.e. a psychologically driven RE mania) being the key difference, can it?
Just living and paying taxes in this country gives me enough exposure to the risk-side of real estate.
If it does pop I will be in a world of hurt and I don’t even own any real estate.
#LeastCoast, #Duffy, #WeArethe96%
http://www.cbc.ca/news/canada/prince-edward-island/land-ownership-restricted-1.3591978?cmp=rss
“For decades, the province has had limits on property that can be purchased by non-residents, who require the approval of the provincial cabinet to buy more than five acres of property, or a property containing more than 165 feet of shoreline.
Now the province has changed its definition of who qualifies as a resident. Instead of residing in the province for 183 days over the course of a year, residents must now live in the province for 365 days over 24 months.
For the first time, the province has also stipulated that to be considered a resident under the Lands Protection Act a person must be either a Canadian citizen or a landed immigrant, regardless of how long they’ve lived in the province.”
#86 Love My Kia why does judging someone equal hating them? I judge people all the time on how they take care of themselves. I dread dealing with addicts and people who don’t take care of themselves, it involves so much work – setting personal boundaries with them, I find.
Hey Boom,I forgot to show you this photo Mrs Flop took last week.
It is a photo of the USS Wisconsin with your age on the side.
I will make sure the authorities change this number to 65 when you have your next birthday…
M41BC
https://imgur.com/Z9Mh8ot
#63 Not 1st
I think with no bills living off 40 large is very easy.Lots of people live on less than that and live well.You learn to live within your means.They stated that they actually lived off 20large so no draw down of principle,perpetual retirement it’s what we all should have aimed for at that age.
And how many virginal first-time buyers have the bank of Mom located in China?
Like the student who recently bought the over 30 million-dollar house…
Man, you people are obsessed. — Grth
Another aspect of high Vancouver house prices is the transfer of inherited wealth. Stories of older parents passing and their home sold and kids inherit millions.
#30/106 Mathman
Yes handing people money they haven’t earned reminds me of people who lived month to month waiting on the inheritance they knew or assumed was coming.
These beneficiaries never had to budget, sacrifice, or even work.
In one case, the waitee got a stipend of 50k per yr starting in 1980, fast forward a few years and on Jan 01 he had to pay it out all over town. Poor schmuck was outlived by his mother who is worth several million……….oh well.
your comment regarding casually bidding up offers another 100k is bang on. Play Money.
#8 Brydle604 on 05.22.16 at 3:29 pm
This video is an absolute must see, to get a picture of the huge disruptive technologies which are about to impact our future way of daily life within the next four years.
This involves
Energy Storage
Electric Vehicles
Self Driving Cars
Solar
This seminar by Tony Seba could be the most informative presentation you will see this year.
===================
Not only informative but frightening. Up till now I have taken the idea that fossil fuels could suddenly be abandoned in the ground as a Republican nightmare but Seba sets out a plausible case as to how this could/will happen very quickly.
Once energy traders grasp the inevitable, they will progressively discount the monetary value of carbon. The abrupt collapse of wealth as we have come to know it would be shocking to the world economy and devastating to the already unstable Middle East. It may be this vision of the future that is driving Saudi Arabia’s current actions.
Seba says the “authorities” who forecast the rate of adoption of new technologies tend to use linear progressions rather than the compounding “S” curves that actually happen in history. They would of course, discount Seba as being out of touch with practical reality. Curiously, according to Motherboard, almost no “expert” organizations have accurately forecast the uptake of clean technologies except Greenpeace. Their forecasts would make Seba look like a prophet.
http://motherboard.vice.com/read/guess-who-accurately-predicted-the-explosion-of-the-clean-energy-market?trk_source=recommended
The other larger part of parental help today versus the past is where the parents money is coming from. In the past it was earned and saved. Today the vast majority of ‘help’ is coming from a HELOC on the parents inflated RE. Just another layer to the Ponzi scheme which will make the landing that much harder.
@#123 Andrew Woburn on 05.23.16 at 11:58 am
life is fluid, it changes all the time, many people fail to see obvious.
“There is not the slightest indication that nuclear energy will ever be obtainable. It would mean that the atom would have to be shattered at will.” – Albert Einstein, 1932
“We don’t like their sound, and guitar music is on the way out.” – Decca Recording Company on declining to sign the Beatles, 1962
“This ‘telephone’ has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.” – Western Union internal memo, 1876
“Reagan doesn’t have that presidential look.” – United Artists executive after rejecting Reagan as lead in the 1964 film The Best Man
#trupm
“Rail travel at high speed is not possible because passengers, unable to breathe, would die of asphyxia.” – Dr. Dionysius Lardner, 1830
“I think there is a world market for maybe five computers.” – Thomas Watson, chairman of IBM, 1943
“X-rays will prove to be a hoax.” – Lord Kelvin, President of the Royal Society, 1883
“Everyone acquainted with the subject will recognize it as a conspicuous failure.” – -Henry Morton, president of the Stevens Institute of Technology, on Edison’s light bulb, 1880
“The horse is here to stay but the automobile is only a novelty—a fad.” – -The president of the Michigan Savings Bank advising Henry Ford’s lawyer not to invest in the Ford Motor Co., 1903
“Television won’t last because people will soon get tired of staring at a plywood box every night.” – -Darryl Zanuck, movie producer, 20th Century Fox, 1946
“No one will pay good money to get from Berlin to Potsdam in one hour when he can ride his horse there in one day for free.” – King William I of Prussia, on trains, 1864
“There is no reason for any individual to have a computer in his home.” – -Ken Olson, president, chairman and founder of Digital Equipment Corporation (DEC), in a talk given to a 1977 World Future Society meeting in Boston
“If excessive smoking actually plays a role in the production of lung cancer, it seems to be a minor one.” – -W.C. Heuper, National Cancer Institute, 1954
“No, it will make war impossible.” – -Hiram Maxim, inventor of the machine gun, in response to the question “Will this gun not make war more terrible?” from Havelock Ellis, an English scientist, 1893
“The wireless music box has no imaginable commercial value. Who would pay for a message sent to no one in particular?” – -Associates of David Sarnoff responding to the latter’s call for investment in the radio in 1921
“There will never be a bigger plane built.” – – A Boeing engineer, after the first flight of the 247, a twin engine plane that holds ten people
“How, sir, would you make a ship sail against the wind and currents by lighting a bonfire under her deck? I pray you, excuse me, I have not the time to listen to such nonsense.” — Napoleon Bonaparte, when told of Robert Fulton’s steamboat, 1800s
“The idea that cavalry will be replaced by these iron coaches is absurd. It is little short of treasonous.” — Comment of Aide-de-camp to Field Marshal Haig, at tank demonstration, 1916
“I must confess that my imagination refuses to see any sort of submarine doing anything but suffocating its crew and floundering at sea.” — HG Wells, British novelist, in 1901
“The world potential market for copying machines is 5000 at most.” — IBM, to the eventual founders of Xerox, saying the photocopier had no market large enough to justify production, 1959
“The Americans have need of the telephone, but we do not. We have plenty of messenger boys.” — Sir William Preece, Chief Engineer, British Post Office, 1878
“It’ll be gone by June.” – Variety Magazine on Rock n’ Roll, 1955
“When the Paris Exhibition [of 1878] closes, electric light will close with it and no more will be heard of it.” – Oxford professor Erasmus Wilson
A rocket will never be able to leave the Earth’s atmosphere.” — New York Times, 1936
I think we all know the real reason the Metrosexual Messiah is in Japan is to work on his Sumo wrestling moves.
If anyone deserves an atomic wedgie,it’s him…
M41BC
I think its important to distinguish between equality of outcome vs equality of opportunity in Canada.
Do women really only make 70% wages that men in Canada do? It is arguable that women in Canada have the same equality of opportunity as men in Canada.
In terms of jobs, education, and housing, the same principle applies. I fully support intelligent immigration policies, and have no problem with welcoming anyone from any country that wishes to become part of the Canadian citizenry, and who wants to contribute to building Canada.
When the federal PC’s thought it was a great idea to allow huge numbers of temporary foreign workers into the country (particularly Alberta) I objected pretty strenuously to my MP.
Was this a xenophobic or racist response?
Hardly.
I have kids that will be entering the job market.
Why should my kids, in my native country, have to compete for jobs with cheap labor imported from outside of this country?
The TFW program, while sold as a way to alleviate labor shortages, was in reality just a crafty corporate strategy to keep Canadian wages down.
So in terms of education and housing, here are some questions:
1. Is the flow of foreign capital coming to Canada reducing ‘opportunities’ for Canadian citizens, in the housing market?
2. Do the numbers of foreign students coming to Canada, reduce the educational opportunities, for Canadian citizens?
Asking these questions, and questioning the policies of our elected fools, is neither racist nor xenophobic.
I support Canada as an open and welcoming multicultural society, but Canada’s primary responsibility is to its citizenry, and the well being of those actually invested in this country.
The Trump effect in the US is a direct result of what is perceived the death of the American Dream.
Most of his supporters are those who believe that there is no ‘equality of opportunity’ anymore. Either because of absurd education costs, or through once quality jobs that now go to the lowest bidder offshore.
While American and European leaders have told them that they are racist, xenophobic and intolerant, and that that globalization and uncontrolled immigration has brought them great benefits, citizens are beginning to push back in America and across Europe.
Canada is not so special that push back cannot take place here. ‘Progressive’ politicians ignore these issues at their own risk.
3118 Flopper…
Nice Ship. Picture from Norfolk
I don’t live on water, as the TAXES in this state for waterfront are astronomical. Being sort of a tight wad anyway, paying higher taxes just to have a yard on mosquito breeding turf, NOT!!
I don’t mind a view of water but, on it…naw.
Besides, in our part of WI you can hardly walk a bit without hitting some kind of dam water!
Didn’t read over the other comments so maybe this was already brought up/answered. What I’m wondering is what effect the loaning of all this money from the bank of Mom/Dad is going to have on them if/when the housing bubble bursts? Unless they actually DO have the funds above & beyond what they need for their own lifestyle to loan their children, it seems to me that a lot of these folks are never going to be able to retire.
Responding to Garth, from #111
The difference would be the qualification process, Garth. Complete financial disclosure, confirmation of assets, income and a good, verifiable credit history.
Different rules. Don’t lump me in with the bigots, Garth. I am not.
It all comes back to that Bank of Mom and Dad again. Aren’t these moms and dads Boomers like me (I’m 55 years old) who have seen housing busts before (early 1980s and early 1990s) and realize it could happen again? Don’t they realize it’s been 20 years since the last one ended, and we’re LONG OVERDUE for one?
@NoName, post #125:
That’s a good collection of comments you’ve posted. one thing you notice is a lot of the people who made these comments were in the industry that would be affected by the new developments of inventions. Intuitively you would think expect the opposite, that they would know better. It seems a lot of them can’t see the forest because the trees are blocking the view. One such comment you missed, when movies with sound first appeared someone in the industry said: why would anyone want talking in a movie?
Man, you people are obsessed – Garth
As Ineed are you. Why not just agree to disagree on this issue instead of continuing to post on this topic every other week?
There was new data. I thought that’s what you folks were clamoring for. — Garth
Tribal Instincts and Immigration
AB Boxster at 128 asked:
Why should my kids, in my native country, have to compete for jobs with cheap labor imported from outside of this country?
**************************************
For that matter why should employers in your City not favor (or be legally requited to favor) kids born in your City?
The answer is that modern society has been slowly discarding its former tribal instincts in this global world.
Increasingly we feel that all humans should have reasonable opportunities.
It’s clearly no longer acceptable to discriminate in hiring by race. And it very much used to be acceptable which was in keeping with hundreds of thousands of years of tribal instincts.
We still discriminate against people from foreign counties. But we recognise a responsibility to allow in a reasonable number of immigrants. It’s the right thing to do.
Borders will become more transparent and less important over time.
Prepare your kids to compete in a global world.
Nationalism is going to go the way of racism.
Doug in London,
Toronto not overdue for anything. If you keep waiting for Boomers to sell and free up the market you’ll be waiting forever, however long that is for you. Too many people look to this blog for salvation. People ain’t gonna give you nuthin for nuthin.
@NoName
@Doug in London
Uber, one of the largest taxi companies in the world, doesn’t own a vehicle, physical dispatch system or any real estate, nor do they employ mechanics, cleaners, drivers.
AirBnB, one of the largest lodging companies in the world, doesn’t own any rooms, chambermaids, etc.
In Canada its funny how, after supporting the status quo for ever, corporate entities like Shoppers Drugs, the BCGEU via the liquor store, etc are now angling to be the legal pot dispensaries.
Change is accelerating and disruptive change is accelerating even faster. We will see more and more upheavals like the cutting the cord stuff with folks ditching cable, etc in the near future.
I mean who’d thunk you would be using a robo advisor on the Internet back in 1980?
Some of these upheavals will be impacting me and you…I mean even now we have a formerly very successful wealth advisor reduced to flogging ice cream by the side of the road to make ends meet.
Change is coming, you can try and avoid it, legislate it out of existence, rant on the Internet against it or you can embrace it, foster it and devise methods to personally use it to your benefit.
To your benefit like Firecracker, not like multiple folks who pontificate here.
My advice? get into HVAC install and repair. The rich will always want to be warm, dry, cool. They might not always want to pay a wealth advisor, at least that is what I’ve learned reading here.
@Lee, post #136:
Typical bubble mentality, this time will be different. After reading your comment time the time tunnel sucked me in and shot me back to 1988-89 when I last heard such talk. I hear, for the first time Cher singing Sooner or later we all sleep alone, and Bobby McFerrin singing Don’t worry be happy. I also just heard something about cold nuclear fusion and an oil tanker called the Exxon Valdez running aground and causing an oil spill. Is that true?
In any event if you are waiting for the GTA housing market to correct who knows how long a wait you are in for but that’s not the point. In avoiding buying a house in this market it’s not so much about waiting for a correction but rather that renting makes far more sense, especially when you wisely invest what you save, as Garth has been trying to tell us over and over and over and over and over and over and over again. Are you new to this blog?
#135 Shawn
————————
The comparison using cities as opposed to nations is really quite lame.
Nation states, their policies, economies, politics, legal systems, etc have always been distinct and autonamous.
Cities just represent a gathering of national citizens, so the analogy is absurd.
“Increasingly we feel that all humans should have reasonable opportunities.”
Agreed, but at what cost to this country.
So because individual citizens do not have opportunities in their own pathetic nation states (China, Russia, pretty much every country governed by religious or authoritative regimes) then Canada should disadvantage its own citizens to try and make life better for the citizens of these states?
And while we do recognize that immigration is required because of internal birth rates, do you believe that immigration to Canada can solve the problems of failed nations elsewhere.?
If you believe this, then you should be advocating for 5 million Syrian refugees instead of the palty 20 thousand Canada welcomed.
Dear Mr. Turner,
From todays Kijijijijiji listings:””for sale 2008 harley davidson deluxe has new tires new battery and new true dual exhaust.over 30.000.00 invested will sell for 18.500.00 cert this is a must see bike tons and tons of chrome””
Hmm… 30K “invested” in a depreciating piece of ear splitting pig iron, eh ? Seems like maybe the moisters aren’t the only ones unable to understand the concept of investing. Maybe HD riding beardy old dudes are delusional too ?…
Will you car retain 62% of its value after eight years of use? — Garth
#134 Pepito on 05.23.16 at 1:50 pm
Man, you people are obsessed – Garth
As Ineed are you. Why not just agree to disagree on this issue instead of continuing to post on this topic every other week?
There was new data. I thought that’s what you folks were clamoring for. — Garth
++++++++++++++++++++++++++++++++++
How is the Greater Vancouver RE Board lying to everyone every couple of months “new data”. New phony data maybe…..
Listened to Ross Kay on #14 Vancouver Real Estate – Bear Market Ahead. Very truthful and informative, suggest everyone listen to it. It is over an hour but worth every minute.
Thanks to Ross Kay for telling it like it is with honesty!
And while we do recognize that immigration is required because of internal birth rates, do you believe that immigration to Canada can solve the problems of failed nations elsewhere.?
If you believe this, then you should be advocating for 5 million Syrian refugees instead of the palty 20 thousand Canada welcomed.
+++++++++++++++++++++++++++++++++++
Canada has a low birth rate because it is one of the most expensive LEAST serviced first world countries in the world. Go look around at all the high tax countries in the world and check out their birth rates. Low. Immigration will not fix this. Cutting the govt fat and lowering taxes will. But will this happen? HAHAHAHAHAHAHA….nope.
#135 Shawn
————————
“Nationalism is going the way of racism”
Really, tell that to the electorate that support Trump and the rise of the radical right in Europe.
Globalization has been a grand experiment that has benefitted many.
But there are many losers in this game, each of whom has a vote and who has not seen any value or benefit to pulling down borders, uncontrolled immigration, and the loss of quality jobs.
Don’t kid yourself that nationalism is dead.
It never dies, but remains dormant as long as most prosper.
You are now witnessing in the US, and Europe the rise of nationalism as a response to the past 30 years of policy.
Let’s hope it doesn’t become as bad as it was in the early part of the 20 th century.
Nationalism, racism, exist throuhout the world today.
They always have, and always will.
To believe otherwise is to live in some utopian dream state.
Garth, I checked out your link to Turner Investments, and it states under Who We Are: “an advisor should also be someone with the knowledge, training and (especially) experience to help you with: ….financing a house… So, investing’s important. We all need money. But you can’t get by on that alone. Nor is money essential for happiness and fulfillment…”
A home can bring happiness and fulfillment to some, so I’m sure a lot of people taking this greaterfool blog’s advice have had to sacrifice some savings to buy Prozac and Xanax just to cope with being sidelined in this frenzied housing market.
And under Resources, there is no link to your greaterfool weblog…. why not?
Nothing to do with tribal instinct changes. It is simply better for everyones standard of living to have goods produced at the lowest cost. Higher wages for a few do not offset a higher cost of goods for everyone. If costs are higher then higher wages do you no good.
Clothing, electronics, furniture and food all cost less because we import them. We buy these products at a fraction of what they would cost to produce locally, if they could even be produced locally. People need to focus on things that either can’t be cost effectively imported or things that can be competitively exported from Canada. Generally these will produce more rewarding and better paying jobs than working on a factory assembly line or in a call centre.
A very realistic forecast. Oil could be at $10 a barrel if it is this guy is even half correct. Of course that would make this CMHC forecast for housing prices be a best case scenario.
According to the National Post RBC could be taken down by the Libor scandal. Better sell those Canadian banks.
Impossible. — Garth
@#130 Linda
“it seems to me that a lot of these folks are never going to be able to retire……”
*******************************************
Yep. Thats about it in a nutshell.
I think it’s right time to buy that condo, everybody!!! We are at the point of “who cares”, maybe when it all goes down even the creditor will be bankrupt, being a reason that this will keep on being fought by nails, teeth and corruption.
#137 Metaxa on 05.23.16 at 2:45 pm
…Some of these upheavals will be impacting me and you…I mean even now we have a formerly very successful wealth advisor reduced to flogging ice cream by the side of the road to make ends meet.
****************************
Now that’s just a funny line! But it only means that said scooper worked and worked his whole life (so far) in pursuit of a dream and it’s finally come true.
Who of us can say the same?
F68ON
Ace Good heart, so people are buying houses today due to a carefully considered analysis of present and future monetary conditions? Even if that were true, do you have that much faith that the masses are correct in their assessment?
Ace, they aren’t worrying about monetary policy and reading Zero Hedge, they’re watching HGTV and istening to their local celebrity realtor and their neighbours and coworkers (who just helped their own kids buy a home) tell them that interest rates will never go up.
brydle604 #8
self driving cars = never happen. software people have an atrocious record in regards to hacking, losing info etc.
do i want to be driving down the road at 120km when some virus drives me off the road? never..never ever..and who even asked for this? once again the tech sector wants to tell us what we need…
solar = will cause lots of pollution on their own…and covering hectares of land with big panels doesn’t seem like an upgrade.
we’d be better off developing more efficient and lower pollution combustion engines… imagine what would happen if every car in the world used half the amount of gasoline….
energy storage breakthrough would be huge though…always proven elusive and really effects the viability of all alternative energy, which isn’t even close to viable as it stands…nice ideas but so far from delivering…
…”…the fallout will not be pleasant. Rest assured, it will come.” – HonGT
#FunnyYouShouldSayThat,Or… #”AndYetItMoves”…
[CBC] – Former top B.C. political aide says foreign ownership should be put to a vote: ‘We should be able to have this debate in Canada without being labelled intolerant,’ says Martyn Brown
…”Calls to address the astronomical spike in Vancouver-area housing prices have never been louder, and now a former chief of staff in the B.C. premier’s office is adding his voice to the debate.
Martyn Brown, former B.C. premier Gordon Campbell’s top aide, wants to put the question of how to control foreign ownership to a referendum.
“We should be able to have a debate about whether it makes sense to restrict foreign ownership in the same way that many countries around the world have — including, by the way, China, Hong Kong, Singapore, Australia, Thailand, Denmark, Brunei and England,” Brown told the CBC’s The Early Edition.”…
http://www.cbc.ca/news/canada/british-columbia/foreign-real-estate-ownership-vote-1.3591839
#InOtherNews,Or… #HoneyBooBoo&TheFamilyJewels
[GovBC] – Premier announces spring [yet another] trade mission to Asia
https://news.gov.bc.ca/releases/2016PREM0035-000517
#126. Excellent post.
Just lost 2 more houses on the Sunshine Coast in a bidding war.
Both went for 10% over asking.
Game over.
I’m starting to get the feeling you only believe Realtors when the data supports your existing argument.
You seem to think Realtors would have no reason to omit foreign transactions because “Hey the sale is already done”. Does it not make more sense that Realtors don’t want future regulations to impede their commissions in the future?
“Maybe not this year, or next, or next. ”
What does that mean Garth? After that statement I’m not sure what to make of this blog anymore.
Garth, you have been predicting a correction now for several years, that obviously has not happened. Instead prices have escalated at a rampant pace.
I think anyone can predict a correction will inevitably happen, just as you have. Housing expansion doesn’t go on forever.
The important point is people can still make a heck of a lot of money in the interim, if this pace keeps up.
If someone buys today and the price increases 50% in the next few years and the market only corrects 30%, isn’t that person still ahead?
Am I missing something here? Perhaps rather than predicting an inevitable correction, maybe focusing on timing and percentage impact of that correction might be more helpful to everyone.
If prices don’t correct for another few years and prices continue to escalate at this rate, don’t you think it is more advantageous to buy, especially at low mortgage rates?
Hi Garth,
The graph does not sum up to 100%. It annoys a perfectionist in me.
Regards,
Lisa.