Coming, part deux

KNOCKERS modified

Close you eyes. Hum Imagine. Now visualize Vancouver house prices dropping by 64%. That would take the average detached house from its current insane level above $1.7 million, all the way down to $650,000. It means anyone who paid more than that could feel a sting lasting a lifetime.

Or Toronto prices declining 42%. The average 416 detached would plop from $1.285 million to $745,000. Ouch. That’s a fast trip back to 2011, meaning almost every buyer since then would be a loser.

“All of the decline will come from the net wealth of homeowners and would eventually show up in StatsCans publications around three months after the 25% national correction was recorded,” says housing analyst Ross Kay.

But what the heck is the guy talking about? A 25% correction in national house prices, whacking YVR and the GTA the hardest (the more bloated, the bigger the bust), would be akin to the US housing meltdown (32%) or the collapse in Toronto prices during the 1990s recession (31%). What is Ross vaping?

Actually you should blame the Bank of Canada which this week did a great job in underscoring all the nasty themes this pathetic blog has been yammering about now for a few years. Houses are inflated because money’s too cheap. People have built-in house horniness, and totally expect more increases. Too much demand is chasing too little supply. The resulting pop in valuations is utterly unsustainable. And the risks are mounting – a slow economy, lousy jobs picture, rising rates to come and a nation pickled in debt. Worse, leverage is out of control. The Bank of Mom is sucking off windfall equity from parental houses and dumping it into speculative condo buys for junior. It’s a doubling-down that could turn a hard landing into a smoky hole.

“What the Bank of Canada suggested today,” says Kay, “is the virtual financial devastation of this country and exposes the real risk those over 65 are facing by not getting honest and unbiased real estate advice first followed up by sound financial advice to immediately implement a strategy to grab that “false wealth” and make it real while they can.”

Yeah. In other words, sell, get liquid, get safe.

So what did the central bank say in its landmark assessment of the country’s financial health?

Here are the highlights:

  • Surging prices in real estate markets like Vancouver and Toronto are not sustainable at their current pace.
  • Vulnerabilities due to the continued rise of household debt and greater imbalances in regional housing markets are higher than they were six months ago.
  • “In this risk scenario, a severe recession in Canada generates a sharp increase in unemployment across the country that places many highly indebted households under financial stress and causes a broad-based correction in house prices. This chain of events would strain the financial system and the real economy. Such a scenario might unfold if a large negative demand shock hit the Canadian economy…”
  • “Self-reinforcing price expectations”, and not economic fundamentals (or Chinese dudes), are propelling prices higher in the Kingdom of 416 and western Delusia.
  • So, buyers are walking into massive risk. “This suggests that prospective homebuyers and their lenders should not extrapolate recent real estate performance into the future when contemplating a transaction.”
  • And, if jobs fade or rates rise and the economy suffers, that “broad-based correction in house prices” could suck off an average 25% in equity.

Now, glue this onto Finance Minister Bill Morneau’s comments yesterday that the T2 feds are doing “a deep dive” into all aspects of the housing market, crafting a housing policy with the goal of ensuring more affordability, and hopefully you can see where this is heading. The last thing a PM who desperately needs to be loved (and hot) wants is single-family detached houses in Vancouver losing $1.2 million in value. The Mills would love it, but the economy would go defib. Already Ottawa’s contemplating a $120-billion hole in federal finances.

Well, nobody knows what happens next. More regulation? A dramatic dampening-down of the market so it doesn’t self-destruct? A slow melt flowing from a slagging economy and rising US rates? A crash? Nothing? Desperate Audi-less realtors sleeping under bridges, eating bugs?

This blog has stopped predicting. You’re on your own.

164 comments ↓

#1 Jimmy on 06.09.16 at 7:06 pm

guess what!!!

#2 Sylar on 06.09.16 at 7:07 pm

First and hello from Vancouver!

#3 S.Bby on 06.09.16 at 7:10 pm

Jimmy finally did it !!!

#4 WallOfWorry on 06.09.16 at 7:13 pm

For that kind of correction you would need to see a dramatic rise in interest rates over a short period of time or a massive economic downturn. Neither is likely. The US cannot afford to raise rates more than a token 25 basis points to try and save face. Look at the economic numbers…GDP growth is non-existent, wage increases is limited to part-time non-manufacturing jobs, the manufacturing PMI is declining, corporate earnings is in a sustained decline and the even the stellar unemployment rate is artificially low because of the low participation rate. Thus, the only real factor is recession where lots of jobs are lost. But Canada goes as the US goes, so how can Canada have a severe economic downturn if the US is doing so well as you continually suggest. Seems like a little sucking and blowing at the same time no?

#5 Doug t on 06.09.16 at 7:14 pm

I can just see the rush for the exit doors coming – get ouT first

#6 Nero on 06.09.16 at 7:14 pm

…….Pass me my fiddle.

#7 Still Hot In Van on 06.09.16 at 7:16 pm

The word bubble is getting tossed around a lot more. People here in Langley (BC/Van) are dazzled by their assessments piling into Home Depot to get their investment of a lifetime looking a little less mundane.

#8 Snowboid on 06.09.16 at 7:16 pm

I think most Canadians are ill-prepared for the inevitable RE correction (nice term, but I really mean crash).

It’s one thing to be over-extended with massive mortgages, but most buyers forget about the ongoing costs of home ownership.

Here is an interesting study done in the US that reviews costs in several metro centres and compares that to salaries, etc.

http://preview.tinyurl.com/True-Home-Costs

#9 Dirt Dog on 06.09.16 at 7:17 pm

BC NDP run on “Affordable Real Estate” or “Foreign Buyers Tax”. They’re In and it’s Over!!!

#10 Pkp801 on 06.09.16 at 7:18 pm

Here’s the thing. If, as you say, the gov’t is running a 120 billion deficit, with more on the way, and real estate is ~20% (or more) of the economy, and the last thing T2 wants is house prices tanking, then wouldn’t it behoove him and the gov’t to keep this bubble blowing and inflating as long as possible by every means possible?

What is it they say about short selling? The market can stay irrational far longer than you can stay solvent?

#11 Jimmy on 06.09.16 at 7:21 pm

I can retire now

#12 RudyGQ on 06.09.16 at 7:23 pm

Blog Dogs, for those who appreciate financial matters this post may interest you.
Went to see the movie ‘Money Monster’ starring George Clooney and Julia Roberts. The plot is about a financial TV host and producer held hostage by a disgruntled investor. Without giving away too much I will say this movie was entertaining with some unexpected plot twists. Of importance to this forum is that the movie is saturated with societal and financial truisms when it comes to behaviours and attitudes surrounding investing in the stock market. Combine this with Hollywood and the audience’s participation in suspension of disbelief and you got yourself a movie.

In my humble opinion George Clooney may be playing a loose adaptation based on the Honourable Garth Turner. (George Clooney could only dream of being so charismatic). Disclaimer: All persons portrayed in this film are fictitious. But if you like financial talking points AND like being entertained (which is 97% of this audience…trolls included), then I recommend you go see this movie. If you have seen it, wouldn’t you agree there are eerie parallels between the movie’s main character and this blog’s host? What say you?

My wife is hotter. — Garth

#13 JSS on 06.09.16 at 7:30 pm

It has always been known that the masses are dumb, yet the masses hold power by numbers.

Yet I don’t see how the Feds can revert house prices back to a normal level across the country, but not cause a riot among the masses. Think of those boomers who have all their money sitting in real estate with nothing for pensions or rrsps, gen-x who have just begun thinking of saving for retirement, millennials that signed up for a $400K mortgage with 5% down. Yet these same generations are fighting for the same job, in a crap job market.

This has the makings of financial anhilation in this country.

#14 Damifino on 06.09.16 at 7:31 pm

…immediately implement a strategy to grab that “false wealth” and make it real while they can.”
—————————-

Fantastic plan! Everyone should do it.

#15 powder_hound86 on 06.09.16 at 7:31 pm

Would be great if a politician actually cracked down on the housing bubble.

Unfortunately, i’m certain anything the Govt does will just make houses further out of reach.

#16 rainclouds on 06.09.16 at 7:32 pm

The lack of political courage allowed this to fester way beyond acceptable parameters.(Cons own the problem. Libs own the solution)Province ain’t messing with the cash cow.They are deaf, dumb, and mute.

Gonna have to be the Fed……..then Canada will be the Hindenburg. “The humanity ”

Pathetic.

#17 Nero on 06.09.16 at 7:34 pm

Sooo many new millionaires all over the GVRD and Southern BC….You can afford to pay so much more for….EVERYTHING!!.

#18 Mr. White on 06.09.16 at 7:35 pm

How do I short Canadian mortgages and publically traded home builders?

#19 crowdedelevatorfartz on 06.09.16 at 7:39 pm

@#12 Rude”y” GQ

Does anyone ride an elevator in the movie?

#20 pathcontrolmonk on 06.09.16 at 7:43 pm

an economist buddy of mine at bloomberg just wrote this article about the illiquidity of RE and somehow tying it in with Theranos’ $5 billion valuation dropping to zero. the folly of those who are rich on paper.

http://www.bloomberg.com/view/articles/2016-06-06/how-theranos-s-founder-lost-4-5-billion-overnight

#21 Caught on 06.09.16 at 7:45 pm

Poloz’s speech today was reminiscent of Greenspan’s famous “irrational exuberance” stock market speech in 1996. It took 4 more years of pedal-to-the-floor insanity to hit the top in 2000. I think we’re getting there sooner with housing here. Unfortunately, the effects to the average household will be more severe due such high exposure to real estate compared to the stock market.

#22 bobtheassetuilder on 06.09.16 at 7:47 pm

“My wife is hotter. — Garth”

———

That is absolutely the correct answer.

#23 Andrew Woburn on 06.09.16 at 7:48 pm

Looks to me like T2 and crew are trying to jawbone down the market without doing much of substance and also starting to position the thought in voters’ minds that they didn’t cause this mess. Of course that is entirely true but it won’t work. Reasonable people won’t blame you for their own folly but cratered house hornies will hunt you down like a wounded water buffalo.

If Harper, the fabled economist, saw this coming, you’d think he would have retired at the top of his game instead of fighting one too many elections. Or is he devious enough to see that staying on and losing the election would stick T2 with the bill?

#24 Brian Ripley on 06.09.16 at 7:48 pm

“…a deep dive” into all aspects of the housing market crafting a housing policy with the goal of ensuring more affordability, Bill Morneau (Cnd Finance Minister)

I have updated my housing starts charts (city & provincial) with the census overlay: http://www.chpc.biz/housing-starts.html

The national housing starts have been in a downtrend since the the 1970’s prior to the 1981 mortgage interest rate peak of 18+%. Meanwhile the census population plot has been doing the opposite… more and more people chasing fewer units of affordable housing and using the suppressed cost of credit to maintain lifestyle.

#25 Dave on 06.09.16 at 7:52 pm

Until the government stops the Chinese from parking their money in Vancouver real estate, nothing will change.

#26 conan on 06.09.16 at 7:58 pm

I somehow doubt you are going to stop predicting. You thrive on it Garth.
Here is my take on what is happening in Vancouver and it is not what you think it is……so grab a cold one or a hot one and put your feet up.

Tax avoidance, over regulation avoidance is a national sport in China. There are trillions of dollars leaving China illegally. This causes Chinese ambassadors to wave angry hands.

This money makes it over to Vancouver. There it is given to local people (friendly to such schemes) who buy a house with it. This put enormous pressure on house prices and this activity is not going to show up on buyer statistics.

Diatribe over……

#27 Ace Goodheart on 06.09.16 at 7:58 pm

Sure hope you’re right Garth. If it was possible to slide into a cool Roncy late 1800’s fully reno’d Semi in the “Six” for 650K that would make a lot of people very happy, for a very long time.

I don’t see it. But you seem to, so here’s hoping.

#28 Timmy on 06.09.16 at 8:01 pm

When you have people like Christy Clark taking relators and developers to China on a trade mission, you can guess where things are going to go. More of the same: selling Canada out to the highest bidder. Disgusting.

#29 Laissez-faire Please! on 06.09.16 at 8:06 pm

Maybe T2 can just run more deficits and bail out all the winners who paid way too much for their slanty semis?

Please, why is the government getting involved in this anyway?

We have created an infantile society where people want the government to intervene and clean up the personal financial messes of those who engage in reckless and speculative spending.

Ridiculous!

Please, if anyone is reading this and you have a monster mortgage, do yourself a favour and sell, get out now.

Adam Smith, where are you when we need you?

#30 For those about to flop... on 06.09.16 at 8:08 pm

As I sit here from my vantage point at a fire lookout from the United States Forest Service I can still see the smoke off in the distance from the controlled burn that the US Fed lit 8 years ago.

It was supposed to be a small little fire to burn off some of the deadwood and put some heat under the U.S economy but is now a full on wildfire that burns uncontrollably.

Chief firefighter that day was Ben Bonfire Bernanke he since left his post and Janet Inferno Yellen took over.

Anyone notice how Janet Yellen’s fringe has come down a lot more?
It’s because she got to close to the fire and singed her eyebrows off.

I tried to warn them that the crew that day wasn’t the best but they wouldn’t listen and therefore sent in Nirp,Zirp,Dirp Birp and Twirp.

These guys try hard but they don’t have the skills or the tools to fight a fire of this magnitude.

Have you ever tried to fight a wildfire with a super soaker…

M41BC

#31 joblo on 06.09.16 at 8:12 pm

What’s this I hear about a Build-a-bear conference in Germany?

#32 Ace Goodheart on 06.09.16 at 8:14 pm

What they’re basically saying is pretty soon you will be able to purchase this for around $998,000 in Toronto:

https://www.realtor.ca/Residential/Single-Family/16969677/309-SUNNYSIDE-AVE-Toronto-Ontario-M6R2R3-High-Park-Swansea

Or perhaps this (but it’s slightly cheaper, so maybe $900,000?):

https://www.realtor.ca/Residential/Single-Family/16973448/26-ALGONQUIN-AVE-Toronto-Ontario-M6R1K7-High-Park-Swansea

Or how about this for 42% off, would cost you around $850,000:

https://www.realtor.ca/Residential/Single-Family/17042021/15-ALHAMBRA-AVE-Toronto-Ontario-M6R2S4-Roncesvalles

What I am saying is, these houses are fairly priced. There is pretty much no chance they are going to lose 43% of their value. They are not shacks or tear downs. Toronto just has some really nice houses, and they sell for pretty good prices.

You can also find smaller houses for a lot less money. The market is very diverse. And then there are reams of condos, more and more every day.

The folks in Ottawa making these doomsday predictions need to actually come to Toronto and see what a $1,700,000 house looks like. They are small castles. I know in Vancouver a $1,700,000 house is basically a shack. Toronto is not like that.

#33 Bonhomme Carnaval on 06.09.16 at 8:21 pm

Hum, maybe Steve & Tom will be the last ones laughing hard, soon (?).

Such is life. You live and learn.

#34 TurnerNation on 06.09.16 at 8:24 pm

Great reminder to look again into MIC.TO kaputs again, tomorrow.

#35 Brian on 06.09.16 at 8:26 pm

Well whatever policy or regulation the government comes up with next, it will likely be a weak effort. Just wait and see.

#36 TangibleAssets on 06.09.16 at 8:27 pm

Completely bemused by all of this deck chairing going on the part of our ‘leaders’ in Ottawa and beyond. North of $2.5m in YVR is offshore inflow (Sorry Garth, no one who lives here, including the real estate agents, believes you) but the Feds have ruled out taxing foreign money. So, it won’t be enough for Junior to say that he tried and then point to his FM’s ‘deep dive’ as evidence. He only needs to look at the inept arm waving BC’s government indulged in over so-called shadow flipping and the heightened cynicism of the natives in response to see it will not be wise to continue this game of ‘see no evil’. Meanwhile his electoral benefactors out west wonder more every day why they hired him. I actually heard a CBC commentator ask himself – out loud and on the air – if he actually missed Stephen Harper! It is that bad.

#37 mark on 06.09.16 at 8:31 pm

Wouldn’t they just borrow and stimulate like hell and blow the bubble even further?

#38 Freedom First on 06.09.16 at 8:33 pm

Predictions are difficult, especially about the future. Yogi.

For myself, I have always liked to buy things, including houses, when people think I am crazy because the price has dropped so much, or, they are extremely jealous I made out like a bandit. Best not to tell anyone, but when your new neighbor is friends with the couple you’ve bought the house off of, says, “I can’t believe you got that house so cheap”, you know the cat is out of the bag.

That being said, for me to own anything, I want to be paid. And, I don’t stand in line for anything. I put myself First, and help others. Makes for a very good life.

#39 Ret on 06.09.16 at 8:39 pm

Oh, and suddenly we are concerned about a housing crash?

Kinda like the Captain of the Titanic getting a little concerned about those big white floaty things – after he slammed into one.

If you want the wealth from your house, you need to list it and sell it. Talking about how much it is worth today or tomorrow is not money in the bank.

No one makes a dime in the stock market until they sell.

#40 Bill Gable on 06.09.16 at 8:46 pm

Mr. Turner – honestly, I try. When my Boomer buddies, here in this mess, called Vancouver, start blathering about how they are going to get that new joint in Rancho Mirage and a new this or that – because their dump, is now worth north of a million.

On Paper.

I try and remind them that this is an era of free money and a bunch of the other things, our bearded host has been trying to get though our thick skulls, for lo’ these many moons.

I get “The LOOK”.

I then realize I have spoken heresy, and I was off the team.

Well, at least I will be able to eat, when these greedy, schtunks, find out what is about to happen.

#41 FR on 06.09.16 at 8:48 pm

Question is – where’s the safe place? If you cash out of your house, where do you put the $?

If interest rate go up, the preferred’s do well, but if the housing market and the housing dependent economy sag the balanced portfolio sags too?

plans are based on 7%…

Pls convince me I’m wrong.

Have you learned nothing from the blog about restricting maple? — Garth

#42 YVR update on 06.09.16 at 8:49 pm

Why stop predicting? What’s happening in YVR is obvious. Some people just don’t want to acknowledge the truth. Purposely or not.

#43 Sir Hani on 06.09.16 at 8:50 pm

This was a very well written and powerful blog. Well done.

Also congrats jimmy.

#44 BOOM! on 06.09.16 at 8:59 pm

Well sold off some of those winners that had weak fundamentals. They will go down fastest in a panic.

Keeping most of the blue chips for the dividends, and maybe some cap gains.

Keeping the bonds/preferreds too for now. A slice in interest gooses value on bonds sell HIGH remember?
Preferred pay. I don’t really give a snot if cap value goes up or down I want the coupon.

Got bids on a new roof and new patio door. Actually under what I expected! No sweat, we’re good for 20 years, I might not be. So what? No family member in my blood line ever made 80, does anyone think I’ll be setting a new trend here? I doubt it highly.

Fixed the Caddy today, a mere e clip that cane dislodged. Greasy mess, but fixed! Cost me 1/2 hour as I not what I do.

Life can be so funny!

#45 AK on 06.09.16 at 9:02 pm

Well, nobody knows what happens next.

“Nothing?”

===================================
I believe that they will just let the market play out. If they do something and the market corrects by 45%, they will be blamed and end up losing the next election.

#46 IM in C on 06.09.16 at 9:06 pm

House prices are not going to fall. Everything around them will change. Garth , and I were raised with the concept of a single family dwelling. At 18 you were out the door. In the future we will have 2 or even 3 generations under the same roof. Homes, being too expensive to sell, will be passed down, with the end result : the rise of the landed gentry

#47 Smoking Man on 06.09.16 at 9:07 pm

Real Estate market like any commodity, price is driven by supply and demand.

Toronto and Vancouver have low supply and huge demand. Until that changes look out… prices will keep rising. Now that we are hitting the summer months. Prices will soften up like every summer.

But the second the govt tries to interven all those with pre approved mortgages will be in a buying frenzy.

Shit bungee in Shlong Branch will go for 1.2 million overnight.

#48 ulsterman on 06.09.16 at 9:09 pm

The bank of Canada’s insightful economists say that surging prices in real estate markets like Vancouver and Toronto are not sustainable at their current pace.

You mean the 40%/year rates? Ya think? That’s why them there economists earn them PhD’s.

#49 toronto1 on 06.09.16 at 9:15 pm

the RE market in the GTA and Vancouver is reaching the panic phase. fear of being priced out forever. Ireland, Miami, Spain all where different until they were not.

People need to remeber that the big 6 banks, along with CRA and the Federal govt have all the meta data– they know the true metrics– income vs mortgage debt

how far people are stretched, how vulnerable everyone is. They have their quaints run mock stress tests on multiple scenarios etc..

for 2 of the heads of banks to call for govt intervention is unheard off but they must feel that the reward (:told you so”) is greater then the risk.

my two cents, in 6-8 months the top news stories on MSM will be about how someone just “turned the lights off” on the market

only ONE thing really allows the RE market to exist and that is leverage and access to capital. Well, the banks vis a vis CMHC control that mechanism, no large policy changes need to be made, just changes that are already in play about capital requirements and a more stringent review of income and the housing market goes bust.

they start to enforce the actual ratios and most people will not be able to buy.

the market will go to whatever the mean income is in the area that can afford that price– thats usually the floor in RE crashes

#50 WalMark of Sadkatoon on 06.09.16 at 9:17 pm

Real Estate market like any commodity, price is driven by supply and demand.

Toronto and Vancouver have low supply and huge demand. Until that changes look out… prices will keep rising.

spot on

money is too cheap and ppl are too stupid

YVR and YYZ will be epic

#51 barb on 06.09.16 at 9:19 pm

“Virtual financial devastation?”
Yup…and even for those boomers who aren’t selling–or buying–houses in Vancouver or Toronto.

Look at T2’s (I know…I know…Harper started it, but T2 isn’t cancelling it) killing of trusts, which occurred effective Jan.1/16. We boomers were slated to inherit “even more money”, but Ottawa wants at least half of it.
And so much for setting up trust accounts for kids and grandkids!

Even the really good accountants can’t fix that at tax time.

#52 ulsterman on 06.09.16 at 9:23 pm

Does anyone have a good explanation how the Lower Mainland property market jumped 40% in one year from what most already thought were insanely high prices? I understand them defying the correction predictors, but to reach such a stunning peak and then jump another 40%. Has this price action ever happened anywhere else in such a short time?

I assumed that those buying last year were already borrowing to the max, with downpayments from parents, RRSP loans, and credit card advances. Where did these ordinary Joe Fraser Valley buyers suddenly find hundreds of thousands of dollars of more credit?

#53 Scary Election Results on 06.09.16 at 9:23 pm

Is Bill Morneau and the Trudeau Liberals saying “No house for you” to young Canadians in favour of foreign nationals laundering money into Canadian real estate?

http://business.financialpost.com/personal-finance/mortgages-real-estate/sorry-kids-no-detached-homes-for-you-at-least-in-toronto-and-vancouver

Prices are rising because locals have lost their minds. — Garth

#54 BS on 06.09.16 at 9:24 pm

#32 Ace Goodheart on 06.09.16 at 8:14 pm

What they’re basically saying is pretty soon you will be able to purchase this for around $998,000 in Toronto:

You really are drunk on the kool aid.

That house will go for a lot less than $998K in the next 5 years. I say closer to $500K.

Here are the “extras” in the realtors listing.

**** EXTRAS **** Energy Efficient S/S Appliances: Fridge, Gas Cooktop, B/I Oven, Dishwasher, Range Hood. Lg Front Loading Washer And Dryer.***Street Parking Available For Under $200 Per Year***

Energy efficient appliances? They are the only ones you have been able to buy for the last 15 or 20 years. And street parking for $200 per year? Wow all that for only $1.7 million. SO what does a house look like with no “extras”? $500K may be too high for that dump.

#55 Blacksheep on 06.09.16 at 9:25 pm

AK # 45,

“Well, nobody knows what happens next.”

“Nothing?”
———————————-
Beat me to it…..

#56 tundra pete on 06.09.16 at 9:28 pm

T2, Crusty Clark, Wynne and you name it, they are all being handed envelopes of cash to keep the party going. Every time one of them stands up and says they are going to do something about the price of real estate, you know they are going to do the opposite.

You can always tell when a politician is lying because their lips are moving. The party won’t be over till the punch bowl is empty and all the koolaid is gone. Then the crying will begin. This will be when taxpayers will be told that there was no way they could see it coming but CMHC will now require YOUR help in order to keep banks solvent.

It’s like the U. S. real estate meltdown never happened and nobody learned anything from it. Understanding that 99% of real estate transactions are an emotional impulse rather than a financial one sheds some light on the situation.

#57 gladiator on 06.09.16 at 9:29 pm

What are you people talking about?
Real estate crash? Due to what?
Rates are still low and a couple quarter-percent increases will do nothing to stop it. There are no big job losses. There are no new laws stopping foreign buyers from plopping their money into Canadian real estate. There is very low supply and crazy high demand for houses now that buyers usually have to offer prices over asking, and their numbers keep growing. The masses’ psyche is that this market will keep going up so that now people buy dwellings for their grandkids!
Now, whoever believes that this is all due for a “correction” – please bring your arguments. I am a renter who eventually wants to buy his own place, yes, house horny, but am looking at this as objectively as I can and I do not see any slowing-down of this freight train and believe that for the next several years it will still go up. Some good arguments for a RE market deflation or crash will be music to my ears. Any takers?

#58 BS on 06.09.16 at 9:31 pm

#46 IM in C on 06.09.16 at 9:06 pm

House prices are not going to fall. Everything around them will change. Garth , and I were raised with the concept of a single family dwelling. At 18 you were out the door. In the future we will have 2 or even 3 generations under the same roof. Homes, being too expensive to sell, will be passed down, with the end result : the rise of the landed gentry

Then where does the future demand come from? If you go from 1 family per house to 3 per house you need 2/3 less houses. Guess what happens to prices if we need 2/3 less houses? Precisely why housing prices will always correct to the point your average person can afford them. If people can’t afford them there are no buyers.

#59 Harbour on 06.09.16 at 9:32 pm

YVR and YYZ are ghost towns. Ever go out at night and look up, there’s floors of condo darkness

#60 BS on 06.09.16 at 9:35 pm

#57 gladiator on 06.09.16 at 9:29 pm

What are you people talking about?
Real estate crash? Due to what?

You run out of fools. Once every fool has bought game over. We are at or close to that point now.

#61 AfterTheHouseSold on 06.09.16 at 9:37 pm

#23 Andrew Woburn
“… cratered house hornies will hunt you down like a wounded water buffalo.”

That’s a great line Andrew. Thanks for the laugh. Still snickering.

#62 BS on 06.09.16 at 9:42 pm

#52 ulsterman on 06.09.16 at 9:23 pm

Does anyone have a good explanation how the Lower Mainland property market jumped 40% in one year from what most already thought were insanely high prices? I understand them defying the correction predictors, but to reach such a stunning peak and then jump another 40%.

From what I am told by realtors who do a lot of transactions the majority of recent sales are being bought by local investors who already own, buying second, third and fourth properties. They use their equity as a down payment. Classic bubble.

#63 Marc in Montréal on 06.09.16 at 9:46 pm

“There’s a 30% chance an earthquake large enough to cause significant property damage will hit southwestern B.C. in the next 50 years.” – Natural Resources Canada, 2010

What will happen 1st… earthquake in VYR or 25-40% correction?… or rising sea levels?

(Cities most at risk, based on average annual losses due to floods : Guangzhou, Miami, New York, New Orleans, Mumbai, Nagoya, Tampa-St. Petersburg, Boston, Shenzen, Osaka-Kobe and Vancouver.)

https://www.bcaa.com/campaigns/earthquake/overview#tab-/campaigns/earthquake/overview

http://news.nationalpost.com/news/canada/manage-flood-risk-now-vancouver-at-risk-from-rising-sea-levels-report-says

#64 WalMark of Sadkatoon on 06.09.16 at 10:06 pm

US wealth is BOOMING even after their housing crash!

http://time.com/money/4363471/americans-total-wealth-record-high/

#65 Saint Herb on 06.09.16 at 10:12 pm

The government wants to make housing affordable so people can buy a house. This can only happen 2 ways. Either the prices come down or the government helps you buy the expensive house. If prices come down, many people go underwater and they don’t want that. If they help people buy the exspensive house, the seller simply adds whatever help they offer to the asking price and the prices go up even higher.

I don’t see anything they can do to help this housing bubble. They must let the market run its course. Whatever they do will just extend the time it takes to correct, like when they lowered the interest rates.

Just when it seems like it can’t go any higher, it does. It defies logic. Sadly I know exactly what will burst this housing bubble. The day after I buy a house it will crash.

#66 Smoking Man on 06.09.16 at 10:12 pm

#1 Jimmy on 06.09.16 at 7:06 pm
guess what!!!
…..
Jimmmmmy

Wtf you did it. Come on, fess up. You went to the forks of the credit , bought an ice cream and begged the shoe polished beard for a top placement.

Congrats.

#67 Arfmooocat on 06.09.16 at 10:15 pm

The new First Lady is the hottest thing on earth

#68 Jenmick on 06.09.16 at 10:22 pm

So you will quote Ross Kay when it suits you, but when he comes out with a report on possible Foreign money laundering and the Vancouver housing make ($15 billion in one quarter ), you say nothing….just because something goes against your beliefs doesn’t mean it isn’t / can’t be.

Ross says a lot if things I do not report. — Garth

#69 Smoking Man on 06.09.16 at 10:22 pm

Prices are rising because locals have lost their minds. — Garth

Yup…… it’s like this.

Mom 1 hates Mon 2s guts because of the implants and her hubby oggoling over her. She is always competing with other bitches.

She’s got granite and stainless steel. So does Mom2.

Mom1 has a great idea. My kid will be more successful than your kid. She goes and gets a helic for the son and tells son to buy a house. He does.

Now Mom2 is not taken this shit lying down. She goes to the bank a gets a helic.

Then all the moms jump on board.

But let’s blame the orientals…

#70 Andrewt on 06.09.16 at 10:23 pm

#57 gladiator on 06.09.16 at 9:29 pm
What are you people talking about?
Real estate crash? Due to what?
Rates are still low and a couple quarter-percent increases will do nothing to stop it. There are no big job losses. There are no new laws stopping foreign buyers from plopping their money into Canadian real estate. There is very low supply and crazy high demand for houses now that buyers usually have to offer prices over asking, and their numbers keep growing. The masses’ psyche is that this market will keep going up so that now people buy dwellings for their grandkids!
Now, whoever believes that this is all due for a “correction” – please bring your arguments. I am a renter who eventually wants to buy his own place, yes, house horny, but am looking at this as objectively as I can and I do not see any slowing-down of this freight train and believe that for the next several years it will still go up. Some good arguments for a RE market deflation or crash will be music to my ears. Any takers?

If you’re house horny go and see how much you can possibly borrow and get what you can.
House horniness solved. What could go wrong?

#71 For those about to flop... on 06.09.16 at 10:26 pm

Reading the last two nights blog posts at the start I was a little bit interested and then a little bit more and then a little bit more and then I started reading really fast.

By now I’m really interested,super, super,interested….now I am speed reading….

Really,really really,really,really interested.

Ohhhh yeah!

That was the best post ever…

M41BC

#72 CMHC is the problem on 06.09.16 at 10:29 pm

#49 toronto1 on 06.09.16 at 9:15 pm”only ONE thing really allows the RE market to exist and that is leverage and access to capital. Well, the banks vis a vis CMHC control that mechanism, no large policy changes need to be made, just changes that are already in play about capital requirements and a more stringent review of income and the housing market goes bust.

they start to enforce the actual ratios and most people will not be able to buy.

the market will go to whatever the mean income is in the area that can afford that price– thats usually the floor in RE crashes”

The easiest way to make housing affordable. It funny listen to the vested interest on BNN cry that we don’t want to make it harder for first time buyers. What a stupid spin . The fact is you will make it harder for the sellers to sell at unaffordable prices and thus prices will drop to where people are about to afford them . There is no asian boogie just stupid people who will borrow until their bankrupt . It seem bankers are worried we are hitting that point.

#73 ANON on 06.09.16 at 10:29 pm

It’s a doubling-down that could turn a hard landing into a smoky hole.

(under)Statement of the year! The MSM is talking bubble, which means the illusion is over. Prepare, and try not to blame and hate, there will be enough suffering as is.
Fin

#74 Big Jack on 06.09.16 at 10:30 pm

Garth, how does one play the imminent housing correction?
Short the big banks? Or, perhaps short the private mortgage default insurers?
Please do tell.

#75 Boombust on 06.09.16 at 10:35 pm

#67

Canada doesn’t HAVE a “first Lady”, dumb ass. Wrong country.

#76 Snowflake on 06.09.16 at 10:41 pm

Hear ye, hear ye!
I am retiring at the top of my game.
Going forward I claim rights to…
“Snowflake”
Specializing in Trigger Warnings and Safe Spaces studies with minimal carbon usage.

#77 Smoking Man on 06.09.16 at 10:54 pm

#59 Harbour on 06.09.16 at 9:32 pm
YVR and YYZ are ghost towns. Ever go out at night and look up, there’s floors of condo darkness

You got a point

#78 Damifino on 06.09.16 at 11:10 pm

#72 Boombust

Canada doesn’t HAVE a “first Lady”
———————-

If Hillary wins America won’t have one either.

#79 comrade on 06.09.16 at 11:16 pm

Regardless of how negatively people perceive T2, but at least people in key functions can openly discuss the issue. If we were under harper, we would have never had thsee reports out. What a mess they have created, and all of it during commodity boom and oil $100+ with nothing to show for. Too bad there is no accountability in politics nowdays.

#80 AisA on 06.09.16 at 11:19 pm

It’s TTM across the board…..

Total Tulip Mania.

#81 VICTORIA TEA PARTY on 06.09.16 at 11:24 pm

IT’S THE TPP STUPID…

…that Mr. T2 doesn’t get too much bent out of shape about Vancouver and Hog Town real estate. Sure he mumbles platitudes and a few tut-tuts, as he does with everything else that’s going on wherever; but that doesn’t mean he’ll actually do SOMETHING about curtailing the madness that lies beneath. Because he won’t.

Why? Because, to beard the Chinese mandarins in their dens of Beijing and Shanghai, is a strict no-no.

There can be no worse nigthmare for either the federal and BC governments, right now, than to reach out and protect the real estate locals.

Changing the status quo, given the likely-to-be-adopted TPP, COULD mean breaking free-trade agreement “rules”, something local pols do not have the guts to challenge.

Vancouverites are, therefore, being held hostage by TPP and other huge world trade shifts than they can possibly imagine. They must feel like those vapourous G-20 protesters: sound and fury signifying nothing, because those in charge are IN CHARGE and don’t you forget it.

Supply and demand forces will keep the market going nuts until it doesn’t.

Just when the “doesn’t” occurs, of course, is the question.

A “strike” by sellers would be a good start. Enough “little” people refusing to sell regardless of offers, will kill the monster.

In such an eventuality Mr. T2 will cluck and fuss and fidget, and show up for an interview with Huff Post and yammer on about the evilness of Donald Trump and the wonderfulness of Hillary the Mad Chatterer.

Meanwhile the denizen Mandarins in the Mysterious East will find some way of punishing the recalcitrant “foreign devils” with various sanctions and currency manipulations, and all will be well, sort of.

#82 Long Branch Apprentice on 06.09.16 at 11:25 pm

Canadians are pathetic and boring.

Why?

Because everyone, especially so called Millennials, puts all their energy into granite f&^%ing countertops and shitty Home Sense furniture and generic townhouses just to convince themselves that they’ve made it. That they’ve arrived.
I can’t count how many spare bedrooms I’ve seen with old Ikea desks holding boxes of diplomas in these truly soulless suburban debt traps. All part of the “I’m a university grad and now I’ll pretend I’m rich” starter pack.

Congrats everyone, you did it. You achieved a level of indebtedness that would drive your great-grandparents to suicide.

No wonder Smoking Man drinks so much, I’m beginning to see why.

Thank the universe for my dog to keep me sober at least part of the day.

Good to see the Sharks get a win, Marleau deserves a Cup. Guy’s a beauty and has been loyal to the teal his whole career. Plus I’m pretty sure Crosby banged my buddy’s ex gf while they were still dating.

Classy.

#83 paddler on 06.09.16 at 11:27 pm

The political talk is now, how to curb the housing market, whilst a group of House floggers predict another 25% increase in the housing market in Vancouver this year. More fear inducing by these house salesman. I guess you ride the wave until she hits the shore.

http://www.news1130.com/2016/06/02/metro-vancouver-housing-prices-expected-climb/

#84 WUL on 06.09.16 at 11:28 pm

There is already a force at work cooling the housing market in my neighbourhood in Calgary. The phenomenon??

My son.

He drags home multiple beater cars with the intention of hot rodding them to roar around in. So the rust buckets clutter up my driveway.

There are two reasons for this. He loves cars and, apparently, he loves my favourite landscaping style.

North Idaho Gothic.

Try it.

#85 Rexx Rock on 06.09.16 at 11:31 pm

The next 2 years will be mostly ham money.It will be unbelievable that prices today will be a bargain in 5 years.Cash is king and that is the future for the next few years.

#86 Smoking Man on 06.09.16 at 11:36 pm

As a man on a mission from Nictonite, a drunken observer sort of.

If it wasn’t for my earthling wife from Scotland I would have never discovered booze.

Your born, plop out of a vagina, (am I allowed to use the word in today’s world) You get a certificate of birth.

Then the programming starts. The goal, a university certificate so you can get a good job.

From my observations a job sucks. But your programming is well thought out. Chicks, blacks fighting for a good job. rather than being the pay master.

Being an owner is were rock starts rock. It’s not in the curriculum.

I got beat up yesterday by dogs on here. I would normally fight you mental cases but I’m giving up on your species.

The teacher has your mind, they got you younger than I did.

Too bad. The Universe is shrinking.

#87 jane 24 on 06.09.16 at 11:53 pm

Sold but empty condo towers are not just a BC problem we have them in London too. The buyers are overseas and hold them empty as an investment. If they rent them out, then they lose value in the owner’s eyes as they become used rather than new. This creates big social problems as our cities need their housing in use.

Son-in-law, the derided architect, says that entire London condo blocks are now sold to single Chinese buyer, finished and then held empty. Although I believe in private property principles this is so wrong on so many levels. Although Garth will say I am wrong/racist, massive sums of corrupt Chinese money are loose in the world, looking for an investment home. All countries need to do something along the Australian lines to protect their citizens lives. Everyone needs place to call home in their own country. When ordinary people cannot not afford ordinary homes then society becomes unstable.

Did I say how impressed we were with Hamilton, Ont when we visited 2 weeks ago. Cannot believe the improvements to that city and the solid, affordable houses.

If anyone is planning a trip to the UK this summer then buy your £ now. Way down on the UK Referendum excitement. Off now to shove ‘leave’ brochures through folk’s doors. The choice is economic certainty via Remain or independence and democracy via Leave. So Leave it is. You cannot put a price on democracy.

#88 A Canadian Abroad on 06.09.16 at 11:59 pm

Housing down 61.8%… yup. That’s a common Fibonacci retracement number and one that is VERY probable due to a very high spike in ANY asset in a short time.

I do feel bad those who will suffer in the correction, but it’s not like they didn’t know it was a game of musical chairs built on stilts, right?

#89 NoName on 06.09.16 at 11:59 pm

#78 Damifino

that was funny !!!

#90 nonplused on 06.10.16 at 12:05 am

Ok, if we are on our own I’ll do some predicting.

This blog has been predicting a correction in housing prices since what? 2006? And we sort of got one in 2008-2009 but then the bankers stepped in with near zero rates and it stabilized and is now firing up like crazy. But what else did we get? Eventually a 25% crash in the dollar (Canadian, that is, the loonie is on a diet and doesn’t look like it can fly anymore.)

So here is my prediction: either the BoC cranks rates soon and saves the dollar (while pouring cold water on real-estate), or give Glamboy ten years of low rates and we’ll be Venezuela north. Sure your YVR house will be worth $5 million loonies, but only a loonie would give you more than $200,000 USD.

And that new plastic currency we have doesn’t even make good toilet paper.

#91 Farm Wife on 06.10.16 at 12:15 am

Remember the old saying “Clogs to Clogs in three generations”

Looks like this will be the future of a lot of people.

#92 Vanreal on 06.10.16 at 12:26 am

There is an article in today’s financial post that talks about the problem being a lack of supply in Yvr and in 416. They aren’t building any more sfh in the city and that’s why their cost is shooting up so much. Condos in the exburbs are still affordable. It’s about supply or lack thereof. Not going to get any better.

#93 millenial1982 on 06.10.16 at 12:28 am

#47 Smoking Man on 06.09.16 at 9:07 pm
Real Estate market like any commodity, price is driven by supply and demand.

Toronto and Vancouver have low supply and huge demand. Until that changes look out… prices will keep rising. Now that we are hitting the summer months. Prices will soften up like every summer.

But the second the govt tries to interven all those with pre approved mortgages will be in a buying frenzy.

Shit bungee in Shlong Branch will go for 1.2 million overnight.

———————————————————————————-
I’m a fan smokey but I don’t agree with you here. There comes a point when no matter what the demand the herd can afford no more no matter the tricks up their sleeves. I believe the breaking point is somewhere between when the fundamentals no longer support growth and your point of view of indefinite growth if there’s a need. Borrowing from mom and dad, renting the basement out, borrowing against the property due to price increases, sub prime mortgages etc we’r’e almost there. Besides, can’t you sense change is in the air?

#94 ontheledge on 06.10.16 at 12:33 am

Off topic.

Just watched a “doc zone” documentary on moisters. Pathetic group of entitled, coddled people.

Here’s my bio

I’m Gen X, Ontario resident. I graduated from uni into Bob Rae’s Ontario. No jobs for a white, middle class, university educated male in those days. My parents kicked me out at 18 and paid my tuition and that’s it. I was grateful (sure it was comparatively low, especially at McGill 89-93). I busted my ass planting trees and taking OSAP to pay for everything else. Went to Amsterdam on successive Reading weeks. Got high. Really high. I skied too…a lot, all over the world. When I graduated I had to pay back my loans and all my “high” living, so I was lucky enough to take a job on the line at Ford in Oakville. I built minivans for 3 years, paid off the loan. I did every fin. services course I could CSC, CPH, OLC, PFP, CIM while on the line. Took a shite job at a discount broker making less than 40k for 5 years, networked, did my CFA. Got a new job, kept networking, got married, bought a shite house, had a kid, renovated it, sold it, bought another, had another kid, renovated it, burnt myself out, sold, took a year off. More suffering. Started a business, failed, debt, suffering. Got a new job 10 years ago, 3 firms later I’m in demand. Never T4’d less than 250K over this time. Did 340k in 2015. Sold the pile in Beach and moved to good old Guelph last summer. No mortgage and retired “on the job” last summer. We pick up our first dog on Saturday from our breeder. Lela is a Barbet, a rare breed, (French Water Dog), my girls (10 and 11) are going to love her. No one ever “mentored” me and going home was never an option its all work, lots of suffering and figuring it out.

#95 LS in Arbutus on 06.10.16 at 12:36 am

I have now heard of a 4th family, in 3 days that is leaving my kid’s school, for a total of 6 families this year. They are leaving the lower mainland. Bowen Island, Victoria, Squamish, LA and Ontario. People are selling out or capitulating as it is sheer madness here on the West side. People are miserable, it’s stressful. Will you be able to afford ever? Will your house maintain its value? Where will you children live? Will the offshore buyers/ new Canadians buy it all? Is that ANOTHER f’n EMPTY house on my block. It is crazy here and now it’s playing out all across the lower mainland. It’s not at all fun anymore. It’s been pretty sad of late to see my kids’ school friends and their families leaving. It’s affecting the social fabric. Six solid, good families, gone. I don’t see them being replaced. School enrollment down. No one can afford to raise a family here anymore. And why would they want to?

#96 NEVER GIVE UP on 06.10.16 at 12:44 am

Starting with Harper wanting to get re elected we had artificial low interest rates decoupled from the US.

This caused the house bubble to start.

The housing bubble has stolen the futures of the Young.
Both the young who have bought and may face a bubble bursting any moment now.
Also the futures of all the people who would have bought in a sane market place.

The artificial interest rates have stolen the pensions of millions of seniors who do not know how to invest.

Our Good Government…… Thieves…. Nothing more Nothing less.

#97 WUL on 06.10.16 at 12:50 am

Again it is late here in Fort Mac but I have been serving long shifts at the Re-entry/Info Centers for the folks arriving back in town.

I have had to deliver disappointing news to the oil sands workers that got a couple of hours off after a 12 hour shift to drive a couple hours from camp to try and receive the financial assistance available from the Gov’t of Alberta and the Red Cross. But I sit patiently giving my long winded advice to about 15 at a time as they arrive in groups over a 2 hour stretch and cover about six options they have to get the aid.

I have never been more impressed than with these Canadians from Bonavista to Sooke.

Tough broncs, quiet, respectful, chiselled and each day they load sixteen tons and swing the nine pound hammer just so snot nosed realtors can fuel their Audis.

Even though I deliver less than satisfying news, they shake my hand, thank me and head back for another 12 hour night shift.

I’ll tell ya, the next time someone disses an oil sands worker to my face, I’ll bust the sonofabitch in the mush.

Salt of the earth and the very best this country has to offer.

#98 YVR2ZRH on 06.10.16 at 12:59 am

Garth . . I appreciate you being consistent in what we could call the “HAM Denial”. What I would agree with you is that the Chinese are not making the Vancouver market completely distort. However, the existence of his foreign money, and the fact that it has a different demand curve (let’s say – fixed demand and basically inelastic on price) creates 2 problems.

1.) It acts as a removal of supply. The fixed amount of foreign demand essentially places the real estate into being an exported product which reduces the domestic supply (especially if it is not being used by the foreign dude as a rental investment – – something that I think we should actually encourage). This restricts supply even more and pushes the equilibrium price higher.

2.) The mere existence of this foreign demand, creates the fire of fear in the locals. Anyone who has access to capital (let’s even say bank of mom and dad) feels compelled to grab and hoard more of the property for fear of it never being available again.

Now the locals are basically to blame. If they all stopped buying, this market would collapse. But – they are driven by fear (of missing out), greed (I want to be part of this windfall), and as you rightly say – house horniness (I must own to nest and procreate) – to acquire and hoard.

I think we need some type of measureable policy that will address this.

1.) Place some type of restriction of access on the foreign dudes. Just at minimum make it so it is not worth their while to leave a property empty.

2.) Change development and zoning to allow for increased supply. Vancouver is quite low density overall and the densification has not moved forward at an appropriate pace.

3.) Start to consider some type of tax which discourages “speculative” activity. (Here in Switzerland the speculation tax is 100% of the gain – -and this tax does not go away entirely until you have owned it for 10 years. – There is ZERO speculation here – in fact – there is almost no activity at all because property is built and then owned almost forever. When you turn housing back to being just Shelter – you’ll be amazed how infrequent it needs to be traded (In my village of 20,000 people there are only around 20 houses even for sale).

A few other thoughts.
– Implement a lifetime principal residence exemption maximum. You could make it around $1 million – or maybe $2 million – but having no cap creates serious tax incentives for those with large amounts of capital to acquire even more expensive homes. Who wouldn’t want all of their wealth to be increasing in a tax free asset.
– Implement income attribution rules for resident/non-residents. If a resident is funded with money (even gifted money) from a non-resident, then the purchase of real-estate will be taxed with non-resident attributes under the income tax act. This prevents anyone from sending their 20 year-old student to Canada with $50 million to buy a house – so that it can be used as a tax shelter for their offshore parent or really anyone else that they collude with. This would make the property not eligible for the principal residence exemption.

– Raise property taxes and lower consumption and income taxes. The tax system in Canada has been designed with the thought that we should tax income and consumption. This worked well when we were a young post-war country with little wealth. Now that people have saved and accumulated, the balance is starting to shift. The current tax system creates inefficiencies in that people who have large wealth place larger amounts into their principal residence to shelter their assets from any tax. Increasing the property tax burden and lowering the income tax burden would re-distribute taxation partly to wealthy people from those who are earning income.

Finally – consider some type of deemed income on real estate (even principal residences) which could be used in some type of “Alternative Minimum Tax” computation such that those with no income would at least be subject to an alternative computation based on their wealth (including their real estate and principal residence).

So many ways to address this – but so little action – and this is why a new poll released today shows the level of frustration with the BC Liberals is very high and crosses all demographics.

Thanks for continuing the discussion . .

#99 diharv on 06.10.16 at 1:08 am

What’s the big deal ? A 25% correction in house prices puts them at last years value , and it’s not like they were affordable then . The market there would have to sink alot more than that before it even begins to approach reasonableness . People up here in central bC just shake their heads at what we hear coming out of Vancouver , even people with millions in investible assets who wouldn’t be so stupid to blow it on Vancouver real estate.

#100 DON on 06.10.16 at 1:16 am

#60 BS on 06.09.16 at 9:35 pm

#57 gladiator on 06.09.16 at 9:29 pm

What are you people talking about?
Real estate crash? Due to what?

You run out of fools. Once every fool has bought game over. We are at or close to that point now

************************************

Or we can remember that a lot of people are returning home from Alberta unemployed and severances are running out so our the LOCs. Just because it’s not front and center in the M$M doesn’t mean it is not occurring. Sooner or later it implodes on it’s on much like the US experience. The experts did a good job of predicting the crash after it was well underway.

#101 Surreal Estate on 06.10.16 at 1:20 am

part 1:

http://www.vice.com/en_ca/video/surreal-estate-part-one

part 2:

http://www.vice.com/en_ca/video/surreal-estate-part-one

#102 jay on 06.10.16 at 1:48 am

Hey Garth we even have campground’s with our house’s in East Van, that must be why they’re 1.5mil. https://www.home-camp.com/spots/trout-lake

#103 Strathcona on 06.10.16 at 3:04 am

I agree with #72’s posting.

In this day and age, of easy credit, the role of the CMHC is questionable. It serves none of the original purpose of financing homes for returning veterans. CMHC should be privatized, long ago.

If you can’t afford a home in your community, you should move to a community where you can afford it.

I enjoy the few posts on here that say what the federal government can afford to allow in the RE market, and what they can’t. Somehow like the US government could have waved a wand and prevented their own RE collapse from easy money.

Canada, Australia, and the UK may suffer the same fate at the same time, as all are developed commonwealth countries with inflated RE markets. If you examine the AU to CAD currencies, you’ll see a long correlation. I do know we are weeks away from a Brexit vote, and a US election in November. A resurgent Russia, a teetering and militant China, all of these factors could really affect currencies and interest rates, with a major event forcing the market’s hand, rather than a central bank.

#104 Shawn on 06.10.16 at 5:56 am

Predictions are Difficult…

… especially when they involve the future, goes the saying.

“This blog has stopped predicting. You’re on your own.”

**************************************
Wise. Warren Buffett claims he has never tried to predict the short-term future. He just buys what seems cheap given its likely cashflows over the LONG term. He says he ignores macro economic predictions. But what does he know? A million internet commenters gotta be smarter than Buffett right?

#105 Shawn on 06.10.16 at 6:15 am

Predictions of Higher Rates Abound…

Meanwhile the German 10 year bond is 0.16% today with predictions it may go negative.

Sheer madness, but there it is…

#106 Sean on 06.10.16 at 7:40 am

Now you are finally talking numbers that make sense… and holy crap is it ugly! The amazing thing is that while the % declines sounds huge, the resulting valuations are hardly unrealistic… Those are STILL fairly high numbers for those cities! Add in a moribund economy, with an increasingly negative feedback loop as the real estate / FIRE sector nosedives… wow!

#107 gladiator on 06.10.16 at 8:21 am

@70 Andrewt:

I’m house horny, but I’m not stupid.

#108 jay on 06.10.16 at 8:27 am

We better stop going into debt as well. http://www.news.com.au/finance/superannuation/australian-dollar-could-drop-to-40-us-cents-if-we-dont-stop-our-lavish-spending/news-story/431ffffa9eab5c1fe27cc2b3cf6f89b8

#109 ROTFL on 06.10.16 at 8:27 am

#32 Ace Goodheart — “The folks in Ottawa making these doomsday predictions need to actually come to Toronto and see what a $1,700,000 house looks like.”

You need to get out on the internet and see what a proper US$1,000,000+ house looks like. It’s in one of the top ten neighbourhoods or suburbs of a great city, in an area with the lowest crime and the best schools, on a large lot unless it’s right in the core, with a two car garage and a bit of architectural integrity. You can achieve that pretty much anywhere besides Manhattan, the SF Bay area, London, Paris or HK.

Those Toronto places you posted fail.

#110 cropgrower on 06.10.16 at 8:32 am

#1…congrats Jimmy, but it would take two in a row to gain my utmost respect. I’m sure the others on this blog would agree……

#111 paul on 06.10.16 at 8:33 am

#78 Damifino on 06.09.16 at 11:10 pm

#72 Boombust

Canada doesn’t HAVE a “first Lady”
———————-

If Hillary wins America won’t have one either.
———————————————————-Don’t bet on it ,Hillary has a thing for her female assistant so you never know! (Not that there is anything wrong with that)

#112 gypsykid on 06.10.16 at 8:42 am

I seriously doubt that any government can curb the real estate mania. What might happen is that people themselves will get frightened of the prices and stop buying and come to their senses and realize there is more to life then “owning” a house.
I’m worried that a drastic government intervention will topple our already fragile economy.

#113 Ace Goodheart son on 06.10.16 at 8:51 am

Ace Goodheart,

Many people don’t care to sink a million or close to it into the houses you posted. These properties seen overpriced even with the fictional pricetags you put on them.

#114 Bat Flipper on 06.10.16 at 8:57 am

As an observer of the market, I can safely say the feds made a huge error, that we will all pay for in time. People scream free market on housing, but we all know that there is no free market in housing. If we got rid of financing regulations, cmhc, etc. the market would be doing substantially worse than it is now.

Here is why they messed up. When rates were high and increasing, the fed relaxed regulations. Think 0 down, 40 year amortizations, first time buyer benefits, etc. These quick and dirty tactics allowed people to easily enter the housing market.

As rates decreased, the fed forgot to regulate the market once again to decrease demand. Now, with rates at epic low levels and regulations still ‘loose’. The government needed to crack down and tighten regulations ages ago. It needed to promote trade, not trade of houses as we see now.

Now, the government seems to want to chase an overextended market to get a ‘soft landing’. We may be past the point of being able to create a soft landing though.

In a country where doctors and lawyers don’t buy houses because they are too expensive, should you be buying a house?

#115 Wack on 06.10.16 at 9:35 am

A very dated bc box sells 3 months ago on our street for 352k, flipper does an update: floors, paint, cabinets and fixtures (I guess 80-100k) just listed for 579k. We’ll see if there are still fools out there?

#116 Brian on 06.10.16 at 9:38 am

And what will happen to the TSX if a correction of this magnitude occurs?

Diversification is critical.

What sayeth Garth?

I say look at what this blog has articulated for several years now. A balanced and globally-diversified portfolio with multiple asset classes will be largely immune to a Canadian housing melt. — Garth

#117 Bottoms_Up on 06.10.16 at 9:42 am

#100 DON on 06.10.16 at 1:16 am
————————-
Most experts were late to the game except Peter Schiff, 2006:

https://youtu.be/LfascZSTU4o

#118 Grey Dog on 06.10.16 at 9:44 am

WUL, beater cars as lawn ornaments…your
Calgary neighbours must love you.

#119 Life among the Stars on 06.10.16 at 9:57 am

#86 Smoking Man on 06.09.16 at 11:36 pm

As a man on a mission from Nictonite, a drunken observer sort of.

If it wasn’t for my earthling wife from Scotland I would have never discovered booze.

Your born, plop out of a vagina, (am I allowed to use the word in today’s world) You get a certificate of birth.

Then the programming starts. The goal, a university certificate so you can get a good job.

From my observations a job sucks. But your programming is well thought out. Chicks, blacks fighting for a good job. rather than being the pay master.

Being an owner is were rock starts rock. It’s not in the curriculum.

I got beat up yesterday by dogs on here. I would normally fight you mental cases but I’m giving up on your species.

The teacher has your mind, they got you younger than I did.

Too bad. The Universe is shrinking.

You seem to get royally pummeled everyday! Don’t abandon us.. what ever will we do!

There are multiple universes. Yours may be shrinking. Mine’s expanding.

#120 WalMark of Sadkatoon on 06.10.16 at 10:04 am

#94 ontheledge on 06.10.16 at 12:33 am

grit and persistence

i love it

awesome

#121 For those about to flop... on 06.10.16 at 10:07 am

Jane [email protected]
If anyone is planning a trip to the UK this summer then buy your £ now. Way down on the UK Referendum excitement. Off now to shove ‘leave’ brochures through folk’s doors. The choice is economic certainty via Remain or independence and democracy via Leave. So Leave it is. You cannot put a price on democracy.

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

So ” a box in the sky” was right you do have an agenda.
Why didn’t you just say so at the start?
I don’t care which way it goes as long as the people are happy.

For the record I think they will stay as I have seen people vent frustrations then backtrack when push comes to shove in Australian and Scottish referendums.

Life will go on either way…

M41BC

#122 For those about to flop... on 06.10.16 at 10:11 am

Won’t Bill Clintons girlfriend be the new First Lady?…

M41BC

#123 Angelsmoke on 06.10.16 at 10:12 am

2017 will be the year of massive western corrections…it’s coming alright!…but the wave of global financial re- modeling is bigger than anyone will be prepared for…Free market democracy will be redesigned in the aftermath. Enviro, nano, bio and analytics will lead the way with the new dogma think tankers….baby boomer houses and cars will be antiquated rubbish in the 21 century….SELL and go liquid

#124 Aggregator on 06.10.16 at 10:13 am

Germany's 10yr bond yield just fell to 0.01% and Japan's 15yr bond went negative overnight. This will put further downward pressure on US and Canadian bond yields as large investors seek positive-yielding safe assets. This also implies bonds have entered a period of wild speculation.

I wouldn't be surprised if we see negative mortgage rates (banks pay you to borrow) in Canada within the next two years.

Not a chance. — Garth

#125 Grey Dog on 06.10.16 at 10:26 am

Since we have lived in our home for 31 years, I truly don’t care if my home loses 50%, IF IT BENEFITS CANADIAN SOCIETY as a whole. (Whenever I say this folks look at me as though I have three heads).

However, I want a seriously HUGE Canadian home investment tax if you are hoarding a Canadian abandoned house. You want a safe investment in secure Canada? Then you must invest in the Canadian infrastructure; simple municipal taxes don’t cut it. Lowering the price of our homes so folks coming from A*a, B*a, to Z*a, can scoop up our homes at fire sale prices is not something I would want to make this sacrifice for.

#126 Aggregator on 06.10.16 at 10:39 am

Not a chance. — Garth

The Bank of Canada has USD$77.9 billion in assets. Global pensions funds have over USD$35 trillion AUM. You decide who controls Canada's 5yr bond yield.

#127 nubbers on 06.10.16 at 10:58 am

Jane 24 @87
Off now to shove ‘leave’ brochures through folk’s doors.

Typical of the isolationist ‘Leave’ camp – blames the UK’s problems on foreigners. Any foreigners. Regardless of whether they are actually from the EU or not.

I suspect you are going to get the opportunity to learn the hard way that EU trade works both ways.

And please make sure your brochures are soft and absorbent. The last one I used was too scratchy and blocked the pipework afterwards.

#128 Sean on 06.10.16 at 11:06 am

This is a worthwhile read.

http://larrysummers.com/2016/02/17/the-age-of-secular-stagnation/

#129 TurnerNation on 06.10.16 at 11:32 am

Life in Corrupt, Kommunist 2nd World Kanada: Paying 50-60% of our income in direct and hidden taxes and to mono/duo/opolies.

In each city, we have hospitals with yearly begging fundraising drives and lotteries (why?) for basic equipment. We are distracted with sickening pap like gender, language issues.

But to pay for your own 1st World care standard? Nope. Leftist media bleeds with:

http://www.cbc.ca/news/canada/saskatchewan/saskatchewan-private-health-procedures-1.3625315

“Law to allow private purchase of CT scans is ‘troubling’: Opposition”

#130 IHCTD9 on 06.10.16 at 11:43 am

#62 BS on 06.09.16 at 9:42 pm

#52 ulsterman on 06.09.16 at 9:23 pm

Does anyone have a good explanation how the Lower Mainland property market jumped 40% in one year from what most already thought were insanely high prices? I understand them defying the correction predictors, but to reach such a stunning peak and then jump another 40%.

From what I am told by realtors who do a lot of transactions the majority of recent sales are being bought by local investors who already own, buying second, third and fourth properties. They use their equity as a down payment. Classic bubble.

____________________

There will be blood running in the gutters if this is the case and the correction is closer to a falling sledge than a feather.

How could there be a soft landing if folks are doing stuff like this?

#131 RW_Z on 06.10.16 at 11:53 am

Even a fast trip back to 2011 means that everything up until 2011 was justified (and maybe beyond, since in 5 years you to pay something off), which means that some of us were wrong about all this.

#132 Ugly Fat Chicks against Smoking Men on 06.10.16 at 12:00 pm

DELETED

#133 Denise#1 on 06.10.16 at 12:04 pm

I often hear it & Kay is again repeating it – about people over 65 (not there yet, thanks) to sell our houses for instant retirement funds, while we can/the market’s hot.
So…how about people like my husband & myself? Our house is our HOME, not an investment/retirement plan. I love gardening: vegetable garden, flowers etc. so need our yard. Hubby is a woodworking artisan: a very talented one; so he requires his workshop.
We plan on keeping our home as long as we can, so we can enjoy our gardening & woodworking. Also love our neighbourhood (it’s the area I grew up in).
I know, finances factor into it. We’ve never been self-indulgent big spenders so hopefully that’ll allow us to keep puttering around our HOME until we croak. Then our children will inherit it, do whatever they wish with it, we’ll be gone :).

#134 Nuke on 06.10.16 at 12:23 pm

Currently renting having sold off real estate. When I calculate the rental value of the property I rent @ 15 times annual rent I get about $250,000. However all the properties on the street are all over $1million. Is the difference the speculation value? Will we ever get back to a normal 3 times salary for a house in major cities like Vancouver and Toronto? If so maybe incomes will double or triple? Why does that seem unreal while we have accepted property values to double and triple. Also, since the RE market is based on low interest rate and limited supply; what would happen if people started to sell (supply increased) at the same time interest rates returned (rose) to where they should be?

#135 Aggregator on 06.10.16 at 1:11 pm

Finally someone developed a real world measure of housing affordability.

‘Affordable’ housing goes far beyond prices and interest rates

So while other affordability indexes currently sit just above their long-term averages, SCAR is at an all-time high, rising quickly over the past 10 years. Today, after purchasing other necessities, a typical Canadian household spends nearly 40 cents of every dollar of income it has left over on shelter – but this is a highly aggregated average. By disaggregating these data, we learn that a quarter of Ontario households are spending more than 60 cents of every discretionary dollar on shelter! And this is an average, too – many households spend more.

And the results, not surprisingly, don't look pretty… (see charts below)

Economic Analysis’s Shelter Consumption Affordability Ratio Index (SCAR)  (PDF)

The question is would the Bank of Canada and StatsCan adopt this index as a measure in housing CPI? No way. The last thing our central bank and government would want is for interest rates to be data dependent on real world affordability and inflation.

#136 family beagle on 06.10.16 at 1:22 pm

#133 Denise#1 on 06.10.16 at 12:04 pm
I often hear it & Kay is again repeating it – about people over 65 (not there yet, thanks) to sell our houses for instant retirement funds, while we can/the market’s hot.
So…how about people like my husband & myself? Our house is our HOME, not an investment/retirement plan.

You’re not in the crosshairs. Relax. Garden and putter. If you have a pricey mortgage, then sell. Many people like yourself are not gambling on real estate. They made a home and are enjoying it. If you pulled the equity to buy investment condos, you might have an issue. Make your own rules. Don’t listen to others.

Fight greed with generosity. Fight fear with contentment.

#137 Capt. Obvious on 06.10.16 at 1:28 pm

@ #133 Denise#1 on 06.10.16 at 12:04 pm

Well sure it’s your home. The question is really can you afford to keep living in it. If you have built up sizable retirement income through savings or pension plan contributions plus your government entitlements, you may well be fine to continue living in your home. Not everyone is in this boat though. A bunch of people will run out of money, and will be forced to sell their homes. Nobody is arguing you can’t keep your house, it’s a question of finances.

In the neighbourhood I’m in (really old neighbourhood in Ottawa), most of the old folks stay in their home until one of them dies. Then the other one can’t look after the place on his/her own and it starts to decay. Then some kind of health calamity occurs and the person is forced to sell to raise funds for ongoing care.

Then our children will inherit it, do whatever they wish with it, we’ll be gone :).
That seems like a good way to guarantee fights among your adult children.

#138 Blacksheep on 06.10.16 at 1:43 pm

Sean #128,

Not a fan of Summers, but still Interesting stuff, thanks.
——————————-
Copyright © 2016 by the Council on Foreign Relations.

Larry Summers:

“This does not mean that quantitative easing was mistaken. Without such policies, output deflation. But monetary-policy makers need to acknowledge much more explicitly that neutral real rates have fallen substantially and that the task now is to adjust policy accordingly.”

“This could include setting targets for nominal GDP growth rather than inflation, investing in a wider range of risk assets, making plans to allow base rates to turn negative, and underscoring the importance of avoiding a new recession.”
——————————-
“Movements in commodity prices in recent months have shown that events in emerging markets, especially China, can have significant impacts globally. It now appears likely that more capital will flow out of emerging markets and less will flow in than has been the case in recent years.”

“These capital outflows and the consequent increases in net exports will further reduce demand and neutral real rates in the developed world, thereby exacerbating secular stagnation.”
——————————-

#139 bdwy sktrn on 06.10.16 at 1:53 pm

10yr bond 1.65 heading to all time record lows.

rates to stay low for another decade.

buy more RE?

#140 WUl on 06.10.16 at 2:01 pm

Gordon Howe – RIP

A reporter once asked Gordie, “Did you ever break your nose playing hockey?”

Howe replied, “No, but 11 other guys did.”

I simply idolized the “Big Man” from 1960 onward.

#141 Walmark of sadkatoon on 06.10.16 at 2:16 pm

I know, finances factor into it. We’ve never been self-indulgent big spenders so hopefully that’ll allow us to keep puttering around our HOME until we croak. Then our children will inherit it, do whatever they wish with it, we’ll be gone :).

reality is that the surviving spouse won’t be able to maintain it

and the kids won’t have the cash to pay the taxes on it

truth

#142 Steerage Bilge on 06.10.16 at 2:24 pm

Is smoking man really kevin o’leary??

http://www.cnn.com/2016/06/08/health/turning-points-kevin-oleary/index.html

#143 Sean on 06.10.16 at 2:30 pm

#138 Blacksheep on 06.10.16 at 1:43 pm

Yeah, I’m not really sure of who he is and any history but the points made in this particular post made a lot of sense. It touches on some interesting theories I hadn’t thought of or seen explored.

#144 Shawn on 06.10.16 at 2:36 pm

No negative Mortage rates, ever…

#124 Aggregator on 06.10.16 at 10:13 am said:

Germany’s 10yr bond yield just fell to 0.01% and Japan’s 15yr bond went negative overnight. This will put further downward pressure on US and Canadian bond yields as large investors seek positive-yielding safe assets. This also implies bonds have entered a period of wild speculation.

I wouldn’t be surprised if we see negative mortgage rates (banks pay you to borrow) in Canada within the next two years.

Not a chance. — Garth

*******************************
Agreed not a chance. A bank, unlike a corporation, can keep cash in a vault rather than pay anyone to hold it for them. Negative mortgage rates will not happen. If they have happened it was only due to some old prime minus 2% loan that went negative. No new mortgage will ever be written for negative rates.

Those buying a 10 year German bond for 0% are idiots. Time will prove this.

But agree rates are bizarrely low, a strange world.

In this world stocks will rise a lot if interest rates keep this up.

#145 straight six on 06.10.16 at 2:45 pm

re RE free fall.. in NewFongland, NEVER happen!
Back in 1983 when RE prices avalanched I was trying to sell a 100K 1st mortgage to a rancher neighbour, I couldn’t understand his lack of interest.
It’s blue chip.. it’s 19% and it’s on the west side. what’s not to like?
His answer.. he no longer monkey’d with that stuff, not since the Great Depression..
But that was ancient history, wasn’t it.
Now I feel the same way after barely surviving the time when rates went to 20% and RE holdings vaporised..
Now I prefer to smell the coffee and appreciate the little things in life.. and like the old rancher, I no longer monkey with that stuff.
Live n learn as they say, or not.

#146 Blacksheep on 06.10.16 at 3:05 pm

Nuke # 134,

“the same time interest rates returned (rose) to where they should be?”
————————————–
Should be…..For when?

Read the Larry Summers link Sean @ #128 provided.

Gives a pretty good explanation why current rates, may just be “neutral” or “natural” for the global economic environment, we now have.

Summers quote:

“making plans to allow base rates to turn negative, and underscoring the importance of avoiding a new recession”

Different times, different rates.

The late 70’s, early 80’s, for example. Double digit inflation, required double digit rates to slow things (and rescue the US $).

Larry Summers was the Secretary of the Treasury for President Clinton and is, the Director of the National Economic Council for President Obama.

The fix is and Hill is the next pres.

Janet will soon be quoted stating: “Conditions have unfortunately deteriorated”

#147 maxx on 06.10.16 at 3:21 pm

“Desperate Audi-less realtors sleeping under bridges, eating bugs?”

As much as I can’t see this happen soon enough to the average, bs peddling realturd, who decimates and distorts the economy by way of obscenely excess gain, that would be a complete insult to homeless people.

Gubbmint ought to look into creating a fiscal meritocracy without delay:
– successful small business: pass and promote;
– manufacturers with the cojones and values to fly on their own fuel without sucking from taxpayers: pass and promote;
– financial institutions demonstrating a net philosophy of yes, making profit, but also helping to create wealth building programs from ages 0-90 and beyond if desired: pass and promote;
– savers who fly on their own fuel, faithfully paying – in full and on time – their fair share of tax: pass and promote;
– corporations that don’t play international “catch me if you can” with CRA and actually pay their fair share (long bloody shot)”: pass and promote.

These are the underpinnings of a healthy economy, not stoopid idjuts who pour their useless, effete hormones into an old, has-been, worn out and now mangling economic device which is re.

I say scrape the re crud from the bottom of our collective shoes or at very minimum shove it back into its correctly sized niche, promote the true heroes of a healthy economy and get things going in the right direction once again.

#148 Joe2.0 on 06.10.16 at 3:27 pm

DOWS dead.
Just doesn’t know it yet.
I suspect more money/Hedge Funds will gravitate to the West Coast RE as it unwinds.

#149 family beagle on 06.10.16 at 3:56 pm

#141 Walmark of sadkatoon on 06.10.16 at 2:16 pm

#133 Denise#1 on 06.10.16 at 12:04 pm
I know, finances factor into it. We’ve never been self-indulgent big spenders so hopefully that’ll allow us to keep puttering around our HOME until we croak. Then our children will inherit it, do whatever they wish with it, we’ll be gone :).

reality is that the surviving spouse won’t be able to maintain it

and the kids won’t have the cash to pay the taxes on it

truth

Google ‘community’. I volunteer to cut the grass. Pay me with cookies or a good tale. Like Denise said, the kids can do what they will.

#150 Aggregator on 06.10.16 at 4:18 pm

#144 Shawn – Agreed not a chance.

If you told a group of central bankers, money managers and financiers ten years ago that the interest rate would be at 0% and unemployment at 5%, you'd be laughed out of the room. Then it happened. If you told that same group Japan's 15yr bond yield would be negative in five years time, you'd be laughed at as well. It happened today.

There is no 'not a chance' in this bizarro world of finance because monetary policy is being made up on-the-fly. You have the BOJ buying negative bonds, the ECB now buying corporate bonds and the BoE mulling the purchase of equities. This is absurdity. You can't even call it market anymore. This is central planning.

Negative mortgage rates are already happening in countries like Switzerland, Denmark, and Sweden, whose bond yields have been falling from by capital flight. It's not theory anymore. Those banks are taking from depositors and crediting towards monthly principle on mortgages. Sound crazy? It's happening.

Are we likely to see negative mortgage rates? Maybe not. Can it happen? Yes it can.

No it can’t. — Garth

#151 A box in the Sky on 06.10.16 at 4:25 pm

#54 BS on 06.09.16 at 9:24 pm

You really are drunk on the kool aid.

That house will go for a lot less than $998K in the next 5 years. I say closer to $500K.

SO what does a house look like with no “extras”? $500K may be too high for that dump.

———————————–

I’m sorry but you’re a complete mouthbreather idiot doomer if you think the price of a detached house in High Park will go down 75% within the next 5 years.

Like straight up, you’re stupid.

#152 Caught on 06.10.16 at 4:54 pm

More record low govt bond yields today. It looks like rates are staying lower for longer…

#153 Entrepreneur on 06.10.16 at 4:59 pm

Wynne, T2, the Liberal gang, all talk about climate change and what they are going to do about it. Climate change is happening now, not 2020, 2013, 2050. Putting a date on it is only a stall tactic! Climate does not know time.

As for #81 Victoria Tea Party, you are probably correct in your assumptions about the Liberals and the TPP so Tom Mulcair of the NDP would have been a better leader of Canada.

This is housing bubble is not healthy for anyone, even the rich, and the economy. Listen to the news, notice what is not being said, the middle class is not mentioned. Oh sure, the homeless, the overdoses, but not about the growth of a community.

We are not only in a bubble but are upside in priorities.

#154 Nemesis on 06.10.16 at 5:01 pm

“Well, nobody knows what happens next.” – HonGT

“Nobody knows anything.” – William Goldman

“We think we are going to have a nice crowd of people there.” – Andy Stephenson, Sotheby’s International Realty Canada

[ColonialTimes] – Public auction a new twist in Greater Victoria’s hot real estate market

…”In the first five months of this year, a total of 388 single-family houses priced at $1 million and more were sold, up from 114 houses in that price category in the same months in 2015, it said.”…

http://www.timescolonist.com/business/public-auction-a-new-twist-in-greater-victoria-s-hot-real-estate-market-1.2275300

#155 Give us this Blog our daily Garth on 06.10.16 at 5:32 pm

I suppose I will be nice and congratulate Jimmy.

Well done, Jimmy. I’ve been too critical of your past performance, and I apologize a bit for that.

#156 shawn on 06.10.16 at 5:52 pm

But You Clearly don’t understand

Aggregator said:

Those banks are taking from depositors and crediting towards monthly principle on mortgages. Sound crazy? It’s happening.

|||*********************************

False, they are charging for deposits. No bank in the world is offering to pay people to borrow money. Not happening. Negative rates is negative deposit rates. No negative mortgage rates now or ever, sorry.

#157 RocDoc on 06.10.16 at 6:14 pm

Re post #1
Yay!!!! Way to go Jimmy!!!! You did it, #1!!!!

#158 salonist on 06.10.16 at 6:16 pm

question, your clients portfolio is insured too how much?
oh, I see,it’s a game of chance.

Weath management clients of established financial companies have $1 million each (minimum) in CIPF insurance, plus CDIC coverage. Bank depositors are covered only to a max of $100,000 individually. — Garth

#159 jefferson on 06.10.16 at 8:28 pm

Well for what it’s worth, personal anecdote from North Durham region in Ontario:

Good friend, former neighbour, sold house in June 2015 for $405k ….we saw the house re-listed briefly, with a new driveway being the only change, for 498k last month….sold in two days for 512k …..

Planning to list our house as soon as possible, hopefully by July 1st….

#160 ulsterman on 06.10.16 at 11:40 pm

A record 15% of all new mortgages in the past year were given to people whose debt equals 450% of their income – that is up by a quarter in a single year.
The greatest number of these walking dead are in (surprise) Toronto and Vancouver.

So they loaded up on debt and bought an asset that they can use for shelter that has appreciated by up to 40% in the past year in the Fraser Valley.

What were they supposed to do? Read bear blogs and stay on the sidelines waiting for a correction that has been incorrectly predicted for the past 8 years? Even if the correction started tomorrow, prices would have to fall 25-30% just for their paper equity to go back to where they bought. Maybe prices will rise another 50% over the next few years and they will be fairly well insulated from any price correction causing them to lose money. What’s on the horizon to cause this sudden correction in prices? Rising interest rates? A slowdown in investor purchases. A very significant increase in down payments or raised lending standards. I don’t see any of these things happening in a hurry.

#161 Alex n calgary on 06.11.16 at 2:15 pm

Here visiting family on van island in Nanaimo, real estate out of control, spilled over specrs from van must be, no real jobs here, lots of poor people, no more fly in fly out to Alberta, I heard someone say it’s booming here, sweet Jesus! Your right Garth, no more predictions, how long can it keep going? I have no idea! I’ve been wrong a lot now!

#162 Andrew Woburn on 06.11.16 at 5:13 pm

I recently posted some info about a California start-up called Otto that plans to retrofit highway trucks for autonomous driving. They are developing systems that operate only on highways to minimize the range of conditions the computer needs to control. At first truck drivers could sleep as the vehicle moved. Later fully autonomous operation would follow between points adjacent to highways.

Brydle604 correctly pointed out that Otto would not find it easy to automate the manual transmissions commonly found in highway rigs as well as other key mechanical systems such as power steering. While true, this may not slow down the introduction of the technology much because:

– The pace at which the auto industry is adopting digital/mechanical controls is accelerating and truck manufacturers are following the trend

– Electronic controls are more energy efficient and therefore save cash

– Fleet operators are finding it difficult to recruit experienced highway drivers. Automated transmissions and computer-controlled systems make trucks easier to drive and so expand the base of potential drivers including more women

Otto has confirmed on its blog site they are focused on automated transmissions. They are working with Volvo trucks which feature the I-Shift transmission:

“The Volvo I-Shift makes drivers more productive, using intelligent electronics to continuously monitor grade, speed, weight, and engine load, shifting when necessary or holding a gear—whichever saves more fuel.”

Volvo has adopted electric power steering which not only lightens the load on the driver but also saves energy since it only requires power when in use. As to braking, modern anti-lock brake systems are basically a computer chip that hits the brakes for you.

It seems to me that fleet operators already have compelling reasons to adopt these technologies that form a potential platform for autonomous driving. Given the challenges and time-line of defining, testing and certifying an autonomous system, it is unlikely that Otto or any potential rivals will now try to retrofit mechanical systems that are already obsolescent. On the other hand, their path to a successful product seems to be reasonably well-mapped.

#163 chris on 06.11.16 at 6:18 pm

Hi Garth I am looking for a good balanced portofolio ETF offered by BMO. I am trying to stay away from mutual funds since they charge silly fees. Thank you

Be careful about liquidity. Some of those are dangerously thin. — Garth

#164 jay on 06.12.16 at 3:31 am

You can almost see Hong Kong from here. http://www.straight.com/blogra/715876/buy-your-way-vancouvers-west-side-bungalow-listed-totally-justifiable-389-million