Misery 2

POKEMON modified

Misery Week, part 2, was unfolding as the young couple sat across from me, secreting their house lust. With small kids, their goal is a $1.5 million place in the country. It would mean a million-dollar mortgage, soaking up all the windfall they got from the last house.

But you’re an entrepreneur, I said, looking at him, with inherent business uncertainty, no pension, a stay-at-home spouse and scant other savings. You’re buying at an inflated moment in the market, at mortgage rates that’ll rise upon renewal. Besides, rural properties are more illiquid, they cost way more to maintain and you want to retire at 50 – just when your kids are hitting uni. Risk on, dude.

Outside the storm was raging.

Not far away employees – all 500 of them – at Toronto’s Arc Productions were reading a notice taped on the door telling them to go home. The entertainment company was kaput. Bankrupt. On markets, the price of oil was sailing down through the $40-a-barrel mark as supply overwhelmed demand, in distinctly bad news for Alberta. In Washington Barack Obama declared Donald Trump to be “unfit” for office, “woefully unprepared,” and called on Republican leaders to dump him. In Ottawa, new stats were confirming what this pathetic blog suspected: real estate’s now the single largest industry in Canada at 13% of the GDP, or 20% if you add in property financing.

These things may not seem to be all that connected, but they are. The world’s moving in one direction. Millions of deluded Canadians are going in another. It’s been 60 years since the national economy grew this slowly, or housing was such a big part of it. But unlike the 1960s, families are now saddled with historic levels of debt. And mortgage rates are 50% lower, suppressed by central banks scared stiff of a beast called deflation. Sixty years ago people bought houses priced at three or four times their annual incomes. Today they use extreme leverage and buy at 10, 15 or twenty times.

I shared this with the kids. But were they listening?

Meanwhile, to the West, more misery.

“Remember,” my insider source said, “that I told you last month the Vancouver market was coming apart –  starting with detached?”

Quite so. Detached home sales in YVR tumbled about 9% in the last monthly report, with some areas off 40% – and that was before the BC Chinese Dudes Crash Tax was applied. Now the local realtors are about to announce a shocker. The number of deals has started to plunge – down 19% year-over-year and way worse on a monthly basis – a whopping 30%. Attached house sales also crashed 20%, and apartment deals were off 7%.

And while detached sales were crumbling, listings were increasing and prices eroding. A classic post-market top – the one we told you last month was coming. So just imagine the impact of shutting out foreign buyers – whether they amount to 5% or 10% of the totals – at a time when everything’s starting to roll over. Bubble meet prick.

Average detached prices are on the decline, and so are sales. Inventory‘s increasing. Demand is being artificially curtailed by government. The meme  that real estate’s bullet-proof is changing fast, and once the stats are published (tomorrow) the misery starts.

Why does this matter anywhere else in the nation? Because, as stated above, real estate is now the largest single industry in Canada. Its epicentre is Vancouver, now a global symbol of local stupidity. The decline there is unlimited, but certainly consistent with the two corrections chronicled here in recent days – 27% in Toronto and 32% in the US. That would take the average Van detached price down just over $500,000. With 91% of all properties in YVR now assessed at over $1 million, wow. Figure it out.

Where does this take us?

More risk. Prepare for it. Manufacturing in Ontario has been hurting despite a low dollar. The energy sector’s in trouble. Our biggest trading partner has a protectionist nimrod running for prez. Debt’s epidemic. And now the single biggest element of the economy shows signs of implosion. Maybe hero T2 can contain the mess, but you might want to have a Plan B, just in case.

Don’t have all of your net worth in one asset, at one address in one city. Follow the Rule of 90 to age-test your real estate. Have a balanced and diversified portfolio. Not too much maple – have twice as much US and international growth exposure. Own lots of asset classes. Buy REITs and preferreds for  growth and yield. Learn how things are taxed, then chase cap gains and dividend income. Eschew individual stocks (risk) and mutual funds (cost). Embrace low-cost ETFs instead. Channel the first bucks you invest into your TFSA. Shun debt. Just because the bank wants to lend it doesn’t mean you should take it. Mostly, think for yourself. Misery loves company.

175 comments ↓

#1 Noel on 08.02.16 at 4:54 pm

Its pretty obvious to me there won’t be any price correction in housing until rates go up – a lot. And that isn’t happening this year, or maybe even next year. Might even get another cut.

And whats with all the doom and gloom? Canada has added nearly 50,000 jobs this year. Debt service costs are at their lowest in history, making the debt-to-income ratio much less of an issue as you make it out to be.

#2 Nemesis on 08.02.16 at 5:05 pm

“So just imagine the impact of shutting out foreign buyers – whether they amount to 5% or 10% of the totals – at a time when everything’s starting to roll over. Bubble meet prick.” – HonGT

#FunnyYouShouldSayThat,Or… #NudgeNudge,WinkWink…

[G&M] – B.C. home seller offering discount to foreigners to blunt new tax

…”One Metro Vancouver realtor says he will cut the sale price of his own Richmond home by 15 per cent for any international buyer, in a response to the province’s new levy against foreign citizens who want in on the region’s overheated housing market…

…Mr. Chen, a Taiwanese immigrant who has sold real estate in B.C. for more than a decade, is not breaking any laws by offering to lower the price in this manner, and he says he has the right to list his house at any price he likes.”…

http://www.theglobeandmail.com/news/british-columbia/home-seller-offering-discount-to-foreigners-to-blunt-new-tax/article31222389/

#3 Cirdt on 08.02.16 at 5:16 pm

Interest rates are irrelevant at this point. The banks are getting a bit less cavalier, and that is almost the same. Artificial demand, or “investment” demand is getting crushed, the mood is changing, people are starting to wonder if it is really different here.

#4 SickofBC on 08.02.16 at 5:18 pm

More corruption out of BC

“Condo King” Bob Rennie, who chairs Clark’s fundraising committee and is a major Liberal donor, denies being tipped off about B.C.’s foreign buyer tax .

http://bc.ctvnews.ca/condo-king-denies-being-tipped-off-about-b-c-s-foreign-buyer-tax-1.3012006

#5 El Presidente Trump on 08.02.16 at 5:20 pm

Still not feeling the love Garth… well, well, 100 more days of joyful chaos… I thought you would be all over a winner.. I’m a winner….everyone else is a loser…SAD!… but I really can’t stand whiners… no crying babies allowed anywhere near me. Get that baby outta here.

#6 YYC lurker on 08.02.16 at 5:26 pm

At least I am getting closer to following the rule of 90 as my house price drops… right?

#7 Context on 08.02.16 at 5:27 pm

The Ben Moss jewelry chain closed all 54 stores across Canada which began in 1910. The liquidation of all high end jewelry has commenced because there was no hope. The ownership blamed the lower CAD but just maybe people stopped buying.

#8 };-) aka Devil's Advocate on 08.02.16 at 5:38 pm

It’s a house!

Sure it is a rather large investment for which you certainly should take pause to do a whole lot of due diligence before purchasing, but, at the end of the day it’s really just shelter. Don’t get your fat, self entitled, Kardashian, lard ass all bent out of shape about having something all your friends are going to turn green with envy about. If that’s what you are about your friends probably aren’t as much as you think. It’s a house!

#9 Canadian on 08.02.16 at 5:38 pm

A year into our much-prognosticated apocalypse and Calgary has seen barely a blip in real estate decline.

#10 Derrick Polson on 08.02.16 at 5:39 pm

Stocks are getting Tired and Donald wants you to SELL! Buying opportunity anyone? And gold is surging today. I was a bit surprised to read Garth holds 18 ETFs, so I will probably add more to my holdings on this upcoming Trump weakness.

#11 Dracula on 08.02.16 at 5:43 pm

http://www.cknw.com/2016/07/30/209181/

“Bajwa has listed his 2,500 square foot home for $1.3 Million.

He’s had two offers so far from locals, below asking price.”

Finally, offers below asking price.

#12 RANDY on 08.02.16 at 5:43 pm

Not likely…Bought lots of preferred ETF’s and then the BoC decided to lower interest rates. Those bastards will likely do it again to support a negative interest program to keep their bubbles inflated. Never trust a Central Banker.

#13 Trump is not the problem! on 08.02.16 at 5:45 pm

Trump hasn’t caused wide spread chaos in North Africa or the Middle East.

That happened under Hillary’s watch!

Enough of the Trump bashing already. Hillary gives me serious indigestion. She will drive the world straight into WW3. Not even a question of “if” but “when” should that woman get back into the WH.

Trump is not a friend of the Fed which is probably why he will not win the election.

But for the record, please look at Hillary’s performance with Bill and after Bill. Frightening!

#14 ED on 08.02.16 at 5:53 pm

Garth,

What do you see happening to the economy as a whole as housing starts its slow slide? Will people be going out less and buying less services; putting massage therapists, therapists, accountants, sales people in a tough spot? Will there be a boom in kd and dollar store sales?

#15 common sense on 08.02.16 at 5:57 pm

#1 Noel

Just curious…

Have you ever smelled coffee before?

#16 Nemesis on 08.02.16 at 5:58 pm

#BonusMiseryMischief,Or… #MoreMillenialsPrefer… #PokémonGO… #ThanGoPokeMan…

[WaPo] – ‘There isn’t really anything magical about it’: Why more millennials are avoiding sex

…”It’s a less sexy time to be young than it used to be, despite millennials’ reputation as bed-hoppers frolicking like the characters on “Girls.” A study published Tuesday in the journal Archives of Sexual Behavior finds that younger millennials — born in the 1990s — are more than twice as likely to be sexually inactive in their early 20s as the previous generation was. Even older millennials are more sexually active than this younger group is.

Recent research also shows that overall, millennials — people born between the early 1980s and 2000 — have fewer sexual partners than the baby boomers and those in Generation X, the group immediately preceding them.”…

http://wapo.st/2aMGaHI

#17 Blacksheep on 08.02.16 at 6:08 pm

James #135,

“My point was that Trump worked his way out of his military duty and that he touts himself as the greatest personal supporter of military on the planet. Which military? The Russian? He cant stand on any side of the fence when it comes to making a stable and believable statement regarding the military or its duties.”
—————————-
“War is a racket, always has been” Smedley D. Butler

I’ll be honest, I would never have gone. Period. I would have simply found a way to avoid it. So while you hold it against him, I applaud him for problem solving.

Trump stayed alive and in one piece, while many of the un-fortunate sons didn’t survive, or came back severely damaged, way beyond the physical.

So I can relate to Trump. He may be a little rough around the edges and need guidance from his handlers, but he is a winner and the US needs a winner…..badly.

#18 75% drop in YVR on 08.02.16 at 6:17 pm

You cannot be even mad at Garth these days, because for the housing bears the news are awesome:

Metro Vancouver home sales dropped 75% after foreign buyer tax announced: realtor

http://globalnews.ca/news/2861138/metro-vancouver-home-sales-dropped-by-75-after-foreign-buyer-tax-announcement-realtor/

I told ya it was the Crash Tax. — Garth

#19 SickofBC on 08.02.16 at 6:17 pm

MLA David Eby’s letter to the Premier about Bob Rennie’s statement he “knew” the new real estate tax was coming, Very interesting.

http://davideby.mla.bcndpcaucus.ca/wp-content/uploads/sites/14/2016/03/Letter-to-Premier-re-insider-information.pdf

#20 Andrew t on 08.02.16 at 6:17 pm

Harsh news about Arc. Must have been how they felt at Silverstein’s.

http://www.blogto.com/eat_drink/2016/07/silversteins_bakery_suddenly_closes_after_100_years/

#21 Smartalox on 08.02.16 at 6:22 pm

@ Nemesis #2:

So what you’re saying is that prices for SFH in Vancouver / Richmond are already headed for a 15% drop?

#22 Google trends tells us what people are thinking about. on 08.02.16 at 6:26 pm

Google searches in Canada for “Housing Crisis”, “Real Estate Bubble”, Real Estate Crash” & “Bubble Burst” are on the rise.

It’s fascinating to watch consumer sentiment changing.

Click the link to see Google Trends chart.

#23 46 and 2 on 08.02.16 at 6:29 pm

Things I believe,

– Trump should be a cartoon character
– All religion is pretty much a bad thing
– Civilized people do not go to war
– Oppressed people go to war
– Rio might be the start of the end of the olympics, looks like a gong show already
– The gold standard must be brought back
– Corruption at all levels is pure evil
– Wile E Coyote is just plain dumb

#24 AK on 08.02.16 at 6:36 pm

#13 common sense on 08.02.16 at 5:57 pm

#1 Noel

“Just curious…

Have you ever smelled coffee before?”
==================================
One would have to be awake first, before smelling the coffee. :-)

#25 Pistachio on 08.02.16 at 6:39 pm

#2 Exilled on 07.31.16 at 5:23 pm
Sir Garth: Is the store open tomorrow? Okay First!!

Of course. Pistachio ice cream just arrived. Ryan is scooping. — Garth

—-

In your dreams… He won’t stay that long.

#26 TnT on 08.02.16 at 6:40 pm

Garth – I can’t thank you enough for all your work on this Blog.

House closed today – fat cheque deposited

I’m in this 1.5 million dollar old Victorian rental (T.O) for less than 2 weeks and doesn’t the drain pipe in the basement burst – flooding the basement with 2 inches of water over long weekend.

Note – I could have bought this or any house with my fat cheque but decided to rent instead. Good thing as this repair will be 1000’s – maybe 10 plus grand all said and done.

Landlord sent in plumber and cleaners with long weekend rates.

Plumber does his inspection and determines it’s a drain issue.

Landlord sends in the drain crew to snake the pipes…

Drain crew snakes pipes and determines there’s a broken pipe beyond the exterior wall.

Landlord sends in the cleaners a second time while we wait for the drain camera crew.

Had I bought this house I would have been begging for extra work at The Belfountain General Store just to stay off cat food.

Thanks Garth

#27 Sheane Wallace on 08.02.16 at 6:45 pm

I had the chance to experience first hand the s..thole Ottawa/Gatineau has become few days ago.

If there is any EFT/trade that shorts Ca markets, CAD and in particularly Ca housing market included banks vs. for example Euro, their economy and housing market I will buy triple leverage short of that putting all my money on it and excepting 10 + time return.

Only an idiot can believe that a mouldy wood particle house in a city with no economy (e.g Van/To) is ‘worth’ 3 time the brick house in Frankfurt or Munich, the heart of European Business and economy.

Semi detached in Brampton more expensive than 2 apartments (no maintenance) in the centre of Munich!

Absolutely incredible.

When it hits the fan it would be spectacular!

I would be watching from the sidelines: Chronicles of the housing madness ravelling in fast motion.

#28 Sheane Wallace on 08.02.16 at 6:46 pm

unravelling in fast motion.

#29 amazon girl on 08.02.16 at 6:47 pm

Amazon girl to Smoking Man

My deepest sympathy . My heart is with you…
Also lost my parents at a young age ….so I know how much it hurts.
Your father is in a better place now…
My father used to say: life is about moments we share with the ones we love.

Your friends are the ones who cries with you…
amazon girl

#30 the other white meat (pork) on 08.02.16 at 6:47 pm

Vancouver prices down to 500k? Ain’t gonna happen brother. How’s the “cowtown death watch” going? Alberta has been taking hit after hit on every front except the price of houses. If prices are that sticky with a one trick pony economy why would there be a sudden collapse in YVR?

I’m celebrating the first month that my portfolio is in the black over the last year. The year to date quotes look rosy but man that was a hard hit when the Fed raised rates. I’m sitting on some cash so I can take advantage instead of being violated the next time they pull that stunt.

A big thank you Mr Turner, your blog finally got me off my a$$ to start investing in ETFs. The last year has been a bumpy ride but things should work out fine in the end. If not, I will retire to a small town and apply for a summer job scooping ice cream.

#31 Erick on 08.02.16 at 6:50 pm

Hi Garth

You regularly advise against buying individual stocks, but recommend buying preferreds
Do you mean individual preferred stocks (and how to pick them then), or ETFs based on preferred stocks ?

Thanks
Erick

#32 MF on 08.02.16 at 6:51 pm

“Hero” T2…lol what a joke.

Don’t worry the central bankers will drop interest rates and give us more “stimulus to save us all…oh yeah they’ve already done that and it’s done f all. Great job. Real great job alright.

MF

#33 Cory on 08.02.16 at 6:53 pm

“But were they listening”

If there is one thing I have learned about people, you can talk to them and try to offer assistance but I think human ego makes people want to trip over their own feet so why bother.

The hilarious part to all levels of incompetent governance in today’s world is they have all the answers on how to solve all country woes but they can’t even implement a federal payroll system to pay their own civil service workers.

The Alberta provincial government fresh, out of high school, implements a carbon tax full steam ahead while they have all the answers on “diversifying” the economy and all will be swell yet they miss a simple legal document where it says if government policy causes the power contract to become unprofitable the contracts can be effectively cancelled and they are now suing a taxpayer owned entity called Enmax and the incompetence will now cost said taxpayers 2 billion dollars but there’s no accountability for these errors. Private sector they’d walk you to the door immediately.

Who knows, maybe once our all knowing politicians hit their college years they might know what they’re doing. But will there be Anything left?

#34 Pistachio on 08.02.16 at 6:54 pm

Not far away employees – all 500 of them – at Toronto’s Arc Productions were reading a notice taped on the door telling them to go home. The entertainment company was kaput. Bankrupt.

Let me guess: DHX Media (DHX-B) will pick up their library assets and some of those 500.

Not everything is gloomy, you could have made a killing with SLW.TO since January. 5% just today.

#35 DisgustMadeMePost on 08.02.16 at 6:54 pm

#17 SickofBC on 08.02.16 at 6:17 pm
MLA David Eby’s letter to the Premier about Bob Rennie’s statement he “knew” the new real estate tax was coming, Very interesting.

http://davideby.mla.bcndpcaucus.ca/wp-content/uploads/sites/14/2016/03/Letter-to-Premier-re-insider-information.pdf

………….

Anyone not think mr Rennie has influenced the Liberal policies over the years ?

During the debate on the tax bill, mr Eby put forward an amendment that would see R E sales linked to S I N numbers. Where money used to buy R E would be monitored for ‘cleanliness’. Of course the amendment did not pass.

I sure hope the non foreigners (90% of the buyers) back right off …

#36 WallOfWorry on 08.02.16 at 6:57 pm

This is great news! Sales volumes go down, calibrates price, maybe we even see a healthy pullback? It will be more interesting to watch the Feds moves…the market is starting to mock them for their repeated posturing about raising rates and then their failure to do so. We know they won’t raise in September just before election so only leaves December as a possible rate hike option. Right!

#37 Long Branch Apprentice on 08.02.16 at 7:02 pm

If only there was a way to make a smart leveraged bet against all this madness to preserve and increase my purchasing power…

Blog dogs, what will USDCAD be at Christmas time this year?

Anyone? Anyone?

#38 WUL on 08.02.16 at 7:04 pm

Calgary home sales drop for 20th straight month and reach 20 year low (1996). CBC Calgary

#39 Pistachio on 08.02.16 at 7:09 pm

A jam from zerohedge:

This Is Why Trump Wins
…because people are sick and tired of corrupt politicians; and, as Jim Quinn so eloquently notes, “the propaganda press telling us it’s raining while they piss down our backs.”

#40 JSS on 08.02.16 at 7:10 pm

Is the TSX slowly decoupling from oil?

#41 Jeff on 08.02.16 at 7:13 pm

The one thing no one talks about – how many families per detached home in Toronto. The number is around 6, that is 6 families per detached home, if that number keeps growing (since rest of countries economy is crap it prob will), Toronto won’t get any more affordable. Top 25% of income owners will own a home now days, and maybe top 50% will own a Semi.

Below that you will be out in the suburbs or SOL in Toronto.

#42 tex on 08.02.16 at 7:13 pm

What a striking coincidence that the value of BTC TANKS on the same day a property tax is instituted in one of the money laundering capital of the world.

http://www.investing.com/currencies/btc-usd-chart

It is plausible that this instrument was being used to circumvent measures designed to curb capital outflows from certain economies.

Yes, I believe that there are coincidences, but not THIS time…

#43 crowdedelevatorfartz on 08.02.16 at 7:16 pm

And the BC/Canada economic bad news just keeps on coming as Christy Clark’s Liberal party heads into next years election with more potential scandals coming to light…..
Its almost as good as the US election………!

:)

#44 Mark on 08.02.16 at 7:20 pm

Blog dogs, what will USDCAD be at Christmas time this year?

Hard to tell, but housing prices falling are very positive for the CAD$ and the inflation numbers in Canada generally. As demand truncation will easily keep inflation under control.

The BoC will probably cut another 25bp this year (and 25bp again next year) in response to the falling house prices (now entering the 4th year of stagnation/falls across Canada). This should support the CAD$, although speculators probably will try to push it unnaturally down.

The TSX has increasingly been buoyed by the precious metals sector. My “prediction” made late last year turned out to be dramatically too conservative.

#45 steerage steward on 08.02.16 at 7:20 pm

Five scenes from Vancouver as it transforms into a playground for the rich.

http://www.bloomberg.com/features/2016-vancouver-real-estate-market/

#46 Harbour on 08.02.16 at 7:23 pm

Who’s that Billionaire bald mouth piece always on BNN?

Did he slam Notley today… oh it was good !!

#47 Smoking Man on 08.02.16 at 7:24 pm

Dad got a great send off.

In other news..
Looks like I’m not the only one that shares this belief.

https://youtu.be/PeAYXAcjH5U

#48 Boombust on 08.02.16 at 7:28 pm

The Vancouver market begaana serious decline in the late Spring. The new tax did not initiate the fall off; it was due to happen anyway.

Clark is just playing politics; she wants to look like the “saviour” of the great unwashed for the May, 2017 election.

If, before then, the market “over corrects”, she will merely blame the downturn on the 90% of locals who have bought into this mess. See? Smart politics.

#49 God Emperor of Mankind Trump on 08.02.16 at 7:30 pm

>In Washington Barack Obama declared Donald Trump to be “unfit” for office, “woefully unprepared,” and called on Republican leaders to dump him.

I’m sorry, what were Mr. Obama’s qualifications preceding his appointment to office?

Two years as an undistinguished junior senator? A “community organizer” before that. No one in his college seems to be able to recall any memories of the guy. A law degree?

Has he a raised a single dollar’s worth of capital outside of his own immediate fundraising needs? Has he hired a single American worker?

#50 S.Bby on 08.02.16 at 7:33 pm

#27 the other white meat (pork)
Vancouver prices down to $500,000? Ain’t gonna happen brother.

No. Read it again.
Prices drop by $500,000
Entirely possible.

#51 Smoking Man on 08.02.16 at 7:37 pm

Wow this kid is a younger version of me.

https://youtu.be/PeAYXAcjH5U

#52 Context on 08.02.16 at 7:41 pm

Now one business that will survive the downturn will be a country store selling ice cream. It needs an internal attraction to entertain the customers as kids screaming for ice cream might not be enough. It might be called the wall of honor to hang pictures of historical significance for an attention grab. The Toronto Star is in business selling matted pictures of years gone by for example. I have one for sale that would crash the doors, but hardly appropriate.

#53 it’s only Trump and coal (but I like it)…. on 08.02.16 at 7:45 pm

US GDP was .9 % annualized for the first half of 2016….sounds like they’re catching down to Canada, haha…

juggernaut? don’t think so….maybe the ‘cleanest dirty shirt’ in light of having the global reserve currency (and being able to manufacture as much as desired ad infinitum (or not))….

Voodoo economics was, and still is FUBAR…..

T2…..Brexit……Trump?…..GT just might go 0 for 3…..as a dual citizen, my vote for T2 was my first time voting here and I recently requested my absentee ballot from the states for the first time also. Guess who I’m voting for? haha…..
there WILL be a lot of folks (unknown ones like myself) that will come out of the proverbial woodwork to vote for him….
he’s a serious a’hole but at least he’s not a Clinton a’hole…..and WILL shake things up if elected….

Hillary should be pilloried…..she had better pull out all the stops (and hanging chads), can you say ‘massive spending/buying’ to win (and avoid some serious investigations)….haha…..I wonder how she looks in stripes?

very fun times sitting back and watching all of this crap play out….slow motion train wreck big time….ok as long as the Central bank’s monetary ’glue’ holds up…..

but hell, equities will continue to move ‘up and to the right’ regardless, eh….massive central bank support can never be counted out. 2 down days after Brexit and blast off… their official motto should be “never count us out while we can still print”…..haha….stock buybacks, lowered expectation ‘beats’, ‘engineered’ earnings….hey, it works!…..and that ‘formula’ will continue, again ‘ad infinitum’ (until it doesn’t)…..

Canadian equities after an RE bust will rock as the $’s (and perception) rotate….so rock on balanced portfolio…..and hold on to those bars tight….

“Real estate and financial services now account for 20 per cent of the economy, levels not seen in the data since the early 1960s. That could be a problem, with household debt at a record and policy makers scrambling to slow price gains that are making homes unaffordable for all but the wealthiest buyers.” National Post…

20% eh, an RE bust will be very interesting to say the least…

#54 Self Directed on 08.02.16 at 7:52 pm

#23 TnT on 08.02.16 at 6:40 pm
———————————
Nice to hear your post-sale stories. And it must be a relief that you are not on the hook for the maintenance. Be a super good tenant and pray for your landlord. His success is your success.

#55 Andrew Woburn on 08.02.16 at 8:08 pm

“Bubble meet prick.”

Garth, how long have you been polishing that line? It’s worthy of the Ernest Hemingway award for concision.

However I hope it wasn’t intended as a surreptitiously unparliamentary reference to the tax-the-foreigner “de Jong show” just initiated by our esteemed BC Minister of Finance.

#56 jay on 08.02.16 at 8:15 pm

Sunny way’s my friend ,sunny way’s .Don’t worry J.T just started sending out the new child benefit cheque’s.My niece is now receiving $5,0000 per year for 1 child up from $1,200 per year and it’s tax free !!!

#57 Happening now on 08.02.16 at 8:20 pm

Metro Vancouver home sales dropped 75% after foreign buyer tax announced: realtor | Globalnews.ca
http://globalnews.ca/news/2861138/metro-vancouver-home-sales-dropped-by-75-after-foreign-buyer-tax-announcement-realtor/

And only 5% foreign buyers can cause this….strange ????

Not really. As forecast here when the tax was hastily announced. Prick, meet bubble. — Garth

#58 Andrew Woburn on 08.02.16 at 8:29 pm

As usual in the financial world, half the people believe we’re on the eve of destruction and the other half think they heard “construction”. However there are trends and signs that can make you say, “Hmmm”.

The attached chart shows how a peak in US merger and acquisition activity has preceded the last two recessions and where we are today. The idea is that M&A activity increases as sagging profits make takeover targets vulnerable. Then, at some point, potential acquirers get spooked and leave the table.

https://gallery.mailchimp.com/451473e81730c5a3ae680c489/images/371f3da3-979c-49e9-a378-a2e4d2dd18a2.jpg

#59 jay on 08.02.16 at 8:31 pm

I meant $5,000 per year oops.

#60 Yeee on 08.02.16 at 8:48 pm

https://betterdwelling.com/the-really-big-short-the-13-7-billion-dollar-bet-against-canadian-banks-over-housing-and-insider-sales/

#61 Vanreal on 08.02.16 at 8:56 pm

#16 75% price drop in van

Did you even read the article. What an overreaction on your part!

#62 Mark M. on 08.02.16 at 8:59 pm

#34 Long Branch – The USD will fall against our dollar, fueled by rising gold and oil prices here, and rate cuts, or the rising probability of them in 2017, there.

#63 A belieber on 08.02.16 at 9:04 pm

#14 Nemesis

A study published Tuesday in the journal Archives of Sexual Behavior finds that younger millennials — born in the 1990s — are more than twice as likely to be sexually inactive in their early 20s as the previous generation was
_______________

That’s a gag study we had published to get helicopter parents off our backs. Did your daughter show you that?

#64 Ronaldo on 08.02.16 at 9:11 pm

#41 Mark

”The TSX has increasingly been buoyed by the precious metals sector. My “prediction” made late last year turned out to be dramatically too conservative.”

Mark, indeed conservative and what a year so far. The last little bull market lasted 20 months or so and this one just began. Lots more to come but will be a pullback before it resumes in the fall. XGD is up 146%, HEP up 115% since Sept. 15th. Good call just the same. Don’t forget to take some off the table.

#65 Smoking Man on 08.02.16 at 9:21 pm

#26 amazon girl on 08.02.16 at 6:47 pm
Amazon girl to Smoking Man

My deepest sympathy . My heart is with you…
Also lost my parents at a young age ….so I know how much it hurts.
Your father is in a better place now…
My father used to say: life is about moments we share with the ones we love.

Your friends are the ones who cries with you…
amazon girl.
……..
Thanks Amazon

Feels weird being an orphan now.. Good turnout, nice send off and moments of insane laughter on my part.

I could not resist.

http://Www.dyslexicsmokingman.blogspot.com

Seams I’m not the only Dyslexic out there.
Read the last sentence….. It will jump out at you.

#66 Stop it already on 08.02.16 at 9:23 pm

Every ad when I Utube is Alberta Government climate change propaganda.
Stop it Notley, what a waste!

#67 Chaddywack on 08.02.16 at 9:27 pm

http://www.bloomberg.com/features/2016-vancouver-real-estate-market/

Love the last line in this article. ‘Maybe vancouver might slow down in 20 years’

Lorne or Garth? You decide!

#68 BOOM! on 08.02.16 at 9:48 pm

Are we really at the dawn of correction? Maybe, it is merely the eve of destruction, who can tell?

My portfolio has puked up $5 grand in losses over the past week. I believe there is more to come, too. August is such a historically sucky month for the markets, and September is just about as bad. Summer blahs…

There is much to be said for profit taking. One always wants to harvest the gains!

I do not wish to hear anything further on the presidential race. The whole bloody thing sucks! Same with real estate, oil prices, or the prospects of whatever!

Yeah, it has just been one of those days around here.

Where did I put the brandy bottle?

#69 Lukas Lou on 08.02.16 at 9:51 pm

#16 75% drop in YVR sales

Haha…I don’t doubt there may have been a drop in sales but it’s not as pronounced as the headline suggests. The analysis was done on a week-over-week basis…if you really want to show how bad the drop is, mind as well do a day-to-day change in sales…it could a be 100% drop.

#70 Ronaldo on 08.02.16 at 9:54 pm

#65 Boom

”Where did I put the brandy bottle?”
——————————————————–
Never mind the brandy, have you ever drank some Newfoundland “SCREECH”. If not, you ought to. Once hooked, you’ll never go back to brandy. Just ask any Newfie.

#71 Smoking Man on 08.02.16 at 9:56 pm

https://youtu.be/-vqJrJ8cxEQ

This kid is the real deal.. He gets it.
He’s no lefty.

#72 WUL on 08.02.16 at 10:12 pm

Garth:

A question from me as a keen student of our judicial system, politics and debauchery. I saw the headline in the G&M that P.M. Trudeau is under fire for excluding MPs in the process of appointing Justices to the Supreme Court of Canada. Seems to me that has always been the case and that the selection of the Supremes has always been the province of the PMO with the influence of Cabinet. If I am wrong, which Jurist are you responsible for?? Spill the beans.

#73 Binder Dundat on 08.02.16 at 10:12 pm

Harrowing perspectives on “homeowners” living through a housing crash- 8 years in:

Underwater in the Las Vegas Desert, Years After the Housing Crash

More than eight years after rotten loans and plunging home values made Las Vegas the center of the housing crisis, thousands of people have yet to recover.

http://www.nytimes.com/2016/08/03/us/las-vegas-2008-housing-crash.html?mwrsm=Email

#74 Hmmm on 08.02.16 at 10:13 pm

But.. I thought according to Garth the # of foreign buyers is not material to make a dent in the YVR market, therefore the 15% tax will not have any impact. /Sarcasm…

#75 Bearded Fat Man on 08.02.16 at 10:57 pm

It’s way too early to tell but I think the recent policy change in BC will exaberate the rush to the interior. Out of the frying pan, the GVRD, into the fire, the Okanagan.

http://www.castanet.net/edition/news-story-172215-1-.htm#172215

#76 Smoking Man on 08.02.16 at 10:58 pm

Not sure you could read the small print in the link to my blog.

It was a plack from city hall at the visitation Hall.
They wanted to say families But it was spelt.

Famalies. This what caused a laughing fit on my part that freaked out the morners at dad’s funeral.

In there faces, he’s had a nervous breakdown. Not knowing they are in the presents of the Smoking Man.

I keep smoking Man and me separated in public.

I saw it as Fama-Lies a new word in my dictionary that I dident need to invent. how appropriate. Weddings, funerals and Xmass dinner where Fama-Lies run deep.

All the same I should not have laughed that hard at my dad’s funeral..

The laughing felt good. But I looked like shit….

#77 macroman on 08.02.16 at 10:59 pm

Crikey Andrew t, #18, I thought when you typed Silverstein’s bakery closed suddenly, you meant Larry’s in WTC 7.

Those double indemnity bagels can really blow up when baked.

#78 45north on 08.02.16 at 11:10 pm

Detached home sales in YVR tumbled about 9% in the last monthly report, with some areas off 40% – and that was before the BC Chinese Dudes Crash Tax was applied. Now the local realtors are about to announce a shocker. The number of deals has started to plunge – down 19% year-over-year and way worse on a monthly basis – a whopping 30%. Attached house sales also crashed 20%, and apartment deals were off 7%.

The tax-that-crashed-the-BC-economy was a miscalculation. The idea was to make Vancouver housing more affordable. Looks like it will be. I posted about a family that wants to buy in Vancouver. The father wouldn’t hear of the possibility of a price decline. I bet they move to Vancouver and rent.

Evaluation day for BC Assessment is July 1. So July 1 2016 everything looked good. Very good. July 1, 2017 is another story. The problem will be finding comparables. Same as what happened in the US: one house sets the price for a thousand.

Washed Up Lawyer: Calgary home sales drop for 20th straight month and reach 20 year low (1996). CBC Calgary

prices will follow

#79 Obione on 08.02.16 at 11:11 pm

Does everyone remember what the markets did two weeks after brexit? The market went into temperary shock, once everyone realized life goes on…. The market went back to normal. Human beings react to chaos and second guess themselves “is this the big bubble?” “O crap I better wait to see what happens.” People that have been waiting to buy will have an amazing opportunity in the next two weeks to get a good house with the chance of putting in a subject to home inspection for once. Things will go back to normal in September.

That aside, I find two things interesting, and am glad this tax in now in place.

What I find interesting is Local buyers are getting bid out by 10-15%. Locals can now compete on offers.

I am watching different markets and there is a massive amount of inventory that is overpriced. Its like a winning lottery ticket. “Ok I don’t really want to move, but hay the market is crazy I’ll price my property 15-20% more then what it’s worth because I know it will be a nightmare to buy something in the same market, and hey, if they buy it at that price I win. There are so many people doing this it’s nuts, and is creating a fake perception of a crash.

Inventory is super low, and if you remove the people that have listed, that don’t actually want to sell its even lower.

Anything that is priced right is still flying off the shelves.

That’s my two cents, if people do over react to the media there will be a temporary correction of 5-10% with prices going back to “normal” in September.

#80 My Life is a Pile of Shit on 08.02.16 at 11:11 pm

“Learn how things are taxed, then chase cap gains and dividend income.”

I love chasing capital gains, but they’re harder to catch than Pokémons.

“Eschew individual stocks (risk) and mutual funds (cost). Embrace low-cost ETFs instead.”

All the ETFs with good liquidity in Canada can be counted on the fingers of one hand. Most Canadian ETFs are woefully illiquid, and US ETFs aren’t cheap by virtue of the cost of currency conversion. In fact, currency conversion is so expensive (about 2%) that one needs to keep a permanent supply of USD if one trades US ETFs. Buying and selling currencies repeatedly would make US ETFs far more expensive than mutual funds. (Currency conversion costs 2% per transaction; mutual fund fees are 2% per year.)

#81 Doug t on 08.02.16 at 11:14 pm

I took a break from the internet today – it was very nice – I went fishing with my brother on the welland river – caught several bass, 4 pike, 8 crappie and some catfish / very relaxing – even saw 2 snapping turtles mating – going back to check on the usual internet sights felt quite lacking after that day

#82 macroman on 08.02.16 at 11:16 pm

#52, Andrew, love your perspective.

Smart stuff, however de Jong is now officially de Gong.

Please do try to keep up, <;{0=

#83 Love My Kia on 08.02.16 at 11:27 pm

And here in northern Ontario, life is good! Housing costs are reasonable and we are the home to the world’s largest freshwater lake!

http://www.netnewsledger.com/2016/08/02/bombardier-signs-428-million-deal-metrolinx-rail-cars/

How you like them apples?

#84 macroman on 08.02.16 at 11:47 pm

The other white gold (silver), #27…

Come to the light, your PF wouldn’t just be in the black over the last 8 months, try 4-10 times.

I hope Rowat doesn’t spew the same Bay St. infLewenza next Saturday.

Maybe after the 20 bagger debt slayer precious metal bonanza these dudes will convert to bullion lickers and buy a Kia.

#85 Love My Kia on 08.02.16 at 11:54 pm

Smoking Man;

What do you mean with Serbians and thunderstorms? I am Serb (a lefty however) but seem to be missing something here.

#86 Mark on 08.03.16 at 12:14 am

“But.. I thought according to Garth the # of foreign buyers is not material to make a dent in the YVR market, therefore the 15% tax will not have any impact. /Sarcasm…”

The Canadian RE market has been stagnant/falling for the past 3 years, including Toronto/Vancouver in wake of the disappearance of the first-time buyer on account of changes made by Minister Flaherty (RIP) to CMHC subprime mortgage insurance.

But this event, of the tax, may go down in history as the trigger of widespread public recognition of the falling prices.

I am reminded of the situation in the summer of 2001. The tech sector was well into the process of implosion. Job offers that went to the class of 2001 were being rescinded left and right. A good friend of mine was paid $10k simply not to show up at her $60k/year job in Ottawa at Nortel. As we know in hindsight, Nortel peaked much earlier, along with the rest of the tech sector, even though in some cases, the senior stocks continued to rise (ie: Nortel’s peak of ~$120 was very late in the game!).

But for most people, the defining ‘event’ of the tech bubble collapsing was the planes flying into the WTC’s and the Pentagon on Sept 11/2001. But the meltdown was well, well underway even before that pivotal event.

Similar deal in the USA circa 2006-2008, where house prices were gradually melting, even though the Realtors and the bankers were using statistical hijinx to try and convince the public that everything was swell. Watch “The Big Short” if you suffer amnesia on the course of events at the time.

Just like in Canada, in the USA, the banks/realtors had the audacity to claim that prices were rising. Sales mix changes were in full force. Yet it was all an allusion in hindsight. The whole process, from peak to collapse, took about 3 years for the US. We’re 3 years from the peak in Canada, and now the visible collapse appears to be proceeding on cue.

#87 Ronaldo on 08.03.16 at 12:52 am

O’Leary slams Notley

http://www.bnn.ca/video/o-leary-on-how-alberta-should-navigate-through-low-oil-prices~922904

#88 Kenchie on 08.03.16 at 1:25 am

#64 Chaddywack on 08.02.16 at 9:27 pm
“http://www.bloomberg.com/features/2016-vancouver-real-estate-market/

Love the last line in this article. ‘Maybe vancouver might slow down in 20 years’

Lorne or Garth? You decide!”

Lorne’s going to sound like an idiot in the not-too-distant future. A salesman is always selling. With that quote, he’s selling fear.

#89 Derek R on 08.03.16 at 1:39 am

#39 tex on 08.02.16 at 7:13 pm wrote:
What a striking coincidence that the value of BTC TANKS on the same day a property tax is instituted in one of the money laundering capital of the world.

It is plausible that this instrument was being used to circumvent measures designed to curb capital outflows from certain economies.

That is actually one of the best explanations for BitCoin value that I’ve heard. Thanks!

#90 Tamsen on 08.03.16 at 1:47 am

Caldwell from Caldwell Securities was on BNN today saying the foreign tax will not affect rich foreigners wanting in to BC. He said words to the effect that that they’ll buy here no matter what the tax is …

#91 Cloudy on 08.03.16 at 1:58 am

#24 Sheane Wallace on 08.02.16 at 6:45 pm
I had the chance to experience first hand the s..thole Ottawa/Gatineau has become few days ago.

If there is any EFT/trade that shorts Ca markets, CAD and in particularly Ca housing market included banks vs. for example Euro, their economy and housing market I will buy triple leverage short of that putting all my money on it and excepting 10 + time return.
_____________________________________________

Not sure how effective they are but Horizons offers a few inverse ETF’s.

HFD.TO – BetaPro S&P/TSX Capped Financials Bear seeks to correspond 200% inverse in relation to the daily performance S&P/TSX Capped Financials Index

HXD.TO does the same thing with the S&P TSX 60

I’ve been thinking about it for a while, but for some unknown reason long shots don’t seem to work that often for me!

#92 TRT on 08.03.16 at 1:59 am

Now why would detached home sales collapse after this 15% tax?? Hmmmm.

If you turn off foreign money inflows, prices would collapse 50%. But I don’t think they will.

Grab the popcorn. The locals (recent Chinese and Indian Immigrants included) want this tap shut off.

#93 Truth Matters on 08.03.16 at 2:14 am

Wow Garth, really putting it out there with these last couple of posts. Love it. Somebody’s gotta say it!

#94 2016 Jobs #'s Not So Stellar... on 08.03.16 at 2:33 am

#1 Noel

True, job numbers for 2106 have increased as you say and “close-enough” to 50,000:

Jan 2016: -5,700 or 0.0%
Feb 2016: -2,300 or 0.0%
Mar 2016: 41,000 or +0.2%
Apr 2016: -2,100 or 0.0%
May 2016: +14,000 or +0.1%
Jun 2016: -700 or 0.0%
_______________________________________________

2016 Net Gain = 44,200 (Self-Employed: -37,500)
_______________________________________________

…aaahh, the ubiquitous Self-Employed which are counted in the Employee class of worker.

The Zen of a recent StatsCan report examining individual tax filings over a period from 1989 to 2010:

“Self-employment goes up with unemployment”.

Typically 10% of the workforce is “Self-Employed”. The rest I leave up to your imagination.

July numbers out this Friday.

#95 meslippery on 08.03.16 at 2:36 am

Our biggest trading partner has a protectionist nimrod running for prez.
————–

Yeah thats cause good paying jobs with benifits are
competeing with people living in squaller.
Ask the middle class if life was better with tariffs and no free trade.
As someone who has lived 56 years I can tell you while
Tvs cost more and maybe refrigerators (Lasted 40 years)
things were better with out free trade.

Ask them go ahead…..

#96 Bram on 08.03.16 at 2:46 am

This blog was always derisive about realtor stats, but now taken as proof for bubble burst?

Like I commented a few days ago:
The real indicator will be Teranet HPI.

If your suspicion of realtors is still there, maybe entertain the possibility of realtors trying to make government’s policy look bad?

#97 Liberal 70's weren't sweet for most on 08.03.16 at 5:58 am

Garth, it was under Liberal Party PM Pierre Trudeau when the country was mired in a two decade long recession. Anyone who matters can remember those long days of the 70’s when jobs were mythical as the Liberals gutted manufacturing and a generation of us had to live in communes and get stoned for decades at a time because the jobs had vanished for Pierre’s ‘sustainable development’ plans to employ the third world.

Are we beginning to see the same malady because of his maladjusted son being foisted upon us by the Hate Harper Faction of Union Bosses, Public Broadcasters who hated being unable to get a Governor Generals appt, and the disaffected Goodales who just wanted to crucify the guys that crucified him?

No other explanation makes sense, the Liberals under Justin are dragging this country backwards into Pierres Closet. Is it Justins memories of his fathers wars with the poor of the third world and the hate from Canadians that those actions started that are enticing him to take Canada back to Africa?

So what was the percentage of foreign buyers affected by the new law that are not from the PRC? So lets get serious, this new law will have zero effect on the market, the media is just trying to swipe the race card across the face of the BC Liberal Party. The corrupt HAM laundering stolen loot out of China are on record saying they don’t care what it costs, just as long as they get the money landed in this safe haven out of the reach of Chinese authorities.

#98 Please Qualify This Statement on 08.03.16 at 6:06 am

Garth, can you please qualify this statement, as it makes no sense to me:

“It’s been 60 years since the national economy grew this slowly, or housing was such a big part of it.”

How can it possibly be 60 years since the economy grew so slowly when we’ve had multiple instances of negative growth over the last 60 years?

#99 WalMark of Sadkatoon on 08.03.16 at 7:10 am

YVR and YYZ real estate prices will come down some day

#100 Zen Headspace on 08.03.16 at 7:19 am

#48 Smoking Man
“Wow this kid is a younger version of me.”
——————————————————————–
Great clip. How true this phenomenon is. Proven over and over. Natural intelligence beats taught regurgitation every time. It is such a great and simple observation that schools only teach you how to play within the boundaries.

Unfortunately, it’s the only real option for most of us. Entrepreneurship cannot be taught. There is no school for it. One is either a “natural”, or just a regular dude (or chick). For the 99% of us regular people, it’s true, school is the “way out”. Unless you’re smart enough to go it alone and create your own wealth and create work for others, you must become one of those workers. Your only hope is to get a spot in the hierarchy that feels less like the slavery that it actually is (i.e., get a gig inside the big house as opposed to out in the fields). In this society, that takes education. If you get educated in a discipline and skill that is in relatively high demand, you’ll make more money, get more perks, get to wear nicer clothes, drive a nicer car, get a nicer chair in a nicer office, with maybe a few sub-slaves of your own (secretaries, assistants, etc.). But you’ll still only be a slave working for the master. You won’t really be a a free person. Just a cushier slave, despised by the other miserable and jealous slaves who perceive you as cowtowing to the master.

If you are smart enough, perceptive enough, and gutsy enough to be an entrepreneur, then congratulations. Whether or not you work harder, or make more or less money than a wage slave is irrelevant. Entrepreneurs are free. Self -employment (i.e., FREEDOM) comes at a dear price. Most cannot handle it. Most cannot afford it. Most are nowhere near smart enough, through no fault of their own, to be able to do what it takes to achieve financial success independently. You either got it or you don’t.

“If you realize that all things change, there is nothing you will try to hold on to. If you are not afraid of dying, there is nothing you cannot achieve.” ~Lao Tzu

#101 CJBob on 08.03.16 at 7:48 am

#77 My Life is a Pile of Shit on 08.02.16 at 11:11 pm
All the ETFs with good liquidity in Canada can be counted on the fingers of one hand. Most Canadian ETFs are woefully illiquid
_______________________
Since Garth’s recommendation has ETF’s held for the long term with annual re-balancing there are plenty of ETF’s that are just fine. Always use a limit price in case there is a spread of more than a penny or two between bid/offer. Any minor loss in the spread is more than offset by the reduced fees vs mutual funds.

#102 NoName on 08.03.16 at 7:54 am

#86 Derek R on 08.03.16 at 1:39 am

how about this explanation why bitcon went down unexpectedly

Hong Kong bitcoin exchange says it was hacked, trading suspended

“In response, bitcoin prices fell to $560.16 by 19:30 UTC, $530 by 23:30 and $480 at press time, CoinDesk USD Bitcoin Price Index (BPI) data reveals,”

http://mobile.reuters.com/article/idUSL1N1AJ208?feedType=RSS

#103 tremblant110 on 08.03.16 at 7:59 am

Canada, particularly Vancouver, put their housing stock on sale to the world and prices skyrocketed taking Canadians out of the market. Dumb move.
On top of that with higher property valuations comes higher taxes. But in BC if your over 55 you can defer your taxes till you sell the house or die. Interest rate on this loan <1%. My friends are deferring their house taxes and investing the money. Easy to get more than 1 %. Win for property owners loss to the other tax payers.

#104 Andrew t on 08.03.16 at 8:22 am

#31 Pistachio on 08.02.16 at 6:54 pm
Not far away employees – all 500 of them – at Toronto’s Arc Productions were reading a notice taped on the door telling them to go home. The entertainment company was kaput. Bankrupt.

Let me guess: DHX Media (DHX-B) will pick up their library assets and some of those 500.

Not everything is gloomy, you could have made a killing with SLW.TO since January. 5% just today.

I don’t think DHX is interested in picking up a production house like that. Most media companies are trimming in house production staff, or replacing them with digital content “creative incubators”, which means paying kids jack sh*t to make 5 minute videos.
The point of mentioning the Arc closing is putting in stark relief what happens when you hit the debt wall, and how abruptly it can happen.

#105 dups on 08.03.16 at 8:46 am

They saw that the housing market would crash and they introduced a bogus foreign buyers tax,
so they can blame it on the tax when it comes down. Once they remove the tax the people will think that it is hunky dory again and up she goes again.
This way the economy and the government never get blamed. Politics at its best. Enjoy!

This blog is terrifying. — Garth

#106 Eks dee sipal on 08.03.16 at 9:02 am

#74 NoName on 08.01.16 at 11:02 pm

I thought I recognized that… I posted that over 4 years ago! Still true. Canola industry was and is still huge today. Important historically for Canadian economy. Many products in supermarket contain canola, consumers ignorant of the harmful effects of synthetic and hybrid molecules, and then they wonder why 50% get cancer and heart disease. Cradle to grave, the aim of the elite is to keep you just healthy enough to run the machines and write their reports for them, but sick enough to need the TRILLION dollar healthcare industry that they also heavily profit from.

Remember, if you hear about it on the TV or radio, it is absolutely 100% fake news. Product placement. Fake School shootings, fake terrorist acts with no blood, etc.., look for the products being advertised. It’s wrong for them to present fake news to you but it’s not illegal. You don’t have to consume it. Turn it off.

#107 opinions&feelings != fact on 08.03.16 at 9:03 am

#94 Liberal 70’s weren’t sweet for most
“No other explanation makes sense”

Here is one, most Canadians don’t share your point of view and they voted what they believed.

There is no conspiracy of “Union Bosses” and/or “Public Broadcasters”. You are grasping at paranoid delusions because you can’t accept that your opinion isn’t shared by most Canadians.

The smartest thing my uncle ever said to me was “Paranoia is a severe form of egotism”; get over yourself, before you hurt yourself.

#108 tetsicles on 08.03.16 at 10:01 am

Blog dogs, what will USDCAD be at Christmas time this year?

let’s focus on what is driving our socialist economies instead – deficits. Christmas is a time when kids tell Santa what they want and adults pay for it. Deficits are when adults tell the government what they want and their kids pay for it.

hohoho

#109 Ronaldo on 08.03.16 at 10:05 am

”Unless you’re smart enough to go it alone and create your own wealth and create work for others, you must become one of those workers. Your only hope is to get a spot in the hierarchy that feels less like the slavery that it actually is (i.e., get a gig inside the big house as opposed to out in the fields).”

I have seen many individuals in my 70 years on this planet with no more than a grade 12 education become very successful businesspersons. It is a matter of putting those natural skills you were born with to work. So much stuff we are taught in schools is so totally useless. I encouraged both sons after going to college for one year to enroll in BCIT or other Tech organiziation and learn a trade rather than university. Today, both are very successful and wealthy businessmen employing others and making them successful. They were taught at an early age the value of money and that there was ‘no free lunch’ in this world. They were taught about the power of leverage. I invested in one of the first home computers that came on the market when they were 9 and 10 and encouraged them to take keyboarding when they went into high school. I taught them basic mathematics at a very early age by turning it into a game. By the time they started grade 1 they were so advanced in math that the teachers were baffled as to how to deal with them. We don’t give children enough credit for their learning abilities. From the time of birth to age 6 or so the speed at which children learn is mind boggling. They absorb knowledge like a sponge. So much wasted time in schools. Both came out of tech school debt free having worked the summers to cover 50% of the costs. I funded the other 50%. I felt that they needed to have skin in the game to motivate them but I realized afterwards that they would have been just as motivated had I paid the full amount. They were bound to be successful. I would not do it any different today. Both have thanked me for what I did. I feel very proud.

#110 BOOM! on 08.03.16 at 10:10 am

#67 Ronaldo

SCREECH…? Never heard of it. A Newfoundland delicacy, eh? I’ll ask around, maybe somebody here in the cultural backwaters of the cow kingdom knows of it.

#111 Ronaldo on 08.03.16 at 10:13 am

#81 Macroman

”Maybe after the 20 bagger debt slayer precious metal bonanza these dudes will convert to bullion lickers and buy a Kia.”
—————————————————————
I doubt it very much that they will.

#112 Tudval on 08.03.16 at 10:21 am

OH wow! 20% of the economy is housing?? What horror! I suppose by your account it should be half that, with 90% going to such important industries like recreation, restaurant, tourism, ‘high-tech’ (pokemon anyone?), and that pill pushing sector we call ‘health-care’.

This is a dangerous situation, as many other jurisdictions have found. Real estate is an emotional industry, completely domestic-based. We may pay for such an unpredictable dependency. — Garth

#113 Damifino on 08.03.16 at 10:24 am

How’s that “deep dive” coming along, Mr Morneau?

#114 fancy_pants on 08.03.16 at 10:33 am

Since the beginning of 2015, the once high-flying NASDAQ is down almost five percent; the NYSE has lost 11.5% of its value; the Dow Jones is down slightly more than 10%; and the S&P 500 is 8.5% in the red.

Interestingly, the 12-month average level of the S&P 500 has fallen for two straight months. That has only happened twice since 1995: ahead of the dot-com crash and the 2007-2009 bear market. Happy investing.

The TSX is ahead 12% this year and the S+P has advanced 5.6%. Bonds are up. REITs are up. Preferreds are up. — Garth

#115 Ace Goodheart on 08.03.16 at 10:43 am

RE: #1 Noel:

“Its pretty obvious to me there won’t be any price correction in housing until rates go up – a lot. And that isn’t happening this year, or maybe even next year. Might even get another cut.”

You’re probably right with regard to Toronto, to a point. However Vancouver has a different problem. Right now the price for a detached house has gone past what is affordable to the middle class. By affordable, I mean that a middle class income earning family, with two full time wage earners, using every means available to them including borrowing, loans from relatives, and all of their capital and RRSPs and savings, can no longer afford to purchase a Vancouver house.

That puts Vancouver home ownership in the hands of the 1%.

That is not a place you want to be. If you are selling something, anything, you want to avoid your product only being affordable to the 1%. Ideally you want everyone to be able to afford it. With a high end product like housing, you want the middle class to be able to buy it.

Selling to the 1% is a hobby, not a business. It is something you do on the side for fun. We now have an entire city full of agents, all marketing their housing offerings to 1% of the population, predominantly as a high grade investment (ie, not to live in).

Toronto is still barely affordable. It also has an actual economy and there are tons more people here.

On the up side, due to intense and relentless government borrowing, house prices will probably never go back to where they were (or anywhere near that). We are going to experience some ridiculously brutal currency deflation. So likely this house price “correction” will help no one. It will just be a lot harder to sell your house.

#116 Shawn on 08.03.16 at 10:45 am

Kevin O’Leary’s Advice

#84 Ronaldo on 08.03.16 at 12:52 am said:

O’Leary slams Notley

***************************************
Thanks for the link. I like Kevin. He is smart anmd entertaining. But wrong on this.

O’Leary is advocating that Alberta give tax breaks to companies that will invest in Alberta. Well, as far as oil we are in surplus and added investment will add to the problem. Better to discourage capital spending in that sector.

O’Leary complains about a 10% corporate tax rate. Money-losing companies are not much affected. Corporate tax rates in Canada have come down from about 45% in 1990 to 25% today. WAY lower than in the U.S which is at 35%.

O’Leary blasts Notley about lack of pipelines. Pipelines are under FEDERAL jurisdiction.

#117 NoName on 08.03.16 at 11:04 am

#103 Eks dee sipal on 08.03.16 at 9:02 am

that is why i placed a link, because post wasnt mine. i plagiarise only sometimes.

my last employer that i worked for used canola as hydraulic fluid and as eco friendly lubricant…

i woneder what oil is used for deep fried sutf commercially.

http://in.mobile.reuters.com/article/idINKBN0K50DH20141227?irpc=932
One big problem is that the oil that cools electrical transformers is also great for frying cassava, chips and fish. Thieves tout it as well as fuel, a “remedy” for wounds, and even to make cosmetics, said Tom Muhumuza, a senior project manager for Ferdsult Engineering Services, a Ugandan firm that deals with energy projects.

—–

and those food lables, when 6% could be 4.8…
http://www.marketwatch.com/story/margin-of-error-on-food-labels-20-2013-11-07

#118 Lea on 08.03.16 at 11:04 am

#109 Tudval

When everyone is flipping houses and putting all their money into real estate, other industries are neglected.

After the real estate crash here in the U.S. was over, several of my neighbors turned their attention to building new businesses.

Before the crash all anyone could talk about was “buy now or never”. The same was happening last year when I lived in Vancouver. Anecdotal evidence, I know, but at least listen to Garth.

#119 Sam the Sham on 08.03.16 at 11:05 am

Well it looks like the “BC Chinese Dudes Crash Tax” is working. The foreign swindlers, embezzlers and money launderers are moving their ill gotten gains to the Toronto real estate market from Vancouver. Party On!

The media is full of stories of sincere, non-rich people who have come here, want to buy a house and now can’t due to a massive, crippling tax bill. Stop the ugly and false generalizations. Vancouver already has enough of a black eye. — Garth

#120 John on 08.03.16 at 11:13 am

Garth, I live in the lower mainland and have a bunch of equity in my house. I am not interested in selling however would it be prudent to take on a HELOC and put that money into one of your recommended investments?

No simple answer to that. Leverage means more risk, of course, and many people are not suited to borrowing to invest. Yak with your advisor about it. Having said that, interest rates are cheap, loan interest is 100% tax-deductible, YVR real estate’s going nowhere and balanced financial portfolios should benefit from grinding, upward global growth. — Garth

#121 maxx on 08.03.16 at 11:18 am

HH Canadians are thick as bricks. The thickest.
Realtards are emotional bullies.
When the bricks finally wake up, realtards will scuttle like the cockroaches they are.
Let’s see them try to bully others in any other line of work.
They’ll be out on their arses before they can say “by now or buy never”.

#122 Shawn on 08.03.16 at 11:32 am

S&P 500 returns

#111 fancy_pants on 08.03.16 at 10:33 am claimed:

Since the beginning of 2015, the once high-flying NASDAQ is down almost five percent; the NYSE has lost 11.5% of its value; the Dow Jones is down slightly more than 10%; and the S&P 500 is 8.5% in the red.

Interestingly, the 12-month average level of the S&P 500 has fallen for two straight months.

*****************************************
The above is totally wrong.

The S&P 500 started 2015 at 2059 and is currently 2160. That is UP 4.9%, not down 8.5% as claimed.

The Dow Jones is up significantly since the start of 2015, not down more than 10% as claimed.

Where are you getting your figures, which are so completely wrong?

As for a 12 month AVERAGE of the S&P 500. I never heard of such a statistic. Sounds like data mining. Also it would be difficult for that to be down for two months when the S&P 500 was setting new records in July.

Sounds like the doomer sites you are relying on have resorted to outright lies?

#123 Noel on 08.03.16 at 11:38 am

#112 Ace Goodheart

I agree with you that Vancouver is a completely different beast than Toronto – good points.

I think Toronto is still quite affordable though. Sure, very unlikely that a family can afford a detached house anywhere near the city, but there are plenty of other options that regular people can afford, just need to make some sacrifices.

#124 Shawn on 08.03.16 at 11:43 am

Domestic Based Industry?

Real estate is an emotional industry, completely domestic-based.

***************************************
True, then again the entire economy of the earth is based on just this one planet with not a thing exported off the planet.

Canada exports about 32% of GDP to the U.S. and has done for years. A few years ago we were still their largest trading partner even though our imports were only about 3% of their economy (given an economy 10 times larger than Canada).

Clearly the U.S. is FAR less of a trading economy than is Canada. The U.S. “relies” far more on its massive domestic economy. Seems to work okay for them.

Trade is good and beneficial. But domestic industries are fine as well.

#125 AK on 08.03.16 at 11:44 am

#116 Sam the Sham on 08.03.16 at 11:05 am
Well it looks like the “BC Chinese Dudes Crash Tax” is working. The foreign swindlers, embezzlers and money launderers are moving their ill gotten gains to the Toronto real estate market from Vancouver. Party On!

“The media is full of stories of sincere, non-rich people who have come here, want to buy a house and now can’t due to a massive, crippling tax bill. Stop the ugly and false generalizations. Vancouver already has enough of a black eye. — Garth”
====================================
Fair enough. They are able to pay (150K – 225K) above asking price?

#126 Ronaldo on 08.03.16 at 11:44 am

#112 Ace Goodheart on 08.03.16 at 10:43 am

ACE, VERY WELL SAID.

#127 maxx on 08.03.16 at 11:59 am

#17 SickofBC on 08.02.16 at 6:17 pm

“MLA David Eby’s letter to the Premier about Bob Rennie’s statement he “knew” the new real estate tax was coming, Very interesting.

http://davideby.mla.bcndpcaucus.ca/wp-content/uploads/sites/14/2016/03/Letter-to-Premier-re-insider-information.pdf

Eby deserves a medal, tho’ I think he’d prefer an official answer. Good luck to him, as stonewalling is the approved Canadian way.

#128 DisgustMadeMePost on 08.03.16 at 12:23 pm

Isn’t that the point of the tax? To keep people from buying a house? Decrease demand? Possibly slow price gains?

Won’t these people , sincere or not, be thankful that they were prevented from entering this bubbly market at the top? What’s wrong with renting?

#129 Ogopogo on 08.03.16 at 12:28 pm

#8 Canadian on 08.02.16 at 5:38 pm
A year into our much-prognosticated apocalypse and Calgary has seen barely a blip in real estate decline.

This one’s for you, my garbage-eating friend:

http://www.theglobeandmail.com/real-estate/calgary-and-edmonton/calgary-housing-market-continues-slumping/article31236287/?cmpid=rss1

#130 drydock on 08.03.16 at 12:46 pm

34 Long Branch Apprentice on 08.02.16 at 7:02 pm

If only there was a way to make a smart leveraged bet against all this madness to preserve and increase my purchasing power…

Blog dogs, what will USDCAD be at Christmas time this year?

Anyone? Anyone?

01010101010101010101010101
Au , Ag , Pb

#131 Nelley on 08.03.16 at 1:00 pm

#125Dis-the point of the tax (like any tax) is primarily to raise government revenue-they crunched the numbers and were shocked to realize how much money they had passed up-IMO their mistake was to make it so large right off the bat-say 3% would have brought in a ton of money and they could quietly raise it every year.

#132 Smoking Man on 08.03.16 at 1:21 pm

#82 Love My Kia on 08.02.16 at 11:54 pm
Smoking Man;

What do you mean with Serbians and thunderstorms? I am Serb (a lefty however) but seem to be missing something here.
….

Sorry about your lefty handicap. Tesla was born in during a violent thunderstorm. Pops left the world during a violent thunderstorm.

#133 fancy_pants on 08.03.16 at 1:24 pm

that is October’s post just coming early. cheers.

#134 Zen Headspace on 08.03.16 at 1:32 pm

As has been previously noted by Garth and various blog dogs, one of the key drivers of the insanity in the real estate market is FOMO.

Our lives are often ruled by the Fear of Missing Out, or FOMO. (Never heard of FOMO? You’re missing out.)

As an emotionally ruled species, we are subject to the weakness of worrying about what we could be having as opposed to enjoying what we already have.

The house we live in, that’s affordable or maybe even paid off, isn’t good enough. Somebody we know has a bigger one, nicer one, better one, fancier one, one with marble floors, one with 7 bathrooms, is in a nicer neighborhood, and on and on. Either way, we suffer because we think that there’s something better than what we already have out there that we are missing, and that by getting it we will be happier and richer and have more status and fun and feel better about ourselves.

Some ways we let the fear of missing out rule us:

We check email, Facebook, Twitter and other social networks often, in case we’re missing something important.

We try to do the most exciting things, and are constantly in search of exciting things, because we’re worried we might miss out on the fun that others are having.

We constantly read about what other people are doing, and try to emulate them, because it sounds like they’re doing something great that we’re not.

We often want to travel the world, because it seems that other people are living amazing lives by traveling all the time.

We miss what we don’t have, miss things, places and people who we aren’t with.

We work constantly, because we think if we don’t, we might miss out on opportunities other people will get.

We feel like our own lives are poor in comparison with the great lives others are leading, and so feel bad about ourselves.

The truth is, we could run around trying to do everything exciting, buy newer and more expensive houses, and travel around the world, and always stay in touch with our smart phones, and work and party all day long without sleep … but we could never do it all. We will always be missing something.

And so, if we cannot help missing out, what is a saner alternative than letting this fear drive us? Let go of it, and realize you have everything right now.

The best in life isn’t somewhere else. It’s right where you are, at this moment. There is nothing better than exactly that.

Today’s millennial FOMO buyers are taking on unprecedented levels of risk. Those who do get into the housing market today could be the most precarious generation of buyers ever. All the easy money’s been made in housing, while the risks of owning multiply.

KEEP CALM AND SAY NO TO FOMO!
——————————————————————–

Ref: Zen Habits – The 39th Lesson BY LEO BABAUTA

Ref: ROB CARRICK Globe & Mail
“Fear Of Missing Out leaves millennials taking on big risk in housing market”.

#135 Guy Fawkes on 08.03.16 at 1:35 pm

#67 Ronaldo on 08.02.16 at 9:54 pm
#65 Boom

”Where did I put the brandy bottle?”
——————————————————–
Never mind the brandy, have you ever drank some Newfoundland “SCREECH”. If not, you ought to. Once hooked, you’ll never go back to brandy. Just ask any Newfie.
—————–
It’s Jamaican rum with a tourist label on the bottle. mostly used to screech in people that are not newfie but would like to be honorary. My circle of friends did not drink it.

#136 Ronaldo on 08.03.16 at 2:05 pm

#121 Shawn

”True, then again the entire economy of the earth is based on just this one planet with not a thing exported off the planet.”
———————————————
Not true Shawn, check out this video.

https://www.youtube.com/watch?v=L915JJMcu4s

#137 Marco Polo on 08.03.16 at 2:07 pm

Garth says ” foreign buyers ” are not driving the market in Vancouver.

A new 15% tax which applies to “foreign buyers” only, as in those who are ineligible for a Canadian passport, has lead to a record filing of 15,000 land registry applications on Thursday and Friday, to avoid the August 1 deadline in Vancouver. These weren’t Canadian buyers rushing to a deadline.

Bloomberg reports that much of the froth in Vancouver ‘ s RE is driven by foreign buyers, not locals.

#138 James on 08.03.16 at 2:32 pm

#127 drydock on 08.03.16 at 12:46 pm

34 Long Branch Apprentice on 08.02.16 at 7:02 pm

If only there was a way to make a smart leveraged bet against all this madness to preserve and increase my purchasing power…

Blog dogs, what will USDCAD be at Christmas time this year?

Anyone? Anyone?

01010101010101010101010101
Au , Ag , Pb
………………………………………………………………….
Is that question pre-Trumpification or pre-Hilleryfication?
01000100 01101111 01101110 01100001 01101100 01100100 00100000 01010100 01110010 01110101 01101101 01110000 00100000 01101001 01110011 00100000 01100001 00100000 01100110 01110101 01101100 01101100 00100000 01110011 01100011 01100001 01101100 01100101 00100000 01110111 01101000 01100001 01100011 01101011 00100000 01101010 01101111 01100010 00101110 00001010

#139 Crowdedelevatorfartz on 08.03.16 at 2:36 pm

@#107 Boom
Not so fast on the “Screeech” unless you also enjoy drinking gasoline.
Newfies also kiss dead Cod on the lips and eat the tongues

#140 Goofy2Shoes on 08.03.16 at 2:40 pm

#14 Nemesis

“‘There isn’t really anything magical about it’: Why more millennials are avoiding sex”

…. because so many of them still live at home with their parents!!

#141 Nemesis on 08.03.16 at 2:43 pm

“That’s a gag study we had published to get helicopter parents off our backs. Did your daughter show you that?” – BelieberInstitute

#FunnyYouShouldSayThat,Belieber…

[Atlantic] – How Helicopter Parenting Can Cause Binge Drinking: The way some white professionals raise their children is exacerbating an alcohol problem on U.S. college campuses.

“I was a teenager in the 1970s. It was a different time. We did not drink—or do drugs or have sex—in captivity. We did those things in the wild, away from our parents, in the danger and thrill of the dark, sacred night. Our parents understood that it was the beginning of the end: We were leaving them. Some of us had curfews, others did not—but either way, you could get a lot done by midnight. Beyond us, on the other side of high school, was some sort of future, probably more or less in line with our parents’ larger plans for us, but maybe not. The average middle-class kid (as we were called back then, meaning: a white kid whose parents owned a house and whose father was steadily employed) was not burnishing dreams of Princeton. Go to class, show up for the SAT, fill out the applications, and then enroll in the best, or the most interesting, or the farthest from home, or the cheapest college that lets you in. We didn’t need much help from our parents to do those things. Which meant that at night, we were free. And we did many dangerous things. Mothers were not yet against drunk driving; cheerful ladies did not give you condoms at school. It wasn’t an arcadia, and many times things went terribly wrong. But most of us survived.

Today, of course, all of that is different…”…

http://www.theatlantic.com/magazine/archive/2016/09/how-helicopter-parents-cause-binge-drinking/492722/

#142 A Girl Who Invests on 08.03.16 at 2:45 pm

Hi everyone. I need some advice/feedback. I’m seeing a lot more currency hedged ETF options. I’ve been reading about the pros and cons of currency hedged funds and I’m leaning to unhedged ETFs. Is unhedged the better way to go?

#143 Terri Krantz on 08.03.16 at 2:48 pm

Who needs stocks, real estate, ETF’s etc. Our family just put $1.5 million split 4 taxpayers between us since 2010 to 2011 in government strip bonds that accrued 110% interest every 10 years, $1.65 million interest only. This is 11% per annum.

By 2041 to 2042 at maturity, we will have $1.65 million*3=$4.95 million just in interest over 30 years.

Our first $68,000 a year income is tax free so we will only pay $245,000 income taxes every 10 years on $1,650,000, a low 15% tax rate only. If you add TFSA’s, this goes down to a low 10% tax rate per year.

Our C.P.P, OAS, life insurance policies, matured GIC’s will last us for decades. We no mortgage, no debts since 1980.

#144 Noel on 08.03.16 at 2:59 pm

#130 A Girl Who Invests on 08.03.16 at 2:45 pm
Hi everyone. I need some advice/feedback. I’m seeing a lot more currency hedged ETF options. I’ve been reading about the pros and cons of currency hedged funds and I’m leaning to unhedged ETFs. Is unhedged the better way to go?
__________________

Why not a mix of both?

#145 TurnerNation on 08.03.16 at 2:59 pm

Canadians are brain dead sheeple yes.

Acquaintance who sold GTA 905 house for a million to go his own way is looking for an Investment Property [sic].

I dare him to find anything cash flow positive. And any gain would be like 2% on investment and fully taxable.
Might as well buy XRE instead.

Like I said Kanadians never allow themselves to be rich. A fool and his money..

Selfie Sheep.

#146 hobo joe on 08.03.16 at 3:00 pm

Foreign tax already having an effect:

http://www.cbc.ca/news/canada/british-columbia/real-estate-tax-new-15-metro-vancouver-foreign-buyers-1.3703987

What many geniuses here fail to understand is that the closings on real estate transactions are typically 30 to 120 days after a deal is completed. By giving a single week’s notice of a debilitating new tax, the implications are immense for a market the size of Vancouver, affecting closings that would normally happen over one to four months. What a cock-up. — Garth

#147 A livin' thing on 08.03.16 at 3:02 pm

#129 Smoking Man on 08.03.16 at 1:21 pm

#82 Love My Kia on 08.02.16 at 11:54 pm
Smoking Man;

What do you mean with Serbians and thunderstorms? I am Serb (a lefty however) but seem to be missing something here.
….

Sorry about your lefty handicap. Tesla was born in during a violent thunderstorm. Pops left the world during a violent thunderstorm.
——

The ELECTRIC UNIVERSE!!!!

#148 Brazil ex-pat on 08.03.16 at 3:12 pm

There were RECORD numbers of closings before the Aug 2nd deadline – lots of locals buying houses I guess.

Seriously. How dumb do you have to be not to understand at least three months’ worth of closings would be accelerated to escape the tax? — Garth

#149 Brazil ex-pat on 08.03.16 at 3:16 pm

#102 dups on 08.03.16 at 8:46 am
They saw that the housing market would crash and they introduced a bogus foreign buyers tax,
so they can blame it on the tax when it comes down. Once they remove the tax the people will think that it is hunky dory again and up she goes again.
This way the economy and the government never get blamed. Politics at its best. Enjoy!

This blog is terrifying. — Garth

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

Actually no – Govt is terrifying – we are witnessing this worldwide….

#150 drydock on 08.03.16 at 3:17 pm

#135 James on 08.03.16 at 2:32 pm

#127 drydock on 08.03.16 at 12:46 pm

34 Long Branch Apprentice on 08.02.16 at 7:02 pm

If only there was a way to make a smart leveraged bet against all this madness to preserve and increase my purchasing power…

Blog dogs, what will USDCAD be at Christmas time this year?

Anyone? Anyone?

01010101010101010101010101
Au , Ag , Pb
………………………………………………………………….
Is that question pre-Trumpification or pre-Hilleryfication?
01000100 01101111 01101110 01100001 01101100 01100100 00100000 01010100 01110010 01110101 01101101 01110000 00100000 01101001 01110011 00100000 01100001 00100000 01100110 01110101 01101100 01101100 00100000 01110011 01100011 01100001 01101100 01100101 00100000 01110111 01101000 01100001 01100011 01101011 00100000 01101010 01101111 01100010 00101110 00001010

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

Machine language goes to root , and so do elemental metals.

#151 RentYVR on 08.03.16 at 3:21 pm

The Vancouver Real Estate Board has released July stats:
http://www.rebgv.org/news-statistics/home-sales-move-record-breaking-pace-july

Compared with June, sales are down, listings are up and prices are up. Combined with the new crash tax I think we may be close to calling June 2016 as the top of the bubble.

In other news, my old landlord who tried to up our rent $1250 per month has just dropped his ask by $800. So nice to see all the greedy RE peeps here start to get their comeuppance !

#152 hobo joe on 08.03.16 at 3:27 pm

“What many geniuses here fail to understand is that the closings on real estate transactions are typically 30 to 120 days after a deal is completed. By giving a single week’s notice of a debilitating new tax, the implications are immense for a market the size of Vancouver, affecting closings that would normally happen over one to four months. What a cock-up. — Garth”

That’s a good point.

Question – why is Misery Week always in August?

#153 Tudval on 08.03.16 at 3:36 pm

Obviously I am here to see what Garth has to say and others who post here, to see if I’m missing something. 20% going to housing doesn’t seem excessive to me, I used to spend more than that even when as I bought when prices were much lower (but rates were also 3 times what they are now). I mean if everybody spends the ‘normal’ 30% on housing and you deduct taxes and utilities, you get at least 20%, right?

I was always of the opinion that we need a healthy amount of negativity to have a good balance of renters vs buyers in the market, but when it gets excessive there is a downside. Lately we have been inundated with warnings from such ‘experts’ in Canadian housing as the IMF, Justin Trudeau, Mr Poloz etc… people who you’d think should be busy enough with their day job that wouldn’t have intimate knowledge of any market, never mind one as complex and diverse as the Canadian RE. Still waiting for Putin and Trump to weigh in on the issue.

In regards to ‘everybody talking about housing’ you know, there is that one time when ‘it’s different this time’. I believe in regards to single detached homes in 416 Toronto we are there. Which doesn’t mean we go to infinity in terms of prices. In the condo market there’s something for everybody, but most think they deserve more that what is available.

But with no new supply of land for sfdh, it seems right that they will not be available to the average income earners. My guesstimate is they are going to the 20% earners at the moment and that base will shrink every year forever. The variable is what that income is, so take into account recessions, interest rate hikes etc.. I don’t live in Vancouver, so I don’t know exactly what’s going on there.

To me, in order to have a chance to correctly analyze any market you need more than stats, technical or fundamental analysis, especially since it’s all local. You need to know who is buying, who’s selling, have knowledge about speculation, financial situation of the homeowners etc… we only have Canadian or at best provincial averages and they are useless to analyze local markets.

I read about anecdotal evidence (even worse than stats for predicting trends), then I look around my (typical) neighborhood and see very little of that. On my street, on average 1 house out of 100 houses for sale every year. Some years none, other years 2. Some have been passed to the new generation by way of inheritance. One flip in 20 years.

In a larger area there’s some tearing down of old houses, building new ones. Nothing abnormal. These are small builders, I talked to a couple – what they do if they get stuck and cannot sell, they move into the last house they built. Probably they have enough to get by for several years in case of a downturn. I bet none of them will slash prices in a panic.

The time even this little activity stops, I’ll know we are in trouble and the price of housing will be the least of our worries.

Now, if you take Canada as a whole there’s always some market somewhere that you can worry about. Can’t remember a time when there was no bad news.

#154 hankathome on 08.03.16 at 3:40 pm

I live in Vancouver’s west end for the last 3 decades. Almost all the houses in the surrounding area (i.e. 6 block radius) are occupied by immigrants courtesy of the immigration investor program. Believe me, I’ve been talking to the neighbors.

Of course these people are very affluent and have heavily influenced the price of homes in the west end. Garth, you should take a walk around Vancouver’s west end; it would adjust your claim that foreign money form a small portion of sales. I’m counting the people of the immigrant investor program as foreign money as they certainly didn’t earn it here in Canada.

If they are immigrants, they are Canadians. They have as might right to live on your street as do you. — Garth

#155 A Girl Who Invests on 08.03.16 at 3:42 pm

#141 Noel – Why not a bit of both?

I could do that, but I’m having a hard time wrapping my head around hedged funds in general. The Couch Potato dude says they aren’t worth it. Others agree with him. Some say hedging is only worth it when your portfolio gets over 25% foreign. Others say having currency exposure is good for diversification so don’t hedge, while others say hedging takes out some of the volatility….and some studies have shown that it doesn’t take out volatility.

Information overload!

#156 Amanda Hull on 08.03.16 at 3:52 pm

The 15% foreign property tax adds $300,000 to a $2,000,000 property in Vancouver for instance.

Looking at 2.4% to 2.5% 5 year fixed rate mortgage rates today this $300,000 upfront tax is equivalent to a 1% point increase in mortgage rates financed over 25 years.

Even at 3.4% to 3.5% equivalent fixed rate mortgage rates that is the 15% tax will have still is not going to do it.

We need to see minimum 4.5% to 5.0% 5 year fixed rate mortgage rates to really push speculation to aside or have a slowing at least.

This is all about more taxing powers and politics. If it was really about putting a stop to out of control, much higher prices real estate prices in Vancouver and B.C., they could easily set a minimum 10% annual mortgage payment or 0.8333% minimum monthly mortgage payment.

So a $2,000,000 purchase price would need minimum $16,667 a month just in monthly mortgage payments instead of the current $8,800 a month that applies to today’s mortgage rules.

It is a real joke and this tax will only continue to increase over the years as Toronto’s land transfer tax already has over the years.

#157 turn of the tide on 08.03.16 at 4:01 pm

Garth,

When do start shorting REITs like XRE and BEI.UN??

Woof woof!

#158 Smoking Man on 08.03.16 at 4:13 pm

#147 drydock on 08.03.16 at 3:17 pm
#135 James on 08.03.16 at 2:32 pm

#127 drydock on 08.03.16 at 12:46 pm

34 Long Branch Apprentice on 08.02.16 at 7:02 pm

If only there was a way to make a smart leveraged bet against all this madness to preserve and increase my purchasing power…

Blog dogs, what will USDCAD be at Christmas time this year?

Anyone? Anyone?

01010101010101010101010101
Au , Ag , Pb
………………………………………………………………….
Is that question pre-Trumpification or pre-Hilleryfication?
01000100 01101111 01101110 01100001 01101100 01100100 00100000 01010100 01110010 01110101 01101101 01110000 00100000 01101001 01110011 00100000 01100001 00100000 01100110 01110101 01101100 01101100 00100000 01110011 01100011 01100001 01101100 01100101 00100000 01110111 01101000 01100001 01100011 01101011 00100000 01101010 01101111 01100010 00101110 00001010

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

Machine language goes to root , and so do elemental metals.
………………..

UCC is going with 1.3975

Print it and put it on your fridge….

#159 Barb on 08.03.16 at 4:34 pm

#106 Ronaldo on 08.03.16 at 10:05 am

———————————————————-
Loved every word of your post!
Congratulations on the fine job you did raising your sons.

I’d be interested in your technique to teach math as a game to the boys when they were pre-schoolers.I

I treated my 2 year old g/son to a little golf…a blade putter, putting cup and four golf balls. He places
the golf balls very close around the cup. I’ve taught him what ANGLE means, and creates. Within a couple of weeks, he was four-for-four.

Any chance there’s a link to a description/explanation of your math game(s).

Sorry blog people to be so far off topic.

But Ronaldo’s post bears re-reading…maybe even printing by “modern” parents.

#160 KF on 08.03.16 at 4:35 pm

#140, Terri Kranz
Please explain where these strip bonds are available.
Are they Government of Canada Strip Bonds?

#161 ej on 08.03.16 at 4:36 pm

Welcome to Surrey 2020:

http://www.nytimes.com/2016/08/03/us/las-vegas-2008-housing-crash.html?_r=0

#162 Spiltbongwater on 08.03.16 at 4:37 pm

Wouldn’t a good Realtor have a section in agreement to purchase to cover any unforseen tax or levy? Guess that would not be in the (insert info here) on the template they use for these contracts. Buyers Realtor really must earn their money by not protecting clients best interests.

No contract can guard against the unknown. — Garth

#163 OSFI on 08.03.16 at 4:39 pm

Mortgages are going to get more expensive in GTA #VanRE Calgary & Edmonton – from $MIC slide deck

New capital framework expected to be published sept 2016
*more risk sensitive by incorporating credit scores and outstanding insured amounts
* includes supplementary capital for metropolitan areas where regional house price to income metric threshold exceeds OSFI’s prescribed threshold…

To be applied Jan 1st 2017

Also CMHC might come with a deductible for banks FYI

#164 DisgustMadeMePost on 08.03.16 at 4:40 pm

What many geniuses here fail to understand is that the closings on real estate transactions are typically 30 to 120 days after a deal is completed. By giving a single week’s notice of a debilitating new tax, the implications are immense for a market the size of Vancouver, affecting closings that would normally happen over one to four months. What a cock-up. — Garth

I don’t think it’s a failure to understand. I think it’s an outright lack of concern.

Surely the Liberals understood and proceeded.

Maybe they think there’s more votes to be had from those that don’t have a million than those that will be affected if their sales fall through.

#165 Victoria Real Estate Update on 08.03.16 at 5:25 pm

Hi Garth, please do not post.

. . . . . . . . . . . . .Calgary House Prices. . . . . . . . . . . .
. . . . . . . . . (September 2007 to June 2009). . . . . . . . .
. . . . .(Percent Below September 2007 Price Level). . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . 0%. . . *. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 0.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 1.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 1.5% . . . . . *. . . . . . . . . . . . . . . . . . . . . . . . . . .
– 2.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 2.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 3.0% . . . . . . . . . . . . . . *. . . . . . . . . . . . . . . . . . .
– 3.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 4.0%. . . . . . . . . *. . . . . . . . . . . . . . . . . . . . . . . .
– 4.5% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 5.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 5.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 6.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 6.5%. . . . . . . . . . . . . . . . . . .*. . . . . . . . . . . . . . .
– 7.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 7.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 8.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 8.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 9.0%. . . . . . . . . . . . . . . . . . . . . . .*. . . . . . . . . .
– 9.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-10.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-10.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-11.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-11.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-12.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-12.5%. . . . . . . . . . . . . . . . . . . . . . . . . . .*. . . . . . .
-13.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-13.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-14.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-14.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-15.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *. .
——————————————————————————————-
. . . . . . . .Sep. .Dec. .Mar. .Jun. .Sep. .Dec. .Mar. .Jun. .
. . . . . . . . 07. . .07. . 08. . .08. . .08. . 08. . .09. . .09. .

(Source: Teranet’s house price index)

#166 turn of the tide on 08.03.16 at 5:51 pm

#25 Sheane Wallace

http://calgaryherald.com/business/real-estate/calgary-based-boardwalk-reit-now-the-most-shorted-stock-in-north-america

#167 rknusa on 08.03.16 at 7:26 pm

The Real Estate Board of Greater Vancouver says benchmark detached home prices surged 38 per cent last month to almost $1.6-million.

The figures capture the last month in which foreign property buyers were not subject to the new tax.

Keith Roy, a realtor with ReMax Select, said that worries over how the tax might affect the real estate market is causing potential buyers to bail from bidding on houses.

“People are just going to sit on their hands on the sidelines and see what happens over the next couple of months,” he told BNN in an interview. “If enough people wait and see, [the tax] is just going to work. Markets are always rational.”

Markets are always rational – LOL

Prices did not “surge 38% last month.” Sloppy. — Garth

#168 Barry in Pickering on 08.03.16 at 7:48 pm

Garth: Calgary Prices have fallen slightly in a year, and are expected to decline substantially.
—————

Who is expecting them to “decline substantiially”, and do they have a track record of accurate predictions?

#169 Francesca Simms on 08.03.16 at 7:53 pm

KF, in 2010 to 2011 bond yields were much higher and you can’t find them anymore.

We spread our money along 8 provincial strip bonds my RRSPs, TFSAs, RDSPs totaling $850,000 initial investments in November of 2015.

However, we could not achieve a 11% annual interest rate or 165% over 10 years. Those of the days of 5% bond rates before compounding.

We got in with 68.9% interest over 10 year periods or 68.9%, $585,650 total accrued interest, $58,565 accrued interest per year on $850,000.

Looking at the way interest rates are going with today it looks like I still came out decently.

These days you are lucky to get 48.0% to 50.0% compound interest over 10 year periods.

#170 Tony on 08.03.16 at 8:59 pm

Re: #1 Noel on 08.02.16 at 4:54 pm

The uniformed that think like you are going to put the Canadian taxpayers on the hook for hundreds of billions of dollars when the real estate market implodes Canada wide.

#171 Tony on 08.03.16 at 9:02 pm

Re: #168 Barry in Pickering on 08.03.16 at 7:48 pm

The average price in Calgary on mls is down about 25 percent from November 2014 and absolutely nothing is selling.

#172 Demonic Possession on 08.03.16 at 9:43 pm

#107″The smartest thing my uncle ever said to me was “Paranoia is a severe form of egotism”;

Nope, Uncle was an idiot. Explain the nine year Hate Harper meme on the CBC. Explain the daily Duffy coverage that magically disappeared the day after the election. Explain why the courts suddenly dropped all charges against all senators who were high lighted during the months of the election cmapign. Nope not delusion…strong background in media and marketing…Canadians got duped with hype, plain and simple. They’re paying for it now in joblessness and escalating taxes.

#173 Ace Goodheart on 08.03.16 at 10:30 pm

#123 Noel:

“I think Toronto is still quite affordable though. Sure, very unlikely that a family can afford a detached house anywhere near the city, but there are plenty of other options that regular people can afford, just need to make some sacrifices.”

True. There are condos, condo townhouses, regular townhouses…Most of the “prime” neighbourhoods with schools that parents like to drool over, are pretty much out of reach now. Even my crap neighbourhood is getting nutty. We had a recent bidding war for a house that is 8 feet wide on a ten foot wide lot (a semi). Apparently over 30 people showed up and there were bully bids. The attraction of this house? It has a very small backyard with a shed and some admittedly cool perennials. Our school zone sucks, our main street is the local ghetto. We have more social problems than a prison. Go figure. When the police come here, they send two cars and four officers. They always look really frightened.

But yeah, if you’re not fixed on a million dollar semi on Roncy or an old two bedroom fixer upper walking distance to the Great Earl Haig Secondary school (where your kids can’t go anyway because it’s full) then there are tons of options in Toronto.

RE: Folks asking what to “short”?

Unless you are a gazillionaire, don’t do that. Stocks are risky enough. Options are just not for working, middle class folk. I get uncomfortable when an ETF that I own dabbles in options. Would never touch them, not even with a barge pole.

If you want to make a little easy cash and you don’t mind some risk, this time next year, purchase some beaten up Chartered Bank stock. I did that back in 2008 when you could buy shares of Canadian Chartered banks for 1/2 of their pre-2008 values (got quite a bit of the blue and gold bank for $26.00 per share). That is going to happen again. And everyone will be telling you, don’t buy bank stocks, the world is going to end and everyone holding them goes straight to hell.

My advice would be don’t believe them and pile on in. It’s going to be yet another contrarian investor party (we are the funnest of folks).

#174 Spiltbongwater on 08.04.16 at 5:44 am

Really, no contract can gaurd against the unknown? When I sold my townhouse, the buyer tried to have a clause where I would pay any assessment in the next 12 months. Obviously I crossed that off their offer, but would that not be similar to a surprise tax?

#175 Stackerbabe on 08.04.16 at 9:03 am

http://www.nytimes.com/2016/08/03/us/las-vegas-2008-housing-crash.html