Yesterday we anticipated some new and consequential data. Today we are digesting it. Ugh. Gruel.
First to the epicentre of the country’s real estate correction, Vancouver. This is what the real estate board boss said in announcing an official 26% plop in region-wide sales:
“The record-breaking sales we saw earlier this year were replaced by more historically normal activity throughout July and August,” Dan Morrison, REBGV president said. “Sales have been trending downward in Metro Vancouver for a few months. The new foreign buyer tax appears to have added to this trend by reducing foreign buyer activity and causing some uncertainty amongst local home buyers and sellers.”
In this case, “historically-normal” can be interpreted as “crash” (analyst Ross Kay) or “chaos” (Van realtor Larry Yatkowsky). This is like an outta control Lambo suddenly slamming on the brakes to try and avoid a cliff. But it doesn’t. Some facts the realtors omitted in their media release on the Friday of a long weekend:
The average price for all properties sold in August ($832,000) is now the same as it was back in January of 2015. That’s 17 months ago – a period of time during which a lot of people paid an epic amount of money for properties which are now, Mr. Market says, worth less. Oops.
Only one in five houses listed for sale last month found a buyer. So, 80.2% of all the sellers just got a taste of illiquidity. More to come. As Kay notes, compare that to the 63% of houses which did not sell in March, and you can see the direction in which this market is headed. It’s interesting that despite the clear trend, the real estate board is calling this “a seller’s market.” They wish.
Meanwhile the first jobs fallout from the Van crash are making headlines. The local homebuilders association is predicting 5,000 hammer-swingers, drywallers and shingle demons will soon be out of work – about 10% of the area’s trades. Like the dismal residential resale market, the new homes business is being decimated by the 15% foreign buyers tax – not so much because deals are collapsing (they are) but because confidence has left town.
“I was surprised at how quick it was,” says the homebuilder boss. “The very next day we were getting emails from our members about contracts falling through.”
The average construction dude in BC earns $55,000 a year, meaning his chances of owning a detached house in 604 are, like, nil. Ironically a tax on Chinese guys intended to reduce house prices, which turns into the catalyst for an industry meltdown, isn’t going to help any carpenter buy the house he builds, especially when unemployed. In fact, a very unhealthy 26% of the entire provincial economy is now real estate-dependent (slightly more than the national number), and currently at risk.
This is a great example of a government pulling out all the stops to encourage rampant housing appreciation (like letting seniors skip paying property tax and allowing first-time buyers to avoid land transfer tax, after gifting them grant money), then murdering the same market with a crushing tax when it was already starting to topple under its own bloated weight. All of those moves, of course, were political – not economic. The unintended consequences have been profound, and what’s happening in the BC market will likely have national implications.
So will the latest US job numbers, also released on Friday. (My know-it-all partner, Doug Rowat, will have more to say about this in tomorrow’s post.) The media portrayed it as “a miss” when 151,000 new positions were created, and the jobless rate stayed sub-5% in August. The doomers said it suggests the US is inching closer to recession and the Fed will never, ever, ever raise rates as a result.
Wrong. The numbers were lighter than expected, but consistent with an economy that’s closing in on full employment. In the wake of the data dump, there’s absolutely no clarity on when the Fed will decide to pull the rate trigger, but the market is giving it a better-than-50% chance for shortly after the Presidential election (which Clinton will win, or we have one momma of a mess on our hands).
In the meantime, will the Bank of Canada panic and cut its key rate given the serious contraction of the economy, our lousy trade numbers and the implosion of BC real estate? The next moment of decision comes on October 19th (the 29th anniversary of the worst stock market dump), and the one after is December 7th (exactly a week before the Fed may move).
The consensus: no.
Stevie Poloz knows where the Fed’s headed. And he understands that dropping five-year mortgage rates below 2% at this instant would cement his role as a Judas goat.
159 comments ↓
I feel the need.
The need for speed.
Robax will have to do…
M42BC
I’m not feeling this development in Coal Harbour.
They want to build the world tallest wood hybrid structure there.
I just got off the phone with Mark Madryga ,and luckily he said that Vancouver will never have another wind storm.
I’m all for non regular ,more exciting shaped buildings but this one seems like an unnecessary risk just so you get a bit more sun in a park for 3 months a year…
M42BC
http://dailyhive.com/vancouver/1255-west-pender-shigeru-ban-vancouver
The jobs report was fine. At full employment, anything in the 150 K – 200 K is positive. Thus, there is absolutely no reason for the Fed not to hike in September. If they don’t, by December there will be other events that will delay once again. And that Garth is the problem. You have to admit it…you have been as bullish as anyone on the Fed raising….2- 4 four times this year may be a zero. No excuses.
Is the CMHC making any adjustments to its auto-appraisal software?
FIRST!
I feel good, da na na na na na na
Low balling YVR RE weekend for me!
The Banks make money even if our rates drop again.
It will fuel the housing market.
That’s all they care about.
Families will be crushed by debt if they lose their jobs.Working fulltime and part time is the norm on the west coast.
No hikes anywhere…Gotta keep piling on that debt til it blocks the sun…
Flopesq….Hope your not going to be downsized in this B.C. slowdown, yet me thinks you’ll always find a way with your skills to do well………….
And FED number manipulators…again a perfect number you came up with yet again….The Bear family would be proud. Not too
“…then murdering the same market with a crushing tax when it was already starting to topple under its own bloated weight”
Hello, we’ve been waiting for this and you have been calling for this for about 7 years now…
First
Mr. Turner:
From Huffingtonpost.ca –
The Vancouver housing market is now falling by various metrics — and the drop is most pronounced among the priciest properties.
The average price of a detached Greater Vancouver home fell by 16.7 per cent last month, representing the biggest single-month drop it has seen in 39 years, according to a graph provided by the Real Estate Board of Greater Vancouver (REBGV)”.
Oy, gevalt.
I remember 1980-1 – when Vancouver crashed. Now we have a bazillion ‘ice cube tray’ condos coming on like – pre-sold at market highs.
OOPS.
Link: http://tinyurl.com/jdhlkxh
HOUSE HUMPING “NEWS” FROM THE LOCAL MEDIA IN 2010 CONTRIBUTED TO FINANCIAL TROUBLES OF FAMILIES
As there is today, there was plenty of house humping by the local media in 2010. The message was: buy now or be priced out forever.
How many Victoria families bought in 2010 as a result of this “news” only to face major financial problems after selling at a substantial loss as house prices fell?
. . . . . . . . . . . .House Prices. . . . . . . . . . . . . .
. .Percent Above/Below March 2010 Price Level. .
. . . . . . . x = Toronto, * = Oak Bay. . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+25%. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . x. . .
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+20% . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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+15%. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .x . . . . . . . . . . . . .
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+10% . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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+ 5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
….0%. . . x*. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 5%. . . . . . . . . . . . . . . . *. . . . . . . . . . . . .
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-10%. . . . . . . . . . . . . . . . . . . . . . . . . *. . . .
—————————————————————————–
. . . . . . March . . . . . . .March. . . . . .January. .
. . . . . . .2010. . . . . . .. 2012. . . . . . .2014. . .
(sources: Victoria’s R/E board, Toronto’s R/E board)
Oak Bay’s actual price decline was likely significantly more than the Frankenumber’s 10.6%. Other areas experienced significantly bigger price declines.
HOUSE HUMPING 2015-STYLE
In 2015, the media quoted local realtors as saying that buyers from
China had suddenly “discovered Victoria” and were “moving the market”.
Of course this was false information as only 0.68% of all local deal went to buyers from all of Asia.
Did the local media present this fact to Victorians? I doubt it.
Why would we expect them to suddenly change course from being one-sided house humpers to being responsible and presenting facts?
THE REAL NEWS
Sales of detached homes tanked across Greater Victoria from April to August.
42% fewer detached homes sold in August than in April, according to the Victoria R/E board’s August stats release.
Last year, only 13% fewer homes sold in August compared to April. This 13% drop likely represents a number not atypical of the area’s decline in sales over this period of time.
Also, the drop in sales (July to August) this year was bigger than in 2015.
VICTORIA’S MARKET POSTS AVERAGE SALES NUMBERS IN AUGUST, DESPITE RECORD-LOW RATES
412 detached homes sold last month, slightly more than in August 2007 (399).
It turns out that 2007 was an average year for detached house sales in Greater Victoria (after adjusting for population growth to make comparisons to other years fair).
That puts August 2016’s detached home sales total at only average for Victoria, despite today’s record-low mortgage rates.
VICTORIA BUYERS BACK OFF
When sales fall that much over a 4 month period of time it means that buyers have backed off – in big numbers.
Perhaps the locals are losing their urgency to buy (FOMO) as they have in Vancouver.
Or, maybe Victorians have hit a debt wall, despite all of that broker-assisted mortgage fraud.
Either way, a future downward path for house prices is a certainty for Victoria and this is without even factoring in the certainty of rising Canadian 5-year mortgage rates.
First sales fall, then prices.
Market conditions (supply/demand) are always temporary. A seller’s market can turn into a buyer’s market within months as we’ve seen happen in Victoria’s recent past.
Many Victoria families will face financial hardship as a result of buying at the wrong time – at near-peak prices before Victoria’s epic housing bubble (completely explodes?) deflates.
The market has now reached ideal employment or ‘full employment’ so hardly surprising that it is 151,000.
I think it was Bernanke who said “Interest rates cant stay low forever. People will do things they later regret.” He was referring to the accumulation of stupid amounts of debt. Americans learned the hard way. Now it is the Canadian’s turn .
People in Vancouver are now waiting. No reason to buy that million dollar crack shack now when you will be able to get it at a big discount in the near future. Think of those people as vultures. Vultures wait until the food is easy to get. Vultures are smart. Be a vulture
I want to use Judas Goat as my handle
I only have grade 10 math but isn’t sales mix important?? My neighbourhood prices are just the same. And those that sold last week are way higher than last year.
House prices will not drop SIGNIFICANTLY until interest rates rise SIGNIFICANTLY. The bubble is a loooong way from being deflated.
Hey Garth, remember that chart you posted a while back showing that Vancouver had gone parabolic?
Here is that same chart updated:
http://i.huffpost.com/gen/4657294/thumbs/o-HOUSING-CRASH-570.jpg
;)
The larger issue with having an economy so dependent on residential real estate is that there is no actual sustainable growth. It is merely passing a hot potato from individual to individual until the whistle blows. All of the “gains” made are at someone else’s loss (ever greater debt). Nothing happy about that outcome.
Contrast it to the oilpatch where we export barrels of slimy ooze before it leaks into the Athabasca River (cleaning up the environment) and bring home great big shiny U.S. $$$. And then get to do it again the next day.
Exports of goods and services to other countries to bring home $$$ is real growth. Selling each other pieces of drywall and particle board is consumption, not growth. Emotional issues aside, a house is just a shelter expense in the food clothing shelter equation. Selling each other massive life threatening expenses is no way to build a stable economy.
Please don’t keep mentioning that Hillary will win. It’s too depressing to even think about.
First
Langley BC is still sizzling. A new listing sold in 1 day, not sure when it was listed, but the SOLD sign proclaimed it so. The house beside the “quick sell” was immediately listed as well, but that one is still available, ask and I can give you the details. You too can have a chance to make an appointment with the agent (who happens to have a Dr. designation) and submit an above ask offer. Maybe by the end of the year the madness will subside here in the burbs, so far so good.
Vancouver real estate ‘kicked in the face’ by new foreign buyer tax
http://www.bnn.ca/vancouver-real-estate-kicked-in-the-face-by-new-foreign-buyer-tax-1.559993
In light of today’s release of Van housing data, I dedicate this to all the greater fools, real estate pumpers and morons who claimed it was different here:
https://www.youtube.com/watch?v=A_sY2rjxq6M
Next up, YYZ. Oh yeah, burn baby, burn.
Vancouver searches plunge on Chinese real estate site – Inquiries for luxury homes dropped 55 per cent after foreign tax introduced
http://www.vancourier.com/news/vancouver-searches-plunge-on-chinese-real-estate-site-1.2336134
Searches for Metro Vancouver homes on China’s largest foreign property real estate portal plunged the day the B.C. government introduced a controversial 15 per cent tax on foreign homebuyers.
“The 25th of July was the day the B.C. government announced the tax, and it was also the day juwai.com had the lowest number of buyer inquiries for Canadian property in nearly two weeks,” said Matthew Moore, president of the Americas for Juwai.com.
Inquiries about Metro Vancouver homes priced at $1 million or more have continued to fall, dropping 55.6 per cent in August compared with a month earlier, Moore said. Inquiries about Vancouver-area homes priced at $1 million or less dropped 8.3 per cent in the same period.
Last week, juwai.com had 30 pages of Metro Vancouver homes for sale — at least 300 properties — ranging from $650,000 North Vancouver condominiums to a five-bedroom house in Shaughnessy listed for $10.8 million.
Byron Burley, juwai.com’s Shanghai-based vice-president, told a real estate conference in Vancouver in June that the Chinese-language site normally has approximately 3,000 residential listings from B.C.
“There has been a demonstrable pull back in Chinese demand in Vancouver,” Moore said, adding that the “inquiry fall has been much greater for luxury properties.”
I want a crash as much as anyone but if you think 26% below insanity means anything you’re insane. August sales were 3% below the 10 year average. Some crash.
Garth. I’ve been a daily reader since 20 comments was a crazy day and squirrel recipes traded like hockey cards.
Your encouragement to take financial control spurred me into action a few years back. With a little balance and diversification its all rainbows and unicorns now. You help others more than you realize, and I for one am very grateful.
Keep doing what you do you strange demented freak of nature (with great abs and buns of steel).
So basically, if the average construction worker is earning $55k a year in Vancouver, which is fairly modest for a city like that, then where is the ‘money’ that is allegedly coming to Canada from the “Chinese” (correction, “was” coming) ending up?
Its not ending up anywhere. Because it largely didn’t exist. But what does exist, in Vancouver, is a strong feedback loop between the banking system and the sellers of houses. “Grandma” sells her Vancouver house and proceeds to stick it all into Vancity GICs “because they offer a better rate than the big banks” (for some reason, housing sellers, particularly elderly ones, have a high level of reluctance to take their bounty to people like Garth who can at least help them diversify away from the mess!). The lenders thus have more funds to shovel into the market, and so on and so forth, creating a feedback loop.
The ‘problem’ here is that as house prices continue to fall (and falling they definitely are — the term “illiquidity” is just code-word for falling prices in most cases!), that feedback loop is almost certainly to be disrupted. With minimal equity and no access to the capital markets, the credit unions are set to become big black holes. Its not even clear, at least to me, if the BC Government has enacted proper legislation that could “resolve” an insolvent credit union system without an extreme amount of chaos.
Very scary times, that’s for sure. Buckle your seat belts, tray tables up!
Seriously, if Canadians would all listen to Garth, it would actually provide a viable reason to incentivize a portion of Americans to actually *want* to move to Canada. Alas, this is not happening.
Times are tough….I sure love getting my rent money at the 1st of each month! Let’s here about how much money a person needs for retirement or how much fun my trip to Vegas is gonna be! Who cares about van or to real estate it’s getting exhausting… People dig their own debt and deserve what they get
People who have never experienced a harsh recession are in for an experience because this one is going to be a doozie.
#28 The American on 09.02.16 at 7:39 pm
‘Cause we just can’t wait for you gringos to move here.
The average construction dude in BC earns $55,000 a year, meaning his chances of owning a detached house in 604 are, like, nil.
Sorry Garth, but no.
The average construction dude in BC may be reporting that as his income to the CRA, but any skilled tradesman is going to be pulling the same in untaxed, side jobs in cash.
Combine that new found income with a propensity to buy an absolute shitshack of a fixer-upper that he can attack with his buddies using materials at cost, and I’d wager that the chances of him owning a detached in the 604 are higher than nil.
#25 Frank on 09.02.16 at 7:32 pm
I want a crash as much as anyone but if you think 26% below insanity means anything you’re insane. August sales were 3% below the 10 year average. Some crash.
——————
You don’t think the biggest drop in Van detached prices in 39 years represents a crash?
Take a look here and tell me what word you would use to describe this price action:
http://i.huffpost.com/gen/4657294/thumbs/o-HOUSING-CRASH-570.jpg
^ Looks like the classic bubble bursting to me; A parabolic rise at the end of the bubble signifying a top, followed by a straight down crash, which is precisely what the chart shows.
It’s over.
sure …a few ‘specers’ are going to think twice in YVR…….well let’s just say more than a few……..
Don’t think that the mid-range market won’t be very, very sticky on the way down, or that banks will be falling over themselves to lend you money – it doesn’t work like that…..
…in other words … don’t hold your breath.
“The average construction dude in BC earns $55,000 a year, meaning his chances of owning a detached house in 604 are, like, nil.” – Garth
———————————————
Average makes $55K? No way.
Once again a weeks worth of bluster and bullshit from the Fed is countered with data that confirms the opposite narrative.
There will be no rate hikes this year, as I predicted after “liftoff” last year. Now that The Amercan is back, I’ll remind him to prepare his excuse.
#8 common sense on 09.02.16 at 7:07 pm
Flopesq….Hope your not going to be downsized in this B.C. slowdown, yet me thinks you’ll always find a way with your skills to do well………….
////////////////////////////////////
HeyCommon,not real sure what is going to happen with work anyway as the Flops are a bit banged up at the minute.
I was supposed to go back to work two weeks ago but I chose to stay of work and look after my injured wife instead,she doesn’t have a car or a license so I have been taking her all her appointments.
Anyway I am having surgery again myself in late October and will be off work for 4 months approx so I will hopefully work on a house or two before surgery,then worry about what to do to pay bills next spring.
Our current situation is a classic example of why you don’t just buy real estate for the sake of it.
We had no income this month and if we had a huge mortgage ,over the next six months our lives would be destroyed by debt.
Instead we will slowly add to our miniature portfolios and concentrate on both getting relatively healthy.
You guys are not getting rid of me that easy…
M42BC
The US labor participation rate is 62%, while 95M people capable of working are not. How does this indicate an economy at full employment?
If unemployment was measured as it was in 1980, the rate would be in double digits.
I too heard Dan Morrison on the CBC this morning saying Vancouver was still a seller’s market…
“Just”
Darned near choked on my Wheaties, I did.
Must hand it to him, it was a master class in spin.
You’d almost think the SM wrote this.
– Fear and loathing in the Vancouver property market
http://www.cbc.ca/news/business/vancouver-canada-home-prices-bubble-1.3744304
Frank, it would appear that you put some value in the REBGV statistics.
Perhaps this news release from 2009 gives us a much better insight into the REBGV astuteness in recognizing the market conditions.
News Release
FOR IMMEDIATE RELEASE
For more information please contact:
Craig Munn, Assistant Manager, Communications
Real Estate Board of Greater Vancouver
Phone: (604) 730-3146 Fax: (604) 730-3102
E-mail: [email protected] also available at Ü http://www.realtylink.org
Buyer activity brings greater stability to the housing market
VANCOUVER, B.C. May 4, 2009 With more buyers and fewer homes for sale in recent months, the Greater Vancouver
housing market has entered a more moderate and balanced state.
For the sixth consecutive month, new listings for detached, attached and apartment properties declined in Greater Vancouver,
down 33.7 per cent to 4,649 in April 2009 compared to April 2008, when 7,010 new units were listed. The total number
of property listings on the Multiple Listing Service® (MLS®), while slightly down compared to last month, remains unchanged
compared to the same period in 2008.
The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver totalled
2,963 in April 2009, a decline of eight per cent from the 3,218 sales recorded in April 2008, and an increase of 31 per cent
compared to last month.
Were seeing greater balance in the housing market, as evidenced by a strong sales to active listings ratio of over 19 per
cent, Scott Russell, REBGV president said. The result is a relatively stable market in which homes are being realistically
priced.
The denial phase:
https://upload.wikimedia.org/wikipedia/commons/thumb/4/4b/Stages_of_a_bubble.png/800px-Stages_of_a_bubble.png
If your favourite hobby is visualising your upcoming vast profits from the crash of the US dollar ….
…. don’t read this.
http://www.telegraph.co.uk/business/2016/09/01/dollar-hegemony-endures-as-share-of-global-transactions-keeps-ri/
“At full employment there is no excuse not to raise rates.” WTF? 94 Million Americans between the ages of 18 and 65 are not in the Labor force and are not counted in the unemployment stats. If counted unemployment is around 24%. “But there are no soup lines like during the depression!” Todays soup lines are Mcdonalds and Wendy’s and Wal Mart. They all accept EBT (Food Stamp) debit cards. This is all fantasy. When reality hits we will truly find out who is wearing bathing trunks as the tide rushes out ……. right before the tsunami crashed home.
Don’t know how widespread this is, but I’ve been informed of bank branch closures in Alberta & Manitoba. Banks are centralizing operations in Ontario (Toronto) for the most part. More job losses as a result of said closures. Based on conversations with clients via work it is also getting more difficult to get/maintain financing. Costs more too.
So now in France, when they talk about “l’autobus”, they really mean it.
“France rolls out ‘world’s first’ driverless buses”
http://www.thelocal.fr/20160902/france-to-roll-out-world-first-driverless-buses
Hanjin Shipping of South Korea has filed for bankruptcy and there were no MAYDAYs from the high seas.
If there is a rogue wave out there in the deep surely a quarter point rate hike by Fed Chair Janet Yellen will not start the curl.
We will need the trades from the Lower Mainland up here in Fort Mac as there are 2400 structures to be rebuilt. To my knowledge, there has not been a foundation poured yet, so unless the insurers are willing to pay to hoard and heat ($$$) we are into next spring to commence the rebuild. If the rebuild in the town of Slave Lake, AB (400 houses torched) is any indication, we are facing a 3 to 5 year period. 30 below requires sterner stuff, however.
15 Shane on 09.02.16 at 7:12 pm
I only have grade 10 math but isn’t sales mix important?? My neighbourhood prices are just the same. And those that sold last week are way higher than last year.
This is what I’m seeing in North Van too, business as usual. A house nearby listed mid week, showed last Saturday and the sold sign was up on Tuesday. A few blocks away construction has begun on Lions Gate Town Center, adding 1200 units and God knows how many cars to an already congested area. Condos are going up all over the North Shore and appear to be selling like hotcakes.
A few rate hikes would be nice (might even save my DB pension) but that appears to be just another pipe dream as well. Remember what happened to the stock market the last time it happened? Brexit was nothing in comparison.
There sure are a lot of homeless camps across the Western U.S. for a country at or near “full employment”.
http://www.vice.com/en_ca/read/homeless-are-flocking-to-americas-forests-but-its-damaging-the-land
http://www.nytimes.com/2016/08/22/us/as-homeless-find-refuge-in-forests-anger-is-palpable-in-nearby-towns.html?_r=0
I certainly don’t pretend to understand more than the Bureau of Labor Statistics, but this is a very strange looking recovery to me.
#12 Victoria Real Estate Update
VICTORIA’S MARKET POSTS AVERAGE SALES NUMBERS IN AUGUST, DESPITE RECORD-LOW RATES
———–
Putting things in caps doesn’t make them true.
Sales are down, yes, but this August was the most sales in August despite the lowest inventory.
No other August has had as many sales. Sales to new listings has been higher, but there has never been this many sales in an August or as few properties to select from.
So I guess even in a hot market August can only do so well.
Happens every year, sales decline seasonally and the bears come out in droves, “This is it!” Oh, but it isn’t, fooled again.
The day will come in condo City of Toronto when a married couple is sitting on the balcony looking at the skyline some fine evening. The bubble has burst but its not too bad as they have a good building and are only down 25% after the first three months. Something catches the wife’s eye passing by from above and its just another jumper. Husband says its time to sell and rent before its too late.
At #31: Godth, not to worry. Americans won’t be moving to Canada. It’s a funny notion Canadians love to tell/convince themselves of in hopes of keeping the market propped, yet at the same time love to bitch about it. So, a typical day in Canadian life.
True story… Canadians actually believe that Americans in droves slap a Canadian flag on their backpack while traveling. Simply put, not true… Maybe a couple here and there, but in a country of over 320,000,000, it’s less than 1% of 1% of 1%. Also, Americans rarely, if ever, travel with backpacks, but keep telling yourselves that! :-)
Can someone enlighten me. What negative effects would happen if the us fed waits too long to raise rates?
Why would they want to take stimulus away, it’s charging ahead their economy.
Mark M., I can’t wait for you to tell the world how the Fed cheats and lies when they do raise rates THIS YEAR. It’s going to be a grand ol’ time watching you eat that crow. :-)
“Meanwhile the first jobs fallout from the Van crash are making headlines. The local homebuilders association is predicting 5,000 hammer-swingers, drywallers and shingle demons will soon be out of work – about 10% of the area’s trades. Like the dismal residential resale market, the new homes business is being decimated by the 15% foreign buyers tax – not so much because deals are collapsing (they are) but because confidence has left town.”
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If foreign ownership accounted for 3%, 5,000 lost jobs sounds a bit too high. No ?
You are so dramatic lol
At #44: Marcus, sure 94MM Americans sounds like a lot, and we could throw them into the mix if you’d like, but that wouldn’t be very fair considering there are 21MM college students comprised in that number, 3MM stay-at-home dads, and 12MM stay-at-home moms. Hell right there is 36MM of your 94MM that would not be included in the labor force whatsoever. Why? Because they don’t need to look for work, genius. Now, let’s throw in Americans on disability, or another 49MM, and well, you’ve got your gap covered up to 85MM. Believe me, the labor force numbers you read are accurate, despite the fact you’d love to denounce them. Sorry, Canada, your employment rate SUCKS.
(which Clinton will win, or we have one momma of a mess on our hands)- Garth
Not so, 100 hundred precent-ish anymore are we Gartho.
Change brings huge opportunities. Ask Doug or Ryan to comment how they will rebalance when Trump takes it in a land slide…
I already have strategy in place… I want see how good your boys are. Actuly I’m favouring Ryan over Doug for now…
Garth said:
Stevie Poloz knows where the Fed’s headed. And he understands that dropping five-year mortgage rates below 2% at this instant would cement his role as a Judas goat.
—————————————————
http://www.ratespy.com was showing 5 year fixeds earlier today at 1.99% from some outfit called Intellimortgage.
Just lettin ya know.
It was a 20-minute promotion from a tinpot brokerage related to the web site. Back to 2.05% now. When a bank drops, it’s real. — Garth
An unusual ‘quiet time’ around these parts. Went out to dinner tonight, everybody sounded subdued, and reserved. Unusual for the usual beer swilling Badgers. Hmmm… what’s got the general trades, and farmers so tight? Sure milk prices are crap, but that isn’t too unusual. Weather has been great and crops look to have a good to fabulous year.
Can’t be the stock market which has been rather range bound of late off its highs, but still plenty high. Perhaps it is the dam low cost of money, and interest earned. Business profits are weaker than expected, and seems like everybody is on thinner ice.
Well, after the long weekend, maybe the Fed will gain its senses (doubtful)…
I’m not worried. Markets rise, markets fall. Fear and Greed are the king & yang of the investor world. Decent companies have seen this crap before, and will again.
Food was excellent, the booze plentiful. Another Friday in the pasture.
Enjoy the weekend.
Flopper – more parts repaired / replaced? Going under the knife again I hear? Hope this isn’t the start of a trend, after 40 things do start failing there young one.
Wait til your my age, you get to go to the funeral home for the estimate every so often. Hang in there! Remember, good booze relives all sorts of ailments! Even if only temporarily.
“Can someone enlighten me. What negative effects would happen if the us fed waits too long to raise rates?”
The ‘classical’ theory is that if central banks run overly accommodative monetary policy for too long, inflation will rise, and eventually spiral into something that damages confidence.
However, there’s a big problem with that theory, in that, low rates actually cause businesses to invest in additional capacity, thus suppressing inflation. So if the Fed were to raise rates, they might actually end up triggering inflation by reducing business investment.
So a lot of it depends upon whether you talk to a “demand-side” or a “supply-side” economist. “Demand-side economists” insist that low rates drive inflation and lead to more spending. “Supply side economists” point out that low rates reduce the required discounting of future cashflows, thus driving a deflationary environment (ie: in Canadian RE, low rates drove the construction of large numbers of houses, which now are flooding the market). As usual, the truth is somewhere inbetween.
Personally I believe that economic “confidence” and broader economic policy, rather than monetary policy, is a greater determinant of the “inflation versus deflation, price stability versus price instability” argument. Central banks can be powerful, but politicians tend to be more powerful in the long run. Interest rates are low across the world because politicians have created policy to foment very low growth and very low expected future returns on capital.
#50 understood by few on 09.02.16 at 8:49 pm
#12 Victoria Real Estate Update
VICTORIA’S MARKET POSTS AVERAGE SALES NUMBERS IN AUGUST, DESPITE RECORD-LOW RATES
———–
Putting things in caps doesn’t make them true.
Careful, or you’ll be branded with the label of “real estate agent” Prices in Victoria are up, as are those in Vancouver and the Lower Mainland and no amount of putting things in caps will change that reality. There might be a hiccup in the sales for a while but this region keeps on growing. Ask any filthy renter who is looking for a new abode.
A kid at work rents a moldy basement suite in Kits for $1500 per month. He and his roommate were two of two hundred applicants. Similar stories from other coworkers who got out of the market while it was still rising. I’ve been out for a decade now so I’m not an agent and don’t have a dog in this fight.
Maybe YVR is experiencing a slowdown but GTA sure isnt. 10+ offers on most places days within listing. Prices going up 10k a month. Just my view from the street as someone actively looking.
Hoping to tie up the Hawg to your rural cone-scooper sometime this long weekend.
What’s the most popular flavour that won’t stain my Depends?
For you that would be Tiger Tail. — Garth
Yoo Hoo!
Freedom Fi-irst!
Howz that oil stock purchase going?
Not too good, eh?
Not to worry, I hear Shout! removes the shorts staining.
And speaking of shorts, thats what you should be doing to oil.
Next time, do some research before shooting your mouth off.
It was a 20-minute promotion from a tinpot brokerage related to the web site. Back to 2.05% now. When a bank drops, it’s real. — Garth
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Fair enough, but if I was talking about that rate to anyone I know I’d be referring to it as a 2% rate whether it was at 1.98%, 1.99%. 2.00%. 2.01%, etc..
#56 Vanman on 09.02.16 at 9:17 pm
You are so dramatic lol
___________
This is a case of stolen identity!
Who are you?
#63 Catalyst: What is your definition of most places and what street are you viewing in the GTA?
Any intelligent feedback that can explain to me that for years people have been saying that foreign money has not made any difference in real-estate and only locals and there greed is to blame (which is true to a point) and yet when a foreign tax is implemented to the market it’s all headlines are saying that it is devastating and the market is crashing. So what gives?? A little of both or more of both.
So, does foreign money have that much of an influence or not?
Unless you live in a particular city and know exactly what the market is doing the rest is pure bullshit, I have never read so many false prophecies that seem to know what the hell they are talking about.
Talk to your neighbors, they know exactly what is going on..
I disagree with your assessment of the US political situation Garth, but it’s not like you or I as Canadians have anything to say about it.
Trump has a good shot at winning, he’s way more popular amongst the plebs than Clinton and he’s drawing 10 times as many people to his rallies which he has far more of than Clinton because Clinton is no good at public speaking. Trump is, in the opinion of Scott Adams (the Dilbert guy, but also a trained hypnotist), a master persuader or even a master magician (of the “real” magical arts which are illusion, persuasion and deception, not some silly Harry Potter stuff). Clinton, on the other hand, if she has any “magic” at all it’s of the deception type. She is a master deceiver but what she’s going to need to win is some help in the persuasion department (which apparently she’s getting, but she can’t do it herself. She can barely read a teleprompter let alone ad-lib a motivational and persuasive speech. The Donald can even if it is devoid of facts or original ideas.)
Anyway don’t worry about the Donald so much. The “establishment” will reign him in pretty quick as they did with Obama and his “hope”. And I’d rather an economic collapse under Trump than WWIII under Clinton. Remember folks it wasn’t that long ago that Clinton was calling Putin “the new Hitler”. Now obviously that was meant for domestic consumption but world leaders don’t talk about each other that way, even if it’s true. Putin is well aware of what the west and, incidentally, Russia had to do to deal with the old Hitler, so this messaging is very menacing. Remember that Russia established the USSR after WWII to prevent another invasion of Russia by the west. They remember well what happened when the German tanks started rolling east. Now the Americans are positioning tanks and missile systems right on the Russian border and Clinton, 2nd most likely person to win the presidency, is calling Putin “Hitler”. Not good. They need to back off or the East and West coasts of North America are going to be uninhabitable for over 100,000 years even if the US annihilates Russia. Nobody is going to win WWIII. You can’t, as I’ve discussed here previously.
(For those who missed it, a nuclear war will liberate all the spent nuclear fuel in the “loser’s” storage facilities either right away or over time as those facilities fail due to lack of maintenance, and the planet will become uninhabitable, even for cockroaches. See the movie “Dr. Strangelove” for details. Both sides have built a “doomsday device” without actually intending to do so. The US device is actually bigger, because their plans to deep bury the waste all got plugged up in congress whereas in Russia if the government want to bury something in a remote location they do, no questions asked. Well you can ask questions but it’ll do you no good and maybe get you locked up. It’s kind of like pipelines. While North American protestors drive their cars (using oil) to protest and block pipelines that they themselves and the economy they depend on need in Russia the pipelines just go through.
@ MF (yesterdays posts) and other with related thinking.
It is getting harder to believe the narrative coming out of the US about a recovery when they aren’t confident enough to raise rates after many months of consecutive job gains. Perhaps it is because this recovery is weak and different from the last – every game has been played out. Looking at this it appears even the IMF is really worried.
IMF urges ‘forceful action’ from G20 to push global growth – https://www.rt.com/business/358017-imf-g20-forceful-action-growth/
And other countries are questioning the recovery as well – perhaps the recovery resembles the cusp of a new economy or the fall of the old – only time will tell.
One thing is for sure during the Great Financial Crisis – Canada/Australia were being touted as the economic bastions off western capitalism, even though the rest of the west was in the crapper stimulus money was buying up commodities.
The West put a band-aid on the wound but never healed the wound itself. Now since Canada/Australia are in the weeds (worlds not buying many commodities) the US has to take over pole position healthy or not – and it seems they need to save face – if not foreign investment may be at risk.
Empires fall sooner or later, could we be in the early stages – who knows. One thing is for sure the Fed is also not confident. Maybe ‘Apocalypse 2016’ is onto something.
People can live in denial for a long long time. Example: Realtors citing that this downward momentum is just a blip without taking into account the present state of the global economy. In BC the BC Socred/Liberal gov touts job creation the highest in Canada. Easy to do when Alberta, Saskatchewan and Ontario are currently down. Then the next day a local developer comes out and says he expects a loss of 5000 jobs in the next 4 months due to the cancellation of building contracts. Political party touts the success followed by a reminder of what we are about to face. Political party gets a feel good message across before the bad news comes about. Research the cycle of corruption…good king, bad king, good king, bad king….Lack luster pace of human evolution.
Can someone give me a convincing breakdown why should I sell my house in North York?
It can clear $800K to invest from the sale, I can rent similar between $2500-3000 per month.
We have $180K T4 family income, no debt. Not much room in TFSA and RRSP.
I think those real estate board speakers should be prosecuted for encouraging a ponzi.
They don’t give a damn about people getting in the market when they know it is toast
#13 604renter on 09.02.16 at 7:11 pm
…People in Vancouver are now waiting. No reason to buy that million dollar crack shack now when you will be able to get it at a big discount in the near future. Think of those people as vultures. Vultures wait until the food is easy to get. Vultures are smart. Be a vulture
_______________
Nice!
On one of the “Daily Shows” with Jon Stewart, the question was raised…
“What do Americans think about Canada? “
Answer: “They Don’t”
#57 The American & Garth…
Blah blah blah… the fact is labour force participation is lower than it has been since 1977. You can define the breakdown of the 94M however you like, the point is the %age of those not working is horrible and it belies the the bogus 4.9% “unemployment” rate.
http://cnsnews.com/news/article/susan-jones/94391000-not-labor-force-labor-force-participation-stuck-628
Steve Saretsky Vancouver Realtor calls out the RE Board stats.
On CBC tonight he said Vancouver, Richmond and Burnaby August 2016 sales are down 57% compared to 2015.
August 2016 sales are down 44% compared to a 5 year average of August 2010 to 2015. Not quite the average August the board is spinning.
He also noted over 26% of August sales this year are actually coming from July (pre tax) many trying to beat the tax.
In reality sales are probably down over 60% from the 5 year average in August 2016.
More from Realtor Steve on the RE board spin:
http://www.vancitycondoguide.com/poking-holes-in-the-real-estate-board-stats/This can only be described as a crash.
Link
http://www.vancitycondoguide.com/poking-holes-in-the-real-estate-board-stats/
#62 the other white meat(pork) on 09.02.16 at 9:44 pm
Careful, or you’ll be branded with the label of “real estate agent”
——————-
Ha. You mean like yesterday or the god know how many times before? Still not realtor. Good thing accusations won’t suddenly turn me into one.
I wonder if VREU has actually ever got it right.. I mean actually accused a realtor of being a realtor.
#16 Debt’s Dark Embrace on 09.02.16 at 7:15 pm
House prices will not drop SIGNIFICANTLY until interest rates rise SIGNIFICANTLY. The bubble is a loooong way from being deflated.
***********************
This blog has heard that many times. Then again take a look at what tipped the US over in 2007-2009. It wasn’t rising interest rates.
Job losses and the associated financial stress leading to divorces/break ups and people are forced to sell. I have witnessed this before BC 1980’s. History may not repeat but when humans are involved it sure does rhythm.
Detached Housing Market Takes Heavy Blow in August
Richmond:
Total Sales
August 2016 Detached Sales: 35
August 2015 Detached Sales: 183
August 2010-2014 Detached Average Sales: 110
Vancouver East:
Total Sales
August 2016 Detached Sales: 47
August 2015 Detached Sales: 154
August 2010-2014 Detached Average Sales: 122
Vancouver West:
Total Sales
August 2016 Detached Sales: 33
August 2015 Detached Sales: 136
August 2010-2014 Detached Average Sales: 122
http://www.vancitycondoguide.com/detached-housing-market-august/
The American is correct to put the kibosh to the notion that Americans will move to Canada in any significant numbers if the Trumpster moves into the White House. These stories appear every fourth November, from Nixon to Dubya to McCain/Palin. November is cold up here and these silly stories make us feel warm and fuzzy.
The sole exception is Babs Streisand. She just wants a date with a younger Trudeau. Was there a second date with T1?
#37 For those about to flop…
******************
Good luck with your surgery and hope your wife gets better soon. If you find yourself in need of employment perhaps the blog network can help. Quality is always hired.
#54 – The American
This “recovery” is seven years old. It’s been the beneficiary of 0% interest rates the entire time and trillions in QE. The result, 1% GDP growth.
Add to that declining productivity and the lowest labour force participation rate in four decades. Remember to take into account the massive decline in business investment, likely a result of 15 consecutive months of shrinking corporate profits. Oh and the ISM? Below 50.
So where’s the stock market? Record highs!
The “really smart people” at the Fed have destroyed this economy, everything is backwards. There’s no price discovery anymore. It’s why you have CNBC headlines that say “Consumer confidence soars, Dow falls.”
It’s also why it doesn’t matter what the liars at the Fed say, there will be NO rate hikes this year or next. The Fed’s next move is a rate cut.
I suggest you join forces with JP, Shawn, Sadkatoon, pbrasseur and anyone else on this forum who still can’t see a bubble until AFTER it bursts.
I’m giddy with anticipation for your in depth analysis on September 21, it will be epic.
The fate of lefties
https://youtu.be/eJlN9jdQFSc
James your turn.
Don and Boom thanks guys.
Gonna serve ice cream for Garth in the morning and follow Bandit around in the afternoon with a pooper scooper.
The boss said I cannot do this in reverse order…
M42BC
TRUMP 2016…
Things will fall into place once he is sworn in this coming January.
When you find this you’ve made it.
Nothing else matters
https://youtu.be/LRt2jX1kaYo
Garth, nothing to mention about the worlds largest shipping company going bankrupt. Canary meet coalmine
Vanstupid, I’m gonna get my hard hat and popcorn ready and just watch. See you in the fall!!
No words just another cigarette
https://youtu.be/R-soyspdwqU
#37 For those about to flop… on 09.02.16 at 7:59 pm
is it in to ask you what’s your trade?
///////
things in nature and written history tend to reepit.
smoking king duch sailor…
Mr. Klaes had, during his eighty years of life, smoked more than four tons of tobacco, and had drunk about 500,000 quarts of beer.
http://goo.gl/e3DEDp
#77/78 BS
The smart agents will adjust to the new market reality quickly; the dumber agents will continue to live in denial of the situation until it’s too late for them.
#76 odious herodias on 09.02.16 at 10:31 pm
“#57 The American & Garth…
Blah blah blah… the fact is labour force participation is lower than it has been since 1977. You can define the breakdown of the 94M however you like, the point is the %age of those not working is horrible and it belies the the bogus 4.9% “unemployment” rate.
http://cnsnews.com/news/article/susan-jones/94391000-not-labor-force-labor-force-participation-stuck-628
”
CNS news is the most retarded “news” website in America, worse that Breitbart. Considering the population of the workforce changed by 2,758,000 and not in labour force grew by 356,000 over the year to Aug 2016, that implies 87.1% of the population growth is either employed or considered unemployed. If this continues at this pace, which I do not expect it to, the Participation rate will rise very quickly.
#76 odious herodias on 09.02.16 at 10:31 pm
#57 The American & Garth…
IN ADDITION TO MY LAST COMMENT:
the employed population increased by 2,571,000 or 93.2% of the total workforce population growth.
“It can clear $800K to invest from the sale, I can rent similar between $2500-3000 per month.”
$800k invested in the TSX index at a P/E of 15 provides an after-tax income of roughly $53k/year. Renting at $3000/month is most likely renting at a net of $2500/month, or $30,000/year. Rents grow at the rate of inflation typically, around 2%/year. The TSX’s earnings growth, over the long term, should resemble nominal GDP. Typically 3-5%/annum.
The math strongly supports dumping RE and using the proceeds to buy stocks. But few have the intestinal fortitude to make the jump, which is why most people, despite the riches bestowed on them by the housing market (and eventually the stock market), remain middle class.
A carpenter should be able to afford a sfh within the city in which she works. If she can’t, a bubbles a looming.
#86 For those about to flop… on 09.02.16 at 11:07 pm
Don and Boom thanks guys.
Gonna serve ice cream for Garth in the morning and follow Bandit around in the afternoon with a pooper scooper.
The boss said I cannot do this in reverse order…
M42BC
///////////////////////////
Yeah,sorry I got it wrong.
I just re -read the email from the boss.
I am going to serve Bandit icecream in the morning and follow Garth around with a pooper scooper in the afternoon…
M42BC
This writeup covers the current US economic situation pretty well:
https://www.stockrover.com/blog-investing-current-market-economy.html
US economy represents what these days of world activity? Maybe 47%?? True numbers are tough to nail down.
Where is the rest of the world? ZIRP or negative rates I hear. The EU is not doing to well, ask any Bankster in Italy, France or, Germany about “how well” they are doing. Britain in the Brexit debacle…. Hmmm.
We are going to raise rates? I would personally love to see it, but my name isn’t Janet.
By the way, can someone explain why REITS are up so nicely, and why long term bonds are up nicely, intermediates as well? The markets aren’t doing nearly as well.
Maybe the Saturday crew without the hose colored glasses of Canadian Real Estate can shed some light.
I smell a contradiction in the air….
Meantime, party on.
#16 Debt’s Dark Embrace on 09.02.16 at 7:15 pm
House prices will not drop SIGNIFICANTLY until interest rates rise SIGNIFICANTLY. The bubble is a loooong way from being deflated.
=======
A bubble is a bubble.. it is irrational. You don’t need a rational reason for it to deflate. It pops when you run out of idiots. Notwithstanding the fact that almost everyone is an idiot, it does appear we have run out of idiots in Canada… hard to believe!
“…then murdering the same market with a crushing tax when it was already starting to topple under its own bloated weight”
Hello, we’ve been waiting for this and you have been calling for this for about 7 years now…
———————————-
Things never quite work out as one would expect. May you live in interesting times.
Garth, I love your posts. Very entertaining and educational – keep up the awesome work for many years to come!
They will cut rates Pearl Harbor Day !
“The unintended consequences have been profound, and what’s happening in the BC market will likely have national implications.”
In no way were these consequences ‘unintended’. A high-profile scapegoat is needed for the upcoming financial disaster. This is the only ‘peaceful’ one which could be made believable to the general public. Although this will add to the aforementioned disaster, the real-estate aspect of it will be minimal with respect to the conflagration as a whole.
This blog has heard that many times. Then again take a look at what tipped the US over in 2007-2009. It wasn’t rising interest rates.
Ummm yes it was. It was rising rates in 2004/05 that caused the bubble to pop (that’s right the peak was 2005, the 2008 stuff was just the financial system fall out from mortgage defaults). Similar story to Toronto’s crash in the 90’s, so no. There hasn’t been a real estate crash without rising rates, it won’t happen.
Hi from Italy Gartho!
What has always kick started a RE crash is a good old fashioned job sucking recession. Next week, 9th, comes the August Labour Force Survey. We just has the worst GDP Negative Quarter since 2009. Below are the job number to date. More negative news will turn the “wait and see” YVR RE into a “every person bailing out for themselves”, which if you believe Garth’s % price drops yesterday…well that has already started.
2016 Net Job Creation, Canada:
Jan -5700
Feb -2300
Mar 41000
Apr -2100
May 14000
Jun -700
Jul -31000
Net Increase, Jan to Jul: 13200
____________________________________
Some are waiting for the HPI, it will tell you the truth in about 3 years time as that is the “scrubbing” period used in its calculation (data is smoothed out over that period); notwithstanding, it also uses nonlinear transformations to create/fit data that is not there and outliers are manually scrubbed – not including the top/bottom 2.5% of the MLS data that are thrown out at the outset.
Secondly, it does not work with low sales numbers as are happening now YVR (refer to Sub-area calculations – not enough sales volume means data is statistically insignificant; although, they do not tell you what that number is).
If you love analysis by paralysis, HPI is great…well if you like detached benchmarks like “one storey”, “two storey”, “single family”. With all the stats they use you end up with these 3 obtuse detached benchmarks.
Zolo.ca instead will actually show you average prices for homes based on the # of bdrms (2 to 6)…l like that better as I would expect most people do as well.
I’ll take something simple like the Average Sales Price and Unit Sales Volume posted on a myriad of sites now by Realtors themselves that indicate a crash is happening (Zolo, Chipman, Yatter, Saretsky et al).
For those of you HPI lovers, ask yourselves if you know how to make these calculations (’cause this is how your magic number is calculated):
-Cook’s Distance when doing Least Squares Regression
-Multivariate regression analysis
-Akaike Information Criterion
-Ramsey RESET Test
-Hedonic coefficient estimates
-Ordinary least square regression (to determine if data is homoskedastic or heteroskedastic).
-Moran’s Index Test
…there are more. But hey, truth is like poetry, most people hate poetry…
The fate of righties and what they look like:
https://www.youtube.com/watch?v=Uzae_SqbmDE
#65 Vern Schillinger
You must follow my Posts closer. I wrote here I changed my mind and invested elsewhere. I said I was delaying my oil ETF purchase until later as there was no rush.
ps. However, buying an appropriate oil ETF right now would be a good long term strategy.
Thank you very hard.
Knock, knock
Hello, the AMERICAN– have you heard about the blockchain type technology that threatens to upset the USD from its apple cart of the world reserve currency????
Nope. Probably not. Careful not to build that wall too high, you might be running from your own police state sooner than you think.
BTW, if you believe the Fed data…
I have some tulips for sale
“The numbers were lighter than expected, but consistent with an economy that’s closing in on full employment…”
Using the “headline” U3 unemployment rate of 4.9% is seriously misleading. U3 is just fantasy used to make the politicians look good. A more accurate reading of unemployment is the U6 at 9.7%. Unlike U3, the U6 unemployment rate expands the definition of the labor force to include “discouraged workers,” or people without jobs who have given up looking for work; “marginally attached workers,” or people without jobs who would like to work but have not sought employment recently.
Always FIRST.
#96 Mark on 09.02.16 at 11:29 pm
“It can clear $800K to invest from the sale, I can rent similar between $2500-3000 per month.”
—
$800k invested in the TSX index at a P/E of 15 provides an after-tax income of roughly $53k/year.
—
Thank you Mark.
What are the details of getting an after-tax income of roughly $53K/year?
Especially with the $180K T4 family income.
Last night I stood at the north end of Water Street, Digby N.S., during night three of Canada’s largest multi day bike rally, where the dawgs nail the hawgs, on their way out of the downtown core parking/posing area. Very few stock bikes, very few mufflers. I could feel the thunder in my chest cavity, which is why I position my self at that spot.
I was sort of musing in my thoughts that if loud pipes save lives, then no one is going to be hurt tonight, when at that exact moment I saw the lightning! A long shiny chopper came hurtling toward me spinning on its side in an impressive shower of chrome plated sparks with no rider on it or in sight.
Although my first instinct was to wonder if I would get to keep it, in that flash of light was this revelation!
Jobs compound like interest bearing funds!!!!!!!
Case in point, if USA needs 240,000 jobs per month for attrition and population growth, and in the last nine years has rarely met that number but is now approaching full employment, I rest can my case!
Buddy soon left on a stretcher in an ambulance, a suiting analogy for this full employment recovery.
Sam…#112…”Using the “headline” U3 unemployment rate of 4.9% is seriously misleading. U3 is just fantasy used to make the politicians look good. A more accurate reading of unemployment is the U6 at 9.7%”
This NY Times article would seem to agree with you…focusing on the 25 – 54 male demographic…where over 7 million can’t find work.
http://www.wsj.com/articles/the-idle-army-americas-unworking-men-1472769641
#111 SWL
Have you considered how much better off the world would be if the U.S. Lost the reserve currency? I just hope it’s slowly so the world can adjust.
U.S. Job Numbers Explained
http://www.zerohedge.com/news/2016-09-02/obamas-jobs-recovery-explained-1-cartoon
Why would anyone buy in the yvr real estate casino? As someone said earlier you are just passing hot potato from one party to the next. A house is a house. You can’t honestly tell me that a flipper who buys a property for 3 million in June, then tries to sell it for 7 million two months later is rational. There is only so much money around, even from China. Sooner or later, you WILL run out of money the way the casino has been operating. You are just betting you won’t be the last one holding the bag.
Hey Garth,
Love the site. Quality infotainment.
Regarding: “Back to 2.05% now. When a bank drops, it’s real. — Garth”
I see 1.99% as the 5 year rate on http://www.ratespy.com. Am i missing something?
More importantly, I’m curious why it is only real if a bank drops. What is better about a bank mortgage? Bank penalties suck and their mortgage salespeople don’t know squat.
On a side note, Stevie Poloz can’t directly drop five-year mortgage rates below 2%. He controls the overnight rate as you know. The bond market controls five-year fixed rates and 5 year yields will drop (with or without Poloz) if the economy keeps stinking up the joint.
Rick
The media and the real estate pumpers all love to use average prices when it’s going up but never when it’s going down, saying its “mix” that’s contributing to the prices going down. While true, why focus on averages when it’s going up? Why not report on medians like they do in the US? Right now, averages are going down because million dollar homes on the west and east sides are not selling. Period. So that means those houses aren’t worth what they’re asking. They never were. So unless buyers come out and start buying the market is tanking. Fast.
The American is right. Americans will not be moving to Canada after the election even if Donald Trump wins. They would sooner stay and live in the US under those circumstances than dare step foot in Canadaland. I’ve lived in both nations with dual citizenship. Mom is American and Dad Canadian.
With authority I say Americans do not even think about Canada and they certainly don’t hate us or speak ill of us. In fact Americans welcome us with open arms. They welcome everyone with open arms. Both nations have a similar population relative to their size of idiots. Generally speaking Americans are more welcoming, outgoing, and authentic than Canadians. As for Canadians there is much work to do identifying our own culture and identity. We’ve made hating America and its people a national pastime. It has gotten so bad that I recently found myself in an argument in a public setting after overhearing blatantly ignorant and irrational comments coming from the other side of the restaurant. The lies Canadians continue to feed upon are an embarrassment and causing me to seriously reconsider my decision to move back to Toronto. I can barely stand reading the Canadian newsstand publications given the very Canadian spin that is put on each story. Read between the lines and you can quickly see the vernacular chosen in most of those stories is carefully chosen to depict a different meaning than the cold hard facts would suggest.
Genuinely I had a much higher quality of life and was happier when I lived in the States. Healthcare is definitely better there having had open heart surgery and two out patient procedures. Americans are dumb and fat no more than Canadians. Believe me we have our same fair share of obesity and I’d go as far as saying Canadians are even fatter these days. Traveling abroad to SE Asia this past year I was informed Canadians are “the most obnoxious and self righteous” people they’ve encountered. Americans are adored and practically treated like royalty. What has become of our people? What is driving this misguided sense of superiority?
The American,
What makes ME laugh is how Americans think they can load up the U-Haul and move to Canada “just like that”.
Typical arrogance and ignorance.
@#70 non+
“I disagree with your assessment of the US political situation…”
++++++++++++++++++++++++++++++++++++
Because yours is so much more plausible?
Trump will win?
President Hillary Clinton will start WWIII?
The east and west coasts of North America will be radioactive for 100,000 years?
Ironman will defeat Thor in a civil war………..
Sorry, wrong fictional plot.
Your political predictive analysis leaves a a lot to be desired unless your Non de plume is “Stephen King” and it is found in the “Fiction” aisle of the local library…..but not to worry ….. even Smokey cant seem to get his book off the ground either
@#115 f.dover
“A long shiny chopper came hurtling toward me spinning on its side in an impressive shower of chrome plated sparks with no rider on it or in sight….”
********************************************
Perhaps the analogy might be “idiots and their shiney, unaffordable possessions are soon parted”.
Is “The Tank” still open for beer in Digby?
#115 F.dover:- Go to MLS and type in Bear River to look at a property or two.
So it was the Foreign buyers after all? Wasn’t the Denial Consensus saying that Asian Influence didn’t exist?
Stated several times and obvious to most: the market was in trouble in June and July. Any negative was bound to push it over the cliff. — Garth
#70 nonplused on 09.02.16 at 10:22 pm
———————————————
So what you’re saying is that we’re pretty well all toast in the coming nuclear confrontation between Russia and the U.S. so I should ignore Garth and take out a massive mortgage and as much debt as possible then live for today because there’ll be no need to pay it off.
Go it. Thanks.
Spoke to my oldest son on the phone last night. He works for a designer/developer in YVR. He says that they can’t keep up with the demand for people lined up to build 10K sq. ft. McMansions. Apparently the Re. Mantra of buy now is alive and strong in that industry. If there is a turn in the market the people he deals with daily don’t seem to be affected by it or don’t care.
some people that i work with and some individual here don’t believe in moon landing…
anyways interesting
watch a videos !
http://www.gadget.co.za/the-hacker-the-scrapheap-and-the-first-apollo-computer/
Bottoms_Up on 09.02.16 at 11:34 pm
A carpenter should be able to afford a sfh within the city in which she works. If she can’t, a bubbles a looming.
=========================
And if she can’t then maybe she should start gathering people around her. Say things they want to hear.
It worked well for a carpenter a couple thousand years ago. The corporation is still going strong.
Now that everyone is talking about the 15% tax and its affect on the market. The Provincial Government can sit back, relax and NOT do its job of dealing with the housing supply problem.
The Feds are planning to send more immigrants here and the cities have turned NIMBY and wont approve building permits in a timely manner.
There should be a 3 month time limit on building permit approvals. Now it takes 2 years to get a permit to build.
Just who do these selfish cities think they are? Playing politics with our lives. There is not enough condos being built to house the people coming here. Full Stop!
Housing in YVR is the number one issue sending our young people into debt slavery for life.
The only solution is to let our governments from the Feds to the municipals that we will vote out the incumbents on the next election no matter what the alternatives are unless they fix this mess!
#13 604renter on 09.02.16 at 7:11 pm
“Vultures wait until the food is easy to get. Vultures are smart. Be a vulture”
Being a vulture is a riot – did a mini version this a.m. Bought luxury, organic coffee beans marked down to 29% of original price. Scooped ’em all, bought almonds the same way, got 20X points on the lot and presto!!! all 12 packages of my coffee is…..free!!
Best score of the week is two mountain bikes in perfect condition, not a scratch for $5 each – no tax, from my favourite second-hand shop.
Vultching is so much fun, and there’s plenty for everyone. Tax avoidance at its finest. It’s not just for low income either, everyone’s in on it – check out the cars in the parking lots as well as how people are turned out.
The smart money is there because saving is so deliciously addictive. We’re spending no more on living costs than we were when we first got married – 31 years ago!
#18 Ex-Cowtown on 09.02.16 at 7:22 pm
“Selling each other massive life threatening expenses is no way to build a stable economy.”
Excellent post – incisive.
Garth:
“… the Presidential election (which Clinton will win, or we have one momma of a mess on our hands).”
Me:
What where you doing in a Conservative government if you are so ‘blinded’ to the criminality of Hillary?!
I have the impression you would have been much happier and more successful in your political career as a Liberal or NDP’er.
Just wondering.
It’s not about me, surprisingly. (Idiot.) — Garth
Sorry for mispelling. I meant ‘were’ not ‘where’.
A few general facts for those greater fools in Toronto who bought debt instead of a residence. The bubble of the 1980’s blew with lots of up and down in average home sale prices from 1991 to 1996. This movement was searching for a real bottom which hit with a final average home price in Toronto of $198,150 in 1996. Its now 2016 with the current bubble growing without any challenge with the exception of one event during the international financial coup with the fraudulent mortgage backed bond market panic. Real Estate prices took a dip like everything else but quickly came back to formulate the continuing Mother Bubble. 1996 was really the beginning of condo city, thus we have the largest bubble in history filled with junk condos and they will be going down hard. The developers cut corners in quality and balance for profits at the buyer’s expense to sell to fools buying with cheap money. They will go underwater quickly losing everything. This Mother Bubble will exhibit several false bottoms on the way down as will take years to reach a real bottom price, so those that are renting do not jump in as the bargain will be an illusion. Those who have not sold the condo yet can kiss your butt goodbye.
@#133 Never Give Up.
I’ve noticed that our “Preem” Christy Clark has started her new election campaign with her ads on the 6pm Goebbel News channel.
Last election her mantra was “Its about the kids..right? Right?”
Her “new” mantra is “Its really , really, really about jobs….”
Time to show her the door so that she can start earning that private sector 300k salary she’s earned by selling her soul to the highest bidder.
@#129 Burton
Its only been a month since the new foreign head tax has been implemented.
Lets see if your son still has a job by Christmas.
So this blog for years has said that foreign money is a minimal player in the Vancouver market.
So why has it depreciated so much since the foreign tax implementation?
Stated several times and obvious to most. The market was in trouble in June and July. Any negative was bound to push it over the cliff. — Garth
We need the same foreign buyer tax in Ontario like yesterday
Mark M.
How does $800K invested in the TSX yield $53K after tax? Are you making assumptions about future returns based on historical statistics and p/e ratios (i.e. risk adjusted return)? The dividend yield on the TSX is 2.7%.
Mark M.
Why are you bullish on the TSX but not the S&P500? I think you’re bearish on Canadian real estate… Do you forsee this hurting bank earnings, thus hurting TSX earnings (banks are 37% of the TSX)?
Not sure what’s the obvious part.
Why am I not surprised? — Garth
Garth:
Upon my review of the Parliamentery record, years ago an Opposition MP gave you an “obscene gesture”.
Spill the beans. What was the gesture?
It is not so much about the actual foreign money but the psychology of the local sheep. The dream that local speculators will be able to sell to the rich foreigner is now all but dead. That was 50% of the market. Combined with the 10% of actual foreign money and you have 60% of sales evaporate overnight with the tax.
One again your all missing a target portfolio that will stand the test of time going forward based on very important factors that need periodic adjustments. We are in uncharted waters like never before in history. Garth Turner has detailed the best approach which is conservative as this is not the time to gamble and roll the dice.
Interesting that in addition to Vancouver hitting a brick wall, high end RE sales in Aspen Colorado, Miami and New York have all crashed in August.
Who knows what that means.
I’m surprised minor interest rates moves, are still such a focus of economic discussions.
Why did Volker radically hike rates. Was he not championed for crushing inflation and saving the US $ ?
Why do the masses keep calling for rates to ‘normalize’?
Do the Cattle not see, the current economic environment is anything but ‘normal’?
Global Central Bank intervention after the GFC has us navigating uncharted waters. Our resistance to endure a real deleveraging cycle, mild technological disruptions (so far) and an old fashioned over supply of global labour means the West gets shite GDP growth.
So rates move 25 basis points up….Or rates move 25 points down…. Yes it sends a message moving markets, but big picture it doesn’t really matter, even to people mortgaged up to their asses in debt.
The Herd needs to step back and look at the odds of real
significant moves, that cannot simply be absorbed by debtors via cutting back on other spending and that would actually force parties to liquidate their homes, or miss payments on commercial debts.
The FED has displayed an unwillingness to move rates any ‘meaningful’ amount and that’s because with this crap growth, (think Volker) they shouldn’t. There is zero chance the FED rate will be up 2-3% in just a few short years with out a disruption on the scale of a: Internet 2.0 or Cold Fusion, driving sudden massive growth.
Thankfully…the US of A is growing…albeit at an anaemic rate, but businesses in BC will gladly take the scraps that are currently being thrown our way.
Come on Elon, we are all counting on you to save us…..
#76 odious herodias on 09.02.16 at 10:31 pm
https://www.youtube.com/watch?v=VQ4ecjVGsRQ
Canamerican #123
No we’re not. It’s those asshole Australians.
generation (rent +snowflake)=precariats
Money Matters by Shirley Yam
Brick and mortar facade buries real truth about China’s property sector
“Yam discusses how building contractors must pay developers to build real estate projects”
Where is China’s property market heading?
http://www.scmp.com/business/china-business/article/2009586/brick-and-mortar-facade-buries-real-truth-about-chinas
http://blog.mpettis.com/2016/08/does-it-matter-if-china-cleans-up-its-banks/
Ha ha
Walmark – where are you in Italy? My family is from a small town near Venice. Have a great trip!
#69 acdel on 09.02.16 at 10:20 pm says “Any intelligent feedback that can explain to me that for years people have been saying that foreign money has not made any difference in real-estate and only locals and there greed is to blame (which is true to a point) and yet when a foreign tax is implemented to the market it’s all headlines are saying that it is devastating and the market is crashing. So what gives?? A little of both or more of both.”
Vancouver was significantly allowing down for 2-3 months prior to the tax being announced/implemented. That said, it undoubtedly accelerated the reduction as both foreigners and local speculators have quickly pulled back.
So the government brings in a “Chinese head tax” in an election year in a deft move to play to the fears of voters – (I believe in calling racism what it is, no one would be having this conversation about the housing markets going crazy if it was British buyers) – It is July and August, when there is a slowdown in sales, everyone and their dog predicts a crash flooding the media with the stories. Of course, the buyers will take a break and the people caught without a ‘chair’ (i.e. people who bought a home and are forced to sell the one they have because they can’t hold two mortgages) bring the sale price down – government manipulation in the markets doesn’t not equal a crash. Doesn’t anyone pay attention to Adam Smith? The market and the money, like water, will find the path of least resistance. Give it 6 months. Vancouver, like London, New York, Silicon Valley, is a world class real estate market. There is billions on the sideline waiting to get in. The pause is what I was waiting for. Thanks Christy.
never give up: Just who do these selfish cities think they are?
you should be “never go” you never go to a meeting of your local community association