Housing is an unstable, volatile asset. This is a fact which has been proved time and again. In the US, residential real estate lost 32% of its value and plunged the world into a recession it is only now emerging from. In the UK, Spain, Portugal, Ireland and other European nations, deflation and negative interest rates have been the result. In Japan, an 80% decline in property values has never really been reversed, despite decades of government attempts.
That Canadians think it’s different here – in a country with a struggling economy, rate manipulation, historic levels of household debt, a housing bubble and flatlined incomes – is curious. So what’s just happened in the Vancouver area, home to the frothiest, most hormonal market in national history, is instructive. As detailed here, the 15% foreign buyers tax was the straw that broke the back of a market already in structural decline. It was not so much that the measure walled off the Chinese dudes (although it did, in large part) but rather that the locals believed that to be the case, while mistakenly feeling foreign buyers were responsible for the gasbag prices their own FOMO has created.
This is classic. Real estate is emotional. Irrational. A gauge of social standing and economic stature – erected on a shifting foundation of borrowed money. Leverage gave big gains in a rising market. Leverage will deliver big losses in a declining one. And it will not be limited to YVR.
The chart above is the official price history record of the Vancouver Real Estate Board, indicating the sharpest price decline in almost four decades. This peeled back the average detached value by about $300,000, and it’s reasonable to assume more is coming. If it looks vaguely familiar, it should.
Below is the S&P/Case-Shiller Home Price Index tracing US housing values. A long period of relative stability turned into a debt-fueled bubble without historical precedent, before ultimately returning to the mean. If folks in Vancouver wonder what might be coming, here it is.
If Ontario enacts a foreign buyer tax (now being studied) or Ottawa decides to raise minimum down payments, or cause rates to rise by offloading mortgage risk to the banks, or Canada descends into a job-sucking recession, or any other catalyst occurs, then we all know what to expect. Risk on.
The only surprise is that your parents will be shocked.
143 comments ↓
Given the ever increasing age of blog dogs (demos suck) this weblog’s next give-away could be small GF branded hair trimmers.
M40ON
Tag this #hairintheawfulplaces.
Ps. Smoking man’s boat must be named Doral fixations?
Ah ah ah…..Not so fast Garth……house prices have not dropped to the point where the average family can afford the average house……it will probably take 5 to 10 years of rising interest rates and rising incomes for prices to drop to affordable levels and many of us may not be around to see it.
RISK ONNNNN!!!!
History never repeats itself but often rhymes….
Like a dominoes affect from BC to Alberta and Ontario next?
Will a BOC rate cut be enough?
or will it be up to the msm /real estate spin machine…
Hit it!!!
https://youtu.be/PGNiXGX2nLU
Pass me my fiddle….
A mean of $800,000 in yvr still seems like too much for average houshold incomes to support. If we really want the Canadian economy to begin thriving once again we have to bring the cost of a three bedroom single family dwelling down to no more than $500,000. The average family will then again be able to fund their TFSAs, RESPs, RRSPs and actually spend money in places other than Dollarama and the thrift store.
First?!
I drove by this house today.
The realtor has sold several houses in this area in the last 6 months,but I think these guys waited too long.
The bloom is off the rose.
I have been wrong before though…
M42BC
http://www.normflockhart.com/listings/index.aspx
20% across canada for all foreigners
Watch the TV series Billions, best show out there
Garth…what do you mean by rate manipulation?
“in a country with a struggling economy, rate manipulation, historic levels of household debt, a housing bubble and flatlined incomes – is curious”
We could very well see a long period of stagnation. As a new buyer in Van or TO, I would stay right out. Renting is so much cheaper. Those who have owned RE for decades and now have 7 figure property near retirement, makes sense to sell now, rent and invest the rest.
About a month a go I recommend shorting twitter because of the bias favouring librals voice and banning conservative voice…
I said jack is moron who should not be running that business..
Look for an upstart……
Badabo Badading. Gab were we come.
http://www.breitbart.com/tech/2016/09/01/free-speech-social-network-gab-growing-as-twitter-facebook-censor-users/
Twitters finished my space style..
Dr Smoking Man.
FIRST…
Sir Garth:
So whats next? Or as it was the time before! Screwed, we is. But not I, for the Garth is with me! First!!
Below is the S&P/Case-Shiller Home Price Index tracing US housing values.
If folks in Vancouver wonder what might be coming, here it is.
except that as US housing collapsed the US Fed cut interest rates from 5% to 0%. And most Americans had 30 year fixed mortgages. And the US controlled the world’s reserve currency. So I’d say it’s going to be worse.
On the first chart, it looks worse.
And it will not be limited to YVR.
no it will pull the rest of BC down with it. For starters. Established professionals have been cashing out and moving back to other parts of Canada. That movement is pretty much over now.
In Canada, CMHC and the banks are national institutions. Corporate mood crosses the Rockies pretty fast.
Jimmy!
Concerning the above caption photo, a new pup must be trained in the proper way such as going into and out of a home or car. The owner must lead the way as his master or the dog in some cases will believe its his home or car. This tip came from the top dog trainer in North America, otherwise the dog will believe he is the master.
Short and SWEET
Robert Shiller, nobel prize awarded economist in his famous book “Irrational Exuberance” reminds us “feedback theory” – in which a group of investors buy an asset, do well over time and inform other investors to buy an asset that does also well over time, merely because there is much more investors going after it, so price goes up automatically. This “feedback” goes on until somebody sane decides to bail, and not just one but quite a few has to do so to be noticeable.
This “feedback” is the foundation of Ponzi scheme, “pump” & “dump” scenario on buying & selling penny stocks and “Greater Fool” theory, according to which there will be always someone willing to pay higher price, and the last one paying the highest price, is the Greatest. Fool, of course. You will not find those in economics books, by the way.
BC & ON Canadians did really well owing a home for the last decade in terms of house price appreciation etc. But if they tell this to our southern neighbors, tell this to Germans (who mostly rent), or Japanese property owners, they will see the whites of their eyes. And face expressions of deep wonder.
Sooner or later they will join them in that disbelief.
Hey Garth
Come on, one month of data does not make a trend. And there is a lot of holes in that data so I don’t think any person can make any conclusions based on it.
Lets see if interest rates go up in the US on the 28th. If they do, can Poloz hold pat? Dollar would immediately go down.
Garth, the government has tools to make real estate more “affordable”. It can eliminate the foreign buyer tax, which may be a violation of trade agreements, it can increase amortization back to 30 – 40 years, it can cut interest rates with this poor GDP growth we are experiencing, and it can eliminate down payments. Do you think they will do nothing in the face of a crash?
The Canadian Bank rate remains flat as provincial and municipal government representatives and the public chatter about the efficacy of using the blunt force of tax to fend off foreign buyers of our tulip bulbs… err… I mean real estate. It’s a good thing the Bank of Canada itself does not need to look for real estate in Vancouver to house its offices of knob twiddlers.
Here is my updated chart of Interest Rate Spread Between BoC Bank Rate Less the Posted 5yr Fixed Mortgage
and CPI, Real Bank Rate & TSX RE Index here:
http://www.chpc.biz/interest-rate-spread.html
We can see clearly that the central bank has not been successful in their attempt to ignite inflation.
Back to the drawing board. Perhaps $CAD depreciation is next… oh ya I forgot… the price of a crap house in Vancouver did that. Thanks.
There comes a time to move from houses to liquidity. This is the time. Or rather, past the time. Last call came in July on this very blog.
The signs could not have been any clearer. Those who hung on too long or who leveraged their way into an obvious peak have no one to blame.
But they’ll find someone.
Isn’t real estate going to tsx bumping bombardier and blackberry?
We’ll see what happens. These stats are based on the average of a few months. We saw this story before in 2009. YVR declined about 15% and then shot up to the current crazy highs.
Still renting and hoping, but not expecting anything.
I try not to wish bad on people, but it is really annoying when I’ve seen people go into real estate and they are pulling in about 2-3 times as my doctor spouse with no education past high school. Then again, life is not fair.
The U.S. data chart that is shown ends in late 2012. Only fair to point out that since that time home prices in the U.S. are once again trading well above the mean, fueled by dirt-cheap 30 year mortgage rates. Way-way above it in California.
http://journal.firsttuesday.us/the-equilibrium-trendline-the-mean-price-anchor/10281/
Time to Ban Foreign buyers of our homes Garth. Only Canadian residents should be able to purchase a property. These homes need to be for our families who work, live and pay taxes here. It’s complete nonsense that a foreign buyer takes away the chance for a resident here to buy a home, at affordable prices.
I’m sick of this and hope the feds ban it soon or at least tax the living hell out of it. If they don’t live here why should we let them buy? China doesn’t let us buy over there, not that I would want to. But it’s ok for them to use our market for their personal gain while our citizens get screwed year after year? This is disgusting.
I can’t believe how foolish this government is.
Canadian homes for Canadian residents only!
Yes. For some reason today’s Blog makes me feel all warm and fuzzy.
I think it may have something to do with me seeing people of all ages and sexes staring at their phones everywhere I go, even when they are with other people, or, cycling, skateboarding, driving their cars. Really looks like the Zombie Apocalypse is now here.
Perhaps the crumbling of the Canadian economy/RE market will shock people out of their trance. At one time it was a little bit difficult to believe just how stupid people could be, but today, with the phone Zombies, the piercings, the tattoos, and the debt levels, you can visibly see the insanity.
Thank God I am me.
Don’t forget that it will also overshoot on the downside as well. How much it overshoots? Many have underestimated this ….See that peak on the upside? That should signal something. Irrational on the way up and the same on the way down.
GM Oshawa couole make Garth’s fatal warning – all eggs in one basket…
https://www.thestar.com/business/2016/09/05/gm-workers-in-for-fight-of-their-lives-as-oshawa-plant-weighs-future.html
#11. …it’s so much cheaper to rent
Been to Vancouver lately? Rents are skyrocketing and vacancy rates are close to zero. I live in a dedicated, professionally managed rental building with over 500 units and a long waitlist. As much as I wouldn’t want to be buying in this market, the thought of competing for one of the very few rental units on the market wouldn’t thrill me either.
I will suspend my judgement about what is really happening with sales and prices here, at least until Christmas. Strange that prices in Cowtown should be so sticky yet in Vancouver they suddenly plummet. This just might be the catalyst we need to rid ourselves of Christy Clark next year but it’s too early to get my hopes up. Kind of a penny ante Hillary or Allison Redford (anyone remember the Albertan jet setter?).
Been telling my wife that renting is the right thing to do this past several years yet prices here in Toronto are just going higher and higher.
I know you been saying it’s time for a correction for a long time but I sure hope it’s happening soon and in a big way
#1 TurnerNation on 09.05.16 at 7:32 pm
Given the ever increasing age of blog dogs (demos suck) this weblog’s next give-away could be small GF branded hair trimmers.
M40ON
Tag this #hairintheawfulplaces.
Ps. Smoking man’s boat must be named Doral fixations?
///////////////////////////////
I thought his boat was named…
Bumjemin Franklin…
M42BC
Unfortunately a 15% tax on Toronto market won’t work.
Very few people in Toronto think ham is the cause of price gains. BC different story.
GTA has a serious supply problem. Builders are restricted with tree hugger laws…
It is a 40 year chart. Anytime the chart drops significantly in one month it continues trending down for many months and years. The most significant decline in that 40 years was last month. It is not rocket science what is coming.
Between now and Dec if the Fed holds, Poloz will have no choice but to CUR, he risks systemic damage to the Canadian economy if he can’t get the dollar to 65 cents, and fast.
The real estate market in Toronto has topped out with few buyers in sight and lots of inventory for sale in condo city both on MLS and elsewhere. Very few traditional homes for sale as the good ones sell fast at a premium or the buyers move out of the core to find something but they too will suffer. Speculation is over as they are trying to sell or are renting out waiting for a pop; they are in trouble too. The traditional cottage country has very few on the market to sell but there are thousands being rented out which is a danger sign.
So if I’m reading the first chart correctly, the long term trend line for detached homes indicates that the average cost should be closer to $500,000 from the current 1.4 million. If the market corrects to match the long term trend line, that is going to have quite the impact. Though it may finally bring housing down to a point where the average family could afford to purchase it!
Those things only help the market when the market is going up. Once it turns down nothing works to reverse it other than letting prices become so cheap investors buy properties for yield. We are a long way from that.
The more I see of life and the schemes contained within, the more I think it is nothing but a big game of musical chairs – with much higher stakes.
Jimmy on Gab.ai waiting list.
@ #28
What would you say if USA didn’t allow Canadians to buy their holiday and retirement homes in Arizona and Florida?
I mean, I get the whole sleeping with an elephant thing — our population is laughably small compared to China’s. But prices in Ottawa (the city) have more or less doubled since early 2000s. And there are not that many Chinese immigrants there. So… we might just all be trading real estate among one another supported by cheap money is all.
Hey no debt. It’s under 20 percent. FYI that show billions is a stupid tv show :(
DELETED
#190 crowdedelevatorfartz on 09.05.16 at 7:23 pm
@ Brazil expat
Well.
You knew that for every Dinesh D’Souza (former republican ex convict) objective “documentary” ( hack job) about the Clintons out there…….
There had to be a rebuttal story….
My thanks to #153 Jess from yesterday…..
http://www.truth-out.org/news/item/37497-the-making-of-donald-trump-david-cay-johnston-on-trump-s-ties-to-the-mob-and-drug-traffickers
++++++++++++++++++++++++++++++++++
I guess you get to insult as much as you want because most everytime I try to reply Garth does not post. So….there you go.
#28
Many Canadians feel your pain and anger but you have to remember why this was done.Huge profits for the banks and to devalue the dollar for exports.The government wins with increase property and transfer taxes.Also a highly indebted society is a complacent society.
“Why Cash Isn’t King Any More”
https://www.theguardian.com/business/2016/sep/05/why-cash-isnt-king-any-more
Happened really fast down here in the states.
I didn’t think I would but I feel sorry for last greater fools that bought. It’s not just an oh chit moment. It ruins years of someone’s life. I feel for the young families with kids.
So according to the blue trend line the price should be about $500,000. The average needs to drop another $1M.
That is a VERY long way down to he mean.
Could it really do that? Seems impossible.
#109 Mark M. on 09.04.16 at 10:22 pm
#150 – Karma
“Plebs eh?”
Mark M. see my response at #191 of Subliminal.
I have to agree with #28 Garth, it’s time to Ban Foreign Buyers…when a Canadian family cannot buy affordable housing, in debt over their heads, have a hard time putting food on the table, have to move for work, then it is time to look at the problem and correct it.
House prices went up here, not because of jobs for families, but low interest rates, banks easy lending, and the talk of foreign buyers. Is it foreign buyers, laundry money, even if not, this conception should be squashed with the proper data so we would not have this mess in our country as it is today. Shame, shame!
Or has this been happening since the international free trade, over two decades ago? It feels like it since I was young, people look and feel puzzled, like what is wrong with our government, leaders and we still feel that way, confused but not no more.
As we age we get slower, wiser and hopefully leave behind a better place but that looks like that will not happen. Time to correct this mess properly, and not only for people, but for earth too. And to be honest with oneself for the inhabitants of that nation, not just a group but all. That is a Leader!
Foreigners are not responsible for inflated house prices. We did that. Attack the real problems, not this fabricated one. Money is too cheap. Credit is too easy. And financially illiterate people have no discipline. — Garth
There are only so many folks in the GTA, Van city, Alberta etc.. That are credit worthy enough to carry the mortgage on an avg single family home. The banks will soon hit a debt wall on the average person.
Real estate is about perception and emotion, in a few months time it will be offical that canada is in a mild recession, that plus vancouver dropping even 15 percent will start the slow down. Never mind what the fed govt taskforce does with housing.
The chatter i hear( for me at least) is starting ti change from housing only goes up to these prices are crazy and its got to end sometime. When that moment comes the supply side will be heavy and buyer side light. As always
GM workers in for ‘fight of their lives’ as Oshawa plant weighs future
https://www.thestar.com/business/2016/09/05/gm-workers-in-for-fight-of-their-lives-as-oshawa-plant-weighs-future.html
General Motors employs more than 4,800 people in Oshawa, according to the automaker.
But it isn’t just direct GM jobs that would be lost if the company shuts down the plant, Unifor says. The union estimates that more than 20,000 indirect jobs could also be affected — from parts makers that supply the plant to local restaurants and other businesses that cater to GM employees.
The larger the bubble the greater the time component for a bottom to be found. There will be a series of pauses or false bottoms formed for adjustments and then it continues downward which will take years to complete. Once the bottom hits do not expect capital appreciation to occur like before, as it will be years more to see this develop in a meaningful way. We are in uncharted waters this time in history.
Re: BC foreign buyers tax – there are other places in the world where governments aim to limit foreign purchases of real estate. Bermuda for example, requires foreign buyers to purchase an acquisition license 25pct (I believe this is right but needs checking) of the value of a detached house. Foreign buyers have also been restricted in the condos they can buy – they can only buy condo stock approved for sale to foreign buyers by the Govt. Bermuda is an extremely low land mass with a huge expat community relative to the local popln, has no income tax, has a very different economy than BC/Canada etc, but you get the point – the Govt policy is there to protect local interests.
some problems the BC liberals now face strategically going forward into the spring election.
”B.C. Liberals must pull off balancing act on real estate: observers”
http://www.canadianbusiness.com/business-news/b-c-liberals-must-pull-off-balancing-act-on-real-estate-observers/
still one of the better analysis of BC’s situation,
written by globe and mail real estate writer kerry gold
”the highest bidder: how foreign investors are squeezing out vancouver’s middle class”
https://thewalrus.ca/the-highest-bidder/
and even if prices did tank 15-25%, you don’t think many foreign investors (probably now taking a break, seeing how thing will play out) will then swoop in again to buy our our property….that piddly, politically motivated foreign tax levied by bc premiere christy and her collusionary clowns will be balanced out against declining real estate values….they still win in the end.
What a sad victim mentality. — Garth
Awesome as usual!
I’m a RE bear and have been since I got into the market in 2005. We bought well under what the banks wanted to lend us both times. Love our house, no real regrets.
I guess I’m not clear on what the end game is here for other bears. Let’s say the market drops 50%, back to 2011 levels. Are all the renters going to jump into the market finally? I mean, how would a regression to 2011 help anyone that is sitting on the sidelines?
Our family has 1% income and I don’t see how we could afford to get into the Vancouver market even with a massive correction. Not to mention that impacts a RE crash could potentially have on our incomes. I guess I don;t understand the gloating from some folks on the coming (maybe) crash, it’s going to be painful and only that that sold the last few years will be winners. Those sitting on the sidelines since 2008 won’t have much to brag about, and the downstream impacts from a crash will take out renters and owners alike.
#35 Smoking Man
GTA has a serious supply problem. Builders are restricted with tree hugger laws…
===
https://www.thestar.com/news/city_hall/2016/07/28/mayor-tory-horrified-over-removal-of-trees-on-bayview.html
#6 Last of the boomers on 09.05.16 at 7:43 pm
A mean of $800,000 in yvr still seems like too much for average houshold incomes to support. If we really want the Canadian economy to begin thriving once again we have to bring the cost of a three bedroom single family dwelling down to no more than $500,000. The average family will then again be able to fund their TFSAs, RESPs, RRSPs and actually spend money in places other than Dollarama and the thrift store.
+++++++++++++++++++++++++++++++++++
Take out the 1 and 2 bedroom shoeboxes where you can not raise a family and that rises to over a million dollars. Long long way to to before Vancouver becomes “livable” again….
“..It is only now only we are escaping from..”
I respect you Mr. T but please….
Massive central bank purchases, earnings per share way down, negative rates, hardly a bump in rate increases from the USA…
Please…
Correction – Bermuda foreign buyer acquisition license fee as of April 2013 is 8 percent for a house not 25 percent. It was however as high as 25 percent at one time, though Govt has effected policy change.
#40 BS on 09.05.16 at 8:47 pm
#22 Keith on 09.05.16 at 8:00 pm
Garth, the government has tools to make real estate more “affordable”. It can eliminate the foreign buyer tax, which may be a violation of trade agreements, it can increase amortization back to 30 – 40 years, it can cut interest rates with this poor GDP growth we are experiencing, and it can eliminate down payments. Do you think they will do nothing in the face of a crash?
Those things only help the market when the market is going up. Once it turns down nothing works to reverse it other than letting prices become so cheap investors buy properties for yield. We are a long way from that.
———————
I agree BS. Once declining prices starts to build momentum, there will be no more FOMO, no more bidding wars. I predict a slow melt in prices fueled by higher inventory levels. Will really suck to be a Realtor for the next few years and have to actually work again.
#12 Smoking Man on 09.05.16 at 7:50 pm
About a month a go I recommend shorting twitter because of the bias favouring librals voice and banning conservative voice…
———————————————————
The long term answer to that censorship will come from blockchain based social media.
Think Twitter run in a decentralized way by the same kind of technology that runs Bitcoin currently.
MattL on 09.05.16 at 10:00 pm
I’m a RE bear and have been since I got into the market in 2005. We bought well under what the banks wanted to lend us both times. Love our house, no real regrets.
I guess I’m not clear on what the end game is here for other bears. Let’s say the market drops 50%, back to 2011 levels. Are all the renters going to jump into the market finally? I mean, how would a regression to 2011 help anyone that is sitting on the sidelines?
Matt,
There is no end game for the bears. Quite frankly, with 70% ownership rates, those that haven’t bought are either incredibly astute or more likely, not able to buy. With mortgage rates at near zero I would suggest that the 30% non-owners will not be big market participants after the fact. That, in itself, will drive the market further down than 50%.
I had one friend who was a potential move up buyer relishing the prospect of a crash so he could move up in the market ….. as if his property was going to be immune from the crash.
Very few people are interested in a crashing market. Look south for proof. Perhaps our American friends will return the favour, as Canada lead foreign purchases of homes in Florida for 7 straight years. Arizona, as well. Mind you, a lot of those homes were courtesy of Helocs. Ouch again.
You are absolutely right. The carnage from this crash will be devastating to young and old alike. There will be very few people gloating.
Good luck to all.
and even if prices did tank 15-25%, you don’t think many foreign investors (probably now taking a break, seeing how thing will play out) will then swoop in again to buy our our property….that piddly, politically motivated foreign tax levied by bc premiere christy and her collusionary clowns will be balanced out against declining real estate values….they still win in the end.
What a sad victim mentality. — Garth
Why. This person’s conclusion makes perfect sense. Foreign investors will love cheaper price.
#57 canali – Listen to Ross Kay, Howestreet.com Chinese buyers had pulled out of the market before the 15% tax, due to Chinese Government making it very difficult for their citizens to take money out of China. Our market needs a big correction and there should be no intervention to prevent that from happening. True some people will never be able to buy a house in Vancouver but that’s always been. Also it’s not a “buyers” market as the realtors like to tell people. We have a long way to go before it’s time to jump in.
Foreigners are not responsible for inflated house prices. We did that. Attack the real problems, not this fabricated one. Money is too cheap. Credit is too easy. And financially illiterate people have no discipline. — Garth
I agree. But I wonder, what if some really smart people were to strategically buy houses in the right place and at the right time, if they could amplify the stupidity. If I had enough money or leverage and was willing to play a multiyear game I could have made a lot of money in Vancouver. The rules that govern the stock market wouldn’t allow this, at least in theory. But YVR real estate is wide open, the wild west. When I read Ross Kay’s piece on Vancouver being a giant Ponzi scheme it got me thinking.
Curious about how the blog dogs are doing who manage their own investments. If you could post your annual % return for however many years you’ve been tracking it.
I’ll start: 9.7% per year average for each of the last 5 years.
Whoever wins should post their current holdings :)
It’s not a race and a ‘contest’ like that does not take into consideration risk tolerance, age, net worth, income, asset mix, family situation, tax exposure or a host of other factors. So, no go. — Garth
#193 Context on 09.05.16 at 10:04 pm
“#191 Karma:- I truly believe that the FED doesn’t make the final decision but BIS really calls the shot.”
LOL. BIS is nothing of importance. There is no global central bank, but the Fed’s importance via other countries/companies using USD so much makes it by far the most important Central Bank in the world.
The BIS is essentially an information gatherer and disseminator of information. That’s about it.
If the BIS “calls the shots” for the Fed, it would be assumed they call the shots in ECB, Switzerland, UK, Canada, Japan, Sweden, Denmark, etc. Why would these countries have such divergent policies?
The reality is they don’t do anything except release reports and scold countries for being too spendthrift.
http://www.bis.org/publ/arpdf/ar2016e_ec.pdf
#71 ROI Poll on 09.05.16 at 10:40 pm
You can just go to google finance and figure out which investments grew the most over any time period you want. Somebody had to own them. They win. Yay. Whatever. Who cares? It’s what’s going to do well in the future that matters now.
https://www.youtube.com/watch?v=79OAyAc3G-M&feature=youtu.be
Donald Trump Great Faith Ministries – BLOCKED by Main Stream Media.
#71 ROI Poll on 09.05.16 at 10:40 pm
Curious about how the blog dogs are doing who manage their own investments. If you could post your annual % return for however many years you’ve been tracking it.
I’ll start: 9.7% per year average for each of the last 5 years.
Whoever wins should post their current holdings :)
It’s not a race and a ‘contest’ like that does not take into consideration risk tolerance, age, net worth, income, asset mix, family situation, tax exposure or a host of other factors. So, no go. — Garth
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I had my money in the bank collecting dust,so I will go with the answer -2 %.
Do I win a teddy bear…
M42BC
#29 – Freedom First: Thank god I am me.
—
Thanks god none of the rest of us have to be you… Eeeww
https://oursask.ca/2016/09/05/the-curious-story-of-how-immigrants-have-funded-saskatchewans-homebuilding-industry/
This is disgusting. Politicians really wonder why we have an innovation deficit. $500M in loans to local property developers, pretty much all of Sask proceeds from the Immigrant Investor Program.
Given the nearly complete lock of support for non-commodity, economic diversification this is especially galling. Sask taxpayers are on the hook if the developers fold. Why? Who is really benefiting here?
They also hired West-Cap to manage the program. West-cap also runs the Golden Opportunities labour sponsored venture fund. With an MER of nearly 8% it smells like a Ponzi scheme. Given some of their “holdings”, I would question the fund’s sustainability if there were any significant withdrawals.
#71 ROI Poll on 09.05.16 at 10:40 pm
The last time they encouraged dik piks on here there were 800+ posts. Neither age nor wealth prevented the urge for one to post their junk online
Very few people are interested in a crashing market. Look south for proof. Perhaps our American friends will return the favour, as Canada lead foreign purchases of homes in Florida for 7 straight years. Arizona, as well.
Garth called it and many of us made out like bandits haha
Would do it again if it happened up here
#72 Karma: If BIS is nothing of importance why does it exist? You say it just is an information gatherer and disseminator of information but doesn’t the FED do just that too? Lots of countries have divergent policies for different reason which the BIS takes into account. I find your in contradiction with your own words as they don’t do anything but issue reports and scold countries. In your narrow world the FED can tell BIS to go to hell.
#66 BG on 09.05.16 at 10:20 pm
#12 Smoking Man on 09.05.16 at 7:50 pm
About a month a go I recommend shorting twitter because of the bias favouring librals voice and banning conservative voice…
———————————————————
The long term answer to that censorship will come from blockchain based social media.
Think Twitter run in a decentralized way by the same kind of technology that runs Bitcoin currently.
……….
Free speech is everything, people that hate it are hideing something.
Offending others is the heart of a true democracy, with out it, tyranny grows like cancer.
Garth, you might be interested in this graph. It’s the same graph above, but SFD only, and inflation adjusted to 2016 dollars. It also predicts where prices could end up if we had the equivalent 1980s and 1990s style corrections.
We are already almost at the full 1990s peak to trough correction, that previously took six years to play out. The velocity of the downturn so far is intense.
Inflation adjusted graph: https://cloudup.com/cPitaqJ38qB
My SIL, I would nominate her for sainthood. I joke about her wrath which is never seen and don’t want to… She, my brother, sister and I stopped at lake for a picnic. My bro picked up a stone and wrote a message on it to call him if found. He went to toss it on the shore but my SIL told him that was dangerous. He noted that he failed to hit the lake with stones earlier and was no danger to anyone. Nonetheless, he walked to the lakeshore, dropped the rock and came back to the park bench. His cell phone rang. It was a text message. “I found your rock – SIL”. She can be a few steps ahead of me.
A house on my street that is nearly identical to mine has gone up for sale again. It failed to sell last year and was rented out for a while. The owner came back and did renovations. It is superior to mine. Asking price has dropped about 20k$ from last year. The owner isn’t motivated to sell so it will be interesting how far he is willing to drop his asking price. I am amazed how sticky RE prices in old Calgary neighbourhoods are. New builds are being more heavily discounted but the lots are tiny – lots of particle board and no green.
#71 ROI Poll
I win, nearly an infinite return % wise on my company stock options back in the day they were what they were and had long expiry dates. Sadly only executives get those now. Now the so called Long Term Incentives (LTI’s) are only based on whether the company beats all the other similar companies and then you get a pittance if they do. The new LTI’s mean that if you get a better job offer you should probably take it. No retention value at all. Unless you are a 1% executive of course, they still get options.
Scott Adam (Creator of Dilbert) on the Rubin Report. I’m sure a lot of Trump supporters will like this.
https://www.youtube.com/watch?v=4AMV6SLT9KI
“Once declining prices starts to build momentum, there will be no more FOMO, no more bidding wars. I predict a slow melt in prices fueled by higher inventory levels. Will really suck to be a Realtor for the next few years and have to actually work again.”
As it stands, the past few years have sucked to be a Realtor. Stagnating volumes. Stagnating prices. Having to explain to your sell-side clients that the price changes seen in the newspapers are a bunch of rather misportrayed nonsense not adjusted for the sales mix.
I guess the big question in my mind is how hard will the Government try to drive a bargain with Realtors when it comes time to sell CMHC properties. Will they drive a hard bargain, offering a modest 1-2% commission? Fee for service? Government-employed salaried Realtors? Or will they bend over and pay what the Realtors typically ask, around 5%? There could be some interesting constitutional questions that arise as well in the courts, particularly concerning whether or not the CMHC is subject to the “land transfer tax” enacted by certain provinces when they attempt to dispose of properties they have seized as part of settling CMHC subprime mortgage insurance claims.
#76 Ontario’s Left Coast
OLC. You just don’t understand.
‘revert to the mean ‘ is a phrase every speculator (in whatever market) should understand, memorize and repeat….and so shall the real estate in YVR, fueled as our host so often reminds us ‘on a shifting foundation of borrowed money’….
However, over what period of time and at what cost to our economy, remains to be seen.
Always has been that recessions are half economy and half psychology…thank you for explaining the latter Garth (posted awhile ago that I could not comprehend why the plunge in YVR RE with no very bad economic news and starting before the Crash Tax).
Right under my nose: the well known J-Curve effect takes hold in YVR RE Capital (talked about by Ross Kay for months now and by innuendo today, Garth). No new investment, people worry and then fear takes hold…l’est voila, negative psychology.
Job sucking recession? We stand on the edge looking at it. May/June job creation was +14,000/-700 respectively and May/June GDP was -0.6%/+0.6%.
July job creation was -31,000. What will July GDP be (Sep 30 release date)? Companies do not shed jobs at that rate for no reason.
Auguest Labour Force Survey will be released this Friday…pray for a rebound or that shock Garth speaks about may well be happening right under our noses, in real time.
If so…well, who knows then what will happen after the worst GDP Quarter since 2009?
#82 Andy P on 09.05.16 at 11:36 pm
Garth, you might be interested in this graph. It’s the same graph above, but SFD only, and inflation adjusted to 2016 dollars. It also predicts where prices could end up if we had the equivalent 1980s and 1990s style corrections.
We are already almost at the full 1990s peak to trough correction, that previously took six years to play out. The velocity of the downturn so far is intense.
Inflation adjusted graph: https://cloudup.com/cPitaqJ38qB
……
Do you have that chart for GTA?
DELETED
Definition of stupidity: The difference between the Long-Term Trend Line and current prices.
All of this crap was by far the result of interest rate manipulation. Pure and simple.
CBs are such posturing twats and the general population largely a fearful mound of manipulable suckers.
There is always so much money to be made before the fiscal mess arrives. Rinse and repeat.
Oh yes worth mentioning, Kanadian Lobsters believe their investment advisors should be taking vows of poverty and living in tents in relatives backyards.
And as someone mentioned a Cayanne is not a Poorsche …only as a rebadged VW Suv :-(
A real advisor might drive a late model Land Rover Defender :
http://www.kijiji.ca/v-cars-trucks/city-of-toronto/land-rover-defender-1996-110-300tdi/1191588736?enableSearchNavigationFlag=true
#6 Last of the boomers on 09.05.16 at 7:43 pm
“A mean of $800,000 in yvr still seems like too much for average houshold incomes to support. If we really want the Canadian economy to begin thriving once again we have to bring the cost of a three bedroom single family dwelling down to no more than $500,000. The average family will then again be able to fund their TFSAs, RESPs, RRSPs and actually spend money in places other than Dollarama and the thrift store.”
Not sure about the dollar values here, but excellent points nevertheless. There is a sweet spot in what you say regarding buying shelter and growing savings (and hence optimism and a healthy national economy) for the future and it lies squarely in interest rate levels.
That seems to have been beyond the grasp of CBs for decades now. Or has it?
#9 Nodebt on 09.05.16 at 7:46 pm
“20% across canada for all foreigners
Watch the TV series Billions, best show out there”
30% – and double the municipal tax.
#11 Jungle on 09.05.16 at 7:48 pm
“We could very well see a long period of stagnation. As a new buyer in Van or TO, I would stay right out. Renting is so much cheaper. Those who have owned RE for decades and now have 7 figure property near retirement, makes sense to sell now, rent and invest the rest.”
Trouble with that is that if you find a great rental, the lifestyle becomes highly addictive. We sold both our properties at the right time and banked it all.
We can lock, leave and forget about it when we travel, our investments pay out as opposed to re and there is no feeling quite like being fiscally unfettered.
We will buy back in, but not now. Way too frothy and sticky.
In the meantime, the fun has begun with realtards and greedy sellers squealing at each other.
Realtard huddles are in overdrive.
@#36 Brazil ExPat
“guess you get to insult as much as you want because most everytime I try to reply Garth does not post. So….there you go.”
********************************************
They may be insults but……When you’re civil about it. You get through. Civil insults take a bit more time but they are far more satisfying.
How are the riots…errr sorry the demonstrations, over Temers appointment as President ?
Is Dilma wearing stripes yet?
Incredible. Trump calling out the fake Obama economy. He’s spot on too.
“Republican presidential nominee Donald Trump, who has previously accused the Federal Reserve of keeping interest rates low to help President Barack Obama, said on Monday that the U.S. central bank has created a “false economy” and that interest rates should change.”
“They’re keeping the rates down so that everything else doesn’t go down,” Trump said in response to a reporter’s request to address a potential rate hike by the Federal Reserve in September.
“We have a very false economy,” he said. “At some point the rates are going to have to change,”
http://www.cnbc.com/2016/09/05/trump-rips-false-economy-artificial-market-says-rates-must-change.html
MF
I’d say that Greater Vancouver Real Estate Board graph shows very well that prices just keep going up over the long term with corrections in the from time to time over exuberance of the market.
Re: #20 zee on 09.05.16 at 7:59 pm
Some people can’t see the forest for the trees.
@#74 Brazil Ex pat
“Donald Trump Great Faith Ministries – BLOCKED by Main Stream Media…..”
********************************************
what are you talking about.
I saw a 30 second clip of The Donald in that church (with his eyes closed) clapping his hands ( out of rythym with the rest of the congregation i might add) on the ABC News the other night.
I saw a repeat of the same clip on the Canadian news last night.
Get your conspiracy theorist facts straight.
Oh , and Trump looked about as relaxed and “at home” in that church as THIS guy……
https://www.google.ca/url?url=https://www.youtube.com/watch%3Fv%3Dvg6pWv1B9L4&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwiqlvag4vrOAhUB1oMKHYyJB5AQyCkIGTAA&usg=AFQjCNEeaLpBClFhB6N5XgGnjhGpwJxtyg
I’m gonna go see how many Canadian dollars the banks will give me for my fake US dollars
Lolol
Is someone able to create and post support and resistance lines to the first chart? Thanks in advance.
It takes a lot of money to keep a bubble of this size going, more than it took to create it. People need to keep on buying at bubble prices to keep the thing inflated.
Of course if the pool of buyers dries up the market can survive for a while on lower volume, but lower volume means less economic activity and less jobs to a viable pool of buyers. Not a long term possibility.
Since fast economic growth is very unlikely we know that the only thing that can keep this market alive is more debt. At 164% of income debt is already at record high for Canada. The real question is how much higher can it climb before this bubble truly burst?
Some countries in Europe such as Denmark, Sweden and the Netherland have far higher debt to income ratios so we know theoretically at least it is possible. There is no mathematical formula that can help us predict when bubbles burst! That is consistent with the knowledge that bubbles are irrational events, by definition unpredictable.
At this point the only place in Canada where I expect the bubble to burst in the short to medium term is Alberta, for obvious reasons, because there the fundamentals have truly changed. Elsewhere not so sure, even despite current appearances.
Re #86
Yeah Mark! Preach it bro!
Lets start talking about how we’re dealing with the mess in the biggest BC housing apocalypse ever.
Not on my dime, folks
Take a few bucks from all sellers who made out like bandits over the last 5 years. Starting with Christy who sold a couple weeks before the tax was introduced. It’s a rumor, I know.
Not gonna happen of course …
For all those who think prices are too high and properties are unaffordable right now, even if the price is going down 50%, it’d still be unaffordable. A typical house in Toronto goes for at least $1.5m to $3m depending on where you are buying, half of that is $800k-$1.5m. How is that affordable at all?
A simple kitchen reno can easily cost $50k. Interlocking a driveway is 10-15k. The days of $200k homes are over. $200k can’t even get you enough raw material to build a house.
Renting is not too bad after all, you don’t have to worry about up keeps and all the other additional expenses that come with ownership.
#38 Context on 09.05.16 at 8:46 pm
Agree.
The houses in C4 that were listed with multiple (double, triple, more) ‘8’s in their number have migrated into rental listings. Some double 88s still sitting on MLS sale side, but it has been since May (or earlier).
That is a great graph. It shows prices would need to correct 50% just to hit the long term trend line. Of course as the graph illustrates prices never stop at the long term trend line when correcting. Prices actually drop below the long term trend line typically by the same amount they went over it. In the case of this correction that would put house prices at zero. That is not possible but it shows there is no real bottom to this correction and a 70% decline of SFHs is likely. That would put prices inflation adjusted at where they started in 2002/2003.
Statistical tie in this latest poll.
Trump 45%
Clinton 43%
https://www.facebook.com/DonaldTrump/photos/a.488852220724.393301.153080620724/10157643692645725/?type=3&theater
#97 crowdedelevatorfartz on 09.06.16 at 8:29 am
@#36 Brazil ExPat
“guess you get to insult as much as you want because most everytime I try to reply Garth does not post. So….there you go.”
********************************************
They may be insults but……When you’re civil about it. You get through. Civil insults take a bit more time but they are far more satisfying.
How are the riots…errr sorry the demonstrations, over Temers appointment as President ?
Is Dilma wearing stripes yet?
+++++++++++++++++++++++++++++++++++
No comment RE: Garth
https://www.rt.com/uk/358434-brexit-recession-economy-growth/?utm_source=browser&utm_medium=aplication_chrome&utm_campaign=chrome
The UK is fine post Brexit. Gee….wadda ya know? Another incorrect prediction of doom from all the global smarty pantz people……
#96 maxx
“…if you find a great rental, the lifestyle becomes highly addictive. We sold both our properties at the right time and banked it all [……]there is no feeling quite like being fiscally unfettered.”
—————————
Well said. That is exactly my story. The thought of owning a home now fills me with apprehension.
Back in my thirties, it was all I could think about.
Canadians are plain stupid. What’s worse and even more dangerous is they don’t realize how ignorant they really are.
#104 pBrasseur on 09.06.16 at 10:58 am
Some countries in Europe such as Denmark, Sweden and the Netherland have far higher debt to income ratios so we know theoretically at least it is possible.
I’m a Dutch immigrant, and had a mortgage there.
The reason that the Netherlands has crazy debt levels is because there, home owners do not pay down their debt.
This has a fiscal reason: mortgage debt is 100% tax deductible for principle home.
So mortgages are engineered by banks to not get paid down, the borrower only pays interest, and on top of that, saves money in a separate savings/investment account, linked to the mortgage account.
Once 30 yrs pass, the saved up money is supposed to wipe out the debt in one fell swoop. Meaning that the borrower always paid full interest on the whole principle, maximizing tax deduction.
Now, it gets even fancier than this:
It is quite popular in Holland to even skip the ‘saving’ part of this mortgage construction, and purely pay interest only. At the end of 30yrs, it would mean refinancing or selling the home. But inflation would have withered away the principle anyway.
Skip forward to modern times: interest is super low (some Dutch people even get paid interest for borrowing, and thus declare income on that!). Also, inflation is steadily transforming into deflation, so that this way of borrowing becomes obsolete.
Bram
You do know the actual Brexit is still at least 2 years away? It will take years after that to determine what the impact is. All we know now is the British Pound is down by 10% since the vote which is not good for people who hold Pounds or assets valued in them (you know the British).
#32 … the other white meat (pork)
Strange that prices in Cowtown should be so sticky yet in Vancouver they suddenly plummet.
Very strange indeed, especially considering that consumer bankruptcies in Alberta are up, from 2015, by 29% and Consumer Proposals are up by 42%.
http://www.ic.gc.ca/eic/site/bsf-osb.nsf/eng/h_br03630.html#tbl2
I can only presume that the Real Estate boards are consistant across Canada in obfuscation and manipulation.
If you are going to make house selling/buying decisions based on statistics ………. follow the trend. The year over year might be way too late.
Good luck
so in my neck of the woods, Coquitlam, the three strata townhouses in my complex have all sold out..listed over the summer between 650-675K.
last week, a comparable unit cam onto the market, listed at 685k..
So….WHERE is this collapsing market?
I see prices continuing to go up (at least for middle-class family housing)
With fixed 5 years nearly 2%, is this really surprising??
#108 BS on 09.06.16 at 12:26 pm
a 70% decline of SFHs is likely
Ha ha ha… what have you been smoking?
How large do you suppose the pent-up demand is of people desperately wanting a home in Vancouver?
Take a guess.
(hint: masses of people complaining they can’t find a place to rent. They would jump on a $400K SFH in East Van, in ANY market.)
A typical house in Toronto goes for at least $1.5m to $3m
———————————————————————————
I like to try a little of what you’re smoking.
Agreed. After 35 years of home ownership we are now renting. Sold high and we love renting and having our money in the market instead of tied to one large Real investment. We may never buy again…besides the ownership numbers do not compute for us. This outcome was not what we expected but life is all about. Obning and weaving!
IS IT TRUE US dollar collapsing on the 27th of September 2016 ?
https://www.reddit.com/r/OutOfTheLoop/comments/4mnu9e/why_does_everyone_think_the_dollar_will_collapse/
#106 Long Time Lurker Here on 09.06.16 at 11:54 am
For all those who think prices are too high and properties are unaffordable right now, even if the price is going down 50%, it’d still be unaffordable. A typical house in Toronto goes for at least $1.5m to $3m depending on where you are buying, half of that is $800k-$1.5m. How is that affordable at all?
A simple kitchen reno can easily cost $50k. Interlocking a driveway is 10-15k. The days of $200k homes are over. $200k can’t even get you enough raw material to build a house.
Renting is not too bad after all, you don’t have to worry about up keeps and all the other additional expenses that come with ownership.
————–
I’ve said it before, and will say it again. If one cannot ever afford a house in a high-priced market like the GTA, then GET OUT!
Let’s say you have to take a 50% pay cut to move to a low-cost area. When a starter home is $150k-$200k compared to $1 million is is certainly doable.
That is unless one LUSTS for that $1.5-$3 million GTA house. That is another matter.
Tired of this Pc/leftist marketing rhetoric.
Get me a cup of unethically sourced unfair trade coffee asap.
Let’s bend those farmers over the barrel and get best prices. Show them who’s boss.
RE: #106 Long Time Lurker Here:
“A typical house in Toronto goes for at least $1.5m to $3m depending on where you are buying”
This is the sort of misinformation that leads people to believe that Toronto is a “bubble” market.
Here is what 2.5 to 3.0 million will buy you in Toronto:
https://www.realtor.ca/Residential/Single-Family/17243620/576-BROOKDALE-AVE-Toronto-Ontario-M5M1S2-Bedford-Park-Nortown
https://www.realtor.ca/Residential/Single-Family/17047321/602-LONSDALE-RD-Toronto-Ontario-M5P1R7-Forest-Hill-South
https://www.realtor.ca/Residential/Single-Family/17271042/39-KING-GEORGES-RD-Toronto-Ontario-M8X1L2-Kingsway-South
These are not regular run of the mill Toronto houses. Toronto is not Vancouver. You don’t need to spend $2 million on a beat down, single storey two bedroom rotten piece of crap.
People think that for some reason and they figure Toronto is headed for a crash. Our prices are not like that. When one takes into account the daily “price” of the commute into and back out of Toronto, the house prices in the City actually start looking very affordable.
Lost another one. Enbridge to merge with US entity.
Widows and orphans dividend play.
#114 Bram
Thanks, yes I get that this kind of massive debt binge is possible only when governments get involved somehow. This would also explain why situations differ quite a lot from one country to another, despite consumption being so similar everywhere else. Even in the US many pointed to congress mandated Fannie and Freddie to have initiated the massive RE bubble.
In Scandinavia and Denmark some figure it’s the generous state sponsored pensions that entice the banks to lend so very easily, that combined to ultra-low rates.
Similar story in Canada, you could say the low rates are accidental but combined with the involvement of government via CMHC backing up lending we end up with the worse bubble in our history.
My take on this is it will take a long time so sort out, but the bigger the government intervention the more distorted the economic reality gets and worse will be the consequences. If this is the case, even if there is no crash, the consequences of the RE bubble will be more durable and severe in Canada than they have been (still are…) in the US.
masses of people complaining they can’t find a place to rent. They would jump on a $400K SFH in East Van, in ANY market.
———
True, but how many of them would qualify for a mortgage? The majority of people who cannot afford current Vancouver rents have low incomes and poor credit. In a falling market, you need good credit to get approved. And you need a downpayment. With moms and dads all over the province recovering from a massive hit on their net worth, where will the downpayments come from? I’m not saying that 400 K houses will languish, or that we’ll ever get that low, but keep in mind that pent up demand is not always backed up by pent up purchasing power.
Nobody globally really cares any more about the Canadian housing market.
No bank will fail, the loans are protected by CMHC.
It is a small, insignificant market in a small, increasingly insignificant globally economy.
Sure,
– a lot of stupid borrowers will get crushed
– the loonie will be inflated to prevent severe depression due to credit deflation (in real, not in nominal terms)
– retirees, savers and people on fixed income will get crushed, some will never retire
just suck it up and move on (certified Canadian Trade mark) and don’t forget to put that conformist smile on your face.
#102 WalMark of Sadkatoon on 09.06.16 at 9:15 am
”I’m gonna go see how many Canadian dollars the banks will give me for my fake US dollars
Lolol”
——————————————————-
About 13.5% less than what you could have gotten back on January 20th when I cashed mine in. LOL
#127 Newcomer on 09.06.16 at 3:25 pm
where will the downpayments come from? I’m not saying that 400 K houses will languish, or that we’ll ever get that low, but keep in mind that pent up demand is not always backed up by pent up purchasing power.
Valid point, but at $400K, those houses would be bona fide investment opportunities for land lords yielding 10%. Unlike the current market, where yield from rental property in Vancouver must be close to nothing.
Once prices drop really that hard, you can easily make some money renting them out. Which means prices will rebound long before they hit -70%. Mind you, the original poster not just called -70% ‘possible’ but actually ‘likely.’ My take is that it is extremely unlikely, unless maybe after a WW3?
About 13.5% less than what you could have gotten back on January 20th when I cashed mine in. LOL
Thankfully I don’t need to time it because my supply of US dollars is unending!
Lolol
#122 cramar on 09.06.16 at 2:18 pm
I’ve said it before, and will say it again. If one cannot ever afford a house in a high-priced market like the GTA, then GET OUT!
Let’s say you have to take a 50% pay cut to move to a low-cost area. When a starter home is $150k-$200k compared to $1 million is is certainly doable.
___________________________________________
Yep.
Another thing, you actually won’t be taking a massive wage cut to move to small town Ontario, wages in the GTA have been getting sacked for near two decades at this point. Too many workers, not enough jobs.
Average house price out my way is ~284K, that’s 6.4X income for a couple that flips burgers at minimum wage. 1100.00/month payment.
A couple in Toronto needs 160K/yr gross to actually break into the very bottom end of the market at the same ratio, and that’s more than double the median household income in the GTA right off the bat.
A 284K small town Ontario house beats a 1.1 Million GTA shack in every category by miles.
So if home ownership is the goal, a 160K family income in Scarborough puts you on par with a couple of WalMart Greeters in Belleville Ontario.
6 years ago my small town area had a median family income of 69,600.00 in 2010. Toronto Median income in 2010 was 68,110.00. in 2014 my area had a median household income of 80,423.00, Toronto did 75,270.00 in 2014.
Yes the ultimate highest wages are in Toronto, but only 1 job out of a 1000 (and dropping) The 999 balance appear to be less than par (and worsening) compared with Rural Ontario. I’ve said it before, the only thing keeping most folks in the GTA are jobs volume, and the big enclaves offering cultural familiarity and security in many forms – that’s it.
There is nothing else on offer in Toronto that even remotely justifies the sub-par wages and cost of RE.
If a guy could leave the GTA horror-show behind, make the same or more money, and buy a kick-ass house for 1/4 of what he’d dump on a 416 shack, why wouldn’t he? Not too many reasons on that list is there?
#75 For those about to flop… on 09.05.16 at 10:57 pm
I had my money in the bank collecting dust,so I will go with the answer -2 %.
Do I win a teddy bear…
———————————————–
Probably not a teddy bear, but maybe a pity scoop from Belfountain ice cream counter? What say ye, sir Garth?
shadow banking
http://onlinelibrary.wiley.com/doi/10.1111/rego.12024/full
========
Cameron’s promise to “break down the walls of secrecy”. Have a look at some of the examples
The new UK register of “who really owns and controls all British companies” – a main plank of the government’s promise to tackle corruption – is already being circumvented
http://www.private-eye.co.uk/issue-1426/in-the-back
http://www.private-eye.co.uk/registry?utm_source=brand&utm_medium=registry&utm_campaign=registry
#124 Ace Goodheart on 09.06.16 at 2:37 pm
RE: #106 Long Time Lurker Here:
These are not regular run of the mill Toronto houses. Toronto is not Vancouver. You don’t need to spend $2 million on a beat down, single storey two
bedroom rotten piece of crap.
People think that for some reason and they figure Toronto is headed for a crash. Our prices are not like that. When one takes into account the daily
“price” of the commute into and back out of Toronto, the house prices in the City actually start looking very affordable.
————————————————-
Median FAMILY income in Toronto? 75,270
http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil107a-eng.htm
GTA? probably around 65 k.
And that justifies the prices that you quote (in the 1.5-2-3 million CAD range)?
650 k + for a crappy semi-detached at Britannia road in Mississauga (where I won’t live even if you pay me)
1/5 of these might seem reasonable for me.
Pass around what you are smoking.
Engrave the following in your brain:
1. There are very little people with money in Toronto/GTA. There are many/predominantly/97 % + people with debt.
It is a working class, not a world class city.
2. Incomes justifies house valuation. Don’t get fooled by the nominal valuation. Real valuations are already past peak (with the decline of the loonie)
Nobody cares any more what nominal valuations are.
3. There is no real economy in GTA/Toronto, only FIRE that has no substance/fundamentals considering lack of base/ the decline in commodities/manufacturing. Consider TPP and it’s impact on agriculture.
The news for the Canadian economy are not good and will get worse. Technically after the incredible run up in debt to support very small growth we are in already in a real depression, nominally we might fake some growth but it won’t be real.
I can’t emphasize strongly enough what the future prospects for the job market really are, specially for the young. The next lost generation. Good luck in paying those student loans.
Valid point, but at $400K, those houses would be bona fide investment opportunities for land lords yielding 10%. Unlike the current market, where yield from rental property in Vancouver must be close to nothing.
——————
That is true, but only if you assume that mortgage rates and rents stay where they are. Rents typically tank in a major correction. So even while, in the long term, you are not likely to see 400K houses sitting idle, I’m not sure that fundamentals bar them from ever appearing, if only for a short time, particularly in the period of unemployment, migration and despair that would follow a retrace to 800 K houses. — Don’t get me wrong, that’s not likely, but I don’t see an argument from fundamentals against it.
#121 Tiger on 09.06.16 at 2:13 pm
IS IT TRUE US dollar collapsing on the 27th of September 2016 ?
https://www.reddit.com/r/OutOfTheLoop/comments/4mnu9e/why_does_everyone_think_the_dollar_will_collapse/
++++++++++++++++++++++++++++++++++++
Crash against WHAT other currency?
Crickets?
#115 BS on 09.06.16 at 1:12 pm
#111 Brazil ex-pat on 09.06.16 at 12:31 pm
https://www.rt.com/uk/358434-brexit-recession-economy-growth/?utm_source=browser&utm_medium=aplication_chrome&utm_campaign=chrome
The UK is fine post Brexit. Gee….wadda ya know? Another incorrect prediction of doom from all the global smarty pantz people……
You do know the actual Brexit is still at least 2 years away? It will take years after that to determine what the impact is. All we know now is the British Pound is down by 10% since the vote which is not good for people who hold Pounds or assets valued in them (you know the British).
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Then I guess that means “the other side of the argument” that the UK economy will CRASH AND BURN does not know for sure either right?
http://www.scmp.com/news/world/united-states-canada/article/2005794/canada-tax-chiefs-knew-foreign-moneys-big-role
See that parabolic increase in the last 6 months?
I attribute that to all the PNE workers entering the market.
“That is true, but only if you assume that mortgage rates and rents stay where they are. Rents typically tank in a major correction.:
Rents are far, far more stable in the long term than prices. Sure, rents might decline a few percent, but prices can easily go down 30, 40, 50%+. Since houses are long-term assets, and have fairly high “duration”, they tend to be very sensitive to changes in long-term interest rates. Spectacular on the way up. Spectacularly painful on the way down.
So even while, in the long term, you are not likely to see 400K houses sitting idle, I’m not sure that fundamentals bar them from ever appearing, if only for a short time, particularly in the period of unemployment, migration and despair that would follow a retrace to 800 K houses. — Don’t get me wrong, that’s not likely, but I don’t see an argument from fundamentals against it.”
Overshoot after a prolonged mania can be especially severe. And the phrase, “markets can stay irrational longer than you can stay solvent” can be quite applicable here. Its not a given that housing will immediately come back to life after a crash. Especially with central banks basically having no ability to move interest rates meaningfully down at this point, unlike the episodes of crashes in the past.
In my opinion, today’s variant of the Vancouver graph is a bit unprofessional. Unless there is a statistical justification that you describe in the text or caption, you just shouldn’t be putting extrapolations on a financial graph (even with the question mark present). It is implying a future (negative) return that you cannot guarantee any more than the manipulative realtors who promise you will make lots of money on new condos.
Of course, you might be laughing in a few weeks when the numbers come out and that question mark can be removed….
Garth, since you keep advocating the “5 bucket” balanced and diversified portfolio, why don’t you do a 5 part series, one blog on each.
I’m not asking you to name individual ETF’s, but preferreds for example, can be tricky with their rate resets, hedged CDN vs. non-hedged. Ready to start buying big chunks but want to do it right.
#80 Context on 09.05.16 at 11:20 pm
“#72 Karma: If BIS is nothing of importance why does it exist? You say it just is an information gatherer and disseminator of information but doesn’t the FED do just that too? Lots of countries have divergent policies for different reason which the BIS takes into account. I find your in contradiction with your own words as they don’t do anything but issue reports and scold countries. In your narrow world the FED can tell BIS to go to hell.”
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The Bank of International Settlements is a loose membership of central banks which takes information from the various countries and helps the central banks work together. It’s the OECD of the banking system. The Fed does not receive marching orders from dudes in Switzerland, as per your assertion. Do you think Poloz takes orders from the BIS too? Or do you think it makes more sense for someone hired by the Canadian government to make decisions? Does Mark Carney take orders from the BIS too? How would the BIS know what’s better for the individual countries’ economies than their own central bank? Do you think Mark Carney or Poloz or Yellen purposefully sets up their economies to fail on BIS’s orders?
What you’re asserting (i.e. BIS “calls the shots”) is complete utter bull feces. I suggest you lay off of the conspiratorial kool-aid.