Death by politician. Who would have thought the very governments that (more than anything) helped create gaseous housing markets would be their executioners?
But here we go.
Just four days ago the feds assaulted real estate with such verve it’s taken this pathetic blog three whole days to detail the blood-&-guts specifics. New tax threats on principal residences. Stress tests for moisters. A crisis for mortgage brokers. Tumbling stocks of lenders. No insurance for rentals or entrepreneurs or 30-year borrowers. It’s a long, tough list.
And that came on top of the shocking 15% Chinese Dudes tax slapped on all Vancouver transactions at the end of July. As that market was already in distress, this had an immediate impact. Recent sales charts for August and September resemble Kim Kardashian’s bottom (or so I’m told).
Now the word’s out that Ontario will be following suit, with an announcement scheduled for after the long weekend. The Chinese Dudes Tax, GTA Edition, will also be at 15% (at least that’s the number being put before preem Kathleen Wynne), which would add $195,000 to the cost of the average detached home in 416. Ouch. Already Toronto has double land transfer tax, which glues an additional $44,200 to the price of a $1.3 million beater house.
Yep, government tolls, levies and taxes are outta control. Now there’s more.
The City of Vancouver will be launching a vacancy tax in the new year, hiring an army of bylaw rent-a-cops to snoop around and see who’s actually sleeping in the properties they legitimately bought and own. If the city deems yours to be vacant for an unacceptable period of time then, zap, you’re taxed. Now West Vancouver is going a step further. The city across the water is a week or two away from asking the province for the right to goose its property tax on anyone (Canadian or not) who owns a home there, lives there, but has a principal residence elsewhere.
Yep, that’s right. Two-tier citizenship. And what will the rate be? “High enough to be meaningful,” a local political potentate says.
Hey, there’s more.
A largely-forgotten hunk of the changes dumped on the marketplace on Monday will forever alter how Canadians are loaned money, and at what rate. Money minister Wild Bill Morneau has finally pulled the trigger on mortgage insurance, and started a process that will see taxpayers shouldering a lot less risk for that $1.4 trillion mountain of outstanding home loan debt.
Until now CMHC has absorbed it all (along with private sector Genworth) since every high-ratio mortgage in the land (where the borrower has less than 20% equity) must have insurance protecting the lender from default. Borrowers pay for this. The lenders get the protection. The government backs it all. This is called moral hazard.
It means a moister with 5% down that she borrowed from Mom, with no actual savings or, like, money can borrow hundreds of thousands at exactly the same rate as her parents who have a 70% down payment, substantial liquid assets and ten times the income. Since CMHC (and the taxpayers) has wiped away the downside for the bank, it adds no risk premium to any loan. You know the result – a housing bubble based on copious, epic, awesomely orgiastic amounts of borrowing.
Anyway, it’s history. Or soon will be. The bet is by this time next year lenders will be forced to have skin in the game by financing deductibles on all these mortgages they make. That risk-sharing won’t come cheap. Bankers will go from having almost no liability to billions of dollars’ worth, and you can pretty much count on mortgage rates going up in general, and rising specifically for those borrowers who have a higher chance of blowing up.
Morneau’s department made a point this week of saying our system of mortgage insurance, and of totally insulating lenders from risk, is “unique in the world.” The goal, he said, is to “require mortgage lenders to manage a portion of loan losses on insured mortgages that default, rather than transferring virtually all the risk onto the taxpayer via the government guarantee for mortgage insurers.”
In the end, this could be the greatest housing market decimator of all.
236 comments ↓
I notice all of these thing the government has done, but I notice as well the one vital thing they have NOT done.
No speculator’s tax.
That is, something like the tax policies that keep those 300-year-old stone houses in Europe from being torn down for plasterboard duplexes.
Example: If a residential house is bought, for the first x number of years (say — seven) any capital gains made on a subsequent sale are taxed back at, oh, 90%.
Not that I approve of those particular numbers; they would have to be adjusted according to the economy and culture of the different areas of Canada — but something needs to be done to return houses (or condos, etc.) to the status of homes, and not commodities. Commodification invariably results in destructive cycles of boom and bust.
No qualms about people making money in the YVR lottery but I sure hated that my tax dollars were covering their bet (should things have gone wrong). The market might get interesting here.
Bring on Mark with his “risk premia” theory. We can all hear him out and dine on crow together. Poor bugger was actually right this time.
About damn time.
These changes were way way way overdue.
It seems that most of these rules are targeted at insured borrowers, would you speculate that banks expecting further rules to target un-insured mortgages? Hence the freeze up in mortgage pre-approvals.
Adding a foreign buyer tax in the GRA will help ensure the detached and semi drop at least 20% in the next 24-36 months with a chance at more
Those who decide to still buy and who are luck to have a job will likely look to cheaper housing such as 2BR condos and town homes
The job losses in the GTA are going to be epic
Largest sector in GTA is financial services. What concerns me is the attack by broke and Liberal governments will inevitably start targeting innocent Canadians and confiscating their homes. Add in exploding user fees and the new carbon taxes fraud and ongoing steady currency debasement and it is very easy to visualize the shocking collapse in living standards we will experience over the next 5-10 years
Don’t get too angry because it was fake prosperity all along.
Heaven help us all
The sky is falling!…… It’s not, this is starting to sound like zerohedge, Prices have no budged in 604. It’s still 1 miliion for anything without moss on the roof in coquitlam/poco. 1.5 for something in bby, forget about van. Don’t care what Ross Kay says maybe mansions in Dunbar are on sale compared to June. Noones selling for less than what their neighbour did. Just look at Calgary. Ya I guess we forgot about them. Savage Job losses prices haven’t budged. Explain that …
Wow early posting Garth is watching ball game
(Sent with slam effect)
wow, this black swan keeps laying eggs. Do you really think Wynne govt is going to copycat Vancouver Garth? What do they think is left in the Ontario economy when they euthanize housing? Crazy…the market had already peaked.
onf51
I find it wildly ironic that it’s the federal liberals who are trying to get people to practice some financial conservatism and to get banks to cut the risk they’re accepting.
OUCH!!!! With so many changes all at once and is so tough to digest, I’m having an stomach pain and maybe turn into IBS very very soon. I guess this is the ultimate Black Swan of the one of a century bubble burst.
With that said, many will turn to variable instead or Bank of MaMa and Papa. there… no problem. NOT!!
These changes won’t make much difference.
Been waiting a while to post this video. The time is right…
https://m.youtube.com/watch?v=3GwjfUFyY6M
It’s about friggin’ time they made changes. The taxpayer backstopping all these high risk loans is ridiculous. I just hope things don’t blow up before a good portion of those crappy mortgages renew under the new rules.
A LEADING INDICATOR
I’ve written about how sales of detached houses have tanked across Greater Victoria since April, down 49.2%. (Realtors hate that I write about this).
It turns out that the April to September sales differential appears to be an accurate indicator of the (near future) direction of house prices in Victoria.
Here’s the data from the Victoria board:
Drop in sales of detached houses from April to September by year:
2006: -38.2%
2007: -34.5%
2008: -22.3%
2009: -2.8%
2010: -49.0%
2011: -25.4%
2012: -35.4%
2013: -26.3%
2014: -17.5%
2015: -22.8%
2016: -49.2%
The only other year that posted a sales drop comparable to 2016 was 2010.
2010’s 49.0% decline in sales ended up being a clear warning that the market correction process had already begun. Indeed detached house prices fell 15-20% as the correction played out. That price decline took place even as Canadian 5 year fixed mortgage rates fell.
Today’s abnormally low level of listings is obviously only a temporary thing. To think this is a permanent thing would mean that you’ve consumed too much realtor kool aid. Listings will increase and we could have an abnormally high level of listings within a matter of months.
A significant drop in sales indicates that the market correction process has already begun, regardless of the current number of listings.
NOT JUST A VICTORIA THING
That a significant drop in sales indicates that prices will be falling soon is generally true for all housing markets.
WORSE THAN 2010
Unlike in 2010, this price correction will not be taking place with falling 5-year fixed rates to slow the decline. This time rates will be rising and pushing prices down.
Tighter lending rules will be in effect for Victoria’s coming market decline. It’s no secret what that will do to prices.
Higher household debt levels, bubblier house prices, etc. will make this market correction significantly more severe than 2010’s.
Did Ontario do any studies on the number of foreign buyers in Toronto like BC did in Vancouver for the months of June/July? Or did they already have this data available? What percentage of sales were to foreign buyers in Toronto during recent months? Anybody know? Or is this simply being done to stem the alleged flow of foreign capital from Vancouver?
What causes crashes is sellers drying up, atleast thats how it happens in stocks
The reasoning the RE industry and related pumpers used was that the government would never do anything to pop the bubble. All the while forgetting that those same governments created the bubble in the first place.
On another note, the “auction house” on Sperling Ave. in Burnaby now has a SOLD sticker on the real estate sign. The vendor originally turned down an auction offer of $1.5 million as too low and wanted at least $1.8 but after not taking the $1.5 turned around and listed it at $1.488 million and was “motivated”. It sat unsold for several months. I’ll bet he got a lot less than $1.488 for that tear down shack.
Unique in the world, special snowflakes, a lot of feelings going to be bruised.
I toured a large swath of New York State south and west of SM`s favorite casino watering hole this summer . I did not see one cornflake box sub-divison or any new houses at all. none , zilch, nada uno.
A this old house paradise for the DIY inclined.
Sure made me realize what an epic gasbag ponzi we have north of 49.
3639 Oxford St (E Van)
https://twitter.com/hashtag/VanRE?src=hash
700k Reduction. WTF? Prices ALWAYS go up in Vandelusional (per the repetitive Skytrain dude).
When the thermals improve The vultures will be circling.
Go Jays!
Boxers or briefs?
Boxers with dress pants, briefs with shorts, commando with jeans };-)
Hawaii or Palm Springs?
Mexico
1st marriage or…?
First Marriage
Semi retired or working til you have a jammer?
Semi retired… gonna work ’til I drop… hopefully, but at my pace and on business I choose.
BMW or Mercedes?
BMW… Mercedes’ are for old farts… and the Palm Springs crowd
Go Jays Go!
There is really a sense that all of these hidden changes will make a dent on the market – but since 2010, the feds have diddled with the market with similar measures, only to have the unintended or intended(?) consequence of inflating the market.
We had the elimination of the 40 year/0 down, the 35 yr mortgage, changes to amounts you could pull out of equity for another home, down payment changes, increased bank scrutiny, etc….
All we saw was the market went up and up and up.
So forgive me if I am ultra sceptical after 6 years of ‘big changes’ to the mortgage industry which only fanned the flames of price appreciation.
On a second note, several posters noted years and years ago that no action would be taken to curb BC price appreciation because it did not impact TO. Once it spread to TO, then action would be taken by the feds. Well, true to form, it took the centre of the universe country to experience unsustainable price increases to prompt POTENTIALLY meaningful changes.
POP … CRASH. IT’S OVER.
Housing market it will very hot this winter, fake fires everywhere, and don’t forget divorces.
Why should I have to share responsibility on a mortgage default when a mortgage is a business deal between a lender and a borrower? It is even more absurd when the borrower is not a homeowner but a speculator or a foreigner breaking the law in his own country. Kafka would have had a field day with this. Canadian taxpayers take on mortgage risk for speculators who are buying houses to flip. Canadian taxpayers take on mortgage risk to benefit foreign speculators. This has moved so far away from the original intent of HMSC as to be unrecognizable. Backing loans for veterans returning from WW2, recognizing that there time in the armed forces not only placed them at risk of their lives, but denied them an opportunity for an education and a career, was a good thing to do. However, some oligarch in Russia who wants to speculate in Canadian real estate isn’t one of those people. We have those here. The Canadian government has turned a blind eye to who has been bringing money into Canada. It’s not just Chinese trying to get money out of reach of their government. Is what is happening going to create a frustrating amount of red tape? Yes. Of course Will that be worse than what has been going on? We’ll have to wait and see. It may well be that Garth is right. The real culprits as Pogo said said , or something like he said, we’ve seen the enemy and he is us.
“…you can pretty much count on mortgage rates going up in general…” Garth
My interest rate charts show real rates continuing to tick up with CPI ticking down.
And on my 6 city SFD chart it’s looking lonely at the top:
http://www.chpc.biz/6-canadian-metros.html
Notice that the total Canadian national MLS projected annual sales plot (521,900 sales/yr) is back to the 2008 highs which is down 5.5% from 2Q 2016 when it was annualized at 552,100 sales/yr. In 2015 it was 505,500 sales/year.
The air started going out of the gasbag in July 2016, well before the BoC and Ottawa started their freakout.
I highly doubt Kathleen will support a foreign buyers tax especially if it causes sales to drop similar to Vancouver. They are taxing the ass of real estate especially in Toronto. Why would they kill the goose that continues to lay the golden egg?
A 15% foreign buyers tax causes scares foreign buyers away and at the same time the double land transfer tax would get hit hard, no way, ain’t gonna happen. Kathleen is addicted to tax tax tax!
This feels like a beatdown. If they keep this up I may actually vote for them next election.
Burn baby burn its a disco inferno
How many people just bought a condo or house without selling their home? These people are screwed and are now in the situation where they may LOSE EVERYTHING!!!!!! Buyers if they had any brains would not buy ANYTHING for the next few months and cause a CRASH that would hit 50% or greater as people DEFAULT on their mortgages. DO NOT BUY and spread the word in social media. Together we will CRASH the HOUSE OF CARDS CALLED THE GTA.
I don’t see anything to object to here. You?
The most shocking thing about these announcements is that it exposes the way lending/borrowing have been occurring. I’m sure many taxpayers have no idea that they, not the banks, have been underwriting the banks’ loose lending practices.
YUP the game plan is to watch prices CRASH 35-50% as this house of cards falls apart. Realtors are going to be very hungry for money. The GAME IS OVER!!!!!!! Time for pain realtors time for P A I N !!!!!!!!!!!!!!!!!!!!!
I predict that sales will stay on the low side and prices remain where they are in Vancouver and Toronto at least well into 2017 and the summer buying season. There would have to be a “black swan” or other kind of freakish event to push people to sell lower.
Greed will out trump (sic) fear until the fear is real.
I’ve been saying for a long time that CMHC creates moral hazard. Without skin in the game banks will write mortgages all day long as we have seen. The banks are likely on board with it but it appears as though they had influence in Morneau’s moves since it will be much harder for mortgages to move to another lender and the higher mortgage rates the banks will charge as a result will of course be good for the banks.
I hold bank shares and those of insurers and I’m not worried about these changes at all. As I’ve said in past, banks are making obscene profits even in these low interest rate times….wait until they actually start reaping earnings from higher mortgage rates /spreads.
Meh, any increase in borrowing costs will probably be offset by the decline in headline rates (which continue to trend down not up). Won’t save all but will mitigate some of the damage.
at last, only sooner if you please.
Governments – they’re like little micro-managers. Never know if they are coming or going. They create these messes and then make it worse by making more idiotic decisions.
“Bylaw rent-a-cops.” What a waste of money. Probably cost more to have them around than the money they’ll collect from vacant properties.
No one will be immune to the consequential damage done by the feet being kicked out from under the market.
Sledgehammer/Thumbtack
Let’s see mortgage brokers and banker still lend to sub prime buyers since our housing market is so strong? What’s that? You don’t want to risk a penny of your capital in this housing Ponzi? That’s what I thought.
The Reset is soon on…
The Reset is soon on…
The Reset is soon on…
Huge ” wake up & smell coffee moment” coming by June 2017.
’bout time.
*throws mike*
Meh.. you guys still don't get it . All this will do is boost the secondary market for mortgage funding (ABCP, RMBS and alternative financing shemes), that will allow unregulated brokers to qualify more unqualified deadbeats for properties they can't afford.
These changes are the start or handoff from public to private funding. There's lots more appreciation to go.
Good, it’s about time the government started listening to the resident’s of the country. Bravo to the Liberal’s.
No need to hire spies to see who lives there who doesn’t in 416 and 905 areas that use city water and hydro…check the bills for usage, pretty easy to determine if showers get used and toilets get flushed…not much water used if no one living there. Plus those are the homes where ticked off neighbours report neglected pools and the weeds growing on the front lawns a foot high!!! This used to be an area where every family used to be house proud, with clipped yards and beautiful gardens.
My mantra: Homes are NOT commodities!
There are a lot of REALTORS® who look forward to a return to more same markets. There are a lot of REALTORS® who do better in tight markets.
There is always people buying and selling…
It will SHIFT from low inventory to high inventory. Demand will wane and prices will fall to meet the diminished demand. Volumes will drop but not dry up. For some there will be a new motivation to sell or buy.
SHIFT happens… learn to ride the tide.
I’m still betting on rising RE over any sideways moving equities market.. at least i can generate income by renting out the housing…
Ever heard of dividends? Rent is 100% taxed. Financial assets gains far less. — Garth
As I said… no one will be immune. Be careful what you wish for. And… “If voting made a difference they wouldn’t let you do it” – Mark Twain
Garth writes:
Death by politician. Who would have thought the very governments that (more than anything) helped create gaseous housing markets would be its executioners?
A bit disingenuous perhaps?
Seems to me it was a different, more conservative type government that set the gas flowing and now its a different nd little less conservative government attempting to stem the flow before kaboom.
They probably will get kaboom in some manner anyway but its wrong to conflate the beginnings of this issue with the current Liberal’s attempts to ameliorate things.
You are a better writer and observer than that, right?
Speaking of being observant, note my reference to governments was plural. — Garth
Good riddance to the gasbag!
Wow! FINALLY the government is doing something. Good for Bill! He has kahoonas after all!!
Nuke the CMHC. As a taxpayer I don’t support it.
Its a globalized world and countries need to adjust taxation and laws to protect its own citizens. Damn right.
TSN turning point anyone?
I have a friend who just sold for over $2.5M a few weeks back. I advised to be wary of small deposit (chinese dude who just got into T.O. paid 98% of ask) from overseas buyers. They got the usual 5% down payment…I warned them to ask for 500k minimum and to offer paying them interest of 1-3% while the deal is waiting to close. No dice…I showed them this blog…told them about all the sage advice..still no dice.
I even warned them about the Orville Redenbocker in charge applying the same 15% tax…still no listening going on. The worst part…they already bought another house and it closes in 20days…the one that they sold ?? end of Jan 2017. How Likely that this deal never closes at all % wise?? my guess is 90% at least. Oh well…you can try and help….I have a feeling when it all unfolds like I told them it might….I just lost a friend because ….I didn’t pat him on the back and say what he wanted to hear.
I always knew Bill had it in him.
I see a tax loophole in Carbon Tax. It’s called O2 tax or the Oxygen tax. I think they should start collecting that too. And while we are on it the solar tax is yet another loophole, our government is missing out on.
A tax on property owners with a permanent residence elsewhere sounds like P.E.I. Hey, that’s the island on the other side!
lala on 10.06.16 at 6:36 pm
Housing market it will very hot this winter, fake fires everywhere, and don’t forget divorces.
Whenever the housing market starts to turn down in sales (even though lying realtor scum say things are well) you start to see these FIRES of homes under construction or being partly renovated where the home owns “happen” to be away that evening the fire broke out. This winter watch for fires as the MONSTER HOUSE OF CARD PONZI SCHEME because of lying realtors and crooked mortgage brokers writing up FRAUD mortgages to people who have no business buying a pair of jeans let alone RE.
Just got a very concerned email from a local mortgage broker subject: “Shocking changes to Mortgage Rules announced by Government of Canada!”
He made sure to include Bill Moreau’s email address and asked everyone to write and express their outrage regarding the changes that he has made recently in the mortgage market.
I fired off a congratulatory note. Should anyone else wish to send Mr. Morneau a couple words of support his email address is: [email protected]
It looks like the Chinese dudes have left town… http://business.financialpost.com/personal-finance/mortgages-real-estate/cmhc-data-shows-foreign-buyers-have-almost-disappeared-from-vancouver-market
Remember the days of assuming existing mortgages? Wonder if we will be seeing more of that now.
Gee..can’t wait to see what tomorrow brings…
The Governments are now in FULL power control.
@#20 Devil’s Advocate
Still on the 1st marriage.
Well done!
You’re about as rare a species as 14 out of 16 Canadian fishery stocks….
http://thetyee.ca/News/2016/10/05/Canadian-Fishing-Industry-Collapse-Risk/
Yep, government tolls, levies and taxes are outta control. Now there’s more.-Garth
….
Happens every time you put a teacher in charge of govt. Totaly clueless when it comes to economics and business.
Revenue comes from funding, funding comes from taxation
The bit they don’t get business generates the money.
DELETED
Why is oil rising yet the $CAD is falling?
Is the $CAD beginning to price in a weaker Canadian economy further out in the future?
Too little, too late.
The boy is leaving as scheduled, family and assets are already out, boy is leaving in few months.
Enjoying every day in the s..thole, including traffic. As I will never see it again in my life. It is liberating in a big way.
As for GTA I wish it all the best, let the houses cost 5 trillion pesso (ops, loonies) , the street musicians have 5 PHDs and the traffic to increase 5 fold in the next 5 years so one can enjoy it better.
Astalavista,
The changes announced by the federal government will penalize middle class home buyers in all regions of Canada.
These measures make housing less affordable as fewer families will be able to qualify for a mortgage. It would be better to encourage housing supply through measures such as increasing the threshold for the GST rebate on new home construction that would also help affordability and generate economic growth.
#30 CRASH!!!!! on 10.06.16 at 6:46 pm
How many people just bought a condo or house without selling their home? These people are screwed and are now in the situation where they may LOSE EVERYTHING!!!!!!
—————————————————
No. Don’t think so. Only, if prices in TO were to fall. Which they won’t. Though I would be most happy if they did.
Used to be a time that if you lost your 6 figure job you could get a new one.
Except for the people who lucked in on the right computer skill set, those days are gone.
I take it CMHC knows this now and wants the F out.
I’ve been trying to understand the whole housing thing. A house is nice, keeps you dry and warm; keeps the bugs out; shelter. Not an investment; it’s shelter. Have watched house on my so, so street in Winterpeg sell for over a quarter mill to people who earn far less than I do . . . can’t figure that out. As for Dampcouver and TO neither have enough to recommend them to justify the prices there. Why pay those prices for Dampcouver when you could live well for less in nice places like Nice?
“The city across the water is a week or two away from asking the province for the right to goose its property tax on anyone (Canadian or not) who owns a home there, lives there, but has a principal residence elsewhere.”
“Yep, that’s right. Two-tier citizenship. And what will the rate be? “High enough to be meaningful,” a local political potentate says.”
I’m at a loss at understanding just what these two paragraphs mean???? What are you trying to say Garth????
I’m actually quite impressed the T2 government went ahead with this most prudent move. There are practically no selfie opportunities in any of this, so it seems they are capable of passing necessary but unpopular laws.
I wonder whose initiative this was? Did it come from cabinet members or industry? Was it Bill’s pals? Anyone have insight?
#6…Wanna bet?
There are OODLES of SFD’s selling far below $1,000,000.00 in the PoCo and Coquitlam areas.
So, get your “facts” straight.
Lets say for example i opened Mathman mortgage corp, and every deal i did was insured by a 3rd party with the premiums paid for by the borrower, where is the incentive for me to ensure the underwriting quality of my loans? I take on literally none of the risk and all of the spread goes to me. In the investing world this is a unicorn.
This up until now is what the banks have had. When the dust settles and the country is in economic ruin because of a housing clapse the post mortem will show;
– wide spread fraud in mtg underwriting (when you have sell to eat compensation structures, like mtg brokers is anyone shocked they fudge the numbers see home capital scandal)
– people that self declared incomes think 2+2 = 150k yr
– shock that baristas and “artists” own 5+ condos and further that they were able to get financing on with no issues
– “I didn’t know we had sub prime lending in Canada”
– people actually don’t have equity they take it out of their homes every year to buy things to pretend to look wealthy
As soon as the tide turns, people panic, realize they can’t perform their annual refinancing trick to pay off their credit cards, those that have multiple properties sell and liquidity becomes king, which means they take what they can get
#5 Debtslavecreator on 10.06.16 at 6:00 pm
The job losses in the GTA are going to be epic
Largest sector in GTA is financial services. What concerns me is the attack by broke and Liberal governments will inevitably start targeting innocent Canadians and confiscating their homes. Add in exploding user fees and the new carbon taxes fraud and ongoing steady currency debasement and it is very easy to visualize the shocking collapse in living standards we will experience over the next 5-10 years
Don’t get too angry because it was fake prosperity all along.
Heaven help us all
—————————-
Absolutely, I hope every debt slave enjoys it.
All the long way. Up and down, up and down, up and down.
And don’t forget that happy smile on your face! Eh?
Hey Garth;
Not surprising to see that a big contingent of your followers don’t get it. They don’t see that there is likely more here than they were wishing for. Of course many are hoping it kicks the daylights out of the market so they have an opportunity to get in. Many will find it isn’t quite so easy as that as they too, in some way, fall prey to the ripple effect of monetary policy gone amuck.
#66 Sheane
I sincerely wish you all the best!
People with decent cognitive horsepower have known the game has been up for a while.
natural selection will expose the legions of idiots that have taken on debt they will never be able to repay and they will be wiped out. Instead of bailing those said people out, i vote to take the money and invest in things and talented people that will actually give us a chance at recovery.
#63 Smoking Man
But every teacher I know, knows EVERYTHING ABOUT ANYTHING…The best being my plumber friend who was called to by a teacher to do a “little job” for him and went on for 5 minutes HOW to do it. My friend left him speechless replying “Gee you know so much, just do it yourself.” and hung up.
Just ask one or listen in to one for a few minutes at any time….
#74 mathman
In the insurance Business in underwriting there are strict rules. You can not write certain loan/risk without assessing it properly. If you do , it is fraud.
In that respect all the banks, mortgage brokers, CMHC are on the hook for improper risk assessment. Real estate agents for improper risk reporting.
I saw in the subway today advertisement for buying condo with 30 k income (not a joke, THIRTY/30 K income) and no down-payment, THEY will give/loan you the down-payment. I am not joking, you can see it in the subway cars tomorrow.
If this is sound system and not a fraud, I am Santa Claus.
its just the banks way of getting their employees, (politicians) to coral people into condos that the banks financed and nobody wants to buy, with the new rules first time buyers can only dream of semis
when politicians start to pontificate all over us, they don’t really believe in the issues at hand,
T2 knows climate change is a hoax, Moroneau does not care about your financial well being, they’re intellectually vacant, they have no scruples, values, etc
they are just change agents, a collection agency for London
#77 common sense on 10.06.16 at 8:21 pm
#66 Sheane
I sincerely wish you all the best!
————————-
Thank you, the same to you. All the best and take care!
Root canals are no fun either, but necessary, considering the reason why one needed a root canal in the first place.
Can’t see anything wrong with much of the above in the long term.
Minister Morneau: 1
REALTURD® Lobbyists: 0
Yes. Lots happening in Canada and the world right now. As always. Although unfortunately most Canadians don’t pay much attention to what else is happening in the world around them. To their detriment.
No one ever knows what is going to happen. Saying to oneself don’t worry about anything just do what you want to do and relax is the jargon of imbeciles. Been hearing a lot of that throughout my life. Even here. I have been proved right world wide, time and time again. Masses getting crushed.
It is because the masses are close minded, lack knowledge, wisdom, and discipline.
I am not arguing with anyone I am just telling you why I am right.
007
Freedom First
PHD/Freedomonics
re#76
Agree and will concede that if I am right on the magnitude of the shock to the economy, that I will be out of work as well. This is what ticks me off, responsible and logical people will be punished for the excess of the irresponsible. We live in an incredible country that has been tainted by cheap money and unbridled excess that comes with it
If under the new regulations suites are subject to a capital gain tax upon sale of a house, will that apply to suites that have existed for many years? Or, will the new regulations have a current starting date (2016?) from which point rental suite activities and property assessments are to be measured?
Hey Garth… the Toronto announcement next week… has a press release already been scheduled? Will the premier announce or the mayor?
Completely unknown. Currently an informed rumour. — Garth
About every six months my wife and I thank the heavens for the Supreme Court of Canada. It is the only institution in Canada that we have faith in. Even with 7 of 9 appointees (I believe – haven’t checked that – no time because Sox vs Indians is on) being Harper appointees.
If you tell your lawyer something that the revelation of would harm your interests, it should go to the grave with your lawyer. If solicitor client privilege is impaired, the system fails.
I accept that it is hard to know where to draw the line in the case of money laundering but maybe in the long term it is best to err on the side of caution:
Supreme Court Narrows Scope of CRA’s Power to Force Disclosure
“The Canada Revenue Agency (CRA) has broad powers to require taxpayers and other persons – including a taxpayer’s accountants or lawyers – to provide any documents or information required for the enforcement of the Income Tax Act.”….
“Generally in Canada there is no privilege in respect of a taxpayer’s accounting documents. Conversely, a taxpayer’s communications and documents in a lawyer’s file could be privileged.”….
“The court unanimously upheld the primacy of professional secrecy in the Canadian justice system.”
http://www.lexology.com/library/detail.aspx?g=72c7e2b3-9dc8-48a3-9347-5b8ddae1ef07&l=7SLNCMQ
#85 mathman on
There is a price to pay for a sane person living in a madhouse.
As we Canadians say: Suck it up and move on/out in my case.
$1.4 trillion mountain of outstanding home loan debt… Is that a typo.. I thought CMHC was limited by legislation to no more than $600 billion. Who is the other $800 billion insured by? Surely the Canadian government isn’t backstopping that as well? Our previous PM and his team mates wear this shame for propelling us down the debtor’s path just to win an election. I’ll be thinking of he and his especially on Remembrance Day when so many of that ilk turn up at our cenotaphs to perform their empty gestures. Disgusting. Vidkun Quisling has company.
Canadian Mortgage Trends. “Forcing all insured borrowers to prove they can afford a payment at the posted rate (4.64%) will remove up to 15-20% of buyers from the market, say lenders.”
For arguments sake that would be a solid 20% of all buyers removed from the market if/when a foreigners tax is applied in Ontario. That will have an effect on the RE market.
Personally, looking forward to RE reality again, prices will be sticky on the way down. But glad something was done (although too late) to protect buyers from themselves in this low interest rate environment, and to shift some of the lending responsibility back to the lenders as opposed to Joe tax payer.
Also kind of glad that flippers and people who don’t report the sale of their cottages and such will have to pay taxes, the same as those of us who are honest enough to report property sales and pay our (or possibly more) fair share.
The Canadian government started this ball rolling by cutting rates and goosing liquidity in response to the ‘great recession’. Similar to how the US government goosed liquidity in the early 2000s, in the wake of the dot-com bust.
With all that cash sloshing around, governments needed a way for consumers to spend, to keep inflation in check, while global factors forced them to keep interest rates low.
Housing is a perfect commodity to have consumers spend on: most people want to own one, (for shelter, if not for the heightened sense of self-esteem), houses cost a lot, are considered secure investments, and best of all, leave the majority of that liquidity in the hands of professionals (the banks) instead of allowing amateurs to ‘hoard’ it, as gold, ‘dead money’ on a corporate balance sheet, or ironically, as equity in a fully paid-off home.
For this reason, it was important that government regulations target first-time buyers: they’d have high loan-to-value ratios, meaning that most of that liquidity remained in the banks hands, and the lifetimes to spend paying for their homes.
Banks make their profits off of the difference between the interest rate that they pay to borrow money from the treasury, and the interest rate they change debtors.
With central bank rates low, there was a great opportunity to profit by jacking up mortgage rates on shaky, loans to horny house virgins.
To keep the banks in check, the government allowed CMHC to insure the principal values of the loans, suppressing mortgage rates to keep people buying homes, reducing risk for the banks, but also limiting their profit potential.
Faced with the small spread between treasury rates and low mortgage rates, the banks increased the number of mortgages and loans in order to keep profits up: make a lot of money off a few loans, or make a little money off of each of a lot of loans, it works either way.
Of course, there were winners, losers, and unintended consequences.
Winners, who saw demand spike for their paid-off homes, cashed out and made a bundle. Right place, right time, right asset mix.
Losers, who cashed out and doubled down, or those that leveraged up. Includes those who re-financed to maintain bad spending habits, or took out HELOCs to by depreciating assets.
Unintended consequences:
– foreign investors who saw solid, geographically favourable assets, as a place to store wealth, away from the prying eyes of their home governments.
High home prices didn’t cause the immigrant investor programs, but immigrant investor programs probably did inspire foreigners to view residential real estate as a both a local mailing address, and a place to store wealth brought in form off-shore. That’s what we call a Win-Win.
Among the unintended consequences were those that follow opportunity. Entrepreneurs, opportunists, profiteers, predators, all different shades of the same colour. Whenever there is an opportunity for profit, they rush in and set up shop.
They’re catalysts really, increasing the rate of reaction with sound, fury, and marketing campaigns. Once the reactions are complete and the reactants are consumed, these people generally go back to being inert.
So now what will happen? An economy has been built, built; the taxpayers have shouldered the burden of increased liquidity, by agreeing to fund liabilities for the next decade or two, in the form of private mortgages. Could have done the same thing by issuing bonds, but it would have been a hard sell: nobody every lined up all night and peed in a cup to buy bonds. Housing is a metaphor for life, right?
Meanwhile, a new government looks at indebtedness levels, particularly amongst those closest to social assistance, and realized the scope and scale of their liabilities. Investment in private housing does little to improve the competitiveness of an economy, unlike investments in industry, or infrastructure, where increases in competitiveness increases sales, reduces costs and improves profits, hopefully in a self-sustaining cycle.
Investing in infrastructure while less efficient at improving competitiveness than investing in industry, promotes trade by getting goods to markets, and fulfills a need for things like roads, sewers and bridges that break down over time, and eventually require renewal.
You are making a fool of yourself. Did Mark share some of his drugs with you?
East Van detached are tanking according to all the stats.
http://vancitycondoguide.com/september-detached-market-report/
Fewest sales on record is not making anything go uppa.
Sales to Actives Ratio also not looking good.
East Van well into what realtors call a buyers market. No uppa there either.
Over 10 months inventory in East Van. Wow. That usually means downa for prices.
Yup prices are tanking, inventory swelling and buyers have disappeared in East Van. That is all before the CMHC changes which will have a greater impact than anything we have seen yet.
I wonder what spooked the government to all act at the same time? They never cared before, do they know something that we don’t?
It’s not two tier citizenship. Why should you not pay a penny in tax for owning multiple homes through numbered corporations when others sleep in homeless shelters, grotesquely overpriced rentals and don’t even have one home to their name? This sense of entitlement is disgusting. How much is enough, Garth? Can you take it with you?
Everybody pays property tax, based on impartial assessments. If a person owns multiple homes, they pay multiple taxes. — Garth
Any idea if the 15% GTA tax will actually include GTA cities like Oakville, Markham, Mississauga, etc. ?
To the people that write here ” many people are not reporting basement apartment rental income ”
1. you have no way of knowing what other file
2. tenants have to write their address and rental amount on their tax return
conclusion- only an idiot would rent out an apartment and not declare the income, and a bigger idiot would type here that others are doing it
Wanna get out of Canataxya?
Check out this useful global search tool.
Find your ideal spot and escape.
https://www.theearthawaits.com/
#42 Aggregator on 10.06.16 at 7:00 pm
Meh.. you guys still don’t get it . All this will do is boost the secondary market for mortgage funding (ABCP, RMBS and alternative financing shemes), that will allow unregulated brokers to qualify more unqualified deadbeats for properties they can’t afford.
These changes are the start or handoff from public to private funding. There’s lots more appreciation to go.
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Aggregator, maybe you’re not aware, but these private lenders in the shadow banking sector charge a lot higher interest rates than the banks posted rates, let alone the cheap rates that everyone has been dependent on.
If the people who can barely scrape up 5% can not qualify based on banks’ posted rates of 4.5% then how do you expect them to be able to afford rates north of 6% from the shadow lenders?
“a housing bubble based on copious, epic, awesomely orgiastic amounts of borrowing’… (and greed)……..you said it Garth and ditto #25
“…. as Pogo said, “We’ve met the enemy and he is us.”
On another note, further south:
https://www.theguardian.com/us-news/2016/oct/06/san-francisco-leaning-millennium-tower-investigation
“ the tallest residential building in San Francisco and, according to developers, the tallest reinforced concrete structure in the western US – has sunk 16 inches since its completion in 2008, and has tilted at least two inches toward the north-west……. this building was only projected to sink between four and six inches over its lifetime. This revelation has set off a round of lawsuits, government inquiries, and recriminations……
TADA!
#94 SimplyPut7 on 10.06.16 at 8:43 pm
I wonder what spooked the government to all act at the same time? They never cared before, do they know something that we don’t?
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Apparently there will be an end to the ZIRP/NIRP
You know, byte and switch. 4-5 years down the road.
But our situation is so unsustainable that even 200 % inflation in the next 5 years will not help.
They hook you with cheap drugs (rates) and then you have to pay all your life.
It is that simple.
im surprised by the breath and scope of these changes. The 15% stamp duty is a done deal for GTA, it was a while ago, only the timing was in question as well as boundaries.
with the loss of 15-20% of potential buyers, inventory now has to decline to equal that amount considering the rest of potential buyers are still in- likely many will sit it out for a few months to see what happens. big shift happening
With social media these days, everything happens faster, minor incidents become huge in a matter of hours (witness Hillary passing out in NY).
Same with market dynamics, ONE single tweet last friday regarding a rumor of settlement regarding DB bank and DoJ caused the stock to rise huge in total % and volume
RE market is no different the mass hysteria of foreign $ caused stratospheric rises in Van city, now it will be the same on the way down. GTA is no different.
Remember that December is the favorite month of mass layoff notices from fortune 500 companies, and that Jan and Feb is the highest for divorce filings– these are people that will sell regardless of what the market is doing– if the lower floor is established early in the new year- watch out below.
to those that say it will cause a huge rise in shadow lending and second mortgages etc… that dynamic only works in a rising market– remeber everyone loves to be the smart person in the room who made x amount on RE. nobody wants to be the chump that brought a house and lost money as 6 months out they were dropping.
Garth, this week’s posts were epic and on the spot but if you can just try to explain how come it took Mr. Morneau so frickin long to do all of these changes.
I know that politicians are not the sharpest tools in the shed nor the fastest thinkers but this was a long time coming.
I would really love to get your 5c on that
#9 Jay on 10.06.16 at 6:07 pm
I find it wildly ironic that it’s the federal liberals who are trying to get people to practice some financial conservatism and to get banks to cut the risk they’re accepting.
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This is too abrupt and savage to be prudent conservatism, it’s flat out fear. Either they do it now or get it done to them by 2018 in spades, just in time for the next election. By sledging the market now they just might slide into the next vote on what could be sold as a rebound.
Anybody here really think this has all been done to help the middle classes?
Just got of the phone with my mom’s sister, not sure how the spell Aunt. Her and hubby both in their mid 80s failing health have decided to ride out Matthew in their condo.
Its in Daytona Beach. It’s between the Halifax river and about 1/2 a kilometer from the ocean. 11 foot sea surge expected. They could have gone inland and stayed with there soon.
Nope they’re staying.
Why not….they witnessed my folks rotting in a nursing home.
Whatever the outcome I wish then well.
If I’m not posting for a few days or so. That’s why.
We do realize that this is probably worse than a combined jump in unemployment and increased rates. How we don’t see the market fall hard is really beyond me. CADs love there homes, but even they won’t be able to withstand a 25%-30% drop in demand for very long.
On to other news, how about a discussion of the tax changes coming to close the loopholes for insurance. Not sure if I saw this mentioned on the blog.
Although I’m not a believer, God Bless Bill Morneau, and JT if he had anything to do with these new policies. Hopefully, before JT’s term is done, CHMC will be dead and buried, or at least an asterisk in the mortgage industry, applying only to old dusty mortgages held by a few retired boomers.
A lot of folks are in for a lot of pain in the years ahead, but hopefully it will save the kids in grade school from succumbing to FOMO when they’re adults.
#103 IO on 10.06.16 at 9:02 pm
Garth, this week’s posts were epic and on the spot but if you can just try to explain how come it took Mr. Morneau so frickin long to do all of these changes.
I know that politicians are not the sharpest tools in the shed nor the fastest thinkers but this was a long time coming.
I would really love to get your 5c on that
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The told him to. His bosses from BIS.
Apparently we are sufficiently enough in debt.
#15 maths are hard on 10.05.16 at 6:39 pm
“Seems like it would have been a whole lot less convoluted to just raise interest rates. Oh wait then the economy might tank even further. So what the government is saying, is we want low rates so people will borrow and stimulate the economy but we want lots of lending restrictions so people don’t borrow and stimulate the economy. Got it? It seems to me we have reached the point, perhaps some time ago, where nothing sensible can come out of Ottawa.”
Ex-cell-ent!!! Within no time, we’ll see as many debt-counselling/restructuring offices as there are realturd locations. Oh wait, maybe the debt counsellors can just take over the empty realtard premises.
#6–sorry but it is happening. https://www.facebook.com/SteveSaretskyRealtor/photos/a.1398033043837356.1073741830.1374837999490194/1590110644629594/?type=3&theater
House in a nice area in Richmond; earlier this year would have been around 1.3m….just sold for 800,000.00 (250k under asking). You need to follow zolo.ca.
the 1.3m amount is what it would have listed for a number of months ago. It listed for 1.05m and sold for 800k. Many are dropping.
The T2 folks finally did something with long term positive potential. It could not have come from the PMO.
#149 CJBob on 10.06.16 at 10:42 am
He is our very own George Costanza. Do the opposite.
Lol! So true, but without the success haha
#151 South Etobicoke Trump Campaign Field HQ on 10.06.16 at 10:43
That’s exactly why we’re working on listing our Inverse Mark 9000 ETF ASAP. Our algorithms and weightings are all based on Mark’s counter-intuitive predictions and deranged theories, yielding thus far simulated gains of 12% in my Excel spreadsheet based on the S&P/TSX composite index.
That’s genius! The performance going against what he posts will be phenomenal!
Now the word’s out that Ontario will be following suit, with an announcement scheduled for after the long weekend. The Chinese Dudes Tax, GTA Edition
Wow this is huge!
Gartho where are u getting this stuff??
Now I won’t be able to focus on the weekend turkey dinners…
You have needed 20% down for rental properties for at least 5-6 years now. I don’t think that this is anything new.
Garth, (outside of all political believes) is this all about public pensions? Seems like Harp had planned for home “equity” accelerated by inflated real estate to provide for retirees (perhaps through reverse mortgages or other equity take outs) since CPP doesn’t have enough strength. Under his agenda that included international investments in CDN real estate, speculations, “dirty money”, basically anything what would support the idea. Libs are using different angle instead (or simply revising anything that was created by cons) with some long term plans on reviving public fund that may eventually include tracking of personal wealth via income tax reporting (as you said few days ago) with future adjustments in distribution. It sure sounds like there is a bigger fish to fry and real estate is only a fragment that needs to be rectified.
#1 Hairhead on 10.06.16 at 5:55 pm
I notice all of these thing the government has done, but I notice as well the one vital thing they have NOT done.
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Just a thought. The BC Finance Minister has like 8-9 properties at the moment. I wonder how many other government officials are in the same boat. Cause a speculator tax would have been more effective in Vancouver. The new Chinese extradition treaty will take care of the money laundering component. Perhaps a trade with China to save the Canadian Canola Industry?
Turn your heads toward Syria, it warrants a look, geopolitics is shifting, it is not what the US is saying…it is what they aren’t saying.
US elections: Why isn’t anyone saying we want a do over!?
#45 devil’s advocate
What is this “shift happens” fluff?. Did you learn it in a Tom Vu seminar?
“Until now CMHC has absorbed it all (along with private sector Genworth) since every high-ratio mortgage in the land (where the borrower has less than 20% equity) must have insurance protecting the lender from default. Borrowers pay for this. The lenders get the protection. The government backs it all. This is called moral hazard.”
So what happens if you put 20% on a house last year and it falls 30% just before you need to renew the mortgage. What can you expect from the bank. Anyone?
I can only imagine double the pain?
#10 Lulu on 10.06.16 at 6:10 pm
OUCH!!!! With so many changes all at once and is so tough to digest, I’m having an stomach pain and maybe turn into IBS very very soon. I guess this is the ultimate Black Swan of the one of a century bubble burst.
With that said, many will turn to variable instead or Bank of MaMa and Papa. there… no problem. NOT!!
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Assumes Moma and Papa aren’t over extended themselves.
#112…
It was Harper and Flaherty who engineered this mess.
Thank God that creep was tossed out last October.
#6 [email protected] on 10.06.16 at 6:03 pm
The sky is falling!…… It’s not, this is starting to sound like zerohedge, Prices have no budged in 604. It’s still 1 miliion for anything without moss on the roof in coquitlam/poco. 1.5 for something in bby, forget about van. Don’t care what Ross Kay says maybe mansions in Dunbar are on sale compared to June. Noones selling for less than what their neighbour did. Just look at Calgary. Ya I guess we forgot about them. Savage Job losses prices haven’t budged. Explain that …
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No one is paying attention to the approaching Tsunami, maybe after the busy Christmas season, definitely in the gray of January.
“Why is oil rising yet the $CAD is falling?
Is the $CAD beginning to price in a weaker Canadian economy further out in the future?”
A few speculators obviously failed econ 101 and are shorting the CAD$. Buying into thoroughly discredited and patently wrong theories concerning interest rate differentials. Just as dumb as the speculators who heavily shorted the USD$ and went long oil in early 2008 in response to the US subprime bubble collapsing.
We know what happened next. And lots of people who thought they were incredibly ‘smart’ shorting the currency got things incredibly wrong. Why did they get things wrong? Because they totally ignored that in a deflation, there is almost insatiable demand for currency to repay prior debts.
yielding thus far simulated gains of 12% in my Excel spreadsheet based on the S&P/TSX composite index.
Hilarious, because if you actually took up the portfolio I use and advocate, you’d be up dramatically (and I mean dramatically) more this year. Even if you accept that most of my pumping around here is that of plane-jane TSX index funds (ie: XIU), you’d be up 14.23% YTD on that.
#25 prairie person on 10.06.16 at 6:41 pm
Why should I have to share responsibility on a mortgage default when a mortgage is a business deal between a lender and a borrower?
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A) Because we should all pay “our fair share”. <— what idiot voters think
B) Because Canadians are docile fools who allow the mega banks to privatize their profits and socialize their losses. <— what the cronies who control the politicians think.
Vote Libertarian next election.
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^ was supposed to be a light-bulb… lol
SELL, SELL, SELL and RENT!
Shave 5-10% off what you “think” your house is worth and come out 10-20% AHEAD when you sell now vs next year or two.
GTA Wikipedia definition. I recall that car licenses cost more in the GTA a few years back. My barber lived two streets west of the GTA limit in Aldershot (Burlington.) He paid the GTA rate.
Looks like Toronto, Peel, Halton, Durham and York are GTA.
https://en.wikipedia.org/wiki/Greater_Toronto_Area
That would be two blocks east of the GTA limit.
Garth: Any source for “the word” that GTA will have foreign buyers tax after this weekend?
I cannot find anything on this in the news.
) aka Devil’s Advocate#67
LOL like a typical realtor who lies everyday for money like a shyster. The fact is it will make homes cheaper since people can’t get that extra 20%. SELLERS need to sell buyers do not need to buy. No buyers price comes down. You have no shame like your shady industry of used car salesmen. Btw many of you will have to go back to selling cars.
Damn looks like the eye is going to do a direct hit on Daytona.
Told my cuz who lives in land to jump in the car and head to Tampa.
“Nope my stupid parents stayed in the condo got to stay close.”
Pleaded with to go. I said his parents know what their doing..,
I’m not sleeping tonight…
Hopefully this post makes it to the blog. Last two this week never showed. Maybe the censorship filters are set too high?
For all the people applauding Morneau’s shifting of risk to banks from CMHC to the benefit of taxpayers, remember the chartered banks do most of the lending and even with these new rules, assuming the banks take more risks, does anyone believe for a nanosecond that T2 wouldn’t bail out our banks? With taxpayer funds??
No material change here…taxpayers still on the hook.
Garth, you rock as usual.
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Remind me of Calgarians that thought, just after T1 brought in the Windfall Profits Tax, their real estate value would not be harmed (early 80s).
But talk is cheap, show me the beef.
Peruse these early September Coquitlam MLS listings below (a minor sampling) and much the same in PoCo. Spot the trend.
You OMITTED the price drops to get to your “upbeat” rendering of current prices. Still think your $1 MM is going to hold?
BTW, NO “moss roofs” here:
$399,800 Sep 5 ($22,200 reduction Aug 16) 45 – 2905 Norman Avenue, Coquitlam, Ranch Park. 3 Bed, 1 Bath, 34 days.
$526,000 Sep 5 ($22,000 reduction Aug 2) 3001 – 2968 Glenn Drive, Coquitlam, North Coquitlam. 2 Bed, 2 Bath, 69 days.
$589,000 Sep 5 ($40,000 reduction Aug 31) 1501 – 555 Austin Avenue, Coquitlam, Coquitlam. 2 Bed, 2 Bath, 34 days.
$699,000 Sep 5 ($30,000 reduction Aug 29) 226 – 3000 Riverbend Drive, Coquitlam, Coquitlam East. 3 Bed, 3 Bath, 20 days.
$790,000 Sep 5 ($30,000 reduction Aug 26) 1220 Nestor Street, Coquitlam, New Horizons. 4 Bed, 3 Bath, 103 days.
$798,000 Sep 5 ($41,000 reduction Aug. 8) 106 – 1685 Pinetree Way, Coquitlam, Westwood Plateau. 4 Bed, 4 Bath, 81 days.
$888,000 Sep 5 ($110,000 reduction Aug 29) 2176 Craigen Avenue, Coquitlam, Central Coquitlam. 3 Bed, 1 Bath, 47 days.
$890,000 Sep 5 ($60,000 reduction Aug 19) 924 Robinson Street, Coquitlam, Coquitlam West. 4 Bed, 3 Bath, 40 days.
$928,000 Sep 5 ($139,200 reduction Aug 23) 1162 Esperanza Drive, Coquitlam, New Horizons. 4 Bed, 4 Bath, 28 days.
$1,088,000 Sep 5 ($50,000 reduction Aug 26) 1285 Sherman Street, Coquitlam, Canyon Springs. 3 Bed, 3 Bath, 90 days.
$1,198,000 Sep 5 ($100,000 reduction Aug. 29) 1739 Dansey Avenue, Coquitlam, Central Coquitlam. 4 Bed, 2 Bath, 26 days.
$1,680,000 Sep 5 ($100,000 reduction Aug 24) 1651 Pinetree Way, Coquitlam, Westwood Plateau. 6 Bed, 4 Bath, 19 days.
$2,888,000 Sep 5 ($111,000 reduction Aug 26) 403 Delmont Street, Coquitlam, Coquitlam West. 8 Bed, 6 Bath, 104 days.
-bsant54
Bloody Canadians. Stop introducing all these tax rules to the property game as you are now providing more incentives for the Chinese to buy in Australia instead. (as if we don’t have enough of them already!)
I call up my cuz daughter. Go west. Stubborn like her Dad and Grand Father.
Daytona is going to be devistated. ..what’s wrong with people . She’s posting pics of her black lab with a helmet on, on Facebook. .Like that’s going to help.
Got a bad felling about this. If see an orange plasma
Flyer launch from 39th and James st at about 3am heading on a due south cource. You know I’m trying to save humans again.
#34 Sockeyemoon on 10.06.16 at 6:52 pm
I predict that sales will stay on the low side and prices remain where they are in Vancouver and Toronto at least well into 2017 and the summer buying season. There would have to be a “black swan” or other kind of freakish event to push people to sell lower.
Greed will out trump (sic) fear until the fear is real
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like a recession and loss, divorce. Once spooked the herd will fear. The hang over is about to kick in.
Morneau’s must have consulted developers who would have wanted to be thrown a bone. The taxes on rentals will decrease rentals from legacy supply as it really isn’t worth it to have that mortgage helper. In YVR we see $4m houses with 2/3 as a suite and a large home office. Suite and office aren’t primary residence. Gains all taxed as income when principal residence is 40% or more a business. Why would you borrow or invest $2.6m and then be on the hook for taxes, insurance and maintenance plus the regular hassle with renters when you will be taxed on income at sale for 100% of gain.
So convert the rental to livable space.Rental supply will drop and developers will have to build more rentals. That will be good because some will be broke.
Garth has let me down. For about two years now, I have sought grooming tips for Boomer from him. Silence.
Some hotshot lawyer is headhunting me in Fort McMurray to re-enter the practice of law and I meet with him tomorrow. I have been going through my wardrobe choices. The MANI I was married in? Yuck! Double breasted and padded shoulders. The Saville Row six piece suit with pleated and cuffed trousers? Gag me.
Epiphany. Channeled by Hon. Buckeroo, M.P., P.C., PBA (Pro Bullriders Assoc.), I have settled on Wranglers and shitkickers. You can take the lad out of Calgary, but you cannot take Calgary out of the….
Again a great post (if you did not delete my prior vitriol post).
Changes will make 1st time buyers look for cheaper anything properties. Those will sell like hotcakes. Mid to upper end anything properties will get killed, that’s a no brainer.
What I would like to see now is how the banks compete with their mortgage deductible insurance and if they ratchet up rates on existing customers that have to renew their mortgages. That would be about 33% of their existing customer base. That is > 10% in the US that it took to collapse their RE market.
I think a mad scramble over next 2 weeks and then silence in the RE markets across Canada, with a wait and see what the banks are doing and if the bubble is bursting.
We’ll see if sellers drop prices by a lot to get out of the market. If recent 170% debt load, 56% < $200/mo away from budget oblivion, 31% technical insolvency etc. rates are correct, it should be a stampede.
This will hurt 3rd and 4th Qtr GDP and Jobs for certain. What a mess this will be.
Perhaps a Cdn Great Recession in the making (why mortgage renewals vs. banks ratcheting up rates post Oct. 17 stats crucial)?
bsant54
#38 Trojan House on 10.06.16 at 6:56 pm
Governments – they’re like little micro-managers. Never know if they are coming or going. They create these messes and then make it worse by making more idiotic decisions.
“Bylaw rent-a-cops.” What a waste of money. Probably cost more to have them around than the money they’ll collect from vacant properties.
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They should equip the bylaw officers with drones.
So what happens to borrowers when prices fall 20% a year from now, they go to renew, and the bank holds them hostage with higher rates because they can’t get insured at another bank? What happens when all these borrowers, many directly or indirectly employed in the RE industry lose their jobs and have to renew?
As Garth says – bubble, meet prick.
https://www.thestar.com/business/real_estate/2016/10/06/new-mortgage-rules-ripple-through-canadas-housing-market.html
“The feds clearly wanted to puncture the housing market and they have certainly done so,” Sherry Cooper, chief economist at Port Coquitlam, B.C.-based mortgage broker Dominion Lending Centers, said in a note to clients. “These measures will provide a tipping point, encouraging those who have been waiting to sell to put their properties on the market post haste. The combination of increased supply and significantly reduced demand will weaken prices everywhere.”
Ray Dalio shows again why he is only a billionaire hedge fundie and not a famous economist. He speaks simple English.
“I think of the gap between projected liabilities and projected incomes in the following way. Holders of debt believe that they are holding an asset that they can sell for money to use to buy things, so they believe that they will have that spending power without having to work. Similarly, retirees expect that they will get the retirement and health care benefits that they were promised without working. So, all of these people expect to get a huge amount of spending power without producing anything. At the same time, workers expect to get spending power that is equal in value to what they are giving. They all can’t be satisfied.”
https://www.linkedin.com/pulse/remarks-40th-annual-central-banking-seminar-ray-dalio
@44 grey dog
We are Canadian citizens, born and raised in Canada, family with 2 children; renters, basement suite, British Properties, West Vancouver. Very interesting to watch from the sidelines, and watch the Neighborhood. Key events to watch: not just hydro or water usage which can be manupulated by the rental agent or the gardener; there is a key parameter which is no one has mentioned here and I notice regularly and is the true tell tale. Loose lips sink ships. Tell only those who can make a difference for the benefit of our children and our Nation and those who have supported the infrastructure of this country for life; those who are truly Vested.
In my time, the practice of “decimation” was where cowardly troops who withdrew from battle were forced to kill 1 in 10 of their own. Ah, the good old days. Anyway my point is a decimated housing market would fall by 10%. Doesn’t seem so bad, does it? I know, these days people use “decimated” to mean “totally wiped out”, so perhaps only 10% left, but we Romans aren’t that crazy we needed the cowards back on the front only more properly motivated.
#71 Terry on 10.06.16 at 8:17 pm
“The city across the water is a week or two away from asking the province for the right to goose its property tax on anyone (Canadian or not) who owns a home there, lives there, but has a principal residence elsewhere.”
“Yep, that’s right. Two-tier citizenship. And what will the rate be? “High enough to be meaningful,” a local political potentate says.”
I’m at a loss at understanding just what these two paragraphs mean???? What are you trying to say Garth????
——————————-
West Vancouver seeks higher tax rate for investment properties:
http://www.cbc.ca/news/canada/british-columbia/west-vancouver-investment-property-tax-rate-1.3793926
Hey Sir Garth:
The Greaterfool is going live to air in Australia now!
Aussies everywhere are now worshipping at the feet of the GF, (and trying to figure to the meaning of the terms “moisters” and “T2”).
Smoking Man just added another 24 million Aussies to his potential audience. That should account for another 4 or 5 book sales?
http://www.macrobusiness.com.au/2016/10/canada-moves-pop-property-bubble/#comments
Harper was an economist. Harper gave us the RE Asset Bubble to goose a weak Cdn. economy. Harper let Cdn’s borrow themselves into oblivion even against the advice of a couple of finance ministers.
The teacher led Libs are trying to prevent a US 2009 Great Recession and save people from their stupid, debt snorfling, self entitled, “the world owes me a lifestyle I so richly deserve with the money of others” selves.
Guys like you should be grateful for dumb ass teachers and economists that keep your MTR at 47 some odd %.
Pre 1972 you would be paying 80% MTR, ask your father.
bsant54
#76 };-) aka Devil’s Advocate on 10.06.16 at 8:20 pm
Hey Garth;
Not surprising to see that a big contingent of your followers don’t get it. They don’t see that there is likely more here than they were wishing for. Of course many are hoping it kicks the daylights out of the market so they have an opportunity to get in. Many will find it isn’t quite so easy as that as they too, in some way, fall prey to the ripple effect of monetary policy gone amuck.
*************
First Thing: You have really toned it down a lot, not like the good old days. Just poking.
Lately, I’ve been helping a sibling who is looking to buy. Smart one, no rush will wait as long as it takes to find something that makes sense. I have warned of the double edge sword as credit scores and cash will matter again…at least to bankers lending money.
The market was irrational on the way up why couldn’t it be irrational on the way down also. Has any real estate bubble landed softly… ever?. Gravity, coupled with momentum on the way down is like watching a cocky base jumper, jump without a parachute, or at least one that works. Tosh.O google it – try Russian Base Jumper – must see.
One scenario:
House prices revert to the mean, or in this case what is affordable even at higher interest rates. These rules are essentially kneecapping the current market and the rest is written in low growth world and ailing Canadian economy. The x factor now becomes job interruptions in the real estate dependent sectors.
I always wondered when the 80s would be back.
#94 SimplyPut7 on 10.06.16 at 8:43 pm
I wonder what spooked the government to all act at the same time? They never cared before, do they know something that we don’t?
****************
Better in the first year of a new government. It is now obvious then needed to do something now, and not closer to the next election. They can still blame this on the previous government.
Hey Garth.
Were the fed changes in the planning stage before the 15% Vancouver Tax was quickly announced?
“So what happens if you put 20% on a house last year and it falls 30% just before you need to renew the mortgage. What can you expect from the bank. Anyone?”
There’s an extremely high likelihood that the bank, with their own money, bought CMHC insurance against that loan and hence really doesn’t care too much about you defaulting on it. The most likely outcome is that they send you a letter with the ‘posted rate’ as the only offer for renewal. Since the loan is underwater, other lenders are not likely to want to touch it.
So instead of getting a nice 2% renewal on a 5-year mortgage (and yes, I do anticipate that rates on 5-year mortgages to good quality credits will drop even further as borrowing demand dries up!) — you’ll be paying the posted rate of around 4.5%.
With no inflation if not outright CPI deflation, a significantly rising CAD$, and falling wages in many sectors, this will prove to be financially devastating to many people.
All of this of course means exactly nothing to people who bought houses with the intention of living in them.
We have a termination of the ability to purchase a house with less than 20% down, insure it with taxpayer money and rent it out. Seriously?? We’re people actually doing this? CMHC was never intended to insure sub prime loans on rental buildings. The idea was to get people “home owning” so industry, which was trying to find a new reason to exist after the war, could salary everyone and create 25 year mortgage slaves. It worked. But sub prime rental properties?
I continue to not view a house as an asset. I know people on here disagree with me (including the editor). I look at it as a place to live.
The value of a house is meaningless. You buy it once (hopefully for cash) then live there till you die. Your relatives fight over it when you’re gone.
I can’t see it any other way. I know others can. I have a great amount of sympathy for your delusions. But I believe you are all wrong about houses, their cash values and whether or not these values actually matter.
Wild Bill Morneau (love the ‘Wild Bill’ nickname) should have also put back 10% down payments, straight up for all price points.
Force buyers to have more skin in the game. But I guess simple folks and first time buyers would cry ‘unfair’.
But it’s totally fair. Home ownership is a huge responsibility with all too easy access to the HELOC. home ownership has become an entitlement. It should be a privilege.
Maybe that’s next. All I can say is… Wow! What’s next? Watching all this unfold is more exciting than a Trump vs. Clinton debate. I sit back from my rental and watch.
@ #106 Bat Flipper – nothing will happen… the mortgages went from 40y to 25y, oil went from over $100 to under $40… did you see any drop in the prices? no… same now….
Re: #6 [email protected] on 10.06.16 at 6:03 pm
Home prices on mls are down about 25 percent from the October 2014 peak in Calgary. Edmonton is down about half that but job loses are starting to pile up in that city. With the new change to mortgage insurance on rental units both Calgary and Edmonton will drop substantially more in price as both cities are heavily weighted towards rentals.
Re: #136 DON on 10.06.16 at 10:31 pm
Everyone will know very soon in the GTA. If the Chinese stop buying in Markham, Richmond Hill, Stouffville and Unionville the entire GTA will get lambasted in price as a free-fall will occur.
Have to agree with #63 Smoking Man on “The bit they don’t get business generates the money.”…So true but ignored by the top. Keeping everyone in taxes, bills does not help the business engine for this country.
#62 crowdedelevatorfartz…on the collapsing fishing stocks…went fishing here at the river and the water was the colour of dark brown. Never seen that colour before. The eggs won’t be able to withstand the roaring water so another river for fish down the tubes.
Hope the rules/changes help Canadians and their should be something there to help the ones who are caught in the middle with this unfortunate game.
If Wynee implements this 15% tax on foreign real estate transactions (or any other measure to cool the market) and it works I predict she is completely finished next election. This will toast the only support she has in the GTA. At that point she will have affected everyone’s pocketbooks. The Liberals have next to no support anywhere else in the province particularly after the whole green energy act/hydro fiasco. People are really getting hammered. Once there is strife across the board for all, everyone pays close attention, and look out.
The Canadian dollar looking grim. Just like our economy.
The U.S. economy is kickin butt. Full employment and rising wages!
http://ca.reuters.com/article/businessNews/idCAKCN1261JF
I can’t recall verbatim all of the recent blog rules but I’m pretty sure smoking man abuses almost all of them. Yet that drunk alien, foreign industry supporting, Hillary loving meathead is still around blog posting just as he called it. Say, are you and Gartho secretely long lost Brothers?!
Re: #99 Hotdogs from Heaven on 10.06.16 at 8:55 pm
The secondary tier lenders will raise mortgage rates higher to stave off bankruptcy. The secondary tier lenders will then start to disappear from the landscape. That’s why their share prices are falling presently.
#85 mathman on 10.06.16 at 8:31 pm
“re#76
Agree and will concede that if I am right on the magnitude of the shock to the economy, that I will be out of work as well. This is what ticks me off, responsible and logical people will be punished for the excess of the irresponsible. We live in an incredible country that has been tainted by cheap money and unbridled excess that comes with it”
————————————————
Same thing happened to millions of Americans and Europeans (and other nations’ people) because of the financial crisis. Innocent people sideswiped because of greed of fools and speculators, bankers and gullible investors.
Why is oil rising yet the $CAD is falling?
Is the $CAD beginning to price in a weaker Canadian economy further out in the future?
Price in a weaker Canadian economy in the future? The Canadian economy sucks right now! And getting worse. T2 is running a budget deficit of $8 billion, a trade deficit of $29.4 billion and current account deficit of $20 billion.
Unless Canada does a 180, the US will continue to widen it’s lead economically. Which will be reflected in an increase in the USDCAD.
As I said before the federal election. T2 will preside over the collapse of the Canadian economy. The Tories got out just in time! Perfect timing. T2 is left holding the bag.
LOL
The teacher led Libs are trying to prevent a US 2009 Great Recession and save people from their stupid, debt snorfling, self entitled, “the world owes me a lifestyle I so richly deserve with the money of others” selves.
do u think he can?
LOL!
me neither
Taking a shot early at the U.S. jobs report. Somewhere in the 250,000 to 300,000 range or at least 100,000 more than the ADP report. I’ll guess 255,000.
Please stop calling it a Chinese dudes tax. Race just muddy the waters.its doing what’s reasonable.
Actually, there will be those who still buy at inflated prices, even as the market is crashing.
I know, because I did the same thing in a previous house price crash. Later, I worked out that the market had turned about 9-12 months before our purchase.
Sometimes, I think that if the internet had existed back then, I might have been saved from life changing negative equity, but really, it depends on what you read. There are so many sponsored lies out there, that anyone could be forgiven for thinking that a property market is still hot, even a long time after it has started to crash.
Private lenders currently charge 10% to 18% interest PLUS a 1% to 3% brokerage fee to set it up. May as well put it on your credit card.
http://www.ratehub.ca/private-mortgage-loans
#99 Aggregator, maybe you’re not aware, but these private lenders in the shadow banking sector charge a lot higher interest rates than the banks posted rates, let alone the cheap rates that everyone has been dependent on.
Private lending in Canada has practically been non-existent since 2008. Lenders haven't even tested demand for crappy mortgages because they've relied on you, the taxpayer, for cheap funding. Yes they would charge higher rates, that will partially be offset by a BoC rate cut.
Don't underestimate demand for subprime in Canada because it should be evident by now that there are enough dumb and desperate buyers willing to take on higher rates to buy property and, a lot of dumb money on the side willing to invest in them knowing there's a majority govt ready to splurge on jobs by running a massive deficit.
Nothing will happen without bond rates going up.
Can i suggest that fellow blogs based in Canada, hit some open houses this weekend and see what is happening on the front line. This will be the proof of the pudding.
91 X on 10.06.16 at 8:37 pm
Canadian Mortgage Trends. “Forcing all insured borrowers to prove they can afford a payment at the posted rate (4.64%) will remove up to 15-20% of buyers from the market, say lenders.”
==============
Remember removing them from the market means they will be forced to sell. Imagine 20 percent going into the market. (note force to sell )
That will be the first phase of prices going down…
Then the banks will re-assess, because housing equity goes down, you may of placed 20% downpayment, but if prices goes down, you can easily lose 10% which puts you into the deadpool for an re-assessment
And so on and so on just like domino’s
#149 I always wondered when the 80s would be back.
========
Ahh the 80’s, I remember those days were tough, line ups around the block just to get a chance to fill an application form for a manufacturing job.
Banks wouldn’t lend money, without triple checking 2/3 years of solid income.
Credit checks…. yes the banks used to do that. Not just asking for your postal code and you got a loan. Two weeks later they gave you a yeah or an nay….
And don’t forget the rising interest rates
Btw the average mortgage went from 8% to 9.5 to 14%
But if you compare it to now.. if the rates goes from 2.5 to 4%. That is basically the same amount increase as the 80%
But remember our debt levels are way way higher and people in those days actually saved money
America is planning on going to war with Russia in Syria.
This might turn into a hot shooting war with Russia.
Google it.
Do some searching on YouTube.
Worried about houses being overpriced?
I think nuclear war is a bit more worrisome, maybe?
#17 S.Bby on 10.06.16 at 6:18 pm
On another note, the “auction house” on Sperling Ave. in Burnaby now has a SOLD sticker on the real estate sign. I’ll bet he got a lot less than $1.488 for that tear down shack.
———————-
you would win that bet. he got 1.35. burnaby ‘was’ a tier 2 ham-ville, but that’s over now.
in ham-less east van a few 33′ tear downs east of Renfrew recently went for 1.2 even, asks were 1.2-1.3. softening? maybe.
closer to commercial there no are recent lot value (teardown) sales, but higher end stuff is still going strong.
in the last 3 weeks there have only been a handful of sfh sales in the area – here they are
1.ask $999k sell$1,070k (this ones attached)
2.ask 1.4 sell 1.393 (small lot)
so far a wash…
nicer places
3, ask 1.25 sell 1.41 (on very busy street but rezoning planned)
4 ask 1.6 sell 1.75 small lot great location
5 ask 1.85 sell 199 small lot great location
seeing a trend….
moving up
6. ask 2,29 sell 2.36 new house reg lot.
——
in summary; 6 deals. 5 over. 1 under.
[email protected] 150k over
[email protected] 70k over
[email protected] 70k under
not exactly carnage yet.
#123 Mark
Stop talking about deflation you confused little prick.
USD is the world reserve currency, this is why you saw the bounce back of the USD. The whole world has debts to pay in USD so they need and will need USD.
The other reason for the bounce in USD was the decline in oil due to fracking/shale deposits in US.
BTW the global worming thing is meant to reduce demand for oil and further strengthen the USD screwing resource producing third world countries (such as the one that we live in)
Nobody in the world owns debt in CAD except internal debt within Canada, even significant part of the provincial debt in Canada is in USD. Just watch this one in Ontario as the loonie dives.
So where your demand for CAD is going to come from? From indebted up to the eyeballs slaves in a society with declining productivity, destroyed manufacturing, in environment of declining commodities and nothing left except services and the Real Estate bubble (arguably the biggest engineered Real Estate bubble ever in the history of the world) that just got pricked?
Oh, we are going to get inflation and that will be a big time inflation.
The Loonie will be absolutely obliterated and nobody except us will notice.
#123 Mark
Here is your ‘deflation’ (HST included), experience from yesterday:
car breaks service – $ 400
tootpaste – $ 8.50
Coffee Americano – $ 3
Roast Lamb Dinner Jimmy the Greek – $ 12.50
Taxi (9 km – $ 40, tip included)
————————–
Trade balance deficit, current account deficit, budget deficits – all huge and growing. Flush! There goes the currency down the toilet.
#84 Freedom First
“It is because the masses are close minded, lack knowledge, wisdom, and discipline.
I am not arguing with anyone I am just telling you why I am right.”
——————————————————————–
“Those who are right do not argue. Those who argue are not right.”
[Tao Te Ching chapter 81]
“True words are not pleasing. Pleasing words are not true.”
[Tao Te Ching chapter 81]
re: Sheane Wallace leaving T.O.
The best part is never going back! I was out of there for 25 years before I was back for the first one day visit.
Then ten more years before the next drive by.
Same rats doing the same pointless race, using the same roads, with about triple the numbers of users infilled amongst them.
You can leave the necktie behind too!
http://www.theglobeandmail.com/report-on-business/rob-commentary/new-housing-rules-have-unintended-consequences-in-atlantic-canada/article32279024
The unintended consequences of the federal government’s preoccupation with ensuring that the Vancouver and Toronto real estate markets cool down will have a very negative effect on the housing industry in Atlantic Canada. It will jeopardize the ability of prospective buyers, often young buyers, to start to build equity in a home.
Ottawa’s fall sledgehammer will needlessly crack Atlantic nuts.
«Why is oil rising yet the $CAD is falling?»
Could it have something to do with this:
http://money.cnn.com/2016/10/04/investing/alaska-oil-discovery-caelus/
YES, YES, YES! What great news! Yes, please Ontario slap a tax on foreign buyers. Yes, government please prick this gaseous housing bubble. It is about time. Now people like me, who actually live within my means, refuse debt and make a decent income, may actually be able to afford a house, the old fashion way, through saving and being prudent with my finances and keeping my shelter in line with my income. I pray Ontario slaps this tax on price insensitive foreigners, and forces the debt junkies to wake up and smell the napalm!
@#76 Devils Aggregate
“fall prey to the ripple effect of monetary policy gone amuck.”
*******************************************
As opposed to a housing market gone mad?
Sorry but, as a Realtor, you’re not exactly an impartial commenter .
And recomending another tax break aint gonna cut it if people cant afford to buy.
The previous situation in the housing markets was a wild west free for all that was heading our economy towards a cliff.
1.5 million for a crappy 50 year old Vancouver special? Give me a break. Like that was sustainable .
BC implemented the 15% “foreign head tax” during the final year of an idiots “reign” as premier. A knee jerk reaction to placate voters that provincial govt officials insisted wasnt needed mere months before the howls of outrage in the media and the voters became too loud to ignore….So our premier turned her back on all that offshore money washing in to the Lowerbrainland to placate the mob.
And the tax merely forced the “ridiculous housing price” situation east to Toronto where, finally, the Feds couldnt ignore the 800lb Gorilla shitting in the room and ….gee whiz….they acted in what? A few weeks? Further proof the Feds dont give two shits about ANY votes west of Ontario.
“Shift happens” ?
No. Gutless politicians, endlessly kowtowing to their lobbyist financial supporters finally realizing that maybe they better be seen to “do something” for the average voter before this real estate pig farts out half its own weight just before being sold for slaughter….
THATS whats happening
As long as the tax is added after the purchase price the moisters would have no clue how much all would cost at the end.
The moisters only look at the sale price just like the items on the store shelves with HST added after at the register.
If the Gov wanted the market to cool without changing a thing; make it a law to advertise the final price of the house after all the taxes and fees and that alone would scare most.
Final price buyer pays is: “RUN”!!!!
Fed Chair Janet Yellen has said the economy needs to create less than 100,000 jobs a month to keep up with population growth. Average monthly job gains have been about 180,000 this year, which Yellen has described as “unsustainable.”
//////////////////////////////////
Sounds to me like Yellen is trying to lower everyones expectations going forward. Slower growth coming.
#43 jay on 10.06.16 at 7:02 pm
Good, it’s about time the government started listening to the resident’s of the country. Bravo to the Liberal’s.
————————-
Gerald Butts is posting here as “jay”.
https://ca.finance.yahoo.com/news/newsalert-canada-adds-67-200-123353516.html
‘great’ job report. part time, service jobs, seniors working more as they can’t retire. And they spin it as good news.
Note that there is no stat on numbers on unemployed young Canadians out of University/College.
Of the new jobs, 44,100 of them were considered part-time work, while 50,100 were self-employed positions — some of which may have been unpaid.
The more-desirable categories of full-time work saw a boost of 23,000 jobs, while paid employee positions rose 17,000 last month, the report said.
The numbers also showed a huge boost in employment last month for Canadians aged 55 years and older, as 56,400 people in that demographic found work, including 37,900 additional positions for women.
A consensus of economists had projected the country would add 10,000 positions in September and that the jobless rate would stay at seven per cent, according to Thomson Reuters.
Quebec saw the biggest increase last month, with 38,300 new jobs, while Ontario gained 16,200 positions, Alberta added 13,300 and New Brunswick gained 4,400. Employment in British Columbia slipped by 600 positions, but on a year-over-year basis it still led all provinces with the fastest growth rate of 2.6 per cent.
In September, the country’s services sector added 55,500 new jobs, with much of the increase in public administration and educational services positions. The goods-producing industries gained 11,600 jobs with construction and manufacturing work providing the biggest boosts.
Stop talking about deflation you confused little prick.
Now now no need to get aggressive
His employment status and investment returns have punished him enough I think
#174 Freeman on 10.07.16 at 3:41 am
Did you ever heard of Maskirovka, that is exactly what russian are doing now, they are masking reality and spewing fiction. I bet you they mr counterintelligence comrade is working overtime for some time now trying to change “narrative” or world politics.
Put in regime would like Trupm to win, do you think that its coincidence that as elections are closing more and more talk about conflict us and cccp.
why do you think nothing happen 2 yrs ago when same $#!7 was floating around internet during a peak of conflict in ukraine. Russia cant win conventional or proxy war against us, that is why the are resorting to deception tactics.
Let me tell you this, you are not freeman, you are prisoner of you own ignorance, hit the library, they have some good books in there.
good read for you.
http://motherboard.vice.com/en_ca/read/guccifer-20-is-likely-a-russian-government-attempt-to-cover-up-their-own-hack
free people carry, russians dont!
Another Government Engineered Political product to facilitate wealth transfers under the guise of fixing a rigged bubble market.
# 176 Sheane Wallace writes:
#123 Mark
Stop talking about deflation you confused little prick.
I thought there were rules about this sort of juvenile stuff?
High school insults are best left in high school.
As a (former) economist and big bank currency trader, here’s my 2 cents on the loonie: In a housing/economic crash in Canada, the loonie will get crushed.
The US dollar went up in the 2008/2009 crash mainly as it played it’s role as safe haven.
Mark is sort of right regarding inflation and deflation: A country that consistently inflates it’s currency (creating more and more of it) reduces its value. Vice versa with deflation. Pretty well supported by theory and practice.
Mark’s error, imo, is his confusing ‘inflation’ with a rise in prices. Inflation really means an increase in the supply of money and credit. Price rises may or may not immediately follow, depending upon a bunch of other factors (such as, is a massive credit bubble bursting at the same time as the CBs try to devalue the currency).
Where we in NA are is quite confusing, as we have the ‘deflation’ of the massive credit bubble, with CBs fighting a losing battle with their attempts to reflate it.
So we have some aspects of deflation, fighting CB inflation, and prices are all over the board, some way down, some way up.
It may seem like semantics, but inflation NOt equalling a rise in prices helps sort out the confusion, but it’s such a massive mess I defy anyone to really understand it all.
#177 Sheane Wallace on 10.07.16 at 5:18 am
#123 Mark
Here is your ‘deflation’ (HST included), experience from yesterday:
car breaks service – $ 400
tootpaste – $ 8.50
/////////////////////////////////
Eight bucks for toothpaste!!
Your name should read Sucka Wallace
Hunt for Red October movie quote
Captain Marko Ramius
“A little revolution now and then is a healthy thing, don’t you think”
We have only ourselves and our insatiable appetite for more to BLAME.
My revolution occured 5 years ago. Best thing that ever happened. Happy in the forest now!
To bad the many (sheeples) in this country need government intervention which is an extension of ourselves to correct the messes we have made. WE have only ourselves and our greed to blame.
Note that house had a firm offer for $1.5 million in the June auction which was turned down. If it just sold for $1.35 that is $150K less in 3 months (plus holding costs). Expensive lesson for the greedy seller.
http://www.theglobeandmail.com/news/british-columbia/burnaby-bc-house-up-for-auction-fails-to-sell/article30697974/
#191 Metaxa on 10.07.16 at 10:20 am
# 176 Sheane Wallace writes:
#123 Mark
Stop talking about deflation you confused little prick.
I thought there were rules about this sort of juvenile stuff?
High school insults are best left in high school.
————————
My apologies to all including Mark,
But sometimes I am losing it with him. Especially when I see the prices at the stores and he starts talking about deflation.
In the end, this could be the greatest housing market decimator of all.
__________________
Or it could have no effect just like the new rules brought in earlier this year. I remember lots of ‘experts’ in the comments section saying it was the beginning of the end. And lots of ‘experts’ last December saying the FOMC rate hike will be the catalyst. So many potential catalysts, ZERO crashes.
But you’re 100% sure this will be the catalyst for the inevitable crash, right? 90% sure? This time its the real deal right?
I won’t hold my breath.
Please do. — Garth
@ Sheane Wallace. You can still contribute without sounding like a some preachy doomer. Life is life, might as well try enjoy it within the circumstances you can control which I’m sure you’re doing. No need to carry baggage about it or living in some imagined future.
You send off a real negative vibe. Lighten up, have a drink or what have you. Enjoy your life for what it is right now. Try observe the world and yourself without thinking about it, there’s beauty in the happening that is life.
Looks like those new rules restricting Airbnb in Vancouver will be easy to enforce with Airbnb on board to registration. More people looking to sell their soon to be illegal Airbnb?
“Airbnb says it’s on board with proposed rules for short-term rentals.”
http://www.theglobeandmail.com/news/british-columbia/airbnb-says-its-on-board-with-proposed-rules-for-short-term-rentals/article32269215/
#181 pBrasseur
Here is the math on your link.
10 billion barrels found, 30-40% recoverable=35%
so, 3500 million divided by 79 million/day =44 days…all gone
But at 200,000/day, 3500 divided by .2 divided by 365= 48 years to recover. So this discovery will supply 1/365th of the worlds daily needs for 48 years at the present rate of consumption.
Read the book Twilight in the Desert, learn there that there have been no serious discoveries since the Ghwar Field, a very long long time ago. Good luck with your optimism after that read though.
#33 CRASH!!!!! wait two years 35-50% CHEAPER on 10.06.16 at 6:52 pm
YUP the game plan is to watch prices CRASH 35-50% as this house of cards falls apart. Realtors are going to be very hungry for money. The GAME IS OVER!!!!!!! Time for pain realtors time for P A I N !!!!!!!!!!!!!!!!!!!!!
———————–
In your wild wet fantasy only!
And yes my fantasy too
No asteroid super alien bugs or Trump nuclear bomb destroying China and YVR, no worry, yet
Genworth (MIC.TO) getting clobbered again today down another 4%.
http://stockcharts.com/h-sc/ui?s=MIC.TO&p=D&b=5&g=0&id=p05887313827
Now down 4.3%. Maybe it has to do with the rumoured Wynne tax coming over the weekend?
#183 crowdedelevatorfartz on 10.07.16 at 8:17 am
If the government hadn’t fostered the growth of the real estate industry to become one of the major economic engines I might agree with you. But to think a sudden and rapid quelling of the industry isn’t going to negatively impact you is naive.
I look forward to a return to more “real” markets but I fear what is about to happen might take many by surprise.
#91 spot on. those in power focus on what is the easiest to do, not on what is right. most of us know that so it remains unsaid. need to find an alternative. just complaining does not do anything of course.
unless there are consequences, this would continue. public servants have no skin in the game. they can waste billions (or trillions in case of USA) and still get pension, bonus, promotions, reelections!
need a system to measure their performance, say similar to supreme court, but of experts in this case, to put on some risk and consequences of all these public servants, enough to deter not to paralyze.
can no longer count on them being a good human and doing it right. like animals they seem to focus on their pack alone while charging us for this “service”.
Calgary housing.. looking at house of same value overall, the price is down from 600 to 550.. from 550 to 500. i am guessing mortgage renewal time and EI payment ending would drive the market.. but it can take from 1 to 5 years.
#166 Tony on 10.07.16 at 1:26 am
Taking a shot early at the U.S. jobs report. Somewhere in the 250,000 to 300,000 range or at least 100,000 more than the ADP report. I’ll guess 255,000.
——-
Just curious why you would think there would be a jobs report home run ? Swing and a miss
clearly, if the bubble does not pop, the government wants property prices to stay this high so that taxes are at their max, and people keep thinking they are rich, and continue consuming…..
who said Canada has a free market economy? the government is messing with the market…..
what if a hurricane hit texas?
disruptor
http://www.nytimes.com/2016/10/09/opinion/sunday/when-the-hurricane-hits-texas.html?action=click&pgtype=Homepage&clickSource=story-heading&module=opinion-c-col-right-region®ion=opinion-c-col-right-region&WT.nav=opinion-c-col-right-region
#133 #6 [email protected]…Really? on 10.06.16 at 10:21 pm
Garth, you rock as usual.
_________________________
Remind me of Calgarians that thought, just after T1 brought in the Windfall Profits Tax, their real estate value would not be harmed (early 80s).
But talk is cheap, show me the beef.
Peruse these early September Coquitlam MLS listings below (a minor sampling) and much the same in PoCo. Spot the trend.
You OMITTED the price drops to get to your “upbeat” rendering of current prices. Still think your $1 MM is going to hold?
BTW, NO “moss roofs” here:
$399,800 Sep 5 ($22,200 reduction Aug 16) 45 – 2905 Norman Avenue, Coquitlam, Ranch Park. 3 Bed, 1 Bath, 34 days.
$526,000 Sep 5 ($22,000 reduction Aug 2) 3001 – 2968 Glenn Drive, Coquitlam, North Coquitlam. 2 Bed, 2 Bath, 69 days.
$589,000 Sep 5 ($40,000 reduction Aug 31) 1501 – 555 Austin Avenue, Coquitlam, Coquitlam. 2 Bed, 2 Bath, 34 days.
$699,000 Sep 5 ($30,000 reduction Aug 29) 226 – 3000 Riverbend Drive, Coquitlam, Coquitlam East. 3 Bed, 3 Bath, 20 days.
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20 days on market is not a long time or impressive. So your telling me things have gone from nuclear reactor hot to red hot ? Crash this is not , show me panic selling…. Townhouses and condos still sellin well. Affordable sfh still selling. 1.6mil w 100k price drop is still insanely high for coquitlam! Coquitlam! Mike drop
#169 BS – Private lenders currently charge 10% to 18% interest PLUS a 1% to 3% brokerage fee to set it up. May as well put it on your credit card.
I'm talking about wholesale funding. And if you think 10-18% is ridiculous then maybe you should be asking why ratehub is even offering those rates.
First National Sees Hit to Net Income on Canada Housing Rules
“I can’t put mortgage insurance on that anymore," Smith said. “Of those mortgages, I’ll put some into ABCP and sell to institutions."
That's the type of public-to-private funding I'm talking about.
typo. meant #92. not #91.
Garth, or anyone else on here with some good insight, should I be reducing exposure in my Canadian dividend paying companies?
#189 NoName on 10.07.16 at 10:14 am
#174 Freeman on 10.07.16 at 3:41 am
Did you ever heard of Maskirovka, that is exactly what russian are doing now, they are masking reality and spewing fiction. I bet you they mr counterintelligence comrade is working overtime for some time now trying to change “narrative” or world politics.
Put in regime would like Trupm to win, do you think that its coincidence that as elections are closing more and more talk about conflict us and cccp.
why do you think nothing happen 2 yrs ago when same $#!7 was floating around internet during a peak of conflict in ukraine. Russia cant win conventional or proxy war against us, that is why the are resorting to deception tactics.
Let me tell you this, you are not freeman, you are prisoner of you own ignorance, hit the library, they have some good books in there.
good read for you.
http://motherboard.vice.com/en_ca/read/guccifer-20-is-likely-a-russian-government-attempt-to-cover-up-their-own-hack
free people carry, russians dont
**************
Wow that was objective proof?? Why not observe and see how this all plays out in the next few months. Shift is happening world wide. Have you seen the NSA interviews on the Stutnex video? Critical logical reasoning will help, yes all countries have their angles. But let’s not revert back to old stigmas good or bad. Change does occur.
#182
“YES, YES, YES! What great news! Yes, please Ontario slap a tax on foreign buyers. Yes, government please prick this gaseous housing bubble. It is about time. Now people like me, who actually live within my means, refuse debt and make a decent income, may actually be able to afford a house, the old fashion way, through saving and being prudent with my finances and keeping my shelter in line with my income. ”
If that truly is your situation, then you always have been able to afford a house. There are – or at least were- lots of affordable markets. Not everyone has a right to live in the beaches, or Kitsilano. My wife and I purchased a home outside of Van years ago, within our means, and will be mortgage free in our 40s. In retrospect we should have gone big on the mortgage because I don’t see homes ever falling below what we could have bought them for in the city in 2010.
If you are expecting 900K homes to hit 450K in premium markets you are going to be very dissapointed. In my market, a 30-40% correction only brings us back to like 2012. Vancouver may be closer to 2014. So all of the renters that have been sitting on the sidelines since 2010 are now going to enter the market at 2012 or 2014 prices? How does that make any sense? And with the new qualification rules, will some of you even qualify for a 500K home in East Van (which I doubt we will ever see) ? Will this crash have any downstream impact on your job and income?
I think all the renters that are over the moon about a crash don’t really understand that you may end up with reduced income, reduced borrowing power and home prices still out of reach.
I mean, if homes in Port Mood drop 40% and I can get into a decent shack for 600K, with 150K down sign me up. Ain’t going to happen though, these aren’t Vegas homes in the desert. Any correction will likely only get us to a spot where most of us were already priced out.
Genworth and Home Capital Group share prices down another 5% today – rough week for these guys.
Smokey, can you not pry the aunt and uncle out of there by telling them they have to evacuate in order to get their daughter to evacuate?
Good luck
193 Penny Henny on 10.07.16 at 10:43 am
#177 Sheane Wallace on 10.07.16 at 5:18 am
#123 Mark
Here is your ‘deflation’ (HST included), experience from yesterday:
car breaks service – $ 400
tootpaste – $ 8.50
/////////////////////////////////
Eight bucks for toothpaste!!
Your name should read Sucka Wallace.
———————————————————-
He only has one tooth so a tube will last him two years if it’s the family size. lol
Without actual addresses so we can see what the heck they were buying your numbers don’t mean anything without reference.
The only number that matters is the final selling price, not how much over or under they sold for.
If the realtor does his/her job properly then the sold price would be the same as the asking price every time.
Shooting for the moon and asking too high (greedy or incompetently) of course it will sell for less, or never.
Asking (on purpose for a bidding war or again incompetently) too low and selling for over then of course it will sell for more.
How is this not clear to you?
#175 bdwy sktrn on 10.07.16 at 4:48 am
——
in summary; 6 deals. 5 over. 1 under.
[email protected] 150k over
[email protected] 70k over
[email protected] 70k under
not exactly carnage yet.
In Feb 2015 this townhouse dropped from 440k to 430k and was just relisted this week for 538k.
204-815 First St New West
MLS® Number: R2113939
It didn’t sell the first time because they are even using the same pictures from two winters ago or are already celebrating Christmas with the lights on the patio and wreath on the door! Sad.
A bubble 16 years in the making will not deflate in 2-3 months … the snowball literally just got pushed over the top of the mountain and is now rolling down and picking up speed.
There may be the odd flat spot and bump along the way but keep in mind this is one of the biggest mountains ever …!
#209 Westvan on 10.07.16 at 12:23 pm
20 days on market is not a long time or impressive. So your telling me things have gone from nuclear reactor hot to red hot ? Crash this is not , show me panic selling…. Townhouses and condos still sellin well. Affordable sfh still selling. 1.6mil w 100k price drop is still insanely high for coquitlam! Coquitlam! Mike drop
out here in on the wet coast one rarely hears any love for toronto thrown about.
we think we are all that, but we still wear a much smaller boot size compared to the godless gta so a little inferiority complex lingers.
however, recent October’s have found many 604’ers firmly leaping aboard the blue jays bandwagon.
very weird feeling to be in a crowded room of lotuslanders cheering intensely for an ontario team.
a good feeling, a very canadian one, but a little strange still.
looks like game 2 becoming a beatdown too!
go jays.
Looks like the Massachusetts Government all but guaranteed the passing of legalization of weed after this story:
https://www.rt.com/usa/361982-marijuana-pensioner-police-helicopter/?utm_source=browser&utm_medium=aplication_chrome&utm_campaign=chrome
One last thing … why not on the next tax return doesn’t CRA establish a baseline for reporting everyone’s principal residences?
A simple box to check and confirm asking if your address on file is your principal residence and locking it in. If not then you are either renting or living with family which could be another box?
It may be millions of houses but I’m sure a smart computer program could then mostly figure out which ones are not principal only and tax accordingly when sold?
interest rate swaps
increased regulatory capital
http://www2.deloitte.com/content/dam/Deloitte/uk/Documents/financial-services/deloitte-uk-fs-cftc-and-eu-otc-derivatives-regulations.pdf
===========
Jane 24
Reporting from Uville in 905 Markham, houses on my street fail to make it to weekend open house. All we need is a “coming soon” sign…sold within 4 days! This spring stuff went for 1.7M$, recently, two homes went for 2M$ each, the last one going a couple days ago.
32 years ago these homes were bought from builder Bramalea for 220k$.
Go BlueJays!
C.R.A.Z.Y. But maybe I’m speaking about myself, hubby about to retire, and we are planning on staying. Love the amenities!!! No debt. One grey dog, small, can afford dog kibble forever…
@#204 Devil’s Advocate
“But to think a sudden and rapid quelling of the industry isn’t going to negatively impact you is naive. ”
********************************************
Well, I currently rent so I’m not concerned about falling house prices.
I’m invested in a balanced and diversified portfolio.
My job is rock solid and I have job placement agencies trying to poach me on a regular basis…….
I don’t intend on buying for a few years yet….
Nah.
The negative effects for me will be negligible ….unless I vacation in the US and have to pay the exchange.
I’m waiting for the “shift” downward to happen.
Can anyone explain how mandatory disclosure on a tax form will change the behavior of people who sign false declarations and dont file.
The ‘problem’ which has resulted in morneaus solution looks like a straw man to me
Garth,
how will TSX investments fair in a housing bear market?
Will those of us with “deposits” tied up in a balanced portfolio of ETFs, Preferreds, etc… be whacked also?
Your humble reader.
Ben.
But sometimes I am losing it with him. Especially when I see the prices at the stores and he starts talking about deflation.
No worries. It happens. Just accept it as most blog dogs have. He’s confused and/or enjoys trolling the new readers. None of his assessments have been shown to be correct. His life results are punishment enough.
#220 yupkime on 10.07.16 at 2:39 pm
A bubble 16 years in the making will not deflate in 2-3 months … the snowball literally just got pushed over the top of the mountain and is now rolling down and picking up speed.
There may be the odd flat spot and bump along the way but keep in mind this is one of the biggest mountains ever …!
———–
Agreed so let’s call it a crash when it’s actually is one, right now buyers and sellers are at a stalemate , my main point is that in a city that is adding population and jobs is not at risk of crash. Calgary meltdown is 3 years old and there is no panic selling so I wouldn’t not expect panic selling unless there are job losses in van. If you can make ur monthly payment you will. Period.
Shifting risk to lenders/borrowers (those actually involved in the contract!) and off the government’s back is good IMO–been a long time coming. There’s no reason gov’t should be insuring mortgages (or bank deposits!!). Taxing foreigners I kind of agree with. The vacancy tax & taxing people with homes elsewhere seems like contempt for private property rights and I don’t see how it’s even legal. The new and onerous process for proving principal residence and bringing in the CRA.. well it doesn’t surprise me.
#213 DON on 10.07.16 at 1:13 pm
stuxnet is a good malware, makes things spin around and around, at crazy speeds.
we dont have to revert back to old stigmas good or bad, that never went away, let me ask you is
creapy clown good or bad?
tootpaste – $ 8.50
/////////////////////////////////
Eight bucks for toothpaste!!
Your name should read Sucka Wallace.
———————————————————-
He only has one tooth so a tube will last him two years if it’s the family size. lol
He’s talking about Preparation H, and at $36 bucks a tube, $8.50 is quite a deal!
https://www.amazon.ca/Preparation-Hemorrhoidal-Ointment-Bio-Dyne-Multi-Symptom/dp/B002AVCHTO/ref=sr_1_2?ie=UTF8&qid=1475875756&sr=8-2&keywords=preparation+h
Wow. If foreign real estate tax is implemented on top of stress test measures, and higher future mortgage rates……then the GTA market is very likely to take a steep correction over the coming years (possibly anywhere from 40% to 65%).
Garth, I think you predicted a moderate correction in YYZ earlier this year. Similar to the last correction in the early 90s I expect immigration to plummet here and remain stagnant for years (unless Trump wins of course!)
If a foreigner buys a home to use for AirBnb, what tax does foreigner have on rental income? Foreigner is not working here and not declaring an employment income in Canada. Doesn’t that place foreigner in lowest tax bracket versus a tax paying Canadian citizen with a solid job in a mid/high tax bracket? That means tax paying citizen would actually contribute more tax on rental income for same AirBnb property compared to the foreigner? Is this right??? Measures must be enforced to reduce such occurrences.
Classic BLIP before the DIP in YVR….and now going to be YYZ!!! Get out if you can!
Finally, $1Million sitting in bank is worth something!!!
How bout we lower income taxes and raise property taxes to cover the shortfall