The crisis

mullet-modified

When egghead Sal Guatieri crunched some numbers in his office in the big, white Toronto bank tower, it was a shock. He recovered, then wrote this to bank clients wondering about the Vancouver real estate market. “The monthly drop was more than double the second worst one on record,” he shared.

And that says it all. Almost. There’s one piece missing.

Guatieri was looking at the collapse which hit YVR in August, the first full month after BC slapped its hasty 15% tax on Chinese Dudes. Of course, sales for detached houses had been crumbling already for a couple of months, so the levy was all the braking needed to bring things to a shuddering halt. Not only did the number of deals tank, but so did prices – down 19% month/month, and turning the yearly change negative.

Last month, no rebound. Sales were 32% lower than a year earlier, and off almost 10% from the prior month. Again, this was totally the result of a single tax imposed on buyers representing no more than 10% of the overall Vancouver market. In other words, it didn’t take much to stick a fork in the globe’s biggest realty gasbag.

But the September result, says Sal, as grim as it might be, “was before the latest rule changes from the federal government. Stay tuned.”

van-chart

BMO chart

Indeed. We could be on the cusp of a rolling collapse in the Vancouver market, and anyone in Toronto who thinks the Kingdom of 416 or the wastelands of 905 are exempt might have a rude awakening coming. Just to refresh: starting in five days all buyers wanting mortgage insurance (which includes just about every moister) will have to qualify at the withering rate of 4.64% (the Bank of Canada’s standard) rather than the contract rate of at least 2% less. So someone who could have afforded a $650,000 house now has to shop in the low fives.

Remember – there’s an inverse relationship between rates and prices. When one goes up, the other goes down. For the past eight years the cost of money has faded and houses bloated. This one change alone equals a big rate jump, and real estate values will certainly react.

But there’s a lot more. New restrictions on what kind of loans can be insured have instantly cut off funding for many self-employed people, for investors financing rental units or people trying to lower monthly payments with longer amortizations. Some lenders have suspended those loans, while increasing lending rates. For example, First National Financial (the country’s biggest non-bank mortgage lender, funding an army of brokers) says its borrowing costs and fees have gone up and at least a quarter of its entire mortgage portfolio will no longer qualify for CMHC portfolio insurance under the new rules. No wonder its stock tanked.

So the ‘stress test’ for borrowers means they qualify for smaller loans, while mortgage rates are rising and access to money is being reduced – diminishing competition and likely leading to most costly loans. Now aren’t you glad you listened to your Dad and became an exotic dancer and Trump supporter instead of a mortgage broker?

But there’s more.

If Wild Bill Morneau pushes ahead with the plan CMHC is promoting, and forces lenders (including the banks) to share the risk on high-ratio mortgage defaults by paying a deductible, they say borrowers should expect to pick up the tab. Right now bankers have no skin in the game, knowing taxpayers (through CMHC) are on the hook for any and all defaults that might erupt if house prices croak.

This, of course, is moral hazard. Lenders don’t force high-risk kids with no savings and gossamer careers to pay more to borrow money than others with huge down payments, because they don’t have to. They accept no risk. So they lend with gay abandon. And you can see the results of lax lending and dirt-cheap funds. Yep. Million-dollar beater digs.

Will Morneau shove this through to conclusion and over the furious lobbying effort now being mounted on Bay Street?

You betcha he will. In fact, WB might just be morphing into F. And who would have imagined that?

169 comments ↓

#1 RANDY CROSS on 10.12.16 at 7:27 pm

Garth..The term ‘gay abandon’ is very homophobic. Expect a call from the HRC.

#2 crowdedelevatorfartz on 10.12.16 at 7:27 pm

Canada’s mortgage meltdown.
4 years overdue

#3 Newbie on 10.12.16 at 7:31 pm

The awakening seems to be really slow… Any specific reason for that?

#4 mitzerboy aka queencitykid on 10.12.16 at 7:33 pm

mullets
business on top
party at the back

#5 Jungle on 10.12.16 at 7:33 pm

What’s taking them so long for chinese dude tax in the GTA?

I’m so glad I sold my rental property last year. Don’t want too many eggs in this basket.

#6 Dirty debtor on 10.12.16 at 7:34 pm

Wild Bill?

Following in the footsteps of the late great Captain Flaherty. He’s not the hero Canada wants, but the hero Canada needs.

#7 SimplyPut7 on 10.12.16 at 7:34 pm

I live in an overpriced city, offering shoe box condos instead of building quality rental units. I warned everyone around me that banks are not your friends and will take everything from you if you can’t pay your mortgage.

These people deserve what’s coming for them. Let them fall.

#8 Dave in Kincardine on 10.12.16 at 7:41 pm

first

#9 The "T" Spot on 10.12.16 at 7:42 pm

Thank dog and all that is holy, we’re no longing backing the gamble on real estate. One can only hope that Wild Bill follows through. The lobbying will be intense and one day he will have to leave public life and go back into the banking fold. Good luck to him !

#10 Queston Beefly on 10.12.16 at 7:44 pm

I’ll take first posting honors tonight! My comments: 30% correction in the works..and demographics won’t help. Can’t wait to see where we are at in one years time.

#11 MF on 10.12.16 at 7:44 pm

I don’t believe these changes will have as large of an effect as everyone thinks. However, they may help reduce some of the fake demand brought on by people buying 4 “investment” properties. It’s amazing with all this supposedly going down there is not one person talking about it on the street here in the GTA.

A couple co workers just bought houses, and believe me, all they talk about is 1) how expensive they are. 2) how much money they will make with their “investment”.

I guess this is why prices are sticky on the way down? People are in denial.

MF

#12 Ogopogo on 10.12.16 at 7:47 pm

Wow, this is building momentum like no other policy passed by our craven governments. Already I’m tracking price reductions all over Kelowna South (the most desirable burb in our delusional little backwater town).

Shared an elevator ride last night in my building with a realtress towing a Re/Max bag on wheels. Middle-aged woman, smartly dressed, but with an expression of absolute exhaustion and defeat. I thought of broaching the subject of the new regulations with her, but seeing that look of utter dejection I just said goodnight when she exited on a lower floor.

Shift does happen, and quickly too. ;-)

#13 Oh bankers and other lenders won't risk their money on 10.12.16 at 7:48 pm

This housing bubble is so huge that no lender would risk a penny of their money unless the government backs the loans. Let them operate in the free and open market with no government backing and see how many 2% loans they make.

#14 Aj on 10.12.16 at 7:48 pm

Jumping off the real estate rocket ship. Listing tomorrow. Entered late in 2013 (life). Read Garths blog and also “The Young and the Leveraged” by a policy wonk shop. Essential reading. Wish us luck! (Hamilton)

#15 bill on 10.12.16 at 7:53 pm

I wonder how mr flaherty would say about this were he still with us?
does anyone know if wild bill eats bacon with his fingers?

#16 M on 10.12.16 at 7:55 pm

Long live Trump !

..now.. Ross Kay the King of Kings said the chinaman was gone one and a half months before the brave BC gov slapped the chinaman tax (i call it “just so you see your gov do something” tax)
Governments are NOT stupid (despite the appearances) , they are just criminal, and when caught they claim “stupid” since for some reason “stupid” doesn’t go to jail (see Hillary playin’ this on real time tv ).

I have some serious puts on HCG :) Buy me some boat :)

PS forget the fed rate hike

#17 Linda on 10.12.16 at 7:55 pm

I thought yesterday was the last day this week the word “Trump” would stain this blog?

On to Shangri-La (Van city). A friend sold her condo last month – whew! With luck, the implosion will ensure that when she finds ‘the one’ future home it will be both more reasonable in price & easier to purchase.

As to rates, yes they will rise as no way will banks not pass on that risk (& lest we forget, higher rates mean more profits for banks too – & best of all, they CAN blame ‘the government’ for it!). Cha-Ching!

#18 JimWa on 10.12.16 at 7:55 pm

One thing which seems to be missing in a lot of analysis what is going to happen to taxes? As house prices fall so will assessments (property taxes) and land transfer taxes.

#19 pathcontrolmonk on 10.12.16 at 7:56 pm

But Vancouver is different, it has mountains and Lululemon!

#20 bill on 10.12.16 at 7:58 pm

I actually meant ‘what’ for ‘how’…
my apologies . I have a bit of a cold at the moment.
and the tail end of a typoon blowing through on sunday I hear. an ill wind?

#21 MF on 10.12.16 at 7:58 pm

#161 NoName on 10.12.16 at 4:36 pm

Lol Palin did have an older woman quality about her..

MF

#22 ANON on 10.12.16 at 8:01 pm

Time to bail-out of housing, to invest in the new “Spirited Funds/ETFMG Whiskey and Spirits exchange-traded fund”!!!
There’s nothing like making the booze also a lot more expensive, in these tiring times. :)

#23 Grey Dog on 10.12.16 at 8:01 pm

My hat is off to Wild Bill, back in 1977, hubby and I went kicking around a model home development near the Eglinton Bellamy GO Train Station, the agent gave us a proper dressing down about buying one of these homes she was selling, her company were going to “dig and dig deep” into our bank account to make certain that every cent we put into a down payment was OUR hard earned money and not something we borrowed from someone else! She made us feel real welcome NOT. Anyways, lesson learned EARN AND SAVE FOR A DOWNPAYMEMT YOURSELF…otherwise, it may just not work out, a couple of years later, interest rates were at 19 and 20 percent!

#24 Sammy the Shnooze on 10.12.16 at 8:02 pm

“Again, this was totally the result of a single tax imposed on buyers representing no more than 10% of the overall Vancouver market.” – Garth

——————————————————-

Ten percent can be HUGE in terms of price impact! Ten people bidding for ten available homes is one thing. Eleven people bidding for ten homes is another. When that extra person has huge funds available for buying, the price scale is tipped even more.

#25 Steerage bilge on 10.12.16 at 8:03 pm

Oh well. Bring it on. 0/40 cons started all this.

Ok let’s get back to trump. Ain’t no sewer low enough.

#26 Toronto1 on 10.12.16 at 8:04 pm

the value of a house is driven directly by the amount and ease of credit available, location, build cost, land value are all secondary. The market will go to the median income of the region. Weither it happens in 6-12-24 months is immaterial.

Wild Bill did the absolute smartest thing he could. People where getting in way over their heads and if not already reached the debt ceiling would have killed all future economic growth.

The last data points available for something similar are Q2 2008 to Q2 2009, thats when liquidity dried up and the average home price in GTA was 400K with a discount mortgage rate of 4.6%. Those are some scary charts…..

From 2000-2010 the home market was reasonable, for people to say that well never see those prices again just wait. My guess is where heading back to 2011-2012 prices in a 24 month window.

#27 domain on 10.12.16 at 8:08 pm

Oh the painful normalization of risk.

Higher rates will smash the housing bubble, and the equity bubble (if the Feds raise rates meaningfully).

#28 Dan on 10.12.16 at 8:09 pm

Glad to hear it! I’ve been waiting years for the insanity to stop in BC and lower mainland- okanagan- and Canada in general- all it’s been for 10 years is HGTV, love it or list it -90% of everyone is real estate expert- investors, landlord and for the most part slave to the big banks or had mom and pop foot the bill for a sure thing investment, because we all know real estate NEVER goes down.

I really think the average person who bought in the last 5-7 years has no idea about the relationship between free and cheap credit and the cost of a 700g mortgage… and this after watching the USA bubble burst- house lust is sooo strong in Canada- and herd mentality is even worse.

Problem is real estate takes years to play out- remember when Gold was hitting 17-18-1900 an ounce- everyone started talking about it- gold creeped into conversations at the water cooler and normally that’s s good sign to get the hell out- no one talking now- will be though if it shoots up to 2-3k an ounce (not likely) then they will think it’s a good time to buy- typical. it’s been 8+ years day in day out bubble mentality- you really have to be outside Canada to see how silly it is and see how much of a bubble it has become- about time it ends.

That probably sounds jaded but it’s just because it’s been so annoying the last years having to hear people justify 1 million crack shacks and 600k apartments.

Let’s see what happens when the banks have to shoulder risks now- turn off free money backed by tax payers- and let’s see what kind of money the banks lend to the average Canadian family. Interesting times.

#29 Dave on 10.12.16 at 8:09 pm

A fifteen percent tax is not going to stop corrupt multi millionaires from overseas buying real estate. This tax is too little too late. The Chinese are merely waiting and watching to see what our inept government will do next. Maybe they’ll diddle around for another few years and “monitor the situation” while people who earn an honest living continue to be priced out of the market.

#30 mark on 10.12.16 at 8:12 pm

So when it turns to poop what wacky interventions will they then pull out to “save it”.

#31 Mike on 10.12.16 at 8:13 pm

Was just talking to my Friend who own in vancouver.

He doesn’t care about 10-15% drop. Prices went up 30-35% in abt year. So, 10-15%(I understand drop value will be more as %) is not much.

So, it’s not going to burst bubble, just may take some air out.

#32 Debtslavecreator on 10.12.16 at 8:17 pm

Should these rules pass and if the banks do not lower their posted rates dramatically the stage is set for a devastating recession and .60 cent or cheaper dollar is on the way by mid summer.
The main driver of asset prices, spending, and hence income is the massive debt bubble
Cutting credit off this much ought to cause a devastating drop in prices and growing job losses

#33 Shawn on 10.12.16 at 8:20 pm

gossamer – used to refer to something very light, thin, and insubstantial or delicate

#34 Mr miguel on 10.12.16 at 8:21 pm

Just got my 6th mortgage today. 35% down. Wasn’t much of a hastle. Purchase price is 367k for a new build townhouse in Ancaster. Would be able to list it for 500k with multiple bids if this was before oct 4th. Now I’m not sure. WhAt I am sure of is I can rent it for $1900 plus utilities which will cover my mortgage taxes insurance and $50 a month road fee. I don’t want to play this game anymore. It was nice turning 49k into 200k for the last couple years. I plan on renting out all my townhouses for 20 years and then sell me all and live off 4% of my bankroll. Royal bank stocks after that

#35 Paully on 10.12.16 at 8:22 pm

Woo hoo! Give it to ’em Billy!!!

#36 Real Estate Guy on 10.12.16 at 8:33 pm

Where is everyone! Waiting see what happens. Realtors of a new scape goat his name is T2.

#37 Peter Bull on 10.12.16 at 8:34 pm

The housing market could become real ugly.

#38 crowdedelevatorfartz on 10.12.16 at 8:39 pm

@#31 Mike
Ask your friend if he cares if the price tanks 40 -50% over the next 5 years ….. then sits there for 10 years…..while interest rates rise.

#39 Dee on 10.12.16 at 8:39 pm

@#18 You’re not wrong. If you look at Toronto’s finances over the last decade, they’ve stagnated on property tax rates, and most other revenue sources are stagnated or falling. All of the wildly increased spending has come through the land transfer tax, which has exploded through the bubble.

No bubble, and Toronto’s balance sheet implodes completely.

(I don’t know other municipalities as well, but I bet this is a common story across the country right now.)

#40 Please Crash Toronto Housing Market! on 10.12.16 at 8:42 pm

Let the market crash in Toronto. All of the debt hogs with massive mortgages buying termite infested, run down 100 year old beaters, makes me scratch my head! People have really lost their minds!

#41 Yuus bin Haad on 10.12.16 at 8:44 pm

No pity for the poor REALTORS[registration mark in superscript]?

#42 South Etobicoke Trump Campaign Central on 10.12.16 at 8:47 pm

Well boys and girls, the Russian Kuznetsov carrier battle group is heading out into the Mediterranean to prevent any Clintonesque Neo-Con efforts to establish a No-Fly Zone for the moderate head-chopping factions opposed to the secular Assad government.

http://imgur.com/gallery/7liH8

Jill Stein (Green Party presidential candidate) said today on CPAC that Hillary is a far greater danger to the world due to her eagerness to provoke a nuclear armed recovering power that is Russia. Gorbachev said recently we’re closer to a nuclear exchange than we were in 1989. Portfolios mean little when faced with incineration.

#43 Lukas on 10.12.16 at 8:51 pm

Yes, as shocking as it may look for the “average” price drop, good luck in trying to find a detached home in the GVRD that is 19% below August price…

#44 Brian on 10.12.16 at 8:54 pm

Smart policy by the Liberals – who would have thought they could increase the interest rate without increasing the interest rate! Diabolical! They have some really smart people and they are listening.

Anyway – I am enjoying the meltdown thoroughly! hahaha pass the popcorn please

#45 Okanagan Man on 10.12.16 at 8:54 pm

#12…..yes prices in Kelowna will and should drop or flatline given macroeconomic environment.

But to suggest that anything significant has yet happened is a bit of a stretch. Many recent sales have paid what can only be called a premium.

Try getting a trade, it is crazy, guys are still working flat out….

#46 Maj on 10.12.16 at 8:56 pm

Not sure that “wild” fits as nickname/adjective for Bill Morneau. I think he’s brilliant so maybe “Billiant”.

Heard Bill’s daughter Clare on CBC radio yesterday…promoting her book and cause:
http://kakumagirls.org/what-we-do/

#47 19% just the start... on 10.12.16 at 8:56 pm

Sept will be worse yet, or at best, the same.

Later Sept reductions worse and early October, well read list prices below. Also tracking other YVR cities, same thing from North Van to Delta, from Downtown to Maple Ridge. Go to Zolo.ca, pick at random.

It is no longer a correction, it’s a CRASH.

Cannot imagine what will happen after Oct. 17, IMPLOSION?

A few refresher Sep list prices below, from previous postings, plus an updated Oct price, the latter 3rd in the list (no moss on any of these properties):

$399,800 Sep 5 ($22,200 reduction Aug 16) 45 – 2905 Norman Avenue, Coquitlam, Ranch Park. 3 Bed, 1 Bath, 34 days.

$888,000 Sep 5 ($110,000 reduction Aug 29) 2176 Craigen Avenue, Coquitlam, Central Coquitlam. 3 Bed, 1 Bath, 47 days.

$928,000 Sep 5 ($139,200 reduction Aug 23) 1162 Esperanza Drive, Coquitlam, New Horizons. 4 Bed, 4 Bath, 28 days. This one relisted in early October at $798,000. 25% overall price reduction.

$1,450,000 Sep 28 ($248,000 reduction Sep 26) 6569 Griffiths Avenue, Burnaby, Upper Deer Lake. 4 Bed, 2 Bath, 55 days.

$1,698,000 Sep 2 (Sep 2 reduction $200,000). 6080 Marine Drive, Burnaby, Big Bend. 9 Bed, 8 Bath, 53 days.

$1,999,000 (Sep 7 reduction $189,000). 4564 Venables Street, Burnaby, Brentwood Park. 4 Bed, 5 Bath, 33 days.

bsant

#48 ww1 on 10.12.16 at 8:58 pm

#18 JimWa on 10.12.16 at 7:55 pm
One thing which seems to be missing in a lot of analysis what is going to happen to taxes? As house prices fall so will assessments (property taxes) and land transfer taxes.

======================================

Wow – how many times does this have to be explained?

Property taxes do not go down when sell prices decrease. They also do not go up as sell prices increase.

The total amount of property tax assessed each year is a fixed number. It’s divided up between all home owners and businesses based on the relative value of their properties. As all prices basically go up or down together, that ratio does not change. So the property tax assessed stays essentially the same.

Jeez.

#49 Re: 19% just the start... on 10.12.16 at 9:01 pm

Some mention YVR RE sticky prices.

Read above post…nothing sticky there, if anything, more like goose dung through your fingers (AB witticism).

bsant

#50 45north on 10.12.16 at 9:02 pm

But the September result, says Sal, as grim as it might be, “was before the latest rule changes from the federal government. Stay tuned.”

the chart “Average Sale Price: Residential Greater Vancouver % change” confirms what Ross Kay has been saying that this is the biggest collapse of real estate in North America.

Bill Morneau knows what is happening. This is deliberate policy. I’m thinking that he saw something he didn’t like. Didn’t like at all. Something that was worse than the enmity of the Italians in Woodbridge. I’m guessing he wants to protect CMHC and limit the collapse of real estate across Canada to 50%.

Mark yesterday posted much the same line: In a nutshell, Ross Kay’s logic is almost irrefutable, and he certainly didn’t mince words.

#51 Mark on 10.12.16 at 9:02 pm

“Should these rules pass and if the banks do not lower their posted rates dramatically the stage is set for a devastating recession and .60 cent or cheaper dollar is on the way by mid summer.
The main driver of asset prices, spending, and hence income is the massive debt bubble
Cutting credit off this much ought to cause a devastating drop in prices and growing job losses”

Your logic is mostly good. Except that of the CAD$ dropping. Why? If Canadians stop being able to borrow, they sure aren’t going to be spending. In fact, they’ll probably be valiantly trying to pay back their debt. Demand for CAD$ will surge. The CAD$ will go up extremely as Canada’s trade deficit turns to a trade surplus simply because Canadians don’t have much discretionary money to spend overseas.

Throw in families selling their recreational real estate in the US and elsewhere to repay their debts at home and to keep their kids from going into foreclosure. As well as selling overseas assets in anticipation of a much higher CAD$, and the CAD$ could easily go over parity and beyond, even in a housing collapse.

Debt deflation is almost always currency positive. And central banks fear it because the only tool they really have is to expand debt, but if the borrowers don’t want more debt, then they can’t do that. Just look at Japan for example, they’ve held the rates at zero for almost eternity now and yet still the Yen is very strong.

#52 Smoking Man on 10.12.16 at 9:03 pm

Been writing like a mad man today, started early 5:30 pm putting the final touches and pretty shitty book, I’m done now, it’s 9pm. I’m spent, the two fingers I used to type are swearing at me now. So no input tonight dogs. Taken the night off.
Carry on my wayward sons and daughters.

#53 conan on 10.12.16 at 9:10 pm

Leaf fans can leave the paper bags at home now. Auston Mathews……..

#54 Loopholes on 10.12.16 at 9:11 pm

Mortgage brokers, real estate agents etc will find loopholes from what I have heard. This might not be enough, wait for more harsher changes?

#55 Toronto1 on 10.12.16 at 9:11 pm

#18 Jimwa

Property taxes are calculated on a mill rate, price is only one factor, the mill rate can be adjusted to weight less on price

#56 Not a big deal on 10.12.16 at 9:14 pm

The good news: 32% drop in sales

The bad news: 132% too expensive for 90% of the population still.

#57 Briana on 10.12.16 at 9:16 pm

Government only implementing foreign tax now to seem like they are actually doing something and taking action – They know what’s coming and no steam left in market so better to take more money from foreigners while they can benefit, why not. Probably a 50% to 60% price corrrection over three years, prices mean reverting for sure. Severe and long lasting market collapse on the way. Immigration already falling due to rising cost of citizenship and lacklustre oil industry, but just wait until the real job losses occur from real estate market collapse…Foreigners will take money elsewhere, where they can get away with purchases without extra fees/taxes/restrictions. I think Australia is already hating on us. Get out while you can folks.

#58 Maj on 10.12.16 at 9:19 pm

“Uncle Bill” is more fitting than “Wild Bill”

#59 bdwy sktrn on 10.12.16 at 9:22 pm

the destruction of vancouver re rolls on!

the only sale in the last week in the comm dr hood was a townhouse. 3br

ask $1,288,000 sell $1,305,000 (oct 2016)

these sold new in 2013 for 745K

——————————
close to a double in 3 years. same property. for a townhouse.

of course detached has done FAR FAR batter.

mark’s brain is stagnant or malfunctioning since 2013.

#60 Briana on 10.12.16 at 9:26 pm

Looks like Torontonians and Tory are onboard for the foreign tax on real estate. Most likely coming very soon. The price spike is happening now as foreigners rush to buy…. but don’t be fooled foreigners…. when Vancouver implemented tax it was effective at an earlier date…. so those foreigners rushing to buy before tax was announced were still dinged substantially $$$. Watch out!!!! Better to dump money elsewhere!

http://m.torontosun.com/2016/10/11/torontonians-favour-foreign-home-buyer-tax-poll

#61 Context on 10.12.16 at 9:28 pm

Just look at the coming mess the Harper Government left the condo buyers in Toronto over the last few years. He was really Peter Pan in disguise playing trick or treat on the greater fools. “O’ what a tangled web we weave when first we practice to deceive.” – Walter Scott

#62 Brian Ripley on 10.12.16 at 9:29 pm

I updated my Household Debt, GDP, Foreign Direct Investment and Balance of Trade chart
http://www.chpc.biz/household-debt.html

GDP and Net Trade improved a tick but the big picture appears to remain sluggish.

A USD/CAD rally will help our exporters, and that appears to be building.

#63 Oakville Slums on 10.12.16 at 9:35 pm

“If Wild Bill Morneau pushes ahead with the plan CMHC is promoting, and forces lenders (including the banks) to share the risk on high-ratio mortgage defaults by paying a deductible”

What???? I thought this was set in stone already???

#64 Ret on 10.12.16 at 9:36 pm

It is not just big cities that have inflated RE. Since when did a clapped out house built in 1960’s in Hamilton become “worth” $450,000?

This Canadian obsession with RE and cellar dwelling mortgage helpers is really quite bizarre. Hopefully WB doesn’t choke when the going gets tough.

#65 Carlyle on 10.12.16 at 9:42 pm

Garth,

As I often do, I read 4 days of your blogs. Regarding Trump I just wanted to say I see an irony in your posts. You attract the same audiences that he does.

That’s not a bad thing. People see hope in Trump much as they see hope in your financial advice. As a firebrand in Ottawa you inspired many. The Establishment in Ottawa was/is? as hated here as Washington is down there.

Yes you also get the crazies just like Trump. But there is also a rationale set that follow you religiously just like Trump because you say it like it is, you aren’t afraid to take fire for telling the truth as you see it.

In your case that truth is about how to make money.

Anyways I think you should go back into politics. You’d do very well in this environment. I know I’d vote for you.

#66 ww1 on 10.12.16 at 9:42 pm

#39 Dee on 10.12.16 at 8:39 pm
@#18 You’re not wrong. If you look at Toronto’s finances over the last decade, they’ve stagnated on property tax rates, and most other revenue sources are stagnated or falling. All of the wildly increased spending has come through the land transfer tax, which has exploded through the bubble.

No bubble, and Toronto’s balance sheet implodes completely.

(I don’t know other municipalities as well, but I bet this is a common story across the country right now.)

=========================================

I know math is hard. But see my answer @

#48 ww1 on 10.12.16 at 8:58 pm

(unless Garth allow earlier comments and renumbers again …)

#67 Metaxa on 10.12.16 at 9:53 pm

One thing which seems to be missing in a lot of analysis what is going to happen to taxes? As house prices fall so will assessments (property taxes)…

Assessment is not property tax.

The property tax you pay is based on a mill rate. If your property value goes down and the city/town/whatever needs more money from you they simply increase the mill rate.

The conversation goes like this: We need x amount of dollars to fund the proposed budget and we have y amount of assessed value in our jurisdiction, what do we need to set the mill rate at to obtain those funds.”

Doesn’t matter what your house is assessed at or even what it is worth…they will get theirs.

#68 Yom Kippur on 10.12.16 at 9:56 pm

The real estate story is boring.

#69 };-) aka Devil's Advocate on 10.12.16 at 9:56 pm

#11 MF on 10.12.16 at 7:44 pm

… I guess this is why prices are sticky on the way down? People are in denial.

Prices are sticky on the way down because of two things sellers hate most;
1.) Selling for less than their neighbor did
and
2.) Selling for less than they paid

#12 Ogopogo on 10.12.16 at 7:47 pm
Wow, this is building momentum like no other policy passed by our craven governments. Already I’m tracking price reductions all over Kelowna South (the most desirable burb in our delusional little backwater town).

Shared an elevator ride last night in my building with a realtress towing a Re/Max bag on wheels. Middle-aged woman, smartly dressed, but with an expression of absolute exhaustion and defeat. I thought of broaching the subject of the new regulations with her, but seeing that look of utter dejection I just said goodnight when she exited on a lower floor.

Shift does happen, and quickly too. ;-)

She was exhausted not from the fight to get business but rather too much demand for her service. This is not an easy market for a REALTOR® to work in. It’s a stress test every day. We are still VERY much in a sellers market. And you are wrong, prices have not fallen… yet. “Yet” does not give you grace… you are still as wrong as wrong can be… there are no deals… prices are strong as demand is strong amid anemic supply.

And… SHIFT does indeed happen and, yes, it can be quick, but it has not changed nearly so much as you imply it has in K-town. I wrote four deals today and am now at my desk with a well deserved rum and coke to take of the edge of the day as I am sure she, who you rode the elevator with, is doing.

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

On the new regulations… I am sure it will slow the market. Not overnight but before Christmas.
Spring 2017 will tell and interesting story. I am looking forward to a return to more normal times };-)

#70 45north on 10.12.16 at 9:59 pm

context: Just look at the coming mess the Harper Government left the condo buyers in Toronto over the last few years.

Here’s the Condo Game:
http://www.cbc.ca/player/play/2419776936

Toronto City Council is basically rendered powerless by the Ontario Municipal Board ( OMB ). It is set up and governed by the Province of Ontario not the Federal Government.

https://en.wikipedia.org/wiki/Ontario_Municipal_Board

#71 David W2 on 10.12.16 at 10:08 pm

A toast to Bill Morneau, for having the guts. to do what others couldn’t

#72 No Mercy on 10.12.16 at 10:16 pm

>Re: #1 RANDY CROSS
>Garth..The term ‘gay abandon’ is very homophobic. >Expect a call from the HRC.

Gay abandon means uninhibited joy, freely expressing your joy and happiness.

Just because the modern us of “gay” in the gay community choose to use this word, doesn’t mean they have a copyright.

“Gay abandon probably comes from the 1600’s … but I don’t have time to do that research.

#73 PeterfromCalgary on 10.12.16 at 10:19 pm

How much will a housing correction effect Canadian equity prices?

#74 Property Accountant on 10.12.16 at 10:23 pm

The big question is, will Morneau eventually force the lenders to have the “skin in the game” in the face of mounting opposition ?

link

#75 Spectacle on 10.12.16 at 10:27 pm

Most poignant posting Mr Turner.

Imagin this is only a 15 to 203% drop, in a very ismall segment/percentage of real estate.

If it tumble more rapidly , perhaps due to a total fictitious “Asian peril ” segment decline , how would the other segments plumet?

For example, a major crackdown and punishment :

Mother of Vancouver mayor’s girlfriend could face death penalty …
http://www.cbc.ca › canada › british-columbia

What are all the mortgage brokers going to do for employment then.

#76 Scott in Gibsons on 10.12.16 at 10:43 pm

Loving the risk being moved back onto the Canadian lenders, and loving the indictment of Hillary by Trump on Sunday. Wikileaks will finish her off over the next few weeks. The big Wall Street/MIC machine is about to have a Trump thrown in its spokes.

BTW, Gibsons has damned good tap water!

http://waterbucket.ca/wuc/2005/12/02/town-of-gibsons-has-best-tasting-water-in-the-world/

#77 Frank on 10.12.16 at 11:19 pm

I never believed in Trudeau, still don’t.

But I believed he knew how to select good people not sycophants. So far, so good.

#78 you're in love on 10.12.16 at 11:23 pm

Garth,
You cannot hide it, you like Bill, he has some balls to push these changes, hat off. They are late but necessary, now the music stopped in YVR. Big time, November numbers will be epic!

#79 ANON on 10.12.16 at 11:26 pm

Poor, that’s what’s on the menu

#80 WalMark of Sadkatoon on 10.12.16 at 11:31 pm

CAD$ gonna tank alongside the Canadian economy

And RE is a big rotten part of the Canadian economy

Down she goes…

#81 cramar on 10.12.16 at 11:33 pm

A couple weeks ago I heard a radio commentary that because of the CDT (Chinese Dud Tax) in Vancouver that HAM has dried up for residential RE, BUT it has now shifted to commercial RE. Haven’t seen any mention of this on this blog. Does anyone have any insight on this?

#82 Tony on 10.12.16 at 11:43 pm

People e-mail you support and thoughts to wild bill. CMHC should be abolished. Let the lenders lend in a free and open market. Don’t they like capitalism?

#83 TurnerNation on 10.12.16 at 11:49 pm

Landlord greed in Toronto?

– Legendary ‘Joe Mamas’ at King/John closed – landlord wouldn’t sign a lease.

http://www.joemamas.ca/
“Joe Mamas will be closed for the time being. Please check back soon for updates. Thank you for your years of patronage.”

– Now this from SRV.UN:

“SIR Corp. and SIR Royalty Income Fund will close Far Niente, Four and Petit Four at 187 Bay St. in downtown Toronto, effective Saturday, Oct. 15, 2016. SIR was unable to negotiate a lease extension with the landlord with sufficient term to ensure a suitable return on its planned investment in the location and has therefore decided to allow its lease for the site at 187 Bay St. to terminate on the expiry date of Oct. 31, 2016”

#84 For those about to flop... on 10.12.16 at 11:52 pm

76 Scott in Gibsons on 10.12.16 at 10:43 pm

BTW, Gibsons has damned good tap water!

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

Nice work,brother…

M42BC

#85 chelsea on 10.13.16 at 12:30 am

Real Estate prices STILL OVERVALUED by at least 100 to 200% …. 30% decrease or so doesn’t even reflect the true value. Homes depreciate each year they sit not being sold, so why pay more to the gas bag sellers and realtors. Waiting for the big heave down before we even move in to buy. To buy in this over pickled real estate market one has sunk into oblivious fortitude.

Happy Halloween..

Cheers….

#86 Fortune500 on 10.13.16 at 12:51 am

#3 Newbie, I agree. I was expecting more reaction in the MSM. Either people are asleep at the wheel, or in denial. Not sure which. Clearly those on the industry side get it, hence the intense lobbying.

Most forums I frequent seem to feel that nothing will ever go down. Ever.

#87 Fortune500 on 10.13.16 at 12:51 am

#3 Newbie, I agree. I was expecting more reaction in the MSM. Either people are asleep at the wheel, or in denial. Not sure which. Clearly those on the industry side get it, hence the intense lobbying.

Most forums I frequent seem to feel that nothing will ever go down. Ever.

#88 april on 10.13.16 at 1:00 am

So Vancouver houses are in price decline. Condos also??

#89 Beef on 10.13.16 at 1:14 am

House prices in van double every few years u guys so stupid

#90 Fortune500 on 10.13.16 at 1:15 am

Some people are mad though … very, very mad:

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2016/10/12

#91 Steve French on 10.13.16 at 1:26 am

Hey Smoking Man:

how’s your hero Donald Trump doin’ today?

That circus freak is completely imploding!

aaahahahahaha.

This is going to be a complete washout that will set back the Republican Party for the next 3 generations…

I foresee a split in the Republican’ts.

Looks like your PhD in Herdonomics couldn’t quite account for dumb a*s Trump.

What a loser. He’s FIRED!

LOL LOL LOL i can’t stop LOLing….

#92 fleabitten monkey on 10.13.16 at 1:35 am

#59 bdwy sktrn –
Yeah bro, nothing selling on East 22nd between Victoria and Knight street all summer long……almost 3 months to sell a corner development lot. All the other properties, reductions or still sitting. One corner lot has recently been reduced from $2.250 mill to $2.050 mill and still no sale. Another corner lot ask was $2.450 mill and nothing, price then reduced and a nothing and then a change of realtor. 3rd corner lot, bull doze bait, already approved for 4600 sq ft home not even a sign out front…no movement at $3.300 mill. Further down East 22nd towards Victoria Dr. no action. Crickets mate all summer long.

#93 Mark on 10.13.16 at 1:35 am

“What???? I thought this was set in stone already???”

I think the big question is just how much retroactivity will be involved. I pointed this out in many earlier posts to the comments section, but basically the CMHC and the banks are locked in what might be best described in the old “Cold War” doctrine of “Mutually Assured Destruction”. If the CMHC cracks down on the banks and forces them into risk sharing, the banks will probably jack up the cost of credit. Thus reducing housing prices even further and creating further claims against the CMHC. And so on and so forth.

The elephant in the room is that CMHC’s ~$25B of capital, give or take, is dramatically inadequate to meet their obligations on ~$900B of subprime mortgage insurance. A reasonable level of leverage, I surmise, for the CMHC to have into subprime mortgage guarantees of the nature they hold, is 5X. 1/5th of ~$900B is $180B. CMHC has ~$25B. They are thus deficient ~$155B. Based on public comments of government and the people who run the CMHC, I don’t think any of them really have a clue what their book of subprime mortgage guarantees really means, or the consequences of such as housing prices continue to fall in Canada. Accelerating more recently after 3 years of relative stagnation.

CAD$ gonna tank alongside the Canadian economy
And RE is a big rotten part of the Canadian economy

CAD$ has already taken its hit. The stars are aligning for a nice moonshot in the CAD$ as indebted Canadians stop consuming and certain global macro factors start significantly favouring Canada.

#94 BTW Garth, that was a great post on 10.13.16 at 4:16 am

Forgot kudos’s to you for the Blog write-up today.

Linked to it, yet again, from my Facebook page – used to teach University/College so I try to warn/educate 100s of Moister “Friends” by sending them to your Blog. Today was another one of those days (former Business and Engineering students).

BTW, they love what you have to say…lots of thumbs up.

One of my former Moister student “Friends” on Facebook, budding entrepreneur/Manager, says he likes the way you write…you tell it like it is, you are humorous and pull no punches (oh yes, he also thought you were very, very informative).

bsant

#95 Freedom First on 10.13.16 at 4:52 am

Yes. Wild Bill. Good on you.

……………………………………………
Yep. Million-dollar beater digs & You betcha he will.-Garth

Pure gold. Well. For me it is. Perspective.

#96 Hard to believe YVR RE prices... on 10.13.16 at 4:53 am

Zolo.ca has a habit of going back in time and changing average sales numbers from even 6 or 9 months ago to boost current average prices, so typical Realtor’s.

Their yesterday Trend data shows only 1 YVR burb with Median prices over $1 MM. Hard to believe.

These prices look like they came from 2009 not 2016.

Typical sales mix in YVR RE is 25% Detached, 10% Townhouses and 65% Condos.

Peruse Median prices which are based on the highest frequency sales price (better than Average since a few high value or low value prices can distort the period Average) :

City Average Price Median Price
#1West Vancouver $3.0M $2.0M
#2Bowen Island $1.1M $719K
#3Vancouver $1.1M $690K
#4North Vancouver $1.0M $840K
#5Delta $1.0M $853K
#6Richmond $897K $617K
#7White Rock $855K $595K
#8Burnaby $771K $535K
#9Coquitlam $697K $480K
#10Langley $661K $503K
#11Maple Ridge $632K $566K
#12Surrey $618K $477K
#13Port Moody $582K $581K
#14Port Coquitlam $557K $478K
#15Pitt Meadows $522K $388K
#16New Westminster $485K $397K

bsant

#97 drydock on 10.13.16 at 5:02 am

#76 Scott in Gibsons on 10.12.16 at 10:43 pm

Loving the risk being moved back onto the Canadian lenders, and loving the indictment of Hillary by Trump on Sunday. Wikileaks will finish her off over the next few weeks. The big Wall Street/MIC machine is about to have a Trump thrown in its spokes.

BTW, Gibsons has damned good tap water!

http://waterbucket.ca/wuc/2005/12/02/town-of-gibsons-has-best-tasting-water-in-the-world/

………………………………………………………….

Anchored off of Gibson’s many times and spent the night and next day or two.
Bowen Island, Gibsons Landing, Ganges all really good memories.

#98 drydock on 10.13.16 at 5:03 am

Forgot Desolation Sound.

#99 Re: Hard to believe YVR RE prices... on 10.13.16 at 5:06 am

Forgot to conclude that it looks like Morneau effect will be to that lower priced properties will sell; thus, mid to upper end priced properties will drop in price to sell and remain competitive (i.e., fewer buyers, drop price vs. your competition to sell to them) or go unsold for extended periods of time.

A lot of “New” property listings on Zolo.ca. Prices much lower than prior listings that have been on the market for quite some time.

Predictable behavior.

Looks like Morneau effect in full swing.

bsant

#100 Self Directed on 10.13.16 at 5:21 am

#43 Lukas on 10.12.16 at 8:51 pm
Yes, as shocking as it may look for the “average” price drop, good luck in trying to find a detached home in the GVRD that is 19% below August price…
—————
Asking price is not selling price. Paying full asking in today’s (not yesterday’s) market is just foolish.

#101 I Am Vulture Man on 10.13.16 at 5:58 am

Hah! A 30% drop in real estate prices would cause property taxes to tank, skew the wealth effect revenue Moroneau has already pencilled in for the Trudeau War in Africa, and bankrupt every city and provincial budget in the land instantly, create mass homelessness as at least a million families would be instantly foreclosed on with another million in a years time and a milllion a year after that until the last five years is wiped off the books.

#102 maxx on 10.13.16 at 7:13 am

Wild Bill is my hero.
And Bay Street can invest in Hades.
Malinvestment, spawned by erroneous government policy, hurts everyone.

#103 Smoking Man on 10.13.16 at 7:48 am

#91 Steve French on 10.13.16 at 1:26 am
Hey Smoking Man:

how’s your hero Donald Trump doin’ today?

That circus freak is completely imploding!

aaahahahahaha.

This is going to be a complete washout that will set back the Republican Party for the next 3 generations…

I foresee a split in the Republican’ts.

Looks like your PhD in Herdonomics couldn’t quite account for dumb a*s Trump.

What a loser. He’s FIRED!

LOL LOL LOL i can’t stop LOLing….
…………………………..

Your drinking again with your bowling shoes on.

#104 Victor V on 10.13.16 at 7:48 am

http://www.movesmartly.com/2016/09/the-tipping-point-for-torontos-real-estate-market.html

Much of the press has focused on quelling demand for homes by introducing a foreign buyer tax like the one introduced in Vancouver. While such a tax would definitely help, I don’t believe foreign speculation is the only problem. I’m seeing a rise in domestic speculation as more and more buyers aim to capitalize on Toronto’s out of control real estate prices – and understandably so.

Unlike stocks, real estate is perceived as being among the safest and most secure investments one can make, couple that with a 22% year over year appreciation and there are few investments out there that can beat it.

Unfortunately this type of wishful thinking is the fuel that drives real estate bubbles.

For the first time in Toronto’s long real estate boom we are hitting a crossroad where the decisions our Governments make (or don’t make) will materially impact the outlook of our housing market.

Our Governments have a choice to make. They can either step in to quell speculative behaviour in our housing markets – both domestic and foreign – or we run the risk of experiencing firsthand the roller coaster ride of a real estate bubble. The too good to be true run up in house prices (that has already begun) followed by an inevitable crash and recession to go with it.

From my conversations with home owners and home buyers – government intervention can’t come soon enough.

#105 CJBob on 10.13.16 at 7:53 am

#65 Carlyle on 10.12.16 at 9:42 pm
Regarding Trump I just wanted to say I see an irony in your posts. You attract the same audiences that he does.
___________________
I believe that Garth attracts a wide audience. It’s the comments section that attracts the tin foil hat crowd because you don’t have to register to post and because the moderation is very lenient.

#106 Trump the Racist Rapist on 10.13.16 at 8:07 am

And the turmoil upcoming in the USA will destabilize international markets, at least for a while.

This will really help to take air out of the Canadian housing bubble, a sense of worry coming from both inside and outside the country.

Don’t count on it. Markets are more rational than the people who come to this blog. — Garth

#107 maxx on 10.13.16 at 8:11 am

#23 Grey Dog on 10.12.16 at 8:01 pm

I hear ya. When we bought our first cottage, we had 40% down payment and still got crappy attitude from [email protected]

#108 crowdedelevatorfartz on 10.13.16 at 8:17 am

And Thailands popular King has passed away.
The worlds longest reigning monarch.
Soon to be replaced by his very unpopular son.
Lets see if he’s as crazy as the new Phillipine President.
Trivia time.
Queen Elizabeth is now the worlds longest reigning monarch.

#109 cramar on 10.13.16 at 8:33 am

Trump and the real cost of his economic plan:

http://www.marketwatch.com/story/donald-trump-supporters-should-read-this-with-an-open-mind-2016-10-13

#110 MF on 10.13.16 at 9:04 am

#34 Mr miguel on 10.12.16 at 8:21 pm

Forgot to factor in creeping maintenance fees. Higher and higher she goes. Might want to increase your rent…which you won’t be able to because Hamilton (I’m assuming you meant that Ancaster) isn’t exactly known as an economic power house.

MF

#111 Victor V on 10.13.16 at 9:06 am

Jobless Claims at 42-Year Low as U.S. Employers Shun Firings

http://bloom.bg/2e84i9s

#112 gattaca on 10.13.16 at 9:16 am

DELETED

#113 MF on 10.13.16 at 9:22 am

#91 Steve French on 10.13.16 at 1:26 am

Not at all. The recent joke of a news story with “women coming forward” just fuels the fire even more.
Remember, tons of his support comes from people secretly tired of this sickening PC culture. This is all seen as part of that same thread.

It’s been like that the whole campaign actually, and every time one of these fake stories comes out his numbers jump.

-It first became clear with the level of bias in the news. It’s so blatant now the outlets don’t even care.
-Then we had all the mega rich limousine liberals coming out to voice their useless opinion on the failing platform of twitter.
-Then we had “establishment” republicans come out. Again, more support.
-Now, after exhausting the minorities card, they are parading out these women, or, using a conversation from over a decade ago.

All this while ignoring massive issues like Hillary’s support of failed foreign and economic policy.

It’s all very desperate and will have zero effect on his support.

MF

#114 Ole Doberman on 10.13.16 at 9:27 am

#73 PeterfromCalgary on 10.12.16 at 10:19 pm

How much will a housing correction effect Canadian equity prices?
———————————————————–
It won’t instead it will send capital fleeing RE and into stocks and not bonds. Stocks are the only place left to go.

#115 John on 10.13.16 at 9:35 am

“this was totally the result of a single tax imposed on buyers representing no more than 10% of the overall Vancouver market”

Are there more statistics available? I am taking 10% at face value and not questioning this statistic, but instead I’d like to know more numbers, like how many local first time buyers there are in Vancouver. What about % of people that are trading up/down?

In short, 10% may seem low… but when we compare to the local first time buyers, all of the sudden, this may be huge.

If it comes out 80% of activity is generated by people trading up/down – and the ending 10% is foreign and 10% local first timers – then all of the sudden foreign activity represents 50% of new owners… We cross check that with amount of new builds and other stuff and come out that foreign is really squeezing out locals.

#116 The times are a changin on 10.13.16 at 9:42 am

It ain’t dark yet….

#117 Smoking Man on 10.13.16 at 9:44 am

The US Election boils down to this.

Internet VS MSM

#118 The American on 10.13.16 at 9:48 am

Half of Canadians are within $200/month of not paying their bills. HALF.

http://business.financialpost.com/news/economy/nearly-half-canadians-within-200-a-month-of-being-unable-to-pay-bills-poll-finds

#119 Ace Goodheart on 10.13.16 at 9:50 am

Even realtors now appear to agree that Vancouver is over valued:

http://www.repmag.ca/news/real-estate-firm-releases-third-quarter-housing-report-215413.aspx

Problem with Van is, over valued is kind of a relative term. It’s kinda like saying, gee I shouldn’t have paid $40,000 for that ten year old minivan with the perfect interior, likely it was only worth 2K. When a house purchased for a couple of mil goes down in value by 600K, it’s a relative loss. I mean, it’s still worth 1.2 million, which is a heck of a lot of money, but you paid 2 million and you have a 1.8 million dollar mortgage….

Oh well. As they say, the greater fool…..

In other news, winter is now on its way. Farmers’ Almanac says it’s going to be a hard one. Why does this matter on a real estate blog? Well all those folks who purchased million dollar semis with “stunning exposed brick walls” are now going to learn the reason why we insulate houses.

Toronto had a couple of rather large fires in the early 1900s. Prior to these fires, houses were built out of wood and brick was used as a “veneer” over the wood to make it pretty. The attics were all connected and when these things burned, they all burned together (I own one of these old fire traps, we had to separate a fully connected uninsulated wooden attic with fire barriers and also remove a bunch of old lathe and plaster and install fire walls).

Why do you care? Because after the great fires, for about 20 years, from around 1910 to 1920, all houses built in Toronto and surrounding areas could not be made of wood. They had something called “double wythe” construction which is two layers of brick, with a space about an inch between. They stopped this in the 1920s as it was just too expensive and went back to wood framing. So you can date these houses.

People have been buying these houses and finding these brick walls when they gut them. This is the “exposed brick wall” phenomena. A lot of them were done over the summer.

They are very cold in the winter. Two layers of brick does not an insulated wall make. Have fun with heating these things. Yes I know it looks pretty.

#120 Electric Nikola on 10.13.16 at 10:06 am

#103 Smoking Man on 10.13.16 at 7:48 am
#91 Steve French on 10.13.16 at 1:26 am
Hey Smoking Man:

how’s your hero Donald Trump doin’ today?

That circus freak is completely imploding!

aaahahahahaha.

This is going to be a complete washout that will set back the Republican Party for the next 3 generations…

I foresee a split in the Republican’ts.

Looks like your PhD in Herdonomics couldn’t quite account for dumb a*s Trump.

What a loser. He’s FIRED!

LOL LOL LOL i can’t stop LOLing….
…………………………..

Your drinking again with your bowling shoes on.
..

The Donald is roasted on a stick. Rather fitting. Bet the farm at 400:1. Got for it. You can’t lose!!!!

#121 Eye on the street on 10.13.16 at 10:22 am

I always look what’s happening in the streets and not manipulated statistics. A few months ago there were no homes for sale in my North Vancouver hood. Now there are a few on many streets. So this tells me there are more sellers. I now believe the market has topped.

The new stress test rules are welcome news, but if the minister reads this post, he should have phased in the stress test over time. Maybe bank rates plus one percent this year, and then two percent next year and so on.
Remember this doomsayers all markets correct themselves and long term the trend is from bottom left to top right.

#122 ccc on 10.13.16 at 10:29 am

A mandatory reading for Canadians heavily invested in RE (applies also beyond housing…)

https://en.wikipedia.org/wiki/Predictably_Irrational

#123 Victor V on 10.13.16 at 11:00 am

Ottawa’s deficit will be $16.5B wider than forecast over next 5 years: TD

http://www.bnn.ca/ottawa-s-deficit-will-be-16-5b-wider-than-forecast-over-next-5-years-td-1.584395

“The economic situation in Canada has deteriorated since budget 2016, impacted not just by wildfires but also by serially disappointing underlying momentum,” TD Economics’ chief economist Beata Caranci wrote in the report.

“We would caution against implementing additional measures that would drive the deficit profile significantly above the status quo.”

#124 Victor V on 10.13.16 at 11:03 am

Ottawa’s new housing rules not ‘catastrophic’: Royal LePage CEO

http://www.bnn.ca/ottawa-s-new-housing-rules-not-catastrophic-royal-lepage-ceo-1.584208

#125 mistabills army on 10.13.16 at 11:10 am

#58 Maj on 10.12.16 at 9:19 pm
“Uncle Bill” is more fitting than “Wild Bill”

Why not Mr. Bill……………….oh nooooooooooooooooooooooo……….

https://en.wikipedia.org/wiki/Mr._Bill
https://www.youtube.com/watch?v=b3E_WARspaU

#126 Bram on 10.13.16 at 11:11 am

Teranet came out this morning:

Canada +0.79% month over month.
Vancouver +0.18% month over month.
Toronto +2.17 month over month.

Toronto still red hot. Sticky prices in yvr.
http://housepriceindex.ca/default.aspx

#127 mistabills army on 10.13.16 at 11:21 am

#93 Mark on 10.13.16 at 1:35 am
“CAD$ has already taken its hit. The stars are aligning for a nice moonshot in the CAD$ as indebted Canadians stop consuming and certain global macro factors start significantly favouring Canada.”

There you again….the dollarette will plummet to depths that even Captain Nemo would fear…forget your moonshot

#128 Mr. Frugal on 10.13.16 at 11:26 am

It’s interesting just how many “tin-foil hat conspiracy theories” have been confirmed as facts by the recent Wiki-Leaks. You couldn’t make this shit up if you tried.

This leaves the Hillary camp with no option but to try to distract the public by discrediting Trump. Personally, I don’t think it will work. Trump supporters don’t trust the MSM. They think it’s all faked to keep Hillary and her corrupt cronies in power.

So this is clearly an asymmetric investment scenario. If Hillary wins, the markets will say “so what”. If Trump wins, the market takes a nose dive and investors will be provided with a gift.

A US market reaction to Trump would likely mimic that of Brexit – a decline of less than 10%, quickly reversed. But he won’t win. — Garth

#129 Rex Ryan on 10.13.16 at 11:33 am

Don’t count on it. Markets are more rational than the people who come to this blog. — Garth

Wrong quote

“Markets can remain irrational longer than you can remain solvent.”

Much more fitting.

Not at all. People thinking markets will react violently and systemically to a Trump win (improbable) or a Canadian housing market correction (probable) are naive. That ignorance is on display daily here. — Garth

#130 LL on 10.13.16 at 11:37 am

#18 – One thing which seems to be missing in a lot of analysis what is going to happen to taxes? As house prices fall so will assessments (property taxes) and land transfer taxes.

He…it’s so good for municipalities those high taxes!
It’s funding their pension plan, they can vote higher salaries..(they don’t use the $$ to do city improvements….forget it)!
Even houses needing renovations are assess really high…more higher tax!
I am expecting if housing prices fall they will increase the taxes %.
They are not interested to receive less in taxes!

#131 };-) aka Devil's Advocate on 10.13.16 at 11:51 am

#121 Eye on the street on 10.13.16 at 10:22 am
I always look what’s happening in the streets and not manipulated statistics. A few months ago there were no homes for sale in my North Vancouver hood. Now there are a few on many streets. So this tells me there are more sellers. I now believe the market has topped.

The new stress test rules are welcome news, but if the minister reads this post, he should have phased in the stress test over time. Maybe bank rates plus one percent this year, and then two percent next year and so on.
Remember this doomsayers all markets correct themselves and long term the trend is from bottom left to top right.

Good advice. Now think about what a Full Time REALTOR® can do for you. Someone no only with their eye on the street 24/7 but who is in constant contact networking with other professional REALTORS® who all not only see what is going on but are so deep into it they have developed a sixth sense that they can actually feel what the market is doing. I mean a “full time, professional” you can trust. Nothing, nothing else comes close.

#132 IHCTD9 on 10.13.16 at 11:55 am

#61 Context on 10.12.16 at 9:28 pm

“O’ what a tangled web we weave when first we practice to deceive.” – Walter Scott
__________________________

“Sure…” – Walter White

#133 Victor V on 10.13.16 at 11:58 am

Ontario said to be eyeing subsidies to bolster bottom end of housing market, rather than tax to cool top

http://business.financialpost.com/personal-finance/mortgages-real-estate/ontario-said-to-be-eyeing-subsidies-to-bolster-bottom-end-of-housing-market-rather-than-tax-to-cool-top

Canada’s most populous province is considering measures to enhance housing affordability while avoiding moves to actively lower home prices, people familiar with Ontario’s plans said.

The approach sets up a policy divergence between the provinces overseeing Canada’s two hottest real estate markets. The federal government tightened mortgage rules last week in a bid to temper price growth in Toronto and Vancouver, and this summer British Columbia imposed a tax on foreign buyers snatching up properties in the Pacific Coast city.

Ontario is instead considering affordability measures such as new support for first-time home buyers and more funding for government-subsidized housing, according to the people who spoke on condition of anonymity because the plans haven’t been finalized. That leaves Ontario focused on supporting the bottom end of the market as British Columbia tries to cool the top.

#134 WalMark of Sadkatoon on 10.13.16 at 12:19 pm

#127 mistabills army on 10.13.16 at 11:21 am
There you again….the dollarette will plummet to depths that even Captain Nemo would fear…forget your moonshot

He’s been wrong on the CAD$ for 5 years now. Needs a moonshot to break even lol

#135 Vern from Cowtown on 10.13.16 at 12:22 pm

Wynne wants to subsidize the bottom of the market vs. cool the madness at the top end?

This is shear madness!!!!!!!!!!

http://business.financialpost.com/personal-finance/mortgages-real-estate/ontario-said-to-be-eyeing-subsidies-to-bolster-bottom-end-of-housing-market-rather-than-tax-to-cool-top

#136 n1tro on 10.13.16 at 12:35 pm

DELETED

#137 Eks dee Sipal on 10.13.16 at 12:48 pm

A significant percentage of homes in Toronto and its suburbs have rental suites, mostly illegal, and mostly basement dungeons. Could we fairly put that number close to or above 50%? Maybe. Bill has dropped a bomb on the speculators like bdwy skytrain. As Vince Carter once said with his hands: It’s over.

I have stated before that the crash will include an abrupt 50% decline in prices, followed by an overshoot of the reversion to close to 80% decline in prices before the dust settles. I don’t believe a bubble has ever burst without this happening (in general).

And this is the Mother of all Bubbles. And at the worst possible time, as trade, technology, and demographics give birth to a brave New Global World.

BTW, in case you missed it… Michael Pence (Trump’s VP running mate) is really just Patrick Cassidy, making him the biological son of Hillary Clinton (Shirley Jones). Doesn’t matter who you vote for. Keeping it all in the family. – XD

#138 Ogopogo on 10.13.16 at 12:59 pm

#69 };-) aka Devil’s Advocate on 10.12.16 at 9:56 pm

She was exhausted not from the fight to get business but rather too much demand for her service. This is not an easy market for a REALTOR® to work in. It’s a stress test every day. We are still VERY much in a sellers market. And you are wrong, prices have not fallen… yet. “Yet” does not give you grace… you are still as wrong as wrong can be… there are no deals… prices are strong as demand is strong amid anemic supply.

LOL, how much more of a low(ercase) realtor can you be? I have a folder where I track ALL properties downtown and in Kelowna South and I can absolutely verify that many houses have been lowered two, three and in some cases even more times. I know it goes right against your mantra, but it’s undeniable. It’s empirical. Prices have fallen where I said they’ve fallen.

Read again what I wrote on that score, or is it too much to expect from a realtor?

#139 pBrasseur on 10.13.16 at 1:10 pm

The federal government is on track to run a $34 billion deficit in 2016

http://business.financialpost.com/news/economy/td-banks-expects-canada-to-run-larger-deficits-than-trudeau-budgeted

Some might (and will) say it’s only just above 2% of GDP so no big deal!

But it is actually a very big deal for the following reasons:

1 – It does not take into account the provinces many of which are in trouble with more to come… Counting that we are probably passed the 3% critical point. Ontario debt should hit 300 billion soon, Quebec ‘s debt is growing close to 280G despite claimed zero deficit, even Alberta deficit will be above 10 billion, about 3% of its GDP!

2 – And we’re not even in a recession, what will happen when we get a real slowdown for example if RE slows significantly which frankly should be expected.

3 – Demographics should make us prudent not more reckless when we know for a fact that growth will be harder to find and healthcare costs will be exploding!

T2 seems to be a very effective politician, maybe he will succeed where is dad has failed: bankrupting this country!

#140 jess on 10.13.16 at 1:46 pm

Scottish limited partnership (SLP)
…”businesses that under an obscure reserved Scottish corporate law are allowed to have secret owners, pay no taxes and publish no accounts – caught up in international conroversy, not least in e-commerce.”

canadian connection?

Last week, it emerged that another SLP was at the heart of a $1 billion (£817 million) digital bootlegging case in the United States.

http://www.heraldscotland.com/news/14799577.Scottish_tax_haven_firm_peddling__dangerous__sex_pills/

#141 Ponies Pilatus on 10.13.16 at 1:46 pm

#81 cramar on 10.12.16 at 11:33 pm
A couple weeks ago I heard a radio commentary that because of the CDT (Chinese Dud Tax) in Vancouver that HAM has dried up for residential RE, BUT it has now shifted to commercial RE. Haven’t seen any mention of this on this blog. Does anyone have any insight on this?
———————–
Sadly, nothing is safe anymore.
now they are after our hockey clubs.
Sacrilege!

http://www.cowichanvalleycitizen.com/sports/389123791.html

#142 Smoking Man on 10.13.16 at 1:54 pm

#120 Electric Nikola on 10.13.16 at 10:06 am
#103 Smoking Man on 10.13.16 at 7:48 am
#91 Steve French on 10.13.16 at 1:26 am
Hey Smoking Man:

how’s your hero Donald Trump doin’ today?

That circus freak is completely imploding!

aaahahahahaha.

This is going to be a complete washout that will set back the Republican Party for the next 3 generations…

I foresee a split in the Republican’ts.

Looks like your PhD in Herdonomics couldn’t quite account for dumb a*s Trump.

What a loser. He’s FIRED!

LOL LOL LOL i can’t stop LOLing….
…………………………..

Your drinking again with your bowling shoes on.
..

The Donald is roasted on a stick. Rather fitting. Bet the farm at 400:1. Got for it. You can’t lose!!!!
……………………

Watch and learn my wee grasshopper.
It just astounds me why no one has figured out this pattern.

MSM is loathed and hated as much as Washington. Only people that like em are fairies and man haters.

MSM is salivating with octopus hands today, groppers on planes.

Logically from a mind twisted socialist Canadian perspective you would assume that Trump is done now. USA is not Canada comrades.

Americans are not as stupid as MSM, Canadians and the political elite thinks they are.

The herd down south like a fair fight. And the fight ain’t fair right now and it’s as obvious as it can get.

The backlash will be. More votes for trump, every time these scandals break out, he gets stronger. No one believes octopus lady’s groping story. who happens to be an MSM journalist, and by the look of her hair cut, a Wynne supporter.

#143 pBrasseur on 10.13.16 at 2:00 pm

Investments (through deficits) in «social infrastructures» such as social housing, this is what’s supposed to revive our economy according to T2, Wynn and the likes!

That after years of massive household spending on real estate has failed completely to help create anything close to healthy and viable economy.

After massive government (CMHC) intervention in the credit market has pushed real-estate out of reach for most Canadians, many of whom couldn’t now afford their own home, we’re going to subsidize housing to make it affordable! How more absurd could this get?

#144 Not a big deal on 10.13.16 at 2:01 pm

#88 april on 10.13.16 at 1:00 am
So Vancouver houses are in price decline. Condos also??

If you can call a 2 million dollar tear down reduced to 1.5 million dollars a price decline then you would be correct.

#145 data on 10.13.16 at 2:03 pm

Magic number is 32%. That is how much “less house” one can buy without more money from bank of mom and dad.

#146 Mark on 10.13.16 at 2:09 pm

“Teranet came out this morning:”

The problem is that you’re using Teranet numbers. That’s like living in the past, and quite a bit in the past at that.

#147 Victor V on 10.13.16 at 2:12 pm

Ottawa has no more plans to cool hot housing markets, Morneau says

http://www.theglobeandmail.com/real-estate/the-market/ottawa-has-no-more-plans-to-cool-hot-housing-markets-morneau-says/article32349959/

#148 Toronto_CA on 10.13.16 at 2:20 pm

Re: Property Taxes –
Less sales of houses do mean less land transfer taxes for local governments; but property taxes won’t fall because house prices fall….don’t people realize that? Only if your price falls relative to other houses…if everyone’s assessed value falls in tandem you still pay the same amount as before.

#149 CanadIain on 10.13.16 at 2:51 pm

Interesting personal story about the housing crash in Fort Mac:

https://www.reddit.com/r/personalfinance/comments/579b61/father_convinced_me_to_buy_his_home_so_he_may/?st=iu8pabjv&sh=7de33c1f

#150 };-) aka Devil's Advocate on 10.13.16 at 2:54 pm

#138 Ogopogo on 10.13.16 at 12:59 pm

Sure you know it all, of course you do. You are obviously so knowledgable on Kelowna South real estate you must know about that tear down at 444 Morrison listed for $799,000 after two days selling in a multiple bid for over list?

Look it up, although you couldn’t possibly know about that still to be reported sale. Rest assured my arm chair REALTOR friend.

You want the facts? Email me I’ll provide the data that will prove to you that you don’t know squat.

#151 jess on 10.13.16 at 2:59 pm

metabolic profiling? hilarious

https://theintercept.com/2016/08/23/trumps-new-billionaire-backer-also-funds-huge-stockpile-of-human-urine/

#152 CJBob on 10.13.16 at 3:07 pm

#138 Ogopogo on 10.13.16 at 12:59 pm
I have a folder where I track ALL properties downtown and in Kelowna South and I can absolutely verify that many houses have been lowered two, three and in some cases even more times.
_____________
So, ummm, the listing prices can drop 3 times and STILL be higher than the same or similar homes sold for in previous months and years. Listing price is meaningless to actual price increases. You get that, right?

#153 };-) aka Devil's Advocate on 10.13.16 at 3:12 pm

Kelowna South is by far the hottest market in the Okanagan Valley at this time. I’ve got at least 10 clients wanting/trying to buy in.

There are currently 42 SFD properties for sale in Kelowna South, 109 sales in the last six months. That’s like 2.6 months of inventory. You know what a “Sellers Market” is right Ogopogo? Anything less than 6 MOI.

Sales price to List Price ratio is currently 98.9%. The last complete month (September 2016) Original Price Median was $594,450, Sale Price Median was $656,500. In other words Ogopogo, the Median Kelowna South home has been selling for 10.44% higher than it’s original list price. So much for your claim of a plethora of Kelowna South price reductions.

#154 BobC on 10.13.16 at 3:31 pm

DELETED

#155 CJBob on 10.13.16 at 3:33 pm

#153 };-) aka Devil’s Advocate on 10.13.16 at 3:12 pm
So much for your claim of a plethora of Kelowna South price reductions.
_____________
But you don’t understand, they have a folder!

#156 Context on 10.13.16 at 3:43 pm

#132 IHCTD: – Is that you Harpo? I am sure as Walter Scott wrote the poem Marmion in 1806 about the Battle of Flodden of 1513 and the quote was there as a piece of epic poetry that he alone made famous.

#157 IHCTD9 on 10.13.16 at 3:46 pm

#135 Vern from Cowtown on 10.13.16 at 12:22 pm
Wynne wants to subsidize the bottom of the market vs. cool the madness at the top end?

This is shear madness!!!!!!!!!!

http://business.financialpost.com/personal-finance/mortgages-real-estate/ontario-said-to-be-eyeing-subsidies-to-bolster-bottom-end-of-housing-market-rather-than-tax-to-cool-top
____________________________________________

LOL, nothing like the feds and Ontario working in exact opposite directions. Wild Bill tries to cool things down while Wynne wants heat it back up again lol!

Seriously I wish I was a single lone wolf so I could just pack up and get the hell out of Ontario – I just can’t take any more of that Clydesdale…

So is she helping rural Ontarians get into bottom end 150K houses, or is it just for those poor folks in Toronto who want to get into that beater 800K SFD?

#158 Smoking Man on 10.13.16 at 3:51 pm

This is how you know Trump is surging in the polls. USA about to go to War with Russia. Why is a lame duck POTUS doing this late in his term? Russia asked it’s people last week to bring home kids that go to school abroad immediately.

The machine is going all in to protect it’s power.

Load up on IODIN

http://www.reuters.com/article/us-mideast-crisis-syria-options-exclusiv-idUSKCN12D2B2

#159 IHCTD9 on 10.13.16 at 3:54 pm

#154 Context on 10.13.16 at 3:43 pm
#132 IHCTD: – Is that you Harpo? I am sure as Walter Scott wrote the poem Marmion in 1806 about the Battle of Flodden of 1513 and the quote was there as a piece of epic poetry that he alone made famous.

__________________________________________

I don’t give a crap about Walter Scott frankly. Walter White led a much more interesting life – and his poetry, while more recent, is leagues greater in depth.

One of his most intriguing:

“No, you clearly don’t know who you’re talking to, so let me clue you in. I am not in danger, Skyler. I am the danger. A guy opens his door and gets shot and you think that of me? No. I am the one who knocks!”

#160 rjrt81 on 10.13.16 at 4:13 pm

#113 MF on 10.13.16 at 9:22 am

bragging about sexual assault is sooooooo PC.

#161 Context on 10.13.16 at 4:19 pm

#157 IHCTD9:- Just in case you want to split and change your mind have a bargain for you. Its on sale for $5,000 which is MLS number 7175917. In fact maybe the Smoking Man might be interested in buying for a safe home.

#162 David on 10.13.16 at 4:22 pm

Canadian Prefab Homes :) http://www.lakewoodcustomhomes.ca

#163 jess on 10.13.16 at 4:27 pm

#111 Victor V on 10.13.16 at 9:06 am

re usa job market hiring subsidies (mega deals)

https://www.ft.com/content/ece4da3c-72bc-11e6-bf48-b372cdb1043a
================================
Innovations in Financing Infrastructure
….the use of the mechanism of value capture to finance urban infrastructure — widely used in Latin America, but just starting to get attention in the U.S.

http://www.uixcities.com/

#164 jess on 10.13.16 at 4:51 pm

value capture instruments

value capture for urban development – instrument has a long history

land value increments benefit by public action
Martim Smolka, Director of the Lincoln Institute of Land Policy’s Program on Latin America and the Caribbean, explains how value capture has been implemented in Latin America.
http://www.lincolninst.edu/key-issues/value-capture-property-tax

#165 CanAda is a house of cards on 10.13.16 at 5:45 pm

CANADA is a country that hates free and open markets. What a stupid country. http://www.financialpost.com/m/wp/personal-finance/morgages-real-estate/blog.html?b=business.financialpost.com/personal-finance/mortgages-real-estate/ontario-said-to-be-eyeing-subsidies-to-bolster-bottom-end-of-housing-market-rather-than-tax-to-cool-top. Vested interests cry and cry. No point in working . Time to become a lazy broker or realtor. Joke of a country which hates free markets but likes to believe they are one

#166 crowdedelevatorfartz on 10.13.16 at 10:30 pm

@#165 CanAda

Dude. If yer gonna call the country stupid why dont you call it Can-a-Duh…….?
Just sayin.

#167 rjrt81 on 10.14.16 at 12:35 pm

“Bill Clinton cheats on his wife. Impeach him. Trump proudly brags about sexual assault(and has cheated on his wives). Elect him. Hillary oversaw the department of state when 4 people died in an embassy attack. Put her in jail. 2 republicans were in office when 200 people died in embassy attacks. No problem. Immigrants don’t pay taxes. Round them up and kick them out. Trump doesn’t pay taxes. He’s a business genius. Hillary’s foundation has only spent 87% of their donations helping people. She’s a crook. Trumps foundation paid off his debts, bought sculptures of him, and made political donations to avoid investigations while using less than 5% of funds for charity (and he got shut down by NY state). So savy… Put him in the White House. Trump made $4 billion dollars in 40 years, when an index fund started at the same time with the same “small loans” he received would be worth $12 billion today… without a trail of bankruptcies, thousands of lawsuits and burned small business owners. He’s a real business wiz. Hillary took a loss of 700k. She’s a criminal. Trump is the first candidate in the modern era not to release his tax returns, and took a billion dollar loss in 1 year. Genius. Hillary takes responsibility for private email servers and apologizes. Not credible. Trump denies things (on the record) he said (on the record), he’s just telling it like it is.

Your arguments are thin. Your ignorance of reality is shocking. Your double-standards are offensive, and your willing ness to blindly support him and recycle the rhetoric is absurd. Your opinion is not fact. Your memes are not news articles. And your hypocrisy is not a platform.”

-Patrick Farron

#168 EJ on 10.14.16 at 1:30 pm

Garth, can you please include links to these reports? This is assuming, of course, that they’re available publicly. I’d love to read the source materials. Thanks!

#169 fixie guy on 10.14.16 at 1:58 pm

“Right now bankers have no skin in the game, knowing taxpayers (through CMHC) are on the hook for any and all defaults that might erupt if house prices croak.”

Anyone who still doesn’t get that this is exactly why Canada is in a massive housing bubble needs a recto-cranial extraction. The feds have been paying people to buy houses since Chretien, flooding the market with artificial demand and liquidity. The banks richly profited thanks to Harper.
Next step will be blaming the Liberals for the correction. Expect Conservative shoe pounders in Parliament to begin the blame game any day now.