The harder they fall

tv-crash

“Hard landing.” No, not the Trumpster. Your house.

In living memory, those two words have never before been uttered by an official of the country’s largest bank and mortgage lender, so this is a big deal. Here’s exactly what RBC’s senior economist, Robert (Mayday! Mayday!) Hogue told bank clients in his analysis of what happens next for Canadian real estate:

“We believe that the new measures – that include more stringent and uniform qualifying rules for mortgage insurance across mortgage types – will both speed up and harden the landing that we previously expected to occur in the year ahead, although they are unlikely to cause a crash.”

So, what’s a ‘hardened landing.’ What’s a ‘crash’? What, exactly, is the bank telling us to expect?

The definitions are hazy, fluid and ill-defined, but we know this: the benchmark of a ‘crash’ is now the American experience of 2006-10, when the housing market peaked on excessive debt, over-borrowing and bloated prices, then tumbled for an average price drop of 32% across the nation. It then took a decade before valuations were largely restored, although trillions in equity were forever lost by millions of families. We also know some areas of the States (Phoenix or south Florida, for example) saw price plops of up to 70% in certain zip codes. These had been the epicentres of speculation and bubbly markets.

So RBC says it’s ‘unlikely” we’ll repeat that experience. That’s good. It would drop the average Canadian house by $156,000. The typical detached in Toronto would shed $429,000 and in Van a SFD would be worth almost $500,000 less. But if the US experience were to hold sway here – markets with super-sized gains ending up with King Kong losses – the carnage in the GTA and YVR would be worse. On the West Coast, terminal.

But, relax.  The bank says that’s unlikely. Not impossible. Just (fingers crossed) not a certainty.

So how hard is a ‘hardened landing’?

Even Royal LePage boss Phil Soper is hinting at something bigger around the corner. He’s just called the diminishing year/year gains made in Vancouver that market’s “final hurrah.” It kinda evokes General Custer, doesn’t it? Or the charge of the Light Brigade, or Mike Pence’s career. Sales dropped another 23% last month and in the last two months YVR has already recorded the biggest price plunge in history. Foreign buyers have split. Speculators have vanished. The locals are sitting on their hands. And all that came even before Wild Bill Morneau dramatically raised the bar for moister mortgages, while lowering the boom on the brokerage industry.

An already-teetering market, adds Soper (this time switching to a sports motif), doesn’t need much of a push to fold completely.

“You take a lineman in professional football — a great, big human being — and they’re sort of teetering on their heels. A child comes along and pushes them on their chest and they topple over.”

That’s what the foreign buyers tax did, he says. And the tough-guy mortgage changes which come into effect tomorrow (Monday, October 17th) are likely to have an even more consequential impact.

This is what a hard landing is made of. The federal government itself estimated the impact on sales nationally to be about 8%. Mortgage brokers figure the average moister couple will be able to afford about $150,000 less in mortgage financing, so instead of shopping for a $650,000 house, they’ll be in the $500,000 range. That, of course, means $650,000 houses will eventually become $500,000 houses – since it was cheap money that sent things in the other direction.

A reasonable expectation, then, is a decline 50% less severe than that which tanked America – because we’re (of course) special. So a hard landing might well equate to 15% or a tad more. But not across the whole country. Moncton, Trois Rivieres, Windsor or Estevan will probably see no movement in the needle. Toronto, with its giant economy and undiminished in-migration, likely a 5% to 10% erosion, depending on the hood. Victoria is at risk for a 20% decline over time, and Greater Van will be lucky to escape with a 35% haircut.

Naturally, nobody believes this. It’s what makes accidents so entertaining.

215 comments ↓

#1 For those about to flop... on 10.16.16 at 6:28 pm

This is a map of each American states biggest import trading partner.
Dominated by Canada and China.

Did not think Saudi Arabia would be on the list…

http://imgur.com/aEpwgth

#2 Still employed in AB on 10.16.16 at 6:28 pm

What are your thoughts on the market in Calgary and Edmonton? Is Alberta about to drive off a cliff?

#3 Jimmy on 10.16.16 at 6:30 pm

Accidents are rarely accidental.

#4 mitzerboy aka queencitykid on 10.16.16 at 6:31 pm

thanks garth
its so nice to hear my stompin grounds
is goin to revert back to…

a one horse province
with two-bit cities
and a semi-pro football team …. just the way i like it
it keeps all the really bad people away

#5 For those about to flop... on 10.16.16 at 6:32 pm

This second one is each states biggest export trading partner.

Dominated by Canada and Mexico.

Did not think Australia would be on the list…

M42BC

http://imgur.com/KqSlYBI

#6 Mean Gene on 10.16.16 at 6:33 pm

At this juncture, only time will tell.

#7 Dave on 10.16.16 at 6:41 pm

With the astronomical price gains in the past ten years in most markets in Canada, 15 percent decline is negligible. Though rates will eventually trend up, this low growth environment will keep rates lower than average for years to come. Folks, if you haven’t bought now, you have missed out on a once in a lifetime opportunity for massive price appreciation. Right Garth?

#8 [email protected] on 10.16.16 at 6:44 pm

Greater Van for 35% may be greater if election promises to get tough come into play. I could see the BC Libs expanding the foreign buyer’s tax to the province to get more votes. Still waiting for Ontario to buckle to demands for a tax on outsiders.

#9 Badnerk on 10.16.16 at 6:45 pm

Upcoming job change means a move is in the works, to Ottawa. Good lord, what to do? Currently own in Winnipeg, mortgage-free, worth $450-500K. My inclination is to keep the house, rent it out and rent myself a place in Ottawa. Or, perhaps I should buy a place in Ottawa that I can easily rent a portion of for income?
Oh, first world problems.

#10 MF on 10.16.16 at 6:48 pm

10% in the GTA?

So basically everyone who bought in the GTA won.

What happened to all the benefits of renting and investing?

MF

#11 jay on 10.16.16 at 6:49 pm

Driving around Vancouver and don’t see many for sale sign’s . Is this the calm before the storm?

#12 Post on 10.16.16 at 6:52 pm

A 35% decline? I think you might be suffering from a bit of neuron loss from your 2 day holiday/binge at the general store.

#13 Rexx Rock on 10.16.16 at 6:52 pm

Toronto,Vancouver and Victoria will be spared from a real estate melt down.Average family income of over $100,000 in these cities will have enough money for any downside.Right now Victoria houses sell first day on the market and basement suites can make $3000 a month on airbb.Many rent their houses and condos on airbb and will never rent them out any other way!!

#14 When Will They Raise Rates? on 10.16.16 at 6:52 pm

I think you may be underestimating the coming decline in RE prices, Garth.

Using your example, I predict that $650,000 houses will drop well below $500,000, because once prices have fallen that far, it will be crystal clear to everyone that the bubble has burst (or at the very least that RE is no longer “going up”), and two things will happen:

1) Listings will swell as speculators run for the exits and principal residents try to lock in gains, further accelerating the decline.

2) Buyers will be hesitant to jump into a falling market, adding further downside pressure on prices.

When bubbles pop, they generally revert to the long term trend, and usually overshoot to the downside due to the psychology involved…

Just my $0.02

#15 The Old Ones Know! on 10.16.16 at 6:52 pm

Please Garth, why go easy on the kiddies! Booms bust, that’s what happens. You, like me, remember the 89 – 90 crash. Oh, I know the young ones will be saying “it’s different now” my dad said “rates were in the high double digits and that’s what caused the housing crash.” Blah, blah, blah!

It’s never different folks, it’s just greed and fear, and when fear sets in, the games up!

Don’t kid yourself folks, once the meme changes, the whole thing comes crumbling in. People start running for the exits, real estate becomes a “bad” investment. Talk of, ” oh I know a couple that lost everything” becomes part of the weekend dinner talk and so the music stops.

If people have convinced themselves that things may only correct a small amount, they are in for a world of hurt.

I think the fat lady, has picked out her dress, and she getting ready to come out on stage to sing!

Sell now if your in over your head, because once the music stops, it takes a whole long while to start up again.

#16 Bram on 10.16.16 at 6:52 pm

Greater Van will be lucky to escape with a 35% haircut.

That puts Vancouver prices back to 2014?

So yeah, it seems valid to call that a ‘hard landing’ not a ‘crash.’

Personally I will take my chances on a decade of price erosion. During that decade, countless Vancouver SFH’s will be torn down and replaced by condos. So eventually, it should make my SFH more rare.

It’s kinda like the stock market:
While you wait for depreciated stock to recover, you get paid dividend. (yay!)
While you wait for SFH market to recover, you get to not pay rent. (yay!)

Bram

#17 TurnerNation on 10.16.16 at 6:54 pm

When you live in City of Toronto you see it is run using tyranny of the minority.

Like extensive Agenda 21 initiatives:
– New bike lanes – in this freezing cold 1/2 season climate – reduce traffic to gridlock.
– A handful of developers allowed into 40-80 story condo projects on every other corner.

And,
– Special interest groups shut down major and arterial roads every summer weekend with marathons and bike events.
– Sub standard city services and transportation due to Sunshine List laziness and largess.

Ja ja should I join the Party? Party faithful.

#18 Keith in Calgary on 10.16.16 at 6:56 pm

Yep……..the “economisseds” are out in full force this week, so you can expect to see the usual code words such as “unexpected”…….”surprised”…….”unplanned”…….there is going to be a lot of “uns” in the coming weeks and months as the FIRE industry dodges, weaves, and spins, around the coming collapse.

#19 Smoking Man on 10.16.16 at 6:56 pm

And it begins.

The loony left fire bombs RNC head quarters in Charlotte NC.

Animals.

#20 bubu on 10.16.16 at 6:59 pm

“That, of course, means $650,000 houses will eventually become $500,000 houses – since it was cheap money that sent things in the other direction.”

that is 23% lower…. Hard to believe…. my bet is per region also…. 100-150k less in LML and Toronto, 30-40k less in AB or other locations….

#21 OttawaMike on 10.16.16 at 7:03 pm

Read Cnd. journalist Dan Gardner’s book on predictions.

His premise is that basically all predictions are wrong.

#22 Ardy on 10.16.16 at 7:09 pm

I hope the rest of the home is made of better materials.

No problem with housing that future 50-100 year mortgages won’t fix………except maybe the house won’t last that long.

#23 Sammy the Shnooze on 10.16.16 at 7:09 pm

“Undiminished in-migration”. – Garth

———————————————–

Nice to see that you finally acknowledge one of the many big factors driving RE in TO.

In-migration is not immigration. — Garth

#24 Bram on 10.16.16 at 7:10 pm

#5
This second one is each states biggest export trading partner.

Huh? What on earth is tiny Belgium buying?

#25 Love My Kia on 10.16.16 at 7:10 pm

Any predictions on the Niagara Region?

905 burbs are on fire up til now and I’m wondering what kind of correction that area is going to see. Similar to 416?

#26 In the cold from Toronto on 10.16.16 at 7:16 pm

If the market drops by 15% in Toronto Capital Economics, the Economist, the IMF, and this pathetic blog would be proven wrong. everybody’s been saying in the last five years expect a 25% drop. in the last five years the RE market appreciated by another 25%.

I expect a 50% drop in Toronto based on the above.

If only a 15% drop happenes, the RE bulls, including the RE agents, TREB and the mortgage brokers were right. And you and I (yes, I agreed with your thinking all along) were wrong.

#27 bsallergy on 10.16.16 at 7:17 pm

Sanity approaceth?

#28 Sheane Wallace on 10.16.16 at 7:17 pm

Any attempt to mitigate the coming housing disaster in Canada will be futile. A house that I lived in that sold for 265 k in 1999 is now ‘worth’ 1.6 millions. Sure.

Pass whatever you are smoking.

Reduction less than 60 % in absolute values (considering the crap the CAD has become) is meaningless.

Not that I do care. Canada lost long time ago any attractiveness except to random Asian immigrants, at least by providing relatively ‘clean’, but fluoridated water and free money laundering.

Repeat with me: Nobody cares about Canada’s economy (just watch the discussions on CETA in Europe)

Small extraction third world economy with pathetic oligopolies and monetary policy (just watch the head of BOC).

—————————–

As for Trump: The idiots that attack him do not realise the kind of service they are rendering him.

The best that could happen to Hilary is for Obama and MSM to start the bull..crap they are spewing on daily bases.

Repeat with me: To render the Donald worthless you just need to ignore him. Just leave the guy alone. People are sick with politic correctness more then with anything else. MSM and political strategist would have caught that if they had an QI if at least 85.

Pathetic, pathetic leaderships.

#29 Bdwy sktn on 10.16.16 at 7:17 pm

35% haircut for van!!!!

Funny guy.

Van will be up another 35% before anywhere else in the country except the gta.

With sales dead for a few months now the pent up demand is growing daily. There will be a release. Prices will resume acsent soon.

#30 Sheane Wallace on 10.16.16 at 7:18 pm

The best that could happen to Hilary is for Obama and MSM to stop the bull..crap they are spewing on daily bases.

#31 Randy on 10.16.16 at 7:18 pm

…see what happens when the tide goes out…

#32 So? on 10.16.16 at 7:18 pm

“Naturally, nobody believes this. It’s what makes accidents so entertaining.”

I’m curious… What’s your expectation of where this market is headed, Garth?

#33 Amir on 10.16.16 at 7:19 pm

Long time reader, first time poster.
What ? Garth now your re predicting only a 5-20 % cut in GTA, after all these years you have been forecasting a correction. That will not even erase the gains of thr last year alone??
Please tell me I misunderstood your post.

Yes, you did. — Garth

#34 the other white meat (pork) on 10.16.16 at 7:20 pm

This will be an interesting one in Vancouver because the locals are still horned up for their dream property and I can’t see that demand disappearing any time soon. The guys I know with 50k incomes and two leveraged houses can’t even see the train that’s bearing down on them. Still full of swagger and wearing those excrement eating grins. I still don’t want to see them get wiped out though.

#35 Randy on 10.16.16 at 7:21 pm

Look at the bright side….Your MPAC assessment might go down…
Unfortunately, your property taxes will go way up to cover the loss of free money your government was getting on the land transfer taxes.

#36 Mr Reality on 10.16.16 at 7:24 pm

5 years ago people thought we were crazy renting, now they want to know how i invest the difference in costs between renting and ownership…..

idiots.

Mr R

#37 mark on 10.16.16 at 7:27 pm

Add on another 5-10% for the psychological impact.

#38 Sheane Wallace on 10.16.16 at 7:27 pm

#13 Rexx Rock on 10.16.16 at 6:52 pm
Toronto,Vancouver and Victoria will be spared from a real estate melt down.Average family income of over $100,000 in these cities will have enough money for any downside.Right now Victoria houses sell first day on the market and basement suites can make $3000 a month on airbb.Many rent their houses and condos on airbb and will never rent them out any other way!!

———————

You mean the 76 k average family income in GTA (before taxes!) justifies crappy condos at 600k, semis in Mississauga for 650 k+ and houses in Mississauga for 900 k that were worth 200 k in 2002, aloing with crappy 1.2 mil houses in Toronto that were worth 200 k in 2003?

Sure, soft landing…

Whatever. housing in Canada’s major cities – GTA Van City, Calgary,…etc. is over 200 % overvalued.

Correction is due accompanied with inevitable contraction in economy.

#39 Pillboy on 10.16.16 at 7:32 pm

Went to the grand opening of Central Park here in Hamilton this weekend just for fun. You’d think there was a Black Friday sale going on. People are asking how they can get their names in on the list of buyers with urgency. For one of the biggest purchases to be made in an instant of sitting down with a rep in about a week and a half is insanity. I cannot fathom how the prices are skyrocketing here in the Hammer to Toronto prices.

#40 Sheane Wallace on 10.16.16 at 7:33 pm

#13 Rexx Rock on 10.16.16 at 6:52 pm
Toronto,Vancouver and Victoria will be spared from a real estate melt down.Average family income of over $100,000 in these cities will have enough money for any downside.Right now Victoria houses sell first day on the market and basement suites can make $3000 a month on airbb.

—————

Here I had to go to the washroom. Form of severe diarrhea.

Only a brain-frozen idiot would make that statement.

3 k for a basements ‘apartment’ on Air BNB when no one else in the world lives in basements?

You man need some very serious professional psychiatric help.

#41 Chris L. on 10.16.16 at 7:48 pm

So everyone should have bought real estate every year except the last one?

#42 Context on 10.16.16 at 7:51 pm

Real Estate prices will fall in Toronto on average like an avalanche on speed with a few false bottoms on the way down. It will take a few years to assess the train wreck, divorces, and dead bodies about the area. Once bottom hits there will be no recovery for at least a decade. The bubble in question is massive and Newton’s third rule will dominate but 50% loss of tax free capital is not out the final equation. Condos will be hit the hardest and the rest of housing types will take their turn.

#43 Rob on 10.16.16 at 7:55 pm

#19 Smoking Man
“The loony left fire bombs RNC head quarters in Charlotte NC.”

Maybe, maybe not. I’m reading reports where some think that it was really Trump supporters who did it – in retaliation for those GOP’ers who have bailed out on Trump.

#44 S.Bby on 10.16.16 at 7:58 pm

Van SFH prices already down $500,000 from last spring. Burnaby house prices continue to drop by $1,000 a day. It’s a bloodbath out there.

#45 Millenial-falcon on 10.16.16 at 8:00 pm

Vancouver decline by %35. So if u bought 2 years ago your still way ahead.

#46 Grey Dog on 10.16.16 at 8:02 pm

9 Badnerk,
What are the chances of ever being recalled to Winnipeg? This is your opportunity to check out. Company may pay for ALL of the expenses for move…this may include them buying your Winnipeg home! My inlaws…at one time had two houses in Calgary one they were living in, which was for sale PLUS the one they had bought and were planning to move into in a couple of months. Company bought BOTH absorbed all costs and moved them! Face it, chances of Winnipeg going UP UP UP is next to nil.

Ottawa is cheap compared to Toronto…rent…if money tight, and if it is a transfer that will see you moving on in a couple of years. As Garth says this is your chance to INVEST.

(I have a friend that bought 4 years ago in Moncton, then lost job…found a new one in Winnipeg two years ago, guess what CANNOT SELL MONCTON home…2 years on the market!)

Good luck with decisions. Let us know final results.

#47 Harbour on 10.16.16 at 8:10 pm

I remember the 80’s run and crash.

I bought a house for 73K that had dropped from 125K

So it took about a 40% hit

#48 stage1dave on 10.16.16 at 8:13 pm

As we’ve re-upped for another winter’s worth of rent on our hovel, thought I’d see what other thoughts existed on renting vs. owning and ran across this site (and thread)

http://www.doctorhousingbubble.com/rent-prices-drop-in-10-of-top-12-us-markets-us-rental-rates/#comments

Lots of discussion about the west coast (LA – SF) rental rates, and reasons for such. Pretty crazy rental numbers anyway….I found it interesting that a few commenters figured the housing crash itself was partly responsible (in conjunction with a few other things) for these rent increases.

Things have sure changed since I was down there!

#49 common sense on 10.16.16 at 8:22 pm

When in the official announcement of WW3?

#50 Highway61 on 10.16.16 at 8:23 pm

#2 Still employed in AB on 10.16.16 at 6:28 pm

To answer your question in a considered manner: no.

#51 Mark on 10.16.16 at 8:23 pm

“What are your thoughts on the market in Calgary and Edmonton? Is Alberta about to drive off a cliff?”

Calgary/Edmonton peaked in 2011, and houses have routinely been available for 20-30% off of peak 2011 prices over the past year or two. So yes, there will probably more of a leg down, but nowhere near as severe as is unfolding in Toronto/Vancouver.

#52 Highway61 on 10.16.16 at 8:23 pm

Consise

#53 For those about to flop... on 10.16.16 at 8:25 pm

Check out this piece of comedy gold.
This is a house about 3 blocks from where I live and is the most recent sale in a 5 block radius to my knowledge.

In a declining market someone rushed in after the changes were announced and paid 1.325 when they were asking 1.399.
At least the block is big enough to accommodate a laneway house.

The real people when got burned this summer were the developers who paid 1.4 for a knockdown who was asking 1.2 and found out a few weeks later that the 15% Not From Here Tax was being suddenly introduced in an already cooling market.

According to zolo my neck of the woods is the 5th hottest neighborhood in Vancouver.
A few blocks east the Knight corridors the 4th coldest.

Even at 50% reduction I would not be a buyer on Knight st…

M42BC

https://m.youtube.com/watch?v=_jn-6e1W8-U

#54 Mark on 10.16.16 at 8:31 pm

“Personally I will take my chances on a decade of price erosion. During that decade, countless Vancouver SFH’s will be torn down and replaced by condos. So eventually, it should make my SFH more rare.”

Why? Vancouver’s market is already physically oversupplied significantly. The only case for building more condos is financial speculation, and the window for that has been shut. Additionally, SFH pricing already includes a substantial component in speculation of such.

In a nutshell, you could find yourself in a situation much akin to owning a gold mine in 1980. Sure, gold eventually went higher, but it took 3 decades and there were giant opportunity costs which you may never recoup.

#55 the Jaguar on 10.16.16 at 8:34 pm

RBC is the least likely of the five to ‘pull punches’. Of the ‘five’, they have the clearest idea of who they are and who they intend to serve. FYI, it isn’t “everyone”. If your request is not on their menu board they won’t be shy about telling you it is not in their financial interest. Go elsewhere There is no identity crisis at RBC. I admire them for this stance. So statements coming from their direction hold more weight for me than the Benjamin Tal’s of the world.
The brakes are being applied, whether by the Feds, CMHC, anxious but cautious buyers, or other less obvious market forces. House prices aside the real scary part is the enormous consumer debt levels in the average Canadian household. Most of that debt is asset backed. A lack of discretionary income to buy all those little luxuries isn’t a problem when creditors wait in anticipation to provide the necessary funds. Who cares if a new Ford F150 Crew Cab costs upwards of $90,000 with all the ‘fixins’. Everyone else is driving one, right? I would challenge all who read this blog to seriously review who you owe and what would happen if the plug was suddenly pulled on your universe. It’s not a taunt, just a suggestion.
The Jaguar moves panther-like, unencumbered by debt, but aware of the impact it has on other’s lives. Your world can turn upside down when you least expect it. Think like a Marine – even if you are Canadian.

#56 the Jaguar on 10.16.16 at 8:36 pm

Improvise – Adapt -Overcome.

#57 conan on 10.16.16 at 8:36 pm

Pretend for a moment that you are a Small Claims Court Judge. Is it the contractor or the TV mounter that is at fault?

#58 MF on 10.16.16 at 8:37 pm

#19 Smoking Man on 10.16.16 at 6:56 pm

Should be interesting to see how the media reluctantly reports the attack on the Republican office

I can see it now:

“Local heroes eradicate hate center from community -CBC”

MF

#59 fleabitten monkey on 10.16.16 at 8:37 pm

#13 Rexx Rock – I have seen you assert an avg family income in Victoria of over $100,000 before which I can’t find anywhere in census data. Do me a favor and send me the source link to this “fact”. Pls and thanks.

#60 the Jaguar on 10.16.16 at 8:38 pm

Correction ….that was meant to say ” not asset backed”..

#61 JimH on 10.16.16 at 8:39 pm

#242 NEVER GIVE UP on 10.16.16 at 3:22 pm
“It’s astounding that the American people could propel a candidate like Trump so close to the White House!
I feel embarrassed for our southern neighbors.
The fact that Trump could have gotten so far speaks volumes about the average intelligence level of our Southern neighbor. Having said that they likely have more genius level IQ performers than we have citizens in Canada!

What a sad state of affairs.”
========
Just a couple of points here, my friend:
“The American people” Certainly did NOT propel this sick excuse for a man so close to the White House.
He WAS propelled there by a slight majority of registered Republicans; a group totalling about 30% of the American voting public. (There are about the same number of registered Democrats, and about 40% that claim Independent status.
While I understand the sentiments that actuate your response, please do not feel embarrassed for us. Instead, let the rise of this belligerent, bigoted blowhard serve as a cautionary tale to all those everywhere who are aware of just how frail all democracies are. If a total bozo can rise to the forefront of the party of Abraham Licoln here, you can rest assured that one is waiting in the wings in all democracies everywhere.

Cheers

#62 Chaddywack on 10.16.16 at 8:44 pm

Vancouver….. 35% seems a bit steep. I thought the entire world wants to move here and real estate only goes up!

I wonder how my former colleague’s three houses he bought in East Van earlier this year are doing. Cash flow positive I’m sure he’d tell me. Definitely know he would at least have no trouble finding a tenant.

#63 Last SK Pirate on 10.16.16 at 8:47 pm

@Badnerk consider the tax implications of having your winnipeg house lose it’s status as your primary residence…

#64 Joseph R. on 10.16.16 at 8:52 pm

Accident? not according to Evan Siddall ( President and CEO of CMHC)

The intended consequences of the new housing policies:

http://www.theglobeandmail.com/report-on-business/rob-commentary/the-intended-consequences-of-new-housing-policies/article32383166/

#65 Don Regan on 10.16.16 at 8:55 pm

First of all Garth, I want to thank you for keeping this Blog going. It offers many insights, opinions, and ideas from your readers. I am aware of a scenario
in Vancouver, where a person lived in their house for over
35 years and had clear title. They had heard and read about all the money being made flipping RE. In July they
put their house on the market for 2 Mil and thinking
it would sell based on multiple offers, went out and
purchased a smaller home for $1.5 Mil in the same area.

Due to the fact they were both retired, they couldn’t
qualify thru the bank and used a Mortgage Broker for interm funding.
Since August they have dropped the $2Mil price down to $1.9 Mil and have moved into the smaller house. They
now have an empty house and the second one has dropped in value.

Now what’s really interesting is that we just heard about a similar scenario that is playing out in Tsawwassen.

I hope those of you who think that situations like this
don’t happen, they do! I don’t know how many hundreds or
thousands of people are hooked in similar circumstances but I’m betting there are a few!
Once again this Blog offers opinions and in most cases the facts.
Thank you Garth

#66 Bytor the Snow Dog on 10.16.16 at 8:58 pm

@21 Ottawa Mike-

So lemme get this straight. A guy is predicting that all predictions are wrong? Right?

#67 Andrew t on 10.16.16 at 8:59 pm

#19 Smoking Man on 10.16.16 at 6:56 pm
And it begins.

The loony left fire bombs RNC head quarters in Charlotte NC.

Animals.

Not cool at all, coming right after those domestic terrorists were foiled in Kansas. Homework assignments tonight is to find a positive news item about people helping other people. It’s not healthy for relationships to go to bed despairing for humanity.

#68 JacqueShellacque on 10.16.16 at 9:01 pm

I know predictions are dangerous, Garth, and I respect you making some. But aren’t they a lot on the conservative side? Here are some gross generalizations: in Canadian metropolitan areas most bilious, StatsCan says median family income is between 75,000 and 100,000. Let’s say 85,000 to keep it simple. Traditionally, house prices were about 3 times family income. So we’ll say $255,000 as the long-term trend price of a house. Give Toronto a 20% premium, GTA outside Toronto and Van a 10% premium because of their (alleged) livability. So $300,000 for Toronto, $280,000 for GTA and Van. I find it hard to believe that under the present economic circumstances we won’t be headed to this sort of long-term mean, which would represent a much more substantial drop than you’re predicting.

#69 Terrence on 10.16.16 at 9:01 pm

Look for prices of homes to keep skyrocketing, for at least another year or mabey two! Garth have you ever been wrong before? If you have, what makes you think your right this time around?

#70 Barb on 10.16.16 at 9:05 pm

“…I could see the BC Libs expanding the foreign buyer’s tax to the province to get more votes.”

———————————————————-
BC Libs have hit the jackpot with all this previously-unforeseen money. More votes? Not their motivation: money first, as B.C. isn’t as flush as they’d have you–and the media–believe.

#71 MSM-Free Zone on 10.16.16 at 9:06 pm

“….Foreign buyers have split. Speculators have vanished…..”
_________________________

Can’t really see any downside on that, particularly those who were turning once vibrant family communities into weed-infested, algae-pooled ghost towns.

No, I was not referring to the Trump supporters. — Garth

#72 Smoking Man on 10.16.16 at 9:07 pm

#21 OttawaMike on 10.16.16 at 7:03 pm
Read Cnd. journalist Dan Gardner’s book on predictions.

His premise is that basically all predictions are
wrong.

………

It happens every time with humans , being a star surfing Alien my calls are bang on..you all know it.

The Savage road trip into the heart of America is post poned. The damn dog sitter got job. Shit. Going take them with us. Probably leave on tus or wend.

Made a pit stop going home tonight. Back at Seneca Niagara. Place is sold out. Yet we got the presidential suite. On the top floor.

I should really start monitoring what the hell my wife is spending.

But them some wild freak show of a feminist might take liberty with that. Call me names.

#73 totalchaos on 10.16.16 at 9:09 pm

We bought in 1992 in the Vancouver burbs and have renovated over the years. We have about 400k in our house total. Running 400k through a Canadian inflation calculator and its about 600k in today’s dollars. Prices were high in 1992 and houses typically track inflation.

In April, houses like ours were being listed for 1.3 and selling between 1.4-1.5 million in bidding wars. If we get away with only a 35% haircut, we will be so freaking lucky.

#74 Saint Herb on 10.16.16 at 9:12 pm

Do all bubbles revert to the mean?

Garth showed a chart for the mean in Vancouver and it showed that the average price needed to drop by 1M to get to 500k mean price. That seemed drastic, but is it possible? Thats a 66% drop.

What is the mean price in Toronto and the GTA? How many percent does the average need to drop to revert to the mean price again? What year does that bring us back to?

I have gone from not wanting to overpay for a house and renting for a while, to being priced out of where I live in the GTA. I don’t need a correction or a hard landing or even a crash. It seems I need a complete collapse of real estate. House I looked at for under 1M 4 years ago is for sale again for 2.4M (no changes made). I thought is was to much then, imagine what I’m thinking now. Not sure if there is light at the end of this tunnel, or if that is a train coming at me.

Only time will tell….

#75 Basement_Dweller on 10.16.16 at 9:16 pm

10% decline in GTA? That is a single year’s gain. How is then real estate a bad investment? You get 10% stock market declines every couple of years.

Very disappointing. Reading this blog for a number of years is equal believing that the earth is flat.

Now where did this blog ever say to expect more than a correction, then a slow melt? — Garth

#76 45north on 10.16.16 at 9:17 pm

Mortgage brokers figure the average moister couple will be able to afford about $150,000 less in mortgage financing, so instead of shopping for a $650,000 house, they’ll be in the $500,000 range.

sure if you own your house outright you can lower the price from $650,000 to $500,000 but if you’ve got a big mortgage you won’t be able to sell it at all.

#77 Smoking Man on 10.16.16 at 9:20 pm

#43 Rob on 10.16.16 at 7:55 pm
#19 Smoking Man
“The loony left fire bombs RNC head quarters in Charlotte NC.”

Maybe, maybe not. I’m reading reports where some think that it was really Trump supporters who did it – in retaliation for those GOP’ers who have bailed out on Trump.
….

Obviously your reading MSM reports writeñ by the Clinton foundation operatives. I read some emails from Wikileaks. Damn she really dispises the little people. Blacks, woman, Hispanics. Just stupid little voters.

Yet on her knees to Goldman Sackes.

I got to get to the bottom of this. Road trip coming my dogs .

Crazed gonzo jeurnaliism will be reserected. Mis spelling yes. But who cares as long as the truth is in there somewhere.

#78 bob on 10.16.16 at 9:21 pm

35% haircut
on top of last year’s 31% increase

is a whopping 4% decline… over 2 years…

when you say “this doesn’t end well”… you should have mentioned that applied to people who didn’t buy in the last 10 years.

#79 World Series on 10.16.16 at 9:27 pm

I’d expect far more of a drop….45%.

#80 crowdedelevatorfartz on 10.16.16 at 9:30 pm

@#2 Still employed in edmonton.

You must work for the govt. …..judging from the cars with Alberta licence plates on every street in Vancouver……………everyone else has left……

#81 Martin Cross on 10.16.16 at 9:36 pm

Garth, if prices drop as you predict they will only drop to levels that you said were unaffordable a few years ago. Will those levels be sustainable once they are arrived at on the way down, and if so, what will be different from the situation on the way up, when you said they were not sustainable?

#82 For those about to flop... on 10.16.16 at 9:38 pm

#24 Bram on 10.16.16 at 7:10 pm
#5
This second one is each states biggest export trading partner.

Huh? What on earth is tiny Belgium buying?

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

Hey Bram,dunno what’s going on between Belgium and Delaware.

Not too sure what’s going on with Nevada and Switzerland either

However , I suspect United Arab Emirates major purchase in Washington D.C is politicians…

M42BC

#83 Smoking Man on 10.16.16 at 9:39 pm

DELETED

#84 KAK on 10.16.16 at 9:41 pm

#16 Bram

Wow, lucky you. I had to rent money from the bank for 20 years to buy my house. Even now it’s paid off I still pay Property Tax and ongoing maintenance costs.

Why don’t you expect home prices to revert to the long term average like they usually have? Remember Vancouver’s crash in 1982? Prices dropped between 40% and 60%.

#85 The Great Gazoo on 10.16.16 at 9:43 pm

In the cold from Toronto – Post #26

“If only a 15% drop happenes, the RE bulls, including the RE agents, TREB and the mortgage brokers were right. And you and I (yes, I agreed with your thinking all along) were wrong.”

Count me in too as being dead wrong all these years, if only a 15% drop happens from the peak.

#86 Karma on 10.16.16 at 9:51 pm

Interesting read on Russia-US rivalry on Syria

http://www.aljazeera.com/indepth/opinion/2016/10/syria-talks-urgent-question-161016101833968.html

#87 BG on 10.16.16 at 9:52 pm

Why is Montreal getting so little love on this blog?

Second largest cities in the country, yet not mentioned when Toronto and Vancouver are, and not even mentioned when Trois-Rivières is.

#88 Context on 10.16.16 at 9:53 pm

The last major bubble was in 1989 as the one during the financial crisis didn’t count because it was a minor reaction as part of the whole. It took from 1989 to 1996 for a real bottom to hit in the GTA; parts of Toronto began an earlier recovery and values went straight up to 2016. The current bubble is massive compared to 1989 so how many years will it take to hit a real bottom? Those who bought into the dream will be watching all their capital melting away year after year and it will be like sitting in room 101 to face your greatest fear.

#89 World Series on 10.16.16 at 9:54 pm

DELETED

#90 cd on 10.16.16 at 9:59 pm

The percentage predicted will be different for each price range. I think the higher the price, the less regression to the normal since the higher priced stuff is usually owned by people with solid incomes and can afford a bump in rates. On the other hand, the modestly priced homes will have a some quite a bit problems. Especially in the new year with a new pres and congress that want to do stuff (which will give a short term boost to the US economy).

Also if hillary wins, the markets will enjoy it since they already know the rules to the dem. game. The markets want predictability. So the markets don’t take off too much, yellin will tap the brakes a couple of times… that is increase rates.

#91 shaking.my head on 10.16.16 at 10:17 pm

“Toronto, with its giant economy and undiminished in-migration, likely a 5% to 10% erosion, depending on the hood. ”

I suppose giant economy relative to hamlets and towns like Ottawa or Montreal or Bradford.

To me it seems like most jobs are govt, construction and Finance. Not exactly diversified.

#92 Metaxa on 10.16.16 at 10:35 pm

#43 Rob:
Maybe, maybe not. I’m reading reports where some think that it was really Trump supporters who did it – in retaliation for those GOP’ers who have bailed out on Trump.

It was a nice conversation about real estate until the post you are responding to.
I’m surprised a well read, intelligent, highly evolved person would have missed that, only to hurl another provocative yet unsubstantiated insult at the left.

#93 Steve French on 10.16.16 at 10:35 pm

My UCC spidey-senses are tingling again today..

there’s a disturbance in the force.

I’m telling you guys, something wicked this way comes….

Everybody knows that the boat is leaking
Everybody knows that the captain lied
Everybody got this broken feeling
Like their father or their dog just died….

#94 bb on 10.16.16 at 10:37 pm

5%-10% decline in GTA prices is chump change to sellers. Even last summer one can always bid 10% less to the seller to buy condos. House sellers still profit from a 10% discount too.

What is interesting though is this: Will the sellers try to rent out their rooms/basements/condos/houses if there are less buyers? They will surely hope that prices will go up again after a while.

#95 Mike on 10.16.16 at 10:46 pm

Oh henny penny Turner , ups and downs yes but the sky is not falling.

#96 Berniebee on 10.16.16 at 11:00 pm

After years of exhilarating price gains, there are many Lotus Landers who think Vancouver house prices cannot fall substantially.

Living there during part of the boom, I bought, held for five years, and sold. I pocketed my short cut to retirement and hopped on a plane.
And now Vancouver’s average SFH price is at roughly a million.

I do understand the mentality. In spite of all the middle class earners living in basement rentals, commutes from Abbotsford or further, with months of grey rainy weather at a time, with east Hastings street a horror story worthy of any American big city slums, with many jobs paying LESS than in other areas of the country, people there still believe that Vancouver is somehow impervious to a stiff correction. Like why Kim Khardasian is famous, Vancouver real estate is expensive…because it’s expensive.

I disagree with a 35% drop. 50% to 70% seems so much more likely. Like the Titantic, once the propellers are up in the air and the ship is plunging straight down, the speed of descent will just accelerate.

#97 Smoking Man on 10.16.16 at 11:01 pm

Why this song keeps popping in my head

https://youtu.be/_FydwthgLeM

#98 It's diff this time...not on 10.16.16 at 11:09 pm

How can it be diff when you have the similar ingredients to what caused the usa crash?

https://www.youtube.com/watch?v=RrFSO62p0jk

#99 N on 10.16.16 at 11:11 pm

Toronto, with its giant economy and undiminished in-migration, likely a 5% to 10% erosion, depending on the hood.
– OK. Kind of makes me wonder whether saving towards down payments by investing in blue chip stocks are worth it. Home prices seem to be beating it hands down.

#100 Van Detached on 10.16.16 at 11:13 pm

FACT Vancouver houses are down 20% from peak already. FACT. Another 20% down will become FACT. Possibly more. Listings are not skyrocketing yet… most want to spend 1 last xmas before spring avalanche o listings.

#101 DM on 10.16.16 at 11:17 pm

I’ve lived through six boom and bust cycles during my life (my job had me hopping all over North America) and the pattern was always the same. The first year of the bust was one of shock, the second consisted of waiting and denial and the third year was about migration. This last cycle is unique because there is no up and coming boom provinces or states to migrate to. The down cycle in these areas lasted between 8 and 15 years. This means your debt must be close to zero and your assets liquid if you want to make it to the next boom cycle intact.

Someone told me recently that “lessons are repeated until learned” …I’ve learned my lesson during the first bust. Have a backup plan, do what you enjoy and remember value is poles apart from price.

#102 YVROptimist on 10.16.16 at 11:27 pm

Sooooo, a 1/3 cut in the value of my home? Bought 13 years ago at $409K, probably worth $2M June the 1st of this year… One third of $2million is… carry the three… a ‘loss’ of $660K?

I could easily see that. And I live in East Vancouver. Really East Vancouver. $1.3M for my place is still a hideous sum for this shack, but probably more in line as to its value.

For some of the properties on the West Side I think only a 35% drop might be lucky.

#103 AisA on 10.16.16 at 11:33 pm

What, soft landers still exist?
I coined that term by they way. lol

#104 Karma on 10.16.16 at 11:48 pm

Trump inhabiting his own echo chamber:

https://www.washingtonpost.com/politics/inside-donald-trumps-echo-chamber-of-conspiracies-grievances-and-vitriol/2016/10/16/1c3c6a72-921e-11e6-9c85-ac42097b8cc0_story.html

#105 Mikey on 10.16.16 at 11:49 pm

People rarely mention Saskatchewan. Specifically Saskatoon. Ps Thanks for the Estevan reference Garth! I get it. We’re a small Province, roughly 3% of overall population. Who cares. But it’s very interesting what’s happening. Seems like nobody (at least homeowners who bought 2011 or sooner) wants to admit we’re in a correction. Stubborn naivety perhaps. Yes, long term (2025 maybe) may look good assuming another commodity supercycle occurs, but all I see is a city that concluded a 6-7 year bull run with a nasty hangover and no relief on sight. Countless overpriced listings sit for months with no buyers in site. New neighbourhoods coming online with excess inventory lingering from previous developments. A lot of desperate cheerleading and denial. It won’t make headlines but Saskatoon is gonna see more pain. This is just the beginning.

#106 Victor V on 10.16.16 at 11:52 pm

A 5 – 10% drop in prices may not sound like much, but would represent a 100% loss of equity for those with small down payments who’ve bought more recently or over-extended themselves.

#107 Metaxa on 10.17.16 at 12:12 am

Story Time.

I’ve taken to going off topic on the odd Sunday to tell a story or two that hopefully illustrates how a person that needs the career can add additional income in order to begin power investing.

I guess its a decade or more ago but I was surfing the government of BC site where they post contracts they want to have filled. Every Provincial government will have one and provincial contracts are easier to grab than Federal.
Anyway I saw that the power utility had a new program whereby they would pay a homeowner to properly dispose of their old or second fridges. They needed contractors to pick up and take the units to the recycle yard.
Lots more detail involved but I was awarded a contract and held it for two years before a large company underbid me…but let me tell you about those two years.

I leased a truck, hired a labourer, did the logistics for a couple of hours twice a week and we actually went out to work on Tuesdays and Thursdays only.

I always bought lunch, paid my guy real well, bought his gloves and boots, maintained the truck to a high standard, etc.

Each of those two years left me with $125,000 after all expenses, before taxes. That is a quarter million in total in case my writing is not clear.
For working two days a week.
We sometimes worked more days but the contract had language in it that paid surcharges for that because of the isolated and remote places we had to drive into…part of the reason it was so lucrative.

I could easily have also hired a driver along with the labourer and still held down a 9-5 job AND still would have made huge money.

Now, not all government contracts will be like that…it was like winning a lottery but you really should book mark your local government’s bid site and peruse it from time to time. You never can tell…and if you are in the mood for making money it can be done.

#108 rjrt81 on 10.17.16 at 12:14 am

#80 crowdedelevatorfartz on 10.16.16 at 9:30 pm

You must work for the govt. …..judging from the cars with Alberta licence plates on every street in Vancouver……………everyone else has left……
——————————————————————–

thought i was the only one who noticed. can’t shake a stick without hitting a red plate.

#109 Bram on 10.17.16 at 12:17 am

#84 KAK on 10.16.16 at 9:41 pm
Why don’t you expect home prices to revert to the long term average like they usually have? Remember Vancouver’s crash in 1982? Prices dropped between 40% and 60%.

You are right about the long term trend.
Over centuries, house prices are exactly matching monetary inflation.
For kicks, here is some price data from the year 1620 (!) onwards:
https://en.wikipedia.org/wiki/Herengracht_index

But in this case, it is different.
1982 Vancouver is a provincial town without international significance, and a moderate national significance.

2016 Vancouver is no longer provincial, it is an international city that, for varied reasons, draws in migrants.

A house in Vancouver in 1982 ≠ a house in Vancouver in 2016.
Normal price development does not apply.

Sure, it is no London, no Tokyo and no New York, heck not even a Toronto.
But then, it is no London Ontario either.
It’s a place where population and economy are growing.
And unlike 95% of Canada, it actually has a bearable climate.
Also, she is much prettier than her sister ‘Seattle’, I might add.

#110 Henry penny on 10.17.16 at 12:20 am

Talk about a hard fall and why rates will never go up without mass global catastrophe first sinking every government. It is a fact that governments have added trillions…many trillions of dollars in EU UK and Dollars etc in self owned debt. They can’t raise rates because every budget will collapse

#111 M on 10.17.16 at 12:30 am

50% baby… 50%

http://www.torontocondobubble.com/2013/02/toronto-housing-bubble-in-1980s.html

PS enough of dogs.. show some babes Gartho…

#112 Cashed out YVR Feb '16 on 10.17.16 at 12:31 am

It’s interesting watching the calculations of average or median income and home buying capacity under the old rule and the new Wild Bill rules. People know the Canadian economy is 15-25% real estate. If real estate takes a 20% hit then house buying capacity takes a 5% hit then now real estate takes another 5% hit to a 25% drop.

But that’s not in a vacuum either. Oil is about to drop again so incomes will take another hit. $50 oil has buffered some housing weakness especially in AB,that will end. No one will have the money to prop up oil in war anyway.

Oil will go back to $25 and combined with the weak Canadian economy the Loonie drops further.

Notice the Loonie dropped even though oil was going over $50 the past week. If that doesn’t show weakness then watch the Loonie when oil starts dropping again.

Weak oil, housing and the Loonie will takes its toll. If the median income was $75k make it $60k. If you want to buy the biggest house you can at $550k now it’s $450k and then you have no money left for anything denominated in USD like groceries from down South.

Here in North Vancouver I have never seen as many Open House signs as today Oct 16.

Buddy in Upper Lonsdale just dropped selling price from $1.8 to $1.5. But noone comes to the opens.

YVR will drop 50-60%, a standard Fibonacci retracement.

Got cash?

#113 Irent on 10.17.16 at 12:31 am

Garth sir, if 10-15%is the modest decline/correction we are heading towards in GTA, do you still have the Get Out sign on display for ppl? Can it really wipe out their retirement and their world will come down shattered?

#114 april on 10.17.16 at 12:37 am

#61 – Some analysts saw the rise of someone like DT years ago. It has nothing to do with the IQ of the American people. It’s been brought on by people’s dissatisfaction with the establishment and it’s not only in the US. People around the world are fed up with government corruption.

#115 Tiger1960 on 10.17.16 at 12:42 am

#28 Sheane Wallace
Vancouver ,and the Gvrd do not put fluoride in the water we consume.
Would provide link , but me and my crew pulled an all niter chasing fallen trees on Hwy 1 .
Keeping the gong show flowing(traffic and drivers)

#116 Fed-up on 10.17.16 at 12:46 am

The fact is no one has the slightest clue. This market has completely baffled me over the years with its relentless ascension to new levels of insanity. It seems to me that a lot of predictions might be heavily under the influence of wishful thinking. The so-called price crash in YVR seems to be heavily debated and contradicted by many on the ground, to say the least.

The only facts are the ones that sit clearly in our rear-view mirror:

-Canadians are house obsessed
-We’ve allowed far too many unqualified buyers to take on far too much debt
-It’s been far too easy for new arrivals and offshore buyers to gobble up huge amounts of real estate in areas that are already woefully under-supplied
-Reckless lending, interest rate and insurance practices abound and far too common in Kanaduh
-All other measures have done absolutely nothing to curtail this raging bull of a market
-So far, anyone who did not buy in the past 15 years has lost out, BIG TIME. No point in denying it.

And most importantly, the vast majority of us here who comment on and follow this blog including its esteemed author, who I am sure had nothing but good intentions and has attempted to perpetuate logic in the face of madness, have been proven dead wrong for nearly a decade.

Only time will tell but I am not holding my breath.

#117 Tiger1960 on 10.17.16 at 12:51 am

http://yourwatermatters.com/vancouver-water/about-fluoride-and-water-in-metro-vancouver/

#118 fleabitten monkey on 10.17.16 at 12:52 am

#13 Rexx Rock – Helmet Pastrick of Central Credit 1 Credit Union came out a couple days ago and said he expects Vic Prices to come down 5 – 10 percent. Now, this guy has being who he is and working for who he works for has NEVER come out and being anything but a housing bull so long as I have seen him in the press in the last 8 or so years. If this man is calling for a 5-10 percent correction, you can bet it will be more than that.

#119 Ex-Cowtown on 10.17.16 at 12:58 am

#78 bob on 10.16.16 at 9:21 pm
35% haircut
on top of last year’s 31% increase

is a whopping 4% decline… over 2 years…

when you say “this doesn’t end well”… you should have mentioned that applied to people who didn’t buy in the last 10 years.
====================================

I hope you have someone else do your taxes and books for you. Your math sucks, and here’s why:

Lets start with a $1,000,000 house. Add in a 31% increase. This gives you a house price of $1,310,000.

Now take a 35% decrease, which is $1,310,000 X 0.65 = $851,500. It works like this because a 50% loss wipes out a previous 100% gain. Don’t feel bad though, most people don’t get this either.

So back to the example, and you actually lost $148,500 on your initial $1,000,000 investment, which is a 14.8% loss, not a 4% loss. Your loss is almost 4X larger than you think and wipes out all of your equity unless you paid at least 20% down (because you also need to include CMHC fees, transfer taxes and sales commissions as contingent liabilities to account for stuff properly).

Math is hard. And nothing lasts forever but the earth and sky. And massive debt from math challenged decisions.

#120 ulsterman on 10.17.16 at 1:17 am

It’s tough to admit but if you’ve been sitting on the sidelines for 5-10 years in Vancouver then anything but a house apocalypse leaves you on the losing end of that bet.

In N Burnaby a 60% crash would still only take prices back to about 2006 – when i originally thought they were too pricey. So i’d get to buy in at 2006 prices in one presumes a rising interest rate environment. I’ve missed out on a) appreciation, b) not moving every 3-4 years, c) the peace on mind of not wondering if the owner will sell or want to move in, d) the ability to make improvement to parts of the house if i wish, e) the many tax benefits of ownership, and finally, f) the pleasure of not having to use the words “my landlord.” If this decline is anything less than 50%, Vancouver renters are still well behind their owner counterparts. Unless that is you are like most on this blog who went all-in around March 2009 in the market and made millions ;)

#121 Ronaldo on 10.17.16 at 1:19 am

#68 JacqueShellacque on 10.16.16 at 9:01 pm

I know predictions are dangerous, Garth, and I respect you making some. But aren’t they a lot on the conservative side? Here are some gross generalizations: in Canadian metropolitan areas most bilious, StatsCan says median family income is between 75,000 and 100,000. Let’s say 85,000 to keep it simple. Traditionally, house prices were about 3 times family income. So we’ll say $255,000 as the long-term trend price of a house. Give Toronto a 20% premium, GTA outside Toronto and Van a 10% premium because of their (alleged) livability. So $300,000 for Toronto, $280,000 for GTA and Van. I find it hard to believe that under the present economic circumstances we won’t be headed to this sort of long-term mean, which would represent a much more substantial drop than you’re predicting.
====================================
Yes, when houses were 3 times average income interest rates were around 10% and the cost to carry such a place (PIT) was around 1/3 of gross average income.

So, if the income is today 85000 and 1/3 of that is around 28000 then at today’s interest rates of say 2.5% you can afford a home valued at $900,000. It all has to do with interest rates. If rates increase to 5% then affordability drops in half to $450,000. As long as interest rates remain low as they are, prices will not come down so drastically. Who would have thought that interest rates would remain at emergency levels for going on 8 years?

#122 BS on 10.17.16 at 1:47 am

Rate Spy calls and end to the party. Not just the high ratio stuff.

For those of you who haven’t bought yet, and have less than 20% equity and higher debt ratios, the government is crashing your party come Monday. You’ll have to prove you can handle a payment at a lofty 4.64% rate. That’ll slash your maximum theoretical mortgage by at least 18% compared to today.

But not just the high ratio stuff. Rates are going up on uninsured mortgages too.

Uninsured mortgages remain available without any new strings attached, but again, those often come with higher rates and all require at least 20% down.

Then Rate Spy comes up with this bold and earth shattering prediction. OSFI will ask that low-ratio bank borrowers be “stress tested” also and that could happen by next spring or possibly sooner. Wow all mortgages may have to qualify for the 4.65% rate. A crash would be a best case scenario if that happens.

The Spy says: October 16, 2016 at 10:30 AM
Thanks Paolo, The change on Oct. 17 hits the 20-25% of high-ratio buyers with above-average debt ratios. That’s a segment mostly made up of first-timers. Home values in most markets, especially weaker markets, will be under pressure. High-demand regions and high-end homes will withstand the change better, at least until OSFI asks that low-ratio bank borrowers be “stress tested” also (that could happen by next spring, possibly sooner).

https://www.ratespy.com/temporary-reprieve-low-ratio-mortgagors-10143324#

#123 Long-Time Lurker on 10.17.16 at 1:48 am

Lots of comments here. I didn’t read them because I might have lost my train of thought.

The Feds slamming the breaks is a bitter pill to swallow but the alternative would have been much worse.

A U.S. style housing crash would have led to a banking crisis. The banking crisis would have led to a credit crisis. The credit crisis would have completely shut down the economy and the country would have gone into a depression.

The U.S. just dodged the bullet but just barely. If we had the same kind of business and government leadership as the U.S. (and other countries) we’d be totally screwed.

Oh Canada!

#124 Tony on 10.17.16 at 1:56 am

Re: #51 Mark on 10.16.16 at 8:23 pm

Edmonton peaked way back in the summer of 2007.

#125 Damifino on 10.17.16 at 2:14 am

Soft landing, hard landing… no one seems to get it. It’s the landing part that’s the problem, not the modifier used to describe it.

Would you rather the value of your real estate falls 30% over a month or over two years? They are equally bad in the long ran.

#126 Andrew t on 10.17.16 at 2:39 am

#85 The Great Gazoo on 10.16.16 at 9:43 pm
In the cold from Toronto – Post #26

“If only a 15% drop happenes, the RE bulls, including the RE agents, TREB and the mortgage brokers were right. And you and I (yes, I agreed with your thinking all along) were wrong.”

Count me in too as being dead wrong all these years, if only a 15% drop happens from the peak.
—-
I might be mistaken but I read these possible devaluations as being a direct result of the new regulations only. If that’s the case, there’s still the matter of the behemoth household debt and just how close some people are to capitulating under debt pressure.

#127 Rational blance on 10.17.16 at 2:44 am

Where did you come up with those random cities that will not be impacted, pulled them out of a hat?

Estevan is already seeing a declined due to lower oil activity, and they had flooding this summer. I think its safe to say that the Estevan’s needle has already moved, and has a long ways to go unless oil prices rebound. Ps, its an oil town, kind of like Fort Mac, have you bin?

#128 PeterfromCalgary on 10.17.16 at 3:20 am

Maybe a crash in Vancouver housing will make them more open to building pipelines. I can always dream!

#129 MSM, Realtors, Banks = Moving Past the Denial Phase on 10.17.16 at 3:29 am

After 6 months of observing what the subject group have been talking about regarding YVR RE, you have to shudder.

These past 6 months have been “death by a thousand cuts”, a downward saw-toothed curve of lowered expectations and/or outright lies about YVR RE.

So when a major banks says “hard landing” and the head of a major RE firm says “final hurrah”, you know it will be MUCH WORSE than they say.

The next step left down that lowered expectation/saw-toothed curve is:

CRASH.

What I cannot wait for is the:

Anger Phase.

Based on the past 6 months worth of creativity or outright lies, the Anger Phase ought to be the STUFF OF LEGEND.

bsant

#130 juno on 10.17.16 at 3:54 am

Housing rates expect to rised : read below

http://www.theglobeandmail.com/report-on-business/rob-commentary/the-intended-consequences-of-new-housing-policies/article32383166/

Remember the questionnaire ask about mortgage rates. A large percent of our society would not be able to cope with a rise in rates. Now that the banks has to back the money they lend out. Will cause banks to select only the cream of the crop and spit out the losers.

As for the ones remaining, will definitely have their rates rise, due to a lack of competition, because by changing banks means a re-assessment of your allowable max loan. This is sweet to the banks because their underwriting will be busy no renewing any of the previous bad loans they gave out, due to non their state of the art assessment and stress test (which was …. What is your postal code.

This may cause a chain reaction which will trigger many small cycles of price reductions over a period of 3 years.

#131 El Doode on 10.17.16 at 4:24 am

A 35% drop in Vanc is going to benefit the HAM on top of the cratering loon. They’ll throw a party that we have made our homes so cheap. A money launderer only wants to get his crooked money out of the country. They don’t care about price or tax. That’s why they’ll bid a million over asking. Sales may be down but not among HAM

#132 IHCTD9 on 10.17.16 at 4:33 am

The initial drop in big city RE in Canada after measures taken is only the first salvo IMHO. The economy, job market, wages, and interest rates all have yet to weigh in post red-mist.

In the not too distant Future, we’re all going to be looking at an entire Country that has financial holes punched in it similar to what Ontario looks like right now.

Bottom line, big city wages stagnate or drop outside the public sector as job competition increases due to more immigration, and more overall unemployment. Hillary is in, rates may rise again. Canadian economy will continue to coast for the foreseeable future. Government revenues are tanking, while spending (on useless crap) by T2 is orgiastic.

It’s going to take years yet, but 50% drop minimum on big city urban detached homes will happen. Buying now will prove fatal, and said buyers will likely not see the return of their target sell price in their lifetime.

In short, fear hasn’t really happened yet, but it will…

#133 NEVER GIVE UP on 10.17.16 at 4:35 am

Jim Hutchison #61
Thank you for your comment. I see and agree with your point. There are weaknesses in democracies and I think more work needs to be done in our democracies to protect us from demagogues obtaining power. You are 100 percent right that this could happen in any country with a Democratic political system.

As a Canadian who cannot vote and participate in the u.s. election. I feel rather susceptible to powers that are entirely out of my control. Your election could cause me to lay off employees and could cause a complete change in my business plan. If Trump was truly against NAFTA then I may not be able to expand my business into the United States where I am planning to go next.
I have no control over what happens but the United States government has a lot of control over what I do. We are nothing but a pimple on an elephant’s ass here in Canada!
CHEERS!

#134 #101 YVROptimist - Look to the Market on 10.17.16 at 6:55 am

You are an optimist and I admire you for that.

The reality is that Van East Detached Average price, as of Oct. 9 is (per Zolo.ca):

$581K ($546K Median)

0 Detached and 0 Townhouse sales. A total of 14 units sold, all Condos. Admittedly, scant recent information or in other words, nothing else is selling other than cheap properties.

William Wat, local Van East Realtor advertisement Sep. 15: “East Vancouver Housing Market Collapsed?” along with the words “huge price reduction” – he is not kidding. He shows a chart with the house price line dropping near vertical and provides house price reduction examples anywhere from $265K to $454K per home.

That was a month ago, pre-Morneau measures that kick in today.

List you home, get offers…that is the market value of your home not what you think it is or what the home down the street sold for or what the list prices are in your area.

bsant

#135 AfterTheHouseSold on 10.17.16 at 7:07 am

FCA workers ratify new auto labour contract.

“FCA has committed to building a new vehicle in Brampton if the provincial and federal governments provide financial support and it meets market demand.”

http://business.financialpost.com/news/transportation/fcas-canadian-workers-vote-70-1-in-favour-of-new-labour-contract

#136 Ace Goodheart on 10.17.16 at 7:25 am

RE: “Toronto, with its giant economy and undiminished in-migration, likely a 5% to 10% erosion, depending on the hood.”

Detached houses in Toronto aren’t going down in price anytime soon. Condos probably (especially older ones). There are just too many people here and there is a huge economy. Every day Toronto’s two main feeder highways (DVP and Gardiner) become slow moving parking lots as all of the people who can’t afford to live here take a 2-3 hour drive in their cars to get to their jobs. Highway 401 crawls. The 400 moves like a line to get into a Victoria Day fireworks show, often all they way up to Highway 9 / Newmarket.

All of these people have jobs. Good jobs. They all would live in Toronto, if they could afford a house.

Toronto is the jobs capital of Ontario. All of the work is here.

We have a scant supply of older detached houses and almost no new ones.

When people occasionally sell a detached house (usually because the owner died and the kids can’t agree on who gets the house) 20-30 people show up and make bids.

If 10 of those people are using CMHC (unlikely, but maybe) then you only get 20 bids. Maybe some of the commuters will sense a softening of the market and start trying for a house again.

It’s not going down here, unfortunately. I would like it to, but the prices of detached houses in Toronto are not going to be affordable.

#137 Victor V on 10.17.16 at 7:29 am

CMHC to issue first ‘red’ warning for Canada’s housing market

http://www.theglobeandmail.com/real-estate/the-market/cmhc-to-issue-first-red-warning-for-canadas-housing-market/article32386112

Canada’s housing agency is raising the alarm over the country’s real estate sector, warning about a strong risk of problems on the horizon.

Canada Mortgage and Housing Corp. will increase the risk rating in its overall assessment of the country’s residential market to “strong” from “moderate” when it issues a new report on Oct. 26.

“CMHC has recently observed spillover effects from Vancouver and Toronto into nearby markets,” CMHC chief executive officer Evan Siddall said in an opinion column in The Globe and Mail. “These factors will be reflected in our forthcoming Housing Market Assessment on Oct. 26. They will cause us to issue our first ‘red’ warning for the Canadian housing market as a whole.”

#138 #29 Bdwy sktn - A Reminder... on 10.17.16 at 7:32 am

Optimist or Realtor? I like optimist and I admire you, but facts, are facts.

Define “soon” in “Prices will resume acsent soon.”

If you look at your Burnaby ‘hood, Oct detached prices are falling and new detached listings have much lower prices.

Here are a few houses, no moss, older, average, at the previously unheard of list prices under $1 MM list:

$860,000
3 bd 1 ba 964 ft2 Built in 1950
5955 Arbroath Street Burnaby Metrotown, 12 days

$888,000
3 bd 1 ba 1188 ft2 Built in 1948
8059 16th Avenue Burnaby East Burnaby, 13 days

$948,000
6 bd – ba 2237 ft2 Built in 1968
8496 16th Avenue Burnaby East Burnaby, 70 days

Or Oct reductions, not reduced new listings already at these prices or lower, no moss here either:

$1,380,000 ($170,000 price reduction on Oct 13)
4 bd 2 ba 2234 ft2 Built in 1959
6871 Carnegie Street Burnaby Sperling-Duthie

$1,148,000 ($101,000 price reduction on Oct 5)
2 bd 2 ba 1335 ft2 Built in 1999
8607 10th Avenue Burnaby The Crest

$1,458,000 ($140,000 price reduction Oct 7)
5 bd 3 ba 2809 ft2 Built in 1976
4031 Parker Street Burnaby Willingdon Heights

bsant

#139 jess on 10.17.16 at 7:51 am

Ignorantia juris non excusat or ignorantia legis neminem excusat

“I had no knowledge of, or participation in… the listing of my name as a director’ of offshore firm”

By Zach Dubinsky, CBC News Posted: Sep 22, 2016 4:15 PM ET Last Updated: Sep 22, 2016 4:15 PM ET

#140 Dominoes Lining Up on 10.17.16 at 8:08 am

Today is Big Domino Day.

Looking back from the future, this day will be seen as the time when FOMO was in a three-way, head-on crash with loss aversion and financial reality.

A fittingly huge, emotional domino toppling over in our streets and in the minds of millions, starting today.

#141 IHCTD9 on 10.17.16 at 8:14 am

#61 JimH on 10.16.16 at 8:39 pm

Just a couple of points here, my friend:
“The American people” Certainly did NOT propel this sick excuse for a man so close to the White House.
He WAS propelled there by a slight majority of registered Republicans; a group totalling about 30% of the American voting public. (There are about the same number of registered Democrats, and about 40% that claim Independent status.
While I understand the sentiments that actuate your response, please do not feel embarrassed for us. Instead, let the rise of this belligerent, bigoted blowhard serve as a cautionary tale to all those everywhere who are aware of just how frail all democracies are. If a total bozo can rise to the forefront of the party of Abraham Licoln here, you can rest assured that one is waiting in the wings in all democracies everywhere.

Cheers

____________________________________________

I think this statement needs a bit of “refinement”. There is nothing “frail” about a democracy that elects a lunatic to lead. They may have shot themselves in the foot (or maybe not), but the majority has spoken as it was designed to do.

Trump has come far in the USA, while Austria almost got their own Trump, The anti-immigration/protectionists have risen in popularity in every major economy in the EU, even in Scandinavia.

The American people DID push Trump as far as he has gotten thus far – who did if not them? You may not like this fact, but your countrymen DO like Trump in large numbers – near majority numbers at times.

The lesson that I am sure has already been learned by future would be politicians is that there is a fat slice of support in the 1st world for any contender who can espouse anti-immigration without sounding like a lunatic.

Trump could have won this election – he won’t, but what comes next? You think that which made Trump so popular will die with his failed bid for POTUS? Not a chance, this sentiment is increasing the world over. I wonder how bad things will be after 4 years of Hillary? Bad enough for Trump #2 to win?

Times are tough, folks are pissed, you can almost guess what happens next.

#142 MF on 10.17.16 at 8:27 am

#115 Fed-up on 10.17.16 at 12:46 am

The reason I think there has been so much conjecture is because the world post 2008 is different. Never before has there been so much government stimulus and manipulation.

The average Joe is doing what he always does, follows the trend.

I think we all thought the emergency measures (ZIRP/NIRP) would have been removed by now.

The reality is the central bankers are all out of ammo and are terrified to remove the stimulus. So the asset bubbles get bigger and bigger (stocks/bonds/RE). The next downturn (inevitable) will see the CB’s get obliterated and will lead to changes. It’s just a matter of time and I think everyone knows it. We just don’t know when.

MF

#143 Renter's Revenge! on 10.17.16 at 8:30 am

#120 Ronaldo on 10.17.16 at 1:19 am

Not to split hairs here, and I’m sure we used different assumptions, but by using an online mortgage calculator and the following assumptions:

25 year amortization
Monthly payments

$28,000/year would service:
a $260,000 mortgage at 10% interest,
a $400,000 mortgage at 5%, and
a $520,000 mortgage at 2.5%.

So it looks like house prices have increased beyond what interest rate-based affordability would dictate, leading me to the belief that there is a psychological component as well.

I think a reversal in the psychological component would have a bigger impact on house prices than an increase in interest rates.

Maybe an increase in interest rates would lead to a reversal in the psychological component??

#144 isuckless on 10.17.16 at 8:48 am

Although I agree that the correct is logical, no sane government will allow industry that amounts to 25% GDP to disappear.
I predict slow “correction”, maybe up to 25% over couple of years (cumulative, don’t quote temporary 35% in VAN).
Too much is riding on the coats of the RE for Liberals to allow return to normalcy.
I am afraid of the future (not only because of US elections)

#145 IHCTD9 on 10.17.16 at 9:06 am

#134 AfterTheHouseSold on 10.17.16 at 7:07 am
FCA workers ratify new auto labour contract.

“FCA has committed to building a new vehicle in Brampton if the provincial and federal governments provide financial support and it meets market demand.”

http://business.financialpost.com/news/transportation/fcas-canadian-workers-vote-70-1-in-favour-of-new-labour-contract
___________________________________________

Same deal GM got – “Sure we’ll keep them on if the government makes it worth our while…”. Unifor and Dias should be offering their membership a rebate of paid union dues…

#146 MF on 10.17.16 at 9:38 am

135 Ace Goodheart on 10.17.16 at 7:25 am

Yeah right. I’ve lived in Toronto my whole life. I remember My dad (now retired) used to get up early and sit in traffic for an hour back in 1995. It stayed the same up until he retired a few years ago.

What was traffic like in 2009 compared to today?

The same.

That market, like all markets, is driven by cheap credit, zirp and speculation. Nothing more.

Garth is just being nice. This thing should take 10 years to bottom 30-50% cheaper.

MF

#147 Jay on 10.17.16 at 9:50 am

Reading some of the hubris in here, you’d think nobody’s been to this dance before.

“Oh, I can handle losing 15%!” — sure, maybe you can. However; how about the other effects along the way?

Can you handle your house taking years to sell to get that price? Better start buying your boss coffee every day, it’d be a shame if you lose your job and you’re stuck in a house you can’t sell.

Can you afford increased interest rates? You’re filled with hubris at 2.5%, but are you so haughty at 5%? How about the average historical rate of 8%? Can you even qualify for a mortgage at 8%?

How about that slow thaw? Every year, you’re paying maintenance, taxes, interest, and your equity is slowly eroding thanks to inflation. Every year, you’re getting poorer while any other investment is growing, and doesn’t have all these costs tacked on.

Also, don’t assume that you’ll be in a market that will recover. Las Vegas lost huge amounts during the housing crash down south, and it never came back. You can’t tell me there’s really a reason for house prices to be 5 times income in Winnipeg or Regina. I’m still waiting for my bre-x, Nortel, Enron, and pets.com stock to recover. Any day now.

Leverage. It’s an amplifier. It can amplify gains well past what you could have achieved with cash, or it can amplify losses well past what you can afford to pay back.

#148 trading with Belgium on 10.17.16 at 10:03 am

#24Bram

#5
This second one is each states biggest export trading partner.

Huh? What on earth is tiny Belgium buying?

******

Belgians love their Belgian Waffles with Maple Syrup.

Trades are settled through Euroclear Bank SA in Brussels. The volume is huge. Digital trading.

#149 CMHC a house of cards on 10.17.16 at 10:06 am

125 Andrew t

That is the big domino stupid realtors and mortgage brokers don’t understand or want to be in denial. A very large unknown number of leople are maxed out on debt ; we’re able to keep borrowing since fake equity kept going up. Now that fake equity will start to go down those maxed out will be forced to sell or getc foreclosed. SINCE debt to income ratio is 170% we know that number of unknown people who will be forced to sell or be foreclosed on is a HUGE number. The house of cards will be crashing down

#150 Smoking Man on 10.17.16 at 10:30 am

Killed an entire bottle of JD last night. Damage, one ear is malfunctioning. Totaly def.
Nasty hangover or what.
Thumbs still working but shaky

1 Assange Internet cut.
2 RT bank accounts sized in London.
3 Iraq kicking ISIS ass in Mosal
4 Trump Landslide in real polls.

Add it all up. Good morning WW3

#151 Spectacle on 10.17.16 at 10:40 am

Reply & addition to #17 TurnerNation:

Great posting TurnerNation ! For those who do not know about the Agenda-21, it has now been changed to Agenda 30 . ( control the dialogue, choose the terms and definitions= Total Control of the population of Earth).

Sinister stuff, and seeing what a 15% tax can do to tip real estate……..wait to see what September 17 ,2016 brings, and now Agenda 30.

How Many Have Heard of the UN’s Agenda 30? | – Fred Sauer Matrix
http://www.fredsauermatrix.com › how-many-…

#152 Boombust on 10.17.16 at 10:40 am

#137…

That house on 16th Ave. in Burnaby has had TWO MAJOR price reductions.

A flip gone badly, I think.

#153 Eks dee Sipal on 10.17.16 at 10:45 am

So, they are using the Siddall character to put a friendly face on the impending housing crash. Yes, crash. Garth can’t legally say it, but I can, your friendly anonymous internet dude. Go Jays Go.

So, I was looking at photos of Evan Siddall, a supposed University of Guelph graduate … OMG. Ears match Carney’s, whose wife Diana Fox is the sister-in-law to LORD Robin Cayzer, 3rd Baron Rotherwick. Can someone get me a photo of Siddall’s wife-slash-spouse-slash-girlfriend-slash-boyfriend? I’m short on time and there is ZERO info out there on a quick search… hmmm https://twitter.com/ewsiddall

Remember when Dalton McGuinty ran away after we exposed him as actor Rob Lowe? And how Rob Ford was “killed” off after I exposed him as Chris Farley? T2 is Brent Gretzky, just look at the spouse match. T1 is slightly hard to see if you are not de-programmed, but 100% true, T1 is indeed Walter. Go to a used bookstore and pull out photos of Walter Gretzky from an old yearbook or such. Match the ears to P.E. Trudeau. Anyone with working eyes can do it. This also means that sports are fixed. But we’ll deal with that later, it’s too much for now, I know. – XD

#154 socratease on 10.17.16 at 10:49 am

#21 OttawaMike on 10.16.16 at 7:03 pm

Read Cnd. journalist Dan Gardner’s book on predictions.

His premise is that basically all predictions are wrong.”

So he is predicting that predictions(including his) are wrong?

#155 calgary phantom on 10.17.16 at 10:52 am

So for those that are not satisfied with the election in USA: How do you get even? Its called dont file taxes with the IRS, ever again. 1040 you say? What is that?

Why does it even matter when the money that is printed by the government has no gold standard? Need more money says the US government? Just print more!

I dont and wont support a government fueled by lies. What is irrelevant is who gets in. For the fools that vote Hillary in, they get to listen to her annoying voice for another 8 years. If Trump gets in then expect more craziness. Either way it sucks.

Expect a mass exodus to somewhere at the November election. Some may say Trump is bad, but Hillary Clinton is pure evil.

#156 Greaterfool Dead on 10.17.16 at 10:52 am

Neurotics on this blog don’t get sarcasm. Steer away from it Garth, or try 1-800-helpline.

#157 TurnerNation on 10.17.16 at 10:53 am

Good posts today Sheane Wallace I see you must be on the JD and making some sense – blocking out all that over education.

#158 IHCTD9 on 10.17.16 at 10:54 am

The median family income in Toronto is estimated at 76,000.00 for 2015. That’s $8000.00 less than 6 years ago.

In my small Ontario town, MFI is 70,000.00 as of 2011, it is probably higher than that now.

The reality is that there is no wage premium whatsoever gained by living in Toronto circa 2015/16 forward.

The GTA has some appeal due to the large ethnic enclaves that allow newcomers an easy transition immigrating to Canada, that’s about it.

Let’s just be honest – the GTA literally stinks, the city is brimming over, the employee market is overstuffed, the traffic has got to be some of the worst in the world, born Canadians are a minority here, immigration will continue to swell the employee market, and trample wages further into the ground.

Not to mention that the RE pricing literally requires you to blow out your frontal lobe with a 12 gauge in order to believe any of those shacks are worth the asking – forget about bidding up.

A Chinese guy I used to work with was more revealing than most when he explained why he was commuting 2 hours East of Toronto to work where I worked (yes he lived in the GTA, fought the insane traffic, paid the stupid rent to live in a dump, and drove 4 hours per day to work in small town Ontario). I told him He could buy a real nice place for 250K out here and have a 10 minute commute on quiet, smooth roads – why the hell are you doing what you are right now?

“My wife does not speak English”

“My wife does not want to live out here” [among us rednecks]

That is why the GTA is brimming in a nutshell, it is why the GTA has the problems it does, and with T2 at the helm these exact problems will keep getting worse.

Think about it, The median family income in the GTA pretty much puts a young couple financially on par with a couple making minimum wage just about anywhere else in Ontario if home ownership is in the plans…

#159 Braj on 10.17.16 at 10:57 am

#106 Metaxa on 10.17.16 at 12:12 am
Story Time.

I’ve taken to going off topic on the odd Sunday to tell a story or two that hopefully illustrates how a person that needs the career can add additional income in order to begin power investing.

I guess its a decade or more ago but I was surfing the government of BC site where they post contracts they want to have filled. Every Provincial government will have one and provincial contracts are easier to grab than Federal.
Anyway I saw that the power utility had a new program whereby they would pay a homeowner to properly dispose of their old or second fridges. They needed contractors to pick up and take the units to the recycle yard.
Lots more detail involved but I was awarded a contract and held it for two years before a large company underbid me…but let me tell you about those two years.

I leased a truck, hired a labourer, did the logistics for a couple of hours twice a week and we actually went out to work on Tuesdays and Thursdays only.

I always bought lunch, paid my guy real well, bought his gloves and boots, maintained the truck to a high standard, etc.

Each of those two years left me with $125,000 after all expenses, before taxes. That is a quarter million in total in case my writing is not clear.
For working two days a week.
We sometimes worked more days but the contract had language in it that paid surcharges for that because of the isolated and remote places we had to drive into…part of the reason it was so lucrative.

I could easily have also hired a driver along with the labourer and still held down a 9-5 job AND still would have made huge money.

Now, not all government contracts will be like that…it was like winning a lottery but you really should book mark your local government’s bid site and peruse it from time to time. You never can tell…and if you are in the mood for making money it can be done.

Awesome story.. I assume this can be done only if you are incorporated? Or something of the sort? Not as an individual though?

#160 maxx on 10.17.16 at 11:00 am

“You take a lineman in professional football — a great, big human being — and they’re sort of teetering on their heels. A child comes along and pushes them on their chest and they topple over.”

Puuhlease. Dramatize much, Soper?
It’s high time these predictable, boring and childish sway tactics were kicked to the curb.
It’s time to make way for something better. Way better.
Our government has done precisely what it should, has deployed beautifully and I sincerely hope that there is more to come. Much more.
We CANNOT build a successful country upon the slavery of debt.

#161 Damifino on 10.17.16 at 11:01 am

#13 Rexx Rock

Many rent their houses and condos on airbb and will never rent them out any other way!!
———————————-

Beware… the tax man cometh!!

#10 MF

10% in the GTA? So basically everyone who bought in the GTA won.
————————————

Not yet. They still have to crystallize the gain, and reinvest with diversification. Then they’ll be ahead.

#162 BS on 10.17.16 at 11:09 am

136 Victor V on 10.17.16 at 7:29 am

CMHC to issue first ‘red’ warning for Canada’s housing market

When the government turns against an asset time to take notice. You have to think we are not too far away from the masses realizing this bubble is done and a rush to the exits.

#163 Greaterfool Dead on 10.17.16 at 11:42 am

I like the irony of Trudeau supporters making fun of Trump supporters.

#164 @133 - Bsant on 10.17.16 at 11:52 am

Thanks for the Zolo numbers, but *what*? Average DETACHED home in East Vancouver at $581?

I know the market might be stagnating, but there has to be an error in there, somewhere, unless prices have come off by $600K in the last 60 days. Have you seen the prices around here? Anything detached in East Van was at least $1M the last time I looked.

Honestly, I don’t really care what my home is worth – I’m not moving anywhere. I agree entirely that my $1.3M number might well be nothing more than a guess. And I agree entirely that the market will dictate the price, no matter how much I believe in my assertion.

My point was that I could see an easy 35% correction in this market. Even in my previously ‘hot’ area of Grandview.

YVROptimist.

#165 Greaterfool Dead on 10.17.16 at 12:07 pm

“Harder they Fall”
https://www.youtube.com/watch?v=caaazgtsgzE

#166 SeeB on 10.17.16 at 12:17 pm

Ugh, for you “MSM” hating dingbats that think the firebombing will get pushed under the rug or spun as a positive:

http://lmgtfy.com/?q=RNC+headquarters+in+Charlotte+firebomb

Local democrats in North Carolina were raising money to get them back up and running. In my opinion, sane folk, despite any political leanings, want to see anything like this happen on their soil.

Garth, your blog comments are mostly a sounding board for lying (possibly trolling?) nut-bars.

#167 Karma on 10.17.16 at 12:17 pm

“Rising sea levels and a falling margin of safety”

https://blogs.cfainstitute.org/investor/2016/10/11/rising-sea-levels-and-a-falling-margin-of-safety/

#168 more like a fool on 10.17.16 at 12:22 pm

#137 #29 Bdwy sktn – A Reminder… on 10.17.16 at 7:32 am
“Optimist or Realtor? I like optimist and I admire you, but facts, are facts…..

….bsant”

FYI fact about Bdwy sktn – he drives 80km (one way!) to stateside costco to save couple bucks on eggs, milk & gas. Millionaire lol

#169 Victor V on 10.17.16 at 12:28 pm

Bank of Canada’s Stephen Poloz to keep close eye on impact of new mortgage rules

http://business.financialpost.com/news/economy/poloz-to-keep-close-eye-on-impact-of-new-mortgage-rules

OTTAWA — It’s a safe bet the tighter federal mortgage rules that are kicking off Monday will be greeted with a big sigh of relief by the Bank of Canada.

The air has been coming out of the Vancouver property balloon ever since Ottawa rolled out its plans to tighten lending regulations two weeks ago. As a result, home sales and prices are down significantly in West Coast hot spots, while Toronto — the country’s other price topper — has, so far, been less affected by the government’s changes, announced by Finance Minister Bill Morneau on Oct. 3.

But central bank governor Stephen Poloz will likely take that early market reaction as a good start to treating a major policy headache: keeping interest rates low, maybe even lower, to generate economic growth without adding to household debt.

#170 Victor V on 10.17.16 at 12:29 pm

Rob Carrick: On a scale of 1 to 10, what’s your level of worry about the housing market right now? 1 is unworried, 10 is very afraid.

https://www.facebook.com/robcarrickpf/posts/1191757614205585

#171 Rexx Rock on 10.17.16 at 12:32 pm

In many areas of Victoria the avg family income is way over $100,000.You have to remember its a affluent city and even the less skilled workers do ft and pt ,bring in at least $75,000 a year.In top of that many households rent rooms to international students for $800 a month tax free.One single mother I worked with had 4 and worked part time.
As for airbb,its happening baby.Its a cash cow or gravy train whatever you want to call it and its tax free until the government finds out.The vacancy rate here is a big fat 0% because of this lucrative business.

#172 Karma on 10.17.16 at 12:32 pm

“27 Charts on the US economy”

http://www.vox.com/new-money/2016/10/10/12933426/27-charts-changing-economy

#173 Karma on 10.17.16 at 12:33 pm

“We’re all a little biased, Even if we don’t know it”

http://www.nytimes.com/2016/10/07/upshot/were-all-a-little-biased-even-if-we-dont-know-it.html?action=click&contentCollection=The%20Upshot&module=RelatedCoverage&region=EndOfArticle&pgtype=article

#174 Victor V on 10.17.16 at 12:36 pm

How Canada’s new mortgage rules could shake up the “shadow banking” sector

http://www.canadianbusiness.com/economy/how-canadas-new-mortgage-rules-are-shaking-up-the-shadow-banking-sector/

When Finance Minister Bill Morneau unveiled tough new mortgage eligibility criteria for homebuyers and lenders on October 3, the goal was to take some of the energy out of the speculation-driven residential real estate market, especially in large urban regions like Greater Toronto and Vancouver. The changes, which took effect on October 17, will have a significant impact on the country’s mortgage industry, too—either helping fuel the growth in private, unregulated lending or causing a shakeout in that sector, with potentially problematic ripple effects.

The big question now is whether the borrowers turned away by traditional lenders because of the stricter rules will just abandon or delay their home-buying dreams, or seek out more expensive loans issued by the private lenders that are neither regulated nor required to carry mortgage insurance. The answer depends entirely on whether the government’s move succeeds in its goal.

#175 more like a fool on 10.17.16 at 12:45 pm

http://www.bnn.ca/chinese-real-estate-billionaire-says-customers-troubled-by-vancouver-tax-1.586823

“…Wu says the tax won’t deter him from plans to invest more than $100 million over the next two to three years to build mainly residential properties in Canada for Chinese buyers…”

Who allows these kind of people to this country??? This is like a slap in the face.

#176 Chopper Dude on 10.17.16 at 1:07 pm

Hard landing or a crash…what’s the difference?

Few years ago I had a HARD LANDING in a helicopter. Machine was a bit bent, my neck and back have never been the same…but I was back flying a couple days later.

A CRASH would have killed me.

Just a thought….

#177 Ace Goodheart on 10.17.16 at 1:16 pm

RE: #145 MF:

“Yeah right. I’ve lived in Toronto my whole life. I remember My dad (now retired) used to get up early and sit in traffic for an hour back in 1995. It stayed the same up until he retired a few years ago.”

Yes if you want to drive. I have lived in Toronto since 2012. Not very long I admit. I never drive in Toronto. The only time I use my car is to head out of Toronto, up the 400.

I have yet to drive a car in the downtown core. I expect I never will. I ride my bike downtown regularly and also I take the subway quite a bit. I have two favorite street car lines, the one that runs down Spadina to Union through the wonderfully planned out new area down by the waterfront, and the one that goes along St. Clair West. Both are a dream to ride. They are separated from traffic and they coast along through the giant traffic jams. I watch with amusement the frustrated people in their cars (each car, roughly about 1/2 the size of a small house, weighing 3500 pounds or so (the SUVs are larger and heavier) contains one person. They all look very angry. I laugh at them.

Yes Toronto still does have some transit problems (like the streetcars that are not separated from traffic and the busses) but these problems are slowly being dealt with. Ideally they will eventually separate all the street car lines from the cars, and things will flow smoother (for the street cars, I could care less about vehicle traffic).

Again, why anyone would drive a car in Toronto is beyond me. No one does that anywhere else. This is the particular oddity of Canadian life. No matter how good the transit, people still have to get places in 3500 pound vehicles, and then complain when things get in their way.

Why anyone thinks that everyone in Toronto could accomplish their transportation needs using large four door SUVs that are literally half the size of the footprint of a Toronto house, without there being any traffic problems, is a mystery I’ll never solve.

If that is the only reason why you don’t like Toronto, then I would suggest getting out of your car. Things are much better on TTC or on a bike.

#178 Karma on 10.17.16 at 1:24 pm

Great read… we’re likely all afflicted and addicted!

http://nymag.com/selectall/2016/09/andrew-sullivan-technology-almost-killed-me.html

#179 TRT on 10.17.16 at 1:38 pm

As of today, gov won’t insure mortgages on properties that are:

1) > $1 Million
2) > 25 yrs amortization

Plus, all insured mortgages face a ‘stress test’.

…………..
So what happens with a $1.1 Million dollar home purchase after Nov 30? What percent down will the banks want IF gov won’t insure low ratio mortgages? 35%? 40%?

It won’t be locals buying $2 million homes in Vancouver then.

#180 peter on 10.17.16 at 1:45 pm

“After all, we don’t care about social justice or systemic equality here. We just wanna be wealthy.”

Garth: I suppose this was a joke?

#181 traderJim on 10.17.16 at 1:45 pm

#19 Smoking Man

The Clinton campaign has been making a concerted effort to label trump and his supporters as ‘Hitler’.

Resulting violence is to be expected. I mean, why not attack Trumpsters, they are nazis right?

Mainstream media: Trump is inciting violence.

Same old same old.

#182 traderJim on 10.17.16 at 1:48 pm

Can a soft landing be managed? I have my doubts. Can’t think of it ever happening before, especially when the bubble was this big.

It could possibly turn into a crash if the housing industry slows down, people start to lose jobs in the trades, etc.

I think that is the most likely scenario. Garth seems to think a correction and then a nice slow melt.

I see a slow melt for a year, and then a crash.

Let’s see who gets to say I told you so a year or two from now. : )

#183 Context on 10.17.16 at 1:49 pm

The City of Toronto has been systematically destroyed and there needs to be an independent investigation. An example is at Yonge and Bloor with too many towers going up around the major subway exchange from north to south and east to west. Who gave the developers the green light for such high density construction? Condo towers have been built with boxes throughout the city with no resale value as who would buy a narrow box with a kitchen slapped on the wall; a tiny living room; and a small table set up called the dining room to look at? Who approved of these construction plans? The subway at Yonge and Bloor will stop with cars half filled with passengers going in all directions and thousands will be waiting at peak hours on the platforms to get on, but cannot.

#184 Polls R Phake on 10.17.16 at 1:50 pm

1.3 million dollars will for a long time be too much money for the average family in Vancouver. So you have to ask your yourself who is still buying houses at these prices?

#185 jess on 10.17.16 at 1:53 pm

question more?

Russia has angrily accused Britain of trampling on freedom of speech after NatWest said it was closing down the bank accounts of the Kremlin TV channel Russia Today (RT).

#186 traderJim on 10.17.16 at 1:59 pm

Further prediction: Housing crash occurs right about the same time as President Clinton is impeached

(yes, she will win the election easily. Republicans downballot will do better than expected as people vote to try to check her corrupt behaviour)

#187 Jack on 10.17.16 at 2:16 pm

DELETED

#188 berniebee on 10.17.16 at 2:26 pm

#130 El Doode “A 35% drop in Vanc is going to benefit the HAM…”

Understand the psychology of the real estate market.

Let’s pretend it’s 2019. Prices in Vancouver dropped 13% in 2017, 18% in 2018. Sales are stagnant. There’s no sign of recovery. Stories of “underwater” mortgages abound in the media. How many HAM will be “investing” in YVR real estate at that point? How many parents are going to risk a $100,000 down payment for the kids in a falling market?

I suspect the “confidence” in YVR’s real estate market is as thin as Trump’s skin. When things turn around, and huge gains become huge losses, we’ll see who has the conjones to buy real estate.

#189 Sheane Wallace on 10.17.16 at 2:48 pm

CMHC to issue 1st ‘red’ warning on Canadian housing market

https://ca.finance.yahoo.com/news/cmhc-issue-1st-red-warning-171031802.html

#190 james on 10.17.16 at 2:52 pm

#149 Smoking Man on 10.17.16 at 10:30 am

Killed an entire bottle of JD last night. Damage, one ear is malfunctioning. Totaly def.
Nasty hangover or what.
Thumbs still working but shaky

1 Assange Internet cut.
2 RT bank accounts sized in London.
3 Iraq kicking ISIS ass in Mosal
4 Trump Landslide in real polls.

Add it all up. Good morning WW3
……………………………………………………………………

Ha ha ha, you are a hoot Smoking Man. I thought the Trump Train was funny but I have to admit you more entertaining sometimes. Are the real polls taken compliments of Troy McClure via Fox? It is so funny that when you are going down in a like a punch-drunk boxer you blame the media, the rigged election, the faked polls, the left wing, the right wing, the GOP, the present administration, your competition, immigrants. Anything but yourself! Yes sir that has Donald Trump written all over it. BTW for a zillionaire you should have paid your dog sitter more money so they didn’t look for a new job. Savage road trip into the heart of America oh this ought to be funny.

#191 Karma on 10.17.16 at 2:52 pm

Garth, there’s a term for the blog dogs that are Trump-lickers: Cowards!

“The source fueling the right’s recklessness isn’t stupidity. It’s cowardice. It takes a basic level of character and respect for truth to confront the world as it is rather than concoct fantasies that flatter your ideology, complement your anxieties and excuse your faults.”

https://www.bloomberg.com/view/articles/2016-10-17/wikileaks-war-on-clinton-is-politics-for-cowards

#192 westcdn on 10.17.16 at 3:05 pm

I should be talking RE but it bores me – give me risk and I can live.

I am looking at the past. As time went by, I grew into a tough introvert. My former wife grew into a tough extrovert – trouble. I see by the journals she kept she felt lonely with me. It hurts but she still covers my back as will I. I have decided I am not marriageable material.

“Nothing like a hanging in the morning to sharpen the mind”. Okay, I am onside for now. I do stray now and again. Avoiding the kickbacks is an art form. I am ready to go – thanks to my mother and father.

#193 bdwy sktrn on 10.17.16 at 3:19 pm

huge gains become huge losses, we’ll see who has the conjones to buy real estate.”
————————————-
i would LOVE to buy 3 more places at 50% off, bring it on!

sadly , no deals here, guess i’m heading back down the I5. :(

to a previous poster, it’s cheese, silly, not eggs or milk where the big savings are!

(although i just found out that a 600usd bottle of scotch counts the same as the cheap tequila i’ve been bringing back, and found some guys who will pay for this swill, so there’s some more savings!)
————–
lcbo
Balvenie 25-Year-Old Single Barrel Traditional Oak Single Malt
—VINTAGES#: 421677 | 700 mL bottle
Facetook this productTwitter this product
Balvenie 25-Year-Old Single Barrel Traditional Oak Single Malt
$1,500.00

usa
$599.99
An image of Balvenie Single Malt Scotch 25 Year Old Single Barrel
Balvenie Single Malt Scotch 25 Year
Old Single Barrel

#194 Andrew Henderson on 10.17.16 at 3:37 pm

rigg-er mor-tis

/,rigger ‘môrtǝs/

noun POLITICAL

when a candidate says that an election is rigged during the days after his campaign is dead.

#195 Context on 10.17.16 at 3:37 pm

The University of Toronto has the best brains in the city for Urban Planning; not to mention other departments who have economic impact models that can be run through a computer. There is an array of talent at the university involved with economics, demographics, architecture, engineering, urban planning, and the environment to name but a few. Were any professors ever consulted or awarded an impact study before condo city was built in Toronto?

#196 chopstix on 10.17.16 at 3:45 pm

http://www.ctvnews.ca/business/chinese-real-estate-billionaire-says-vancouver-customers-troubled-by-b-c-tax-1.3118404
”Chinese real estate billionaire says Vancouver customers troubled by B.C. tax”

excerpt:
”In an interview with The Canadian Press, Wu says he understands the B.C. government is trying to rein in Vancouver’s real estate market but hopes the tax will be changed, though he did not elaborate.

He says he plans to discuss the matter with Prime Minister Justin Trudeau when the delegation stops in Ottawa on Tuesday during its eight-day Canadian tour.

Wu says the tax won’t deter him from plans to invest more than $100 million over the next two to three years to build mainly residential properties in Canada for Chinese buyers

#197 Karma on 10.17.16 at 3:50 pm

Yikes… $1.1 trillion in bond portfolio losses if rates rise 1%, according to $GS.

http://www.bloomberg.com/news/articles/2016-10-17/divorce-is-destroying-retirement

#198 The Nature Boy on 10.17.16 at 3:57 pm

#149 Smoking Man on 10.17.16 at 10:30 am
Killed an entire bottle of JD last night. Damage, one ear is malfunctioning. Totaly def.
Nasty hangover or what.
Thumbs still working but shaky
blah blah blah.
——————–
What is the name of your wife’s boyfriend?

#199 Duncan herbert on 10.17.16 at 4:13 pm

Toronto will take at least a 15 percent bite. 5- 10 percent would only equate to what they gained last year. Places like Moncton and Estevan will hit 10 percent at least. No stone will be unturned. Some people won’t be able to renew and those will probably go on the market.

#200 NoName on 10.17.16 at 4:29 pm

#190 Karma on 10.17.16 at 2:52 pm

carma grab a snickers, you are not you, when you are hungry.

https://www.youtube.com/watch?v=MixNh9L7G5M

#201 jess on 10.17.16 at 4:32 pm

Links Oct 12
October 2016

Singapore’s central bank has shut down a second Swiss bank in the city-state and separately fined UBS in its biggest crackdown on alleged money-laundering activities connected with Malaysian sovereign fund 1MDB. Swiss authorities have opened a criminal investigation

http://www.swissinfo.ch/eng/1mdb-investigation_singapore-closes-falcon-private-bank-for-malaysian-fund-link/42508008
See also Falcon Bosses Ignored Staff Warnings on 1MDB finews, and (from July 2016) How Malaysia’s 1MDB Fund Scandal Reaches Around the World Bloomberg

#202 Smoking Man on 10.17.16 at 4:54 pm

#180 traderJim on 10.17.16 at 1:45 pm
#19 Smoking Man

The Clinton campaign has been making a concerted effort to label trump and his supporters as ‘Hitler’.

Resulting violence is to be expected. I mean, why not attack Trumpsters, they are nazis right?

Mainstream media: Trump is inciting violence.

Same old same old.
……………………………

The Left are savage animals masquerading as someone who cares.

The UN just band rebel media from attending a climate summit. And apparently, Obama handed them control over the internet.

Free Speech days are numbered unless Trump wins.

#203 Smoking Man on 10.17.16 at 4:55 pm

#197 The Nature Boy on 10.17.16 at 3:57 pm
#149 Smoking Man on 10.17.16 at 10:30 am
Killed an entire bottle of JD last night. Damage, one ear is malfunctioning. Totaly def.
Nasty hangover or what.
Thumbs still working but shaky
blah blah blah.
——————–
What is the name of your wife’s boyfriend?
………….

Shlong Zumanga

#204 Metaxa on 10.17.16 at 5:05 pm

@ #158 Braj:
Awesome story.. I assume this can be done only if you are incorporated? Or something of the sort? Not as an individual though?

Individuals can play around with the stock market but any rentals, taking on a business, providing any service or goods to any business, selling anything on the Internet, doing anything that can be categorized as “business” really should go through a incorporated entity.

Sure it costs a bit each year to keep it active but there are so many benefits from GST/HST rebates, depreciation, ability to quickly absorb another company, etc.

Just don’t call it 239872016BC Ltd.
You can incorporate as that but dba as (Wife’s Maiden Name) Enterprises.

Mine is (Made up first name, feminine) Estates. Named after my first wife who died of cancer, doing this deal for our kids, hopefully it will make for a better future for the kids.
although that story doesn’t work so great now I’m 70+

Maybe doing it for the grand kids?

Its business, what can I say…if that helps great.

I mean we no longer drive drunk for the kids, we no longer smoke in the house for the kids. You really want to sell me this house…at my price…for the kids.

#205 DON on 10.17.16 at 5:16 pm

#183 Polls R Phake on 10.17.16 at 1:50 pm

1.3 million dollars will for a long time be too much money for the average family in Vancouver. So you have to ask your yourself who is still buying houses at these prices?
*****************

Greaterfools????

#206 Ace Goodheart on 10.17.16 at 5:37 pm

RE: #182 Context:

“The City of Toronto has been systematically destroyed and there needs to be an independent investigation.”

You don’t need an investigation. Our City counsellors have opposed these developments one after the other. The developers appeal to the OMB, they usually rule in favor of the developer, and the project goes ahead. This is also true in terms of development fees, the developers pretty much always appeal the fees to the OMB resulting in a lower fee.

There is an entire “niche” area of law that has come into being around this problem, with boutique law firms that only do OMB work for developers. It is a full time job. Pretty much every condo project goes to OMB. It is done now as a matter of course.

The problem is Toronto City counsel has no final say as to what the development fees will be, and what condos get built in Toronto. You can look around and see the bizarre City Scape that is resulting from this, odd and ugly, haphazard and insane, condo towers that fit into nothing, rising like weeds out of the remains of the old City, with no thought given to planning or esthetics.

That is how things work when you have a Provincial Board, that is not accountable to the citizens of Toronto, making planning decisions.

#207 Karma on 10.17.16 at 5:38 pm

“Posh people spend less time noticing others”

http://www.economist.com/news/science-and-technology/21708573-posh-people-spend-less-time-noticing-others-your-class-determines-how-you-look?fsrc=scn/tw/te/bl/ed/yourclassdetermineshowyoulookatyourfellowcreatures

#208 };-) aka Devil's Advocate on 10.17.16 at 5:51 pm

As we inch closer and closer to a communist state.

I have client/friends who moved here from such oppressive states. They have been through this before and are ringing the warning bell.

The new mortgage rules will distance FTBs from the dream of home ownership and they will blame the government, as so they should, for creating the bubble in the first place and now trying to correct their first mistake with yet another.

“Let the ruling classes tremble at a communist revolution. The proletarians have nothing to lose but their chains. They have a world to win. Workingmen of all countries, unite!” – Karl Marx

#209 TCContrarian on 10.17.16 at 6:10 pm

“A reasonable expectation, then, is a decline 50% less severe than that which tanked America – because we’re (of course) special. So a hard landing might well equate to 15% or a tad more. But not across the whole country. Moncton, Trois Rivieres, Windsor or Estevan will probably see no movement in the needle. Toronto, with its giant economy and undiminished in-migration, likely a 5% to 10% erosion, depending on the hood. Victoria is at risk for a 20% decline over time, and Greater Van will be lucky to escape with a 35% haircut.

Naturally, nobody believes this. It’s what makes accidents so entertaining.” GT
++++++++++++++++++++++++++++++++++++++

Nice to see that you have a sense of humour!

“Naturally, nobody believes this.” Good way to be ‘right’ in any scenario that unfolds.

I would double those estimates (in ‘real’ dollar terms). In nominal $$’s could be close to your estimates.

TCC

#210 };-) aka Devil's Advocate on 10.17.16 at 6:13 pm

Because real estate prices will not fall nearly so much as you might hope for. As somebody else on this blog said on the topic “those with large mortgages can’t afford to reduce their selling price”. Sadly this is where Darwinian economics comes to play – survival of the fittest. Again though those who find themselves most vulnerable will be recent FTBs who have had little opportunity to build equity. The publicity of those first capital punishments (pardon the pun) will be something of a battle cry for they who see themselves next in line at the gallows pole.

#211 EB on 10.17.16 at 7:04 pm

#190 Karma on 10.17.16 at 2:52 pm

Indeed, name-calling and shaming. The prime staple of the Left’s debating strategy.

#212 Econsensus on 10.17.16 at 9:35 pm

#120 Ronaldo

You’re spinning the numbers high.. The monthly payment premium multiple on a 25 year amortized mortgage at 10% compared to 2.5% is slightly under 2 for any given principle amount. For argument sake, we’ll round up to 2.. The average household income for Toronto is just about $80,000 which when multiplied by 6 (2 x 3) equates to $480,000, not $900,000. According to TREBs latest numbers, the average GTA selling price is $755,755. Now if interests rates don’t go up and remain the same forever(LOL), prices would need to drop by more than 36% to revert to the norm.

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil107a-eng.htm

http://www.trebhome.com/market_news/market_watch/

#213 Brett in Calgary on 10.18.16 at 10:03 am

Looks like Bryan Adams has about $6 he can collect ;-)…. bought his first real 6 string… was the summer of 6-9.

#214 Ace Goodheart on 10.18.16 at 2:09 pm

Re: #198 Duncan herbert:

“Toronto will take at least a 15 percent bite. 5- 10 percent would only equate to what they gained last year. Places like Moncton and Estevan will hit 10 percent at least. No stone will be unturned. Some people won’t be able to renew and those will probably go on the market.”

Remotely unlikely. Toronto real estate will never be cheap again.

With Toronto R.E. it’s all about the neighbourhood anyway (though there are really no undiscovered pockets south of HWY 401 anymore).

Toronto is a city of condo dwellers who aspire to backyards.

Most of them will never get there.

Those that will, consider themselves to be very successful people.

They are probably right……

#215 Braj on 10.18.16 at 7:28 pm

@ #158 Braj:
Awesome story.. I assume this can be done only if you are incorporated? Or something of the sort? Not as an individual though?

Individuals can play around with the stock market but any rentals, taking on a business, providing any service or goods to any business, selling anything on the Internet, doing anything that can be categorized as “business” really should go through a incorporated entity.

Sure it costs a bit each year to keep it active but there are so many benefits from GST/HST rebates, depreciation, ability to quickly absorb another company, etc.

Just don’t call it 239872016BC Ltd.
You can incorporate as that but dba as (Wife’s Maiden Name) Enterprises.

Mine is (Made up first name, feminine) Estates. Named after my first wife who died of cancer, doing this deal for our kids, hopefully it will make for a better future for the kids.
although that story doesn’t work so great now I’m 70+

Maybe doing it for the grand kids?

Its business, what can I say…if that helps great.

I mean we no longer drive drunk for the kids, we no longer smoke in the house for the kids. You really want to sell me this house…at my price…for the kids.

Thanks Metaxa, love reading your and Ace’s comments for some reason.