The odds are 92% that US interest rates will rise in four weeks less a day. So, pay attention.
On Thursday the Fed boss, Janet Yellen, made it abundantly clear the path is now clear for more expensive money, Trump or no Trump. The American economy continues to improve, she said. There’s almost full employment. Inflation is green-shooting all over the place. So it’s liftoff on the 14th. Meanwhile several of her central bank colleagues have added if Congress goes along with Trumponomics (lawmakers were warned this week to prepare for ‘sweeping legislation’), cutting taxes and voting for big spending, rates will continue to rise into 2017.
As the duck said to the actress, of course, it’s all about stimulus. When politicians lower taxation or hike public spending, that’s fiscal stimulus. So central banks can normalize rates, withdrawing monetary stimulus. Right now, that’s da plan.
Meanwhile, did you notice TD raised mortgage rates? Again? All of the major lenders will soon follow RBC’s lead, adding between 10 and 40 basis points to their home loan costs, as well as gluing on a premium for amortizations over 25 years. It’s the direct result of the Trump tantrum in the bond market we’ve been telling you about for the past few days, combined with Wild Bill’s October changes.
So what should we reasonably expect? Best case and worse case scenarios? Is all this post-Trump stuff just another example of a pathetic blogger crying wolf on a distant ridge, or could this come to wash over your family and your financial life?
Beats me. I just come here for you deplorables. But let’s conjecture a little.
Scenario A: Fixed-rate mortgages move up about half a point in the next six months (already happening). Between 10% and 20% of first-time buyers are knocked out of the market by higher mortgage costs and the new stress test. (Again, already started.) The Fed raises its rate a quarter point in December and another half in 2017 (assumed now by financial markets). Vancouver pushes ahead with its vacant-house levy (passed this week) and foreign buyers disappear thanks to the 15% tax (already occurring).
Projection: YVR real estate drops 40% in sales and 20% in price by the end of 2017. Toronto housing sales reduce 10% to 15%, prices decline 5-7%, then enter a long corrective phase. Smaller markets suffer disproportionately. Nationally prices reduce 15%.
This assumes the economy stays about where it is, oil doesn’t drop to thirty bucks, the US does not shred our essential free trade agreement, the loonie remains above 70 cents, governments stop diddling with housing regs and Adele plays no more concerts at the Air Canada Centre for at least fourteen months.
Scenario B: now, this sucks. But instead of this blog making up bad stuff to worry about, let’s turn that job over to the federal government’s housing agency – where they have actual forecasters, fancy economists, risk assessment officers and more powerful modelling tools than my iPhone4.
CMHC just finished assessing what might happen if the SHTF in various forms. For example, a big mother of an earthquake – which would jump unemployment to 8.4% and probably shave less than 1% off the value of Canadian real estate. Hmm, not so bad. The agency also looked at a collapse in commodity values and a plunge in the price of oil to just $20. Ouch. That one would be devastating – the jobless rate jumping to near 9%, and real estate values toppling 7.8%.
But the worst thing the fed eggheads could imagine is what more people believe might actually come to pass, given recent events – a rapid increase in mortgage rates. If that were to come to occur, here’s the expected outcome: unemployment rocketing to 12%, home prices dropping 30%, and a hit to taxpayers (through CMHC losses) of $2.1 billion. Scariest – the potential failure of “a major financial institution,” aka, a bank.
For comparison, when the American real estate bubble popped, houses declined 32%. That robbed the middle class of $6 trillion in equity, caused a clutch of Wall Street giants to fail, created a global credit crisis and ushered in a recession which today (nine years later) we’ve still not fully recovered from (plus gave us POTUS Donald Trump). Also recall the last Canadian real estate dump (circa 1990) brought down Toronto prices by 31% – and it took 14 years for the average house to recover.
Property values and mortgage rates move in opposite directions. They’re perfectly negatively correlated. It’s why crap houses now cost $1 million and Canadian mortgage debt tops $1.2 trillion. But you know that. You just don’t know what’s coming.
191 comments ↓
I’m humbled by the creativity of some people.
I love Trump!!!….ain’t afraid to say so. My company is set to greatly benefit from Trump as reported by the CEO. Notley has been a thorn in our side.
I’d love to see the chart showing the loss to CMHC if housing goes down 31%…34% and so on.
I bet you wouldn’t like to though.
We believe in one Lord Trump, the Emperor, the Almighty, ruler of heaven and Earth, of all that is, seen and unseen. We believe in one Lord, Emperor of Mankind, the only Lord of creation, eternally begotten of Humanity, Human from Human, Light from Light, true Lord from true Lord, begotten, not made, of one Being with Humanity; through him all things were made.
For us and for our salvation he came down from heaven, was incarnate of the Holy Spirit and came among us. For our sake he has faced down Globalism; he withstood death and was enthroned. To this day he lives on in accordance with the Scriptures; he resides upon Mother Terra and is seated upon the throne of Humanity. He will come again in glory to judge the living and the dead, and his kingdom will have no end.
We believe in the Holy Spirit, the Emperor, the giver of life, who proceeds from Humanity and from Terra, who with Humanity and upon Terra is worshiped and glorified, who has spoken through the prophets. We believe in one holy true and divinely guided Ecclesiarchy. We acknowledge one path for the defense against Globalism. We look for the justice for our dead, and the life of the worlds to come.
The Emperor protects…
Listen. All this is Sounds great, what’s never addressed is van and to r growing population wise….. Fast. Rental vacancy is a hair above zero. Alberta has had a terrible time economically. Houses have not budged. Canadians hold on to their houses. Period. No price drops Unless people are forced to sell and even a one percent rise in rates will not change that.
Prediction for Toronto. Prices next year going up not down. Slower rate of increase though. Maybe only 5-6 %.
After that who knows. Anyone who says they do is just in the dark as the rest of us.
thx garth
im happy being a deplorable
Garth the BOC mentioned today that they won’t be following US interest hikes. Dollar will fall as will our economy.
Of course our bank will not move next month. Was never a consideration. — Garth
Good debt vs bad debt )
Oh we know what’s coming alright…it’s like a storm just over the horizon…..
Can we have a blog party if Janet pulls the trigger this time? or
Can we have a blog guess a thon as to when the US markets correct 25% or more?
Mark can pay for the party from his US/CDN Fx profits.
Just for stress test purposes, what would happen if some combination of all scenarios played out? Natural disaster, tanking oil/resources, and rapidly rising rates (combined with the stuff already in the works)?
If only 5 per cent of the American population were unemployed, the U.S. economy would be on fire.
http://business.financialpost.com/midas-letter/0404-midas
Superficially, one might conclude that 95 per cent of the U.S. population was gainfully employed, and the remaining five per cent are not. In actual fact, according to Pew Research, at any given time, around 60 per cent of the American population is employed, and 40 per cent is not.
That “major financial institution” shares a public washroom with at least one other “major financial institution”.
#germs
Many have posted many reasons why interest rates CANNOT rise. It is amazing to see how futile it is to prognosticate about the future. Now the conversation will turn to how much it can possibly rise, and why a certain ceiling can never be breached, yada yada…
“When politicians lower taxation or hike public spending, that’s fiscal stimulus. So central banks can normalize rates, withdrawing monetary stimulus. Right now, that’s da plan.”
How will all that fiscal spending be financed when tax revenues are reduced and monetary stimulus removed? Maybe the plan is to raise rates as much as they can now so that further monetary easing can be accommodated when the spending begins? Bridge the gap before inflation finally kicks in.
With the large number of realtors posting here you know they are suffering financial pain. TO sales will continue to drop along with prices. Get the popcorn out it’s going to be a fun housing crash to watch. Happy Housing Crash Everyone!
Judging by the flyers for vinyl and pressed corn flake micro-McMansions built on postage size lots with Tonka toy-sized garages that appear in our mailbox two or three times a week, the news hasn’t percolated down to real estate agents in the Cochrane area yet. They’re asking 40-60% more than the shacks are worth IMHO, but maybe there are some Greater Fools around the Calgary area.
Loonie continues to fall today, woo hoo.
Lesson I learned 3 decades ago: The trend is your friend.
That trend may continue a little longer
Loonie definitely below parity for years
RE #11 meslippery on 11.17.16 at 6:24 pm
I agree with you. Obama Care has this huge loop hole. Eliminate a full time job and turn it into 2 part time jobs and voila !!!!! No employer premiums required.
So, business owners are not dumb usually, and that is what they did. The employment numbers from the USA are fiction.
I am hearing now that this Obama Care loop hole created an army of “deplorables” and they all voted for the Trumpster.
Wonder what Al Sinclair will be preaching tonight on hot property?
Hey Garth,
“a rapid increase in mortgage rates”..
How much of a move, and how rapid of a timeframe does their model consider?
240 basis points over 6 months in 2016/2017. We’ve moved 1/6th of that amount in 1 month.
Love that picture. Very creative.
Listened to Janet today, it sure sounded like rates are going up soon. I understand that returning to “normal” rates are expected to be lower than they have traditionally been.
2017 could be interesting as we transition to higher interest rates and the Trumper team rolls out their new economic plans and push some people out of the country – which will put upward pressure on prices.
Garth- Am I a bad person for hoping one of the above scenarios happens?
So if I read this right, what you are saying is that I should be loading up on real estate? Ha! This certainly makes a “responsible” home owner nervous. So glad that the [email protected] has been handing noose tying amounts of debt to poor shmucks for the past 5 years. They go down in flames while the “responsible” owners just get burned…
“There’s almost full employment.”
Bizarre that anyone would claim this. Trump won by running around claiming that unemployment was in excess of 20%. He has far more credibility than the Federal Reserve “economists” who think that the economy is nearing full employment because people have minimal quality part-time jobs (really, the only ‘jobs’ created over the past decade or two!). People are hurting, and even Yellen knows in her heart that the economy has miles to go before it is even on a path to recovery.
Yes, inflation is rising, but the problem is that of a very weak supply side unable to produce goods because of a hollowed out economy and increasing reluctance of foreigners to invest in USD$ (US Treasury dumping is accelerating!). Not surging demand which is what you’d see if there truly was “full employment”.
As far as market ‘odds’ indicating a high probability of a rate hike, didn’t the ‘market’ predict a certain Hillary win a few weeks ago? How did that turn out?
CMHC just finished assessing what might happen if the SHTF in various forms.
Yet another CMHC propaganda device. If CMHC was held to the same standards as private sector financial institutions, they’d only be allowed 5X leverage into the sort of subprime guarantees they perform. With $900B of guarantees, they need $180B of capital. They have, what, $25B, so they’re short $155B. A 30% downturn in generalized housing prices means that the CMHC portfolio, weighted to subprime, would likely experience significantly higher losses (as CMHC subprime insurance isn’t bought against the best quality loans and the best quality collateral!). So CMHC may very well see 50-60% losses in house prices across its portfolio if nationally its “just” a 30% loss.
$1-$2B might not seem much (and it isn’t!). But the numbers simply aren’t credible.
“You just don’t know what’s coming…..”
Commenter Apocalypse 2017?
The Americans have just discovered in the desert of West Texas a motherlode of oil trapped connecting to a formation which could amount to, as much as, 75 billion barrels of oil. No problem drilling it out as its cost effective at todays low prices. Lots of natural gas too, so Alberta has had it and perhaps Canada too.
“On Thursday the Fed boss, Janet Yellen, made it abundantly clear the path is now clear for more expensive money, Trump or no Trump.”
——————————————————————–
I am glad you understand what she is saying when she speaks.
@#5 Politically correct bird
Not to worry. Van vacancy rates will rise when the Alberta economy picks up and all those Deplorables head “back to rebuild FtMac”
That is, of course, if they can pay their power bills…..
http://www.google.ca/url?url=http://www.cbc.ca/news/business/not-impressed-fort-mcmurray-residents-bemoan-steep-utility-bills-1.3775793&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwjfvciSgLHQAhUNzmMKHe_GBUcQFggdMAI&usg=AFQjCNEsPENwyuJDcpOTIBPRrsJ4YxyhpA
Don’t expect our friends to the south to: 1) protect us from the crash coming or 2) care.
The more things change, the more they stay the same.
We’ve all been warned – thanks Garth.
Superficially, one might conclude that 95 per cent of the U.S. population was gainfully employed
What idiot would assume that?
Everybody knows babies are born, kids go to school for 2 decades and seniors retire for a couple decades more.
60% of people of working is is typical.
Yawn
“….Wall Street giants to fail, created a global credit crisis and ushered in a recession which today (nine years later) we’ve still not fully recovered from (plus gave us POTUS Donald Trump)…..”
____________________
Given his own history of personal bankruptcies, clearly Trump is incapable of learning anything from the 2008 GFC either. Or maybe, he’s just happy with his own Golden Rule…..”Those who have all the Gold get to make all the Rules”….
“…Trump’s financial-services team will aim to replace Dodd-Frank with “new policies to encourage economic growth and job creation,” according to his transition website, GreatAgain.gov. The Trump team specifically cites the Consumer Financial Protection Bureau and restrictions on banks’ trading activity as targets for cuts…..” – Chicago Tribune
Thanks Obama
“As the duck said to the actress, of course, it’s all about stimulus.”
Hidden meaning? Subtle Double entendre?
From the front lines…
1611 W61st Ave Vancouver
Sold for $2.68M in June 2015
Flipped for $3.5M in March 2016 :)
Currently Listed $3.0M
Reduced from $3.89M :(
Just curious Garth,
Even if prices in Vancouver drop by 20-30 percent, do you think would then be anywhere near levels where it makes sense to buy?
Canada is screwed.
Funny part of investing is the fact no one really knows. Covering all the bases on the other hand has its advantages.
For all those souls that own rate reset prefs, and find themselves at a loss, might be surprised down the road? Actually may have wished they had loaded up on a steal while soaking up tax efficient div in the mean time. And what about the gains regarding the Dow & S&P 500 and other indices?
Most would sell underperformers and buy outperformers not realizing the fact that they’re maxing losses.
Performance isn’t something a retail investor should chase. It just don’t work that way.
Sell sell sell!! …..of course houses in some areas have more than doubled, god forbid you give 20% back!!
With the Canadian economy and housing in the shits , surely the tsx will have double digit gains in ’17!!
If housing corrects swiftly the economy will suffer. This is why a balanced portfolio should be underweight Cansda. — Garth
I think the crash has just begun. Talked to a GTA agent the other day about a property, he uttered the words “the price is flexible.” I haven’t heard those words come out of an agents mouth in a long time. Apparently the people who listed their house had a recent offer fall through because the buyers couldn’t sell there house for the money they needed to by this house and also the banked declined their financing.
Credit is tightening up, people no longer able to sell for what their neighbor sold for a few months ago, and this is in the GTA folks!
I think interesting times await us in the not too distant future.
Can you believe that news! A major bank failure, if this is not writing on the wall, I’m not sure what is. There definitely is a shift in my neck of the GTA. People seem scared, new “cash for you” places popping up in areas, that I haven’t seen before. Dollarama seems to be be a lot busier than usual. I think people who have been living on the edge are now teetering on the cliff.
So which “major financial institution” would (potentially) fail under a worst case scenario? Which of the big 5 banks is most vulnerable? Sure would love to know …
Who cares what the “odds” of a hike are. Maybe we get one hike. Maybe. Then the market tanks and the Fed reverses course. Oh and no such rate hikes are even being considered here in Canada. I’m sticking with my long duration bets, that’s still the winning hand.
But yes, Vancouver real estate is going to get crushed regardless because the geniuses here really believe that the laws of economics don’t apply here. Crazy!
Garth, things are brewing for some real economic change in the US of A….
that said how close is Canada in having to move in step, or do we still have the ability and identity to move at our own beat and maintain what is right for us, Finance Minister Flaherty held is own…
What a joke. You call these interest rates and interest rate increases.
These rates used to be double 5 or 6 years, 5%+ and triple, 7% to 8%, 16 years ago.
Rates will hit a wall and fall in the next 12 months maybe 18 months as the U.S. economy and world economy pulls back and drops hard.
Real estate, stock markets and debt junkies will all be the real losers.
So a rapid rise in interest rates causes a 30% drop in prices…
A sudden rise to what rate? And in what time span?
A portfolio Underweight in Canada?Of course , Canada makes up about 4% of the world market , so naturally it should be underweight in any portfolio…. Canada is like a tiny ant ….a giant in hockey tho …eh…
Thus you hyperbole on the TSX was misplaced. — Garth
With mortgage rates creeping higher there may be a point where the Morneau stress test rate of 4.64% moves higher as well. In the UK, the government just announced a new stress test that applies to “buy-to-let” [buy-to-rent] property purchases. Prospective borrowers must be able to prove that they could achieve a rental profit of at least 25% if their mortgage rate was 5.5%. (Interest only mortgages in the UK are currently as low as 1.79%.) This measure takes effect in the new year, and follows an earlier measure that prohibits tax deduction of mortgage interest from rental income, in an attempt to cool the overheated property market. Many middle class people have invested in rental real estate to help fund their retirement, taking advantage of abnormally low mortgage rates. http://www.telegraph.co.uk/news/2016/11/16/buy-to-let-crackdown-will-end-the-dreams-of-middle-class-investo/
It sucks to be a doomer
U.S. stocks at record highs.
Banks that doomers heard were “technically insolvent” have soared.
Maybe I’m thinking about this the wrong way but if house prices decline 30% wouldn’t the loss to the average owner be more? Only people who fully own the property would lose 30%, for owners who are mortgaged (leveraged) wouldn’t the loss be significantly higher? I have no idea what the average mortgage amount is on the average property but I’m curious what that 30% drop in the home value would equal for them. Anyone?
To clarify my last comment – the loss of their equity in the house. For instance if the house was 100k with 20k paid off and the value dropped 30%, they will have lost 100% of their equity and owe 10k.
But Garth – do property values and interest rates always move diametrically? I remember my realtor playing the I just got off the phone with my mortgage broker, interest rates are going to rise game, time to get in…This game can be played all the way up to 20%, just like it did in 1980. In 1972, interest rates were low, and home values doubled. My father bought a home in 1974 for 20k. The seller thought he was crazy to spend 20k. That home would be worth 100k by 1980 all thanks to inflation. The exact kind of inflation The Donald is promissing….
Garth you really can’t imagine spending 10 bucks a loaf of bread or 2 million for a Burnaby special? Inflation is the only thing that will save the world’s economies by wiping away our debts.
Regardless of your position on climate change (I think it’s happening, because I trust scientists generally), the real issue is what to do about it.
I do not buy the idea that we will wake up one day in the near future and the world will have ended.
The answer to progress is usually more progress, and we just need to wait for technology to provide us the answer, as it always has, and always will.
Believing otherwise is doom and gloom Malthusian nonsense that has always, as in 100% of the time, been proven incorrect.
The interesting question is when will the BoC follow… How much lower do they want to see the dollar go… Sure it’s great for exports (which are mainly raw materials and therefore help only large companies). But Canadian consumer gets pummelled when buying everything from their next Kia to that nouveau green cauliflower.
As much as Trump’s policies will benefit my businesses, I am frightened for the protectionist rants that are growing globally. Freer trade had made all of us significantly wealthier…well, except for Mark. Yes there are transitions and challenges upgrading skills (and this will continue to accelerate and get more difficult) but the overarching theme of freer trade is higher levels of wealth for the overall populace.
I don’t care if interest rates went to 10%
I’m not drowning in debt like the majority of Canadians
Which bank will fail?
I’d put my money on CIBC. They have a history of major cluster um fuddle duddles.
Hard to change that culture.
These predictions are frightening and more so because there is no prediction about the effect on stock markets. In 2008 when the housing market crashed, stock market crashed. Do you see the same thing this time around? When they start talking about the possibility of banks going under – it’s pretty scary.
More to the point – in 1929 the stock market crashed because of exactly the same conditions that exist today – high tariffs, widening gap between the rich and the poor, too much credit extended, over consumption, a protectionist sentiment, deregulation, high leverage and a fascist coming to power in Germany. RESULT 1929 stock market crash. So when you make predictions can you comment on the stock market as well as the rest. Will a balanced portfolio make it through that kind of disaster?
US gov’t debt has grown by more than US economic “growth”…. not only YTD, but on a trailing 12 month basis… and since 2008. There is no growth. And with all that new debt, the last thing they can afford is higher rates. Not saying they can’t raise a quarter point just to save some face, but the whole meme of growth driven rate hikes is really not happening.
#5 Millenial-falcon on 11.17.16 at 6:03 pm
Listen. All this is Sounds great, what’s never addressed is van and to r growing population wise….. Fast. Rental vacancy is a hair above zero. … Canadians hold on to their houses. Period. No price drops Unless people are forced to sell and even a one percent rise in rates will not change that.
———————
all correct, special case is asian cash on the west side of van. a bit softer there it seems.
here the supply is quickly going back to normal (none) . 2 more sales in the hood this week , there is NOTHING available for sale that is decent.
one new listing – it’s a beauty (circa. 1910), 1st open is tonight. it’s 1.99m. lovely.
https://www.realtor.ca/Residential/Single-Family/17585314/2316-GRAVELEY-STREET-Vancouver-British-Columbia-V5L3C4
trump is gonna neuter the fed and put ol yellen back in the dog house on a short leash.
People worry about house prises plummeting, others say that stagnation or a slow melt won’t pose a problem. They forget that the first peril is that without constant (although irrational) house price increases the bottom will fall out of the economy due to the fact that people can no longer rely on HELOC’s to cover their extravagant lifestyles. This leads to unemployment among those who provided these extravagant services. And so on, and so on…
Good to see our southern neighbours doing increasingly well!
http://mobile.reuters.com/article/idUSKBN13C2FB
2.1 billion is ‘only’ 10% of Nova Scotia’s debt.
It is ‘only’ 2,100 million
It is only 8,400 1/4 million dollar defaults.
Or, 16,800 $125,000 defaults.
It is only a very modest prediction of what can potentially happen here.
Currency failure will be a topic of discussion one of these days due to the lack of Greater Fools to drive prices higher.
Also, today I talked with a lady that bought a new bung in Wakefield Mass. in 1948 for $3,500. Now her taxes are $4,800. It goes on and on.
Beats me. I just come here for you deplorables. But let’s conjecture a little.-Gartho
………
Such a catchy word. Deplorables..
Think the last thing anyone would want to be called today is normal. That’s so yesterday.
Not much to report on today other than I started following female erotic writers on twitter. I start reading some of their stuff.
Jesus, and I thought my book was kinky, not even close.
But then mines a comedy. One of them bought a copy and now wants to be best buddies with me, too embarrassed to share the email… It’s already in the garbage bin. I had no idea chicks were this bad ass.
Told her: sorry I’m married and there is a chic called Sherly Valintine on Greater Fool that would give you a lot of trouble. It’s best if you find someone else for experiments and book ideas.
26 Context “The Americans have just discovered in the desert of West Texas a motherlode of oil”
———–
You should read a book called “The Energy Non-Crisis”. The US has had more oil that the middle east since it was discovered in the early 70’s. Yet the discovery was hidden from public knowledge. They wanted to creat a fake ‘Oil Shortage”, ramp up the price of oil and continue to but from the Saudi’s, paying them with worthless paper currency. This allowed the US to save their own oil reserves for the time when the world would no longer accept their worthless currency as payment.
What Weight Canada?
“A portfolio Underweight in Canada? Of course , Canada makes up about 4% of the world market , so naturally it should be underweight in any portfolio…”
*****************************************
And Canadian companies are the only ones that trade in Canadian dollars and pay dividends in Canadian dollars.
And most Canadians face in excess of 90% of their expenses in Canadian dollars. Even after accounting for imports Canadian face most of their expenses in Canadian dollars. (Imports are about one third of GDP)
So just what should be the exposure to Canadian equities. Is there a set number?
It is surely not 4%, that would be absurd.
Is it half the equity position? A third? 25%? Two thirds?
At what level is one under weight Canadian equities?
#26 Context on 11.17.16 at 7:00 pm
The Americans have just discovered in the desert of West Texas a motherlode of oil trapped connecting to a formation which could amount to, as much as, 75 billion barrels of oil. No problem drilling it out as its cost effective at todays low prices. Lots of natural gas too, so Alberta has had it and perhaps Canada too.
….
At 75 million barrels day….all of it up in smoke in 1000 days…look no climate change here folks.
Keep in mind the atmosphere all of the smoke fits in to is as thick as the sheen on the globe sitting on the teachers desk…
Canadian Dollars
It is sometimes said that Canadians get a 10% pay cut when our dollar falls 10% versus the American.
Not true, it’s more like 1% or 2% at most.
Remember when our dollar soared over 40% from under 70 cents to over $1.00? Remember how our prices all fell 40% and we got like a 40% pay raise?
Right, neither do I. I don’t remember the impact on inflation being as high as more like a 4% drop to what it otherwise would have been.
#33 Stimulating Duck on 11.17.16 at 7:10 pm
“As the duck said to the actress, of course, it’s all about stimulus.”
Hidden meaning? Subtle Double entendre?
===================
Not sure where Garth went to school but, back in Stone Age Britain, we used to create double entendre’s by adding “As the actress said to the Bishop” and vice versa. This was based on 19th century beliefs that Bishops might profess more virtue than they practise and that actresses of the day were essentially prostitutes. Still, even at our most degenerate, we were unable to visualize unseemly conjunctions of lady thespians and barnyard fowl. Again, where did Garth go to school?
However in today’s full frontal world, the double entendre is likely a dead duck anyway.
Looks like 2017 is shaping up to be a memorable year…
#64 Pete on 11.17.16 at 8:51 pm
26 Context “The Americans have just discovered in the desert of West Texas a motherlode of oil”
———–
You should read a book called “The Energy Non-Crisis”. The US has had more oil that the middle east since it was discovered in the early 70’s. Yet the discovery was hidden from public knowledge. They wanted to creat a fake ‘Oil Shortage”, ramp up the price of oil and continue to but from the Saudi’s, paying them with worthless paper currency. This allowed the US to save their own oil reserves for the time when the world would no longer accept their worthless currency as payment.
….
The Clintons and the Bushes. Have been protecting their biggest donors for decades.
It’s over. If you have investments in Saudi, Qatar, UEM bail. Something tells me there’s going to be a few color revolutions now that the mafia protection racket is over.
Pipelines, Fracking, Coal, is where you should shift too. The UN climate hostile is over. Bail on green energy too.
Pete was on a roll, until
“They wanted to creat a fake ‘Oil Shortage”, ramp up the price of oil and continue to but from the Saudi’s, paying them with worthless paper currency.”
********************************
The kind of worthless paper currency that the Saudi’s have used to buy American companies and real estate? Consider their sovereign wealth fund and what it owns.
A U.S. dollar is worth what it will buy. With a Billion U.S. dollars you can buy quite a lot.
If the America government has some huge undeveloped oil pool and wants to hang onto it for higher prices or a time of scarcity, that is their business. But doubtful this is true.
Conspiracy theorists are a strange breed.
“Jeffrey Gundlach was the only prominent financial professional to predict Donald Trump’s victory. Yesterday, he revealed how he made that call.
How did he know Trump would win and stay convinced of that prediction?
It was “pretty simple,” Gundlach said. He identified which candidates were the worst. He does not look at the ideology of the nation or the candidates’ rhetorical strengths, he said. He figures out which candidates have the most glaring weaknesses.
Hillary Clinton was a uniquely bad candidate, he said, because of her failure to beat President Obama in 2008, followed by her problems with the email server and a “basic lack of honesty.”
Why did Trump win? Gundlach said that people felt abandoned by the economy, with the median worker having suffered low or negative wage growth since 1973. This came while the top 5% realized a 51% real increase in their purchasing power. He said that the corresponding increase for the top .01% was so large it would have “blown the scale” of his graph.
“The ownership of wealth has shifted,” Gundlach said. “But those trends are about to reverse.” Gundlach said that wealth inequality will decrease.”
http://www.advisorperspectives.com/articles/2016/11/16/how-gundlach-predicted-trump-s-victory
#5 Millenial-falcon on 11.17.16 at 6:03 pm
Listen. All this is Sounds great, what’s never addressed is van and to r growing population wise….. Fast. Rental vacancy is a hair above zero. Alberta has had a terrible time economically. Houses have not budged. Canadians hold on to their houses. Period. No price drops Unless people are forced to sell and even a one percent rise in rates will not change that.
—
What I learned from Sir Garth…if mortgage renewal time comes and your house is worth say…15% less than what the bank has assessed it at, you the home owner has to cough up the difference in order to get a mortgage from the bank. Depending on the amount of outstanding debt and how much the house has fallen in value, this could easily sink a person. Now multiple this by hundreds and even thousands of people who are in mind numbing debt. Very sobering.
This is why I’m so fond of teachers, Ronald Reagen them all, like the air traffic controllers.
http://www.breitbart.com/california/2016/11/17/anti-trump-san-francisco-teachers-union-prepares-curriculum/
I don’t see oil recovering. Speculators are long, OPEC seems to be playing “whack-a-mole” with producers and…
somebody just discovered the largest oil deposit ever found in the US. estimated at 20 billion barrels in Texas.
http://www.businessinsider.com/usgs-estimates-20-billion-oil-barrels-in-texas-wolfcamp-shale-formation-2016-11
#72 Andrew
Didn’t Bill Clinton say “It’s the economy stupid?”
If you are working, fat and happy you let a lot slide.
If your unemployed and getting desperate, you do what you need to in order to survive.
First National raised it’s fixed rates on Monday.
https://www.firstnational.ca/residential/mortgage-resources/mortgage-rateshttps://www.firstnational.ca/residential/mortgage-resources/mortgage-rates
Expect rates below 3% to be over soon… I’d say before Spring 2017. Easily! We were in the 3% range 2 years ago, even without a FED hike.
I wonder which major Canadian bank will fail first. I say CIBC. These guys have been cranking out the dividend increases over the last couple of years.
Imagine one of the big six banks failing. Wow never thought I’d see the day.
First National raised it’s fixed rates on Monday.
https://www.firstnational.ca/residential/mortgage-resources/mortgage-rates
#74 Quebec is Great on 11.17.16 at 9:16 pm
I don’t see oil recovering. Speculators are long, OPEC seems to be playing “whack-a-mole” with producers and…
somebody just discovered the largest oil deposit ever found in the US. estimated at 20 billion barrels in Texas.
http://www.businessinsider.com/usgs-estimates-20-billion-oil-barrels-in-texas-wolfcamp-shale-formation-2016-11
….
Damn son, that oil will only last 266 days at 75 million barrels / day up in smoke.
Are you going to make me stay up all night to quant your numbers.
I almost feel the despair Garth feels, but only a fraction of it according to my math skills. I got grade 12 in Etobicoke before I moved all the way east ya know.
Trump’s plan:
– Lower corporate tax rates (from 35% down to 15%, according to campaign policies).
– Increase infrastructure stimulus on a massive scale.
Reducing tax revenues and increasing stimulus spending paid for by issuing much more debt? Hmm…
So devalue the currency? then what inflation?
Will the U.S. reach $20 trillion of debt in the first quarter of 2017?
Are there trillions in unfunded liabilities?
A widespread pension problem?
Will the U.S. dollar not be the safe haven it once was?
Can the U.S afford to have military stationed in more than 150 countries?
Meanwhile, India’s surprise move to abolish high-value bank notes has caused a financial crisis in the country.
Oh crap alright.
#74 Quebec is Great on 11.17.16 at 9:16 pm
I don’t see oil recovering. Speculators are long, OPEC seems to be playing “whack-a-mole” with producers and…
somebody just discovered the largest oil deposit ever found in the US. estimated at 20 billion barrels in Texas.
http://www.businessinsider.com/usgs-estimates-20-billion-oil-barrels-in-texas-wolfcamp-shale-formation-2016-11
———————
Maybe Trump will say… “you know what Canada? We don’t need your dirty bitumen pipeline. Thanks, but we got Sweet Crude from Texas and we’re going to make america great again.”
Tread lightly, Trudeau.
I am Nostradamus – I’ll tell ya what’s comin bub – a sh*t storm
RATM
“So which “major financial institution” would (potentially) fail under a worst case scenario? Which of the big 5 banks is most vulnerable? Sure would love to know …”
My guess is that one of the provincial credit union “systems” would blow up before any of the big-5. And without subordinated bond issuance, or ‘equity’, there really isn’t much they can do other than go cap-in-hand to Ottawa begging the government to quid pro quo the big-5 into taking over. Or doing bail-ins, but those are likely to be the kiss of death to any institution that attempts them at this point.
This is what I really fear. And the ‘market’ is already reflecting such fear by pricing credit union borrowing at significantly higher than that of the big-5.
“What I learned from Sir Garth…if mortgage renewal time comes and your house is worth say…15% less than what the bank has assessed it at, you the home owner has to cough up the difference in order to get a mortgage from the bank”
In practice, although theoretically possible, it doesn’t usually work that way. In the practical sense, the bank merely hikes the risk premia applicable to your loan. Instead of getting that nicely discounted rate that you’ve been enjoying for the past few years — the renewal letter that arrives offers you the posted rate, or potentially even worse. Without a good equity position, there is little ability to go shopping around (no lender will underwrite a brand new underwater loan!), so one is stuck with the horrible loan terms as imposed by the banks. A payment that was manageable with ease thus becomes a payment which sucks a huge amount of formerly discretionary income out of the household. The deflationary impact of this on the economy is certain to be huge.
Curiously if you read a modern bank mortgage loan contract, most of them have the right to unilaterally, in their opinion, payment into equity at any time during the term if the price of the collateral has dropped. The borrower also is required to fully maintain a property, the interpretation of such is, again, at the discretion of the bank. So in a rising rate environment (whether policy rates, or just risk premia), the banks have some extraordinary powers to force either early repayment, or higher rates upon their customers, even for mortgages that were theoretically fixed for a term.
Its for this reason that not only will the big-5 banks survive a severe housing downturn/crash, but they will actually thrive. Remember in the 1990s — the banks, despite falling RE prices, actually quadrupled their share values. The combination of rising profits, and a rotation of investment enthusiasm away from housing and towards other asset classes.
one of the big issues in the face of a housing collapse has to be confidence in our institutions. Recent failings on the part of the CRA and the Business Immigrant Program have both undermined public faith that they actually are acting on behalf of canadians. Of course the claim is that it was the last government who presaged this outcome by cutting employee numbers but the problem appears to be closer to home. Auditors are worried about being seen as racist while Quebec provides a back door to Canada for many. Unless these issues are addressed then Canada, in its effrts to maintain the open society that most of us cherish, will in fact lead to its demise. in the process we will see the odious likes of Leitch and her ilk gaining popularity beyond their alberta heartland. Worst case is we start indulging in the Steve Bannon-esque nonsense about who this country belongs to.
Can’t happen.
Garth said so over and over, check archive.
I said ‘bank’. — Garth
52 traderJim on 11.17.16 at 8:03 pm
Regardless of your position on climate change (I think it’s happening, because I trust scientists generally), the real issue is what to do about it.
I do not buy the idea that we will wake up one day in the near future and the world will have ended.
The answer to progress is usually more progress, and we just need to wait for technology to provide us the answer, as it always has, and always will.
Believing otherwise is doom and gloom Malthusian nonsense that has always, as in 100% of the time, been proven incorrect.
…….
Trader Jim, I like your posts, your head is screwed on properly. You get it but no one is perfect. I need to enlighten you.
As a proud member in good standing of the tinfoil fedora society, climate change is a scan. Trust me.
The truth can be found by googling the below cryptic code.
9781365489037
#64 Pete:- Thanks, read the book and seen the video years ago. What little oil they do produce is sold to Japan and they are constructing the largest LNG plant in the world up there. In Alaska under cap is enough oil and natural gas to fuel America for 200 years all drilled, tested, and proven.
#79 Wrk.dover on 11.17.16 at 9:30 pm
I admire your patience with the young people.
Just a small correction on number 75.
http://www.indexmundi.com/energy/
Yellen says she isn’t going anywhere when Trump takes office.
http://app.tmxmoney.com/news/cpnews/article?locale=EN&newsid=w71429&mobile=false
In addition to firmly stating that she has no plans of leaving the Fed before her term as chair is complete, Yellen also made clear that her views on bank regulation differ from Trump’s.
Sure Janet, whatever you say…
#11 and #24
The UNEMPLOYMENT NUMBER counts the number of people who are unemployed and ACTIVELY SEEKING WORK IN THE LAST 4 WEEKS. It doesn’t count people who’ve given up on looking for work.
The LABOUR PARTICIPATION RATE is around 65% in Canada and a bit lower in the U.S. (62%) and counts the number of “working age adults” who are employed (or unemployed but looking for work). Remember, many people don’t want to work for personal or family reasons – or because they’re independently wealthy and don’t need to!
“Full employment” is considered to be when the unemployment rate goes down to about 4% or so…this is because there are just some people who really aren’t employable, no matter what….
#34 No Money Down on 11.17.16 at 7:12 pm
From the front lines…
1611 W61st Ave Vancouver
Sold for $2.68M in June 2015
Flipped for $3.5M in March 2016 :)
Currently Listed $3.0M
Reduced from $3.89M :(
—————————————
No words. This house doesn’t have a soul. It’s empty and cold. Good luck getting 3.0M. They are obviously trying to get out quick and don’t want to chase a down market with piddly decreases. It just doesn’t have the opulence that a $3 million dollar house is expected to have. I guess none of them do anymore.
Also, I love the chewed up back yard. Crows really love Vancouver RE lately. Thanks to that pesky European Chafer Beetle.
http://www.realtylink.org/prop_search/Detail.cfm?areatitle=Vancouver%20West&ARPK=37,44,36,26,10105,41,21,32,30,28,23,33,22,39,24,43,29,40,34,853,31,35,42,27&ComID=&agentid=&MLS=R2119180&rowc=2&rowp=1&BCD=GV&imdp=&RSPP=5&AIDL=27,42,35,31,853,34,40,29,43,24,39,22,33,23,28,30,32,21,41,10105,26,36,44,37&SRTB=P_Price&ERTA=true&MNAGE=0&MXAGE=200&MNBT=1&MNBD=1&PTYTID=5&MNPRC=3000000&MXPRC=3000000&SCTP=RA
Nah! A slight raise in mortgage interest rates isn’t serious. It’s simply a First World Problem.
Homeowners who will struggle on payments can just take a 2nd part time job. At any schedule they want. Problem solved.
Another solution is to rent out a room or basement. That’s easily 500-1200 per month cash flow.
No way homeowners going to sell at a loss. Renters will continue subsidizing owners.
Other way ’round. Owners now clearly subsidize most tenants. — Garth
Re: The Texas Oil Motherlode
So a discovery of potential gushers in the Lone Star State. Pikers. The McMurray Formation up here where it is cold and restaurants only serve thin ham sandwiches on stale bread with cold coffee for $12.50 can fuel us for a long time. Then check out the Carbonate formation below. We will never run out of oil.
Sadly, it is that thick, sandy, corrosive, sulphurous, expensive, dirty goop that is pricey and not haute couture oil.
Ft. Mac. Frontier. Opportunity.
Odds were 92% that Hillary would win.
The week prior to the vote they were 65%, dropping to 50%. She then won half the popular vote. — Garth
#60 pete…..Yes…many are maxing out on Heloc’s….that’s where the math gets interesting. I read somewhere it was 14% of gdp! Alot of equity has turned back to debt. Not so bad if that’s in investments…but I think most is consumption….
#87 Smoking Man on 11.17.16 at 10:12 pm
52 traderJim on 11.17.16 at 8:03 pm
————————————————
Interesting link regarding global warming and climate change.
https://en.wikipedia.org/wiki/List_of_scientists_opposing_the_mainstream_scientific_assessment_of_global_warming
Mark can pay for the party from his US/CDN Fx profits.
Ouch.
Or the title of this blog post… “Oh, crap.”
Dec 9th, 2013 10:12 pm As housing goes does down, and as debt expansion slows in Canada, the CAD$ should start to do really well. Debt deflation almost always means a higher currency.
http://forums.redflagdeals.com/why-cad-usd-dropped-so-much-1-year-1420560/#p17961268
Re: Appealing Real Estate Tax Assessments
About 10 days ago, Bev and the Supremes of the SCC issued its decision in Edmonton v. Capilano Mall. Oops. Unintended consequences galore.
The dreary shopping mall was aggrieved by the $31 Mill. assessment so they appealed it arguing that it should have been $21 Large. The mall’s hapless lawyers filed a submission. Edmonton’s lawyer’s actually read the submission and with alarming acuity realized that an error had been made. The assessment at $31 MM should have been $45 MM Loonies.
The smoking gun!
The highest court in the land agreed and said the mall should have been assessed at $41.
Don’t read the decision. Filled with legal ramblings and Latin.
Vancouver real estate drops by 1/3. So an East side crack shack will go for one million, not 1.5. Financing available at a higher interest rate. You’ll still be waiting for the affordability train to arrive.
wake up. you are in Kanata. the land of nothing happening. certainly not a revolution. the sheeple will pay. through the nose if that means showing emerikans we know betta’ here :)
keep calm and let the buyers do what they do best…. buy, buy, buy and anti-trump rallying in between!
hahahaha
#91 Ignorance Is Bliss
The UNEMPLOYMENT NUMBER counts the number of people who are collecting UI(EI) benefits.
Benefits run out and you are still unemployed well
we will no long count you as unemployed.
Yeah trust what those numbers represent if you think
that makes any sense.
The crash will not be universal. Let’s run some predictions. Here’s mine:
EPICENTER in the GTA should clearly be
Richmond Hill – price drop of 35%.
Followed by Vaughan, Scarborough (north of Kingston Rd) and Etobicoke (some pockets exempted) all 25% down.
Excessively speculated areas that don’t offer top value: like Leaside, Bedford-Park and similar wanna-be hoods – instant drop of 10% in an attempt to contain it
However, certain areas will still grow 10-15% a year. No, I’m not going to tell you which ones. There need to be losers before there can be winners… right?
“Damn son, that oil will only last 266 days at 75 million barrels / day up in smoke.”
sure, math is right, but the assumption is wrong: 75 MB/day is the whole world consumption.
No single oil field can produce so much oil in a day.
“As the duck said to the actress, of course, it’s all about stimulus.”
quote from Howard the Duck?
#5 Millenial-falcon on 11.17.16 at 6:03 pm
Listen. All this is Sounds great, what’s never addressed is van and to r growing population wise….. Fast. Rental vacancy is a hair above zero. Alberta has had a terrible time economically. Houses have not budged. Canadians hold on to their houses. Period. No price drops Unless people are forced to sell and even a one percent rise in rates will not change that.
Hey keep in down in front…the movie ain’t over yet, sit back and grab your popcorn. The best part is yet to come.
#87 Smoking Man
Trader Jim, I like your posts, your head is screwed on properly. You get it but no one is perfect. I need to enlighten you.
As a proud member in good standing of the tinfoil fedora society, climate change is a scan. Trust me.
==========
Why would anyone trust someone who boasts about being a compulsive liar?
Anyways, any long time readers here will know that no one is more interested in sinking their teeth into a good conspiracy than this guy right here. I like to try to make sense of the madness as much as possible from building 7 free fall, to the real reason for the invasion of Iraq. To the shit that is being sprayed in our atmosphere, to weather modifacation and possible mind control via HAARP antennas being placed in key locations throughout the globe.
My tinfoil hat goes way back.
I am surprised that you have bought the global warming hoax like you have, hook line and sinker. Big oil and the Koch brothers have funded the hoax meme to further their agenda of a petroleum driven planet. Like the obvious changes in the weather, this is easy t see. Perhaps a little more difficult from inside a casino, but still easy to see.
Not only is the climate change hoax meme convenient for big oil, it is also convenient for those who simply do not want to, or fear change. Its easy to get people to jump on the band wagon of everything is fine, business as usual, nothing to see here. Heck, I want to believe it myself, but that would require putting on some serious blinders to reality and the blatantly obvious.
Well, your most of your predictions on the herd are spot on, you clearly don’t have a clue with what is really going on with this delicate ecosystem for which all life here on depends upon.
Denying climate change and its relation burning fossil fuels is a sure bet that future generations will be more screwed than we are now.
A very selfish bet.
Now, before you call me a lefty or go on some drunken rant, know that I do not fit that mold, nor do I aspire to fit any mold, or really care what most people think.
I don’t agree with more tax being the answer either, but I also don’t agree with partying like drunken sailor’s while pretending everything will be fine if we burn more coal or fossil fuels while abandoning green or renewable energy
Fossil fuels and your way of thinking represent the dinosaurs from which they came
I liv in van and had the house price discussin at work everybody said it just slows in december wait till scpring not a single person said house priceswould drop , no land low rates etc.100 percebt are convinced next year will be lke the last 20 30 percent rise, i made a few bets thadt it could stop going up nobody would bitethey said save your money. Full delerium is in effect nobody can beleive van could ver drop.not saying it willbut i bet it does.
the big five are like ships of the line, will come through still floating, other “banks” umm a clue look closely at smaller banks that are almost entirely invested in real estate, there be the suspect scow(s). credit unions not likely, excepting a couple on the pacific side of the country
Firstly, this talk of Canadian inflation to come is just that, talk.
The 1980’s inflation ridden Canada I remember had an expanding economy, largely oil and gas and RE, where an employee could walk across the street and get a job the next day for at least 10% more in salary – due to skilled labor shortages (20% was considered “moving money”) – add to that double digit BoC rates.
We do not have a booming economy nor are the McJobs currently being created that either. Do not get me going on “one trick pony” Poloz.
Secondly, prices according to Ross Kay and on average, have already dropped by 21.5% end of September in YVR RE. Autumn 416 prices already starting to drop, have already peaked.
Scenario A Projection:
YVR RE average price drops by 40%, February 2017. 416 average price drops by 20%, and still dropping like a rock, February 2017. No one cares about % drop in sales other than Realtors, Canadians care only about price. So called RE “fence sitters” remain on fence as they will not be approved by the banks for a mortgage.
RE et al 20% of Canadian GDP in a tailspin, many job losses, recession gives way to something worse in that sector. Oil & gas prices have not budged, still in the doldrums. Unemployment inches its way to 9%.
BoC keeps rates low thinking that the experience from the past 3 years = success. More Canadian investment money flows South of the border.
T2s “shovels in ground” does little to offset GDP drop from tail-spinning/stagnant RE et al and Oil & Gas sectors, Keynesian Economics triumphs yet again. Low dollar does nothing for Oil & Gas until late 2017 when demand finally = supply.
That is what will happen. All the dots are nearly connected, be forthright enough to accept that and then the rest, well, is easy enough to predict.
bsant
Someone figured out they had a functioning spare tire.
The Left will probably build a museum around this and make it their patent work of art.
Instead, Right Rednecks will steal it and with their oxyacetylene kit, cut the Denver Boot off and re-use the tire (unwittingly recycling which will infuriate Left art lovers ’cause they did not think to do so, actually, wouldn’t know how).
My take on the difference between College educated Left and blue collar Right.
Poignant.
bsant
Ban ke May oon just stuttered the truth on climate change. Says it has to do with raising 100 billion for developing countries. Whoops. Trump is right, there is no climate change, it’s all a hoax to raise taxes towards some airy fairy scheme . Our little darling, junior trudella, he’s just a beliber, in the nonsense that wafted out of obamas anal cavity, poor junior. Voted with his heart, and got skunked, poor little dim wit.
# 96 Garth, there is the small matter of the millions of illegal immigrant votes, the dead and the ineligible felons still being counted under strict supervision. Hillary winning anywhere close to half the vote is subject to argument and being tested for truth.
“Right now, that’s da plan.” – Garth
—————————————————–
The plan for the Fed remains the same as the last few years. Talk up the economy and threaten to raise rates, but refrain from actually doing so. Quarter point doesn’t count. Cheerleaders only.
Projection: YVR real estate drops 40% in sales and 20% in price by the end of 2017. Toronto housing sales reduce 10% to 15%, prices decline 5-7%, then enter a long corrective phase. Smaller markets suffer disproportionately. Nationally prices reduce 15%.
So Vancouver prices will drop to January 2016 levels? Why not normal income and rent ratios?
The week prior to the vote they were 65%, dropping to 50%. She then won half the popular vote. — Garth
Only because of California. Texas people could have come out in droves and then Trump would have won the popular vote.
Electoral college is here to stay. Trump going to everything for Florida and the rust belt states (Michigan, Penn, Ohio, and Wisc) over the next 4 years if he wants to win again.
Expect Nafta to be nuked. Cant believe you can’t see thru that.
Just a story:
Was chatting with a relative who lives in small well to do retirement town (Vancouver Island). There are homeless people in Parksville and Qualicum BC. Streets are dead quiet at 8pm – people living in doorways etc. The range is young to old.
The issue has been a concern in most island communities – Campbell River, Courtney, Comox, of course Victoria and Nanaimo and everywhere in between.
Yah! There’s always homelessness but not to this degree. I thought the BC economy was golden. I take it some of these people have jobs but can’t afford the local rents and are living in RVs, tent trailers, cars etc.
We need to start getting creative again, our country seems to be floundering at the moment. We need to stop selling raw logs to the world and start producing at home. Of course it is protectionist, it’s also called good business sense and for local communities a much needed employment bump. I am not advocating a return to old ways, just the thought of not capitalizing on our own resources is insane.
Not morbid, but the local newspapers pump out the obituaries which are almost a long as the real estate ads. Who will buy the houses they vacate…remembering the towns are quiet and not for people who like all the bells and whistles.
Kindly quit saying President Trump. The real election (and it is not just a formaility either) does not take place until December 19th, and if enough patriots in US intel spill enough beans about the Russian vote count hacks, the US electoral college could be forced to provide the biggest December surprise in history.
A long shot to be sure, but more often than not, sanity raises its head. Trump (who never wanted to be President in the first place) could actually concede saying he “wanted to win fairly, not win a rigged system rigged by Russia”.
So don’t buy the MSM (titilated by the prospects of all US media being owned by one giant right wing conglomerate merger) spin that this is a done deal.
It is far from a done deal. Only in their dreams.
#89 Not so patient on 11.17.16 at 10:17 pm
#79 Wrk.dover on 11.17.16 at 9:30 pm
I admire your patience with the young people.
Just a small correction on number 75.
http://www.indexmundi.com/energy
—-
Thank you for that beautiful link. I used the #75 to keep the math simple on the calculation
I want to repeat, the thickness of the atmosphere in scale on the globe sitting on the teachers desk is the same as the thickness of the shine on the paper.
That is where all of this oil goes every day as the climate changes.
#22 StuckinYVR on 11.17.16 at 6:49 pm
“Garth- Am I a bad person for hoping one of the above scenarios happens?”
Nope. But you are for asking. ;-)
#87 Smoking Man
I hear ya and I have not done a lick of research, but of course I know it’s all blown out of proportion.
It’s like the study that says, for example, ‘Coke is carcinogenic’, which the media interprets as ‘drinking an ounce of Coke gives you cancer immediately’, when if you actually read the study it says that if you drink a thousand gallons of Coke a day for the rest of your life your chance of getting cancer increases by .0002 %
So the whole climate change debate is irrelevant, imo.
We just have to make sure the lunatics running the asylum don’t institute some idiotic scheme that inevitably involves taking money from people who earned it and giving it to people who say they deserve it.
I do see the whole climate change movement as a big scam to funnel tax dollars to enviro groups.
#47 to_be_frank on 11.17.16 at 7:47 pm
“In the UK, the government just announced a new stress test that applies to “buy-to-let” [buy-to-rent] property purchases…….This measure takes effect in the new year, and follows an earlier measure that prohibits tax deduction of mortgage interest from rental income, in an attempt to cool the overheated property market. Many middle class people have invested in rental real estate to help fund their retirement, taking advantage of abnormally low mortgage rates. http://www.telegraph.co.uk/news/2016/11/16/buy-to-let-crackdown-will-end-the-dreams-of-middle-class-investo/”
Slow and stupid government (anywhere in the world) allowed this to happen with economic and social destabilization being the result. A case in point:
https://en.wikipedia.org/wiki/Fergus_and_Judith_Wilson
#49 and #50
Underwater.
Just a matter of time. Told ya so!
http://www.cnn.com/2016/11/17/health/hawking-humanity-trnd/
Stephen gives the best case scenario. In reality, the end times are upon us now thanks to Trump.
#5 Millenial-falcon
Mr/Mrs Falcon.
There seems to be a short supply of housing in Van City and Toronto, but it doesn’t seem to add up.?
My experience and realtor friends, living in one of those two city’s is that there is tonnes of vacancy everywhere. I mean tonnes!
Seems Vancouver has such a high vacant homes issue, that the government felt compelled to tax them.
In Toronto, it is clear to many, and word on the street that price to rent ratio is so high that it is over 50% better value renting! Due to this, just about everyone I know that has a condo or house for rent is fretting quietly. They are either cash flow negative or holding a vacant investment. They are too proud to talk about it!
THE ELEPHANT IN THE ROOM
Inflation and higher rate are coming, I have no doubt about that. This will not happen overnight of course (at least let’s hope not…) but it’s pretty much unavoidable IMO.
Governments and central banks everywhere implement very inflationary policies, they always have really, but in the past decades the arrival of millions of new cheap workers in the emerging markets had a world-wide deflationary effect that countered the bad behavior (protectionism, overregulation, too much taxation and overspending) of our governments. This effect has started to fade, inflation can now run more freely.
Contrary to what many people think a bad economy and high inflation can very well coexist, it’s called stagflation and was de norm before globalization started.
Over time only the productive will succeed in maintaining/improving their standard of living. I’m reasonably confident about the USA but Canada need to worry, a lot.
Get paid from work in USD, invest in USD and keep your money in USD. That 35% to 50% raise will help you survive whatever happens to the CAD economy. Freelancing is your friend and if you don’t have a skill to freelance, then you may find yourself unemployable.
RE prices do not inversely correlate with interest rates. It’s a lot more nuanced than that. There is a time lag and many other factors. In early ’80s prices did not fall even as rates shot up to 20%. In late 80’s, prices actually continued to go up until the bright minds in the government started to introduce additional taxes and change regulation (happening now in some jurisdiction).
Also in the early 90’s Canada looked far worse than the US: they were winning wars against dictators, increasing their stance in the world, they just ‘liberated’ Eastern Europe, signing new trade deals left and right, they were on a tear. We had sky-high deficits, rising taxes, a BOC fighting invisible inflation, Bob Rae, Kim Campbell and Jacques Parizeau. I could go on, but why? I’m not here to change anybody’s mind, just to add a few facts to woefully lacking attempts at analysis.
There won’t be any actual across the board real estate “crash” in Toronto. What will happen is over priced real estate will come back into normal price zones. This will occur in a fractured manner, with individual zones throughout the city experiencing different price movements.
This is due to Toronto being full of high and low demand pockets of real estate. Some areas are very high demand, others are not. Right now we have an artificial increase in prices caused by too many people being able to afford real estate. If that changes, then the people who lose out will be those who purchased solely on the idea that no matter where they purchase, and no matter how much they pay, prices will always go up.
There are areas of Toronto right now that are going to experience double digit price increases for land value in the next five years. I can probably point out about six or seven of them but you can do your research yourself and figure them out.
There are also areas which are over priced and that will decrease (think – exposed brick walls, 100 year old semis having recently undergone questionable renovations, “prime” neighbourhoods, houses located close to schools that parents drool over).
Toronto is a mixed bag.
To figure it out is pretty simple. Remember the “goldilocks” rule. A house has to be affordable to the middle class working family residing in the area. So a middle class family, using every financial means available to them, must be able to afford to purchase and live in the housing stock. If not, then the houses become toys for the 1% and sales will drop like they are falling off a cliff. The price of the housing stock has to remain in the “goldilocks zone” of middle class affordability. Otherwise the market is going to correct downwards.
In Toronto though you are not worried about that if you are speculating. You are concerned with density, intensification, transit, and land value. You are going to be very interested in an entity known as the Ontario Municipal Board. You are also going to want to keep a watchful eye on what your City counsel is doing in terms of planning for the area where you are looking to purchase. It is also often helpful to have a look at who owns the land in any particular place. Real money in Toronto real estate is made by being able to predict where the next intensification project is going to happen.
Canada’s inflation rate rises; food prices fall for first time since 2000
https://beta.theglobeandmail.com/report-on-business/economy/canadas-annual-inflation-rate-rises-to-15-per-cent-in-october/article32923379/?ref=http://www.theglobeandmail.com&service=mobile
The absolute biggest threat to our economy is taxation. High and rising. If Canadians are highly indebted it’s because of the high taxes, not because because mortgage debt. It’s ridiculous for the government to tell us we are not spending within our means, when they take 55% of our earnings, don’t you think?
Why not lower taxes at the same time as introducing regulation to tighten credit? That will allow people to pay off debt, problem solved.
Hey Garth,
“a rapid increase in mortgage rates”..
“How much of a move, and how rapid of a timeframe does their model consider?
240 basis points over 6 months in 2016/2017. We’ve moved 1/6th of that amount in 1 month.”
******************************************
Not sure people appreciate that this is far from a Canadian problem. The shift in the bond market is not calibrated to market fundamentals. The US homeowners are also facing a 40% increase in mortgage rates which will create a more immediate dislocation than here in Canada. In the US it is far easier to walk away too.
The real question is why is the bond market seeing this shift. Do we really believe because we think Trump is going to drive growth? Or is it because sovereign US debt is being dumped by the Chinese and others for they fear the protectionist economic policies of Trump and the global movement of populism?
For the focus here to be on a potential 10% correction in Canadian real estate market is pretty myopic? Watch for Dec 4th and the Italian referendum as the next key macro event that will affect our financial markets. It certainly isn’t whether TD raises mortgage rates by 10 basis points.
Wow! Six references to Trump in last night’s post. Is this a drinking game?
Suddenly Ford has decided not to move to Mexico. Clearly, Trump is going to follow through with this promises. I’m really going to enjoy the next four years. Go Trump go!!!
http://www.breitbart.com/news/trump-on-twitter-ford-wont-move-lincoln-assembly-to-mexico/
So, remember I said I had to sell me father’s house ? Well, the first round of negotiations have begun.
I reviewed the listing agreement today………..sent it back to strike/amend several clauses…..
1 – allowing the listing agency to keep the deposit, told them the deposit is payable to the vendor and becomes my property without any claims towards it on their behalf.
2 – agreeing to pay them their commission if the sale does not complete for no legal reason, regardless of who backs out. LOL !!! Like I seriously would agree to that as well.
3 – requiring me to show them all offers and advise them of any interest in the property 90 days after the listing ends.
4 – And some other stuff…….
Statesman out with inflation numbers…
Say food/grocery prices down year over year.
Is it any wonder guys like Trump get elected when these blatant lies come out of Gov??
My buddies trucking company picks up food (both reefer and dry van) and can tell you prices have gone up significantly over the last year for both fresh and packaged foods.
if lies like these from the elite continue, then expect more brexits.
123 Apocalypse3016 on 11.18.16 at 7:53 am
More realistic than usual, but I still bet you’ll wind up having to eat crow and start posting as “Apocalypse3017” in a century’s time.
Say what?
Can that be true? 10% of resold homes are never lived in?
https://betterdwelling.com/city/vancouver/10-of-homes-being-resold-in-vancouver-have-never-been-lived-in/
I doubt their oldest example of “not lived in since 1989” is correct.
I’m pretty sure the seller claims “never lived in” since renovation, not since construction.
If the 10% figure is even remotely correct, then it is a good thing that they passed that 1% unoccupancy tax now.
#8
Of course our bank will not move next month. Was never a consideration. — Garth
“Never” is a strong word.
On jan1 you thought that BoC would raise rates on Oct 19.
Next two BoC moves will be down, not up.
Canada is aligning herself with Europe now (0%), not with the United States of Trump.
Bram
#118 Wrk.dover on 11.18.16 at 5:49 am
I want to repeat, the thickness of the atmosphere in scale on the globe sitting on the teachers desk is the same as the thickness of the shine on the paper.
That is where all of this oil goes every day as the climate changes.
====================
Oil is important to your portfolio and let me help everyone to feel a little bit better about yourself on your next single occupant commute to work.
We are lead to believe today’s oil was sequestered in the ground a long time ago, like when dinosaurs roamed the earth.
It was taken from the atmosphere by the plants, yada yada.
So these days we are just doing our part to return the earth to her natural state. :)
And anyone in Canada who is trying to slow down global warming is a maroon and unpatriotic. Studies have shown Canada becomes a net benefactor in a global warming economy.
Trying to tax progress seems really counter-productive.
Don’t you think?
#123 Apocalypse3016 on 11.18.16 at 7:53 am
Just a matter of time. Told ya so!
http://www.cnn.com/2016/11/17/health/hawking-humanity-trnd/
Stephen gives the best case scenario. In reality, the end times are upon us now thanks to Trump.
…….
Seriously, you listen Hawking. He’s a wack job. Doesn’t know shit.
Celebrity wierdo that doesn’t ouñ one patent or invention.
Electric Universe is where it’s at. UCC
Trump won because I willed it via the UCC
@106 SWL-
Those low frequency ground oscillations are caused by the boring machines required to dig the Deep Underground Military Bases. Or DUMB, for short.
“Higher down payments needed to battle housing risks: CMHC CEO”
http://www.theglobeandmail.com/real-estate/the-market/cmhc-chief-says-higher-down-payments-needed-to-battle-housing-risks/article32923702/
Our mortgage is up for renewal in March, thought I would ping our bank for rates….. Big 5. We are currently at 2.9% in Calgary.
“We can do early renewal for you if you like as the rates are to the up swing I can give you 5y’s–2.69%, 4–2.59%, 3–2.49% and 2–2.36% “
#117 Future Expatriate:- Guccifer 2.0.
Re: #5 Millenial-falcon on 11.17.16 at 6:03 pm
All scenarios including yours point to a dramatic drop in housing prices in Canada.
Bram: Next two BoC moves will be down, not up.
Canada is aligning herself with Europe now (0%), not with the United States of Trump.
You do understand that when the BoC moves rates down in conjunction with U.S. rates moving up our dollar will drop significantly?
I think that you are missing the big picture. Mortgage rates are pretty much determined by the bond market. As the bond market continues to sell off, albeit slower, reacting to Trumps “possible” direction it puts pressure on yields and they rise to attract buyers. This is currently happening in Canada.
When the U.S.A. raises rates in December, 90+ % chance, it will put pressure on the Bank of Canada to follow their lead. They don’t have to follow and in my opinion, won’t, but that would also put downward pressure on the loonie. That would create a situation where Canada would actually be importing inflation. Not a good situation as it would put further pressure on the Bank of Canada.
The bond market could become the FIRE industries biggest enemy over the next couple of years. During the Global Financial Crisis an historic amount of Canadian bonds were purchased by countries around the world, pushing yield rates to near bottom levels. If they decide we are not all that safe, watch out. Canada wouldn’t be able to purchase enough of our own bonds to stop that ugly from happening.
Pay attention to everything that could affect your life and plan accordingly.
Re: #131 RiseandShine on 11.18.16 at 9:17 am
Trump said he’d normalize interest rates if he got elected. Well he did get elected. Trump is a businessman and sees the damage zero interest rates have done to America and the world economies. Japan is still in a long term recession all these years later thanks to zero interest rates. The European economies are in disarray directly a result of negative interest rate policies.
As someone living in Van, fairly recently bought our first property (a townhome), while I’m concerned about seeing a drop in value of our place, I’m not that concerned because we can afford our payments (mortgage only about 3-3.5X our annual gross salary) and we’re planning on staying awhile. I’m also thinking that detached will drop much more significantly than attached, and in fact this might close the gap in prices between the two a bit, making it easier to upgrade in a few years time?
Re: #6 Penny Henny on 11.17.16 at 6:06 pm
Toronto is not a good barometer of true housing prices because of all the teardowns and rebuilds. You have to go outside to places like Scarborough or Etobicoke to get a true gauge of housing prices. My guess is the GTA real estate will drop around 25 percent in 2017 and be reported by the CRA as a 4 percent drop. We already see the same thing in Calgary where the average house price has fallen around 25 percent since October 2014 but is being reported as a 7 to 8 percent fall by the CRA.
The largest? fined but still licensed after so many fails?
The British Virgin Islands has fined the law firm at the centre of the Panama Papers scandal $440,000 – the largest ever penalty issued by its financial regulator
failure to maintain controls to prevent money laundering and terrorist financing;
failure to assess the risks of customers and one-off transactions;
failure to undertake due diligence checks on
failure to keep up-to-date records on customers and
failure to carry out proper compliance checks.
====
“G20 countries, including Canada, agreed to phase out fossil fuel subsidies in 2009. However, the burning of oil, gas and coal is still supported across the world by subsidies amounting to $5.3tn a year, equivalent to $10m a minute every day, according to the International Monetary Fund.”
========
8.31 Mar 2009 —–> growth rate of capital one?
“Dec 9th, 2013 10:12 pm As housing goes does down, and as debt expansion slows in Canada”
And housing hasn’t gone down much (its been more of a case of stagnation since the 2013 peak, with consumer debt expansion continuing in the non-RE sector). So the logic is still intact. That a slowdown in debt expansion (or even a reversal) is positive for the Canadian dollar.
Consumer prices are now deflating in food and other categories. If it weren’t for speculators pushing the CAD$ down, the rest of the economy would be in significant deflation at this point. Speculators can only move markets against fundamentals for so long. The recoil will be violent when it does happen.
Is Hudsons Bay Company predicting the demise of the Canadian Housing Market?
Here is a weekly chart of HBC.TO. What an ugly looking H&S formation and check out the MACD which just crossed downward. UGLY!
http://stockcharts.com/h-sc/ui?s=HBC.TO&p=W&yr=5&mn=0&dy=0&id=p65568240844
If it busts downward a bit more the H&S projection is $0 . As one of Canada’s largest retailers is it predicting the implosion of Canadian retail spending from a popping of the Canadian housing bubble? We’ll see but keep your eye on $14.
Vancouver with it’s tax of the day housing policy is trying to milk a dying cow, while taking the credit for reduction in speculation.
The fact is, housing peaked prior to all these legal nuances. The gov’t senses a revenue decline and tried to fill up its coffers at the very last minute.
When the floor establishes years later, they’ll begin subsidizing again, supposedly to help out, once again, getting credit for something that’s totally beyond their control.
…”automated army of chatbots “yelling fools”…The researchers have coined the term “computational propaganda … Dr. Howard said. “The polarization of the election is going to make this stuff worse as we self-groom our news networks.” (oxford researchers msn.com)
polar opposites
http://freakonomics.com/podcast/idea-must-die-election-edition/
http://bipartisanpolicy.org/person/olympia-snowe/
https://www.edge.org/responses/what-do-you-consider-the-most-interesting-recent-scientific-news-what-makes-it
The “We” Myth revisited..
pBrassuer said:
Over time only the productive will succeed in maintaining/improving their standard of living. I’m reasonably confident about the USA but Canada need to worry, a lot.
**************************************
Standards of living are ultimately individual and not set by country. Same for productivity.
Let us stop referring to the well being of Canadians or Albertans or Americans as a group. Success is individual, not collective. You can be very poor despite a high average standard of living. And the opposite.
Some will soar and some will sink. It has ever been thus. Your success will not depend very much at all on whether you are American or Canadian.
Again, there is little or no ‘We’ in economics. Save that concept for politics.
The “poor Japan” Myth
#147 Tony on 11.18.16 at 12:55 pm said:
Japan is still in a long term recession all these years later thanks to zero interest rates.
*****************************************
Have you checked the unemployment rate in Japan? what about their standards of living? I think you will find that (well, on average) they are doing quite well despite low GDP growth. What is the poverty rate in Japan?
Gloom and doom! Come on Garth! It will not be that bad!
Feel free to point out any inaccuracies. — Garth
#131 RiseandShine on 11.18.16 at 9:17 am
… For the focus here to be on a potential 10% correction in Canadian real estate market is pretty myopic? Watch for Dec 4th and the Italian referendum as the next key macro event that will affect our financial markets. It certainly isn’t whether TD raises mortgage rates by 10 basis points.
*************
Reports out of Italy indicate they are loosing billions on Russian sanctions, Italian business persons visiting Criminea etc.
Do they dare defy the EU?
Thought I was the only that thought way.
You are saying the same except more timid on the timing.
Good to read.
Probably, somewhere between your and mine predictions lies the truth – separated only by time.
If it happens, an ugly reality that will cost Canadians much. It will take a decade to regain that RE loss of wealth. Bad news for Boomer retiree’s relying on that nest egg.
Thank you Shane, needed to read there are other like minded individuals connecting the same dots and concluding the same.
You too Garth. You feed us the information, give some opinions. There has been little or no good news in 2016. For every step forward, it seems followed by two steps back. Cannot wait for 2017. Hopefully, a quick correction followed by a turn around then.
bsant
“You do understand that when the BoC moves rates down in conjunction with U.S. rates moving up our dollar will drop significantly?”
I wouldn’t take that as an absolute truth, especially with the spectre of an extreme amount of domestic deflation taking hold as the housing market collapses. The US Fed pushed its interest rates down to zero much faster than the rest of the world (ie: Europe, Canada, etc.) did, yet here we have an extremely strong USD$.
Domestic demand for the CAD$ will be significant as house prices fall as debt associated with housing, and consumer debt must be repaid in CAD$. Hence, there’s demand for the currency simply for repayment. This tends to be significantly deflationary, and supportive of the currency when it does happen. Hence, CAD$ and USD$ rates can disconnect, and the CAD$ can still go up significantly despite the BoC cutting rates to zero and even engaging in some form of QE. Interest rate differential theory might work for short-term trading, but is next to useless for longer-term trades (if it actually worked as some theorize, for example, Latin American “banana republics” which have high single digit or double digit interest rates in their local currencies would have some of the strongest currencies in the world!).
#146 oncebittwiceshy on 11.18.16 at 12:49 pm
You do understand that when the BoC moves rates down in conjunction with U.S. rates moving up our dollar will drop significantly?
Why do people insist that a low loonie is bad?
Let me guess, you are not a business owner, but instead an salaried employee that likes his holiday accommodations abroad for cheap?
A low loonie makes Canadians buy from domestic suppliers (WIN!). A low loonie makes foreigners buy more Canadian goods (WIN!) (*)
You also make it sound as if inflation was evil. It is not necessarily bad.
With high inflation, those towering mortgages (hopefully fixed rate!) will wither away so the mountain of debt doesn’t come tumbling down (WIN!)
See it this way: if BMO is stuck with a 10 yr term at 3.95% and inflation is at 6%, the home owner’s income will be rising each year and making the debt principle look small in comparison after 10 years. Just make sure it’s paid off by then, or the house sold.
Bram
(*)Note that both these effects cause the loonie to go up again: it is a self-balancing system. A high loonie causes low demand for it. A low loonie causes high demand for it.
#151 Mark on 11.18.16 at 1:22 pm
“Dec 9th, 2013 10:12 pm As housing goes does down, and as debt expansion slows in Canada”
And housing hasn’t gone down much (its been more of a case of stagnation since the 2013 peak, with consumer debt expansion continuing in the non-RE sector). So the logic is still intact. That a slowdown in debt expansion (or even a reversal) is positive for the Canadian dollar.
Consumer prices are now deflating in food and other categories. If it weren’t for speculators pushing the CAD$ down, the rest of the economy would be in significant deflation at this point. Speculators can only move markets against fundamentals for so long. The recoil will be violent when it does happen.
***********
Can you prove food inflation is going down just because a headline says so?
Didn’t steak get replaced with ground beef as one of the indicators of inflation. I take it we have now replaces ground beef with pollock to make the stats look good.
Too much ivory tower thinking here. You need to start buying your own groceries and quit believing everything you hear.
@Ancodia
“…For instance if the house was 100k with 20k paid off and the value dropped 30%, they will have lost 100% of their equity and owe 10k.”
They would have lost 100% of their equity, & still owe 80k on a property worth 70. Then mortgage renewal might cost an extra 10k to align the mortgage and house value.
If I understand correctly, if the major banks up their posted 5 yr fixed rate, the stress test rate will go up too???
#120 traderJim on 11.18.16 at 7:24 am
#87 Smoking Man
I hear ya and I have not done a lick of research, but of course I know it’s all blown out of proportion.
It’s like the study that says, for example, ‘Coke is carcinogenic’, which the media interprets as ‘drinking an ounce of Coke gives you cancer immediately’, when if you actually read the study it says that if you drink a thousand gallons of Coke a day for the rest of your life your chance of getting cancer increases by .0002 %
So the whole climate change debate is irrelevant, imo.
We just have to make sure the lunatics running the asylum don’t institute some idiotic scheme that inevitably involves taking money from people who earned it and giving it to people who say they deserve it.
I do see the whole climate change movement as a big scam to funnel tax dollars to enviro groups.
—-
Which is why your post isn’t worth a lick either.
So not only can we not buy a house or find an apartment to rent, there are suddenly so many people in Canada, I cannot get a family doctor and have to wait 2 months to see a dermatologist. My car got a big dent and it will be one month before any body shop in Victoria can fix it. And our stupid government wants to bring more people into Canada. So it is not about racism just too many people. Myself and ALL of my friends and family are getting really mad. So hats off to Trump. “Let’s build a wall” mentality is growing fast in Canada and it is our governments fault
Immigrants dented your car? — Garth
Speaking of “Renter’s continue to subsidize the owners”… the government needs to crack down on illegal / unclaimed rentals and take their share of this income.
@Tony #147
Trump’s moves are intentionally inflationary to move with Yellen’s rising rates. That is normalizing, he doesn’t get a say in whether the Fed raises rates. Yellen’s going to move regardless of who was in the White House.
http://www.wsj.com/articles/feds-yellen-rate-increase-could-become-appropriate-relatively-soon-1479387604
@Bran #161
Most Canadians are too poorly educated to understand how exchange rates impact the domestic economy. It’s actually kind of sad.
#73 Under Water on 11.17.16 at 9:05 pm
#5 Millenial-falcon on 11.17.16 at 6:03 pm
Listen. All this is Sounds great, what’s never addressed is van and to r growing population wise….. Fast. Rental vacancy is a hair above zero. Alberta has had a terrible time economically. Houses have not budged. Canadians hold on to their houses. Period. No price drops Unless people are forced to sell and even a one percent rise in rates will not change that.
—
What I learned from Sir Garth…if mortgage renewal time comes and your house is worth say…15% less than what the bank has assessed it at, you the home owner has to cough up the difference in order to get a mortgage from the bank. Depending on the amount of outstanding debt and how much the house has fallen in value, this could easily sink a person. Now multiple this by hundreds and even thousands of people who are in mind numbing debt. Very sobering.
——————–
yes it is true but like i said very unlikely and you would have expected your scenario to play out in calgary by now but sales have actually stabilized and are trending back to normal all this inspire of 40 dollar oil
vancouver is way more insulated from economic shock than calgary if prices haven’t dropped in a alberta jobs genocide van has no hope , garth kinda stopped talking about the calgary death watch cause there was no death 2 years later
#147 Tony:- Trump is a man of many contradictions who blows a lot of smoke. His property portfolio benefited greatly from refinanced or new mortgages on his properties. He was not damaged one bit from the low mortgage rates as he welcomed it all with open arms.
Re: #104 EPICENTER -Survey Now Open on 11.18.16 at 12:19 am
The average price of a home 32 years ago in Richmond Hill was about $30,000. A 40 fold increase in 32 years is on the high side considering a new car doubled in price over the same timespan. A 35 percent fall is on the extreme low side.
Re: #156 InvestorsFriend on 11.18.16 at 1:54 pm
A debt to GDP ratio of 3 to 1 means Japan has gone well beyond the debt wall and the chances of that country ever coming back to prosperity are very slim.
Some of you talk about the new oil find in Texas as if its of no concern and what is Canada’s daily exports of oil and the costs involved. Canada’s energy policy over the years has been non existent and we are in political trouble within a global environment of competition. We can’t even get the oil properly to a east or west point of shipping into world markets. Any LNG projects are a joke in regards to both coasts getting natural gas to world markets. This country is doomed with a rude awakening going forward. Harper the clown declared to the world Canada was an energy superpower which was a farce and why did Warren Buffett dump all his stock in Suncor?
http://www.theglobeandmail.com/real-estate/the-market/cmhc-chief-says-higher-down-payments-needed-to-battle-housing-risks/article32923702/?click=sf_globe
“I have yet to be convinced that people in our country “need” access to 19:1 leverage to buy homes,” Mr. Siddall said. “In fact, it may be a fool’s bargain with the extra demand simply feeding higher house prices: the benefits of the policy accruing to wealthier home sellers rather than to the young first-time homebuyers it purports to help.”
Counter response to #139 Russ….
I sometimes drink beer with a PHD Nuclear Physicist fella and we talk about things, not opinions and people.
Here is the thing about oil, if you grow a years worth of pond scum on an area as big as a paint can lid for a year, deposit it in the can and repeat over and over every year for thousands of years, then compress it all relentlessly, you will have a paint can full of oil.
So, releasing that all at once restores the balance? No.
Next time you look out a jet window at all of the feilds that have been ploughed over and over, ask your self where all the exhaust gasses went.
What the PHD fella says about what two hundred parts per million of carbon dioxide does in the atmosphere compared to one hundred and fifty parts per million, is scarier than the economy.
Bram, you are extrapolating “importing inflation” as probable wage growth. Not a chance.
When the FIRE industries overtook manufacturing, mining, forestry, agriculture, fisheries, oil and gas industries combined everyone should have been concerned with the possibilities of bubbles and subsequent crashes. You can imagine the kind of job loss and economic downturn that such a crash would create.
Nobody will be relishing the higher interest rates created by the bond market not wage growth.
The very same people that lose their jobs and are struggling with underwater mortgages, which are costing more each renewal, will be fighting exhorbitant grocery bills thanks to the “low loonie”.
See it this way: if BMO is stuck with a 10 yr term at 6.95% and inflation is at 2.6%, the home owner’s income won’t be going anywhere and making the debt principle look impossible to overcome after 10 years. Just try to make sure it’s paid off by then, or the house sold.
YVR prices (SFDs) dropped 16% in 8 months in the ’07-’08 correction.
http://www.chpc.biz/plunge-o-meter.html
’07-’08 Average Vancouver SFD lost $122,900, or 15.9% in 8 months (2%/mo drop)
’07-’08 Average Calgary SFD lost $92,499, or 18.3% in 18 months (1%/mo drop)
’07-’08 Average Edmonton SFD lost $78,719, or 18.5% in 21 months (0.9%/mo drop)
’07-’08 Average Toronto SFD lost $63,867, or 13% in 13 months (1%/mo drop)
’07-’08 Average Ottawa Residence lost $25,664, or 8.6% in 6 months (1.4%/mo drop)
’07-’08 Median Montreal SFD lost $6,000, down 2.6% in 6 months (0.4%/mo drop)
And here is a chart that might plot the next 4-5 years (“..then enter a long corrective phase.” Garth)
http://www.chpc.biz/history-readings/the-shadow-of-reality
I am sure that everyone is aware of the expanding crimes taking place in the City of Toronto proper so where do you want to live? This is important for renting or buying into an area. There is one vast area where there is no crime to the south, north, east or west – name this location.
#124 cto on 11.18.16 at 8:02 am
#5 Millenial-falcon
Mr/Mrs Falcon.
There seems to be a short supply of housing in Van City and Toronto, but it doesn’t seem to add up.?
My experience and realtor friends, living in one of those two city’s is that there is tonnes of vacancy everywhere. I mean tonnes!
Seems Vancouver has such a high vacant homes issue, that the government felt compelled to tax them.
In Toronto, it is clear to many, and word on the street that price to rent ratio is so high that it is over 50% better value renting! Due to this, just about everyone I know that has a condo or house for rent is fretting quietly. They are either cash flow negative or holding a vacant investment. They are too proud to talk about it!
THE ELEPHANT IN THE ROOM
———
wrong, just because they are vacant does not mean they are available for lease to the public, try finding a place to rent with a goldfish let alone a cat here , oh you found somewhere? how much? north of 2000 for a 2 bed apartment? , lemme guess your not from van
#134 Keith in Calgary on 11.18.16 at 9:50 am
You never heard from that agent again did you?
@millenial falcon #180
Cap rates are terrible in Toronto. If you’re purchasing properties at these levels, there’s no way you’ll be able to make a decent amount of money.
Of course there will be a prize for the correct core location as will disclose Toronto’s biggest secret for fine dining at 1/2 price. How about a breakfast with two eggs any style including your choice of bacon, sausages, or ham. Then there is home fries, toast, and coffee, tea, or orange juice all for $5.49.
#5 Millenial-falcon
your right, im not from Van.
the monthly cost to rent a house in T.O is much less than the cost to own. those that have these investments are subsidizing their tenants.
As for Van,
wouldn’t you think that if a bunch of people are holding on to vacant houses, that logic would deduce that they would sell them as fast as the can the moment these assets start loosing value?
Like the other fella said, the show is just beginning, as the cracks widen in Van.
@Context #179, try jane and finch
#5 Millenial-falcon
one other thing my friend. something millenials have never experienced is interest rate increases. and as slow as they shall be there shall be a negative correlation back, maybe over the next 10-15 years.
good luck.
http://vancouver.craigslist.ca/van/apa/5850850067.html
http://vancouver.craigslist.ca/van/apa/5877882208.html
http://vancouver.craigslist.ca/van/apa/5872336159.html
http://vancouver.craigslist.ca/van/apa/5879470044.html
C’mon Millenial-falcon, if you’re gonna make the claim at least check craigslist first. Over 100 apt. condos, suites, homes etc. for $2000. or less on todays Craigslist Vancouver.
#171 Context on 11.18.16 at 3:26 pm
#147 Tony:- Trump is a man of many contradictions who blows a lot of smoke. His property portfolio benefited greatly from refinanced or new mortgages on his properties. He was not damaged one bit from the low mortgage rates as he welcomed it all with open arms.
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I’m at the FabTech show in Vegas right now. These guys are all trying to make a living in manufacturing things one way or another. What matters most is what these guys think. I had many conversations with the guys/gals running the booths today, and it’s easy to determine that Trump is the best news they’ve had in a long while. They don’t give a damn how rich he is, or how he made his money.