Boxed

fedex-modified

Here’s a fresh blog because, after all, you have nothing better to do today, and the liquor store’s closed. Me too, apparently.

GOING DOWN IN COWTOWN

It’s been a while since a single-family house in Calgary was selling for less than half a million. But here we are. Sales are falling, inventory rising and prices declining. The benchmark price for detached houses slipped to $498,300 last month, which is $17,000 or 3.3% less than a year ago. That’s also about four thousand less than a month earlier, which means anyone who bought a year ago and needs to sell today would be leaving about fifty grand on the table. Ouch.

Local realtors aren’t sugar-coating this. Says the local board’s economist, the pneumatic Ann-Marie Lurie, “I think when you look at the aggregate, it’s a reflection of some of the adjustments occurring in the upper ranges of the market and it’s been spreading into the mid-section, as well.” As for the growing number of listings: “Now, potentially, product has been sitting on the market for a lot longer and that’s starts to influence pricing.”

So Cowtown buyers are thin, and those in the market now are reaching for a falling knife. Oil continues to be volatile, and while the OPECers are trying to curtail production (and drive prices up) the Trumpians seem poised to frack things up over the next couple of years (and drive it back down). Combined with this Spring’s rising mortgage rates, expect cheaper houses.

DID YOU GET A RAISE IN 2016?

Yeah? Then you’re special. Just like Mom told you. But for most people, there’s a compensation backslide going on.

StatsCan calls this the worst wage slump in 15 years, with the average weekly wage in absolute decline – even before the current inflation rate of 1.2% (or 47% for cauliflower) is factored in. Average compensation for Canadian workers has been zero for a year – so when you adjust for inflation, most people are worse off. By the way, US wage growth for 2016 has been positive whiles ours is negative.

It gets worse in Alberta, natch. Wages there have fallen 2.6% in the past year, which helps explain the item above.

wages

YOUR HOUSE ATE YOUR PAYCHEQUE

Remember 1990? Sure ya do. Vanilla Ice was topping the charts, just to prove how screwed-up things were. I was a Member of Parliament and five-year mortgages were 12.5% (no relation between those two. Honest).

Because the cost of home loans was so extreme, houses were cheap (the average Toronto house sold for $255,500) but people were struggling to pay for them. So 26 years ago an awesome 63% of gross household income was required to carry the average house after slapping a big 25% down. (The mortgage I took on my townhouse in Ottawa after being elected in 1988 was 14%.)

Today five-year mortgages are (for now) in the 2% range, which has helped push average prices to the point of stupidity ($776,700, including condos). This helps prove the obvious negative correlation between the cost of money and the cost of real estate – verified by the Royal Bank when it tells us that once again 63% of pre-tax Toronto incomes are needed to carry that average shack. (Naturally, this is less than in Vancouver, where the stunned locals require 92% of untaxed income – about 115% of what they actually make – to afford a house.)

So, things are just as unaffordable now as they were when people were slammed with double-digit mortgages. When it comes to Toronto (unlike Vancouver) the market continues to advance, as low inventory combines with rampant speculation to drive prices up 20% year/year. Just imagine what the situation could become when five-year loans are 5%, rather than two. Or if the provincial real estate boss, former politician Tim Hudac, gets his way and persuades the province to dish out free down payment loans to moisters. Yes, just like in BC. It’s all worked out so well there.

WHEN REALTORS WEEP…

…pay attention. Speaking of Vancouver, the trends are unmistakable, and apparently irreversible, according to the country’s biggest housing flogger, Royal LePage. Sales have been falling for five months and average detached prices are $200,000 less than in the summer. Market activity peaked last February – almost 11 long months ago. So if you sell properties in YVR, the trend is not your friend.

LePage boss Phil Soper admits it, as his company calls for a ‘double digit’ drop in prices during 2017. “Home prices had gotten so out of whack with the growth in underlying wages and salaries that there had to be a correction,” he says. “And it’ll happen in 2017. “It’s a twitchy market — people live on more of a hair trigger. When there’s a change in external circumstances — like interest rates or economic confidence or government regulation — you feel it much more acutely if your mortgage eats up twice your disposable income compared to someone elsewhere.”

Rates will be rising in 2017, if not pushed higher by a skittish Bank of Canada, then certainly by the bond market as the US plumps the cost of money. Meanwhile exports are sketchy, job creation dodgy, wages slack and commodity prices uncertain. Soper is stating the obvious. But a ‘double-digit’ decline will not make average houses affordable to average families.

So, yes, more is coming.

87 comments ↓

#1 Last of the boomers on 12.25.16 at 6:06 pm

Merry Christmas and happy holidays. Garth, take a break! What are you doing posting today! Bless you Garth, Ryan, Doug, and all of the staff at Turner Investments!

#2 crowdedelevatorfartz on 12.25.16 at 6:13 pm

Geez Garth
I thought Ebeneezer Scrooge was the only person besides Santa that slaved on Christmas Day?

Bored?
Or just feeling sorry for us loser blogdogs going through Greaterfool “withdrawl symptoms” out there?

#3 Bram on 12.25.16 at 6:14 pm

Yeah, a lot of the bubble pricing is caused by low rates.
But a small part of the high costs is due to red tape.
A scary read on what the nanny state has become:

https://beta.theglobeandmail.com/opinion/all-i-wanted-to-do-is-build-a-house/article4346687/

Shame on you, government.

#4 rainclouds on 12.25.16 at 6:32 pm

Woo hoo . GT working Xmas! toadying over…….

Pathetic though. my highlight of the day.

Back to Calgary RE. as in foreclosure activity

http://jugglingdynamite.com/

#5 For those about to flop... on 12.25.16 at 6:32 pm

Normal programming resumed…

M42BC

#6 crowdedelevatorfartz on 12.25.16 at 6:33 pm

@#3 Bram
Yep.
The beaurocrats rule their little feifdoms with impunity.
Punishing people that dont follow “their” rules and using those self same rules to intimidate , harrass and hound a 92 year old man and his disabled wife.
Well done. I hope they feel proud of themselves for enforcing “the rules”
All brought before a judge who had more sense than these little govt pissants.
Perhaps when beaurocrats are made personally, financially responsible for the idiotic decisions that they try to “enforce” there would be less donkeys with clipboards in positions of authority.
Unfortunately we’d have to start at the top of govt and work our way down.

#7 Pete on 12.25.16 at 6:36 pm

Merry Chris†mas Garth.

#8 Dark Matter on 12.25.16 at 6:38 pm

Merry Christmas Garth to you and your’s.

#9 For those about to flop... on 12.25.16 at 6:52 pm

Hey ya,so I was checking out that website you posted the other day with all tha reductions in Vancouver, because I noticed a few had shiny new reduced logos on Zolo so I wanted to find out how much they had taken off.

The first one is the one I was checking out ,as it is just around the corner from me and was bought earlier this year for a quick flip,but they are now stuck with it in a declining market.

But check out that 1.5 million smackeroo reduction on the second one ,that’s some serious coin and an overwhelming confession of greed and overpricing.

Clean up on aisle 5…

M42BC

5540 Windsor Street, Vancouver
Nov 18:$1,788,000
Dec 23: $1,768,000
Change: – 20000.00 -1%

3290 Marine Drive, West Vancouver
Oct 31:$8,000,000
Dec 23: $6,500,000
Change: – 1500000.00 -19%

#10 Digby Ditherman on 12.25.16 at 7:18 pm

A CHRISTMAS PRAYER

Thank God … the sky is finally falling.

I, (and millions of equally luckless, stuckless Canucks) are really tired … after an insane decade of ‘crazy’ to keep “holding her up” …. year-upon-year.

Bank of Canada, et all be damned. Let her crash.

But please, please, …. let it finally be the really Big One. Wipe out all the corroded, fluff, flakery and discombobulated distortions from every corrupt governing system that pretends to care for us and our futures.

Time to get back to the basics. Even if its painful.

#11 John in Mtl on 12.25.16 at 7:23 pm

Merry Xmas Monsieur Garth, your squeeze and doggie ;)

Merry Xmas Mr Doug and Mr Ryan !

And, Thank You All for your relentless efforts to educate us, to warn us of potential mistakes, and for your good humou Garth; you sure are a tough Cookie :)

#12 Bob dog on 12.25.16 at 7:25 pm

Canadian can expect further reductions in their standard of living with the coming wave of automation, self driving everything and a government obsessed with immigration. I read about oil patch haul trucks completely automated. No high pay employee needed. Hell the Vancouver transit system has been self driving since 1986.

#13 acdel on 12.25.16 at 7:31 pm

Even though crowded elevator “something” thinks that I am a transplanted Quebec fellow living in Fort Mac, not that there is anything wrong with that unless you feel that you are not Canadian, if so, piss off.

Living is Cowtown for most of my life and going through numerous down cycles over the decades what baffles me about this one, I compare this recession to what we went through in the 80’s minus the interest rates, but why housing is not dropping at it has in previous downturns? Albeit it has dropped a small amount but nothing compared to previous downturns.

Cheap money I guess but something stinks about all this, not normal economically. Time will tell!

#14 John in Mtl on 12.25.16 at 7:50 pm

@ #3 Bram on 12.25.16 at 6:14 pm:

…But a small part of the high costs is due to red tape.
A scary read on what the nanny state has become:
https://beta.theglobeandmail.com/opinion/all-i-wanted-to-do-is-build-a-house/article4346687/

Shame on you, government.

Incredible, yes, what the world has become while we were not looking or too busy to care… There’s even a whole book on the subject, and it is indeed a sad tale:

“Bureaucratic Insanity: The American Bureaucrat’s Descent into Madness” https://www.amazon.com/dp/1530989523

#15 };-) aka Devil's Advocate on 12.25.16 at 7:54 pm

I knew it, the gig is up and 2017 is going to be the year I don’t sell a grain of dirt. Oh boo hoo hoo.

NOT

#16 moses on 12.25.16 at 7:59 pm

Garth you must celebrate Festivus . All the best to you and your family in the New Year

#17 drydock on 12.25.16 at 8:03 pm

Christmas cats.

…………………………………………………..

http://www.cbc.ca/news/canada/calgary/cats-christmas-trees-1.3912517

#18 Randy on 12.25.16 at 8:06 pm

Denying Reality. The only thing that Liberals are good at.

#19 Linda on 12.25.16 at 8:14 pm

Merry Christmas to all & here is hoping 2017 has better news economically for Canada as a whole. Yes, prices are dropping in Cowtown – the slump in O&G has quite a bit to do with that. News earlier this week, the municipal council/mayor are actually going to make less in 2017, due to an apparently negative CPI. Of course, 2017 IS an election year, so there might be some slight political reason as to why the drop in compensation was mentioned. To be fair, any increases are always mentioned via the news, so an actual reduction isn’t just because a municipal election is coming next October.

#20 Glen B on 12.25.16 at 8:23 pm

Merry Christmas to Garth and all the Blog Dogs.

#21 For those about to flop... on 12.25.16 at 8:38 pm

Mrs Flop is a Seahawks fan and was curious what games were on today as Sunday is normally NFL day but most of the games were played yesterday.

I came across this article from a few years ago on how the billionaire owners and politicians take the American taxpayers to the woodshed…

M42BC

http://www.theatlantic.com/magazine/archive/2013/10/how-the-nfl-fleeces-taxpayers/309448/

#22 Spatula on 12.25.16 at 8:55 pm

Oh boy… spatula ain’t no swamp.

#23 Smoking Man on 12.25.16 at 8:57 pm

Bat man alert on CAN bonds. Second ear drawn.

Bet accordingly…

#24 the Awakened One on 12.25.16 at 9:00 pm

” I was a Member of Parliament and five-year mortgages were 12.5% (no relation between those two. Honest). ” – Garth

Haha ! Very funny Garth… maybe it’s time we need to vote you back into that House of Hate.. and let the mayhem begin!

Happy Holidays, give Bandit a beer for me, would ya?

#25 Rich Louis on 12.25.16 at 9:21 pm

Garth,

A sincere, heartfelt thank you for keeping this fantastic blog going! Like a fine wine, it gets better with age – or you could say that ‘it’s not a lousy as it used to be’

Merry Christmas!

M40

#26 Rear window on 12.25.16 at 9:23 pm

#23 Smoking Man on 12.25.16 at 8:57 pm

Bat man alert on CAN bonds. Second ear drawn.

Bet accordingly…

—–

Tanks Smoking Betman.

This as an interesting analysis.

http://markets.businessinsider.com/news/stocks/A-core-part-of-the-American-dream-has-changed-and-it-helps-explain-why-Trump-won-1001629087

“Before the great financial market crisis, housing was always a very liquid asset,” said Schomer. “If you lose your job in Ohio, you sell your house and move to California, because that’s where all the jobs are. Because of the housing crisis, so many people have been so underwater with their mortgage that they couldn’t do that.”

“For the past six years, that typical mobility that we had in the US, where people would go where the jobs are, has been lost. At the same time, the jobs being created aren’t the kind of jobs that everyone can do. The people who lose their jobs in one industry can no longer just transfer it easily to another industry. There’s a cyclical element here, which is the housing story, and a structural element, that the skill sets are not easily transferable anymore.”

#27 Entrepreneur on 12.25.16 at 9:36 pm

Interstellar Carbon Tax

Kristie got a message
Mars had water,
images of constructing
biggest hydro dam,
but must clear all
the environmental points,
will work on it until
bright green light.

Ho, ho, ho,
All for Canada,
Canadian jobs and
Canadian businesses,
Ho, ho, ho.

Now T2 ears perked
wants in the act,
multi billion deficit
for an oil pipeline,
as for the infrastructure
international bank system,
star to star accomplishment
interstellar pipeline dream.

Ho, ho, ho,
All for Canada
Canadian jobs and
Canadian businesses,
Ho, ho, ho.

Any spills or disasters
world class response,
now we feel really safe
no worries at all,
and any emissions
Interstellar Carbon Tax,
and just think, all this
for us Canadians!

Merry Christmas, To All!

#28 Smoking Man on 12.25.16 at 9:52 pm

In 2016 We lost Bowe, Cohen, on Christmas day George Micheal RIP. 53 years old.

I always advocate more fun, less worry. Smoke, Drink, Gamble..

I’ve never been to exeited about watching a safe bet grow slowly. All in risk bets are such a rush.

Because when the universe has had enough of you, your just worm food.

You won’t remeber the good or bad shit you’ve done.
When all the people you know die, you where never here.

Might as well go all in with fun.

#29 InvestorsFriend.com on 12.25.16 at 10:47 pm

Wage drop of 2 percent?

Reality is more like most people hot a small raise and some people took a huge drop.

The mythical average wage owner basically does not exist.

No average exists. That’s why it’s, ah, average. — Garth

#30 InvestorsFriend.com on 12.25.16 at 10:48 pm

Got a raise and average wage earner…

#31 Cottingham a bargain on 12.25.16 at 11:26 pm

Is the difference between a mutual fund sales guy and one who sells ETF’s and or stocks just the fact that fees are less with ETF’s and stocks?

What I am getting at is that regardless of what fees actually are , I expect more from my mutual fund sales guy or etf sales guy than just to pick funds and etfs.

I would assume that your guys do more than that Garth but shouldn’t we expect the same from the guys who use mutual funds ?

Ultimately, whatever investment vehicles you choose to go with, isnt it about the overall service rather than the fees ?

Of course. Fee-based advisors (unlike fund salesguys) don’t ‘sell’ anything, since they collect no compensation for security selection. — Garth

#32 Cici on 12.26.16 at 12:17 am

Merry Christmas to all, and to all a good night!

#33 devore on 12.26.16 at 12:22 am

#15 };-) aka Devil’s Advocate

Yup, it’s all about you. The more things change…

#34 Ponzius Pilatus on 12.26.16 at 12:50 am

#28 Smoking Man on 12.25.16 at 9:52 pm
In 2016 We lost Bowe, Cohen, on Christmas day George Micheal RIP. 53 years old.

I always advocate more fun, less worry. Smoke, Drink, Gamble..

I’ve never been to exeited about watching a safe bet grow slowly. All in risk bets are such a rush.

Because when the universe has had enough of you, your just worm food.
You won’t remeber the good or bad shit you’ve done.
When all the people you know die, you where never here.

Might as well go all in with fun.
————-
Thanks Smokie,
For again pointing out that we are losing the brightest artists far too early.
While all the losers on this blog are mindlessly regurgitating : Merry x-mas Garth and bandit et nauseum.
People are dying like flies on Vancouver’s Eastside.
Garth, I get it.
This is not a blog where people come to rant against social injustice.
But, for Christ’s sake, the wellbeing of humans should always come before dogs.
So I say belatedly Merry Christmas to all the lost souls who succumbed to addiction in Vancouver’s Eastside and all over the World.
God bless them.

#35 Tony on 12.26.16 at 12:54 am

Re: #4 rainclouds on 12.25.16 at 6:32 pm

Genworth Canada has to rank as the best short sale I can possibly see. To see total morons buying the stock recently in sympathy with U.S. bank stocks rising is an absolute head shaker. Alberta will probably see tens of thousands of personal bankruptcies leaving Genworth Canada insolvent.

#36 Tony on 12.26.16 at 1:05 am

Re: #13 acdel on 12.25.16 at 7:31 pm

Obviously you haven’t sold any houses lately in Calgary. Prices are down on average 20 to 25 percent from the October 2014 peak. The last vacancy rate posted for Calgary was 37 percent (residential properties listed for rent but didn’t rent). The figure is currently climbing. Real estate fell about 30 percent in Calgary in the 1980 meltdown. That was back when CRA told the truth. Today all one has to do is compare the selling prices pre October 2014 with the selling prices today. Low and behold down 20 to 25 percent.

#37 steerage steward on 12.26.16 at 1:30 am

Get ready for 2017. Grath warned you

https://www.youtube.com/watch?v=rR8TqaHIOu4

https://www.youtube.com/watch?v=KRUErh47sao

#38 Too much debt on 12.26.16 at 2:25 am

BOC is warning. Is anybody listening?

https://youtu.be/rR8TqaHIOu4

#39 Polls R Phake on 12.26.16 at 4:38 am

If you take out the public service – whose wages only go up – I bet you that drop in wages is much lower.

#40 When Will They Raise Rates? on 12.26.16 at 6:24 am

@ #14 John in Mtl on 12.25.16 at 7:50 pm

Thanks for the link. This is why I vote Libertarian…

If Garth will allow it, here’s the full text:

‘All I wanted to do is build a house’

It was the fifth house that Craig Morrison built with his own hands, and the last. He had built things with his own hands for 70 years, often using lumber he produced at his own small sawmill. Now he would build a modest, single-storey house where he could look after his wife, Irene, suffering from Alzheimer’s. He would do the work himself, of course. Didn’t everyone in New Brunswick? “I’m not flush with money,” he explains now. “I didn’t want to go into debt.”

Thus it was that Mr. Morrison broke ground three years ago – at 88 – for a bungalow on land overlooking the Bay of Fundy near St. Martins, a seaside village east of Saint John. And thus it was that Mr. Morrison got into trouble with the law for the first time in his life.

In the past two years, building inspectors have hauled Mr. Morrison into court six times, each appearance more harrowing than the last. A couple of weeks ago, the provincial agency that employs building inspectors demanded that the court forcibly remove Craig and Irene Morrison from their home, that the house be bulldozed, and that Mr. Morrison be found in contempt of court – meaning, almost certainly, imprisonment.

Mr. Morrison worked long hours into his 92nd year, fixing the inspectors’ long lists of defects. But for the court, he made his position clear: He would not vacate the house. If the court found him in contempt, he would go to jail.

In a memorable account of these proceedings, New Brunswick Telegraph-Journal writer Marty Klinkenberg reported Mr. Morrison’s lament: “I thought this was a free country, that we had liberties and freedoms like we used to have, but I was sadly mistaken. … All I wanted to do is build a house, and I was treated as if I was some kind of outlaw.”

Building inspector Wayne Mercer found many things wrong with Mr. Morrison’s house – although it wasn’t obvious that the building-code infractions he cited made it particularly unsafe. He noticed that Mr. Morrison’s lumber – custom-sawn – did not carry the requisite stickers. The windows did not carry the requisite stickers, either. The roof trusses and floor joists, he thought, were questionable. He wanted the ceilings torn out, drywall removed and wall studs replaced.

“[The inspectors]seemed to find fault with everything I did,” Mr. Morrison said. “They were out to get me because I was doing it with my own land and my own lumber and my own trusses and floor joists in my own time.”

At one point, a professional home builder, Raymond Debly, volunteered to do an independent inspection. He determined that the house exceeded the requirements of the National Building Code. It was “built like a fort.” The lumber, old-growth spruce, was superior to any lumber on the market. (“Some stamped lumber,” he said, “shouldn’t be used to build a doghouse.”) The floors were double strength. (“You could walk an elephant across them.”) And the trusses were fine. (“They were built the old-fashioned way,” said Mr. Debly, himself 80, “the way we did it in the ’60s.”)

Mr. Morrison’s long struggle with an implacable bureaucracy came to a merciful end in a Saint John courtroom on Nov. 1 when Mr. Justice Hugh McLellan ordered the planning commission to negotiate a settlement with Mr. Morrison, saying, “I’m not going to order a 91-year-old man to jail and have his wife placed in a nursing home.” The planning commission subsequently agreed to allow the Morrisons to live in their home, without further molestation, until they die.

Son of a lumberman and cattle rancher, Craig Morrison comes from self-sufficient stock, the sturdy people who built this country with their own hands. He raised seven children (and has 14 grandchildren and eight great-grandchildren). Yet, government inspectors almost took him down.

This is a true Canadian story, a cautionary tale of the tremendous power of the state over the individual in an age of pervasive bureaucracy. It is, indeed, a profound parable of irretrievably lost independence and casually forgotten freedoms.

#41 Freeman on 12.26.16 at 8:01 am

Oh Oh, according to this study, mortgage rates will be 2% higher in 2 years time.
http://www.zerohedge.com/news/2016-12-25/scariest-forecast-treasury-bulls
Now this is the trigger that will finally POP the Canadian housing bubble.

#42 Les on 12.26.16 at 8:27 am

You are giving the impression that a 63% affordability index for both 1990 and now are somehow comparable.

However the prospect of paying off 3x the amount of debt now compared to 1990 is in no way comparable

In 1990 a decline of interest rates would permit the subsequent payment of principal whereas now an increase in interest rates would make principal payments impossible

Debt can certainly be paid off quicker as rates decline, but did you miss the part about houses costing 300% more? Moreover, rates will not stay where they are for years to come. Does not end well. — Garth

#43 Bluebird on 12.26.16 at 9:21 am

Thanks Garth for a year of great reads & belly laughs! Enjoy the holidays & our best wishes to you and yours :)

#44 Keith in Rio on 12.26.16 at 9:47 am

Laying under the fan in my condo……..currently feels like 42 degrees and it’s only 1245 PM…….reading the snowfall warnings in Calgary online………heh.

I remember the times Garth is writing about……..and I’d rather carry 200K of mortgage debt at 12% than 700 at 2%…….

Eventually you can pay the 200K off with lump sums…….you’ll never pay off 700 unless you win the lottery.

#45 disconnect on 12.26.16 at 10:05 am

Sorry if someone has asked this already.
If ones down payment for a home is suppose to be un-leveraged money to qualify for a CMHC insured mortgage. Then how can BC’s down payment loan program for first time buyers qualify as part of one’s down-payment? Am I missing something here?

#46 NoName on 12.26.16 at 10:40 am

As sit and type this and I look back what my family and i did in 2016. Putting in consideration not having family vacation, times when we pushed fabric of time and sanity past breaking point, and that we every day found our self in uncharted territory of life, i come to one conclusion, not only that we survived this year, actually we did very well this year.

Everyone accomplished something important or gained valuable experience from their good or bad decision.

So blog dogs i would like to thank you all for all sane or insane comments, there is always what not to do, to learn from comments in steerage bilge section of this blog.

And on a another note, my smoking hot wife outdid her self yesterday, she made sure that bird and potroast was perfect, and that
essentials are ready to hand.

note to my self
-should get out more next year

#47 drydock on 12.26.16 at 10:45 am

McMansion Hell.

http://kunstler.com/podcast/chatting-kate-wagner-mcmansion-hell-dot-com/

http://www.huffingtonpost.com/entry/mcmansion-hell_us_57ffb8e2e4b0e8c198a6a4b5

#48 Bram on 12.26.16 at 10:53 am

#4 Bram

Sorry, I didn’t realize it when I linked it, but the story of the builder and the inspectors is from 2010, thus old news.

It was made into an acclaimed movie: “Still Mine.” http://www.imdb.com/title/tt2073086/

The man and his wife since died.
The house was for sale.
And the house was sold in 2015:
http://crowtherrealestate.ca/properties/2020realestate/f-print_page.asp?action=brochure1&ID=49

#49 Queen supported Brexit on 12.26.16 at 10:57 am

Who thought our Queen was so “deplorably” progressive?

http://www.independent.co.uk/news/people/brexit-latest-news-queen-said-she-backed-uk-leaving-eu-a7495926.html

#50 Penny Henny on 12.26.16 at 10:58 am

#13 acdel on 12.25.16 at 7:31 pm

Living is Cowtown for most of my life and going through numerous down cycles over the decades what baffles me about this one, I compare this recession to what we went through in the 80’s minus the interest rates, but why housing is not dropping at it has in previous downturns? Albeit it has dropped a small amount but nothing compared to previous downturns.

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

May I float a theory?
Perhaps prices aren’t dropping like rocks (yet) is because these days it is much easier to get a HELOC.
So those with some equity in their homes are borrowing against said homes to cover the bills and the mortgage.
This buys them time and the housing market is not getting flooded with people who HAVE to get out.

#51 religion vs spiritualism on 12.26.16 at 11:11 am

#34 Ponzius Pilatus

So I say belatedly Merry Christmas to all the lost souls who succumbed to addiction in Vancouver’s Eastside and all over the World.

God bless them.

===

Amen.
G_d bless you Ponzius Pilatus.

#52 Alberta Bound on 12.26.16 at 11:18 am

Re comment by Polls R Phake. So true about government salaries. Trudeau and Notley are puppets of the public sector labor unions. Given the financial climate, these unions need a 20% pay cut across the board and the sooner the better. Won’t happen with Trudeau and Notley. We need new leadership.

#53 NoName on 12.26.16 at 11:21 am

#40 When Will They Raise Rates? on 12.26.16 at 6:24 am

This is why I vote Libertarian…

—-

Maybe before you go to vote next time maybe you should watch this virdeo.

https://youtu.be/-EYM8sQlMic

#54 Deccie Mcknoll on 12.26.16 at 11:26 am

Merry Christmas to:
-Garth
-Lewanza
-Rowat
-Garth’s Dog
-Smoking Man
-Mark
-Freedom First
-And all the Realtors out there!
-Oh and Team Canada Hockey!!

#55 Context on 12.26.16 at 11:31 am

#33 devore:- I am glad you didn’t use the name Devour when you associated it with the Devil’s Advocate as you got my attention. Devour is the name of a horror movie which scarred the hell out of me that involved using the computer at a university. You never know who the pretty gal is your dating, and not a movie you would ever want to watch, as Krumpus pales in comparison.

#56 Jimbo on 12.26.16 at 11:39 am

On Christmas day, after some bottles of cabs, syrahs, and pinots it was finally asked. Will rates go up?

Participating in the discussion was: a realtor, consultant for one of the big 5 , 2 engineers, an educator and a lawyer.

Our conclusion was more or less in line with what Garth said. The whole notion of BOC not wanting to match FED increases 1 for 1 is tail telling in itself. Canada is not doing well. It’s a sick puppy and the cure, whatever that may be, could end up being worse than the disease.

If BOC raises rates, they will do so knowing there will be casualties. This would in turn risk T2’s re-election. The FED would have to raise the rate a couple of times for BOC to begrudgingly raise it once. Irrespective of what BOC does, the banks will increase their spread in 2017 and onward.

Anyway you look at it, if Canada keeps rates where they are or even if Canada raises rates, purchasing power will decrease in 2017.

#57 WUL on 12.26.16 at 12:03 pm

#21 FLOP

Thanks for that link re taxpayers funding the NFL. I read the article a long time ago but now I have saved it so I can send it to Mayor Nenshi and Calgary City Council when the billionaires Murray Edwards and Clay Riddell come asking for my money to pay for their hockey rink. Don’t get me started.

#58 For those about to flop... on 12.26.16 at 12:29 pm

One of the barometers I like to use to see how healthy an economy is,is to see how much hoteliers can get away charging for a nights accommodation.

During the 08/09 time period I remember staying in the downtown Portland Marriott and the Hyatt in downtown Phoenix for less than $80 Canuck bucks a night.

After scrolling around for a while last night ,looking for a target for spring break next year and looking at what the hotels were asking that we stayed at recently the trend is definitely up.

I will go anywhere once as long as there are no budgie smugglers…

M42BC

#59 ANON on 12.26.16 at 12:38 pm

Remember 1990?

How about remembering something closer, like2008?

At least this time when someone?asks why no one saw it coming, BOC will have the youtube link ready. The “ifs” are also popping-up like mushrooms after the rain, all over the media. Think of them as “whens”, instead. Many saw it coming.
Merry Christmas, Garth and blogdogs! Last Christmas is shaping up to a whole new meaning…

#60 Flamed out in Kitchener on 12.26.16 at 12:47 pm

Happy Holidays Garth. Thanks for all the good information and keeping it real … always with great humour.

May we all have a healthy and prosperous 2017.

Oh and Justin, Kathleen, and Rachel … look in the mirror and do the right thing for Canada and step down and let some adults take charge. Canada just can’t afford you any more.

#61 InvestorsFriend on 12.26.16 at 1:10 pm

The Concept of Average can be VERY misleading

No average exists. That’s why it’s, ah, average. — Garth

*****************************
Agreed, no average person exists.

The problem is that it is almost automatic to interpret the average wage level as being a TYPICAL wage level.

The average earnings may have gone down about 1% but in reality almost no one got a 1% decrease. Instead a bunch of high wage jobs disappeared and we got more lower wage drops. Many people got a small raise in 2016. Some people got fewer hours.

This is VASTLY different than the case if most or even large numbers really got a 1% decrease.

The meaning and implications of average wages or average house prices and even average temperature is misinterpreted greatly every day. In some cases typical may be close to average. In the case of the average 1% wage drop, it is obvious that that is anything but typical.

#62 conan on 12.26.16 at 1:26 pm

Almost worth an article about what percentage of your house cost is development fees and taxes.

This should do it.

https://www.youtube.com/watch?v=R2nAflFSjv8

#63 John Z on 12.26.16 at 1:30 pm

Hey Garth. I’ve been an avid reader of this blog but never commented before. However after last night’s dinner at a friend’s house in Mississauga (suburb of Toronto for those who dont know) I couldnt help myself but to share what I heard.
People in the GTA have totally lost their minds. They are under the assumptions that this price growth in housing of the last decade will continue forever. Many friends and relatives of my buddies have quit their jobs to become morgage specialists and real estate brokers because this is where the money is. Its sickening and maddening. I met a guy there whose family bought their house in mississauga 6 years ago for 600k and now it has doubled in value and the guy believes that it will keep climbing and no force in the world can stop this price appreciation. When I asked him why he thinks that? He said because ‘we are special.’ His arrogance was very visible and was there for all to see. It was at this point where it hit me: every Tom, Dick and Harry is involved in the Real Estate one way or the other and usually this is the time when rug is taken away from under the feet. Remember the gold climb to $2000? Everyone wanted to buy gold and where is gold now? Remember the insane Vancouver housing prices and the big lineups at the showings? Where is the Vancouver housing prices heading now? Remember the dot-com bubble? Enough signs for me to stay away from this madness but I’m sick to see how many of the peopld I know are blind to see the real picture.

#64 jess on 12.26.16 at 1:53 pm

what is a “meth bot farm”

this “bot farm” generates $3 to $5 million in fraudulent revenue per day by targeting the premium video advertising ecosystem.

Falsified domain list and full URL list to show the magnitude of impact this operation had on the publishing industry

IP addresses known to belong to Methbot for advertisers, their agencies, and platforms to block.

https://www.whiteops.com/methbot

#65 InvestorsFriend on 12.26.16 at 1:59 pm

All I wanted to do was build a house

The story at number 3 is from 2010 and I saw a movie a couple years ago that must have been about that exact story. (Or the exact same story has played out more than once, which is quite possible.)

#66 For those about to flop... on 12.26.16 at 1:59 pm

Well,as the year draws to a close and another celebrity passes away ,which is now a weekly event,it’s only natural that we reflect upon the year.

One of my biggest losses this year was my substitute teacher BOOM ,who used to help me break down Garth’s posts when he was busy with the other kids.

Not real sure what happened to the guy ,but it made my smile the other day when a few posters asked where he was.

We became fast online friends , much to the annoyance of the guys who come here daily to start an argument and he changed his handle from Retired BoomerWI to BOOM after I started calling him that as I am a lazy typer.

He was one of the first and most constant supporters of my GAP code idea which came to me during a generational war on here as a way to state some details about yourself quickly and also to sign off with, also to lower the curtian of anonymity for those concerned about people posting under handles as a way to humanize the posters thoughts.

I don’t really have the vocabulary to fully state what I mean on this point ,but I guess you could say it’s a way of stating this post was written in good faith, even when I am being mischievous and stirring someone.

Someone asked if he got banned or got disinterested,the answer is no ,he wasn’t fighting with anyone and we were having fun with the U.S election and he always announced when he was taking a break.

People come and people go on this blog,but I believe he cared enough about us to leave with no misconceptions as to why he wouldn’t be writing anymore.

To be honest ,I don’t really care if BOOM was a 28 female stripper living in Florida that was catfishing me,that person did what a lot of us hope to do when we leave a comment, they made me laugh, made me think from a different perspective and we mutually respected each other although we had different views on a lot of things.

BOOM loved this blog and was honest enough to discuss the faults with his country and try to understand what makes Canadians tick as I do daily ,even though the last few years I have become one myself.

I hope he is o.k .but I don’t think so as I mentioned before he loved catching up with us each day and being a one percenter of visitors to this blog that took the time to leave a comment and document our daily thoughts.

As you could tell by the bosses post yesterday,minds don’t stop ticking over just because it’s a public holiday and this place is a refuge for the inquisitive.

Not real sure how you cap a post like this one, but I guess I’ll do BOOM proud and post our GAP codes together as a sign of our friendship and our intention to laugh and learn at the same time…

M42BC
M64WI

#67 InvestorsFriend on 12.26.16 at 2:09 pm

Penny Henney’s Debt Theory (from number 50)

“May I float a theory?

Perhaps prices aren’t dropping like rocks (yet) is because these days it is much easier to get a HELOC.”

***************************************
Absolutely. These days people can continue to run up debts for a year or two after loss of a job. As long as you pay the minimums, no alarm bells go off at the bank.

I believe you can literally withdraw cash from your line of credit to make the payment on the SAME line of credit. (I did it once just to try it.)

Why should anyone fail to make a payment when there is plenty of opportunity to borrow new money to pay old debts? Done quietly, the bank has no idea that the borrower has lost their job. But check the fine print, I suspect we might be obligated to tell the bank we have lost our job before taking out more money on the line of credit. But I have never heard any stories of anyone getting in trouble for not telling the bank. But done on a large scale it would amount to fraud.

#68 Libertarian on 12.26.16 at 2:13 pm

#53 NoName on 12.26.16 at 11:21 am

#40 When Will They Raise Rates? on 12.26.16 at 6:24 am

This is why I vote Libertarian…

—-

Maybe before you go to vote next time maybe you should watch this virdeo.

https://youtu.be/-EYM8sQlMic

====

Yeah, that guys is not Libertarian.
A Libertarian would never wear that t-shirt.

#69 cramar on 12.26.16 at 2:40 pm

#21 For those about to flop… on 12.25.16 at 8:38 pm

Mrs Flop is a Seahawks fan and was curious what games were on today as Sunday is normally NFL day but most of the games were played yesterday.

I came across this article from a few years ago on how the billionaire owners and politicians take the American taxpayers to the woodshed…

M42BC

http://www.theatlantic.com/magazine/archive/2013/10/how-the-nfl-fleeces-taxpayers/309448/

—————

21st century version of the Roman Coliseum to keep the masses entertained. The real suckers are the Joe Sixpacks who pay hugh amounts for tickets to pro sports. One way to financial independence is to never spend more than $20 to attend a sporting event. If nobody went because it too ridiculously expensive, the whole house of cards would soon collapse.

#70 Context on 12.26.16 at 2:42 pm

This is for the Toronto condo high rise suckers who love the view paid with debt. Costs on all fronts will be rising going forward as no discounts are in sight. Did you get a raise this year in wages or was the bonus a bit short? Did the Christmas Party get cancelled this year and the presents are few because the credit card has been maxed out? The only item that can justify an increase in asset value of the condo must be a rapid increase in wages. Kind of looks like you might have a problem, and why didn’t you sell to rent with those tax free dollars when you had the chance to do so? P.H. made a good point above, as she has it figured out.

#71 Kevin Li on 12.26.16 at 2:50 pm

Alberta is in trouble because there has never been any real leadership there. It’s always been a one industry place, and they didn’t save any REAL money during the good times and didn’t diversify properly into other sectors associated with oil/gas. Now the NDP is putting an ideological stranglehold on it with a $15/minimum wage. We’ll see Premier Kenney next.

Most Canadian commentators simply don’t understand the real estate market in places like the GTA. Wealthy people are coming here and they want nice homes, low crime rates, big homes, and the GREENBELT.

These aren’t people who are worried about a blip in the interest rates and they don’t have to worry about the local call centre laying off people or Rogers cutting staff. They already have money and are looking for a nice safe place to live.

This is why the GTA (and now even north of it, like in Sharon, Queensville) is taking off and won’t be going down like the rest of normal Canada. Like there are certain communities in wealthy parts of Toronto that are rock solid.

#72 Kevin Li on 12.26.16 at 2:53 pm

Would like to add:

Trudeau is wrecking the Canadian economy.

But with a dead low Loonie and more immigration, Canada is cheap for people looking for safety, good schools, GREENBELT from other countries where it’s not “shameful” to make money and you don’t get taxed to death.

#73 Barb on 12.26.16 at 2:55 pm

“StatsCan calls this the worst wage slump in 15 years, with the average weekly wage in absolute decline…”

———————————————-

It’d be even worse if SC omitted government employees: municipal, provincial, federal.

#74 condomania on 12.26.16 at 3:18 pm

Over a big Xmas dinner I found out 2 relatives had each bought THREE, count ’em, THREE condos in a huge new development.

The plan for each is to retire in 2 or 3 years when the development is finished and then sell their big city home and one or two of the condos to help fund their retirement.

They had each talked many friends into buying condos in the same development on spec too.

“Can’t possibly lose!”

“Prices will never go down again”

“I’d buy more if only I could find a way to get the down payment”

“I tried to buy another one but they wouldn’t let me”

Interesting, very interesting.

#75 acdel on 12.26.16 at 3:42 pm

#36 Tony

Thanks for the feedback!
Not in my neighborhood, still selling fast mind you not as much as the good years but nothing like the discounts of the past when down turns occurred. Just not happening!

#76 acdel on 12.26.16 at 3:46 pm

#50 Penny Henny

Your theory I can relate to, thanks.

Mind you it is surprising the resilience of people this time around comparing to the past; I “DO” wish them all the best. The 80’s were dreadful, so many of my friends parents lost everything, I hope that this will never happen again.

#77 Dan on 12.26.16 at 3:48 pm

I hope you are right and people can talk about something else other than real estate in BC for a change. Wouldn’t it be great if you could simply rent close to where you worked for a reasonable price without being looked down upon from the debt slaves. Wouldn’t it be nice if speculation stopped completely?

Where the place you live was simply that, a place to live because you need one and not an ATM, leveraged to the nuts investment that only goes up in value so you can get rich 100% guaranteed because the bank gave you 95% of the money (backed by the tax payer and CMHC and zero risk to them).

What a silly idea. How did it come to this?

I’ve asked this question a few times and still now answer- can someone explain to me how houses and most decent apartments being extremely unaffordable is good for any city and the economy?

Or how forcing people to pay most of their disposable income to the bank or (for that risk free generous 2% mortgage for a house you can hardly afford) or get abused by stupid rents is going to benefit any city or any economy?

This deserves to not end well.

#78 Dan on 12.26.16 at 3:52 pm

Oh, forgot to add, wouldn’t it be nice is the government would stop toying and distorting the real estate market so it could finally be free to explore supply and demand based on incomes and not subsidised loans, give out free down payments, supply record low interest rate loans from banks with virtually skin in the game backed the tax payer.

I wonder what would happen?

#79 Smoking Man on 12.26.16 at 3:56 pm

#54 Deccie Mcknoll on 12.26.16 at 11:26 am
Merry Christmas to:
-Garth
-Lewanza
-Rowat
-Garth’s Dog
-Smoking Man
-Mark
-Freedom First
-And all the Realtors out there!
-Oh and Team Canada Hockey!!
……

Perhaps all the flu meds I’m on right now are making me a bit snapy, I have a problem with the order of names. Don’t get me wrong, I’m sort of honoured to be on this list.

But why the hell is Mark above Freedom First?

#80 Cottingham a bargain on 12.26.16 at 4:20 pm

Also, as an add on to my previous post, isn’t it kind of an advantage to have an advisorand a portfolio manager on the mutual fund both with an interest in good performance as opposed to just a fee based advisor?

Aren’t two eyes better than one so to speak ?

#81 Mark on 12.26.16 at 4:27 pm

“But a small part of the high costs is due to red tape.”

If housing were scarce, rents would be skyrocketing. But they’re not. In fact, rent growth has been anemic, telling us that there’s no problem on the supply side of housing.

The real story is that speculators have expanded what they’re willing to pay multiple-wise. Nationwide, housing trades a P/E ratio in excess of 35 on an equivalent basis to stocks. Given historically low growth in rents, a justifiable P/E is only around 10. The high prices are caused, not by foreign money, but rather, by excess enthusiasm of financiers. Excessive numbers of “landlord families” eating up 20-30 units a piece heavily on credit, are heavily behind the Vancouver/Toronto bubbles.

#82 Mark on 12.26.16 at 4:32 pm

“Anyway you look at it, if Canada keeps rates where they are or even if Canada raises rates, purchasing power will decrease in 2017.”

Purchasing power of Canadians who are reliant on borrowing, sure. But as Canadians can no longer borrow as collateral values are falling, the Canadian dollar’s purchasing power should increase (deflation). Fewer dollars chasing the same (or even more) goods. It was the expansion in lending that caused the depreciation of the Canadian dollar as people short-sold Canadian dollars and went on shopping sprees of domestic and imported goods. Vacations to the local “lake” turned into bi-yearly vacations to Mexico, Asia, and Europe for a large number of Canadian families. When all of this goes into reverse, the Canadian dollar should do extremely well, despite the Bank of Canada being forced to lower interest rates to make up for the lost demand.

What people seem to forget is that every dollar borrowed is one that eventually has to be paid back. So with so much consumer debt in the Canadian system, there’s a lot of latent demand for Canadian dollars building in the system. Which is why deflation and lower BoC policy rates are likely in our future, independent of what happens “down south”.

#83 Merry Christmas TO... on 12.26.16 at 4:39 pm

#79 Smoking Man

Perhaps all the flu meds I’m on right now are making me a bit snapy, I have a problem with the order of names. Don’t get me wrong, I’m sort of honoured to be on this list.

But why the hell is Mark above Freedom First?

Calm down… you are not in the classroom.

Here is a bone for you…
https://www.youtube.com/watch?v=cTDrWAc-kY8

#84 Original dave on 12.26.16 at 4:47 pm

Family divided over this whole real estate thing. Parents insisting children buy because everyone else is. Makes for a very tough holiday with lots of tension. No one takes real estate more serious than italians. If people only knew how obsessed italians are

#85 Entrepreneur on 12.26.16 at 7:21 pm

#45 Dan…maybe this will help…need 20% down to be insured by CMHC…and the free interest loan only to a certain priced home.

#77 Dan…look up free international trade and trade, find the difference. Once you understand that then you can understand how our leaders talk. Hint, not to us.

Look at Britain with Brexit and U.S. with Trump. People in those countries had enough of free international trade.

#86 Exurban on 12.27.16 at 1:46 am

…you have nothing better to do today, and the liquor store’s closed.

Another difference between Toronto and Vancouver — yesterday when I was preparing for Christmas dinner at our house I realized I had forgotten to buy a bottle of port for our guests. I googled “liquor store open Christmas Day Vancouver” and was surprised to find that at least 15 private liquor stores in the Lower Mainland are indeed open December 25.

#87 Vern in Cowtown on 12.27.16 at 3:52 pm

Learning: Median Calgary condo prices are down 14% YoY (In December).

Boom would’ve wondered why Canadians, with access to ample space n geography, would pay a premium to live in an elevated closet that requires you to pay rent (strata fees) even after you own the place.