Over the last few weeks this pathetic but addictive blog has tried to warn the nation. The nation ignored it. There are now multiple offers being made on houses all the way from Lunenburg (seriously) to the dodgiest streets of Toronto, through the windswept grape fields of Niagara, the smoke of Hamilton right into the thirsty underwear regions of Victoria.
Almost everywhere, there’s limited supply – but still-cheap mortgages and buckets of house lust keep people buying. Yes, many markets are materially slower than they used to be, but prices have not corrected as one would expect. For every smart seller grabbing windfall gains there for four drooling greater fools with fat pre-approvals waiting to buy. In all of the GTA, for example, list prices are mere suggestions at where the opening bid should be placed.
The yellow flags, meanwhile, are everywhere. Debt is rampant. CMHC this week warned of seriously overvalued markets. The Bank of Canada’s freaked enough to consider another rate cut. The feds are apparently readying more measures to douse the fire. And it’s starting to look like everything done to date – higher downs, the moister stress test, lender restrictions, bigger mortgage insurance premiums – ain’t working.
Real estate’s a disease. Never more costly, it’s the opiate of the masses walking into historic levels of long-term borrowing even as a unpredictable, mercurial bully moves into the White House. Do people not know this could raise interest rates, whack the economy or jack the jobless rate? Probably not. And they don’t care.
Well, it’s not just me trying to save people from themselves. Analyst Jason Bilodeau, of Macquarie Research, is also warning of a train wreck in the making, and has just issued a report to let people know “what a real housing correction looks like.” Unlike what most Canadians believe, when real estate makes that fateful adjustment it will be neither shall nor short. Past corrections, Bilodeau found, have ranged from 5% to more than 25%. “But this time will be different,” he says, “and we mean worse.”
I thought you might be interested in Macquarie’s summary. Print this. Leave it on your daughter’s pillow.
“We maintain our view that there will be a material moderation in Canadian housing activity in 2017. We expect slower domestic Personal Loan growth to reflect a material moderation in domestic housing activity including lower new home construction, lower sales activity and moderating/declining pricing.
“The risks of a more severe outcome have risen in our view. Concerns reflect 1) a housing market which is overstretched by many measures 2) increased regulatory interference aimed at cooling the market place and 3) evidence of suggesting a correction is now underway in select markets.
A 25% drop would seem probable (US crash was 32%)
“History suggests that such a correction could be severe. We have studied several previous housing corrections in Canada dating back to the 1970s. Regional Price corrections have ranged from 5-10% to as much as 25%+. By some estimates, it would take correction of 15% to 30%+ on average in current house prices to return to trend levels. During prior housing corrections, bank stocks have declined on the order of 20-25%.
“But this time could be different…and we mean worse. HH leverage is at all-time record highs, the recent pace of price appreciation is nearly unprecedented, housing is more important to the economy than it has ever been and fiscal policy is already highly accommodative.
Compared to incomes, prices are unsustainable
“If a housing correction unfolds, we believe that there is likely to be material downside to the current operating outlook for domestic lenders. We considered lower levels of personal loan growth and higher levels of credit losses. Based only on first order impacts, 2017/2018 estimates could be lower by 5% to as much 15-20%. We would expect actual results to be worse when compounding factors are considered.
“We are downgrading CIBC, MIC and HCG from Neutral to Underperform to reflect our growing concerns regarding the domestic outlook. As the risks regarding the domestic economy rise in our view, we want to further reduce our exposure to domestic banking, Canadian Housing and the Canadian consumer. Notwithstanding their discounted multiples, we believe CM, MIC, and HCG offer the greatest exposure in our coverage universe to the risk of further deteriorating domestic conditions. TD Bank remains our only Outperform rated name.”
Look familiar? Canada on the same pre-crash path as US
158 comments ↓
None of it matters because Trump’s war with the PRC is now “imminent”. I wish I was being facetious. http://www.washingtontimes.com/news/2017/jan/27/us-impending-war-china/
Garth…You can’t fix Stupid.
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Wooooo bring on this 25% adjustment, and I will be waiting to scoop up a deal.
This is insane, when buying stuff don’t people want to get deals and not pay over asking? Had to sell Granny’s house in the GTA area, first offer came in 22% over asking, are people just out to lunch?
God bless you Garth Turner
Your great blog has helped turn Canadian consensus against Toronto SFHs for the last decade, allowing me to accumulate C01 and C02 detached and semis cheaper than otherwise possible.
As Howard Marks writes in “The Most Important Thing”,
the best trades are when:
1) you are right
2) the consensus is wrong
I love this blog
BTW I see something similar in the equity markets today
Consensus view: US stocks overvalued
What do I do? BUY
This is why the Bank of Canada Governor Steven Poloz should cut interest rates now from the extremely high 0.50% to below 0.05% to boost spending.
We need our Canadian loonie to be lower in value to boost our exports and real estate sales to foreign buyers who need a stable country to start a family.
Poloz complained a few days ago that a 70-cent loonie is too overvalued.
He is right. The Canadian loonie should be at below 50 cents today. It is important that the Canadian loonie be competitive in this global market.
Canadian citizens should petition for a 30 cent Loonie to boost our exports and develop our economy and real estate market in the Toronto-Golden Horseshoe area. Our Canadian Loonie is too high that it is not creating jobs in Ontario.
I pray that the Canadian loonie go lower than 50 cents this year to boost our manufacturing in Ontario. We need a lower loonie to boost our economy.
Its nuts out there. Housing market is on fire again. Canadians are plain insane to buy these cardboard comstructions for lifelong earnings. They will never pay them off. Wages are not even close to support this maddness. Why is this happening?
Everyone I know with a house is saying the same. Oh we don’t care if it drops 20% – it’s a place to live, forever house, high demand area.
Their goose is cooked.
Can’t believe the amount of people I know that are sitting on a gold plated retirement, if only they sell their grossly overpriced house. Thier comments? It’s only going to go up further and they don’t want to leave any money on the table! Ai Ya!
Well in my neck of “eviscerated” Vancouver (Pt Grey) two houses within 2 blocks of here have sold recently for over $5m after less than 1 week on the market. Not locals buying either so 15% Christy tax apparently no deterrent. Entirely anecdotal I know, but fwiw, one of the two sold +$1.5m than it went for 18 months ago.
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Why bother using numbers and graphs to tell people why houses are overvalued? These greater fools don’t know how to add or subtract!
Attention Kmart shoppers there’s a blue light special in isle 4 – canadian houses on sale
Thanks for your persistence Garth.
Unfortunately the financial knowledge of the average person is atrocious.
And then consider the knowledge of half of the population is below the average.
Maybe those that frequent your blog will be aware of the impending mess and act accordingly. Or not.
Last weekend at the Toronto international Boat Show VIP opening day.
Many buyers signing on the dotted line and sold signs evident. My take is the wealth effect created by home equity.
I saw this game back in the late 80’s when everything was great until it suddenly wasn’t.
BTW: A friend sold her Lunenburg heritage home in 2 days. She bought it 2 years ago after it had been on the market for 2 years. Sold for $25k more than she paid in a stagnant market.
Today: 600 GM Canada jobs going to Mexico; 1340 jobs at HMV Canada to be lost in next 8 weeks. Canada is not in a good place.
“The Bank of Canada’s freaked enough to consider another rate cut. The feds are apparently readying more measures to douse the fire. And it’s starting to look like everything done to date – higher downs, the moister stress test, lender restrictions, bigger mortgage insurance premiums – ain’t working.”
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It’s not working because everything done to date has not been a rate increase. Is that not how you kill the music and switch the lights on? I don’t understand why they would be considering a rate increase when that’s what got us here in the first place. Am I missing something?
Another great residential real estate post. You are making it harder and harder for your fellow Canadians to say, after they have lost their job, their house, and their cars “why didn’t someone warn us”. (Hope they don’t live in a province that has deficiency judgements.)
Garth you have given these people more than enough information to protect themselves. You can lead a horse to water….
It IS different this time cuz the government manipulates both supply and demand and moves the goal posts when required. This is not a housing bubble, it is the new reality.
#11 Rifles
Can you provide MLS numbers or addresses on these sales?
#1 pathcontrolmonk on 01.27.17 at 6:33 pm
You might be right. It depends on the advice that Trump received. After WW2 there was an idea floating around of not stopping at Berlin, and instead, take the fight to the Russians. At one stage in the Cold War, American Generals were calling for a Nuke strike. Claiming rightfully, as it turns out, that the Russians only had 2 or 3 atomic bombs.
With China, the plan might be to make the bold move now. These Chinese man made islands are in international waters. The neighboring Nations are not pleased.
Could be a bold move, could also be reckless stupidity. History awaits. If it happens, trade gets funky, and markets are going to freak.
“During prior housing corrections, bank stocks have declined on the order of 20-25%.”
“We are downgrading CIBC, MIC and HCG from Neutral to Underperform to reflect our growing concerns regarding the domestic outlook. ”
If this happens, expect a dividend cut from CIBC. This will impact pension plans.
In the early 90s, National Bank was forced to cut its dividend, coinciding with the last housing bust.
I am opting out of the housing market. Things are just too crazy. Let those who wish to live a life sentence of debt, do so. But as for me, nope, I am done. Government is corrupt, people are insane, sellers are greedy, I’m done.
“Almost everywhere, there’s limited supply –”
Weird that there is limited house supply when canada has been building proportionally way more houses than the U.S. for years. Not single family inside the big cities, but still…
Canada has been running around 200,000 houese per year. U.S. should be ten times but in past few years averaged more like 4 times.
Today’s charts are the best I’ve seen yet.
The second chart shows house prices to disposable income approaching three standard deviations from the historical average. Stats guys will tell you that the probability of staying within this range (μ ± 3σ) is .9973. In other words, the chances of that trend continuing much longer is 0.0027.
Translation: There is a 99.73% chance that the top is in or imminent.
If I were a betting man, extrapolating from the timeline on that second chart, I would bet all in that 2017 is the year of the great Canadian housing crash.
#17 Ryan M. on 01.27.17 at 7:10 pm
“1340 jobs at HMV Canada to be lost in next 8 weeks. ”
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Surprised they survived this long. They were huge in the late 80’s.
The last graph shows a nice correlation between Canada and the US but Toronto real estate prices will just keep driving the red line upwards and backwards. Toronto has too much free money following a tiny supply of homes.
Ontario losing 625 jobs to Mexico. (There are 3100 jobs currently at this plant.)
http://www.cbc.ca/news/business/gm-unifor-ingersoll-1.3955128
“Speaking to reporters after a caucus meeting in Quebec City, interim Conservative leader Rona Ambrose said the incident speaks to the need for more government action.”
Apparently if what governments are now doing isn’t working, then the answer is always more government and my wallet.
I’m not sure exactly what Rona Ambrose would like to see happen, but basically this is for Unifor and Cami-GM to figure out. I’m done with more bailouts for auto sector plants.
I have noticed that people buying houses here in Toronto anyway, are buying what they can afford the payments on. But there is really no consideration for actually owning the house. No one seems to even consider this as a possibility. I talk to people who paid a million dollars for a house and put 20% down, and who are quite happy to be able to make the monthly payments.
When I ask about when they likely will own the house, I get blank stares. No one believes they will own the house. The mortgage is not considered to be debt. It is a normal thing, that a house always has, and the only important thing is being able to make the monthly payment, and their “equity”. No one seems to even be able to consider a period of time when they might own their house.
In fact most people i talk to, are not considering owning their house at all. Most of them are doing renovations to the house, that they think other people will like (I met folks with no children, who did not intend on having any children, who installed a “nanny suite” during their renovations, because the contractor told them that it would increase their resale value).
Everyone has a weird sickness.
It really isn’t even that wonderful a thing, or that big a deal, to actually own your Toronto house. I know, I own mine. It is like meeting the Wizard of Oz, very anti climactic. What really happens is you realize that this expensive item that you live in is needing repairs to this and that, and you have to keep up with it all. We have two things now that need fixed, yay more contractors and more repair bills.
The only thing I am watching with regard to this housing ridiculousness is bank stocks. I made some serious cash back in 2008, buying shares of RBC for under $25.00 during the crash. I am seriously hoping that I get another chance like that. I am actually keeping a bunch of my holdings in cash, just waiting for the opportunity.
Residential housing investment related to GDP
Figure 11 is a nice chart, and not one I have seen before.
You would think we would be in surplus supply at least of new houses based on that chart.
U.S. still has room to rise to get back to normal on that chart. Buy U.S. home builder stocks.
After my last drunk post, I promised myself I wasn’t gonna read this blog anymore or write in….but I’ve had a couple…. and I think I am addicted (seriously- sad).
I was ready to throw in the towel, for years I’ve seen this insanity and have been baffled, how can it keep going and going? The other day, I thought, “f+++ it, I guess this is normal” but still wondering how the average working family can afford anything anymore in Canada without shrugging off a massive amount of debt.
And I don’t mean single detached house (who cares) I mean, normal townhouse, decent apartment (for under under a price that doesn’t stretch you into debt servitude + taxes and strata).
Funny thing is, it really doesn’t effect me right now one way or the other, but I can see the damage it is doing and yet, no one cares.
Why, I guess, 70% home ownership, guessing (80% of population (and politicians) having a vested interest in price rising and that the party keeps going) so now that a whole upcoming generation can’t buy anything decent or are forced to rent at stupid prices, sucks to be them- too bad, just the way it is. Get used to it I guess- awesome.
All the 40-60+ crowd with homes going, ya this is crazy, but licking their lips and hoping prices just keep going and going…screw the younger generation. Maybe it is foreign money pushing up prices to these levels??
Honestly, I might be a bigger real estate bear that you at prices the last 7+ years Garth and if I m ready to throw in the towel so either this is the top of the top or the new normal.
Will say one last thing..FOMO is a dangerous thing, but when a whole country has it- who knows how long this keeps going, I just know FOMO decisions rarely ever end well.
People are stupid. Stupid people think only in terms of “monthly payment.” They literally don’t care what the price of a house is, as long you tell them that the monthly payment is something they can afford.
Even in Calgary, a city hit by huge job losses, home prices barely moved. So imagine the kind of economic “whack” that would be required to cause a 25% overall reduction in Canada.
I think only rising interest rates will correct housing.
2017 & 18 are going to be interesting years to watch in Alberta. With 10% unemployment, the new carbon tax (which is not revenue neutral, it constitutes a significant brand new tax on everything), higher income taxes, and low oil prices that don’t seem likely to improve much anytime soon, budgets will be under a lot of pressure.
In addition, I expect net migration to go negative if it hasn’t already. Add all the new mortgage rules to the mix and I think it’s pretty clear there is only one way for things to go. And I doubt it will be to the trend line.
When taxes are increased, the price of everything else must decrease because raising taxes does not conjure up any new money. It simply means people have less money to spend on other things. Sure, the government plans to turn around and spend the money on bold new spending plans, but all the ones I’ve seen like subsidizing windmills and closing coal plants are a complete waste of money. Forcing non-economic change on the economy through government compulsion always results in a less than efficient market, reduced growth, and wasted capital.
Every time I drive by Canada Olympic Park I am reminded of this. The 90 meter ski jump is one of the Calgary skyline’s most visible and recognizable features. It hasn’t been used in years, despite the fact that COP is still doing well. But it always was (as Paskapoo) before the government bought it out to host the Olympics. The bob sled run is still in operation, but how many people actually use this multi-million dollar adventure for it’s purpose? Tourist runs down on a thing that isn’t a bob sled account for most of the use at this point.
The speed skating oval gets good use though. Probably because the university owns it and a lot more people like to skate than jump of the 90 meter in a strong cross wind.
Another proposal I love to hate is the proposed new hockey arena and football stadium. What a colossal waste of money that would be. The Flames never win anything and don’t sell out the Saddle Dome now. The Stampeders have something like 11 home games a season and also seldom sell out. This is proposed to be paid for with all kinds of government money and ticket levies, and then the 2 stadiums we already have at tax payer expense will be mostly sitting empty far before the end of their useful lives. What a colossal waste. And of course you know it will go way over budget. A better idea would be to spend a quarter of the money upgrading the existing facilities. For example the Saddle Dome could use a new parkade, and that would also benefit the Stampede grounds generally for all uses including the Stampede itself. And more washrooms. Both facilities need more washrooms. That is really the main thing they need to fix in terms of modern facilities. Everything else works pretty good. McMahon could also use a parkade and it would also be multi use, providing student parking for the UofC and park and ride for transit, while also providing more parking for Stamps games. But a brand new facility? Why? Just because the Saddle Dome is older than some other facilities? It’s not that bad. And McMahon is pretty good compared to some of the other CFL teams. And they only have 11 home games a season, and tickets are as low as $30, so they can only pay so much rent.
But when government money is involved, no amount of waste is too much. So they will probably build it. It seems crazy, especially in light of the fact that the CFL is always on the verge of bankruptcy and really can’t support a massive infrastructure project.
Well, Kelowna price adjustments are swinging to the red.
So far this month there has been 75 reductions and ten increases.
The infamous house at Tanager got another haircut as they still can’t offload it.
Maybe the realtor should buy it as after all this time it must feel like home…
M42BC
309 Tanager DR Kelowna
Jan 12:$895,000.00
Jan 27: $839,000.00
Change: – 56000.00 -6%
p.s. For those wondering what happened to my first two posts. I noticed something was amiss and decided to ask for its removal just in case as the verification was unclear.
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As long as tourists are willing to pay $100+ a night for a room (Airbnb) prices won’t come down. Why would they? What’s needed is the local politicians need to get off their ass’s and put a stop to this illegal activity.
@#21 Conan
“These Chinese man made islands are in international waters. The neighboring Nations are not pleased.”
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Correct.
The Phillipines launched a protest over these “man made islands” ( essentially submerged reefs at high tide which according to international maritime Law cannot be considered “sovereign territory” as claimed by the Chinese” no matter how much dirt you dump on them).
The Phillipines won their case in 2016 and China ignored it.
But now that the Phillipines is run by a man crazier than Donald Trump we have a stalemate.
China is schmoozing him with promises of billions in aid while the US seethes at his about face.
Mean while we have Japan lending Vietnam old coast guard cutters to patrol THEIR island claims while Malaysia, Indonesia, Taiwan, Japan, Singapore all wait to see what the US navy will do under The Donald.
Unfortunately China has spent billions on its navy including “Carrier Killer” missles and has ramped up the jingoistic rhetoric to unprecedented levels arguing that the South China Sea is “theirs” by historical right even though their version of history goes against most accepted historical review.
No chinese archeological sites on any of the “real” islands to strengthen their claim but …no matter. History will be rewritten. Reefs will be paved over for military landing strips…….
Trillions of dollars per year ships through the Malaccan Straights as well as 20% of the worlds refined oil, not to mention fishing rights, oil rights, whatever.
This could turn into a shitstorm of epic proportions when you have Chinese naval ships playing chicken with US navy ships. Only a matter of time before someone gets killed…
Then we’ll see who blinks first…….
I’ll take notice to a ‘correction’ of 50%+. Even then that will bring us to probably less than a decade ago.
RE nationally is basically overvalued by that much if not more and I totally agree.
I’ll stay invested but all this stupidity can carry on for decades as Japan (historical) and Holland (current) are any example.
Garth, you have no patience, just wait it out we are near the very top and the ride down will be horrific.
Currently in GTA higher highs are made on lower lows of inventory– bad news circa last year Vancouver.
The mortgage changes take time to work their way through the system and become public knowledge. the minute housing turns down in favor watch the herd stampede to the exit.
Silly Canadians think its different here, even with all of the research and facts about Ireland, Spain, US etc..
Funny thing i hear all of the time, the US was different, Macdonald employees and Stripper where buying 3 houses etc.. yea, but there there houses combined was still less then one house in the GTA or Vancouver.
I urge, honestly, seriously, urge the cheerleaders and new perspective buyers to spend 2-4 hours over the weekend and research the rise of RE bubbles in Ireland, Spain, US anywhere in the world in the last 10-15 years.
Chart out the median income- income to price at peak-current income to price after the market crashed. Then chart out the debt to income before and after the crash.
Do the same for GTA, Vancouver, Canada etc.. you will see some striking similarities on the before and after with all countries you choose, now chart that too GTA/Vancouver market and see what comes next. The chart lines will be nearly interchangeable with each other.
dont worry, all of the top dogs at the ministry of finance, banks, have already done it and that it is why they are scared sh*tless of the current conditions, they keep trying to cool it down to prevent and all out catastrophic crash but no listens.
here is an analogy– 18 wheeler semi screaming down a one way highway one a road that eventually ends and well….falls off a cliff., The authorities try to warn the driver via CB radio , but he speeds up even more, they hastily install speed bumps, to no avail, truck keeps on moving, they throw down a few loads of gravel but nope, that badboy keeps on truckin. they deploy the spike strips, they slow it down but it still moving. Authorities are running out of time- the semi is almost at the point of no return by now so they shoot out the tires—– the truck is slowing but still moving towards the cliff…….. will it stop or is the momentum too great?
but yea its different here, were special etc…
Look at the difference between that awful Trump and Mr Nice Guy Justin ,when G.M moves production to Mexico ,cricket’s .That’s the kind of leadership Canadian’s get ,Trudeau’s economic plan is to sell infrastructure to international investor’s and Canadian’s are gonna pay .http://toronto.ctvnews.ca/gm-layoffs-of-625-workers-signal-need-to-renegotiate-nafta-unifor-says-1.3259984
Re #11 Rifles
We all know Chinese money laundering is driving the market in Vancouver and a 15% tax won’t phase them. Christy Clark is so corrupt that this will continue. The developers have their stooge and so there will be no crackdown
“There are now multiple offers being made on houses all the way from Lunenburg (seriously)”
^ There’s your top indicator right there, folks.
I thought that house prices tripling in Sutton in 2 years was a pretty darn good indicator that the top is in, but multiple offers in Lunenburg takes the cake!
If you have ANY Canadian RE… SELL, SELL, SELL! DO IT NOW.
Oh ya, in my rant against the proposed new stadiums in Calgary, I forgot to attack another one of the stupid ideas they are using to sell it: Calgary needs a “field house”. Oh really? Have you seen what they did to the main soccer center now that they have replaced the busted bubble? Soccer, lacrosse, indoor football, and ultimate plus probably other sports we have you covered. Have you seen the new Genesis facility? More soccer plus basket ball and volley ball, indeed anything played in a gym, covered. And we still have plenty of other gyms including the Repsol sports center. The old Calgary West Soccer Center is still there for now and there is a brand new multi-purpose facility going in north of Rocky Ridge. We don’t need a field house. We’ve already got better than that, just spread around a bit. All these perfectly good and some quite modern facilities will also see reductions in revenue if a new field house is built.
And don’t forget about traffic. The proposed location for the new stadium is crappy for traffic. There are 2 lanes west, but everywhere else is 1 lane exits. So they would have to spend a fortune on road upgrades. If you want to come watch the game from the north east, well you can’t get there from here.
Crystalized a good gain on a house in 2012, and decided to rent, because math is easy. However there is always the voice of unreason in the back of my mind feeling unwealthy for not having a house, even when I know better…that’s how ingrained it is.
Watching CBC talk about 600 Auto jobs gone in Ontario, and everyone loses their shit! 100 000 gone in Alberta and they give a sympathetic blurb here and there….biased much CBC?! Great post again BTW…
@#99 Economics major?
“Did Trump really graduate from the Wharton School of Finance with a bachelor of science degree in economics? How is that possible?”
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Ummmm.
He cheated?
Housing Markets Real as China Curbs Capital Flight
Amazing that our government does nothing about this and we have to wait for the Chinese Government to put a stop to it
http://www.theglobeandmail.com/globe-investor/inside-the-market/housing-markets-reel-as-china-curbs-capital-flight/article33791099/
So I go into to blood lab today for more tests. They give me this little plastic bottle with two tiny test tunes attached.
She says make sure you wee wee into the big container, not the test tubs.
I crack a joke and said “The big plastic bottle is going to be a challange. You got anything bigger”.
She smerks.
Next sceen. I’m surtless, she’s sticking these things on my chest for an ekg. My hand is on the bed rail.
While sticking these things on my skunk hairy chest she drives her sensative area right on my hand.
I’m taken back. I move my hand up 5 inches up the bed thinking it’s safe. She moves and does it again.
Conclusion some woman are bad ass.
Past corrections, Bilodeau found, have ranged from 5% to more than 25%. “But this time will be different,” he says, “and we mean worse.”
it’s going to be worse than the collapse of housing in the States: As house prices collapsed in the States, the US Fed reduced rates from 5% to 0%; most mortgages in the States were 30 year fixed term; federal and state governments stopped foreclosures.
There is the proposition that the banks take the risk on a portion of a mortgage, that proposition if enacted will be the straw that breaks the camel’s back – they won’t. I mean 244 Bain in Toronto sold for $1.8 million – banks read this blog – they’re not going to bet their own future on the property nor on the buyer.
Bill Clinton said it in his State of the Union Address in 1995 and got a standing ovation. Donald Trump says it and is excoriated as a racist.
https://www.youtube.com/watch?v=m3yesvvYEvs
Good thing there is no such thing as a double standard in American politics. It’s different in Canada, of course.
History repeats itself.Right now were almost like medieval times.The bankers and the government are the medieval feudal lords and the middle class and poor are the medieval serfs.Bankers lower interest rates to near zero and devalue our currency.The government impose high taxes,rules,regulations and many other things to burden its people.There you go,am I right?
Oh I am still on it. Ok, you could get to the proposed new stadium from the NE by train pretty easy. But I’ve been to the NE, it’s soccer territory, nobody there cares a bit about hockey. I’m not trying to be racist, I’m just trying to point out a fact. Immigrants generally don’t know or care about hockey, but they do love their soccer. Hockey is just too expensive and awkward to catch on in most of the world. You aren’t going to see the Brazilian government building an ice rink in every hick farming town across the nation like the Canadian government did in the 50’s and 60’s. Not going to happen. Just keeping the ice on would be a huge expense that they can’t afford. But they have plenty of grassy fields.
With O’Leary as leader, the Conservatives would sit at 37 per cent, the Liberals at 38 per cent and the NDP at 17 per cent.
http://globalnews.ca/news/3207501/kevin-oleary-justin-trudeau-conservative-leadership-race-poll/
Forget median income to price ratios.
Look at China and specifically HK. What’s the median income to price ratio there? And how long has it been like that?
Toronto real estate prices will remain irrational longer than you will remain alive.
As long as tourists are willing to pay $100+ a night for a room (Airbnb) prices won’t come down. Why would they? What’s needed is the local politicians need to get off their ass’s and put a stop to this illegal activity.
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Why would you want more regulations about what you can do with (that which is supposedly) your own property?
Typical jealous Canadian attitude; stop others from benefiting from something I’m not a part of.
So George Soros wants to turn un schooled men into little high pitched voiced Starbucks Coffee bitches
George boy..
I give you a Deplorable
https://www.youtube.com/shared?ci=LzzUiPWqs3M
Magical thing about being in your 50s. You look around the room, the range of let’s go babe, limitless.
Not like an acne faced grasshopper with standards.
HMV to close all stores nationwide:
http://exclaim.ca/music/article/hmv_canada_facing_canadawide_closure
Sears next?
When will this real estate market ever burst? Like, it’s crazy? Burst, burst, Busrt! Burst already! Explode! Implode! Do something! Enough! Wipe out the market. Let it crash and burn! Drop a nuclear bomb on it! Raise rates, make the bank shoulder their own risk, increase down payment rules, tax foreign owners, tax speculators! Someone, please do something!
#54 Pete on 01.27.17 at 8:46 pm
Why would you want more regulations about what you can do with (that which is supposedly) your own property?
Typical jealous Canadian attitude; stop others from benefiting from something I’m not a part of.
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Because hotels are risking money and equity and are creating jobs. That attitude ought to be protected, if not encouraged.
Airbnb(ers) aren’t risking equity, creating jobs nor contributing to the GDP.
I detest Toronto and all its ugly little houses, its depressing dirty streets, its ugly, unfriendly people. I detest the shifty guys that lurk in alleyways, I detest the vapour, pot smoking dudes at the medicinal Cana clinics. Get me out of this filthy, pathetic city.
#34 For those about to flop… on 01.27.17 at 7:54 pm
p.s. For those wondering what happened to my first two posts. I noticed something was amiss and decided to ask for its removal just in case as the verification was unclear.
************
Was wondering what happened!
.#35 Smoking Man on 01.27.17 at 7:55 pm
DELETED
***********
Just another Friday night – company left the house?
As an example of our collective insanity in Canada and Ontario/B.C. in particular I would mention that average U.S. selling prices for homes are now making new all time highs again. Here is the iconic Minneapolis mansion wherein was Mary’s apartment suite on The Mary Tyler Moore Show. Listed for $1.7 million for almost 10,000 sq. ft. on .35 acre in downtown Minneapolis area – a very large, sophisticated and high income city.
We deserve the beating we are going to get in Canada when this madness ends.
#47 SM
And your post relates to today’s topic how?
Breaking bad.
We all know the real name of Hiesenburg. Who wrote it ?
Writers are gods gift to man kind.
They like the shadows, that way they don’t need to deal with the bull shit of relationships.
Re: my post #62
Sorry, forgot to post link
http://news.nationalpost.com/homes/mary-tyler-moore-show-home-for-sale-in-minneapolis-for-1-7-million
A 25% drop would seem probable (US crash was 32%)
NEVER.
THE GOVERNMENT WILL NEVER EVER ALLOW IT.
ARE YOU PEOPLE ALL DEAF AND BLIND ?????
we’re a goin’ back to 2001 prices, my boys.
62 Dobermanduke on 01.27.17 at 9:40 pm
#47 SM
And your post relates to today’s topic how?
..
It don’t , I’m special , suck it up.
Garth,
I appreciate your careful, non-panic-invoking comments but I think it is impossible that this housing gas bag will deflate slowly and orderly. I think it will be a major trend reversal once it begins.
Kyle Bass, profited from the RE in the USA. He foresaw what was going to happen. In the video (although few years old) foresees war.
https://www.youtube.com/watch?v=fOqY1Cfaafk
How does this impact ZPR?
House newbs will just walk away from their two bedroom one million dollar (20 teenies/2010’s version of luxury home) after their mortgages triple after their home equities drop to less than half of what they forever owe and paid.,…(forever not)
Its all factored in before hand.
Its all good ….until its not.
But as for now…eat drink sleep dream .,.for tomorrow ….there is no tomorrow.
DELETED
Garth….as it s widely acknowledged that the monthly payment and not price is the sole determinant in making a purchase decision why do we keep bemoaning the acceleration in price? Prices can double from here before 100% of income, borrowing from Mom, and credit are exhausted. Notice I didn’t even touch on the billions of dollars being laundered into the country from all directions. Gosh….we know the drug business is booming in Canada….where is all that money going. A recent article in the news was of one lawyer allowing 25 million dollars through his unquestioned accts….. How many lawyers and banks etc are complicit in the trade?
As long as emergency rates are at play, drug money eases through unchecked, bank of Mom and easy credit are available prices will continue to double and triple if not more. Look at the Sunshine List for example….many people will be shocked to see civil servants earning half million dollar salaries and multiple is that are common. Prices are not the issue in Canada….let’s bury that dog.
Fundamentally, historically and insanely prices have tripled in the time we’ve been talking about this and there’s only a contagion of the disease. Like it or not the market is exploding…no signs of implosion. Buy now or forever be priced out.
At # 66′
The Government won’t allow it?
Bahaahaa
So I guess to U.S. Allowed it to happen,
#59 Joseph R. on 01.27.17 at 9:21 pm
#54 Pete on 01.27.17 at 8:46 pm
Why would you want more regulations about what you can do with (that which is supposedly) your own property?
Typical jealous Canadian attitude; stop others from benefiting from something I’m not a part of.
———————————————-
Because hotels are risking money and equity and are creating jobs. That attitude ought to be protected, if not encouraged.
Airbnb(ers) aren’t risking equity, creating jobs nor contributing to the GDP.
—
The world is changing… Condo owners risk capital, whatever. Most importantly, they clearly serve a demand – otherwise Airbnb would not exit.
Capitalism at work. Go with the flow, stop whining.
US Q4 GDP growth comes in at 1.9% and 2016 annual nets out at 1.6%.
A $20 T debt with higher interest rates cannot be serviced with sub 2% growth. So one of two things must happen: either the US doesn’t raise rates or they stimulate in a way that creates inflation.
And we already see Trump picking fights with China as well Mexico and Europe. You do the math.
Nice pile a dirt or should I say soil, perhaps could
Still be used to plant something
#66 VANCOUVER DUDES on 01.27.17 at 9:50 pm
A 25% drop would seem probable (US crash was 32%)
NEVER.
THE GOVERNMENT WILL NEVER EVER ALLOW IT.
ARE YOU PEOPLE ALL DEAF AND BLIND ?????
**************************
Read history. There are many ways in which housing bubbles pop. Many factors, even its own over exposure in a low growth environment.
Have last months retail stats come out yet?
Airbnb(ers) aren’t risking equity, creating jobs nor contributing to the GDP.
————————————-
The world is changing… Condo owners risk capital, whatever. Most importantly, they clearly serve a demand – otherwise Airbnb would not exit.
Capitalism at work. Go with the flow, stop whining.
—————————————-
Hear! Hear! Exactly. Enough with the petty Canadian attitude that says we must stop others from bettering themselves, we must hold them back. ‘If I’m not part of it, nobody gets to be a part of it.’
Look at UBER: They’re great, I’m fully in favour of UBER and I used to be a taxi driver many long years ago.
Perhaps traditional hotels are going to go the way of the stagecoach.
Lefy s
https://www.youtube.com/shared?ci=OR9oGaljTTM
The graphs Garth displayed today do not apply to Calgary. Read the fine print.
#29 Ace Goodheart on 01.27.17 at 7:47 pm
………………………………………………………….
I like your cash waiting plan, to buy RBC stock. But what about other banks besides the big 5 banks? Would you consider buying stock in First National or Home Capital Group? Wouldn’t these lenders fall harder due to more severe defaults? Or is RBC just a sure bet they will be around for another 100 years?
TrumpForThe Ages
…….or Trump cuts Govt by 20% like he talked about. Do you have any idea how much money that would save in the USA?
The “Monthly Payment” sales pitch is not new. I remember leasing a GM truck back in the late 90’s. I was moist then, and I think the sales team knew it. They only spoke in terms of “so what can you afford per month?” They have to be very careful who they use that tactic on. Today if they tried that, I would let them have it.
I see my fellow out of work realtor co-working posting on garths blog again. You guys sound like horrible shysters but that what we do best. Prices will continue to go up because of drug money and people wanting to buy in Toronto even though it’s more expensive then New York city. Toronto is cheap compared to other but I will provide no date or logical argument just empty shyster words. Lucky for me I don’t even need high school to be a realtor. Have you been conned by a high school drop out realtor?
#57 Joseph R. on 01.27.17 at 9:11 pm
HMV to close all stores nationwide:
http://exclaim.ca/music/article/hmv_canada_facing_canadawide_closure
Sears next?
…………………………………….
oh probably. HBC after that. Maybe time to dump any stock in traditional retail. But Dollarama, Costco, Amazon, Walmart… are here to stay during and after the Great Canadian Housing Crash.
For the second time in two days, I submitted a pithy and mildly brilliant comment to the previous day’s article by Hon. GT. The far North has accelerated the deterioration in my McMurrayite mind. Go to about #138 in last night’s comments. It is thought provoking and about a scurrilous movement I am stirring up against my own self interest.
Even if home prices in GTA dropped by 30% we would still have unafordable homes; when considering the incomes still lagging behind. We have a bigger problem than we thought! There would be a lot of economic slaves tied up tp the bank rope for a very long time.
Sigh…reading this post (and replies) reminded me of another “trucker” analogy vis-a-vis the Canadian RE madness, and one that may be somewhat fitting.
A grizzled, veteran trucker (a prospective new hire) is being tested on his currency with DOT and ICC (hey, anyone else remember THEM?) regs and procedures…he is then subjected to an oral exam featuring what-if situations and his corrective actions.
For 17 years he’s been accompanied by his swamper Leroy, he makes it clear that they’re a “team” and they talk solutions out together.
In a prospective scenario, he is confronted with an overloaded flatdeck (violation) a defective air brake system (violation) combined with excessive speed (violation) and is told that his rig is travelling down a steep incline and headed for a bridge…and there’s a KW with a reefer attached jacknifed right across the entire deck.
“What’s the first thing you do?” the interviewer asks, anticipating a quick, professional response.
After a long pause, the hi-miler answers…”Well, I guess I’d lean over and wake up Leroy…”
“Wake up Leroy?! Why would you waste yer time doin that?”
“Well” he answers, “Leroy and I been together 17 years, and I wouldn’t want him to miss a M/F’n wreck like this one’s fixin ‘ up to be…”
(the following has been plaigarized from an old Gene Tracy tape by way of a 40 yr old memory, btw)
I thought this market was nuts a half dozen years ago…now I feel that I’m resigned to watching a really bad horror movie, and everyone wants to tell me the ending…but I STILL have to watch the bloody thing!
Garth you should probably ban this kind of fake news crap:
> pathcontrolmonk on 01.27.17 at 6:33 pm
> None of it matters because Trump’s war with the PRC is > now “imminent”. I wish I was being facetious. > http://www.washingtontimes.com/news/2017/jan/27/us-impending-war-china/
I mean what a bloody load!
Some pretty great quotes about this garbage “newspaper” if you can even call it that, more like a tabloid.
https://en.wikipedia.org/wiki/The_Washington_Times#Political_stance
The linear regression includes the accelerated price growth since 2004 which probably distorts the trend line. If you graph it across the tops to 2004 interim high you end up around 120 and if you draw the regression across the lows you end up around 100. Any kind of significant correction could easily bring the index down 100-120.
#66 VANCOUVER DUDES on 01.27.17 at 9:50 pm
A 25% drop would seem probable (US crash was 32%)
NEVER.
THE GOVERNMENT WILL NEVER EVER ALLOW IT.
ARE YOU PEOPLE ALL DEAF AND BLIND ?????
……………………………………………….
No, but you are definitely not paying attention to what’s going on. If Canada messes up negotiations with the US (which they will), or dips into recession (job losses are a sign of weak economy), or interest rates keep climbing because of rising bond prices (caused by FED rate hikes, Poloz hands are tied), or if everyone tries to sell at the same time (over-supply) when no one can afford to buy (lack of demand), what do you think Shady Christy can do to prevent the housing market from crashing? Nothing.
And what if it all happens at once? Screwed. Screwed. And more screwed.
This is basic grade 8 logic. It’s also very dangerous to walk and text in traffic, but monkey see monkey do.
Rising rates (see rate reset preferreds) combined with stagnant wages and job cuts will displace families and move them down (not up) the property ladder. It’s called debt repayment/consolidation.
Finally, answer me this riddle: What do BC Assessments and winning lotto 649 tickets have in common?
Answer: Unless you claim them, they expire.
Garth,
You used to be a “go by your guts and instinct” kind of guy.
And I think it served you well.
After you hired the “graphs and lafs” guys, something seems amiss.
You’re the boss.
Teach the kids that there is no substitute for boots on the ground knowledge.
Comment #46 John
John you are so very right. Our governments are virtually useless in the world of globalization. They are either corrupt and take advantage of foreign capital (Christy Clark) or completely useless (JT).
Pink Snow falling in Vancouver.
These guys are in trouble.
They just don’t know it yet…
M42BC
5626Elizabeth Street, Vancouver
Nov 18:$3,588,000
Jan 27: $3,199,000
Change: – 389000.00 -11%
https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAwMTdZVA==
Garth: suggested pic for future blog post: https://i.reddituploads.com/712cecec67d34d928a6e1b9cb02d8fd7?fit=max&h=1536&w=1536&s=1793cc8d03ebedf595b3258e254e0198
The answer is easy, change the CHMC rules so that the banks eat the first 25% of any mortgage loan loss. The banks will then become very very interested in income proof and house valuations before fronting their own, rather than taxpayers, money.
The govt doesn’t have the guts to do it as it knows that Canadians selling houses to each other is 25% of the whole Canadian economy now and they can’t survive killing the golden goose as other possible industry is so uncompetitive. What a mess. But the longer they wait the worse it will be.
Govt should have fired the bullet last year when they still had 3 years of mandate to be loved again. Now if T2 wants to hang on to power he has to let the RE market collapse on its own without getting his own hands dirty. Blame it on previous governments.
Bad times are certainly coming as you can’t build a socialist paradise when your biggest customer who lives next door is Trump. Expect to be eaten for breakfast. Can you actually imagine T2 succeeding in Dragon’s Den selling Canada to investors.
Inflation is coming, the Canadian dollar is going down and higher US rates are coming. Trump will pump oil like crazy and so the price of oil will collapse again. Other EU countries will make leaving EU and Euro noises so instability there too. Here in Britain we are all still delighted at being independent soon and don’t care what happens to Scotland.
BIG CHANGES that you cannot fight but need to find a way of dealing with. There is always a way to make money in this word. You just have to be ahead of the curve ball and know your next step. Times change so change with them.
In social and family situations i’ve simply stopped engaging in conversations about real estate. It’s just a waste of breath trying to explain my position; real estate really is like a cult (or disease). It is what it is. If you’re lining up, or in a bidding war, to buy something you don’t really need then you’re getting ripped off. Baby boomers have screwed millennials so hard, but my cohort is so stupid i guess we deserve it.
62 Dobermanduke on 01.27.17 at 9:40 pm
#47 SM
And your post relates to today’s topic how?
..
It don’t , I’m special , suck it up.
Garth’s blog is about economics, real estate and money. If you want to consistently go so far off topic why not start your own blog? You are such a prolific writer you don’t need to ride on the coat tails of someone else.
“In many ways the performances of Donald Trump remind me of male chimpanzees and their dominance rituals. In order to impress rivals, males seeking to rise in the dominance hierarchy perform spectacular displays: stamping, slapping the ground, dragging branches, throwing rocks. The more vigorous and imaginative the display, the faster the individual is likely to rise in the hierarchy, and the longer he is likely to maintain that position.” – Jane Goodall
“I guarantee you there’s no problem [with the size of my penis].” – Donald Trump
#7 I’m NOT Poloz on 01.27.17 at 6:45 pm
“This is why the Bank of Canada Governor Steven Poloz should cut interest rates now from the extremely high 0.50% to below 0.05% to boost spending.
We need our Canadian loonie to be lower in value to boost our exports and real estate sales to foreign buyers who need a stable country to start a family.
Poloz complained a few days ago that a 70-cent loonie is too overvalued.
He is right. The Canadian loonie should be at below 50 cents today. It is important that the Canadian loonie be competitive in this global market.
Canadian citizens should petition for a 30 cent Loonie to boost our exports and develop our economy and real estate market in the Toronto-Golden Horseshoe area. Our Canadian Loonie is too high that it is not creating jobs in Ontario.
I pray that the Canadian loonie go lower than 50 cents this year to boost our manufacturing in Ontario. We need a lower loonie to boost our economy.”
Canada’s and Ontario’s problems will never be fixed by a lower loonie. Ever. Diddling with currency does not fix weak economic legislation nor structures, let alone harmful, myopic leaders handcuffed by electoral cycles.
Devaluing the CANADIAN DOLLAR is a desperate, last-ditch attempt to fix the destruction occasioned by lousy policy which has to change before the economy and hence currency value is restored. Devaluing would exacerbate the hitchhiking monkey of low productivity.
Plus, your posts are idiotic.
In all the bluster from Trump, there is a possible flaw. He is used to dealing mostly with Americans for the most part and if dealing with foreign nationals, there would be the reasonable expectation that his financial assets would be protected. But, if he has to resolve a challenge from the Communist Chinese regarding American naval power in the East, there is no contract law, fiduciary responsibility, or anything really other than just raw power. The essence of this flaw is that he has no effective predators in his past and this has bred an overconfidence that is his essential flaw. He is about to go up against forces that have no qualms about breaking all the rules he assumes will be in place.
He is a bully, clearly, and like most bullies, if he faces an uncertain outcome in a conflict, he may freeze. I don’t think he has the cojones to stand firm. He is no leader, no statesman, and certainly has no sense of history nor does he possess any guiding philosophy as far as I can tell. All he has is greed. Like Kevin O’Leary, he is a shallow, hollow man who is given over completely to the pursuit of status and wealth in a wealthy country. Trump will be completely out of his element in dealing with the Communists, both Chinese and Russian. And while I would not bet against the Americans, they are surely in for a drubbing thanks to this fool Trump.
#8 hopla on 01.27.17 at 6:48 pm
Its nuts out there. Housing market is on fire again. Canadians are plain insane to buy these cardboard comstructions for lifelong earnings. They will never pay them off. Wages are not even close to support this maddness. Why is this happening?
—————————
The real culprit are the criminally stupid organizations of CMHC and BOC.
With idiots running them.
If not for:
– CMHC which insures ultra-subprime mortgages at very low cost,
– and BOC who has no role in meddling with the cost of money long term,
house prices would be 30 % of what they are now.
The problem is the more we are running this Ponzi scheme the more our economy declines as money flow into unproductive sectors of the economy – FIRE sector and retail.
Adding to the national debt (all these outstanding ultra-subprime mortgages are guaranteed by the federal government so the real national debt is much, much higher than the officially recognized number).
The problem is actually worse as there is widespread securitization of mortgages incentivised by CMHC!
Which are for sure one way or another in your pensions plans.
Inflationary depression, destroyed economy and no jobs is a given.
As for retirees and people on fixed income, I would recommend conjugal visits to the BOC puppet once he finds his earned place in jail.
#97 Saraya grewal on 01.28.17 at 1:54 am
Comment #46 John
John you are so very right. Our governments are virtually useless in the world of globalization. They are either corrupt and take advantage of foreign capital (Christy Clark) or completely useless (JT).
—————
That’s because Marxists are morally bereft. Corruption, psychopathy, narcissism and authoritarianism are traits that most leftist politicians generally share in common. One thing they all have in common is that they are all pathological liars. And hypocrites.
It’s no wonder that they’ve sold us out. What did you expect?
#100 jane24
Absolutely. CHMC should be abolished.
BOC should be restrained to their original mandate to provide liquidity, not to control the cost of money.
Of course the CAD will be destroyed, it’s price is determined by idiots!
Politicians at highest level represent the greediest, most incompetent bunch of morons, if they had even decent management abilities they would have been in the private sector.
I was hoping some time ago that this insanity would stop at some point in time and I could salvage at least portions of my public pension.
Now I am in the process of actively withdrawing all my funds from registered plans in Canada and transferring them abroad, I also have completely written down the potential CPP and old age benefits.
RE: #84 Self Directed:
“I like your cash waiting plan, to buy RBC stock. But what about other banks besides the big 5 banks? Would you consider buying stock in First National or Home Capital Group? Wouldn’t these lenders fall harder due to more severe defaults? Or is RBC just a sure bet they will be around for another 100 years?”
No.
If I was a gambler (which I’m not) I would consider shorting the crap out of First National and Home Capital Group.
Yes I believe those lenders are going to fall harder than the big five.
My idea is not to purchase stock that is falling hard. My idea is to purchase stock that is undervalued. I believe the big five will recover to greater heights. It likely is a 10 year play, which is fine by me. My 2008 play has matured to now (9 years) and looks good (RBC trades at I believe $95.00 today).
I do not believe that the smaller lenders will recover. Their future looks like either bond holder buyout or CCAA.
Based on Fig. 6, if history repeats, I see the indice fall to 90 from 160.
That implies a drop of ~40% of the real estate price.
https://ca.finance.yahoo.com/news/feds-post-another-monthly-deficit-160314069.html
20 billions projected deficit per year + another 100 billions in new mortgages, 80 % of which would never have been lent if not for CMHC.
That at federal level, at provincial you do the math.
RE: #78 TrumpForTheAges:
“And we already see Trump picking fights with China as well Mexico and Europe. You do the math.”
Unless Trumpster and his band of billionaires plan on using their own money to fight some more major US wars, this isn’t going to happen. The United States cannot even make it through the month of March without raising their debt ceiling and borrowing to pay the interest on their trillion dollar problem.
From around 1950 or so, the USA has been borrowing money to fight wars. This resulted in a certain type of person getting into US politics, namely a person who would support the Military Industrial Complex, which provided directly and indirectly most of the good jobs in the United States. They became so tied up with their military and fighting wars all around the world, that no one looked at the bank balance.
The idea was American freedom first, ask questions later. American freedom was just invading any country which had a government that for one reason or another, wouldn’t co-operate with US industrial interests, and replacing it with a US friendly right wing dictator. They did this for years.
The result of the above is that the US economy relies on government borrowing for military purposes.
But they cannot borrow any more money. They ran out of domestic sources a while ago, and turned to international bond markets. This shift took place around the same time as the great real estate bubble started building in the USA (the one that popped in 2008). They borrowed billions (perhaps trillions?) more and then fought yet another massively overpriced war against yet another tin pot government that was not a threat to anyone. They won, of course, but then the invaded country degenerated into anarchy and still today is one of the world’s most dangerous places. They will never get any of that money back.
The problem is as I said above, the USA cannot borrow to finance any more major wars. If they invade China, where are they getting the funding from? China is their primary lender. They have no more room on their credit lines.
The USA will actually have to start running budget surpluses and actually start paying back the trillions that they owe. What is the likelihood of that happening?
They’ve got a big problem down south and Trumpster is not going to solve it for them. He will just make it worse.
jane24 on 01.28.17 at 2:34 am
The answer is easy, change the CHMC rules so that the banks eat the first 25% of any mortgage loan loss. The banks will then become very very interested in income proof and house valuations before fronting their own, rather than taxpayers, money.
—————————————————————–
That’s all government has to do to solve and correct the most distorted housing bubble in Canadian history. No bank would lend a penny at current values or interest rates. E-mail T2 and wild bill and anyone else you think should know. Tell them the free and open market is the only way to solve this mess.
#97 Saraya grewal on 01.28.17 at 1:54 am
Comment #46 John
John you are so very right. Our governments are virtually useless in the world of globalization. They are either corrupt and take advantage of foreign capital (Christy Clark) or completely useless (JT).
===
Not arguing with the classifications, BUT – what would blog dogs recommend the federal and provincial governments do in this situation?
I am very curious to read the suggestions.
Concrete actionable recommendations, please – no theoretical dreams.
Guys, let’s all just take a moment to acknowledge what is perhaps one of the most important milestones about to occur for all of professional sports in the past 5yrs.
A grand slam final Feddy/Nadal rematch!!! I am so giddy I feel like its Christmas Eve and I’m 6yrs old. See you dogs bright and early at 3am. Happy day to all…
-Bj
#53 Leo Trollstoy — “Look at China and specifically HK. What’s the median income to price ratio there?”
Price to median income breaks down when fully half your population is living in public or otherwise subsidized housing, as in HK. Singapore is even more extreme at 80%.
@Rockylal, post #10:
I don ‘t know why more people aren’t cashing in their winning lottery tickets either, especially when any gains you make are tax free. What you have here is a once in a lifetime chance to get rich, and most people who are eligible aren’t taking advantage of it.
#102 re
Well I don’t think he’s riding on your coat tails. Lol
Flop
Look at 72nd ave between 112-116 street in Delta,a forest of for sale signs about four blocks long with more popping up everyday.
#102 Dobermanduke on 01.28.17 at 7:35 am
62 Dobermanduke on 01.27.17 at 9:40 pm
#47 SM
And your post relates to today’s topic how?
..
It don’t , I’m special , suck it up.
Garth’s blog is about economics, real estate and money. If you want to consistently go so far off topic why not start your own blog? You are such a prolific writer you don’t need to ride on the coat tails of someone else.
====================================
Smokey’s posts are so far off topic, they’re on topic.
CMHC acronym shared by Canadian Mental Health.
What a coincidence!
#100 jane24 on 01.28.17 at 2:34 am
Correct. Our government is completely clueless and out of touch with what Canadians want. This goes for “old stock” Canadians and brand new immigrants as well.
Kudos to you Brits for Brexit and staying the course..even in the face of those who are delusional who disagree with it. Britain will watch the EU collapse from afar.
MF
To nonepulsed:
Many international teams train all winter months at Calgary Olympic park on bob’s track. Thru work I dealt with Australian who coaches team China this year. They all benefit local economy as well.
Figure 2 and the 25% price drop
Macquarie’s graph is flawed in that a 30 year trend line of a growing price can only be properly graphed as a straight line trend on a log scale. So their 25% decline to the trend is not reliable. (Still, we are no doubt above trend).
Math is math.
“Coincidently” the normal arithmetic scale is scarier…
Anecdotal: Here in WA minimum wage increase was voted in. Voila Jan 1, prices up a full dollar on most items at groc store. Meanwhile hub informed by boss that he’s looking at a pay cut because L&I (equiv to WCB in BC) is killing company profits. The squeeze is on phenomenon apparent everywhere.
Response regarding ::
“#46 John on 01.27.17 at 8:23 pm
Housing Markets Real as China Curbs Capital Flight
Amazing that our government does nothing about this and we have to wait for the Chinese Government to put a stop to it”
The canadian government, Trudeau and his fun people , are opening 40 plus offices in China, and also refuse to permit action in any way to deal with International corruption into Canada.
My bumper sticker input for today….
http://www.theglobeandmail.com/globe-investor/inside-the-market/housing-markets-reel-as-china-curbs-capital-flight/article33791099/
Houses and Stocks above the trend line, OMG?
Record low interest rates provide a reason for stocks and houses to be above the trend line.
In the case of houses the increased “financialization” of the economy which is never going away also provides a reason for houses to be above the trend line. Borrowing and lending are simply easier than ever and more common than ever and that is unlikely to change.
(Still, some cities seem far to high in house prices, but don’t expect a return to some historic trend line.)
Oooohhhhhhhhhhh!!! Not just the Chinese Dude HeadTax in VanCity killing the buying spree! Now China is ACTUALLY starting to crack down on $$$ fleeing the home land!
++++++++++++++++++++++++++++++++++++++++++++++++
China’s Army of Global Homebuyers Is Suddenly Short on Cash
China’s escalating crackdown on capital outflows is sending shudders through property markets around the world.
In London, Chinese citizens who clamored to purchase flats at the city’s tallest apartment tower three months ago are now struggling to transfer their down payments. In Silicon Valley, Keller Williams Realty says inquiries from China have slumped since the start of the year. And in Sydney, developers are facing “big problems” as Chinese buyers pull back, according to consultancy firm Basis Point. (More) http://bloom.bg/2kysGzB
Zolo Vancouver showing under 1M (995 k) avg sale price. Haven’t seen that for a while…
#104 maxx on 01.28.17 at 8:54 am,
#7 I’m NOT Poloz on 01.27.17 at 6:45 pm/ is an idiot.
But he/she will get his/her 30 cents loonie. Hope he would be able to afford $ 15 cauliflowers.
#127 InvestorsFriend
In the case of houses the increased “financialization” of the economy which is never going away also provides a reason for houses to be above the trend line.
——————————–
If the “financialization you speak of is “never going away”, then aren’t you simply saying there’s a new, steeper trend line we should draw that’s not so shockingly far below current valuations?
In essence, a rewriting of history… or what?
Trumps 90 day ban on certain countries is a stroke of political genius.
First, it will be a short-lived token gesture with a slightly increased vetting process afterwards. Second, every single terrorist attack, and there will be more, from here on in he can blame on Obama or prev admins. Any terrorist attack in Europe and he can point and say “see, I protected us from that”. His political savvy is remarkable.
This is a racist and Islamophobic action. No American should be proud. — Garth
#7 I’m NOT Poloz on 01.27.17 at 6:45 pm
I would not be surprise if this is posted by the real Poloz.
This is what happened when you appoint the incompetent former boss of Exports Canada to be in charge of your nation’s money.
#119 millmech on 01.28.17 at 11:11 am
Flop
Look at 72nd ave between 112-116 street in Delta,a forest of for sale signs about four blocks long with more popping up everyday.
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Hey Millie, sounds like just land assembly.
I quickly looked into it and saw no evidence of Pink Snow.
What I am trying to document are houses that are back on the market for less or less than 20% than they were bought for in the last year or two.
Many people overpayed in 2015 and then thought they were safe when 2016 went ballistic ,but it appears at the moment that it was the blowoff and now the lava leaking out of the Vancouver Volcano is about to burn some people big time.
The one I highlighted on Elizabeth was purchased for 2.7m for mainly land value and even after the bloated 2016 assessment they are going to have a hard time offloading it.It appears they overpaid by about 700k.
The person before them found their fool ,but the market sentiment has changed.The demand for condos is still there, but detached houses are plummeting as buyers are waiting as they know prices are in a downward spiral.
Paying 2.7m for a block of land in a so – so part of town is not a language that I know how to speak…
M42BC
This is a racist and Islamophobic action. No American should be proud. — Garth
______________________
Absolutely, I agree 100 percent that this is racist and completely un-humantarian. I’m not (trying to) making a moral or ethical statement on it.
Some people see Trump as unpredictable, I disagree, just trying to cast some light on what I see as his motivations and possible logic. It’s like when he refused to condemn the KKK, how can any sane/not racist human being, not condemn that organization? But he has a political plan and I’m speaking to that plan.
I don’t agree with banning people from certain countries, but at the same time I rarely read anything on the MSM about the illegal invasions of said countries by the Americans, British and Canadians committed by the Bush’s and Clintons.
Are you saying that Donald Trump is a leftist politician?
#127 InvestorsFriend on 01.28.17 at 12:57 pm
Houses and Stocks above the trend line, OMG?
Record low interest rates provide a reason for stocks and houses to be above the trend line.
In the case of houses the increased “financialization” of the economy which is never going away also provides a reason for houses to be above the trend line. Borrowing and lending are simply easier than ever and more common than ever and that is unlikely to change.
(Still, some cities seem far to high in house prices, but don’t expect a return to some historic trend line.)
***************************
A house is worth only as much as someone is willing to pay/leverage and the bank is will to lend. Things always return to the mean (in relative terms). The bubble cannot be explained by economics (you can use economic data to try and measure it) but it is facilitated by the human ‘group’ thinking…and as group thinking get ridiculous people walk away.
Case in point – my younger siblings who were looking to buy are now priced out. They were worried about not getting in, but in a shockingly short period of time house prices in their have skyrocketed and now they are happily priced out. Concentrating on starting a business on the side and growing it and not spending every moment of their time looking for something affordable. They are becoming more productive again. As more people come to this realization, mindsets change just like they did in past housing bubbles from the 60’s to the US etc. It all hedges on people’s financial confidence with no brights spots on the economic/job horizon.
Outside of the real estate hot markets in BC, unemployment is steadily rising, yes Devil’s Advocate even Kelowna. With severances running out in Alberta (those sent packing to BC are starting to sell assets to keep afloat)
The new normal is always like the old normal when it comes to human thinking based on primal emotions (fear, greed) both double edge swords.
If you are not old enough to remember lessons from the past…you owe it to yourself and your clients to research and find out what happen. Things have moved to the extremes.
the info trump received
Gregg Phillips, who spurred Trump’s calls to investigate election results. Who is he anyway?
Who first tweeted (source) voter fraud? interview with greg phillips
Gregg Phillips, whose Twitter profile identifies him as the founder of VoteStand (“America’s first online fraud reporting app”)
http://www.mediaite.com/online/man-who-championed-claims-of-widespread-voter-fraud-gets-brutally-embarrassed-on-cnn/
who is greg phillips? Backgrounder
https://www.theguardian.com/us-news/2017/jan/27/trump-voter-fraud-gregg-phillips-unpaid-taxes
http://www.dallasnews.com/news/local-politics/2010/03/13/Exclusive-State-privatization-champion-gets-1424
replacing bad grammar
#134 DON on 01.28.17 at 2:45 pm
#127 InvestorsFriend on 01.28.17 at 12:57 pm
Houses and Stocks above the trend line, OMG?
Record low interest rates provide a reason for stocks and houses to be above the trend line.
In the case of houses the increased “financialization” of the economy which is never going away also provides a reason for houses to be above the trend line. Borrowing and lending are simply easier than ever and more common than ever and that is unlikely to change.
(Still, some cities seem far to high in house prices, but don’t expect a return to some historic trend line.)
***************************
A house is worth only as much as someone is willing to pay/leverage and the bank is willing to lend. Things always return to the mean (in relative terms). The bubble cannot be explained by economics (but you can use economic data and try and measure it or the direction it is headed) but it is facilitated by the human ‘group’ thinking…and as group thinking get ridiculous people walk away.
Case in point – my younger siblings who were looking to buy are now happily priced out. They were worried about not getting in, but in a shockingly short period of time house prices in their area have skyrocketed and now they are really priced out. They are now back to concentrating on starting a business on the side and growing it and not spending every moment of their time looking for something affordable to buy.
They are becoming more productive again. As more people come to this realization, mindsets change just like they did in past housing bubbles from the 60’s to the US etc. It all hedges on people’s financial confidence with no brights spots on the economic/job horizon.
Outside of the real estate hot markets in BC, unemployment is steadily rising, yes Devil’s Advocate even in Kelowna. With severances running out in Alberta (those sent packing to BC are starting to sell assets to keep afloat)
The new normal is always like the old normal when it comes to human thinking based on primal emotions (fear, greed) which are both double edge swords. Spiking electricity and properties tax rates are the new talk.
If you are not old enough to remember lessons from the past…you owe it to yourself and your clients to research and find out what happened. Things have moved to the extremes
Flop
Your research has spurred me to study the data and look for trends in real estate on Van Isle (Maui of the North). I am trying to re-brand the name.
Looking at zolo: Vitoria added 18 house listings today and 17 yesterday low to high end.
Nanaimo: Reduced prices – on every page. Newly built houses are priced high and holding, area doesn’t matter.
The Cowichan Valley in between Vic and Nan. Like it was last year with only new big houses with large price increases – in every area.
Going for a drive tomorrow. This is getting interesting like trying to find Waldo.
It’s funny how this blog ignores and doesn’t post the inconvenient comments. So much for the pluralism of ideas.
Lots of ideas here. But they have to come with some respect. — Garth
#122 MF — “Our government is completely clueless and out of touch with what Canadians want.”
You mean they’re out of touch with what YOU and people who think like you and congregate in the same forums as you, want.
Much of the revenue that Abacus Data, EKOS, Environics, Forum Research, Ipsos-Reid and Léger is from government accounts, polling citizens. Also, many citizens contact their MPs and provincial representatives, and staffers monitor the media for citizens’ views.
#132 hope and ruin:
“Trumps 90 day ban on certain countries is a stroke of political genius.”
Not really. I know people who are dual Iranian – Canadian citizens, and who have lived in Canada most of their lives (ie since they were children). These people cannot enter the USA at this point in time, and I am being told they are also having problems boarding flights that will transit US airspace (which is a hard one as it is winter vacation season and people like to go south to Cuba and Mexico, which means flying over the USA).
This executive order is frankly nuts.
There are people who can’t go to work anymore. There are people who are permanent US residents with green cards, who have houses and jobs and families in the USA, and who are not permitted to go home. Trump is destroying lives, quite literally.
This is likely the most insane thing a US president has ever done (and I remember the George W. Bush era).
For sure it is racist and xenophobic. But it is also just bang out crazy.
This is a racist and Islamophobic action. No American should be proud. — Garth
—
Maybe.
How would you call though, creating wars and expecting Western societies to absorb millions of displaced people, without any effort to settle them in countries of the same region, similar culture, religion, many of them with great wealth?
How come this is not even part of the discussion?
Why did Obama and Hillary Clinton destroyed Libya, one of the countries with this potential and created an other wave of refugees?
What was the goal, what did they achieve?
The best part is that these former leaders are considered humanitarian, civilized human beings, above the doubt of racism.
Echoes of America turning away Jewish refugees as WW2 broke out. Trump just admitted that the terrorists have won. — Garth
This is a racist and Islamophobic action. No American should be proud. — Garth
There you lefties go again…confusing race and religious beliefs, sad…
This time he managed both. Speaking of prejudice, not being a racist or a religious bigot does not make a person a lefty. — Garth
RE #112 Ace Goodheart on 01.28.17 at 9:34 am
” If they invade China, where are they getting the funding from? China is their primary lender.”
Actually, the nation to invade, is the one who you owe the most money to. Victors alter history, and they can cancel the debts. China is a no brainer target when one thinks about it.
If you haven’t, buy now. Yes, prices are dumb. However, with the BEGINNING of Trump’s ‘NO IMMIGRANTS’ policy starting, where do you think they’re gonna go? Canada is only looking rosier to them. And a good number will buy. With him in charge of the U.S, it IS different here. Canada is going to get more pricier. The GTA or Burlington-Hamilton is going to POP.
Relax Peeps…we aint even did QE like the USA and EU….the party is just getting started chill….Hard assets going to rocket…..dollar dead….inflation is here except for wages
WUL: For the second time in two days, I submitted a pithy and mildly brilliant comment
key word: mildly:
End Old Age Security or reform it. Paid out of general revenue to Wrinklies based upon their birth certificates. $6500 per year and you youngsters are paying it after I and my cohort lived through the Golden Era.
concern about Trump: In all the bluster from Trump, there is a possible flaw.
key word being possible
Met many people from in GTA in Puerto Vallarta over November and December.They grew up there like myself in the 70’s and loved it.Now they all hate it and that its grown to big and fear for their kids growing up there now.Why is that?
Good post Doug,
Check out Mark Blyth for a cogent explanation of Trump’s popularity, Chomsky isn’t too helpful for this phenomenon in my opinion:https://www.youtube.com/watch?v=-K8bf6dbYt4
If you haven’t already that is.
Popularity does not = correct nor wise. Germans loved Hitler. He made them feel special, tribal, unified of purpose. — Garth
Popularity does not = correct nor wise. Germans loved Hitler. He made them feel special, tribal, unified of purpose. — Garth
Lol who claimed anything about wise or correct besides you?
Some Germans did indeed love Hitler, here is a point form list of why this was so…phronesis be damned:http://www.bbc.co.uk/schools/gcsebitesize/history/mwh/germany/economicrev_print.shtml
Unwise leaders breed bad outcomes. — Garth
Unwise leaders breed bad outcomes. — Garth
Exactly, Trump could be interpreted as the outcome of 30 years of neoliberalism and a growing chasm between the haves and have nots. Its perspectival I guess. Bad for whom?
Everyone. — Garth
Canadian Western Trust is now advertising that if you have your RRSP with them they’ll help you invest it in arms length or no non arms length mortgages. So if you can’t get a mortgage from a financial institution you can just ask Mom and Dad to lend you their RRSP!
Great article! Wow. Just dont read chomsky. Anything but that loser. Do some math instead. Or read kafka.
And watch porn for intellectual stimulation. NYT?! Lol, burn that cancer