Gravity

Young Dorothy and I built our first house decades ago. On the cheap. So much alum siding it looked like a giant can of tuna. But it was home. And we could come up with the mandatory 10% down payment – ten grand. Of course, the mortgage rate was 12.5%. And then, three years later, we had to sell and chase better jobs. Lost money. Real estate had fallen. The mortgage break fee alone was excruciating. There was a recession at the time and getting out was a narrow escape. “Well,” I remember saying to her when it was all done, “that sucked.”

Lately money’s been cheap and houses dear. In fact, Canada has a real estate bubble – at least in a couple of cities – that’s made headlines around the world. No generation prior has paid so much for a home nor been willing to shoulder so much debt. Never before in history has the cost of a house detached so seriously from what people actually earn. Never have we seen young people so hungrily make up the difference with borrowed money.

Apparently it’s about to get worse. Think of Isaac Newton. More on that dude in a minute.

Many blog dogs felt pooched yesterday by a new survey from HSBC on our needy Millennials. The kids are lining up to step off the cliff. Among the two-thirds who don’t presently own real estate, a staggering 82% indicate they intend to buy within the next five years – yes, salivating to grab assets that have never cost more. But 73% of these same people admit they’ve saved nothing and have no plan. That’s where Mom comes in.

Close to 40% of the owner-kids say they bought thanks to a withdrawal from the Bank of Mom, with half of them having to ask for more to cover unexpected costs. Oops. But why are the Mills so house lusty? First, their parents facilitate and encourage this behaviour, because real estate worked for them. Second, houses always go up (see the underwhelming blog post on recency bias yesterday). Third, financial illiteracy is rampant and most moisters wouldn’t know an ETF from an STD. Fourth, peer pressure. When everybody’s doing something, everybody wants in. The herd speaks with a single voice.

So, on to Newton. Trust me. It’s relevant.

In 1711, shortly before most Boomers were born, the South Sea Company was created and given a monopoly on trade with Spanish colonies in South America by the British government, in return for absorbing that country’s war debt. Cool deal, it seemed. Innovative. Investors loved it and bought in.

By 1720 the shares were £128 when evil insiders circulated false claims about revenues. That drove the stock to £175 and attracted a lot of new investors into this sexy play, including Sir Isaac Newton, the gravity-discovering guy and primo scientist of his day. Great move. Within months Newton had doubled his money with the price rising to more than £330. Like the supremely wise person he was, Newton decided to get out, pocket his profits and move on.

However, like a slanted semi in Leslieville or a Vancouver Special, this puppy continued to rise in value as more and more greater fools piled in and made huge returns. In fact, by the summer of 1720 shares had surged to £1,050. Newton’s buds were rolling in it. So, envious, back he went – buying into the venture at a level thrice that at which he’d sold – just a matter of weeks before the peak. By that autumn the bubble had burst – since pure speculation, recency bias and greed were behind it. Shares crashed to £175. Newton lost twenty thousand pounds – the equivalent of more than $3,000,000 – and exited the investment broke. His journey had been comprised of four stops: greed and satisfaction, followed by envy and despair.

Okay, so that was 300 years ago, and you don’t care? Well, the same happened with Toronto property in 1989. Dot-com and tech stocks in 2000. Gold in 2011. Vancouver in 2015. Houses in Markham, 2017. Whenever assets erupt in value, driven not by fundamentals but by emotion (and especially when supported by debt), it does not end well. The last in are the first to be squished. Those who don’t take windfall profits risk lasting regret. Fools who trade up in a rising market become greater fools. And parents pushing kids into real estate they have not earned and debt they don’t deserve do them no favour.

Stuart is a seasoned, experienced, big shot portfolio manager with one of the bank-owned wealth management outfits. It was he who this week reminded me of Newton’s putz.

“Time will tell,” he says, “but I couldn’t help but ponder the potential similarities that may occur with our Vancouver (and Toronto) real estate valuations; psychology and end points.  I think that guys like you and me see these things in a different manner because we deal with “bubbles” in many forms on a constant basis.

“I have noticed that most often I am too early on the sell side because of the self-fulfilling destiny of capital flows from the herd,  that drive simple overvaluation to absurdity.  Michael Burry of course was 100% right in shorting the CDS’s but was “early”  as valuations went from stupid to demented… eventually he was vindicated.  Anyway, the day will come…and as you have pointed out I suspect it’s begun already out here.

“As Buffett says ‘What the wise do in the beginning, fools do in the end’…..I also like ‘The decline in any bubble will be equal and opposite to the delusion which preceded it.’”

Be careful what you covet. It’s a long way down.

160 comments ↓

#1 Steve on 02.28.17 at 5:44 pm

I’m shocked at what people are paying / yes I do mortgages but still am completely shocked / will it end ?
All I know is I love Owen Sound …. homes for 200k and a life of walks / beach / friends / and talk on the street is not reno’s / values / selling high / staging
Kids still play …
cheers

#2 Michael Heath on 02.28.17 at 5:48 pm

The ideal way to do it is to exit a bubble in stages. Never cash in everything. At some point as the bubble bursts you will lose some of your investment but the staged gains on the way up should compensate.

#3 gravity 2 on 02.28.17 at 5:50 pm

#94 jess

If just a portion of these stolen and hidden funds was properly taxed, this could help developing countries finance their fight against extreme poverty, providing vital government revenues for education, healthcare and infrastructure in the poorest countries.

My taxes have been supporting these causes for decades now, and I have to tell you Jess, that the number of displaced people, refugees just keep increasing to never before seen levels year after year.

It seems to me, that the more we help the more we create incentives to create profitable misery bearing conflicts, bigger and bigger layer of organizations that provide a living for more and more professional helpers, rescuers moved around the globe from one hot spot to the other.

The more we help the more comfortable are the chaos creating powers, after all, my and your taxes will help out to clean up the mess they create, while their business keeps growing – thanks to my taxes and goodwill.

I think we are actually becoming enablers, we are putting more and more people in danger as collateral damage, because creating chaos, displacement of millions seems to be like a profitable business as long as it sparks flowing money out of our pockets.

#4 RentYVR on 02.28.17 at 5:59 pm

“But why are the Mills so house lusty?” – good points Garth, but you’re missing the fifth reason: government heavily incentives real estate above all other assets/investments, both through tax policy and through insurance to lenders. Hard to fight that.

#5 Saint John proud! on 02.28.17 at 6:07 pm

Bah! I sold my nortel @ 115! Bubble my …

Awesome story regarding Newton.

#6 Don Regan on 02.28.17 at 6:11 pm

Cant believe it!

6849 Heather Street
Vancouver West

$3,279,600 Assessed Value
$2,150,000 Make an offer over asking.
Winner announced after all offers recd.
I would think they are desperate.

#7 Chaddywack on 02.28.17 at 6:11 pm

I’m still shocked with the mentality in Vancouver. From what I’ve seen lately people are falling into 1 or 3 camps.

1) Things are not selling because of the foreign buyer tax, but after the BC election in May when Christy Clark is re-elected she will repeal the tax and then “the Chinese” (yes…because ALL Chinese people do the same thing….right…) will come back in droves buying up all the remaining land

2) Things are not selling because it snowed in Vancouver this winter and there was ice all over the roads so no one could get to open houses

3) China has cracked down on capital controls but it’s only a matter of time before “The Chinese” (sigh..) find a way around it and money will start flowing in again.

All I know is people are still bragging about the equity in their homes and refusing to list for less when they want to sell……funny thing is for the first time in about 5-8 years I’m actually seeing listings sit stagnant…..fun times ahead.

#8 Ed Devlin on 02.28.17 at 6:17 pm

My son just sold a condo he owned and pocketed about $30,000. He wants to continue renting and invest the proceeds but isn’t sure how to go about it. I don’t think a broker would look at him with only $30,000 to invest. “Investment advisors” mostly just want to sell him mutual funds that are dogs (no offence intended) or very high risk. So how should he get started in sane investing? Just set up an account with an online brokerage and start buying ETF’s? How would he decide what ETF’s to buy?

Thanks for your advice.

#9 For those about to flop... on 02.28.17 at 6:23 pm

Hey Broadway,what did 5310 St Catherines go for?

I’m sure they at least broke even with the renovation costs included.

I think it was the same guys from the one at 3303 Carolina that you were telling me about.

I thought they sacrificed that one so they could hold out on this one a bit longer to the right bid came along.

You would have to be pretty desperate to take a loss in the Spring at this stage of the cycle…

M42BC

#10 rainclouds on 02.28.17 at 6:26 pm

@89 Soost

Fair comment, I was actually thinking back to my peers. Borrowing from parents isn’t exclusive to your generation:-) My observation (for what its worth) is people who dont earn the money handed to them value it less than the person who sacrificed. There are always exceptions.

You dont have to OWN in an expensive city either. Renting is a viable option. Moving is another , neither requires the bank of Mom.

Question remains: what happens IF this bubble bursts and the valuation of your purchase wipes out your (parents) down payment.

Part of being an adult is standing on your own including paying for what YOU can afford.

#11 jess on 02.28.17 at 6:30 pm

An international network of leading investigative journalists is today contacting 7,000 politicians in 20 countries to request they publish details of their own tax records as part of a new global drive for accountability and transparency in politics.

https://taxdisclosure.org/?platform=hootsuite
http://www.taxresearch.org.uk/Blog/2017/02/28/international-investigative-journalists-spearhead-global-push-for-politicians-to-disclose-their-taxes/

The inspiration for the Tax Disclosure Project was esteemed Pakistani journalist, Umar Cheema, a board member of Finance Uncovered and a member of the International Consortium of Investigative Journalists.

In 2012, Umar, who two years earlier had been kidnapped and beaten up after writing stories critical of the government, contacted all 446 federal legislators in Pakistan asking them to disclose their tax returns. Only two responded.

He then trawled through Pakistan’s Electoral Commission to obtain the national tax numbers of politicians. Thanks to a whistleblower who helped check their tax records, Umar established that around 70% of Pakistan’s lawmakers including the country’s President and 34 ministers did not file tax returns.

The impact of his follow-up report in 2013 was phenomenal. Today every politician in Pakistan makes public his or her tax data. In fact, every Pakistani citizen’s tax details are published annually in a public directory.
Umar Cheema, investigative reporter at The News in Pakistan, said: “It is the duty of journalists to hold politicians accountable. Nothing is more important than politicians’ financial integrity. Without it, they will remain defenders of the interests of the rich. This campaign for the tax disclosures of politicians will bring back what they’ve lost: the public trust
e.g.
On dark money
https://www.opendemocracy.net/uk/adam-ramsay-peter-geoghegan/secretive-dup-brexit-donor-links-to-saudi-intelligence-service
whose funding who
http://www.transparify.org/

Kola Aluko, a Nigerian energy mogul, bought the 79th floor penthouse at One57 for $51 million in 2014. It has four bedrooms, four-and-a-half baths, 6,240 square feet, sweeping views of Central Park — and a past-due $25,000 property tax bill.
But Aluko has bigger problem, it seems. The 47-year-old tycoon is under investigation in Nigeria and in Europe for alleged money-laundering crimes.A Nigerian court, according to various reports, tried to freeze Aluko’s assets, including his One57 unit, as part of the alleged scheme to defraud the government of oil sale profits.
Meanwhile, as of last year, a Nigerian court could not find Aluko to serve him with papers. He may simply be floating around the world on his 213-foot yacht, the Galactica Star.In 2015, the ship was sailing around the Mediterranean. It was spotted in Cancun last year, and may now be berthed in Turkey.”
==========

????
37% of young homeowners borrow from ‘bank of mom and dad,’ HSBC survey indicates

LONDON/NEW DELHI: Global banking giant HSBC has disclosed being probed by tax authorities in India and several other countries, including against its Swiss and Dubai units, for allegedly abetting tax evasion of four Indians and their families.

http://economictimes.indiatimes.com/news/politics-and-nation/hsbc-discloses-tax-evasion-probes-in-india-other-countries/articleshow/57356726.cms

banks “reputation” is important to them?
https://www.pressreader.com/canada/winnipeg-free-press/20170228/281788513840447/textview

read violations here
http://violationtracker.goodjobsfirst.org/parent/hsbc

#12 Sylvain on 02.28.17 at 6:31 pm

And then you get article like this one that tells you that there is nothing wrong. https://www.thestar.com/business/real_estate/2017/02/28/torontos-home-prices-in-line-with-other-world-cities.html

#13 gagagravity on 02.28.17 at 6:36 pm

Garth

Wasn’t Newton the dude who measured gravity by the Apple falling….wonder if we may see a modern equivalent with the Apple stock….

#14 [email protected] on 02.28.17 at 6:39 pm

Meanwhile the banks are urging the government to reconsider having them shoulder more mortgage risk.

https://www.bloomberg.com/news/articles/2017-02-28/canada-banks-push-back-against-risk-sharing-mortgage-deductible

#15 Randy on 02.28.17 at 6:42 pm

“Well, the same happened with Toronto property in 1989. Dot-com and tech stocks in 2000. Gold in 2011. Vancouver in 2015. Houses in Markham, 2017. ”

Bitcoin 2017?

#16 And with the real estate fall .. on 02.28.17 at 6:44 pm

Shall come the TSX. Sorry . If this real estate fall is dramatic it will spill onto the markets , unless commodities save the day .

TSX is now flat for the year . 2016 was silly , talk about herd mentality

#17 S.Bby on 02.28.17 at 6:54 pm

When the speculators bail out then it will get real ugly. There are five empty houses within a one block radius of me. And those are only the ones I know about; there are likely more. Some are up for rent (and have been available for months with no takers) and others are just sitting and rotting.

#18 Self Directed on 02.28.17 at 6:57 pm

Garth, you might not want to reference the great Vancouver crash of 2015 as an actual event that happened. The crash is yet to be “official fact” in the history books.

Besides, don’t you mean 2016???

The truth of the matter… we’ve seen a softened market due to China putting capital controls on currency. And also, the market is always slow around the holidays.

The outer lying areas of Vancouver, including Surrey, Coquitlam, Port Coquitlam, Pitt Meadows, Maple Ridge, Mission, Abbotsford, and Chilliwack are still seeing gains. The only prices softening are price points between 1-2M. The only stuff crashing are houses over that amount. And that could turn around quite quickly.

A crash will occur when all price points are affected. And this won’t happen until:

a) Interest rates rise consistently, or
b) recession occurs enough to have a serious impact on jobs and the economy, nationally.

Neither a) or b) are on the horizon, and no one can predict when either of those events could happen. As long as Canada keeps churning out tiny growth with low interest rates, housing prices will remain sustainable.

#19 Jason on 02.28.17 at 6:57 pm

Your turn now Toronto. “Toronto’s Trendy Queen Street West Is Filling With Empty Storefronts”

https://betterdwelling.com/city/toronto/torontos-trendy-queen-street-west-filling-empty-storefronts/

#20 Nonplused on 02.28.17 at 7:01 pm

It is human nature to “go for broke” when you don’t have anything left to lose. So what are these poor millennials supposed to do? They lost their jobs to automation, excessive immigration and a poor economy, they have huge student loans because they stayed in school too long and got a useless degree, they don’t have any money to invest in the stock market, and they face the highest combined tax rate of any generation in history. So of course they turn to the housing market. It’s the only place they perceive can make any money. Well, that and SeekingArrangement.com.

#21 Irish Stew on 02.28.17 at 7:03 pm

Homes in Windsor & Chatham Kent SW Ontario were dirt cheap last year for real estate.

Even there, the market is now bare w/ listings and those that hit the market are getting multiple offers above asking.

Bubble……pop?

#22 not 1st on 02.28.17 at 7:05 pm

Whats Newtons house worth Garth?

#23 MF on 02.28.17 at 7:06 pm

Renting sucks because with wages so low and rents so high you are not able to ever save.

It’s a vicious cycle.

MF

#24 AJ on 02.28.17 at 7:12 pm

One of the boys in my sons class has Down syndrome. He’s an incredible boy that brings joy to the world. Please tell Stuart his poor choice of words causes families a or of hurt. Life’s too short for that.

#25 Freedom First on 02.28.17 at 7:14 pm

Interesting Post. Financially illiterate idiots with money bankrupting themselves.

Also, financially illiterate idiots with money bankrolling their irresponsible financially illiterate idiot offspring. This will absolutely be the root of many divorces at both ends.

Also no wonder most lottery winners end up bankrupt, and the wealthy are the minority.

Also, and no surprise, stupid is as stupid does is very very true. Yesterday, today, and tomorrow.

I am very grateful for the wisdom shared with me by wise people over the decades. From what I’ve seen going on around me all of my life, and how my life is today, I know I could not possibly have done it alone. My greatest attribute, I listened to the wise. I consider this a great feat, as I too have a big Ego. I have been blessed.

#26 Smartalox on 02.28.17 at 7:15 pm

Lately money’s been cheap, and real estate has been expensive.

When I bought a condo in Vancouver in 2007 (before the 2008 – 2009 crash of financial markets, and subsequent ’emergency’ interest rates), housing was still expensive – about 4 times income at that point – and had risen about 50% from 2003 levels.

And mortgages were 7.5% then, or more than twice what prime rates are now (yes, it happened once, kids, and it’ll happen again!).

I admit that things really exploded in 2010, after rates were crashed to 2% or less, but that was just rocket fuel on a fire that was already almost too hot to touch.

#27 Dave on 02.28.17 at 7:18 pm

Why is Seattle significantly cheaper than Vancouver when there are far more good paying jobs and many high tech companies in Seattle like Boeing, Microsoft, and we have…well, Lululemon and construction jobs? What else can explain this other than the Chinese are late in discovering Seattle?

#28 Lucas on 02.28.17 at 7:18 pm

#6 Smoking Man on 02.26.17 at 10:50 am

Wow. Just download realtor app.

Jesus, nothing in Shlong Branch under a million.
Rediculos. So I go look at other areas of interest from years ago way out in the bonnies. Insane prices. Bidding wars. Never saw that one coming.

Sell and go where.

I checked out rentals. Rediculos 4k month 4 a shit bungee.
—————–

Millionaire gambler!!!
….ya, sure…

#29 small time investor on 02.28.17 at 7:19 pm

#8 / Ed with a son and $30,000 to invest

It’s easy to open a self directed trading account with any of the big five banks. Some even allow you to have a training account, sorta like taking a dry bath.

If he’s not desperate for the money this year or next, I’d suggest to buy dividend paying REITs for example. There are several of those stocks paying anywhere from 6 to 8% or even more. Stock prices can fluctuate but their dividends are pretty solid.

#30 toronto1 on 02.28.17 at 7:20 pm

bubbles are never different- all the same with same psychology in play. unlike the stock market bubbles, the vast majority are invested in RE and want to believe its true.

When prices detach from fundamentals like earnings they end up reverting to mean, always have and always will.

Canadians are so uppity about the housing bubble and how its different– its not, mortgage fraud here is rampant, speculation is rampant and will end the same it always has.

Garth, no amount of history lessons will matter, people believe what they want absent of facts.

#31 Dave on 02.28.17 at 7:20 pm

Re # 7 Anyone who has the money to pay cash for a home in Vancouver would view a 15% tax as a minor inconvenience. This tax is for Optics so corrupt Christy can get re-elected. We know that the crackdown on money flows out of China is what has finally caused Vancouver to burst. The correction started before the tax was even implemented.

#32 Newton would buy Van RE now on 02.28.17 at 7:21 pm

Being smart has nothing to do with being financially literate.

That’s the bottom line!

#33 Debtslavecreator on 02.28.17 at 7:23 pm

Record debt tied to an illiquid asset selling at record nominal and inflation adjusted prices
Record leverage and a population that is mostly financially dumb
Mortgage rates at the lender I work at are going up match 1 and we will start charging extra for refi and amortization of more than 25 yrs
This is horrifying and is very likely to result in a devastating outcome for hundreds of thousands of recent speculators and anyone using their house like an ATM machine
So sad too bad
Renting debt for a chance at a capital gain but with the risk of losing it all or pay much cheaper rent with no risk and no headaches …..
At least in America and most of Europe homes had fallen to multi year nominal and inflation adjusted prices with buyers able to lock in long term mortgages at cheaper than any 7 year mortgage in Canadstan
Good luck Canadian moisters

#34 Self Directed on 02.28.17 at 7:25 pm

Speaking of recessions in Canada… are we seeing a new trend here with the S&P TSX? It dropped, but the DJIA is maintaining it’s course.

Might be time to buy bonds while they are still cheap.

#35 Misallocation of Capital 101 on 02.28.17 at 7:26 pm

The Global Housing Crisis and the misallocation of capital.

https://www.rt.com/shows/renegade-inc/378716-uk-house-prices-risks/

#36 Paul on 02.28.17 at 7:27 pm

This bank of Mom has been going on so long heloc’s 2nd Mortgages, cashing rrsp’s giving the money to the “kid’s” to get them in a house is just inflating the all ready stretched bubble. There is not a Mortgage broker or agent willing to put his or hers money at risk. At one time to top up a buyer 0ne or two calls got private funds not any more, from where I sit.

#37 Paul on 02.28.17 at 7:31 pm

#22 not 1st on 02.28.17 at 7:05 pm

Whats Newtons house worth Garth?
————————
A fig.
Had to sorry

#38 BobC on 02.28.17 at 7:33 pm

Sorry Garth, off subject but in fairness this just has to be said. Real estate isn’t the only problem. What happens if it all hits the fan at the same time?

All of us deplorable’s down here expect to hear you Canadian Trump haters talk the same way with the shoe on the other foot.
I’m sure you’ll keep your open heart and open mind as people flood into Canada this summer including convicted criminals and those with no job skills.
You should plan now knowing every 5-600 kids you’ll need another school house with bilingual teachers and administrators. I read one Houston Tx school district had kids that spoke over 80 different languages.
Also these people will need healthcare, housing, food and every other social service you have.
Here comes your chance to show the American Trump supporters and especially Trump himself how accepting a flood of undocumented people will make Canada stronger. We’re going to be so embarrassed.
Remember as this unfolds this summer your a kind nation, a loving and giving nation. You should quietly pick up the tab. I’ll share this much to help you out. We found out working a lot of overtime or maybe 2 jobs can help a lot as wages drop due to competition and as taxes go up.

https://www.yahoo.com/news/door-knocks-dark-canadian-town-front-line-trump-111159858.html

#39 rknusa on 02.28.17 at 7:41 pm

re: Whenever assets erupt in value, driven not by fundamentals but by emotion (and especially when supported by debt), it does not end well.

our Finance Minister disagrees with you

from the Globe and Mail

Finance Minister Bill Morneau says rising home prices in Toronto and Vancouver are supported by low unemployment and higher incomes

WTF!

#40 The Wet Coast on 02.28.17 at 7:54 pm

Ross Kay recently said the real estate board of greater Vancouver recorded no sales over $1,000,000 in the last 5 days of January, and then there was a disproportionate number houses over $1,000,000 in the first five days in February. Giving February a “bump” If what Ross is implying to be going on is, don’t they put people in Jail for that type of thing when it involves the stock market? Just sayin’…..

#41 TCContrarian on 02.28.17 at 7:54 pm

“Okay, so that was 300 years ago, and you don’t care? Well, the same happened with Toronto property in 1989. Dot-com and tech stocks in 2000. Gold in 2011. Vancouver in 2015. Houses in Markham, 2017. ” -GT

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

Don’t forget the Tulip Mania and a couple others…

The Newton example shows that ‘recency bias’ and the herding instinct is not a test of IQ. We’re ALL susceptible to it.

Although I’m in total agreement, Garth, if you are to use ‘gold’ in the context of a bubble, I think you should’ve used 1980 as reference (that was a true ‘bubble’ which took decades to recover from). The 2011 peak was only an intermediate pause; gold eventually go to much greater heights during this cycle (which will likely peak during 2020-2021). I hate to guess an actual $ amount, but suffice to say that it’s pretty much a given that it’ll be >$2k. We can thank Central Bankers for that!

By the way, in CAD, the price of gold has been in an uptrend since 2013. Check it out!

I was buying some more of my gold ETFs yesterday, BTW. Just ‘love’ those intense ‘down’ days which cause most participants to panic. Not easy being ‘contrarian’, I have to admit!

TCC

#42 For those about to flop... on 02.28.17 at 8:00 pm

Not too sure if someone already put this up the other day but it was just brought to my attention.

Apparently at the Marine Gateway building there are 609 empty or non resident units there.

This project was built on top of a skytrain station and so should have helped with the local rental market.

Similar problems at some of the other transit hubs…

M42BC

https://beta.theglobeandmail.com/real-estate/vancouver/bcs-empty-home-problem-moving-beyond-just-vancouver/article34130746/?ref=http://www.theglobeandmail.com&

#43 toronto on 02.28.17 at 8:00 pm

is now like London, New York. Forget it, the average bloke can’t buy and raise a family there. It’s over– EVEN with a 40% correction.

ship sailed. Buy in cambridge, waterloo, barrie..etc…..and a good reliable car , that’s a yucky commute.

at least we’re not as expensive as Shanghai…lol

#44 Mandingo on 02.28.17 at 8:02 pm

I don’t know why you keep referring to Vancouver like there was some big crash, correction, fall or any other negative impact on the market. Prices have barely moved and sales have barely slowed. Houses are still selling and prices haven’t fell hardly at all. The gains people in the market are far superior to any price decline. I live here, I would know. Forget about some stats that you read online. Get a grip

#45 Ya right on 02.28.17 at 8:05 pm

Lol, you’re out to lunch if you think houses in Markham are going to drop from $1.2Mil to $500k. It’ll never happen.

#46 world view on 02.28.17 at 8:09 pm

Let’s put Canadian housing market in context.

IMF 1016 Q3 data, around the world:

real house prices, house price to income ratio, house price to rent ratio.

Graphs and downloadable CVS data to mine.

http://www.imf.org/external/research/housing/

#47 Vanrentor on 02.28.17 at 8:28 pm

Big banks are freaking out about Toronto real estate

http://www.mortgagebrokernews.ca/news/a-lending/big-banks-are-freaking-out-about-toronto-real-estate-221806.aspx

#48 Olive on 02.28.17 at 8:38 pm

#39 rknusa on 02.28.17 at 7:41 pm

from the Globe and Mail

Finance Minister Bill Morneau says rising home prices in Toronto and Vancouver are supported by low unemployment and higher incomes

————————————————–

Would you be able to provide a link to the source/article.

Thanks

#49 Catalyst on 02.28.17 at 8:46 pm

So for me – I have been a nearly daily reader/follower of the blog for a few years and the biggest value to this blog is the diversification message.

As far as houses go, I just bought my first house. I was paying $1750 rent for a 1 bedder and with $80k down bought a place for $400k. Combined with P+I+Condo fees+prop tax (utilities I paid while renting also) I am about the same out of pocket each month except 600 is going to principle so assuming house prices stay flat then my rent has decreased 600 a month even at today’s insane levels. At 7% return on my downpayment I would get $466/mo from a diversified portfolio.

Houses are ungodly expensive compared to some metrics but in the current credit environment are still quite cheap and so you have to believe in a pretty extreme interest rate hike scenario for the math to flip.

The last 20 years was built on declining rates and boosting asset values and I just don’t see it reversing any time soon.

End of the day you gotta live somewhere and housing isn’t so expensive right now unless you demand a single detached. Stay away from flipping properties or buying rental units but for a primary residence I think it often makes sense to buy.

My 2C.

#50 Smoking Man on 02.28.17 at 8:54 pm

#28 Lucas on 02.28.17 at 7:18 pm
#6 Smoking Man on 02.26.17 at 10:50 am

Wow. Just download realtor app.

Jesus, nothing in Shlong Branch under a million.
Rediculos. So I go look at other areas of interest from years ago way out in the bonnies. Insane prices. Bidding wars. Never saw that one coming.

Sell and go where.

I checked out rentals. Rediculos 4k month 4 a shit bungee.
—————–

Millionaire gambler!!!
….ya, sure…
…….

You’re onto something, you should see my old broken down pick up truck and my tiny house, all the spent cigaret butts on the front lawn. Anyone with half a brain would naturally assume I’m an impoverished bastard. Did you ever watch Breaking Bad? You learn a lot from that show. I even look like Heisenberg. Wish I knew how to cook meth, I would add it to my list of super fun things to do.

#51 South Sea Bubble on 02.28.17 at 9:03 pm

“Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac’s talents didn’t extend to investing: He lost a bundle in the South Sea Bubble, explaining later, ‘I can calculate the movement of the stars, but not the madness of men.’ If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases.” — Warren Buffett

#52 Smoking Man on 02.28.17 at 9:05 pm

Watch Trump address congress with the TV volume off and this cranked on the ear buds.

https://www.youtube.com/shared?ci=DWyl6je4VjQ

Amazing experience with a good buz going.

#53 Travis Bickle on 02.28.17 at 9:07 pm

“Okay, so that was 300 years ago, and you don’t care? Well, the same happened with Toronto property in 1989. Dot-com and tech stocks in 2000. Gold in 2011. Vancouver in 2015. Houses in Markham, 2017.”

Mr. Turner is implying that what happened in Vancouver real estate prices in 2015 is the same as the South Sea stock crash from 18th century!?! Really…

Vancouver housing prices are off by about 10-15% and even less for “normal” priced (i.e. under $1 Million) properties. That is literally nothing. And NOWHERE near a crash or bubble-burst magnitude of other historical crashes he listed above.

So, I argue that Mr. Turner is being a drama queen when it comes to Vancouver real estate, which he puts in the same category with South Sea stock price or dotcom crash of 2000!
What is happening in Vancouver is a relatively minor price cooling, and would become a serious crash only if prices dropped by 40-50%, which (sadly) I don’t think will happen in Vancouver, at least not in the next 20 years.

I put “sadly” in bracket above to indicate that I would welcome the Vancouver (and Toronto) housing prices crash since it would allow many honest folks opportunity to buy houses they need to live in and have money left for other things in life. However, I think it ain’t happening. Small cooling in prices (up to 15%) yes, but nothing more than that. And then, up again by 30%, and so on … until global money runs dry… perhaps 20 years from now.

Here, let me remind you of what I said the comparison was: “Whenever assets erupt in value, driven not by fundamentals but by emotion (and especially when supported by debt), it does not end well. The last in are the first to be squished. Those who don’t take windfall profits risk lasting regret. Fools who trade up in a rising market become greater fools.” There. Feel better? — Garth

#54 soost on 02.28.17 at 9:24 pm

I know I should bee in a globally diversified mix of ETFs and Vanguard dividend funds but right now I’m in dirty bank mutual funds —- canadian banks who incestuously invest in their own kind. Is an overexposure here risky in a crash scenario (mortgages being big part of the bottom line)

#55 Binder Dundat on 02.28.17 at 9:31 pm

#48 Olive

Finance Minister Bill Morneau says rising home prices in Toronto and Vancouver are supported by low unemployment and higher incomes

http://bfy.tw/AMhY

#56 Cheap Houses on 02.28.17 at 9:32 pm

More people are watching the Trump address in the USA than the Oscars. Just saying.

#57 Smoking Man on 02.28.17 at 9:38 pm

DELETED

#58 DollarDragoness on 02.28.17 at 9:40 pm

Hi there – 22-year-old Millennial speaking! (My mother dragged me into this whole financial independence obsession through your blog, Garth, for the record). And I gotta say, you are really on point about my generation. At least twice a week the Mills in my office lunch room start blathering about houses. This co-worker went to see a mortgage specialist, this one is looking at houses, that one is buying one, etc. I’m rather adamantly against buying in my region (the Okanagan), and yet no matter how logical my arguments, I usually get one of two answers:

“Eh, it doesn’t matter, Dad’ll bail me out if it fails.”

Or “But I’d rather pay my own mortgage, not my landlord’s!”

Nevermind the ridiculous amount of math I can pull up on net worths and what they look like when you rent & invest or when you buy in markets like this one.

So many greater fools. Millennials are going to be hit by this one hard (but not me, because hey, I learned from the best. Thanks Garth!)

#59 guests on 02.28.17 at 9:48 pm

#56 Cheap Houses on 02.28.17 at 9:32 pm

More people are watching the Trump address in the USA than the Oscars. Just saying.

Obviously.

#60 common sense on 02.28.17 at 9:51 pm

Donnie..nice speech…..

Who is paying for everything? Do I hear the national debt level going to 25 Trillion?

#61 Confusing on 02.28.17 at 9:51 pm

Up here on burke mountain coquitlam, everything is up and selling (presale) within days…sadly…because I want to sell my townhouse and get a sfh

Not sure how the south sea company speculation had to do with shelter costs but still interesting to read about

How much should a lifetime of shelter cost? Apparently garth knows but is not telling ? Does anyone know?

#62 Miss v on 02.28.17 at 9:54 pm

#8 Ed Devlin on 02.28.17 at 6:17 pm

Have your son checkout Millenial Revolution blog which includes a series on opening a self directed account and how to buy, diversify and rebalance ones portfolio. They are clients of Garths and follow a lot of his views so worth checking out.

#63 joe campbell on 02.28.17 at 9:58 pm

what canada needs is more cities.

calgary has doubled in size in 35 years. we can keep spreading out or we can make a new downtown 100 kilometers away (cough rocky mt house).

if we do not make new urban centres than yes, there is a large demand for single detached homes close to the core of condos. new urban centres can be cheap, affordable, and built to a housing code from this century. they would require labour to built, something the short on housing and employment crowd can offer. the best part is it would seriously decrease the value of existing homes.

bc is the only province where this is actually hard to do, damn mountains.

#64 Smoking Man on 02.28.17 at 9:59 pm

Deleted Seriously.

Trump Rocks….Suck it up.
Don’t worry about me. Think The first episode of Breaking Bad.

Trump the exact opposite of what MSM says he is.

The real racist is the lefty loons. Chicago, get that around your head.

I’ll bet you a million bucks that Trump helps those poor black buggers in those inner cities enter the middle class. They shoot people and sell drugs because that’s the only option. Till now. They are just votes to the globalist lefty loons.

Obviously, you never read the chapter titled Shlong Zumanga in my book. Otherwise, my post would not be deleted. You bastard

Yes It’s Jack tonight. Sorry for the aggression.

#65 Andrew Woburn on 02.28.17 at 10:06 pm

I don’t know about you but this is one of the scariest things I’ve seen in a long time. Meet “Handle”, a Boston Dynamics robot. Imagine if this thing had a gun.

https://www.youtube.com/watch?v=-7xvqQeoA8c

#66 JSquared on 02.28.17 at 10:12 pm

More people are watching the Trump address in the USA than the Oscars. Just saying.

Obviously.

___

Maybe they should be watch this instead…

http://www.msnbc.com/rachel-maddow/watch/new-commerce-secretary-at-nexus-of-lucrative-trump-russian-deal-886220355575

#67 Brainless homemaker on 02.28.17 at 10:16 pm

Hi Garth, thank you for all the advice you provide. But as a mom of 2 kids, no house, with 70k savings, there is no fee based financial advisor who can take up us as client. I am always directed to banks with this kind of amount. Any help?

#68 Brainless homemaker on 02.28.17 at 10:19 pm

And I am not able to really follow you and kind of open accounts by myself and do all those things about etfs and balanced portfolio you suggest. I don’t get it unfortunately and need hand holding..so it gets tough and banks are always mutual funds

#69 Does Morneau read the news? on 02.28.17 at 10:21 pm

In the last 10 days, almost all the major banks have fired big warning shots about TO and YVR markets. RBC BMO SUNLIFE and SCOTIA CEO was today.

Oh, hello there…

http://www.huffingtonpost.ca/2017/02/28/toronto-vancouver-housing_0_n_15068912.html

Garth, does Morneau get phone calls from the bank CEO’s? As in hey do something before this turns into an all out Poo-Poo Storm?

Something has to be done, the mortgage rules are not working and they were not the solution this market needed. Going after Joe and Mary first time buyer was useless. With prices heading over $1.5 mill for average detached in Toronto, the market needs now needs major taxes for speculation and foreign buying, period.

And he should be calling Wynne and Tory about a foreign buyer tax and speculation tax in their own hoods. Toronto is out of control.

#70 Trump a friend to Canada on 02.28.17 at 10:24 pm

Told you Garth, Trump like you(Canada) and the British are part of the good old boys club. He only has good words to say. Everyone else who not part of the club will face tariffs. Three cheers for Trump. Stop acting like a greedy right wing crazy CONservative Trudeau and tighten up immigration.

#71 Trump a friend to Canada on 02.28.17 at 10:26 pm

Andrew Woburn on 02.28.17 at 10:06 pm
I don’t know about you but this is one of the scariest things I’ve seen in a long time. Meet “Handle”, a Boston Dynamics robot. Imagine if this thing had a gun.

https://www.youtube.com/watch?v=-7xvqQeoA8c

____________________________________________
Google owns Boston dynamics and Google is already scary

#72 WUL on 02.28.17 at 10:40 pm

28 Feb ’17 – (Feb – CREB). The + 20% increase in Calgary real estate sales YOY for the first two months in this year may be of no moment. The current real estate market cycle on the vast plains may have hit its nadir in Jan ’16 so an improvement may have been inevitable and it could not have been worse. Median and average prices holding, new and active listings down, days on market waffling.

We still have to wrasse with the effects of the disappearance of significant capex in the oil sands in the Taiga in the next many years. What, $200 billion spent on mines and SAGD projects between say 2000 and 2014?

We were knee deep in clover in those halcyon days from Comox to the Rock.

#73 WUL on 02.28.17 at 10:42 pm

“wrassle” not “wrasse”. Concussion symptom.

#74 cramar on 02.28.17 at 10:46 pm

Last In, First Squished – LIFS. Nice!

#75 it's not going to change on 02.28.17 at 10:48 pm

this is not going to change in the gta. short-sighted politicians want owners to feel wealthy. owners vote. they will allow foreign money legal or not to come in and buy everything. that’s it. that is the economic plan. they are not capable of thinking or planning for anything better. anyway all they have to do is win the next election. and so it goes, year after year, no fixing, no planning, just get to next election.

these cities with their urban sprawl are poorly designed. as one poster said above, a better plan would be to create many urban nodes of various sizes with good infrastructure and their own downtown area with all the desired amenities. there will have to be more density in housing – think semis, row houses, other missing middle. if these are in a walkable/transport friendly environment i think that younger people would like this lifestyle. who wants to mow all that grass anyway. transportation into the city would be efficient/fast but not needed as business would thrive in these urban nodes. you’d only have to come to toronto to see drake or watch the leafs lose again. house prices would come down, allowing people to spend in the community and grow the economy organically, instead of this false economy.
hopefully, some enterprising politicians of some regions will capitalize on toronto’s high living costs, think out of the box, and try to build these types of urban nodes, attracting millenials to their region and stealing jobs away from the toronto. businesses do not want to pay toronto rents or wages either.

#76 FULL TEXT on 02.28.17 at 10:49 pm

Transcript of President Donald Trump’s Tuesday February 28, 2017 address to a joint session of Congress

#77 };-) aka Devil's Advocate on 02.28.17 at 10:52 pm

I may not like it but it’s the market. Supply and demand plain and simple.

People vote with their dollars – DOLLARS are the truest ballot.

Exorbitant real estate values are… “REAL”. It’s not what the seller want’s or their REALTOR® says that is the value of a property, it’s what a buyer is prepared to pay. Simple as that.

Sure, in the opinion of many, the market is irrationally exuberant once again. That does not mean it is entirely unsustainable. Supply and demand.

There are currently over 7 billion people on this planet. Forecasts call for over 10 billion by 2050. That’s not really that far away.

Absurd as it is, it is what it is. Don’t get your tits in a knot festering over it. Do what’s right for you. Don’t get bent out of shape looking for the “meaning of life”. HINT – it ain’t stainless, hardwood and/or granite.

Bees built honeycomb nests. The don’t think about the meaning of life. They do what they DO. And you should do what you do, McMansion, Pup Tent, Teepee, Igloo, Refrigerator box on the corner of 1st and Main.

Sure it’s unsustainable but guess what…. you are too, no matter what. So enjoy what little you really have (TIME)

Don’t get caught up in keeping up with the Jones’. Do what makes you happy. If that’s granite, stainless and hardwood… so be it. If it’s sitting on a park bench enjoying the show… fill your boots. Do what works for YOU.

None of it is wrong.

#78 Rachel Maddow on 02.28.17 at 10:57 pm

#66 JSquared on 02.28.17 at 10:12 pm

More people are watching the Trump address in the USA than the Oscars. Just saying.

Obviously.

___

Maybe they should be watch this instead…

http://www.msnbc.com/rachel-maddow/watch/new-commerce-secretary-at-nexus-of-lucrative-trump-russian-deal-886220355575

====

or this:

https://www.youtube.com/watch?v=v4zwsvMJ5uQ

#79 NoName on 02.28.17 at 10:57 pm

#65 Andrew Woburn on 02.28.17 at 10:06 pm

I don’t know about you but this is one of the scariest things I’ve seen in a long time. Meet “Handle”, a Boston Dynamics robot. Imagine if this thing had a gun.

https://www.youtube.com/watch?v=-7xvqQeoA8c

—-

Imagine if this thing had a brain.

#80 Smoking Man on 02.28.17 at 11:23 pm

DELETED

#81 For those about to flop... on 02.28.17 at 11:25 pm

Hey BS ,this post is for you.

Here’s a couple of houses that I have been waiting for the assessments to be updated because they had a tough time to sell even though they were on Vancouver’s Westside.

Both went well below…

M42BC

3006 26th Ave w Vancouver
Assessed 3.01m
Sold 2.52m Jan 2017

3306 14th ave w Vancouver
Assessed 2.91m
Sold Oct 2016 2.15m

https://evaluebc.bcassessment.ca/property.aspx?_oa=QTAwMDAwMEVWUw==

https://evaluebc.bcassessment.ca/property.aspx?_oa=QTAwMDAwME5FUA==

#82 rknusa on 02.28.17 at 11:26 pm

sounds to me like the border tax is a go and Canada is screwed

most importantly for Canada it sounded like to me that the border tax is a go

I quote

“We must create a level playing field for American companies and workers.

Currently, when we ship products out of America, many other countries make us pay very high tariffs and taxes — but when foreign companies ship their products into America, we charge them almost nothing.”

“The first Republican President, Abraham Lincoln, warned that the “abandonment of the protective policy by the American Government [will] produce want and ruin among our people.”

Lincoln was right — and it is time we heeded his words. I am not going to let America and its great companies and workers, be taken advantage of anymore.”

#83 prairie person on 02.28.17 at 11:31 pm

Friend of mine bid on two condos in Victoria. Didn’t get them. Bought the third one. Bid high. There were eight people bidding. Real estate sales and prices are heading up on the Gulf Islands after years of going down. People moving out from Vancouver? With the Canadian dollar down, Americans get an incredible deal buying places on the Gulf Islands.

#84 karlhungus on 02.28.17 at 11:32 pm

Garth, thoughts on this pension fund drying up?http://www.nydailynews.com/new-york/teamsters-local-707-booming-pension-fund-runs-cash-article-1.2982433
Even more reason to take the cash when you can?

#85 Fortune500 on 02.28.17 at 11:56 pm

Ah, the Landed Gentry. Should have chosen your parents better kids.

#86 Piet on 02.28.17 at 11:58 pm

@#65 Andrew Woburn

“Imagine if this thing had a brain.”

Robots will be sentient some day. It would be helpful if within the next couple of decades they become sophisticated enough to serve as caregivers, performing tasks such as changing one’s thirsty underwear.

#87 BillyBob on 03.01.17 at 12:04 am

#38 BobC on 02.28.17 at 7:33 pm

https://www.yahoo.com/news/door-knocks-dark-canadian-town-front-line-trump-111159858.html

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

I’d say that immigration is more than a little related to real estate and the economy.

What I found interesting about the article was the comments. Incredible. Hundreds and hundreds, almost every one a variation of the same theme that Canada’s smug, smarmy liberalism is about to be sorely tested and they can’t wait for it. The consistency and sheer volume of it seems to show a great pent-up frustration. Most Americans I’ve met don’t give much thought to Canada, but it seems that we’re on their radar now – and this is the opinion.

It does seem that Trudeau’s tweet , (which let’s face it, was more about poking Trump than sincere sentiment) welcoming “all refugees” may have been a tad ah, misplaced.

Be careful what you wish for, JT. Why isn’t he right at the border welcoming the refugees? Great photo op.

#88 Cheap Houses on 03.01.17 at 12:30 am

#78 Rachel Maddow on 02.28.17 at 10:57 pm
#66 JSquared on 02.28.17 at 10:12 pm

More people are watching the Trump address in the USA than the Oscars. Just saying.

Obviously.

___

Maybe they should be watch this instead…

http://www.msnbc.com/rachel-maddow/watch/new-commerce-secretary-at-nexus-of-lucrative-trump-russian-deal-886220355575

====

or this:

https://www.youtube.com/watch?v=v4zwsvMJ5uQ

Or this:

Rachel Maddow Owned election night:

https://www.youtube.com/watch?v=fUZ7eEGbwA8

#89 TRUMP on 03.01.17 at 1:19 am

THE KING HAS ARRIVED…..Though shall all take a bow and move out the way!!!

#90 Morneau Measures on 03.01.17 at 1:24 am

Good warning today but few will listen.

As long as Cdn. banks can lend money with impunity and little or no risk, the RE asset bubble will continue on.

If Morneau is serious about Cdn. debt levels, then he needs to transfer more risk in mortgage loans to the banks. Something like CMHC insures 50% of the loan, the banks the remainder.

If you want an epic crash, then enact that law for mortgage renewals as well. Then “capacity” and “cash” as lending criteria will mean something again.

#91 hikerVancouver on 03.01.17 at 1:45 am

Vancouver crash?
While I think prices are not in touch with earnings at all, I have not seen any signs of a crash!
There is maybe a slow down, and maybe it will crash, but it definitely didn’t crash, yet!

#92 GLOBALIZATION on 03.01.17 at 2:32 am

DELETED

#93 ronh on 03.01.17 at 2:33 am

A chart from Dr. Doom, Marc Faber? Isn’t he a goldbug?

#94 traderJim on 03.01.17 at 2:37 am

Damn good speech but the best part was watching CNN have to admit that a whopping 78% polled viewed it positively.

Oh yeah and watching people like Pelosi squirm as Trump made mom and apple pie statements that they had to sit on their hands for.

Dems must be in absolute panic as Trump paints them into a corner.

The Kentucky yokel that gave the Dems response was hilarious too. He basically supported most of what Trump just said.

Great entertainment.

#95 When Will They Raise Rates? on 03.01.17 at 3:10 am

Macroeconomic analyst Rob Kirby says, “The world is flush with money, extremely flush with money.” This is causing some to worry about the instability of hyperinflation. So, is this the reason some of the biggest money managers and investors on the planet are talking about moving money into gold and silver? Kirby, who sources gold and silver by the ton for clients, says, “These people are very perceptive. . . . These people are aware that there are too many dollars chasing too few things, and they realize what they are witnessing around them can’t be happening unless money is being expanded, and money is being expanded around the world. As I say, I believe it’s coming out of the dark side of the U.S. Treasury. This can make things very unstable going forward. If you produce too much money, you run the risk of triggering a hyperinflation. If we do end up in a hyperinflationary event, the price of metals will soar. They will soar measured against anything else that goes up in value as well.”

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

#96 ccc on 03.01.17 at 6:35 am

And in the pic photographic evidence on Newton’s bride after hearing about the South Sea stock crash…
Never to repay the LOC taken for the big day…

#97 John on 03.01.17 at 6:46 am

Good morning. CBC has been outputting an interesting series on houding in Canada. The latest outputs review cases where renters are finding it increasingly unaffordable in the GTA for example. Many are not just moving to the outer commuter zones of the GTA to qualify for a mortgage, but also just to afford new higher rent bills. A family buying a Thornhill house in the gully of 2008 for $500,000 now are sitting on a place worth over a million, but for which they would no longer qualify. If buying today. Local renters are now paying more to rent than the 2008 purchaser is for mortgage, taxes and utilities ( likely). Their house has doubled in price. Depending on where they work, they might consider selling. Moving to a smaller place with access to the GO system in the outer tier and have the most flexible earner relocate to a very close job. Then, once the long bull tanks and dividend yielding stuff bottoms, pour in the cash. Other asset classes as advised; and only after T2 puts his cards on the table on his tax changes for investment. T1 made massive changes in the 1980s that whacked investors and cottage owners. Apple, fall, close, tree.

#98 DoomandGloomer on 03.01.17 at 6:50 am

Toronto Real Estate Market = Icarus

http://www.mythweb.com/encyc/entries/icarus.html

#99 Victor V on 03.01.17 at 7:12 am

Ottawa keeps wary eye on home prices in Toronto, Vancouver

https://beta.theglobeandmail.com/news/politics/ottawa-keeps-wary-eye-on-home-prices-in-toronto-vancouver/article34169163

#100 Euro Observer on 03.01.17 at 7:41 am

#45 Ya right on 02.28.17 at 8:05 pm
Lol, you’re out to lunch if you think houses in Markham are going to drop from $1.2Mil to $500k. It’ll never happen.

———————
Markham? Hahaha.
I won’t pay 300 k for a house there.

1.2 mil? You are insane,

#101 Vancouver Dudes on 03.01.17 at 7:52 am

DELETED

#102 maxx on 03.01.17 at 7:59 am

#10 rainclouds on 02.28.17 at 6:26 pm

“Question remains: what happens IF this bubble bursts and the valuation of your purchase wipes out your (parents) down payment.”

Strikes me that a lot of retirement capital which would otherwise have been spent on the street, spread out nicely and broadly in the real economy will never get there. Fewer trips to restaurants (replaced by trips to coffee shops instead), fewer renos, fewer new clothes… trips abroad… gifts… donations to charity……..so much cash being dumped down a single black hole so that tptb may collect land transfer taxes, municipalities collect an average of 1% of the home’s value annually, realtards collect obscene commissions, hardware stores rake in profits from spoiled-rotten kiddies with weakened spines wanting to play with their new 3-D “colouring books”.

Small wonder we’re sliding down the ladder in terms of global economic standing: economic makeup of very little diversity, huge levels of national wealth pouring down a single asset, government debt, out of control government spending, personal debt like never before and Robot Nation coming to a business near you.

The re nut needs constant repayment, so even more retirement savings will be poured down the re drain as jobs disappear and/or degrade in quality.

Gawd, so many dumb, scared-witless Canuckleheads and so little re.

#103 Fact-Checking the Donald on 03.01.17 at 8:06 am

Click the links below for independent fact-checking of Trump’s address to Congress last night.

https://www.theguardian.com/us-news/2017/mar/01/donald-trump-congress-address-fact-check

http://www.independent.co.uk/news/world/americas/us-politics/donald-trump-speech-fact-check-lies-claims-joint-address-congress-jobs-immigration-pipeline-a7604861.html

“Ninety-four million Americans are out of the labour force.” — Donald Trump

This is a grossly exaggerated claim that seems to rely on the roughly 94 million civilians who are 16 or older and not in the labor force: a figure that includes retired people, high school and college students, people with a disability, etc. The unemployment rate in January was 4.8%, or about 7.5 million people who are looking for work but can’t find it. — The Guardian

#104 NoName on 03.01.17 at 8:24 am

2 more sleep before
revilation that everybody knows.

#105 HogtownIndebted on 03.01.17 at 8:32 am

When Newton invested in the South Sea Company (whose main business was in the slave trade – so much for British righteousness) he was already over 77.

Later studies of his blood indicated he had poisoned himself with mercury doing experiments.

This almost certainly affected him mentally, and he was known for being quite oddly eccentric in his later years.

So Newton jumped into this bubble as a brain-addled geezer. No wonder he did it.

House horny millennials: What’s your excuse?

#106 Tater on 03.01.17 at 8:53 am

23 MF on 02.28.17 at 7:06 pm
Renting sucks because with wages so low and rents so high you are not able to ever save.

It’s a vicious cycle.

MF
——————————————————————–
Rent is high? I’m renting a house now that would sell for nearly 30 times the annual rent. That’s dirt cheap.

#107 James on 03.01.17 at 8:56 am

I think that this explains it all Garth.

https://s-media-cache-ak0.pinimg.com/originals/12/97/46/129746b3c033e4aa26536978011383cb.jpg

#108 IHCTD9 on 03.01.17 at 9:12 am

#103 Fact-Checking the Donald on 03.01.17 at 8:06 am
____________________

Nice twist. DT did not say ” 94 million people are looking for work but can’t find it” did he?

He said: “Ninety-four million Americans are out of the labour force.”

The unemployment rate in no way reflects the total persons not working in any country anywhere in the world.

Why do folks talk about fake news and elect guys like Trump? Because said folks are not so stupid as the spin doctors employed at the Guardian evidently think they are.

#109 traderJim on 03.01.17 at 9:15 am

#103 fact checking

Good job. You keep ‘fact checking’ while Trump keeps persuading.

And I thought I was a slow learner.

#110 neo on 03.01.17 at 9:16 am

The US odds of a Fed rate hike in March now top 80%.

Again, nothing to see here…

Momentum in the last 24 hours has been remarkable. Get ready. — Garth

#111 Stockpicker on 03.01.17 at 9:30 am

Loved Trumps speech last night, futures up 180. I love the Cramer quote of the day “capitulation to equities” so true. In my 40 years investing I have never seen real estate and stocks go up at the same time. Investors pick one or the other. I firmly believe that the chickens are roosting on real estate, a calamity of consequence. As equity goes up, so goes inflation followed by rates, down goes real estate…..if you havent cashed in windfall profits by now this coming down cycle might outlive you.

Did you see the bank earnings? wOW

#112 jess on 03.01.17 at 9:36 am

https://www.cbinsights.com/blog/startup-failure-post-mortem/

https://www.bloomberg.com/news/articles/2016-04-21/vc-gurley-tells-startups-to-beware-of-dirty-fundraising-terms

#113 IHCTD9 on 03.01.17 at 9:42 am

Is there an election coming up or something?

https://www.thestar.com/news/queenspark/2017/03/01/premier-kathleen-wynne-to-cut-hydro-rates-by-25-per-cent.html

#114 Shawn on 03.01.17 at 9:52 am

We’re heading to S&P500 2700…

Get long folks. VFV. Sell your house and buy VFV.

#115 IHCTD9 on 03.01.17 at 9:59 am

#3 gravity 2 on 02.28.17 at 5:50 pm

My taxes have been supporting these causes for decades now, and I have to tell you Jess, that the number of displaced people, refugees just keep increasing to never before seen levels year after year.
_____________________________________

Yep. The war on drugs, the war on poverty, the war on inequality. The minute the government gets involved, you almost always get even more of what they’re fighting against. Sure everyone wants to help everyone else, the problem comes in carrying on with the same programs and massive spending even after there are literally decades worth of zero results in the rearview.

“The road to destruction is paved with good intentions”

#116 Euro Observer on 03.01.17 at 10:13 am

The tale of teh two currencies – the normal and the sh..ty one

http://www.zerohedge.com/news/2017-03-01/30y-yields-tops-3-march-rate-hike-odds-spikes-above-80

https://ca.finance.yahoo.com/news/bank-canada-holds-rates-cites-150341989.html

#117 Stock Picker on 03.01.17 at 10:38 am

Sorry for the double post…but did you read Poloz’ comment that he’s going to keep kicking rates down and the dollar in the head because of ” uncertainty in the economy of the US” ….holy s**t is this guy a liar , an Obama malcontent or senile or what? The DOW just passed 21000 on Trumps speech on aggressively growing the US economy….including many Canadian companies that will coat tail . What nonsense out of Poloz, unbelievable. Truly a spectacular low for a central banker.

#118 Marcus on 03.01.17 at 10:46 am

Trump just hit a grand slam with his speech before congress. DOW over 21000. Democrats look like chumps during speech dressed like the KKK. Interesting days.

#119 jess on 03.01.17 at 11:03 am

deconstruction trump
rule of law cut backs? —->the agencies need fraud checkers in each of these agencies

(buy backs stock 2 1/2 trillion?)
===================
what went unsaid with trumps speech
May 22, 2009

Malcolm K. Sparrow
Professor of the Practice of Public Management
John F. Kennedy School of Government
Harvard University
Senate Committee on the Judiciary: Subcommittee on Crime and Drugs
Wednesday May 20th, 2009
Hearing: “Criminal Prosecution as a Deterrent to Health Care Fraud”
60b defrauded/year
medicare crooks / corporation by industry itself

340b this year will be drained computer billing fraud
https://www.hks.harvard.edu/news-events/news/testimonies/sparrow-senate-testimony

“The rule for criminals is simple: if you want to steal from Medicare, or Medicaid, or any other health care insurance program, learn to bill your lies correctly. Then, for the most part, your claims will be paid in full and on time, without a hiccup, by a computer, and with no human involvement at all.
In 2000 I updated and reissued “License to Steal…read more

===
the pentagon given 54billion an agency that cannot audit itself?

#120 Shawn on 03.01.17 at 11:04 am

I think we get another leg down in oil that takes us sub $40 / bbl on WTI. Nice drop in the $CAD over the last few days…

#121 Alex on 03.01.17 at 11:11 am

XAW is up 1.54%
VCN 1.05%
I love U Trump
I don’t care about politics, all I care is about money

#122 Mattl on 03.01.17 at 11:17 am

Vancouver crash, good one. My buddy just sold his last in in the Maple Ridge for 825k with multiples. This home had been sitting for a few months but Feb came and so did the buyers. Sold for only 10k less then 2016 prices. Prices out this way have not softened at all.

Wake me up when I can get a nice house in Port Moody for under 750k. That would require a correction only, not a crash, and so far no evidence of that even happening.

I know you want to be proven right on your running 10 year RE crash prediction but it hasn’t happened yet.

#123 Vit on 03.01.17 at 11:46 am

My 15 year stock trading experience tells me that I cant sell any commodity because price is high , because it can go much higher. We should have some changes in the market like increase listings , more days on a market , stagnated sale of multi dollar homes … .. just to consider to sell . So instead just bushing this market put your collective mind to analyze this market . And yes one can call a Bottom or Top , thats how professionals make $$$.

#124 IHCTD9 on 03.01.17 at 11:53 am

#49 Catalyst on 02.28.17 at 8:46 pm

Houses are ungodly expensive compared to some metrics but in the current credit environment are still quite cheap and so you have to believe in a pretty extreme interest rate hike scenario for the math to flip.
________________________________________

If you look at my old mortgage: [email protected] – that would have been 43K in interest paid to the bank after 25 years. Total cost: 168K – 34% was interest.

If you buy my house now: at [email protected] – that would be 96K paid in interest to the bank after 25 years. Total cost: 376K – more than double the [email protected] despite rates in the toilet. Interestingly also 34% would be the interest paid.

Buy now scenario at:

3.5%: 139K interest after 25 years, 416K total 49% int.
4.5%: 185K interest after 25 years, 465K total 66% int.
5.5%: 233K interest after 25 years, 513K total 83% int.
6.5%:283K interest after 25 years, 563K total 101% int

Raises to any one of the above rates could happen within 1 mortgage term. Difference in monthly payment from 2.5% to 6.5% is 622.00/month. You’ll have to earn an extra $825.00 gross to pay that, so you’ll need to get a raise from your boss of about $5.15/hr to cover the increase after you renew your term. Meanwhile your house will be dropping in value.

The difference in total cost from 2.5-6.5 is $187,000 in just interest. That’s way more than I paid for my place 17 years ago to start with INCLUDING THE INTEREST! Things are still pretty loopy even though I am far from the GTA.

Given the financial condition of Canadians in general, I think 1-2 points up is going to be a kick in the face for many. You can see a little costs a lot even on a measly 280K. A million dollar mortgage rising from 2.5 to 6.5 would increase the monthly by $2218.00. How would it fly asking your boss for an $17.00/hr raise?

An increase of just 1 percent (2.5-3.5) in mortgage rates puts the percentage of interest paid over 25 years up 45% (34-49%)!! And the dollars attached to the percentages are big when we’re talking 7 figure principals.

Won’t take too much IMHO. Big thing is keeping the cost manageable which you have probably done at 400K

#125 NoName on 03.01.17 at 11:53 am

my link no work at 104… here is working one

https://www.youtube.com/shared?ci=8kh5Nq64m1I

#126 bdwy sktrn on 03.01.17 at 11:54 am

#9 For those about to flop… on 02.28.17 at 6:23 pm
Hey Broadway,what did 5310 St Catherines go for?
—————————
it went for ask less a hair. 1.64x on a 1.65 ask.

#127 Spectacle on 03.01.17 at 12:04 pm

Regarding ::
#61 Confusing on 02.28.17 at 9:51 pm
Up here on burke mountain coquitlam, everything is up and selling (presale) within days…sadly…because I want to sell my townhouse and get a sfh

Not sure how the south sea company speculation had to do with shelter costs but still interesting to read about
—————————–

Things Fall Down.

( Bonus points: the joke is that Newtonian physics should have been evident in regard to this, For Sir Issac Newton.). Sigh……can I have my spoon back please.

#128 Vit on 03.01.17 at 12:06 pm

RE #81 have you guys noticed how ugly looking are those 2-3 million dollar homes in Vancouver compare to sim . valued homes in Toronto … You will never see vinyl siding on 2 mil. home in Toronto …

#129 bdwy sktrn on 03.01.17 at 12:18 pm

#9 For those about to flop… on 02.28.17 at 6:23 pm
Hey Broadway,what did 5310 St Catherines go for?
—————————
it went for ask less a hair. 1.64x on a 1.65 ask.

——————————————-
sold last spring at the PEAK 1.32.

1.64 leaves 320,000 for renos’s and costs.

i’d say this one is definitely green snow.

#130 Euro Observer on 03.01.17 at 12:18 pm

#116 Stock Picker

Central banker? The guy is a joke, he cannot find his johnson without a magnifying glass.

#131 bdwy sktrn on 03.01.17 at 12:23 pm

ps ; watch for a beat on costco numbers today.

#132 For those about to flop... on 03.01.17 at 12:48 pm

O.k ,so I just crunched the numbers for the last half of February for my Motivated Sellers Index for Greater Vancouver.

From Feb 15th to the 28th.

Number of listed price reductions….431

Number of the properties that have been purchased in the previous 3 years….134

These numbers translate to 30% of the houses that had price reductions in the last half of February were relatively new purchases.

One caveat is a tiny percentage of these are new builds and so they are not back on the market like for like….

M42BC

#133 Samantha on 03.01.17 at 12:59 pm

#49 Catalyst on 02.28.17 at 8:46 pm

…and housing isn’t so expensive right now unless you demand a single detached.

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

You mean owning detached house with some land right in the middle of expensive cities, isn’t a birthright of every Canadian?

#134 Victor V on 03.01.17 at 1:04 pm

Bank of Canada keeps rates unchanged amid ‘significant uncertainties’

http://www.bnn.ca/bank-of-canada-keeps-rates-unchanged-amid-significant-uncertainties-1.684237

BMO Capital Markets senior economist Benjamin Reitzes said the Bank can only hold off on a hike for so long.

“They remain firmly on hold, and have opted to remain focused on the negatives, while largely overlooking the recent string of better data,” Reitzes wrote in a Wednesday note. “The BoC’s dovish skew is intended to keep Canadian yields and the loonie under pressure. However, if the data continue to be positive, they won’t be able to deny the obvious for much longer.”

#135 For those about to flop... on 03.01.17 at 1:26 pm

Hey Broadway,I agree I think they made probably 100k.

When they purchased it they would have had designs on getting over 2m
but they did a good job renovating it and I’m sure the guy next door that spent 2.5m on a new build with a dump each side is happy.One down one to go.
The house on the other side is a derelict rental and the landlord mows the grass once every three years whether it needs it or not.

Not all flipping is bad by the way.

These guys at least provide jobs and upgrade the houses.

The ones that buy and hold without doing any improvements aren’t really benefiting anyone but themselves and their realtors…

M42BC

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAwMjdQSg==
https://www.zolo.ca/vancouver-real-estate/5310-st-catherines-street/5310

#136 Victor V on 03.01.17 at 1:37 pm

‘Trees don’t grow to the sky:’ Another big bank CEO warns about hot housing market

http://business.financialpost.com/personal-finance/mortgages-real-estate/another-of-canadas-big-bank-ceos-is-warning-about-housing-market-corrections

#137 For those about to flop... on 03.01.17 at 1:43 pm

#127 Vit on 03.01.17 at 12:06 pm
RE #81 have you guys noticed how ugly looking are those 2-3 million dollar homes in Vancouver compare to sim . valued homes in Toronto … You will never see vinyl siding on 2 mil. home in Toronto …

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

Hey Vit,you want ugly overpriced real estate, well I’m your guy.

Check out this monstrosity that they are trying to get the best part of 9 million for.

They state mainly land value but livable.

Not too sure who is going to spend 9m ,build a luxury house and try to get 15m in the current environment.

They are on the hook for the best part of 7m ,so you know this correction has their attention.

This house looks like a baseball bat collided with a mint chocolate chip icecream…

M42BC
https://www.zolo.ca/vancouver-real-estate/3775-angus-drive

#138 John of Grant on 03.01.17 at 2:23 pm

#86 Piet
Robots will be sentient some day.
———————————————–

Really? Based on what? Watching 2001? Please explain how a bunch of ones and zeros spring to life and become self-aware.

#139 jess on 03.01.17 at 2:25 pm

An Important Court Opinion Holds Lawful Warrants Can Be Used to Obtain Evidence from U.S. Internet Service Providers When those Providers Store Evidence Outside the U.S.

..”Friday’s opinion involved an investigation of crimes that occurred in the United States, were committed by United States citizens, and were committed against United States victims. Those crimes were facilitated by e-mails sent inside the United States to recipients also inside the United States. But Google only partially complied with the search warrants, refusing to produce all of the information in its possession, custody and control. Google instead limited its production to records that it said it could determine were stored within the United States.

Google argued that search warrants issued in the United States can only compel Google to produce data stored in the United States. As Google has explained, Google stores individual data files in multiple data “shards,” each separate shard being stored in separate locations around the world. Google cannot determine where its separate data shards are stored around the world at any given time. Google also moves that data around the world using computer algorithms that decide where data is stored at any given moment. As a consequence, Google’s argument would mean that data that happens to be outside the United States – even data that the government knows about and describes in a search warrant affidavit – is never accessible. Not with a warrant; not with a treaty request to another country; not with anything. And even assuming that the location could be determined, the Google algorithm could move it to another country before legal process could reach it. ”
February 6, 2017
https://www.justice.gov/opa/blog/important-court-opinion-holds-lawful-warrants-can-be-used-obtain-evidence-us-internet

#140 Blacksheep on 03.01.17 at 2:33 pm

Flop # 82,

Hey BS ,this post is for you.

“Here’s a couple of houses that I have been waiting for the assessments to be updated because they had a tough time to sell even though they were on Vancouver’s Westside.”

“Both went well below…”
——————————————-
Below what, BC Assessment?

“BC Assessment appraisers analyze all real estate sales in their area and develop common units of comparison and corresponding values.”

http://bcassessment.ca/Services-products/Understanding-the-assessment-process/market-value-and-property-assessment

BC assessments are done generically.

That’s why when you act as mortgagor to a bank, the bank sends it own appraisal dude to get an accurate market value, as to not end up with a loss on it’s books due to lack of monies down, lack of mortgage insurance or a bad valuation, if things go sideways on the bank.

This is how inaccurate BC Ass. is: I’ve got a 880sq/ft 100K shop/outbuilding on my property that was built in 2010 and looks like a second house, that does not even show up on my property assessment.

What is relevant and missing in your sample:

1) How much was the home purchased for (including renovations)?
2) How much did the home sell for (minus realtor fees)?

By your admission yesterday, you contradict your basic posting theme:

Flop # 97,

“Every day in Vancouver there is still a crazy amount of money being made on real estate. I don’t need to waste time showcasing that though”

Careful dude, your agenda is showing….

#141 jess on 03.01.17 at 2:45 pm

#3 gravity 2 on 02.28.17 at 5:50 pm
how about those tax payer bailouts
public private partnerships
http://wallstreetonparade.com/2017/03/mr-president-this-is-what-you-should-know-about-public-private-partnerships/
accounting firms over billing customers
The rate payers irate over under billing /sounds like our payroll system

Prostitutes, False Billing, a $3 Billion Lawsuit: Oscar Mixup is the Least of PwC’s Problems

By Pam Martens and Russ Martens: February 28, 2017

http://wallstreetonparade.com/

#142 Barb on 03.01.17 at 2:58 pm

“…RE #81 have you guys noticed how ugly looking are those 2-3 million dollar homes in Vancouver compare to sim . valued homes in Toronto … You will never see vinyl siding on 2 mil. home in Toronto …”

———————————–

Funny you should mention that.

I was just thinking how ugly those Toronto “twin-peaked three-storey, rotted-behind-the-brick semis”, whose interiors resemble a bowling alley, are.

Especially when there are 10 of ’em in a row.

Gawd!

#143 cramar on 03.01.17 at 3:10 pm

#128 Vit on 03.01.17 at 12:06 pm

RE #81 have you guys noticed how ugly looking are those 2-3 million dollar homes in Vancouver compare to sim . valued homes in Toronto … You will never see vinyl siding on 2 mil. home in Toronto …

————

In my area you rarely see vinyl siding on $200k homes.

#144 soost on 03.01.17 at 3:12 pm

Wild Bill said YVR and YYZ prices are attributable to high incomes and low unemployment in those cities.

He forgot about the nonexistent labour, health and safety laws and environmental standards abroad.

#145 ej on 03.01.17 at 3:18 pm

http://business.financialpost.com/personal-finance/mortgages-real-estate/canadas-banks-are-pushing-back-against-taking-on-more-mortgage-risk

Makes sense, why would bankers want to give up their great, protected market.

#146 Euro Observer on 03.01.17 at 3:40 pm

#144 soost on 03.01.17 at 3:12 pm
Wild Bill said YVR and YYZ prices are attributable to high incomes and low unemployment in those cities.

He forgot about the nonexistent labour, health and safety laws and environmental standards abroad.

—————————
They were the same (income and unemployment) in 2000 and house prices were 25 % of the current in GTA.
20 % in missisauga.

If our financial minister is so incompetent, I can imagine what his tax reforms will be.

————————–

#145 ej

of course they are ”ínsured”. The only driver is the balance book of CHMC.

When this baby blows everything/the whole economy goes down the drain. It will be ephic.

In the meantime from the ”real” economy there will be 40-50 % left.

#147 Euro Observer on 03.01.17 at 3:46 pm

The economy is exacty as fake as the chicken meat in a subway sandwitch

http://www.cbc.ca/news/business/marketplace-chicken-fast-food-1.3993967

#148 For those about to flop... on 03.01.17 at 3:53 pm

Blacksheep.

My agenda?

I’ve already stated that I work on luxury housing on Vancouver’s Westside mainly.At least I used to,not sure what I am going to be able to do this year.

I work for developers that have been buying blocks of land for 3/4 million and build houses and sell them for around 9/10

Everyone knows that a tonne of money has been made in the Vancouver market the last decade or so.

What is the point in showcasing that.

I had seen some cracks in the market and then I had ankle/ foot surgery and then I found out my suspicions that my blog buddy Boom had passed away and I was dwelling on it a lot because I couldn’t walk or leave the house so I started doing my Pink Snow posts to show to risk being taken and to give me something to take my mind off the pain I was suffering.

People were saying prices weren’t going down.I showed otherwise.

People said no one was in trouble because the last couple of years were so great.I showed otherwise.

I have probably wasted a lot of time trying to show people what is really going on in Vancouver.

Probably wasting time doing this post right now that I think of it…

M42BC

#149 Cheap Houses on 03.01.17 at 3:55 pm

#103 Fact-Checking the Donald on 03.01.17 at 8:06 am
Click the links below for independent fact-checking of Trump’s address to Congress last night.

https://www.theguardian.com/us-news/2017/mar/01/donald-trump-congress-address-fact-check

http://www.independent.co.uk/news/world/americas/us-politics/donald-trump-speech-fact-check-lies-claims-joint-address-congress-jobs-immigration-pipeline-a7604861.html

“Ninety-four million Americans are out of the labour force.” — Donald Trump

This is a grossly exaggerated claim that seems to rely on the roughly 94 million civilians who are 16 or older and not in the labor force: a figure that includes retired people, high school and college students, people with a disability, etc. The unemployment rate in January was 4.8%, or about 7.5 million people who are looking for work but can’t find it. — The Guardian

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

Sorry friend but you are an endangered species of human that actually believes government data. I believe the President over the government employees he intends to fire.

#150 Euro Observer on 03.01.17 at 3:59 pm

I will be frank, when prices were going:

– from 200 to 300 to 400 to 500 to 600 k for a shack in Mississauga,

– from 250 to 350 to 500 to 600 to 750 k for a modest house in Totonto

things looked funny

Now at over 1 mil for Mississauga and 1.3 mil for Toronto is is actuallly very, very scary.

The only thing I am working on is to get all my assets out of the banking system in Canada. As fastest as I can.

And I am very, very scared.

It beats the crap out of me how people like the BOC governor, finance minters, CMHC board of directors, bank CEOs can actually go to sleep every night.

I would like some of the drugs that they are on, seriously.

#151 Spaccone on 03.01.17 at 4:05 pm

#147 Euro Observer on 03.01.17 at 3:46 pm
The economy is exacty as fake as the chicken meat in a subway sandwitch

http://www.cbc.ca/news/business/marketplace-chicken-fast-food-1.3993967

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

Noticed around 2008/2009 several chains/locations taking a dive or slide down in quality (Subway, Quizno’s a little bit as well). Felt crazy noticing it as it seemed like something others didn’t pick up on. I don’t know how anybody could look at the “meat” behind the Subway window at not question what it’s made up of.

#152 Dan.t on 03.01.17 at 4:07 pm

Here is the problem with Bubbles… and yes, Canada has a real estate bubble (especially Van and GTA) but markets can stay irrational for a long time.

Now mix in a healthy dose of 99% of Canadians you simply can not lose money in real estate (at any price), plus government incentives and subsidies to help the public buy over inflated housing (condos, houses, apartments, whatever) and you have the perfect recipe for housing all out defying fundamentals. Oh, and the social stigma of not participating is the absolute worse… brings everyone in near the end.

And yes, housing (accommodation) does not reflect what average folks can actually afford to pay. But when fundamentals go out the window for so long, analysis and everyone else associated with now unaffordable housing start to change their tune…. just like justifying Nortel at $120. They always find a way to justify it.

I don’t understand why it is not a major major issue with the public. Cheap (basically free) money and government breaks to get everyone heavily indebted have made housing and even renting unaffordable and Canadians just shrug it off.

Seems like there has been so much shaddy and full on fraudulent activities going on for a long time with regards to real estate but nothing is done. Politicians seems very content to let the party continue.

Once people get fed up, which should have happened a while ago and simply stop buying at crazy prices, then it will end. The opposite is happening and people trying to get in the market are doing so by any means possible( bank of mom, massive debt, fraud, whatever,) just give me real estate. It’s gone beyond stupid but money is still virtually free and banks keep lending with ZERO risk, so there you go.

#153 IHCTD9 on 03.01.17 at 4:20 pm

I don’t know how anybody could look at the “meat” behind the Subway window at not question what it’s made up of.
__________________________

Made with “white meat”.

#154 @ #8 Ed Devlin on 03.01.17 at 5:07 pm

Ed, get your son to Google ‘Canadian Couch Potato’. Along with the aforementioned Millenial Revolution those are good sites to get you started, with portfolio examples. Then go purchase a book called ‘The Millionaire Teacher’. Canadian author that follows the simple, balanced portfolio mantra. You could both benefit from the read. I’ve gifted that book to all my kids and, nephews and nieces while they were still in high school. All but one of them now have TFSAs with balanced portfolios. Helps to bait them with stunning travel pics and the question, “How would you like to travel like we do?” Haven’t broke it to them yet that travel is not what a TFSA is for. Not until you retire.

#155 Blacksheep on 03.01.17 at 5:11 pm

Flop # 148
—————————————————–
“Everyone knows that a tonne of money has been made in the Vancouver market the last decade or so.”

“What is the point in showcasing that.”
——————————————————
If your going to play reporter showing the potential downside to the Van RE market with multiple daily posts, might I suggest you at least wait until, there is actual loses occurring.

Painting scenarios like today, comparing sold prices to BC tax assessed value is completely pointless, as I’ve just shown. Or your fave, showing original list price, minus, revised list price, like it’s a loss in dollar figures?

No $’s have been lost or made until the home sells, till that point its pure speculation.
—————————————————–
“People were saying prices weren’t going down. I showed otherwise.”
—————————————————–
Of course some of the 1.5 million + prices are off for reasons already acknowledged here.

When a party that paid 3 million, is forced to sell for 2 million, get all over that shit and shout it from the rooftops. If you support your perspective with: bought / sold prices my critiques will disappear, because we both become just witnesses to facts.
—————————————————–
“Probably wasting time doing this post right now that I think of it…”

We all have out distractions in life, hope the ankle heals up soon….

#156 @M42BC on 03.01.17 at 5:20 pm

Keep posting, buddy. I enjoy the “pink snow” posts.
RE valuations are in LaLaLand. Not just in Canadian hot spots. Also in some US cities.

The shoe will drop when Fed raises rates and lures more money into guaranteed income. Fed has to raise or the faith and trust in USD will erode.

Allot of RE is bought by investors parking their money. Legitimate or illegitimate sources shouldn’t be a concern.

The biggest problem for me is that livability in Vancouver has gone downhill. Don’t know much about Toronto but at least Toronto is a metropolis with good infrastructure in every direction. Good airport and flights to everywhere in the world. I can understand why Toronto is desirable. I cannot understand what the lure is to buy in Vancouver now, at these levels and with the problems the city and surrounding burbs will inevitably be facing. Everything there is decaying and rotting. The infrastructure is mostly in a state of disrepair. Trump would be disgusted if he came to drive around town.

On an international scale, Vancouver is no longer able to compete. Investing in Vancouver is not attractive. People are either leaving or preparing to get out.

I’ve seen Vancouver firsthand for 20 years and don’t like the city it has become. There are 3rd world problems in many parts of the city. Violent crimes, child prostitution, rampant drug abuse, shortage of housing and the list goes on.

Looking at Calgary now to relocate. Great city in a downturn with a loonie left government that’s not going to get reelected a 2nd time. Rents in Calgary are dirt cheap compared to Van and the infrastructure is more 1st grade, comparable to Houston or Atlanta.
Once the NDP.gov is out, the investment Dollars are coming back is my prediction.

Keep up the good work!

#157 Scott on 03.01.17 at 5:28 pm

@ #14 [email protected] on 02.28.17 at 6:39 pm

If you didn’t think banks were predatory before…

#158 Buffett's (2016 Q4) Asset Mix on 03.01.17 at 8:19 pm

Berkshire Hathaway’s 2016 Annual Report and SEC Form 10-K are now out:

http://www.berkshirehathaway.com/2016ar/201610-K.pdf

http://www.berkshirehathaway.com/2016ar/2016ar.pdf

Buffett’s (2016) Q4 asset mix has not changed much from Q3: 49% equities, 16% bonds*, 35% cash**.

*includes preferreds and warrants **includes treasury bills

#159 Pre-retiree on 03.02.17 at 3:38 pm

Smile of the day:
About slanted semis……..

http://www.cbc.ca/news/canada/toronto/house-blown-over-1.4006173

#160 Julie in Vancouver on 03.02.17 at 3:48 pm

Also, the Vancouver housing market crash you keep referring to is not quite as it seems. Prices on the high end have only dropped 6.5% points. Townhouses and Condos (which are barely affordable for 2 working professionals) aren’t budging! Sure, sales have decreased significantly, but we’re not seeing the price drop that resembles a “crash” yet. From what I can see, supply hasn’t increased much either.

https://www.reddit.com/r/vancouver/comments/5x57qx/rvancouver_real_estate_forecast_feb_2017_update/

I’m still waiting for this “market crash”.