The soulless semi in lifeless Whitby was sold in days. Multiples. Dan was one of the realtors representing disappointed bidders. His people tried to buy with an offer worth 26% more than the listed price. Futile, he said. “There was no hope.”
And so 148 Brownridge Place went in a flurry for $730,000 or 146% of the asking price of $499,000. For half a house, 26 feet wide. Sixty clicks from the downtown core of Toronto.
Lately the light’s been going on for more people. “We’ve been in this place for 16 years,” Andy told me on Thursday morning from his north Toronto home, “and I’m stunned at what I’m told it’s worth.” He retired a few months ago and worries if his million in investments (no pension) will carry him through. But if he sells, he suddenly has $2.5 million to deploy and a forever income above $12,000 a month. “How,” he asked, “can I afford not to do this?”
Sellers today – at least in the one frothy market remaining, our nation’s largest – are gods. Every decent property is gone after one or two open houses and a night of offer warfare. Every asking price is but a starting point. Every bid is unconditional. No need to stage your home to solicit interest. Hell, forget scooping the cat’s litter box. Sometimes you don’t even need to let people inside. Own it, and they will come. Supplicant purchasers, begging you to take their money. However much you want. P-l-e-a-s-e.
This is unique and historic. Year/year gains are 20% each month. Yet incomes are flat. The economy blows. Trump’s a threat. Debt is epic. But the froth continues. A classic bubble, driven not by fundamentals but by speculation, greed and groupthink.
A bubble’s most vulnerable when people argue it’s invincible. That would seem to be now.
This week the threat became more real. After their surge higher, stock markets retreated Thursday as the odds of a March interest rate hike approached 90%. Astonishing. Two weeks ago there was an 80% chance of no increase – that’s how fast the landscape changes. Yet another Fed insider has come to Jesus. For months Lael Brainard argued against higher rates, saying the conditions were not right. No more. “It will likely be appropriate soon to remove additional accommodation, continuing on a gradual path,” she said in a Harvard speech. “We are closing in on full employment, inflation is moving gradually toward our target, foreign growth is on more solid footing and risks to the outlook are as close to balanced as they have been in some time.”
She joins the others mentioned here this week lining up to vote for a rise in the cost of money on March 15th. This may yield three increases in 2017 – tripling the US bank rate by the end of 2017. In anticipation, the US$ is advancing (our loonie is falling) and bond yields are spiking. US Treasuries just hit a seven-year high.
Of course, the Bank of Canada will follow. Not immediately, but inevitably. And in the meantime, fixed-rate mortgages have only one direction in which to travel. Apart from the greater fools trying to buy houses in a time of excess with scant listings, a growing chorus of smart people are sounding the alarm. In recent days, the head of RBC did it. BeeMo’s senior economist called out. Now Scotiabank’s boss, Brian Porter, is reminding buyers how nuts they are. “This is a complicated issue. We’re concerned from the perspective that trees don’t grow through the sky and markets will correct at some stage here.”
On that very topic, sales in Vancouver dropped 39.5% last month, and 11% from December – and are running well below the 10-year average. Listings continue to collapse. No surprise. When almost every house in the city costs at least a million, and the average family earns $68,000, who the hell can afford to move?
On Friday Fed chair Janet Yellen delivers a speech which will be scoured for nuances as to the possible March hike – now being given an 88% chance of happening. And why not? Unemployment has crashed to just 4.8%. New jobless claims sit at a 44-year low. Corporate profits are set to swell by double-digits. Financial markets and consumer confidence are scraping the ceiling. And all this is even before Trump slashes business taxes, spends big on infrastructure and the military or shreds regs. America’s hot. Inflation’s back. The years of free money are ending.
Don’t expect Canadian real estate markets to crash and burn. Won’t happen. Prices are sticky, as they’ve learned in Calgary. But new buyers face potential loss. Severe, perhaps. Especially if they’ve borrowed big.
Sellers, on the other hand, are omnipotent. Relish it.
150 comments ↓
Are most of the staff a tad hungover today Garth?
Post RRSP season Party?
argument with a colleague today about the virtues of the TFSA. If, say, you maxed out your TFSA contribution limit and grew that sucker to $300k and then withdrew $250k, how much could you contribute next year? $5,500 + the $250k? Or is it just the max cumulative contribution limit?
All of it! — Garth
Real estate is bullshit.
The real value is obviously in a chat app, as the market proved it today.
Snap had a valuation of about $33 billion.
The stock closed at $24.48, up 44% at the IPO.
Enjoy.
Hey triple “A” did ur old women get ur resp account set up? Love ur uncle tommy
Garth, what do you see regarding Europe. Lepen now leads her closest contender by 4 point. If she is elected, I’d say that the EU will come apart. If that happens, all hell will break loose. Ukraine, Putin. The best one could hope for is that the core EU states, France, Germany, Finland, maybe Holland and ? will hold together. However, it would be chaos. In the meantime, in spite of Trump’s addressing congress and not going off topic, there is terrible uncertainty. Business hates uncertainty. I ask because I’ve been advised to sell some of my portfolio. friends with a different manager have also been advised to sell ten percent. There seems to be unease. In Canada add the housing and debt situation and it is even uneasier. Is taking a more conservative position called for?
Where do you see mortgage rates to be here if there is 2-3 rate hikes by year end?
My co-worker sold his semi in Milton for 160,000K over. 815K for a semi in Milton. I don’t know if I should feel bad for the buyer or maybe he will go on to make 200K and is a genius. I just don’t know anymore… 9 years this has been going on. Maybe it is invincible?
Better sell quick. Paris is putting a 60% tax on vacant homes, and they only have 8,000 more than Toronto. Wait until this anti-speculation movement catches on.
https://betterdwelling.com/vacant-homes-global-epidemic-paris-fighting-60-tax/
Sorry, not France. LePen would take france out of the EU.Finland, Belgium, Denmark Sweden. With France and England gone, there are slim pickings.
>> Don’t expect Canadian real estate markets to crash and burn.
Do you still expect a slow melt? Or could you see a scenario where price stickiness allows stagnancy without declines. Then could the current unaffordability drag on for many years until wage inflation returns affordability to the norm?
Can’t wait for the show!
Today’s pic.
That’s what beards are for.
Also for collecting scraps of food.
Hipster dufus!
The Fed rate hike although long over due will be the beginning of an economic unwind. The stock market is extremely over valued and ready for a major correction. China, like the Great Oz, will have the curtain pulled back and their false claims of a strong economy exposed and the Commie hammer will reign down. Canada, sitting like a whipped pup in the corner, will pretty much do whatever they have to in order to appease the U.S especially if threatened with a Border tax. The EU is hooped, which is plain to see, and slowly but surely will crumble. And watching what is happening in Venezuela, one can’t help wonder the same thing happening here in this socialist nation.
In the meantime Trump wants a Bigger WAR machine.
Late to the party on yesterday’s Ballad of Allison the Headstrong, but trying to catch up today…
I think the idea of “financial freedom in her 40s” is possible. If she’s 33 now, that’s a decent 15 years to work with. As has been pointed out, the MR folks (and numerous others) made it from zero to a mil in a decade, and half of that was done without the help of the Honourable Garth Turner.
Assuming that Allison:
1) Has no major outstanding debts
2) Has a realistically modest idea of “financial freedom”
3) Has a decent income, and
4) is willing to save most of it,
then she could certainly achieve “financial freedom” before 50, and decide from there whether she wants to keep working or not.
However, considering that she’s 33 with what essentially amounts to no savings, I’m guessing that one or more of the above does not apply. C’est la vie.
Don’t expect Canadian real estate markets to crash and burn. Won’t happen. Prices are sticky, as they’ve learned in Calgary. But new buyers face potential loss. Severe, perhaps. Especially if they’ve borrowed big.
Yep, as one that lives in Alberta, gone through numerous recessions, this one is different, expect the unexpected in this province in the next few years.
wow Smoking Man called the mania in T. to happen in 2017
That’s one more correct prediction than Harry Dent’s call for Dow 5,000.
Or was it 2,500.
Long USD!
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Unemployment may be at 4.8%, but “not in the workforce” is still at generational highs. All time highs if you look at the total number of people not the percentage. Until that number starts coming down things aren’t as rosy as they seem. Most of these people are not retired, they are “systemically unemployed”. This is where the real pain is being felt in America. Where once there were 2 jobs per household, now there are 1 or none.
The usual factors are at play, computerized automation, excessive immigration, and declining energy return on energy invested. None of these things appears to be going away.
The stock market is at all time highs, some businesses are booming, and money is as cheap as it’s ever been to borrow. But the consumer, who is the lifeblood of the economy, is on the ropes. His job is being outsourced or replaced by automation, his cost of living is rising, and he’s working part time at Home Depot. This is evidenced in retail America where the malls are turning into wastelands. It’s not all Amazon that’s doing it.
I was just going through the box of stuff that came out of my daughter’s car after she totaled it and came across a Tomtom GPS machine I’d forgotten about that I bought her when she first started driving. The fact of the matter is it’s a mini touch screen purpose specific computer with it’s own battery. I thought, “who buys these things anymore, my phone and my car stereo can both do this now”. But it does show the pace people need to change is accelerating. First, they made maps of every city in the world on paper. Then they made the Tomtom and all the map makers got laid of. Now, they have GPS in everyone’s phone and car stereo and I don’t know what happened to Tomtom. Their website still functions but I doubt anyone who has an iPhone or Android (or even a Blackberry, or a car) will ever buy one again. Why would you?
They keep saying the computer is still no match for the human brain, but I think that is becoming increasingly less true every day. A single computer is already a better unit at many things, but with the web literally everywhere but the top of the mountain (unless the mountain has a ski resort in which case it’s there too) a computer isn’t a single computer anymore, it’s thousands of computers all hooked together. The memory and processing power available to your phone greatly exceeds that of your brain. What to know the square root of 1723969? Don’t worry your puny little brain about it just ask Siri. Can’t remember the dates of the Apollo missions? Ask Siri. Need financial advice? Don’t worry yourself with research and books on the subject just go to greaterfool.ca. Need to pay those pesky taxes? No need to go to an actual person at an actual bank the easy option is available online and you don’t even have to get out of bed to do it (assuming you sleep with your computer or phone). Heck you don’t even have to leave the house to rent dirty movies anymore, and they are now literally free. Where they get the money to pay the “actresses” comes from I don’t know but I bet the pay there has been dropping too, as it becomes increasingly the only option to make a quick buck.
Computerization has been going on for a long time, and the state it’s at now would be mind boggling to the inventors of the transistor. But we haven’t seen anything yet. I mean just marvel for a moment at the miracle that it will take you less than 30 seconds on Google Maps to view your house from space and also from the street. Or any house, anywhere in modern the world. Your brain cannot do that. You are obsolete.
So, a quick word on minimum wages. We’ve already seen McDonald’s do it and now Wendy’s is on board. All raising the minimum wage does at this point is incentivize companies to replace long term labor costs with a short term and relatively cheap upfront investment in additional computers and automation. Sure, there will still be some employees, especially the ones that keep the machine going, but that won’t last either.
the possible March hike – now being given an 88% chance of happening. And why not? Unemployment has crashed to just 4.8%. New jobless claims sit at a 44-year low. Corporate profits are set to swell by double-digits. Financial markets and consumer confidence are scraping the ceiling. And all this is even before Trump slashes business taxes, spends big on infrastructure and the military or shreds regs. America’s hot.the possible March hike – now being given an 88% chance of happening. And why not? Unemployment has crashed to just 4.8%. New jobless claims sit at a 44-year low. Corporate profits are set to swell by double-digits. Financial markets and consumer confidence are scraping the ceiling. And all this is even before Trump slashes business taxes, spends big on infrastructure and the military or shreds regs. America’s hot.
====
America is not just hot.
America is burning hot.
The sore loser Democrats can’t digest what had happened, they are hell bent on pushing the country to the edge, even to a civil war.
As clear as the coming of Brexit and Trump was.
The dice is rolling.
This will also be ignored, the same way, until the first gun shot, when all hell breaks lose.
Discussing interest rate will be as decadent as watching cabaret in Berlin in 1938.
Mr. T would you say Toronto owners are in a heightened state of Nirvana at the moment?
It seems the USA just can’t lose…even if rates go up a few times, if the EU falls apart, where does all the fast money flow to? Yes, likely Uncle Sam…
Funny how history repeats:
Snap Chat: reminiscent of the Dot Com Era, We All Remember where that ended.
Real Estate Stupidity 101. 1989/90 in Canada ,2008 In The States, not to mention most of Europe, same play book different cover, the debt,greed and stupidity is many times higher, likely to end with a crash that is significantly more painful in the end.
Given that this has already been one of the longest inter-recessionary periods in the history books, that OECD private debt-to-GDP ratios are still in the danger zone (>150%) ten years after the Global Financial Crisis, that interest rates are still less than 1% and typically fall several percent during a recession, I’m curious how long you think this rip-roaring tear in “expensive” money is going to last?
Canadian Big Five banks, all of whom have done their own hypocritical part in gassing the current Canadian real estate bubble, are suddenly ‘sounding the alarm’?
That is rich, really rich.
Friend just appealed his 48% increase assessment, got it knocked down to “only” 25%. What a deal… That is here in Langley BC… Took only one hour, saved thousands…
Something to realize is Britain was in an economic & financial position where it could consider going out on its own. Britain did many years of tough reforms and austerity to try to stave off state failure.
France on the other hand, everything is in deficit. The one thing propping them up is they have the Euro currency and the unconditional backstop of the EU behind their financial system.
Re Dave, on 60% tax that Paris has implemented: at least their government has the integrity to act on this problem. In Canada, Bill Morneau is “monitoring the situation” Doesn’t that make you feel reassured?
For those sellers like Andy with huge equity, cashing in now will be the equivalent of winning a loto. For the foolish buyers, it will be years of agonizing debt and trapped in a home worth much less than they paid for and that if they sell could clean out the balance of their savings and ending up bankrupt. What a mess this is going to be. We never seem to learn from the past.
That’s the better part of what’s talked about here for last decade but housing still holding or going up in value over long term.
It’s a shell game.
That becomes less relevant as the cost of entry rises. Most people now hobble themselves trying to play. — Garth
Pretty interesting comments so far.
I’ll make my sparse contribution:
“I feel like I’m back in the ’80s. Now if only I still had hair!”
#10 Tulips
”Then could the current unaffordability drag on for many years until wage inflation returns affordability to the norm?
——————————————————————
To the norm would be 4-5 times annual income. For Vancouver that would indicate a house value of around $340,000 or wages tripling. That would likely take another 40 years or so.
Vancouver SF Detached Price
Down 6.6% from JUL 2016 Peak
Vancouver Town-House Price
Down 0.3% from AUG 2016 Peak
T-Houses are priced at 46% of SFDs
or 1 SFD = 2.2 Townhouses
Vancouver Condo Price
NEW PRICE PEAK FEB 2016
Condos are priced at 36% of SFDs
or 1 SFD = 2.8 Condos
Charts here: http://www.chpc.biz/vancouver-housing.html
Tomorrow we should have Toronto data.
It’s all simple. Summarizing the trends and opinions of experds, here is the absolutely reliable short to mid term forecast.
Trump will bankrupt the US and Canadians will buy Manhattan in exchange for a bungalow in North York and three joints.
#10 – According to Ross Kay at Howestreet.com Vancouver is in crash mode. He has the data but we won’t be getting it from MSN except for some phoney spin. Check Ross’s archives. Excellent track record. Garth quotes him now and then.
#18 Nonpulsed
So with all this computerization and advancements in technology what do you foresee as the future for teachers and professors in the near future? Personally, I believe most will become redundant.
#23 GFC v2.0 on 03.02.17 at 7:26 pm
Canadian Big Five banks, all of whom have done their own hypocritical part in gassing the current Canadian real estate bubble, are suddenly ‘sounding the alarm’?
That is rich, really rich.
————————————————————–
Hypocritical is right. They were preaching the same thing back in 2010 if you recall at the same time competing for market share with their 2.99% mortgage rates. In the meantime, prices of real estate has doubled in To and Van since then.
#30 Brian Ripley
Van and Hog town, not surprising; the rest of the country; irrelevant; is that bad or good?
Unfortunately bad for some but if one is willing to move as mentioned in last week post to an affordable location upon retirement; dam, if I were in that position that would be my personal dream; best country in the world that we live in, seriously look what is happening in the rest of the world; minus the blizzards and snow shoveling. On the positive great workout! :)
you know what’s even more mind boggling than Toronto real estate?
most of the beats by black Atlanta gangstas in rap music is done by a white kid from fort erie…
nothing makes sense anymore.. nothing
Remember this?
http://www.fortmcmurraytoday.com/2013/11/05/suncor-introduces-automatic-trucks
Looks like more jobs lost.
http://app.tmxmoney.com/news/cpnews/article?locale=EN&newsid=TBDJH557
#23 GFC v2.0 on 03.02.17 at 7:26 pm
>>Canadian Big Five banks, all of whom have done their own hypocritical part in gassing the current Canadian real estate bubble, are suddenly ‘sounding the alarm’?
That is rich, really rich.<<
**********************************************
My thought exactly!
I'll never forget Bernanke's infamous,
"The Subprime mortgage market problem is… contained".
Now, exactly how the Canadian RE will unwind (ie. whether it will 'melt' or 'crash n burn'), I think is an unknown.
What IS known is that a large % of 'home-owners (ie. mortgage holders), will find out what happens in a bear market while using excessive amounts of leverage.
TCC
100 percent pricing in Toronto will continue to rise unless there is foreign tax. There is so much foreign interest in detached properties, locals are fighting for semis. The Govt bodies don’t want to do anything to end the speculation and allow locals to overextend themselves from their after tax income to bid more and more. Very ugly indeed.
#14 Alex on 03.02.17 at 7:05 pm
Late to the party on yesterday’s Ballad of Allison the Headstrong, but trying to catch up today…
I think the idea of “financial freedom in her 40s” is possible. If she’s 33 now, that’s a decent 15 years to work with. As has been pointed out, the MR folks (and numerous others) made it from zero to a mil in a decade, and half of that was done without the help of the Honourable Garth Turner.
Assuming that Allison:
1) Has no major outstanding debts
2) Has a realistically modest idea of “financial freedom”
3) Has a decent income, and
4) is willing to save most of it,
then she could certainly achieve “financial freedom” before 50, and decide from there whether she wants to keep working or not.
However, considering that she’s 33 with what essentially amounts to no savings, I’m guessing that one or more of the above does not apply. C’est la vie.
===================================
I believe that super-annoying girl and her silent b/f had STEM educations, paid for by their parents, and then went and worked in that field to save their investment capital. Apparently it was a horror having to work for a living, which is why in desperation they turned to investing, and turned $800,000 into a million, lucking into the timing of starting post-GFC.
So unless our poor friend from the other day has the same advantages or luck, it just ain’t gonna happen for her.
In 2014, 87.4 million [Jan. 2017, 94.4 million] people 16 years and older neither worked nor looked for work at any time during the year. Of this group, 38.5 million people reported retirement as the main reason for not working. About 16.3 million people were ill or had a disability, and 16.0 million were attending school. Another 13.5 million people cited home responsibilities as the main reason for not working in 2014, and 3.1 million individuals gave “other reasons.” — Steven Hipple
Click the link below for a thorough discussion by an economist with the Bureau of Labor Statistics of the reasons why people who are not in the labour force are not working:
https://www.bls.gov/opub/btn/volume-4/people-who-are-not-in-the-labor-force-why-arent-they-working.htm
Or you can listen to Stephen Bannon or read Breitbart News for “alternative facts.”
Hopefully, most readers of this blog will exercise critical thinking skills, and realize that statisticians and economists don’t have political agendas.
Garth,
“Don’t expect Canadian real estate markets to crash and burn. Won’t happen.”
Pleaaaassssssseeeee !!! USA, Spain, Ireland have all had significant housing crashes in recent years. Give yourself a shake and wake-up…households are spending a million plus for dry wall in crappy hoods. Households have epic debt beyond this lifetime and long term employment is history.
And you say a housing crash is not possible. My, my, my…your housing predictions have flipped 360 degrees.
Anything is possible. But a crash-and-burn is highly unlikely. Of course one is not needed to spread despair. — Garth
Inflation to set in soon and the rates will rise. The U.S. has exported perhaps $10 trillion, but nobody knows how much, in exchange for good things from around the world. It was a great trade for a while. The foreigners get paper created at essentially zero cost, while Americans and Canadians live high on the hog with the goodies those dollars buy.
Ultimately, most of these dollars will come back to the U.S. and Canada, to be traded for titles to land and businesses.
$730K for a semi detached in Whitby? Wow…I have no words.
Except. We are doomed.
#33 Ronaldo on 03.02.17 at 8:07 pm
#18 Nonpulsed
So with all this computerization and advancements in technology what do you foresee as the future for teachers and professors in the near future? Personally, I believe most will become redundant.
===================================
While access to knowledge has exploded, do not confuse it with rational, critical thought. The most sophisticated algorithms are only ever-more impressive simulations of human thought, just as the Boston Dynamics robots are ever-more impressive simulations of human movement. Both remain completely the product of human ingenuity, design, and production. Even the machines used to produce the machines were some human’s idea.
There are certain things machines excel at: boring, repetitive tasks. Force multiplication (capable of tasks require strength beyond human. Consistent task replication. And yes, as a result, huge swaths of jobs are being eliminated.
But do not confuse the volume or pace of change as being synonymous with technology being inevitable. Examples abound of things that are easily technically possible yet ended up on history’s scrap heap because they can never meet other criteria, i.e. financially viable, socially or morally acceptable. And certainly the somewhat admiring tone of one of the earlier posts is off-putting: unless one really views a planet of drones, heads-down in their screens as they shuffle around, as some ideal of humanity’s “progress”.
To suggest that teachers and professors will be redundant is true only if one believes that facts are the same thing as wisdom. But I do believe that the traditional ones will become obsolete if they continue to use their cozy academia to perpetuate political ideology and stifle opposing viewpoints instead of fulfilling their actual purpose: modelling and teaching critical thought.
#31 Leebow
Sometimes “Spicoli”humour is just …funny. )
#40 BillyBob
I believe that super-annoying girl and her silent b/f had STEM educations, paid for by their parents, and then went and worked in that field to save their investment capital. Apparently it was a horror having to work for a living, which is why in desperation they turned to investing, and turned $800,000 into a million, lucking into the timing of starting post-GFC.
So unless our poor friend from the other day has the same advantages or luck, it just ain’t gonna happen for her.
—–
According to their blag, they worked their own way through school (co-op engineering program), and invested the first couple of years *before* the GFC, but had the wherewithal to actually hold the investments instead of panic selling.
When I first read the news stories about them, I flipped through the figures, and if I recall correctly, about 80-85% of the money was from straight-up savings, with the balance being investment returns, so when they started investing is largely irrelevant. This is the case for pretty much anyone who achieves financial independence that quickly – they save so quickly that long-term returns don’t really end up doing any of the heavy lifting.
I’m personally heading towards financial independence in a 15-year time frame, on (currently) more modest earnings and no assumptions of majorly favourable stock markets. 15 years is actually a significantly easier time frame than 10, if you look at any of the “savings rate vs. retirement date” calculators, you see that there’s diminishing returns to increasing your savings rate vs. years of work required to be independent.
Anyway, my point is that regardless of what happened in one case or another, the math and overall concept speaks for itself – financial freedom on a 15-year timeline is a realistic goal IF you are capable of saving about half your take-home pay. Investing is not the hard part, it’s the long-term commitment and discipline to spend significantly less than you earn.
DELETED (racist)
It might be good if you posted our entries and just wroted DELETED instead of the content when you object. You know, like you do with Smoking Man – who we know and appreciate that you have a special relationship with.
That way we would know if our messages crossed the line. I’d promise to be a good boy if you do that.
Deletions are almost always for vulgarity or racism. Being a moron isn’t enough. — Garth
Garth, you are right about 1 thing. House prices in Calgary are sticking. and that is will a daily increase of homes coming on the market, including vacated ones. So , how do you explain why prices here are sticking?
Curious what the debt wall is for Canadians?
wonder how much more debt lenders are going to expand in order to keep this afloat.
inventory levels will stabilize soon, as boomer in their mid to late 50’s and early 60’s start to sell– once in a lifetime opportunity here.
dont know if it will be T2 Cap gains taxation, or inevitable interest rate climb but something will shift the course it always does.
watching the RE market- shades of tech bubble– i remember as a high school kid, i remember people talking about how the tech boom was the new normal etc.. substitute that for RE and its almost the same- the obsession is reaching lunacy stage. lol
canadian housing ? not crashing ? …lol… wow Gartho baby… just when I was betting that you were not pissed drunk when you wrote this :)
Big black whole in the ground baby :)
Net worth of housing in BC , down 32 bil (with a “b”) going to 160 bil down by election time. What do you think will do to any BC government budget ?
What do you think it’ll do to banks baby ?
:)
The idea that big city R/E values will melt down rather than crash seem to assume the credit tap won’t close very tight, very quickly.
Is it realistic to expect that lenders will still lend indiscriminately to moisters if property prices look like they are ready to shrink 5% or more per year and interest rates are moving up?
Is the failure of Calgary to crash yet a sign that the laws of financial gravity have been repealed or is it that lenders are afraid to push too hard for fear of causing a stampede there and in other cities and/or there just hasn’t been enough pain yet to trigger many distress sales?
If the force driving the insanity in the market is not Chinese dudes but FOMO and cheap money, what happens when there is no longer any reason to fear and money isn’t cheap any more?
I am open to argument but I don’t get where the support for a gentle price slide will come from once people grasp that house prices can actually fall.
No Hope I hear ya.
Confessions of The Smoking Man a day early.
NoName. thanks for that post yesterday.
When you have everything but want just a bit more.
Please note I am a confused serial liar, take from what I write here with a bit of salt.
My real name is Jim Stoj people at the tax farm know me as STOJ.
I have left out the remaining 12 characters of my last name, you know, identity theft and things like that. But you dogs are smart bastards and can probably figure it. Just please don’t post your big internet find on here, Identity theft is real. But sadly don’t think anyone would want mine, so go nuts.
Now what an amazing experience creating Smoking Man, Learning to write, fooling myself that I can make a living doing this.
Smoking Man is my total alters ego. I’m nothing like Smoking Man, Truth is I’m dirt poor at the moment, why else would I drive that truck. I’m a chicken shit when it comes to investing. God has trained me well over time.
Yes, Casinos, and the zest for life, I was diagnosed with terminal cancer years ago, so I figured I’m not going to outlive my money have fun, live for today so I went nuts.
Fk I’m still here. What an amazing wife I have, backs me 100% They don’t make em like that anymore.
The truth is god hates my guts. but I keep him so entertained he keeps me around, he’s truly a demented prick.
Every time I have ever invested a cent in anything, it goes south fast and I can hear god laughing at me from the heavens.
He is such a bad ass that anytime I make a call, the son of a bitch makes it happen, further torturing me. And I have made amazing calls and never bet them. Know your enemy is all I’m saying.
I paper trade forex and have helped a few dogs on here become millionaires. I’m not that lucky personally.
Well, smoking man took over my linked in account recently, Some kind of mental breakdown on my part. Years of building a great reputation down the toilet in a few keystrokes. No one on my contact list will ever hire me on contract again. I’m toast. broke, no fx account in the islands.
Do I blame anyone? hell no. I set out to be a gonzo writer by the encouragement of you blog dogs and I did it. My book is good, it’s great. But I should have planned a marketing budget. Now, the lefty loons will take great pride in mocking me.
Just know this, if I find out who you work for, and I buy 1 fricken share. God is taking your company down.
NoName. thanks for that post yesterday.
My place is mortgaged to the titts, what little I have left, I’m forced to sell early. 2018 is the peak.
I’m changing the name of the book to Deplorable Aliens, or something like that. There is a Dr. Win out there who will help me do this right. at least I will be able to buy cigarets and wine on you dogs making it a best seller by telling everyone you know how great it is.
Being a book writer doesn’t pay shit vs. a great code smith. But I culturally fked that one up. I’m still a great code smith that no one wants’s
Medical Smoke is so under-rated for killing cancer. Should have gone for chemo and I would have zero challenges or problems now.
Dr Stoj
#39 Alex on 03.02.17 at 8:51 pm
that’s because they don’t know any better. they are just feeding the ponzi waiting for the next sucker. toronto is an immigrant town and a worker town. some parts are nicer, but average nicer. for these prices they can do better. people here buy because they work here or have family here. what is the excuse of the wealthy foreigner putting up mcmansions all over an average worker town. if/when they want to leave, there will be no one to buy.
#43 Cowpoke
Not sure about that due to we are all in the same boat.
Too many count Canada out; not sure why besides stupid politics, but!!! We have what the world needs, we are blessed, it will all sort itself out in the near time if we choose to; it is up to us to make the right decisions.
Despite the impending doom and economic cataclysm that will arrive on the Ides of March, FLOP and I can rest easy and feel joyous. Sunday, March 26 a fixture with Fremantle vs. Geelong.
FLOP, I got 5 quid, garnered in the Athabasca oil sands, says the Dockers whip the Cats. You in?
Get well soon.
This is the bi product of QE.
Trillions of dollars flooding the global markets.
The banks get you hooked up, and then up the ante (mortgage rates) as often as they want.
It won’t end well.
But it will take a few years.
Image your 2.5% mortgage at 6% in 5 years.
Ouch.
They will keep the housing market propped up until the new monetary system is implemented. Trump won’t shut up about making ‘Murica great again, and that sooner than people think his new gold backed currency will magically be implemented and ‘level’ the playing field.
— Look it up, he’s said all of the above! —
Everything is in a bubble right now, stocks, bonds, ETFs, real estate, you name it. This is a byproduct of the soon to be defunct monetary system. They aren’t raising rates because they know very soon (according to Trump) a new monetary system will be in place (Economist magazine predicts 2018).
What’s this mean? Well, if your CAD is about to be demonetized, you might want to invest in something that does well when currency becomes wallpaper.
Until then, buy a house with huge leverage cause this thing is just going to keep going.
A crash-and-burn is highly unlikely.
That is correct in the context of historical standards but not in the immediate recent history. Many people will be stuck servicing a stinking heap of debt with severely restricted means biding time until uncle sam stokes the furnace of inflation to rescue us from ourselves in 10-15 years.
The cycle never stops.
Don’t expect Canadian real estate markets to crash and burn. Won’t happen.
Ross Kay commenting on the sudden and drastic drop in BC real estate:
there’s going to be no money for renovations
no money for new houses over $800,000
no money from HELOCs
provincial revenues from land transfer tax will dry up
provincial revenues from sales tax will be reduced
sounds to me like the BC economy is going to crash and burn. Asked if people in Toronto should be worried, he answered “worried is an understatement”.
Ross is a smart guy. Extremism gets attention. He will find the balance. — Garth
Garth said CANADIAN real estate would not crash and burn. But, as we’re always told, “All markets are local”! In other words, Vancouver and Toronto will crash and burn while the rest of the country merely “adjusts”.
And, if Garth doesn’t see it that way, I sure as hell do.
Hey Garth, thanks for all of your posts; greatly appreciated by all of us especially me that read them all.
For all the blog dogs, what a great group we have, some successful, others wish to be, others doing the best that they can with open honesty of their life struggles, we are a blog dog family (sorry Felix), ok, I will forgive the feline poster but my black lab will not! :)
Thanks,
Goodnight all!
DELETED (Racist)
#19
Discussing interest rate will be as decadent as watching cabaret in Berlin in 1938.
————–
Tired of uneducated Canadians having no clue of history.
Cabaret was set toward the end of the Weimar Republic in 1933.
#53 Andrew Woburn:
Astute as usual. Again I extend my entreaty with respect to “sticky” Calgary real estate prices. Correct me if I am wrong. The average or median prices are what the buyers are spending on properties. The transaction values. So, for this year’s spend they acquire far finer homesteads than they would have in last year’s dustbowl. What is the flaw in this analysis?
The result? Sellers being pounded.
#41 Reply to #18 Nonplused on 03.02.17 at 8:56 pm
Or you can listen to Stephen Bannon or read Breitbart News for “alternative facts.”
Hopefully, most readers of this blog will exercise critical thinking skills, and realize that statisticians and economists don’t have political agendas.
—
Nobody is free of political agendas or at least favored political views.
Part of exercising critical thinking skills is to listen to a wide variety of alternative views, which represent facts from different angles, articulating different political, ideological views.
Part of critical thinking is to realize and acknowledge that main stream ideas start as fringe, and main stream ideas become fringe.
SM,
Please cut the shit.
It makes me dizzy to read your stuff.
Make your point and sign of.
Garth, if I may. To add to my question above. Assume that I am correct that purchasers are getting more for the buck with an average spend on Calgary houses this year over last. That matches Toronto purchasers acquiring lousier homes with each monthly rise in average transaction values.
Or should I just step outside to look at the Northern Lights and enjoy a DuMaurier?
#52
It will only make the banks more profit!
No one in Canada walks away from a house, it is the pinnacle of financial and social success to own a home(even under water) than to be a lowly renter, better to own the banks than to be owned by the banks.
#54 Smoking Man on 03.02.17 at 10:10 pm
No Hope I hear ya.
Confessions of The Smoking Man a day early.
NoName. thanks for that post yesterday.
When you have everything but want just a bit more.
Please note I am a confused serial liar, take from what I write here with a bit of salt.
My real name is Jim Stoj people at the tax farm know me as STOJ.
I have left out the remaining 12 characters of my last name, you know, identity theft and things like that. But you dogs are smart bastards and can probably figure it.
..
Ya mean Ecuador is a bust!! no helipads!
I just want to know which dehavilland planes you were in charge of for the engineering development… so I can avoid flying on them!
#33 Ronaldo
Teachers and professors are probably redundant now, or at least a great many of them are.
The other continuing scam, at least at the post secondary level, is text books. Why on earth they are still making students buy paper text books is beyond comprehension. It’s a scam. Everything in them is already available on line.
#41 Reply to #18 Nonplused
Let’s see here, lets use a calculator on this one, hmm, 94.4 – 38.5, minus… 16.3, 16, 13.5, and 3.1. Ok even using the numbers you gave I have 7 million people unaccounted for not counting the 3.1 “other reasons” and the people who are retired, on disability, or staying home because they can’t find work. The “alternative fact” is that if good paying jobs were readily available all of the categories listed above would go down. It’s the overall non-participation rate that matters because it can be compared to the non-participation rate when times were better, not the excuses people give when asked a poll question. What do you expect them to say? “I’m too lazy”?
#45 BillyBob
Interesting points, but I guess I am saying that more and more of the routine stuff that used to take a human no longer does, and much more so in the future. When was the last time you cracked open a paper encyclopedia? Nobody buys them anymore and the salesman that used to come door to door is out of work. Do you even do your own taxes with a pencil anymore? I use TurboTax and I don’t even know what it’s calculating. I just put the numbers in and send money (online).
I don’t foresee human activity being out of the picture for some time, but the leverage now is huge. Once you teach one car to drive itself, you’ve taught them all to drive themselves. So a small team can cause the unemployment of hundreds of thousands of people.
As for teachers, yes what you say is true. But one teacher can now address thousands of students at a time via the web and recorded lectures. Many MBA programs are available online. This is another leverage waiting to be exploited. And it will be. See the Khan Academy for details. http://www.khanacademy.org You can learn anything you want to for free. Maybe you don’t get the piece of paper, but you probably don’t need it anymore.
The French are notorious for speaking with their hands on their hearts and voting with their hands on their pocketbooks.
To date, no appetite from Italy or Spain to withdraw from EU.
The rest are small countries that need EU free trade.
Populist parties are capitalizing on growing anger with internal problems than with leaving the EU.
And even if Le Pen gets elected, she has stated their will be a referendum about leaving the EU.
Thus, years before the unraveling of the EU, if at all.
#50 IM in C on 03.02.17 at 9:32 pm
Garth, you are right about 1 thing. House prices in Calgary are sticking. and that is will a daily increase of homes coming on the market, including vacated ones. So , how do you explain why prices here are sticking?
———————————————————-
It’s like Martin Armstrong says, it’s capital flows escaping Europe and buying RE over seas.
When you look at whats happened to Vancouver and now Toronto the international community knows Canada is filled with crooked politicians turning a blind eye to foreign money hiding off the grid as governments are trying to tax everything left right and center to survive.
When domestic fundamentals don’t make sense – like Canadian RE, it’s because you are not looking at whats happening in the world as a whole.
Last weekend I was talking to the BIL, who is torn after receiving a bit of a windfall from selling his mom’s house, who passed last summer.
Invest? Maybe. But, he thinks he will make more long term though buying another condo in his building and renting out his current one. It’s an old building, and the only way he’ll get a big payout long term is if he gets top dollar when it eventually gets torn down. It’s made a modest 5.5% increase per year since he bought 3 years ago (and this is in Richmond, that crazy market).
We were talking about it a bit and I suggested that he should try to run some numbers and figure out what works better for him with less effort, and less (likely) capital gains taxes that will come from renting out a second place. If he’s only gaining 5.5% a year, he can get that from modest investing without the effort of being a landlord.
His response “I should talk to my mortgage broker. Mortgage brokers always have your best interests at heart.” I stopped my argument at this point, as I felt it was hopeless.
This is why my generation is screwed. Instead of trying to learn what works for you yourself, we auto default to taking the advise of a professional who stand to profit from our decisions, because of their title that makes them an “expert”.
This is also what is powering the US stock market, it’s the only market liquid and deep enough for massive international capital flows.
While I don’t suspect a us-style crash, prices have to go down. These prices make absolutely no sense.
It’s almost impossible to afford anything reasonably. I get that cheap credit is a gasbag but reason will ultimately prevail.
I remember as far back as August, you were predicting listings to build up huge in Vancouver in the following months? As that would be the next stage of the bubble??
Ross kay sounds like a wingnut on his interviews.
Garth, you’ve been calling it wrong for the last decade costing anyone who followed your advice fortunes. But you can’t admit that part. Liberals in BC have guaranteed support levels for the market and most people are locked into historically low interest rates for the next 5-10 years.
Garth your time is now. There is a reason you were forced out of politics before your time. You are the modern day Jesus. Those who do as you command end with financial security to their dying days.
#45 Billy Bob
This may be a clue as to where we are headed.
http://theconversation.com/technology-will-make-lecturers-redundant-but-only-if-they-let-it-53339
Re: #10 Tulips on 03.02.17 at 6:51 pm
Condos, apartments and townhouses fell six and a half percent month over month in Edmonton. Home prices there are now well below the peak way back in the summer of 2007.
Anyone who’s bought during the last eight years will be screwed screwed screwed if rates double from the eight year low of 1.8% to what could be 4 to 4.5% by the end of ’17. If your mortgage has you fifty bucks away from starving now…..and say the average millionaire is paying between 5 and6 thousand a month. What will the landscape look like if monthly pmts go up to 7 to 9 thousand?
#45 Billy Bob
Another interesting article on future schooling.
https://www.theatlantic.com/education/archive/2015/03/the-deconstruction-of-the-k-12-teacher/388631/
GT,
You underestimate the incompetence of Poloz. There will be no rate hike in CAD, on the countrary, rate cut.
The guy lives on another planet, he is so delusional , it is really unbelievable.
I am sure there is medical condition for it, complete detachment from reality, but unfortunately we are lacking medical professional to diagnose and treat him.
#68 I agree with you stopped reading SM sometime ago I can’t figure him out maybe it’s good therapy for SM to vent on this blog.
There will be 18-million people in Ontario by 2035. 52% of them will live in the GTA or 9-million, up from 6.5 million today and people here are wondering about the price of housing? Math is hard!
#49 POST
Deletions are almost always for vulgarity or racism. Being a moron isn’t enough. — Garth
——————————————————————–
Thank goodness. The moronic comments are the most entertaining. And there is certainly no shortage of them.
What happened since 2009, 2010 when 10 and 30 year Canada bond yields were in the 3.25% to 3.8% range?
They kept dropping with small blips up but the trend was always down.
The same goes for the U.S., when Barack Obama came in 2009, bond yields jumped to 4.0% U.S. 10 year and 4.8% 30 year treasury bonds by spring 2010 and since then down and down with some blips up but still lower around 7 years now.
Trump and Republicans are in and what is the trend, higher bond yields and higher mortgage rates, rising stock markets just like what happened with a new U.S. president Obama back in 2009 to 2010.
This will fizzle out in the next 10 to 18 months and a U.S. and Canada and probably a mostly global economic downturn will happen again and you guessed it, lower bond yields, lower mortgage rates and lower stock markets.
Here in Canada with real estate prices never having a minimum real 15% to 20% correction as values have gone up almost straight for 20 years now will make Canada’s situation more vulnerable and probably worse.
The Bank of Canada may have instituted a 0% rate or maybe even the -0.50% in the next few years. They have already mentioned this as a possibility back in 2016.
@54 Smoking Man
Doesn’t matter how you go through life, so long as you live it and enjoy it.
And, if you are as good at coding as you say, you’ll be able to find a place to park your butt if you want to look for it. The world still needs people with drive.
Thumbs up – which ever character you are behind the keyboard…
« Don’t expect Canadian real estate markets to crash and burn. Won’t happen. »
I used to agree with that. But now I don’t
I think chances of a bloody crash/economic meltdown in Canada are 50/50.
This debt binge has gone too far and is still ongoing, this is uncharted territory. The consequences can’t be anything but tremendous.
One great danger comes from the fact we are desynchronized with the US and much of the world in fact, their households have deleveraged and ready for a fresh start while ours are at the end of the rope. Rise in interest rates are normal, even advisable for them but a kiss of death for us, sure we’ll resist for a while, maybe heroically, but this correction is simply unavoidable.
If it’s any consolation other socialist nations such as Denmark and Sweden are in the same boat!
we live in a new reality
“It’s over for the little guy”
https://www.youtube.com/watch?v=BxFQYw_MmAA
From “Johnny Cakes” (episode 8, series 6 of The Sopranos): two mobsters collecting their protection money from the shops. Until they run into Starcostabucks, where “every f’ing coffee bean is in the computer”.
#88 The real Kip
«There will be 18-million people in Ontario by 2035. 52% of them will live in the GTA or 9-million, up from 6.5 million today and people here are wondering about the price of housing? »
Sometimes things have ways of not turning the way you planned…
But I agree, big need for cheap housing!
«Prices are sticky, as they’ve learned in Calgary.»
That’s called delusion, eventually passes…
Anyone else notice that Garth quoted the average household income in Vancouver as $68000? Last year it was $72000. That’s a 5.5% drop in a year. Kind of worrisome.
#67 alt views on 03.02.17 at 11:05 pm
I rejected the statement by #18 Nonplused, “Most of these people are not retired, they are ‘systemically unemployed,’” implying that most of the people not in the labour force want a job but can’t find one. Nothing could be further from the truth. Click the link below for actual data from the Bureau of Labor Statistics.
Do you reject government data because you think government statisticians are incompetent or untrustworthy? Do you feel the same about audited financial reports and auditors? Do you make financial or economic decisions without facts? By gut feeling?
Critical thinking is about identifying, analyzing and solving problems methodically rather than by intuition or instinct.
#72 Nonplused on 03.02.17 at 11:22 pm
Hoo-boy! The excerpt was written in the year 2015, and the figures listed related to the year 2014 (not to 2017). Did you read the article?
If you want facts for Jan. 2017 of persons not in the labour force by desire and availability for work (in thousands), click the link below:
https://www.bls.gov/web/empsit/cpseea38.htm
I’m assuming, of course, that you want to base your rant on facts.
Oh! and in answer to your asinine question, I expect people not in the labour force who want a job but can’t find one to say (when surveyed), “I am looking for a job but can’t find one” or “I am discouraged over job prospects” or “I am not available to work now” or any one of a number of possible valid answers.
New target for Toronto housing market peak:
Q1 2019 <—–*
Why…our interest rates will not rise until at least Q4 2017. Even a 1/4 point bump each and every time…adds only 1% to rates by 2019. Big deal. 2% mortgage becomes 3%.
The Mortgage brokers simply will fudge the figures, a bit more stated income etc.
Working on an undergrad. degree in Herdonomics,
M41ON
#42 Olive on 03.02.17 at 8:58 pm
“….flipped 360 degrees.”
180.
IMHO, the sludgy nature of our economy will persist until a black swan slides along. We’re great at sludge in Canada- it’s what happens with government greed, protectionism and an economic egalitarian agenda.
This serves to maintain the status quo of sticky re prices, a c.b. that does nothing, nada, zero, ziltch, bupkis to initiate healing the economy, legions of Canadians shopping “off the grid”, eschewing services and going back to tearing facial tissue in half……leading to even more cash being forced into FIRE as opposed to the broader economy.
Small wonder the US is hot.
Reminds me of a great line from Truman in Armageddon: “we got a lot better rockets than the coyote”.
But Canada is a cute little coyote with a wide-eyed and smirky selfie attitude.
GTA average selling price up 27.7% y-o-y in February. If this is not the top, it sure looks like one.
http://www.trebhome.com/market_news/release_market_updates/news2017/nr_market_watch_0217.htm
@#100 Samantha on 03.03.17 at 9:12 am
Just imagine.. my house is making more money than me just sitting there.
So now we shouldn’t expect Canadian Real Estate to Crash and Burn?
In the immediate term? The coming years? Decade?
You’ve been predicting a return to the trend line for some time. “It will end in tears”
Please lend us some clarity to your new insights.
How can anyone mistake a healthy, consequential correction for a devastating ‘crash-and-burn’? Too many people here talk in extremes. Must be Trump’s fault. — Garth
Janet Yellen to speak after Fed officials hint rate hike is near
http://www.bnn.ca/janet-yellen-to-speak-after-fed-officials-hint-rate-hike-is-near-1.686556
#101 Oh Yeah!! on 03.03.17 at 9:40 am
@#100 Samantha on 03.03.17 at 9:12 am
Just imagine.. my house is making more money than me just sitting there.
=====================================
Until it doesn’t :)
Garth – to me a return to the Trend Line is a crash and burn as far as the masses are concerned.
Ronaldo and Nonplused,
thanks for your comments and links. A quote from one of the lined articles nicely sums up what I was trying to say about both tech, and education:
“The first cellphones were prohibitively expensive, but now smartphones and tablets are handed out to people opening a bank account. The technology on these phones is also becoming increasingly powerful, and will continue to advance so that what is cutting edge today will be mainstream in about five years’ time.
This educational technology can change the way that university students learn. But ultimately, machines can’t replace teachers. Unless, that is, teachers are just selecting and packaging content with a view to “getting through the syllabus”. As demonstrated above, computers and algorithms are becoming increasingly adept at the filtering and synthesis of specialised information. Teachers who focus on the real role of universities – teaching students how to think deeply and critically – and who have an open mind, needn’t fear this technology.”
The only constant is change, as they say…
Hi Garth, I have the option of buying my grammas condo in Salmon arm for 125k, it’s worth 250k. I only make 45k per year. I know I would get instinct equity but I would never sell it. I’m just worried about rates rising, I can get a 5 year locked in for 2.95% so if rates do rise how much do you think they could be in 2018-2019? I can buy it within 2 years from my gramma
Thank you very much- great blog
slow but still expensive in east van for liveable places.
1. place next door went up for sale at 1.9 a week ago. i thought it was way too high – sold sticker yesterday.
2. a 33′ lot just off the drive (with a rotted bung – liability) sold last spring for 1.6. i was shocked at the time and posted it here. well it’s up again, this time the ask is 1.9.
breaking out to new highs in east van( grandview).
oh well.
And the spin doctors:
https://ca.finance.yahoo.com/news/expert-toronto-real-estate-market-is-fairly-balanced-124844248.html
A profession without ethics and total lack of moral obligations to the clients and the general public.
2068 GRANT STREET
1. place next door went up for sale at 1.9 a week ago. i thought it was way too high – sold sticker yesterday.
—————————–
sold over ask – dom8
price? – over 1.975
Std house, std lot, instant sale at record priced in the middle of the biggest slowdown ever seen in 604 re.
Detached Toronto homes crack $1.5-million, with suburbs hopping
The Globe and Mail – 2 hours ago
The average price of a detached Toronto home has cracked the $1.5-million mark for the first time, and the neighbours couldn’t be happier.
Price of homes sold in Greater Toronto Area last month up 27.7% from year ago News1130
Price of homes sold in GTA last month up 27.7% from year ago Toronto Star
————————-
As I said: total meltdown of the currency. Run for the hills.
#101 Oh Yeah!! on 03.03.17 at 9:40 am
@#100 Samantha on 03.03.17 at 9:12 am
Just imagine.. my house is making more money than me just sitting there.
………………………………..
Did you sell it? Do you know where you will go after you sell it?
You haven’t crystallized any profits, until you do.
María Mercedes Riaño reveals secrets of Mossack Fonseca
Lawyer: Mossfon Trust was created to avoid taxes
Eliana Morales Gil
Attorney María Mercedes Riaño, who is being investigated for money laundering by the Public Prosecutor’s Office, said that Mossfon Trust, a subsidiary of the law firm Mossack Fonseca (MF),
http://www.prensa.com/in_english/Mossfon-Trust-estructuras-evasion-impuestos_21_4702989655.html
speaking of free tax education for journalists
https://www.youtube.com/watch?v=Hom07yGhg0Q
Binary options — the latest investment scam that’s costing victims everything – cbc
Family of man found dead after losing life savings urges action, hopes it won’t happen to anyone else
http://www.cbc.ca/news/business/binary-options-scam-1.4007066
did you like the movie The Big Short? i did. so now i’m reading the novel by Michael Lewis. it’s got much more content not found in the movie.
i’m only on chapter 1. here’s a great quote:
How do you make poor people feel wealthy when wages are stagnant? You give them cheap loans.
i have not finished reading the book yet. but we all know how it ends
#79 – Maybe, and some people might think you sound like a “wingnut”.
I’m seeing more and more rentals coming up in Calgary as the semester is coming to an end.
Starting to think one of the reasons prices remain sticky is many are trying to rent a room or basement to stay alive.
Since most of these won’t be filled it will just prolong the inevitable.
#102 falseprophet on 03.03.17 at 9:58 am
So now we shouldn’t expect Canadian Real Estate to Crash and Burn?
In the immediate term? The coming years? Decade?
You’ve been predicting a return to the trend line for some time. “It will end in tears”
Please lend us some clarity to your new insights.
How can anyone mistake a healthy, consequential correction for a devastating ‘crash-and-burn’? Too many people here talk in extremes. Must be Trump’s fault. — Garth
———————————————————-
What is healthy Garth?
For example houses have gone up 100% in Calgary over last 10 years – right now people think the “correction” is run it’s course, is 4%-ish considered healthy?
#102 falseprophet on 03.03.17 at 9:58 am
So now we shouldn’t expect Canadian Real Estate to Crash and Burn?
In the immediate term? The coming years? Decade?
You’ve been predicting a return to the trend line for some time. “It will end in tears”
Please lend us some clarity to your new insights.
How can anyone mistake a healthy, consequential correction for a devastating ‘crash-and-burn’? Too many people here talk in extremes. Must be Trump’s fault. — Garth
——————————
We just need to define what ‘crash and burn’ is.
6 times increase in house prices in Mississauga in 15 years with 10 % increase in income justifies meaningfull healthy correction of 75 + %.
In Ireland houe price increase of 3 times justified a healhty corrrection of 50-70 % in 2008-2009.
I had the chance to speak on many occassions to Irishmen about it, they felt it was a bubble, then devistating crash and burn.
Nobody said a wolrd about world class cities, everyone wants to live here, all other crap and nonsence Ii hear fom absolutely truly delusional Canadians.
Being the politicallly correct Canadian I am, I will settle for a ”healthy correction” of real estate prices in Canada of 75 + % in real terms, not caring pretty much about the expression in nominal terms in teh pice of crap currency that Poloz is eimiting.
New principal residence reporting will help CRA home in on condo flippers
http://business.financialpost.com/personal-finance/taxes/new-principal-residence-reporting-will-help-cra-home-in-on-condo-flippers
Nobody said a word about world class cities, everyone wants to live here, all other crap and nonsence I hear fom absolutely truly delusional Canadians.
Being the politicallly correct Canadian I am, I will settle for a ”healthy correction” of real estate prices in Canada of 75 + % in real terms, not caring pretty much about the expression in nominal terms in the piece of crap currency that Poloz is emitting.
We are truly entering the euphoria phase of the biggest credit driven real estate bubble in history.
Now even Brampton is more expensive than Long Island.
We shoud be proud to be able to establish the biggest record in stupidity on file and keep improving it on daily bases.
People with jobs “don’t get” people with out jobs, as in why they are not in the workforce.
When we ran out of payments I was 35 and my wife was tenured into a career with a 60% transferable DBP and had 17 years to go.
So, was I supposed to wear a succession of full size vans out following the salt truck to work and pay people to do the things we wanted done here on the estate with my small cut of after expense and tax dollars, or stay home and be a tax deduction for her, and work for ourselves full time, income and tax free.
Believe me, if the pay was right I would still be in the work force today, but no, the pay people give trades people that haven’t a greed gene doesn’t cut it after expenses, when chump change is not motivation for someone that won’t perish without it.
It came in handy, not having a job to hold me here when she took her deferred salary leave-year-off every fourth year. It was also convenient when she had meetings with overnight travel involved, allowing me to accompany her and so on.
Statistically, I fall through a crack and I know I am not the only one not working because it would only be wasting time to do that.
Or I could have worked these last 27 years and our portfolio could have been bigger, and we could go to Jamaica an extra fourth time each winter…but…why? Get it? How much is enough? The answer is in direct ratio to…at what cost? That is how much is enough.
http://www.cbc.ca/news/canada/british-columbia/surging-sales-of-vancouver-condos-townhomes-edging-up-real-estate-prices-1.4007104
http://www.huffingtonpost.ca/2017/02/02/9-charts-canadian-housing-wtf_n_14441902.html
Vancouver and Toronto are more expensive than Paris, New York and Tokyo
taxes, taxes, taxes…or not:
“It’s very important to disclose that type of information,” Rizqy said. “Here we’re talking about a tax structure, about the intention to evade tax. The CRA can go and investigate these families and see if they actually did something else.”
from here: http://www.cbc.ca/news/business/kpmg-offshore-tax-dodge-1.4002778
But if we middle-classers are 2 bucks shy on our tax return, look out!
What’s the weather’s like on the Isle of Mann?
Garth,
On your article from March 1st, your advice for the Kid with 15K was to put it all in her TFSA and then keep on adding to it.
Why not put it in RRSP instead and get a pretty nice chuck deducted from taxable income instead?
Wouldn’t that be better?
Thanks!
Without knowing her pension situation or income, no. — Garth
More tales of madness.
Even the realtor is saying “hey guys, this isn’t funny anymore”
https://beta.theglobeandmail.com/real-estate/toronto/escalating-housing-prices-in-toronto-leave-buyers-with-stickershock/article34172060/
Thanks so much for the reply.
Let’s say hypothetically :) her income was 67K and she had a municipal pension plan contribution since 2015… no other pensions.
Would TFSA still be a better move?
Thanks so much!
With a DB pension? Absolutely. — Garth
@SM
NoName. thanks for that post yesterday.
—-
I hope no salt with this part, and You are we
#111 Euro Observer – meltdown of the currency.
You’ve got that right.. always tried to get this message out. If and When they decide to defend the currency, house prices MIGHT correct but guess what: even if you get less, it’s going to be worth more. ONLY for those with a lot of equity. The funny thing is, these are the people who cash out (and I see it’s the advice on this blog that they should cash out) They are in the best position to wait for proof, not fall for the scaremongering.
As for ‘running for the hills’, here’s the problem with that: in relation to the rest of the world, we live on the hill.
The Price of Power: Faced with seething voters, Premier Kathleen Wynne is cutting hydro rates. While the relief will be welcome, the Liberals are turning their back on the adult conversation they had promised Ontarians.
http://mcaf.ee/6ueshp
the headline was copied from the print edition. The headline by-the-way is brilliant! It doesn’t appear in the link.
#126 Barb on 03.03.17 at 12:46 pm
from what I have seen on my tt videos is that Man is a lush ,wet place ,very green with a climate mild enough to grow palm trees in some of the gardens . the palms look a lot like the ones that grow here in Vancouver . Man has very sensible driving laws as well .
very little ‘nanny state’ is what I hear.
http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/are-tfsas-and-rrsps-just-tax-relief-for-high-earners/article34183561/
First off, they taking your TFSA cred Garth?
Second, I take exception to ‘the benefit of these programs flows mainly to higher income people’ line. These benefit knowledgeable people who know how to use them properly. Holding a GIC, minimal benefit. Saving for a new car, no benefit.
Alot to people are not wealthy for a reason.
Many blame others for their lack of wealth.
They can’t see the forest for the trees.
Coming soon…..the million dollar semi in Whitby.
Seriously though I grew up a stone’s throw from there in the good ol’ shwa.
That is a lot of money for that, or any neighbourhood in Whitby.
Word is Yellen is going to dump another Trillion into the machine soon.
Bye bye middle class.
It appears with 15-20 potential buyers being left in the cold on every $1.2 million dollar listing (and often more than that many) that the housing demand in Toronto will continue for a long, long time. I said SFHs in Toronto would be $2 M by the end of 2016. I was not far off. One can assume a person who bids $2 M for a $1.3 M house probably needed to take on a nasty second to complete the sale. Or they are doing what many are doing now, asking mom and dad for an advance on their expectance.
NoName. thanks for that post yesterday.
—
I hope no salt with this part, and you are welcome.
As for buying 1 share in company that I work for, buy it if not for juicy dividends, any other reason is OK to.
Janet Yellen says the Fed is likely to raise interest rate this month if data holds up
http://business.financialpost.com/investing/market-moves/feds-janet-yellen-march-rate-hike-appropriate-if-data-holds-up
CHICAGO — The Federal Reserve is set to raise its benchmark interest rate later this month as long as economic data on jobs and inflation holds up, Fed Chair Janet Yellen said on Friday, in comments that likely cement a rate hike at its next meeting.
Several of Yellen’s U.S. central bank colleagues in recent days had also put a rise at the next rate-setting meeting on March 14-15 of the committee firmly in view.
“At our meeting later this month, the committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate,” Yellen said in prepared remarks to a business luncheon in Chicago.
talking about criminals:
http://www.cbc.ca/news/business/kpmg-offshore-tax-dodge-1.4002778
The amnesty offer, leaked to CBC News in a brown envelope, granted KPMG clients “no penalties” as long as they paid back taxes and modest interest.
As a condition of the May 2015 amnesty offer, the CRA itself demanded that KPMG clients not talk about it in public.
——————————-
1. Would it be fair to find out what their penalty is and refuse to pay higher penalty on any assesments by CRA?
2. Should we claim missed interests on our tax return due to Poloz theft/manipulating interst rates? How about claiming missed capital gains on potential hoouse purchases due to government missmanagement of CMHC?
It is not a crrime to propose it to CRA, lets see what they are ‘going to reply if 1 milllin people do it.
This detached home was listed at $1.285-million. It sold for $2.1-million – $800,000 over asking:
http://www.theglobeandmail.com/real-estate/toronto/escalating-housing-prices-in-toronto-leave-buyers-with-stickershock/article34172060/?click=sf_globefb
RE agents should be worried. Prices might be going up right now but if sales volume slows drastically as it appears it will, followed by a ‘correction’, well that’s going to hurt their bottom line.
But for the time being they can enjoy making mid 5 figure commissions for a week’s light work, at the most.
Sweet. Some smart financial advisor should be chasing them down before they blow it all.
#54 Smoking Man on 03.02.17 at 10:10 pm
No Hope I hear ya.
Confessions of The Smoking Man a day early.
NoName. thanks for that post yesterday.
When you have everything but want just a bit more.
Please note I am a confused serial liar, take from what I write here with a bit of salt.
My real name is Jim Stoj people at the tax farm know me as STOJ.
I have left out the remaining 12 characters of my last name, you know, identity theft and things like that. But you dogs are smart bastards and can probably figure it. Just please don’t post your big internet find on here, Identity theft is real. But sadly don’t think anyone would want mine, so go nuts.
Now what an amazing experience creating Smoking Man, Learning to write, fooling myself that I can make a living doing this.
Smoking Man is my total alters ego. I’m nothing like Smoking Man, Truth is I’m dirt poor at the moment, why else would I drive that truck. I’m a chicken shit when it comes to investing. God has trained me well over time.
Yes, Casinos, and the zest for life, I was diagnosed with terminal cancer years ago, so I figured I’m not going to outlive my money have fun, live for today so I went nuts.
Fk I’m still here. What an amazing wife I have, backs me 100% They don’t make em like that anymore.
The truth is god hates my guts. but I keep him so entertained he keeps me around, he’s truly a demented prick.
Every time I have ever invested a cent in anything, it goes south fast and I can hear god laughing at me from the heavens.
He is such a bad ass that anytime I make a call, the son of a bitch makes it happen, further torturing me. And I have made amazing calls and never bet them. Know your enemy is all I’m saying.
I paper trade forex and have helped a few dogs on here become millionaires. I’m not that lucky personally.
Well, smoking man took over my linked in account recently, Some kind of mental breakdown on my part. Years of building a great reputation down the toilet in a few keystrokes. No one on my contact list will ever hire me on contract again. I’m toast. broke, no fx account in the islands.
Do I blame anyone? hell no. I set out to be a gonzo writer by the encouragement of you blog dogs and I did it. My book is good, it’s great. But I should have planned a marketing budget. Now, the lefty loons will take great pride in mocking me.
Just know this, if I find out who you work for, and I buy 1 fricken share. God is taking your company down.
NoName. thanks for that post yesterday.
My place is mortgaged to the titts, what little I have left, I’m forced to sell early. 2018 is the peak.
I’m changing the name of the book to Deplorable Aliens, or something like that. There is a Dr. Win out there who will help me do this right. at least I will be able to buy cigarets and wine on you dogs making it a best seller by telling everyone you know how great it is.
Being a book writer doesn’t pay shit vs. a great code smith. But I culturally fked that one up. I’m still a great code smith that no one wants’s
Medical Smoke is so under-rated for killing cancer. Should have gone for chemo and I would have zero challenges or problems now.
Dr Stoj
__________________________________________
Please don’t tell us this was another lie re cancer.
You have my sincere sympathy Smoking dude for the cancer. My brother had terminal cancer and it was quite bad on the whole family. He went out with the family surrounding him to a better place. He did it his way assisted by meds and medical person. He couldn’t take it any longer so he made a conscious choice. It is sick insidious disease that mankind must eradicate from the planet.
Best wishes on the Winnebago ride across America.
I guess I qualify as an omnipotent seller, the lot severance closes in May. I will have a mid 6 figure to invest…can i come see you Garth? Can I bring the pup age 14…would like to impress upon him the virtues of planning.
Onf52
Anyone got investment ideas on how to bet against Canadian Housing?
It’s gonna crash, so what is the best course of action? Aside from selling your house, where do you invest your money?
#145 Self Directed on 03.03.17 at 5:19 pm
Short HCG, just like this guy:
https://www.vice.com/en_ca/article/meet-the-wall-street-short-seller-betting-against-canadian-real-estate
Euro Observer That article in Huffington Post is garbage – so many mistakes, who reads that rag anyway – I hope not people who want to get educated in financial matters.
Anyway, the only Paris Toronto is only more expensive than, is the one right here in Ontario. If you are talking about the capital of that unstable socialist republic in the heart of Europe, you can only look at something on the ground if you have 2 million Euros (another failing currency). Other than that, if you chart Toronto house prices against gold price you will find, remarkably, that they intersect pretty often the same moving averages, so they are pretty much in sync if you;re not too picky and take a larger time period (say 3-4 years).
US Fed rates are being raised gradually. Cover for BoC to stay put or advance on the coat tails of Fed. Watch the bond market for clues. If C$ debt is not attractive, nobody out there will buy it. BoC will not engage in stimulus or stealth QE. The trend is changing. Even ECB needs to act soon because inflation in Europe is creeping up. Much of Europe is paid on blanket labor contracts where an increase in the cost of labor is difficult when the inflation monster rears its ugly head.
The CBs all embarked on a journey in uncharted waters when they printed trillions from thin air.
Nobody can predict what is around the next bend. That is what it means to be sailing in uncharted waters.
Ross Kay must feel vindicated knowing that the market crash he has been calling for is now finally here, ten years later, and the losses are a massive 3% YOY in YVR. I’m sure at some point he will be right, and the market will correct, but you don’t get to play the seer when you’ve been wrong for so long. If I call for a stock market correction, starting today, that finaly hits in 2027 and reverts to 2022 numbers,does that make me a visionary? Would you call me correct for predicting an imminent correction that in fact took a decade?