“We bought a house in Oakville in 2013 for 506K,” Brian writes me. “We could sell that property now for 950K. I’ve done nothing to warrant that gain, just painted and a few minor upgrades.”
Sweet. Windfall profit. So, whaddya going to do about it?
“I’ve debated the idea of cashing out now and just buying a nice townhouse in the area for 500K. I’d be liquid then with a paid off home (overvalued at 500K but whatever). we are 36 with 2 young kids in school. They would be in the same schools with the move just with a smaller backyard, they can go to their friends houses for a swim if they want.
“We’d be freeing up 2k a month in mortgage fees, half of that could go to investments, the other half could go to lifestyle/travel. We already have pensions and savings plans for kids school. Any thoughts would be great.”
So I replied:
At what other point in your life could you make $450,000 in four years, tax-free, while reducing your debt and increasing your cash flow and future financial security?
What’s to debate? — Garth
And Brian replied:
“My thoughts exactly, why does everyone tell me it’s madness then? The fear of missing out on future growth?”
Now, I’ve no idea who this guy is, other than he reads the blog and is therefore (naturally) a superior being. High IQ. Likely brawny with rakish whiskers, confident dog, planning to rescue wildlife this summer holiday, work on his doctorate, then buy a Harley. Typical. Or, maybe he’s the normal Globe or HuffPost reader, incapable of acting on rational thoughts because he’s under the emotional thumb of his dominant MIL and nest-happy spouse. Because, you know, real estate always goes up.
Thus there are two kinds of people when it comes to this all-consuming topic. One group believes house price growth is infinite and only idiots would leave the table. The other (much smaller) group are astonished at the bubble, understand it’s irrational, assume reality will return, think Mom is a loon, and know they’re staring a gifty nag in the snout. Brian, for example, realizes his house made more money than he did every one of the past four years, and tax-free. He also understands what goes up can come down as easily. Especially in a world of rising rates, Trumponomics, a 74-cent dollar, pervasive house porn, epic debt and rampant financial illiteracy.
Speaking of property lust, Jamie’s just sold a business in the wild fringe burbs of the GTA, now wants to downsize and move to Hicksville. The boring house he and Dawn own cost them $650,000 in 2007. “I told the realtor I want two million for it,” he told me on Friday, as they prepared to list it Monday. But that day at noon, a bully offer – $2.3 million, after the agent yakked about the property in his office. Will he take it? No showings. No stress. No vacuuming.
Nope. “I’m not leaving any money on the table.”
Well, this will be interesting. Ontario’s government revealed Monday it’s on the verge of bringing in one or more measures intended to douse the market’s flames next month, making legends out of guys like Brian and Jamie. The premier calls it a “comprehensive set of plans” to deal with out-of-control house prices in the vast GTA area, which has now infected locals all the way from Prince Edward County to Georgian Bay to the shores of Lake Erie.
Among the possible moves: (a) a foreign buyer’s tax, like in YVR, although local realtors say offshore buyers are just 5% of the market; (b) a special speculation tax levied on people who buy non-principal-residence properties; or (c) the ask Ontario made to T2 before the last federal budget, to increase the capital gains tax on secondary properties in order to nail flippers. We won’t know if one (or all) of these emerge in some form until the Ontario budget, now expected in a few weeks.
If Vancouver is any guide – where a narrow tax on foreign buyers ended up collapsing sales within just a few weeks in an unbalanced, frenzied market – the Big Smoke could be in for a jolt. It might be the Ontario budget, or higher mortgage rates later in 2017, or the simple fact listings are disappearing because nobody can afford to move, but rest assured some catalyst will occur.
The house pumpers will then sit around on this pathetic blog, stare into the campfire and say, ‘why didn’t we see that coming?’
160 comments ↓
No one ever talks about the people that lost money during Toronto’s last crash.
“It Took 22 Years For Prices To Recover From The Last Toronto Real Estate Crash”
https://betterdwelling.com/city/toronto/it-took-22-years-for-prices-to-recover-from-the-last-toronto-real-estate-crash/
Sure, realtors assure the public foreign buyers are “only” 5% of the market, they’re snake oil salesmen. They said the same thing in BC, then government stats showed it to be up to 4 times higher!
“If Vancouver is any guide – where a narrow tax on foreign buyers ended up collapsing sales within just a few weeks in an unbalanced, frenzied market – the Big Smoke could be in for a jolt.”
OR, they could be in for a temporary lull and foreign capital regroups and adopts a wait and see approach and then jumps in again after less than 6 months….like they are doing now in Vancouver.
http://vancouver.24hrs.ca/2017/03/20/christy-clarks-house-of-cards-could-fall-as-housing-prices-foreign-ownership-rise-in-vancouver-victoria
The Vancouver plunge was over-rated as FOMO has kicked up, bidding wars on condos are now commonplace, and the limited supply of detached homes have kept prices high.
If Vancouver is any example, those in the GTA just have to wait six months to get their full money off the table.
It’s really quite amazing all of these bubbles have gone on faaaaar longer than anyone thought.
At this point so near to the end of the game, the risk of holding out for minor gains anymore is just not worth it.
Cost – Benefit analysis 101.
Garth, If the Foreign Buyers tax next hits the GTA, will the Hot money need a new home, like maybe Rural Saskatchewan and Manitoba?!
If Vancouver is any guide, this could go on in Toronto for several years yet, and things could go higher. Who said prices were about to crash in Vancouver 3 years ago, Garth?
Canadian Snowbird in the U.S.: Update.
Canadians are not the only ones facing this crisis.
Americans could see the worst real estate crisis since the last housing crash.
It won’t begin in the housing market. It will start with shopping malls.
I posted last week about being leery of U.S. REIT’s holding commercial shopping malls.
@ #5 Restie Furland on 03.27.17 at 6:26 pm
The hot money isn’t coming in anymore, around the world people are talking about Chinese buyers defaulting or selling. Realtor’s are playing FOMO with domestics that think rich money launderers are dumber than they are.
Hm…super rich asian money launderer…and you’re going to play them with that bungalow in High Park? Good luck.
(a) a foreign buyer’s tax
Bad idea. There’s only 5% foreign buyers so what real difference can it make? If you do, be prepared to backpedal on it like Christy is now doing in BC.
(b) a special speculation tax levied on people who buy non-principal-residence properties
Bad idea. Just enforce the tax laws as they stand.
(c) increase the capital gains tax on secondary properties in order to nail flippers
Bad idea. The existing cap gains laws are adequate for all investments. Why make property investment a special case? Even if it is flipping. Let the the flippers feel the other side of the coin when the SHTF as we know it will.
Houses are moving in my neighborhood in Calgary. Prices seem to be stable or higher than the boom. Optimism is picking up and there is a bit more work and no real sign of the depression it should be. Hiring is pretty much dead and office Vacancy is 30%+ and housing rentals are very cheap and easy to get. Its all very confusing. I’m just not sure who all the people that are paying such high prices for houses in this market. People must be a lot more optimistic about the future than I am.
Like I wrote yesterday, they’re going to extend rent control for properties built after 1991.
Dear Finance Minister, I can afford to buy $400000 DETACHED house and I want to buy in lawrence ave/Bayview ave area.
Can you please make tough regulations so that prices come down to this level and I can afford to buy in this area.
“why didn’t we see that coming?’”
=====================================
greed.
I remember as a little boy about 12 years old, watching the aftermath my Grandparents faced when they got caught at the peak of the market in the GTA.
As I grew up I came to learn that they signed on the bottom line for a new build and waited for the construction before selling their old home, just as the market rolled over. Carrying two houses that are dropping in value like a stone wipes you out pretty quickly.
They had no choice but to sell them both. Got out of one. The other, their realtor suggested they could do better than the offer on the table. Over 12 months went by before another offer came in. 30% below the previous one.
But people will still be surprised this time around when it happens again.
I always am amused by the so called 5% foreigners that spike up the prices; it only takes one, whether local or foreign to bid on a property with a stupid price to escalate the problem, what it comes down to and always has is plain bidding, one hopes to get the best price for one’s property, some would call it good business sense while others would call it greed. Red or Blue pill??
It’s always a choice of one whether to take it or not! It’s human nature!
OMG Brian, do it now!! Everyone else is broke so who cares what they think? In terms of potentially missing out on further growth, the townhouse could presumably still go up in value too. Think of the vacations you could take with your family by eliminating that mortgage payment and investing that windfall! No money worries!
I hope none of you is waiting around for properties to drop so much that you can jump in on a crash and double your money in three years or quadruple it in ten. You’ll never get the opportunity that was the past ten years ever again in real estate. Trying to repeat what exhibits A and B above or your cousins have done with real estate this past ten years is insane. You’re in for a lot of pain if that’s your expectation. Buying a cheaper property to live in is another matter. I just don’t think real estate will be the road to wealth going forward for our lifetimes except for those who are developers. Call me crazy.
Garth,
Brian’s story is fiction…your creative writing entry helps illustrate the “sell” and invest away from real estate assets.
Nothing here is fictional. I’m worried about you, however. — Garth
“No showings. No stress. No vacuuming.” And limited dealings with a REALTOR®? No brainer.
So I replied:
At what other point in your life could you make $450,000 in four years, tax-free, while reducing your debt and increasing your cash flow and future financial security?
What’s to debate? — Garth
——————————————————
Because one bird in the hand is worth more than 2 in the bush.
Endowment effect:
https://en.wikipedia.org/wiki/Endowment_effect
Soon as he gets liquid, he will probably blow it all. Thats the trend.
Only about 10% of the population have a large balanced portfolio Garth talks about. Most too scared to put it in there.
#9 Damifino
You should open your mind to the world of economystics. Your reply seems to indicate you are limiting your thinking to logic and reason. There is no reason to do this in either the realm of politics or economystics.
The ultimate goal of economystics is free lunch for everybody but no one working in the kitchen. This is accomplished through ever higher taxes and redistribution. Therefore, no excuse to either raise existing taxes or create new ones should ever be left underutilized. All opportunities to raise taxes must be utilized to the maximum extend possible.
It’s kind of like how we managed to sell the public on the idea that we need Carbon Taxes to save the planet after that movie “An Incomprehensible Truthy Sounding Idea” came out. In reality it is nothing but a consumption tax and nobody has the money to pay it but what a sales job! Well, same thing with the housing bubbles. It’s a great opportunity to impose more taxes by telling the people we are making housing affordable again! Can you see the brilliance? Raising taxes on houses will make them more affordable to the average buyer. I know people can’t see it from a strictly logical point of view, which is why we have economystics. It’s been working since 1913 so give it a try.
Eventually, the goal will be to have the combination of property, capital gains, and income taxes equal 100%. Yes that’s right, at tax time you will turn over 100% of your income, your house, your investments, your business, your cars, everything to the government for proper management by highly skilled economystics. It’s for your own good. The government will then “redistribute” these assets in the most socially just way possible such that we all share the wealth equitably. If your house hasn’t gone up in value to much you may get to keep it year to year, but if it has you must pay the market value to retain it by giving up your cars and retirement portfolio. This way everyone will have a house and grocery money too.
Of course we are still going to keep consumption taxes like the HST and Carbon Tax, or the HSCT as I like to call it. We want all money taxed 3 times so there is 3 times as much wealth to go around. Ultimately we would like to move that number higher.
Let’s take a business example of say a theme park like Disney Land. Well, it’s worth a lot, but the consumers don’t own it even though they are the primary users. So we tax Disney Land 100% and then issue ride tickets to all the population. Now everyone can enjoy the rides and nobody has to pay. It seems simple in this example but it is exactly how welfare, CPP, OAS, free health care, and other easier sells that are already in place work.
http://vancouversun.com/news/local-news/growing-number-of-migrants-renouncing-canadian-immigrant-status These guys didn’t get rich by being stupid.
This madness isn’t stopping anytime soon….don’t kid yourself.
If what you want to hear is “a crash is coming” keep reading. You are missing out on buying and nothing will happen. If things crash today, they are only going to 2014 or 2015 prices in the GTA.
Here in Oakville thing have gone more crazy than they were last year.
In Guelph nothing is selling over $450k. Most homes have been on sale for weeks!
Ontario’s government revealed Monday it’s on the verge of bringing in one or more measures intended to douse the market’s flames next month, making legends out of guys like Brian and Jamie.
the Ontario government revealed Monday it’s on the verge of making its stupidest decision. Ever. Basically it’s promising to regulate and control the housing market. As I posted before it’s not even a provincial problem: CMHC, bank regulations and interest rates: these are federal. What could go wrong? Well if house prices fall 10% the Liberals will not be re-elected. She thinks she has problems with electricity rates in rural Ontario! the people in rural Ontario don’t even have decent internet, they work hard and do without – they don’t organize!
This is sheer hubris!
#11 I’m stupid on 03.27.17 at 6:54 pm
Like I wrote yesterday, they’re going to extend rent control for properties built after 1991.
—
Can’t legislate private property to subsidize rent and at the same time tax rental income at 100%.
“Look! Warren has learned how to cut and paste! — Garth”
–==–
There you go Garth, I did it again, no hands this time!
I am so offended Garth, it is so much easier being a sycophant and avoiding this abuse. Instead of responding to perfectly reasonable points, you respond in an ad-hominem fashion that would make any leftist proud. Maybe you are used to people that truckle under your authority or something. Your arrogance impedes your understanding. If you could step down from your self appointed platform that blurs your perspective, you might see that this is a complex system that you have sorely fallen out of touch with. For example it is beyond bewildering how you can believe the likes of CNN news anchors are “paid to be accurate” as you put it. It makes one question your credibility. All but the most benighted reading this blog can see the stark contrast from your obvious deep understanding of most all things financial to your tabloid-like political commentary, which is strange considering your background. In fact when you first veered off on your anti-trump escapade I thought it was a joke and was not even you writing because you were previously so intellectually honest. I am amazed that you can not see this. This is probably why you are wrong on most current issues today like Brexit, the reasons for the rise of the bloviating, megalomaniacal, populist trumpster etc. I fear we are entering int a Hobbesian nightmare of sorts, identity group vs identity group, and in order to remedy this philosophical divide we are going to have to learn to really talk, listen and understand each other or it will not be pretty.
Now do not get me wrong, I love your blog and writing style and humour but you are not always right. I just wish you would incorporate some self reflection. You are one strange mixture of left and right that is for sure, Garth. Oh well, I guess you can not have everything. Here, I will give you a fitting smelling mistake for you to mock me with so at least I will be prepared.
Oh yeah, hey crowdedelevatorfartz, I have a nice warm dingleberry for you.
Sell, boys, sell, for heaven’s sake!
Brian, that’s a downgrade, at your age it’s not the way to go. Look at the amortization schedule, you’ve been soaked for interest for the last few years, continue and you’re seriously bringing down the principal. I have a mortgage and the majority of the payment is principal, so it feels a bit like paying yourself, but that’s only because I’ve had it for a few years. If you look at the schedule you will see more and more principal with the passing years. Downgrades and relocates to cheaper areas are fine, but it’s most often a one way ticket. 36 is too early to downgrade or cashing equity, I’d stay put
Paying over $2,300,000 for a home in Toronto isn’t that bad.
I was forced into Poloz’s secret Psychiatric facility after ranting that he expects Canadians to work for free under a 50-cent Loonie.
These are my dreams that I’ve been having when I was foreced into Poloz’s secret facility to re-educate Canadians about the benefit of 0% interest rates and a 50-cent Loonie:
I wish to tell you that it is worth it to invest in real estate, college, marriage and raising a family Toronto. Toronto is closed-society that punishes men for “street harassment” for saying hello on the street to a woman, so your wife will be less likely to be catcalled on the street. Your daughters will be taught to hate all men, while your sons will be drugged with Ritalin by a female teacher to prevent misogyny in adulthood.
I was educated by Anita Sarkeesian that Toronto’s culture is more sophistcated than the European history of Paris, Nice, London, Madrid, Montenegro, Berlin and Rome combined all together.
When I responded to her that Montreal is way more cultural than Toronto by far, I was labelled a Trump supporting misogynist who hates women.
When I questioned why Toronto is expensive, I was forced with Ritalin down my throat and yelled at that Toronto is a world class city thriving with investment and foreign purchases because Toronto is the best city in the world.
When I complained that people in Toronto Gay Pride were flaunting their genitals in public in front of little boys, I was labelled a homophobic like I was Jamaican.
I will obey Poloz, man up, work for free under a 50-cent Loonie and take on a hefty mortgage to marry a female from Toronto so that she can later divorce me to re-marry Poloz while 50% of my future wages will be garnished to pay alimony and child d support.
#Toronto _is_the_best_city_in_the_world_416_inthe6IX.
FLOP, glad you are back. I too noticed your absence.
Yes, The Famous Stampede City in the Valley of the Bow may have bounced off the bottom. 20% increase in sales YOY, an uptick in median and average prices, lower inventory and DOM nearly constant. AB optimism and spring. The sage policies of Notley in making conventional oil and gas more competitive than in our sister provinces of Sask and BC even with the 2 point increase in corp tax rates.
This one is for the “I don’t have a million “crowd.
This house just hit the market for 988k , assessment is 1.246
The trade off is that it’s old and on a fairly busy street.
Mountianview cemetery is opposite, so it should be dead quiet at night.
Only 5 km from downtown and a bus stop out front.
It’s there if it means that much to you…
M42BC
https://www.zolo.ca/vancouver-real-estate/5250-fraser-street
https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAwMjczMw==
Should read unconventional o & g. Fracking in the Montney play. No sales tax and disfunction on the right.
… Will the property bubble simply move on once again, say to Quebec?
Note: the 5 percent number people keep mentioning as foreigner-bought Pertains to the resale market. For new developments (condos, notably) it is double or triple. Obviously, this IS a major driver in fuelling the markets. As any economist will tell you, prices are set at the margin.
All housing bubbles are self correcting because eventually development catches up with demand. There is a reason parking is 1/4 the price in Denver as it is in Calgary even though Denver is 4 times the size. They built more parking garages as they call them (they don’t know what a parkade is).
The real estate bubbles in Vancouver and Toronto are the direct result of restrictive building allowances and zoning and will go away as soon as the necessary properties are built. Houses will turn into condos and condos into skyscrapers and that will be it, but until the builders and developers have extracted their billions they’ll keep paying city council to restrict development permits. It’s the way it’s always worked.
But, you might say, “Vancouver has limited land! And they aren’t making any more! Everyone wants to live in Toronto!” Well, to those folks I would say “Have you been to New York? How about London England or Paris?” They’ve managed to squeeze 3 or 4 Toronto’s into a smaller footprint in each case. And don’t get me started on Singapore or Hong Kong. Singapore doesn’t have quite twice the population density as Toronto but it’s close enough. So to those who say “they aren’t building any more land” I say bullshit. They just go up. Suddenly 1 city block is 50 city blocks. Where there were a few houses near a transit line now there are 30 stories of them. “They aren’t building anymore land” is rural thinking. It doesn’t apply to the urban environment.
Even in the sprawling suburbs of Calgary the idea that “they aren’t making anymore land” does not apply. In vast fields where once was one farmer and maybe a few hundred cows, there now are thousands of houses, several shopping malls, a fitness center, and transit (train) stations.
So the idea “they aren’t making anymore land” may be true from a strictly geographical viewpoint, but from a population density point of view it’s just a stupid thing realtors say. Unless you are talking farmland, it simply isn’t true. And even in farming, the amount of produce that can be squeezed out of an acre of land has gone up astronomically with the use of far less labor, so it isn’t even true there. I’ve been to Holland, right to Gouda actually, where the cheese and some Delft Blue comes from. Driving around, you don’t see the cows. They live in condos (barns) too. I don’t know that they like it anymore than a city dweller does but it’s how it’s done.
#10 I agree. Part of it is limited supply, but other than that I am with you, makes no sense considering Calgary is pretty beat up right now with not much chance of an upswing, in my opinion.
#2 AGuyInVancouver on 03.27.17 at 6:22 pm
There is also wack of business coming in from law firms that specialize in money laun…..errrr international banking.
Hey dogs, thanks for the usa info yesterday. Apperantly my account is in rehab. I might need to contact Turner Investments soon seeing that my accounts mind is fried.
No job for me. No job prospects. I’ll be forced to sell Shlong Branch. My last million. 12 more months I’d get another 400k pisses me off.
Better to put it in Garths hands than my losing streak of late. Lost all my confidance.
http://www.yukon-news.com/news/yukon-hotel-sued-over-alleged-multi-million-dollar-immigration-scam/
…and he can cry if he wants to (sorry Lesley Gore, wherever you are).
#26 Warren – the lagging indicator
I don’t agree with everything he says either but Garth is funny as heck, gives great investment advice and there is learning from many in the Comments (and some are so out there that there worth reading just to make yourself feel good).
You can always tune to another channel.
I tune in every day and glad for it.
Warren…such big words. That must make you right.
FYI…fun fact about CNN, both Mika B. and Joe from morning joe show were guests at New Year’s Eve party at Mara Largo this year.
Do you know what separates the winners from the losers?
Winners always do what’s in their best interest no matter what others believe.
Losers know what needs to be done but don’t have the courage to act.
We’ll see which one Brian is! Please keep us informed!
My mother is a loser! She had an offer 2 weeks ago for 1.7 million and turned it down because she changed her mind and delisted her home. Over 60 widow with a scant pension and less than 300k saved. SMH
Yup.
And to truly impress the Economists, it is called:
The Law of Diminishing Returns
#29 I’m Not Poloz
We have a loosely organized support group for people like you (and us) my friend. It’s called MGTOW for short and “Men Go Their Own Way” for long. Most of it is on YouTube. Prepare to be depressed if you venture in but only for a while, freedom awaits.
When I got divorced, and that was a long time now very few cars survive that long, I eventually came to the realization that my STBX (soon to be ex) was not running the same fuel in her brain that I was, she was marching to a different drummer and felt that all of woman-kind’s problems were the result of men and thus all of her problems must be because of me. Well ok, maybe in my case it might have been true but I don’t think it was so for all women or men.
Anyway, with the help of a counselor and my very good divorce lawyer I was eventually persuaded that the best route was to grant her what she wished and that the likelihood of her changing her mind was low. Anything I did to save the relationship would be construed as manipulation, even if I gave up drinking beer. Thus, I granted her divorce from one man. We’ve had relative peace since.
Today, what is happening is that all western women are divorcing all western men on mass. Well, I see no choice here either. If they don’t want us, stay away and buy a Harley. Since 1905, it’s been the icon of male freedom. I don’t have a Harley anymore but I have 2 Jap bikes and they serve the same purpose for those on a budget. Harley riders will always look down on you for riding Japanese or European steel, but not as much as they look down on those who don’t have a bike at all. When push comes to shove, they treat you like a younger brother.
#10 Mr Schadenfreude – Interesting, I’ve yet to read anything explaining why Calgary’s residential RE market didn’t totally collapse (along with commercial)in the aftermath of oil plunging. What theories are being circulated about it? How did all those laid off employees afford their mortgage payments?
I think I’m at Seneca Aligany in Salamanca.
This tune on the ear buds with a half finished cigarette hanging from my mouth and only ice cubes left of my 9th glass of double Jack Daniels.
It’s heaven.
https://youtu.be/XFkzRNyygfk
For those who don’t believe the crash is real and or the timeline for an eventual decline is much longer then many (many) are now predicting, no problem roll the dice and take your bets. It’s your life.
BTW could be wrong but I believe Garth said it would a slow melt vs sudden 2008 style crash south of the border. I’m sure he’ll go over this again as drama unfolds here at home.
The big short: Speculators turn ugly on the loonie in wrenching shift
From 1.6B long to 1.8B short the last week
http://www.theglobeandmail.com/report-on-business/top-business-stories/canadian-dollar-loonie-cadusd-usdcad-euro-oil-donald-trump/article34428937/
#37 Smoking Man on 03.27.17 at 8:14 pm
Hey dogs, thanks for the usa info yesterday. Apperantly my account is in rehab. I might need to contact Turner Investments soon seeing that my accounts mind is fried.
No job for me. No job prospects. I’ll be forced to sell Shlong Branch. My last million. 12 more months I’d get another 400k pisses me off.
Better to put it in Garths hands than my losing streak of late. Lost all my confidance.
..
I thought you worked in Boston making real $$$ and had moved to ecuador to live off your billions of untaxed forex winnings. Sell your million dollar Muskoka cottage.
Deleted.
#42 I’m stupid on 03.27.17 at 8:21 pm
Do you know what separates the winners from the losers?
Winners always do what’s in their best interest no matter what others believe.
Losers know what needs to be done but don’t have the courage to act.
We’ll see which one Brian is! Please keep us informed!
My mother is a loser! She had an offer 2 weeks ago for 1.7 million and turned it down because she changed her mind and delisted her home. Over 60 widow with a scant pension and less than 300k saved. SMH
…..
That’s why she named you stupid. This pig is not done eating yet.
Another 20 percent before the hogs belly explodes.
Your inheritance will come. Be patient.
An infants tee shirt, wrong color, never used, for sale.
Let the bids begin.
” I’ve yet to read anything explaining why Calgary’s residential RE market didn’t totally collapse (along with commercial)in the aftermath of oil plunging. “
It did. Discounts of 20-30% from peak (2011) prices are not uncommon in Calgary these days. And Calgary RE wasn’t all that much oil driven (very few people in Calgary work in the O&G industry!), but rather, driven due to the RE bubble itself in the city.
In places that are truly O&G driven, like Fort Nelson, RE prices have utterly collapsed. But even Calgary has seen quite significant price decreases since the 2011 apex.
Not directed at Garth, but to others in the comments section. What’s all this nonsense about a big recovery in Vancouver?
I’m looking at a 20.8% DECREASE in price from last years average, and an 11% DECREASE in price over the last month…
https://www.zolo.ca/vancouver-real-estate/trends
@#26 Warren the Indignant Laggard
One word for your rant……….
Paragraphs
Have any of you dogs ever tried to untangle a set of ear buds hammered. It’s almost inpossable sobar.
I did it…..
I deserve a Nobel price.
DELETED
Biography
https://www.youtube.com/watch?v=SmVAWKfJ4Go
#51 Mark
So Calgary isn’t oil driven? Seriously?
Prices are sticky because more people saved than some might have guessed, and people have used up their bullets trying to wait out the drop. Also, severance packages were actually decent.
There are a lot of people trying to rent houses out rather than sell them, which limits supply and keeps house prices somewhat higher. Some of the inventory coming onto market now is very good quality in nice neighbourhoods, for prices you wouldn’t have dreamed of 6 years ago.
But saying Calgary isn’t oil and gas driven is just totally ridiculous. That has to be the dumbest comment I’ve ever read on this blog. Ever.
Alberta still has a couple things going for it
1) Net population inflows (from SK MB and Int’l)
2) Highest participation rate in the country
3) Highest weekly earnings
Also just because the average price stays the same does not mean that last years average house is the same as this years. If you are still employed and your budget is 500K you might just buy a nicer, bigger house, in a better neighbourhood for 500k.
Lights off on the buds right now, been cut off. Indians setting the limit of the last one.
https://www.youtube.com/watch?v=u9Dg-g7t2l4
Go with the gut. ..
AS THE OLD SAYING GOES ON WALL STREET…….
BULLS make money, BEARS make money….
But PIGS always get slaughtered!
Attention millionaires, now you too can live in Schlong Branch alongside Dr. Smoking Man.
Realize your lifelong dreams with this little sht bungee:
https://www.realtor.ca/Residential/Single-Family/17825512/58-ASH-Crescent-Toronto-Ontario-M8W1E6-Long-Branch
Originally designed for the factoryman returning home putting his feet up in front of TV with beer and emitting an almighty belch, now it awaits a repurposing your “forever home”.
*Not a millionaire? Ask about our Lifetime Debt options.
I don’t see the problem…. If foreign investment is ONLY 5% then who cares is they implement the tax. It shouldn’t even make a ripple in the numbers…..
But……
What it did in Vancouver is make investors (local and foreign) pause for a moment to see what the effect will be. The smart investors decided to wait and see, and check out the other desirable markets like Toronto.
If Toronto implements this tax, they will have investors pausing for a moment too. Then watch what Calgary’s market does…… Then we will get the head scratching regarding why the Calgary market is going through the roof.
When you tose the towel in of pretending to be a normal.
Have this one on the buds.
My favorite.
https://youtu.be/tAGnKpE4NCI
DELETED
This Jamie guy’s already infected with greedlust. To the point where he would never ever be happy with what he gets for his overvalued house. He will always second-guess himself , did he sell too soon ? Only if he waits too long and sells in a panic in a down market and looks back on the money he left on the table previously will he get what he deserves. Sellers like this make me sick and worried about my children’s future.
My sense is that the majority of people in the GTA feel that house prices can only go up. I don’t know of anyone else that I work with who believe that there will be a correction. ( I work with many educated Health professionals in a hospital) They have all bought houses, new vehicles and seem to have lots of money to spend. Probably borrowed money. Mind you, most of these people are Millennials.
I myself, am starting to wonder when this craziness will end. I also think that speculators and real estate agents have made lots of money with this ongoing bubble that never seems to burst. These speculators are becoming our one percenters.
They prey on the greater fools, of which there seem to be lots around.
I really wish this correction would hurry up and perhaps ” zap” some of these speculators.
#52 Wog. It’s about time. I hope your right. According to someone named Auzzie Jurock in Vancouver “prices are rising everywhere” but notice in his newsletter that Vancouver is not mentioned only the outskirts of Vancouver. More and more people are refusing to buy from greedy sellers and greedy agents, buying further out continuing to be influenced by realtor spin.
People like Garth, Ross Kay and a few others seem to be absent from mainstream media. Figures!
https://youtu.be/5DuRVp3S2G
Fk
Why wouldn’t people think houses appreciate forever? That chart shows that have almost every year for the last 2 decades. Even if the do go down they recover within a couple.
#34 NonPulsed
Speaking of density, Vancouver is a nature preserve compared to many cities around the world. Vancouver has a population density of 802 people per sq. km. Compare that to New Delhi at 11,300 and Manila at 43,000 people per sq. km. Vancouver has a ways to go yet. Shortage of space? Last time I was there and looked skyward, I didn’t see any. Realturds have been singing the same song since I can recall in the 70’s.
Discounts of 20-30% from peak (2011) prices are not uncommon in Calgary these days.
Prove it.
And Calgary RE wasn’t all that much oil driven (very few people in Calgary work in the O&G industry!), but rather, driven due to the RE bubble itself in the city.
Oh my goodness.
Mark is the only person with a worse track record than the average bear on this blog.
My feeling is people in the GTA, save for a few rational souls, have forgotten what risk is. As they say, you can practice crash landings in the simulator all you want, but you’re likely to feel different when the real thing occurs. The problem here is that few have even thought to try the simulator.
I’m speechless. 5 long hours and no one has commented on the bombshell news of Home Capital Group firing it’s CEO Martin Reid?!
http://www.cbc.ca/amp/1.4043174
OSFI is uncovering major irregularities, if you want to call it that. Stage 3 is very serious stuff.
Here we go.
Why work when you can just flip property!?!? Our government has proven that they are committed to keeping this bubble inflated! Why work hard!?! If you have been working for an hourly wage in the past 15 years then you are a fool! Property flipping is where it’s at no need to have a job… Ever! Just buy a house in Vancouver or Toronto and watch it appreciate!
All these years I’ve been thinking that markets are free! LOL! So silly! I don’t even know why I bothered to run this small business! Should have bought 5 houses!
#58 Still employed in AB:
Add a 4th factor. Lowest taxes in the country.
My bet is the Sousa will do nothing. Just say that he will commission a report on what exactly is causing the spike in real estate prices in the GTA , then hold a few meetings to discuss the report before taking action.
The Boy Wonder’s gonna get us all stoned so we don’t realize what a bad job he’s done.
He hopes we’ll forget about his broken election promise about electoral reform.
His misplaced sycophancy towards China has continued the trend of Canada’s trade deficit of $46 billion dollars with that country:
http://news.nationalpost.com/full-comment/kelly-mcparland-twenty-five-years-of-courting-china-has-canada-shouldering-a-46-billion-trade-deficit
All those Canadian companies, technology, jobs and resources being shipped to China and that wealth coming back and buying up Canadian real estate, causing the current spike in prices.
He hopes we’ll not care about his jacking up the national deficit and debt, just like his father did.
He hopes we won’t care about a soon-to-be .55 cent Canadian peso.
Because the Boy Wonder hasn’t a clue about economics, the business world, trade, technology, innovation, making a profit, living within a budget, working hard to reach a goal. While Trump’s policy is “America First”, the Boy Wonder’s policy apparently is “Canada Last”.
You won’t sell for 2.3M?
What a dummy!
Sell sell sell and get your agent to cut his commission in half or find someone new. Duh.
#61 TurnerNation on 03.27.17 at 10:03 pm
Attention millionaires, now you too can live in Schlong Branch alongside Dr. Smoking Man.
Realize your lifelong dreams with this little sht bungee:
…………….
50 foot lot for 999?
What?!? Why so cheap. Is sh long branch in Manitoba.???
In gritty east van this goes for 2+.
In the other half of the city it’s double that.
Why ,after such a run , is TO still only half of van’s prices….
………
So here’s what I’ma gonna do..
Sell the 50′ lot in van ….
And buy 2 of them in dongbranch.
Smokey I’m coming over with weed, JD and 2 cartons of players. Look out!
Ps my kid just came back from a school trip to peru. She brought back a big box of coca leaf tea. (Shhhh) I’ll bring that too!
I feel the need to interject some rational thoughts about the housing market in the GTA…
All those condo towers need to come online to help balance out the market. Not how you might be thinking though….
See, Toronto will need those high perches in order for the single family home purchasers of the last year to jump off of when they realize they might actually be stuck with the mortgages they took on, especially as rates rise. As for the condo buyers, they’re already set to do the right thing when the time comes.
For those who think we cant have a crash, I offer this bit of news:
https://beta.theglobeandmail.com/report-on-business/home-capital-terminates-chief-executive-martin-reid/article34440301/?ref=http://www.theglobeandmail.com&service=mobile
I dont know how accurate The Big Short was, but it said only 8% of homes failed to meet their mortgage payments causing the crash… how many originations did HCG have since 2014? I know banks have tightened up…
DELETED
#65 diharv on 03.27.17 at 10:39 pm
This Jamie guy’s already infected with greedlust. To the point where he would never ever be happy with what he gets for his overvalued house. He will always second-guess himself , did he sell too soon ? Only if he waits too long and sells in a panic in a down market and looks back on the money he left on the table previously will he get what he deserves. Sellers like this make me sick and worried about my children’s future.
DON’T WORRY.
IF YOU DON’T ALREADY OWN PROPERTY YOUR KIDS WON’T HAVE ANY FUTURE.
@Brian
Don’t worry about what other people are telling you, do, what you feel most comfortable with. This GTA bubble won’t go on forever. I watched the same thing happen from 1986 to the peak of March 1990 in Toronto & yes it ended badly. On the way up knew of people buying & flipping mutiple houses & knew of people losing homes in after the crash. Doesn’t matter if you live in a detached or a townhouse, I’ve lived in both. What matters is living in a good area with good schools & parks for the kids & having enough money to enjoy doing things with family without a lot of financial stress. Sold my SFD last year in Toronto, moved 10 minutes outside of Toronto to a family neighbourhood with less traffic, closer to the beach & transit & have money in the bank! What more could you ask for.
#77 Suede on 03.27.17 at 11:39 pm
You won’t sell for 2.3M?
What a dummy!
Sell sell sell and get your agent to cut his commission in half or find someone new. Duh.
You;re a renter, aren’t you.
May the lord have mercy on your soul.
good night dogs
https://www.youtube.com/watch?v=T6_vIZHMAAQ
7672
We are all screeching to eternity.
My Dad’s turning 70, my friends 85 yo dad just died.
Be carful what your family gives, and what they what
Do the math before loving your Mom
Deleted
#69 Ronaldo
You spelled my handle wrong. Other than that I thing we are on the same page. I spell stuff wrong now and then and every time so peace brother.
”although local realtors say offshore buyers are just 5% of the market”.
Lol, that’s a dishonest salesperson saying that so triple it to 15 %.
On the other hand Garth swears it’s only 5%.
Who do we believe? Thanks for not approving any comment I make on this topic, real robust discussions here….
#69 Ronaldo
Although I did just do a bit of wikipedia and they say they population density of Vancouver is a little under 5500 people per km^2. We need to fact check these things of course or Garth gets mad at us. But I think that number is for Vancouver proper and not “greater Vancouver”, including Burnaby, Surrey, North Vancouver and all the other burbs. Vancouver is not like Calgary, in that it is not one city, surrounded by farmland and acreages.
Sales in Vancouver aren’t tanking.
That’s BS
Real Estate is religion in Canada and to ALL Canadians.
Government set the table with 0% down, 40 year amortisation, Free money, ultra low interest rates, get a house and get home equity line of credit and Canadians have been binging for years and years and years and now it is money see- money do.
Why do you think any recent grad wants a huge mortgage right away. Because Real Estate ONLY ever goes up. It really is different this time.
This is belief, like the belief that if I have 20 Dollars (which real value is nil) in my pocket, I can buy a 6 pack with it in the liquor store- that is how strong the belief is in Canada.
Canadians are debt pigs. Plain and simple. I bet the big banks just lick their lips when they get together. “ok, they are all hooked, what can we shove down their throat now?” Increase line of credit, give more access to debt, raise credit card limit, what else?
Monkey see- Monkey do:
Boomers, easy jobs, steady wage increases, sick defined pensions, lived in an environment of 35 years declining interest rate cycles, bought homes to live, voted in politicians they wanted….
Now laughing all the way to the bank. Funny that most think they were super smart investors because they simply did the norm and bought a place to live…..
Laughing further as millennial and fools think they can do the same thing by buying a friggen 450k apartment or 1.2 million house with 80k average salary.
Our world is not the Boomers world. Competition is fierce for decent jobs, wage growth zero or negative, immigrants with 2 degrees and a doctorate competing for same jobs, crappy pensions, interest rates will start a new rising 35 year cycle (remember that a few years), all at a time when
Canadians only want debt and real estate. and yet Prices keep going up, why?
Real estate is the be all and end all of Canadian success. Sad.
WOW, you have 6 houses, Wow you own 2 “investment” apartments (negative cash flow), everyone tapping each other on the back right now cause they are so smart as prices rise.
IF they don’t, even for a year or two, I would say even flat prices will hurt lots of speculators, falling prices will demolish the economy.
So it continues…policies will stay in place to keep party going as long as possible. Economic fundamentals don’t matter in Canada.
https://www.youtube.com/watch?v=5Nrv5teMc9Y
Garth in the left
Have a few friends in the ca banking industry that want this to end
https://www.youtube.com/watch?v=MYArZ9EUUaY
I find it weird that Garth singles out the Globe and Huffpost in this post as adding to the house lust in this country. I find these two outlets to be the most bearish on housing. Especially Globe and Mail which actually researches and investigates what is going on. Articles from Kathy Tomlison have done more to expose and create change around corruption, impotence, and fraud (significant in BC) that has brought about actual red face embarrassment from said practicers and some tangible change.
Just my observation.
I will give the you the truth, if two of you on earth agree about whatever you ask
All I ask is that you but bow down to me, just a small thing for everything you want
https://www.youtube.com/watch?v=IloIoGj5Mj0
#22 Economystical
Economystical is the only blog dog that has posted a comment that reflects something approaching the reality of our collective economic situation. Sad, but true.
Smokingman
That’s why she named you stupid. This pig is not done eating yet.
Another 20 percent before the hogs belly explodes.
Your inheritance will come. Be patient
That statement proves my point about winners and losers. Homes could very well increase 20% or they can become illiquid. No ones a fortune teller so you must act in your own best interest and going into retirement with $2million is better than a home and 300k liquid. I’m not thinking of an inheritance, my dream is that my mom blows it all and enjoys her life.
#22 Economystical on 03.27.17 at 7:19 pm
#26 Warren – the lagging indicator on 03.27.17 at 7:36 pm
#29 I’m Not Poloz on 03.27.17 at 7:47 pm
Thanks for all the belly laughs this morning. Are #22 and #29 the same person?
My realestate buddy in newmarket told me yesterday that a new townhouse build in Newmarket is being developed and sold, someone just scooped one up and sold the piece of paper on CONSIGNMENT marking it up already 100k and taking their cut for standing in line! A piece of paper for 100k more! Apparently this is the type of thing that happens over in China.
If this is the case, we all should be buying more realestate!
That is an ‘assignment’ sale, not ‘consignment.’ It is perfectly legal, but the proceeds will be taxed as regular income at the seller’s marginal rate. — Garth
en masse (not on mass)
@#62 April
“someone named Auzzie Jurock in Vancouver “prices are rising everywhere”….
*******************************************
I hate to rain on your flowers April but Ozzie Jurock has been pumping real estate in the media for at least 35 year that I know of.
However, You are correct. He hasnt specifically pumped Vancouver real estate in a long long time in his “deals of the week”.
During the crazier days of the Van prices I recall one of his “deals of the week” was a gas station for sale in some small hickville in eastern BC about 400 miles away.
He’s a real estate huckster….nothing more
– This isn’t 1989. Debt is now our culture (college kids are handed credit cards as part of student loans).
– Unprecidented overseas interest, and into spec condos.
– Record low rates even if/when they rise by 1-2%.
– People today still vying for houses they know are overvalued.
– Any GTA area tax and drop in prices only will put homes ‘on sale’ into more frenzied buying activity.
– Pushy and overfed boomers and funding their kids: “Why you know buys da house?” mentality.
Working on my undergrad program project in Herdonomics (with minor in Lesbonics).
M41ON
@#72 Sunnyside
“OSFI is uncovering major irregularities, if you want to call it that. Stage 3 is very serious stuff.
Here we go.
********************************************
Yes indeed.
Here we go…….
Unfortunately it took insane housing prices and lending practices in Toronto to let the 800lb sub prime gorilla out of the room.
Apparently other major Canadian cities arent worthly of govt regulatory oversite.
#10 Mr Schadenfreude on 03.27.17 at 6:50 pm
“Houses are moving in my neighborhood in Calgary. Prices seem to be stable or higher than the boom. Optimism is picking up and there is a bit more work and no real sign of the depression it should be. Hiring is pretty much dead and office Vacancy is 30%+ and housing rentals are very cheap and easy to get. Its all very confusing. I’m just not sure who all the people that are paying such high prices for houses in this market. People must be a lot more optimistic about the future than I am.”
At or near the bottom of a slump, there will always be a few persistent idiot floaters. Always. These are the ones who’ve drunk so much kool aid that they are completely and irreversibly blind to common sense. They look like most everyone else, some have money, many a good education, but have lost at least a few marbles to endless realtard bs. Don’t get confused by them.
The US of A is showing solid fundamentals.
http://scottgrannis.blogspot.ca/
UK regulator contacts lenders on ‘Laundromat’ money-laundering claims (28 Mar 2017)
Russian money and the ‘Global Laundromat’: what banks said
Banks were asked if transactions had raised red flags and if they were cooperating with Moldovan investigators. (uk guardian)
British banks handled vast sums of laundered Russian money
https://www.ft.com/content/534d611f-3cd8-3ce9-9a76-2cadb3a5d011
#41 Free Bird on 03.27.17 at 8:20 pm
FYI…fun fact about CNN, both Mika B. and Joe from morning joe show were guests at New Year’s Eve party at Mara Largo this year.
—
They’re not on CNN, they’re on MSNBC, smart guy.
#49 Smoking Man
That’s why she named you stupid. This pig is not done eating yet.
Another 20 percent before the hogs belly explodes.
Your inheritance will come. Be patient.
********************************************
Another 20%? Hmmmm. There are going to be a lot of headwinds for the rest of this year and 2018 that won’t allow that to happen. Especially in the west end of the 905. The 416 might hold up relatively though..until it doesn’t.
Time in the market is more important than timing the market.
Does this apply to housing? Yes. However, buying at peaks instead of troughs is what a fool does. It’s risky to buy now of course, but if you own your house in full with no mortgage, it is different.
As it is in investing, buying and holding is a fantastic strategy in both real estate and investments. The more you sell, trade, or move, the less your ROI.
Even if the market sank 50%, if you have time, it will recover eventually.
On a 950K valuation, the game theory breaks out, that they could sell and the market rises, they could sell and the market sinks, they could keep and the market rises, or they could keep the home and the market slides.
With the costs of moving, the best answer is to stay, get a line of credit and invest the equity. Best of both worlds really.
Buy reasonably safe, income producing investments and enjoy a good return on your assets without selling/moving, paying a realtor, land transfer taxes, etc.
#19 Yuus bin Haad on 03.27.17 at 7:15 pm
““No showings. No stress. No vacuuming.” And limited dealings with a REALTOR®? No brainer.”
Excellent post, as usual.
#51 Mark on 03.27.17 at 9:09 pm
Discounts of 20-30% from peak (2011) prices are not uncommon in Calgary these days.
This is false.
Post evidence or change topic.
Thx for trying
Sounds like Home Capital Group caught up in sub prime scam. This is all coming to light
It always amazes me how everyone is an expert when it comes to real estate. So what you’ve bought a house. Develop millions of sq ft of commercial space (as I have) bought, renovated and sold multiple homes (as I have) and build 100’s of hi-rise units (as I have). You will quickly see it’s not for the faint of heart. The ONLY reason we are in a “bubble” (not sure I would call it that, but for lack of a better phrase I’ll go with it) is low interest rates. Supply has not been able to keep up with demand (red tape is THE reason). As soon as my RSP portfolio doesn’t get the 9.8% adjusted cost after fees, I’ll be worried. There’s just WAY too much money out there looking for a home. It’s that simple. Capital, equity and construction take-out financing is roaring and has been for years. When that starts to contract, get worried….hasn’t happened yet. Before 2008, we had 6 to 9 months warning. Spring of ’08 financing markets contracted. Call to action for government? Not likely. They have ZERO control over this and anything they do will add to the red tape and make supply diminish even more.
#29 I’m Not Poloz on 03.27.17 at 7:47 pm
So I am not the only one who feels like in a mental institution in Toronto (like Jack Nicholson in ‘One flew over cuckoo’s nest’). So sad for the kids with this school system.
I do Not believe realitors, I believe in me, I was forced to sell, or be in debt, and who wants to pay to an X, All I can say I keep waiting, and I still see the same old dumps for sale, asking way to much, with realitors, so I will still wait, no hurry, and I will have my pick. ALL in due time
Home Capital shares plunge following news that CEO has been terminated
http://business.financialpost.com/news/retail-marketing/toronto-based-mortgage-lending-firm-home-capital-group-fires-ceo-martin-reid
Houses are moving in my neighborhood in Calgary. – #10 Mr Schadenfreude
IM(H)O this is only denial, or one of the last bubble phase before the big slide.
https://people.hofstra.edu/geotrans/eng/ch7en/conc7en/stages_in_a_bubble.html
Meanwhile thousands of good jobs are being lost, offices are being vacated, foodbanks are booming and UI benefits are running out. As proven with their budget the feds are insensitive, they cut subsidies for exploration without giving anything in return.
Albertans have been told for month now that this is just a cycle and things will soon come back to «normal», at some point they will realize that this is BS, something has truly changed.
“Lethbridge and Sylvan Lake population growing faster than Van” Slightly misleading but a heads up for sure.
http://www.westerninvestor.com/news/opinion/are-people-fleeing-vancouver-census-suggests-exit-trend-becoming-a-stampede-1.10067536?rew.ca%2Fnews=rew.ca%2Fnews
Does debt in Canada have to be repaid?
Serious question.
That is a serious question because 22 Trillion in personal debt is insane and when I ask other Canadians (I m outside the country for a while now) they tell me stories of co-workers and people they know,
“oh, ja, its normal, people carry massive credit card debt, mortgage debt, use home line of credit on bank said “equity” even when they still owe 80% mortgage, borrow from one credit card to pay the next”… I can go on..
Can someone explain what I am missing? Is the plan to live like a king on borrowed money and then go bankrupt?
I am just trying to understand the mentality. Does debt have to be paid back in Canada?
Is it really just about the monthly?
Will the government just forgive debt obligations?
Again, if someone can explain how most people are thinking there I would appreciate it because I don’t understand it and I would like to.
– it is either debt or everyone is super rich. Then the government of BC has to update their average household income stats because from what I see, 700k+ houses in lower mainland still equate to 8:1 earning to house prices and 3-1 is considered affordable.
Pink Pollen falling in West Vancouver.
These guys got caught speculating,paying 4.6 m for this 1965 build last June.
Been trying to flip it for a couple of months ,but West Vancouver average sales price is down over 23% yoy,and so you can see where this is most likely headed.
I would have ran when I saw the Camelot sign…
M42BC
1470 Camelot rd, West Vancouver
Jan 25:$5,188,000
Mar 22: $4,998,000
Change: – 190,000 -4%
https://www.zolo.ca/west-vancouver-real-estate/1470-camelot-road
https://evaluebc.bcassessment.ca/property.aspx?_oa=QTAwMDAyOUNHWA==
You know, when you boil it all down; it all goes back to stupid politicians, and most importantly – stupid voters. We really do get the government we deserve, evidently we deserve to be punished. Those that will be paying for Trudeau, Wynne, Notley et al have no clue that this will be their fate – and their kids fate. Hell most of said folks probably voted them in.
That’s right – Canada is signing long-term irrevocable, majority backed covenants in greed and stupidity. Any Politician that stands up to run on fixing our swan dive will be obliterated by Canadian voters. You want to win the election? Clam up about the debt, deficit, interest rates, and the economy… …for starters.
To those with ears to hear, I say once more: Get out of debt, manage your taxability and exposure to government with ferocity. If you don’t like where we’re headed – don’t volunteer to fuel the machine driving us there. The day looms where we may be looking at some of the same decisions Greece had to make (or were Forced to make) in regards to revenues and spending. These days, folks over there roam the woods for berries to feed themselves – nice.
The Gig economy, millions of min wage part time service jobs, an untold 10’s of Billions worth of stalled, or dead resource extraction projects, will all pile drive revenues into the ground. A portrait of angst painted over a canvas of mega-debt and greed inducing million dollar Urban compost heaps. Maybe framed with a B.A.T. before too long. Business investment is dying, no one cares.
Get ready to get gutted by your friendly neighborhood tax collectors – it’s coming…
The price of Home Capital Group (HCG) dropped from $27.71 to $25.70 (7.25%), but it now seems to be treading water.
“‘Several’ Home Capital directors, officers served with OSC enforcement notices” — FP
http://business.financialpost.com/news/fp-street/several-home-capital-directors-officers-served-with-osc-enforcement-notices
http://www.bnn.ca/time-for-the-adults-to-act-short-seller-on-home-capital-group-1.708248
Independent investor and well-known short-seller Marc Cohodes is reiterating his call for greater regulatory scrutiny of Home Capital Group (HCG.TO 7.07%) in the wake of the mortgage lender’s surprise firing of Chief Executive Martin Reid. In an interview on BNN, Cohodes, whose allegations of impropriety at the company have not been proven, called for a full investigation of Home Capital.
“It’s time for the adults in Canada who regulate and oversee this company to take action,” he said. “[Home Capital will be serious] when they hire outside legal counsel to do a full internal investigation of what’s really going on there.”
#101 – I don’t know how you think your raining on my “flowers”. I happen to have seen his weekly newsletter and that’s where I got the info.. I totally agree with you regarding this man… “a real estate huckster”
JIMMY!
he’s a bit of a nutter, but good for him, big Jim Pattison is donating 75M to the local hospital.
“It’s normal, people carry massive credit card debt, mortgage debt, use home line of credit … even when they still owe 80% mortgage, borrow from one credit card to pay the next…
“Can someone explain what I am missing?”
The best explanation I’ve ever heard on this topic has been attributed to Albert Einstein:
“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”
#123 bdwy sktrn on 03.28.17 at 1:03 pm
JIMMY!
he’s a bit of a nutter, but good for him, big Jim Pattison is donating 75M to the local hospital.
————————
“big” Jim Pattison?
He’s a tiny, tiny greedy human being.
Personably responsible for half the province living on minimum wage.
Time to get a better role model.
Let’s talk in 20 years when the guy will be stuck in his townhouse in Oakville, the ‘windfall’ long gone…. or, if he’s really disciplined, perhaps quite intact while he’s watching the market every day still hoping to make the move back up without paying more than he got when he cashed in.
If he gets very, very lucky, once in two generations lucky, he may get back into his old house at a lower price, which after adjusting for costs will net him a (place right-hand pinky finger at the corner of the mouth) …100k gain! Maybe even 150K. Wow!
“#101 – I don’t know how you think you’re raining on my flowers.”
I think it had something to do with the saying, “April showers bring May flowers.”
Am I right, #101 crowdedelevator?
Definitely must read !!!
—–
The Economics of Despair
“The health crisis afflicting working-class Americans recalls similar symptoms in Russia following the collapse of communism.”
goo.gl/0N7shH
Link
https://goo.gl/0N7shH
“I dont know how accurate The Big Short was, but it said only 8% of homes failed to meet their mortgage payments causing the crash… how many originations did HCG have since 2014? I know banks have tightened up…
”
Even though the banks have tightened up people are still arranging mortgage through brokers. I was talking to a guy who comes to our church last Sunday, was surprised to hear that he was buying a old condo for 280k. He works at a warehouse, most probably making 12.5 hourly. When asked how he got the mortgage, he said all the banks declined, so went to this …… broker and the broker arranged the mortgage in no time. He himself admitted that he had to fake a lot of things to get the mortgage, but his justification is he is not doing this to buy a million dollar house. The guy is from India and the broker is from Pakistan.
The government has to make it legally mandatory for all the financial institutions to verify the claims of income by people who apply for mortgages with CRA so that this kind of fraud is eliminated.
#127 Ponzius Pilatus on 03.28.17 at 1:29 pm
#123 bdwy sktrn on 03.28.17 at 1:03 pm
JIMMY!
he’s a bit of a nutter, but good for him, big Jim Pattison is donating 75M to the local hospital.
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“big” Jim Pattison?
He’s a tiny, tiny greedy human being.
Personably responsible for half the province living on minimum wage.
Time to get a better role model.
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i said ‘nutter’ , not role model.
but, a long long time ago our family income came from a pattison company. it was something like 6x min. wage.
market rates for mid/sr mgmt. seemed fair to me.
we had a single mom neighbour who was facing homelessness , his church got funds to keep a roof over their heads just for the asking. can’t be that bad.
his 150′ yacht apparently is all white carpet and no ketchup allowed on the hot dogs served.
#113 ed on 03.28.17 at 10:46 am
It always amazes me how everyone is an expert when it comes to real estate. So what you’ve bought a house. Develop millions of sq ft of commercial space (as I have) bought, renovated and sold multiple homes (as I have) and build 100’s of hi-rise units (as I have). You will quickly see it’s not for the faint of heart. The ONLY reason we are in a “bubble” (not sure I would call it that, but for lack of a better phrase I’ll go with it) is low interest rates. Supply has not been able to keep up with demand (red tape is THE reason). As soon as my RSP portfolio doesn’t get the 9.8% adjusted cost after fees, I’ll be worried. There’s just WAY too much money out there looking for a home. It’s that simple. Capital, equity and construction take-out financing is roaring and has been for years. When that starts to contract, get worried….hasn’t happened yet. Before 2008, we had 6 to 9 months warning. Spring of ’08 financing markets contracted. Call to action for government? Not likely. They have ZERO control over this and anything they do will add to the red tape and make supply diminish even more
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You are absolutely wrong.
The biggest reason for the bubble is CHMC and their ‘insurance’. Wild Bill chickened out as he know perfectly fine that already it is 10 years and 1 million dollar per house in GTA too late.
If CHMC voids all insurance on books, most of the lenders if not all will go kaput, prices will dive to 25-30 % from the current despite zero rates as no bank will lend you anything.
Just to add to Dan T’s post…I’m wondering just how much of that borrowed money in Canada is against present real estate values in the form of HELOC loans.
Garth I wonder if you and your team could create a post on this subject.
I am wondering what happens when the value of the real estate backing the mortgage and the HELOC together dip below the combined debt.
I have heard that the HELOC loans are “call” loans and so upon renewal of the mortgage would the “underwater” homeowner be liable to come up with the difference as is the case with just the mortgage?
Just what are the rules regarding those loans?
I’m thinking these loans are what are financing a significant portion of the Canadian economy and have the potential for a major disruption.
Big news….
https://www.thestar.com/news/investigations/2017/03/28/province-stripping-tarion-of–role.html
#52 Wog The Vancouver condo market is doing well, as it is the only thing local buyers (and local speculators) can now afford. The Single Family Home market has tanked though, as greedy sellers and realtors have priced everything for the offshore buyer.
A little over a month ago, a 1.5 story house next to my brother’s place sold for $650K in West Hamilton. It’s in a dumpy area near McMaster where student housing (slums) is the majority. The buyer purchased it sight unseen from Montreal. Most likely he’ll keep renting it out to students to carry it, and wait for equity to build before flipping it (easy money right??). This dumpy run-down house in a normal market would fetch $350K in Hamilton. In a stupid FOMO market, it would be expected to fetch $450K-$550K. In this current insane market, it did sell for $650K. There is a LOT of this kind of activity happening in Hamilton. Nobody wants to miss out on the hot capital gains to be made from flipping, but they can’t carry the additional mortgage without bringing in some rent to offset it. Somehow these buyers are getting mortgage approval, or they’re joining forces as pooled investors.
My brother’s story next….
They should audit CMHC and look at all the mortgages they are backing and you will see a fraud like no other. Canada is the biggest house of fraud in the world. This is just a tip of the ice berg
Victor V on 03.28.17 at 12:49 pm
http://www.bnn.ca/time-for-the-adults-to-act-short-seller-on-home-capital-group-1.708248
Independent investor and well-known short-seller Marc Cohodes is reiterating his call for greater regulatory scrutiny of Home Capital Group (HCG.TO 7.07%) in the wake of the mortgage lender’s surprise firing of Chief Executive Martin Reid. In an interview on BNN, Cohodes, whose allegations of impropriety at the company have not been proven, called for a full investigation of Home Capital.
“It’s time for the adults in Canada who regulate and oversee this company to take action,” he said. “[Home Capital will be serious] when they hire outside legal counsel to do a full internal investigation of what’s really going on there.”
wow….the dominoes are falling…next up ontario budget and spec tax , FB tax, empty home tax….
https://www.thestar.com/news/investigations/2017/03/28/province-stripping-tarion-of-builder-regulator-role.html
#111 Leo Trollstoy on 03.28.17 at 10:35 am
#51 Mark on 03.27.17 at 9:09 pm
Discounts of 20-30% from peak (2011) prices are not uncommon in Calgary these days.
This is false.
Post evidence or change topic.
Thx for trying
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Leo – you should try doing the same, posting evidence. Works both ways.
#127 Ponzius Pilatus
“big” Jim Pattison?
He’s a tiny, tiny greedy human being.
Personably responsible for half the province living on minimum wage.
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… and a deeply devoted Christian.
To put the almost 9% drop in Home Capital stock price today at $25.28 per share.
It was 94 cents back in April-1-1999 and reached a high of $55.24 back in August-22-2014. This is Google’s records.
This is a 5,876.60% increase in about 14 years and almost 5 months. This is not even including the annual dividend yield anywhere from 3% to 5% over the years.
This is not sustainable. No, I don’t own the stock but it looks like it is back to 2010 levels.
There’s a saying on Wall Street — bulls make money, bears make money and pigs get slaughtered.
grassroot movement
Maryland is on track to become the third state to ban hydraulic fracturing, or fracking, for oil and natural gas, after the Senate voted 35-10 on Monday for a measure already approved by the House.
The bill is now headed to Republican Gov. Larry Hogan, who is in favor of a statewide fracking ban.
Hogan, who once said that fracking is ” an economic gold mine,” stunned many with his complete turnaround at a press conference earlier this month.”
http://www.ecowatch.com/maryland-bans-fracking-2333222930.html
Author Frank Schaeffer, who formerly spent decades along with his father, theologian Dr. Francis Schaeffer, creating (and profiting from) the far right anti-abortion political movement, joins us to discuss how he believes Democrats can win back both the White House and Congress, from the perspective of someone who, for many years, had preyed on the fears and false facts favored by rightwing, so-called “values voters”. You can’t convince them of facts, a fired-up Schaeffer tells me today, but you can drop a lit metaphorical match into their gas tanks by helping them understand how Trump himself has “betrayed them.”
http://bradblog.com/audio/BradCast_BradFriedman_USBombingCivilians_FrankSchaeffer_EvangelicalsLitMatch_032717.mp3
to [email protected]:
Jimmy Pattison is that well-known bird, the HypoChristian.
Of the many terrible business practices that there are records of:
1) A Marketplace investigation found that Jimmy Pattison car companies had the greatest number and highest cost of “extras” on car purchases, plus unconscionable financing documents, bullying sales tactics, corrupt repair procedures — the conclusion was that overall, any Jimmy Pattison dealership would be the worst place for anyone to buy a car.
2) Mr. Pattison has himself admitted that the lowest-selling salesman every month is fired, regardless of tenure of employment or personal situation. Fifteen-year employees who have suffered a death in the family and whose sales go down — canned. Pattison has admitted this, saying that (paraphrased), ” . . . the market is showing the salesman that he is not competing well, so it is rational, and a service, actually, to discharge the person so that they can move on to employment they are better suited for.”
soo. is home capital the buy of the day?
Reviewing all the comments on these blogs, it’s not difficult to identify those that are going to be totally screwed as mortgage rates continue upwards and valuation declines. I don’t mean just homeowners but also Realtors and anyone else helping themselves to the huge mortgage money that people have been foolish enough to borrow to buy property over the past couple years. Why else would anyone leave a comment suggesting that house values will increase indefinitely or that any decline will be small and short-lived? They couldn’t possibly know that, nor could they possibly know “it will be different this time”. Perhaps they went to a Real Estate seminar that told them if they want it to be true all they have to do is believe hard enough, say it out loud, put it in writing, and it will happen. And because they couldn’t afford the cost of the seminar as a result of their new found debt, they paid for it with their brand spanking new Home Equity Line of Credit. Brings to mind the old adage “A fool and his money are soon parted”.
For you fanbois of former PM Paul Martin & Stephen Poloz:
http://www.thepeterboroughexaminer.com/2017/03/28/paul-martin-jean-augustine-among-seven-receiving-trent-university-honorary-degrees
Look at us up here in the wilds of the Kawarthas!
No.73 Mafia cat
Why work?
This exactly the ethics our garbage government has instilled into the generation that matters.
Filling productive rolles In The workplace or starting a business just doesn’t stand up to speculation on housing when our garbage government has stacked the odds so badly against everything else and supports housing without any regulating what so ever.
Why bother growing a business or being part of a growing business.
Our government has prostituted itself to the lowest levels. Ok
Euro Observer: Wild Bill chickened out as he knows perfectly well that it’s already too late. If houses in the GTA cost $1 million it’s too late.
It’s not clear to me that it’s too late. I do think that there will be a major crash: 30% across the board loss in value, personal depression, families split apart. Woodbridge, a waste land. However my personal theory is that CMHC and the major banks will be all right. CMHC doesn’t insure mortgages where the purchase price is more than $1 million. My personal theory on 18 Mitchell is that the bank wrote a 1st mortgage for $600,000 – half the purchase price:
http://www.greaterfool.ca/2017/03/10/balls-2/
which means you miss 3 mortgage payments and the bank exercises power of sale!
+/- 5%.
We are still flogging the issue of whether +/-5% of foreign buyers could cause price inflation in a real estate market, such as Van or TO. Blog dog ROTFL at # 109 on 07.08.16 at 11:39 pm linked to a Yale study titled “Distant Speculators and Asset Bubbles in the Housing Market”.
http://www.econ.yale.edu/~shiller/behfin/2012-04-11/Chinco_Mayer.pdf
Of course, the study was 52 pages of text, graphs and fancy statistics, so I assume that no one, including our host, bothered to read it. Do go over it, because it establishes that 5% of “distant speculators” were quite enough to skew several housing markets in the world. It is politically correct and does not mention race or colour.
So don’t worry if it’s 5% or 20% of distant money; 5% is quite enough. And local speculators don’t register on the scale.
That is an ‘assignment’ sale, not ‘consignment.’ It is perfectly legal, but the proceeds will be taxed as regular income at the seller’s marginal rate. — Garth
OH I GUESS I WOULDN’T TAKE IT THEN……LOL
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