The miss

No interest change coming on Wednesday. How could there be? The Bank of Canada can’t raise rates yet because the economy – while doing w-a-y better than last year – is still slack, flaccid, limp and everything this manly blog is not. But it can’t cut, either, since we’re a nation of debt snoflers completely devoid of discipline.

HSBC knows that. The international banking giant has Canada in its crosshairs, since few peoples in the world sponge up borrowed money they way we do. The lender has just undercut every other bank in the land, offering a five-year fixed-rate home loan for the low price of 2.36%. “We want to be more competitive,” the CEO says. “I certainly want to have our share of the market…”

Well, 2.36% is a scant seven-tenths of one per cent above the current inflation rate, making this almost-free money. Without a doubt, within a year or two it will be. And it’s reasonable to assume HSBC will be handing out hundreds of millions before the offer expires.

So the Bank of Canada’s Stevie Poloz can’t win. In report after report and ad nauseum speeches he’s warned of excessive borrowing. Households are over-extended, he says, and vulnerable to shocks like rising rates. And yet he does nothing about it. The bank’s key rate has idled at 0.5% for the last two years. Poloz plunged it along with oil prices – which had a lot to do with igniting a real estate maelstrom in Vancouver and Toronto. The higher houses go, the more people borrow. A vicious circle.

So here we are. Households owe $2.08 trillion, which is bigger than our $2.07 trillion economy. Two-thirds of that is long-term mortgage debt, taken out at the lowest rates in history. That they will rise is a given. And then we’re in trouble.

The financial press, that dreary bunch of writers who cover basis points instead of Kardashian bottoms, was rife with fresh evidence this week of how close to the edge your neighbours, co-workers and fool relatives are skating. At a time when inflation is 1.6% and wage gains actually negative, Canadians added an average of 11% to their mortgage debt in the past year. Worse, almost three-quarters say they’d be somewhat screwed if mortgage payments increased by just 10%. That would come with a simple 1% increase in home loan rates. And, yes, it will arrive.

Manulife claims it worries for both the Millennials and the Boomers, who together account for 65% of the population.

“The millennial segment owes more than any previous generation and are not prepared to meet unexpected expenses. They’re homeowners, their furnace could go, they could need a new transmission on their car,” says the company. As you might expect, the kids are drowning in debt – with 86% of them in hock, compared with just 39% of the wrinklies. But Boomers have a special challenge – much of their net worth is locked into houses, so if rates rise and home equity falls (and the ability to sell), it’s a sinkhole for retirement finances.

Four in ten Boomers have at least 60% of their wealth in their house and another 21% say it accounts for more than 80%. Meanwhile the fact almost half of Millennials are getting loans from the Bank of Mom means Boomers are sucking out equity so their kids can become indebted. What a great strategy. If rates rise and real estate falls, they ‘re both pooched.

Back to Poloz. If raising rates means 70% of people start having trouble paying their debts, and may cut back on consumer spending, he has an even bigger problem. If lowering them means more economic activity, more borrowing and increased debt, then how do we ever get out of this quagmire? But if leaving them alone means more predatory and irresponsible sharks like HSBC swim into our beaver pond to cull victims in the name of market share, well, no good happens.

This is the legacy of bad monetary policy. The debt overhang may now never go away – at least not for a generation or two. The correlation between a mountain of debt and mountainous house prices is irrefutable and absolute. This is the reason (not Chinese dudes) why we are now have 86% of our young people sautéing in borrowed money they may be incapable of repaying.

My first house cost $66,000 back in the bronze age, and my first mortgage was at 12.25%. In the Eighties, when I was first elected to the House of Commons, my mortgage was 14%. But a great house cost less than $300,000. Today a fiver is 2.36% and real estate sets you back a million.

So much for progress.

225 comments ↓

#1 Dave on 05.23.17 at 5:25 pm

Does it really matter about BOC as long as the federal reserve increases rates?

#2 Doug t on 05.23.17 at 5:28 pm

Poloz is frozen – rates won’t go up for next 10 years. Keep piling on more debt people – you know you wanna

RATM

#3 Left is best. on 05.23.17 at 5:33 pm

Dream of that single-family home in the suburbs fading fast as highrises move in.

http://business.financialpost.com/personal-finance/mortgages-real-estate/dream-of-that-single-family-home-in-the-suburbs-fading-fast-as-highrises-move-in

#4 AJM on 05.23.17 at 5:36 pm

Rare poster, but an avid reader & big fan of Flop’s pink snow posts. Along that vein, 2652 Haywood Ave, West Vancouver makes an interesting study. I’ve been keeping tabs on this one as it’s in my hood.

This place was purchased in Dec 2014 for $2,338,000 whereupon it had an extensive renovation – $300,000+?
It was subsequently “panic”-listed in early Dec 2016 for $4.2M if memory serves. Listing was then taken down and property was relisted for $4M in Jan 2017 where it languished for 4 months.

Late last week I (finally) saw a sold sign up on the house. Interestingly, it would appear the realtor quickly relisted for $3.1M immediately prior to sold sign going up (listing here: http://www.grantconnell.com/showlisting/397511/2652-Haywood-Avenue-Dundarave-West-Vancouver/ ). My guess is that a 3.1M offer was accepted and the realtor had to relist to avoid showing a 25% haircut over ask.

Where this gets interesting is that, going back to 2014 sale, these guys realized profit (or loss) of approx. 607,000 less their reno cost (3,100,000 – 2,338,000 – (3,100,000*.05 frictional costs)). Include interest payments on the mortgage and opportunity cost on the downpayment / reno cost and you can bet this 2014 sale lost money.

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAyOTRUTg==

#5 FED UP on 05.23.17 at 5:39 pm

If Poloz or Morneau actually wanted people to be more responsible they would insist that CMHC tighten up lending rules… Simply increase the required amount necessary for a down payment, shorten amortization periods and tighten up bank requirements in regards to lending practices… That would put a swift end to all of this housing bu!!$hit. Seriously… WTF!?

#6 Dan.t on 05.23.17 at 5:42 pm

Poloz is simply an idiot… enough said. Canadians are debt pigs. Nothing will change… hence greater fools beat each other up and try to outbid each other with fake funny money ( which will soon have no value) to buy 500k condos.

No government official or political party wants to touch this s**t show…look at christy Clark in BC, just give out 37k free money as long as party doesn’t end on her watch… that alone probably kept her in office cause BC love super high house prices and who doesn’t like free money

#7 Shut down CMHC on 05.23.17 at 5:47 pm

The government needs to shut down CMHC and problem solved for idiot poloz. Banks will continue to make risky loans to anyone with a heart beat but no CMHC and interest rates on mortgages will shoot through the roof. CMHC plus mortgage fraud is the cause for this monster of a housing Ponzi. Poloz you are a puppet silver spoon shill.

#8 The Arctic Gringo: Qalunaaq on 05.23.17 at 5:47 pm

According to RateSpy, a broker is offering even more free money – 2.03% for 5-year fixed.

Stop the insanity! But then this…

Street Capital Group Inc. (“Street Capital” or the “Company”) (TSX: SCB), today announced that its wholly-owned subsidiary, Street Capital Bank of Canada (“Street Capital Bank”), has launched the Street Solutions Program, its new mortgage program targeting the uninsured segment of the mortgage market. Street Capital Bank is now offering this program through a small group of mortgage brokers in Ontario and will progressively expand to additional approved mortgage brokers across Canada.

#9 Lulu on 05.23.17 at 5:49 pm

If the T2 regime is bold enough, slash the CMHC and turn the existing monster mortgage term to generation mortgage, like 100 years max, so that the payment will be much lower and more manageable even when the rate raise eventually. Is it fair? Not totally but I think it will help to ease the mountain of debt and we may able to raise a little bit of rate ourselves.

#10 Dave C. on 05.23.17 at 5:55 pm

Good article on real estate trends, “Real Estate Lessons From An Economist That Died Over 100 Years Ago”

https://betterdwelling.com/real-estate-lessons-from-an-economist-that-died-over-100-years-ago/

Curious where you folks think Canadian real estate is at in the cycle?

#11 Howard on 05.23.17 at 5:55 pm

Garth – now the question is this : How much will responsible savers with no debt, like myself, have to bail out these idiots? In what way will Poloz and the Turdo government force people like me to soften the downfall of the indebted? Because I know it’s going to happen. These people will never, ever be forced to deal with the full consequences of their poor decisions.

#12 rainclouds on 05.23.17 at 5:59 pm

Sooo the BOC bet is: the damage done today by NOT elevating interest rates and addressing unrealistic pricing will be less impactful than letting this fester for a few more years.

We already know the lack of Political leadership in BC/Ont/ Canada got us in the unholy mess.

It is now abundantly clear the independent steward of monetary policy hasn’t got the mettle to stop what any reasonable person recognizes as FUBAR.

Kick can down road…….Owe Canada

#13 bob dog on 05.23.17 at 6:00 pm

The bank of Canada certainly can raise interest rates but it wont. The stock market is at an all time high. Ferraries and Lambos roam the streets of Vancouver. Houses are selling like hotcakes.

Keeping interest rates low helps nobody but the 1% who are becoming more and more wealthy while the government keeps up its punishing war on the young.

I worked for a company that made 100 million in revenue on 100 employees. No new jobs were created. The owner became a billionaire while employees struggled to make rent. If thats not bad enough the idiotic federal government gave the company SRED tax breaks which all ended up in the hands of the US company that bought it.

The interest rates are low because inflation is low. Isn’t it funny that the terrorists running the bank of Canada wont include food and shelter in inflation calculations. Why would they. Corporations require neither food or shelter.

Has the government considered the possibility of young people leaving the Canada and starting the next tech revolution in another country.

Get a NAFTA visa and get out.

#14 calgaryPhantom on 05.23.17 at 6:00 pm

Sure million dollar houses in toronto, even at 2.36% is too expensive for an average buyer.
But 2.36% and a good 500k house in calgary is a great deal.

#15 Wrk.dover on 05.23.17 at 6:02 pm

Polooze must either declare the rates are the tax free income that they are or raise the damn thing.

As a saver, I feel like I am missing out on money for nothing here, unlike the happy borrowers.

They can borrow some more to pay that paltry interest too.

#16 Leslie McNeelie on 05.23.17 at 6:04 pm

Garth,
How can anyone still be long in the Canadian Stock Market with economic conditions such as these? I feel like I am ready to just invest outside of this Nation.

#17 The Technical Analyst, CSTA, CPD on 05.23.17 at 6:04 pm

” how do we ever get out of this quagmire? ”

Housing is an asset like any other:

1. Currently housing it is in overbought territory.
2. it goes oversold territory where people FEAR owning a house. Retraces gains (33-66%)
3. Then asset price adjusts to normal historical income levels.
4. Repeat over time.

Don’t get too caught up in “it’s a place to live” or “you have to buy one to have a family”, it is just an asset.

#18 Ex-Cowtown on 05.23.17 at 6:06 pm

Looked at a new truck last week. It cost more than my first house… by about $10K. Kept on lookin’.

#19 Average Joe on 05.23.17 at 6:07 pm

I was clearing out the basement ahead of our move next month (sold last year, rented back for a year and will continue to rent for the foreseeable future) and found an old OREA booklet from 1984 with mortgage payment tables. This was way before you could punch a couple of numbers in a web form and instantly know exactly how screwed you were going to be for the next 25-30 years. The tables started at 8% and topped out at 25%! Lowering the interest rates to spur economic investment was a brilliant move which was supposed to give our businesses an incentive to invest in the future, but why bother when there is easier money to be made by trading in commodities, in this case real estate? Have we learned our lesson? Probably not.

#20 Leo Trollstoy on 05.23.17 at 6:09 pm

#92 Leo Trollstoy on 05.23.17 at 9:26 am
Although this is the correct question, it’s been asked before. His response is always the same: either ignore, falsely claim it has been provided elsewhere or deflect. Either way you won’t get a source. But good try!

#100 Mark on 05.23.17 at 10:27 am
I’ve given you sources in the past, but if you don’t want to believe me…

I called it! When asked for a source Mark will either ignore, falsely claim it has been provided, or deflect. He did the last 2!

Im awesome

#21 Round 14 on 05.23.17 at 6:13 pm

Ho hum…..

Another, ‘we are the most indebted we have ever been and rates will be rising – just not anytime soon….’

A familiar refrain, every year, since 2012.

Lets just re-cap the last 8 years of housing predications and ‘should have’ events linked to the correction of a 13 year bull run….

FEDERAL MEASURES TO COOL THE MARKET
The feds have eliminated zero down/40 year mortgages; increased the required downpayment; change the loan to equity rations; clamped on investment properties. And prices keep going up….

A DELUGE OF HOUSING SUPPLY
Nationally, we are building 2 homes for every person. We heard of overbuilding in Vancouver in 2011 and 2012 that would flood the market. We heard of 40,000 condos coming online in TO that would flood the market. Now, the condos in TO have been absorbed and all he hear about is a lack of supply in TO and Vancouver. Prices keep going up…

MOUNTING AND CRIPPLING PERSONAL DEBT
Every year, Canadians achieve a new ‘record’ level of debt that blows everyone away and will cause the house of cards to fall. Years ago we were spending 140% of our income and now its 167%. This is much worse than in the US before their price correction. Prices keep going up…

NATIONAL AND PROVINCIAL RECESSIONS
Anemic growth and a transition to part time work from full time, coupled with commodity price collapses, were all supposed to cripple the market. We have had several quarter of recessionary growth, and a collapse of the major revenue generator in several provinces. And prices go up and remain flat in those provinces with ‘recessions’…

CREDIT TIGHTENING
Our so-called prudent banks were engaged in tightening credit and increasing their due diligence on mortgage approvals. Yes, prices go up despite investigations into fraud and bending of the rules….

FOREIGN CAPITAL AND RESIDENT CONTROLS
Currency clamp downs in country’s like China, coupled with a BC foreign buyer’s tax, were supposed to stall if not kill the market. Well, Vancouver and its surrounding communities are having their prices re-inflated after a temporary lull. Prices going up…

So to summarize – the feds try to cool the market; we have recessions and anemic growth; and explosion of personal debt; overbuilding of houses; rising interest rates; foreign buyers taxes; and all that happens is that prices continue to climb in the hottest markets for years…

So what exactly is going to stop this juggernaut that has not stopped it after 13 years?

Read the post. — Garth

#22 David McDonald on 05.23.17 at 6:20 pm

Given the level of indebtedness higher rates would cause a lot of pain so if US rates go up in June the Bank of Canada may not be able to raise rates to defend the Dollar. Combine this with renegotiating Nafta and we Canadians may see a sub 70 cent dollar before year end.

#23 The Wet Coast on 05.23.17 at 6:21 pm

The reason that many folks have huge debt in YVR is they were able to borrow huge amounts of money to compete with well heeled Chinese dudes. No Chinese dudes and Vancouver real estate looks like Edmonton or Calgary.

So you’re right it was low interest rates. But the rocket fuel was off shore money. China has reported that for the 3rd consecutive month that foreign currency reserves are about 3 trillion, and that capital controls are working. I can say that the quality of the listings continues to improve. Unless the China dude tap gets turned back on, count on the slow assent in the high end to continue. Just look at Zolo for West Vancouver.

#24 The Wet Coast on 05.23.17 at 6:22 pm

Sorry I should have said decent

#25 conan on 05.23.17 at 6:23 pm

When rates go up house prices are going to adjust/crash.

It is all fun and games on the way up, but the down side could be a disaster. Do we really want vulching when this happens? Is that the most efficient way to sort it all out? Sounds great for the one percent, but shit for the sheeple.

https://media.tenor.co/images/e59684bfb3c745f2d483ea6a5a0c3bd7/tenor.gif

#26 US solutiuon on 05.23.17 at 6:27 pm

The US invented long time ago the solution for being solvent with higher interest rate: up to 30 years long mortgage.

It allows to adjust interest rate without sending into default 70% of the population and wiping out the ruling political elite, regardless of the parties.

Count on it.

#27 FOUR FINGERS WATSON on 05.23.17 at 6:30 pm

This won’t end well, the sky is falling, blah blah blah. I don’t believe it any more. If rates go up we are screwed, therefore rates won’t go up. Enjoy !!!

#28 powder_hound86 on 05.23.17 at 6:30 pm

My wife and I joined the ranks of indebted home “owners” (serfs).

We’ve lived below our means for years allowing us to save save save. We are both salaried highish income. Put a down payment of 35% on a beautiful infill house in Edmonton.

All in Monthly costs amount to roughly 25% of our after tax income. Our TFSA’s and RRSPS are both maxed out, and we both have a pension through our employer.

I finally broke down and bought. Got tired of renting basements. Can only do that for so long. But, we followed garth’s advise and are balanced. We have a chunky portfolio for a 28 year old couple and now also property.

I realize that we could have continued the rent game, having to move every other year and likely come out ahead 20 years from now. But there is also some value in enjoying your life and your money today, because you could die tomorrow.

#29 Smoking Man on 05.23.17 at 6:40 pm

Zumanga has a master plan for every one.
Divide then destroy cultue and capitalism.
Then the big cull.

Just one supper hero left to save us. His name is Jay Smokeweeden

I read it in great book.

Unless your pulling down over 200k you’re in poverty in Toronto.

#30 Fake News on 05.23.17 at 6:44 pm

Not sure why Garth feels that anything anti-Trump is fair game here, but you are not allowed to criticize the left.

Anyhow, for anyone thinking it was a lone wolf attack in the UK, it wasn’t. It was organized and its coming to a concert your kids will attend soon. Get ready.

#31 I'm Not Poloz on 05.23.17 at 6:46 pm

Is that Kathleen Wynne for today’s blog post?

On a serious note, cutting interest rates in Canada will cause a 50-cent Loonie.

Poloz wants a 40-cent Loonie to boost exports while Canadians pay $10 for Cauliflower and $20 for those British chocolate wafers in that gold & red package.

#32 Alice on 05.23.17 at 6:46 pm

“Four in ten Boomers have at least 60% of their wealth”

Wow, just wow. I’ve never understood this strategy. Having to sell your possessions, and downsizing is a sad way to retire.

#33 FED UP!!! on 05.23.17 at 6:56 pm

#9 Lulu!?! What the heck!?? R U insane!??? That would send prices to the moon!!! I would buy 10 houses if they did that!!!

Does no one want to actually pay off a house anymore!?!? It seems like people would rather just pay interest to the bank for the rest of their lives! Jesus!!

People!! You are RENTING money!! Rent is cheap right now… Wait till your rent goes through the roof!!!

#34 Alex S on 05.23.17 at 7:02 pm

Atrium Mortgage Investment Corporation (TSX:AI)(TSX:AI.DB)(TSX:AI.DB.A)(TSX:AI.DB.B) (“Atrium”) announced today that it has entered into an agreement with a syndicate of underwriters bookrun by TD “Securities Inc. and RBC Capital Markets and co-led by CIBC Capital Markets, pursuant to which the underwriters will purchase $20 million aggregate principal amount of 5.30% convertible unsecured subordinated debentures of Atrium due June 30, 2024 at a price of $1,000 per debenture.”
https://web.tmxmoney.com/article.php?newsid=4549718499518930&qm_symbol=AI.DB.B

Atrium is taking 5.30% loan so that they give 3-5% mortgages?

#35 AK on 05.23.17 at 7:02 pm

” If lowering them means more economic activity, more borrowing and increased debt, then how do we ever get out of this quagmire?”
——————————————————————–
It means, Just kicking the can further down the road.

#36 Randy Belwood on 05.23.17 at 7:05 pm

The Fed will do almost nothing and anybody who gets in the Fed’s way will end up dead.

#37 Adam on 05.23.17 at 7:06 pm

#4 AJM

2652 Haywood sold for $3.6 million according to MLS. If all goes through, sale price will be confirmed on evalue BC in a few months time. The list price was reduced from $4.098 million to $3.98 million but I think was typed into the realtor’s website incorrectly which is why you see the link to $3.098 million.

#38 Business Owner on 05.23.17 at 7:06 pm

Is there data like this on commercial real estate?

#39 waiting on the westcoast on 05.23.17 at 7:10 pm

#23 The Wet Coast on 05.23.17 at 6:21 pm says “The reason that many folks have huge debt in YVR is they were able to borrow huge amounts of money to compete with well heeled Chinese dudes. No Chinese dudes and Vancouver real estate looks like Edmonton or Calgary.”

What is amusing with your thesis is that you think 5% (ow even 25%) of a market is the market. If the non-Chinese dudes has any sense, they would refuse to pay the elevated level and eventually the price would decline… It is fear, death wish mentality, and pride (I won the bidding war) that had fed this beast.

I laugh when I hear how the 5% by bidding high control the market. Stupidity to follow an overbid by the 95% is what is driving the market… But not much longer. The Piper will have his due…

I missed this run because I thought the Canadian economy would follow the US and was mistaken. But the current market has no where left to go… Whether today or in a year, it has definitely peaked in Van and heading the other way…

#40 I'm Not Poloz on 05.23.17 at 7:12 pm

@#22 David McDonald on 05.23.17 at 6:20 pm

The mandate of the Bank of Canada is to keep Inflation in control. A 60-cent Loonie when oil prices are at US$55-60 per bbl will cause excess inflation.

Poloz will have to increase interest rates to prevent hyper-inflation and further depreciation of our Loonie, but Poloz claims that the 61 cent Loonie in 2002 (when oil was at $25-30 for that year) is supposed to be our fair market value for the Loonie.

Even the new Zealand Dollar is increasing closer to the current value of the Loonie, and NZD exports are dairy and lamb meat.

When the NZD surpasses the Loonie, and then when the Loonie falls below the 60-cent Level, Poloz will have to increase interest rates or else Canada will become like Wiemar Germany or Zimbabwe in 2008, only with SJWs and political correctness. Bad time to be in Canada with a 50-cent Loonie and 40% inflation.

#41 Pepito on 05.23.17 at 7:15 pm

Two-thirds of that is long-term mortgage debt, taken out at the lowest rates in history. That they will rise is a given. – Garth

Nothing is a given. But you’re right on the progress thing.

#42 Nonplused on 05.23.17 at 7:17 pm

#9 Lulu

How would 100 year mortgages help? People would just bid up prices even further.

If you need 100 years to pay off your house you can’t afford it. 25 years is about the max given lifespans and the need at some point to save for retirement for non-government workers.

Plus the economics are only for the short sighted. The total amount of interest you would pay on a 100 year loan is significantly more, perhaps several times, what you would pay over a 25 year loan, even if the monthly is more. More money for the banks, more taxes for the government (you have to earn those dollars even if it is at a future date), and less money for you over your lifetime. Lots less.

#43 Timmy on 05.23.17 at 7:17 pm

If Polz actually wanted to fix the housing problem he could up the downpayment to 25%. Not surprising he’s doing nothing to fix the housing problem, he was appointed by Harper.

#44 traderJim on 05.23.17 at 7:18 pm

@Bert

“As a trader you’re no doubt up on confirmation bias, recency bias, normalcy bias. I’m guessing you’ve spent time developing an ability to discern signal from noise.”

Exactly. Notice the person who claims Trump is stupid for making a simple spelling error or typo and ignores the fact that out of a population of 6 billion, Trump is one of a few hundred to be worth $10 B, and the only person in history to be both a multi-billionaire and president of the USA. Just becoming President is a feat that what, only 44 people have achieved. Oh yeah, Joe Blow typing from gramma’s basement is smarter than that guy, no doubt. They have no idea how ridiculous that claim makes them look.

Trump does make mistakes and he also treats facts with disdain, but almost always in trivial matters. He gets the big, important things right.

People who have never had an important job, let alone started their own business (or 500 of them) and become a multi-billionaire aren’t smart enough to see the importance of that.

#45 MF on 05.23.17 at 7:21 pm

First off, I want to say that gen-x should not get any free pass here. They are the most delusional of all, buying in 2003-2007 right before the financial crisis, ZIRP, and the job market fell apart. It’s all luck, but they all believe they are geniuses. This group is the most pathetic of all.

Anyways,

The reason why we millennials are taking on debt like crazy is because:

1) 99% do not expect to pay off the huge mortgage. The expectation is to sell, pocket a huge profit, and then “move up” the property latter. Houses only go up so nobody cares.

2) With wages and overall job security the way it currently is, there is no chance to afford a place without debt and the debt is only short term (my point above).

3) We are entering the family forming age of 25-40, and having your own place with your partner is seen as part of the transition. Yes some cultures will live at home until later, but once marriage happens we will try to find our own place (usually).

MF

#46 Greater Fool on 05.23.17 at 7:24 pm

Savers are losers if you save your money you’re missing out the opportunity to live a good life. You don’t need money to have everything that is good in life, all you need is DEBT! Get you at the nearest bank, it’s almost free, buy everything you need and live a great life RIGHT AWAY!
Then talk about equity every single minute of your fantastic life in front of those losers that work hard, save money and live in a basement suite, because this is so 2017 and this is the great white Canada!
Do you invest on something that is not RE? Does that even exist in Canada? You are the Greater LOSER! Debt RULES!!!!

#47 waiting on the westcoast on 05.23.17 at 7:28 pm

Another editorial on Canada’s overheated market and a call for an interest rate hike…

https://www.bloomberg.com/view/articles/2017-05-23/what-canada-should-do-about-its-housing-bubble

#48 crowdedelevatorfartz on 05.23.17 at 7:29 pm

Jayzus Murphy.
That is one ugly damn dog in the picture

#49 I think I know something on 05.23.17 at 7:29 pm

“Two-thirds of that is long-term mortgage debt, taken out at the lowest rates in history. That they will rise is a given. And then we’re in trouble.” – Garth

————————————————–

Garth, rates CANNOT rise for a number of reasons. Some of which you’ve stated. Poloz is in a quandary. Damned if he does. Damned if he doesn’t. Canada is a nation of massive debtors and the whole financial system would sink if rates were to rise appreciably as people would not be able to shoulder their loans. So, it isn’t going to happen for the simple fact that the system can’t handle it. Now, Garth, can you handle the truth?

The consensus opinion is for the first BoC rate increase to occur in the first half of 2018. — Garth

#50 MF on 05.23.17 at 7:33 pm

Interesting how Garth mentioned the contribution of bad monetary policy to the debt levels.

The BOC should have raised rates in 2010/2011 to dampen the debt binge but they didn’t. They did this even though history has shown low rates for too long cause painful asset bubbles and debt levels. Did anyone at the BoC do any research? When they “warn” us, you cannot help but laugh at how absurd it is.

I heard that the Fed is debating having Mark Carney as the next fed chair. Really? This guy is a great example. Everywhere he goes he brings the ZIRP failure with him. It’s the only thing he knows how to do even though it’s a failed policy.

MF

#51 Raj on 05.23.17 at 7:34 pm

1300 new listings in last 24 hours :)
Summer gonna be fun !!

#52 lost in translation on 05.23.17 at 7:40 pm

There is no news agenda other than covering the most comedic leader in living memory. — Garth

====

Now you are trying to be a comedian, yourself.

Let Taleb explains you Trump.

https://www.bloomberg.com/news/videos/2017-05-18/taleb-sees-worse-tail-risks-than-in-2007-video

#53 Mark on 05.23.17 at 7:40 pm

“The consensus opinion is for the first BoC rate increase to occur in the first half of 2018. — Garth”

The “consensus” is clearly wrong. The Canadian economy, with decelerating RE activity, will have severely reduced consumer consumption. Hence, no inflation, hence no rate hike. Rate cuts are far more likely.

Who do they even survey to come up with these ‘consensuses’? Rising risk premia will (and arguably already has) take care of housing speculation. With prices stagnant since the 2013 apex due to credit tightening, particularly in the subprime sector at the CMHC.

Let’s have your qualifications as an economist, dude. — Garth

#54 Chaddywack on 05.23.17 at 7:40 pm

Poloz kind of reminds me of when my parents said they would ground me for getting home late, but I knew they were all talk and never took them seriously.

By the time they were going to punish me I was long moved out of the house.

Why would anyone believe they should be prudent because rates have been so low for so long? Recency bias is flourishing in Vancouver.

#55 Full RT on 05.23.17 at 7:40 pm

#39waitingonthewestcoast
What is amusing with your thesis is that you think 5% (ow even 25%) of a market is the market. If the non-Chinese dudes has any sense, they would refuse to pay the elevated level and eventually the price would decline… It is fear, death wish mentality, and pride (I won the bidding war) that had fed this beast.

I laugh when I hear how the 5% by bidding high control the market. Stupidity to follow an overbid by the 95% is what is driving the market… But not much longer. The Piper will have his due…

——-
Ya, this is one of those posts you are going to regret because it shows your complete and utter lack of understanding of real estate economics.

This is all you need to know about how a small percentage of buyers can impact the market – 8% of marginal buyers in the US caused a 32% national decline in prices.

When you are ‘amused’, go back to this stat that even Garth has cited. Its a proven fact – not a little theory…

While those following the 5% – which provincial data in BC showed to be double digits actually – are stupid for sure, the prices they pay are directly linked to that supposed 5%.

Argue about what matters – low rate cause high prices. The Chinese guys are a meaningless distraction. — Garth

#56 Cto on 05.23.17 at 7:41 pm

Obvously increasing rates and enforcing tougher CMHC rules would fix this but as stated, they don’t want to. Housing is the only show in town since they gave our jobs away. A number of years ago some people asked the WTO what would replace the manufacturing jobs that slip away.
The answer is clear, it’s debt my friends.,..

#57 Love this Blog on 05.23.17 at 7:44 pm

I will rub my hands with glee when she pops.

Some hard lessons are coming.

#58 AGuyInVancouver on 05.23.17 at 7:51 pm

#39 waiting on the westcoast – Doug Porter of BMO has said 5% is more than enough to move the market, it doesn’t have to BE the market. And given that govt stats showed foreign buyers were much than 5% in Metro Vancouver it is no surprise it became the frothiest market. What people underestimate is how much that money trickles down to fuel outrageous prices in both other cities, and in different housing types. If Mr and Mrs Smith sell their West Van bungalow for $3 million, they’re armed with a lot of cash to to go condo shopping.

#59 Buster Baxter on 05.23.17 at 7:51 pm

Garth – now the question is this : How much will responsible savers with no debt, like myself, have to bail out these idiots? In what way will Poloz and the Turdo government force people like me to soften the downfall of the indebted? Because I know it’s going to happen. These people will never, ever be forced to deal with the full consequences of their poor decisions

This Garth, this.

#60 FOUR FINGERS WATSON on 05.23.17 at 8:05 pm

Argue about what matters – low rate cause high prices. The Chinese guys are a meaningless distraction. — Garth

David Rosenberg has issued yet another piece of blistering common sense (which most mainstream and sellside economists seem to lack in wholesale amounts these days), in which he explains why the action at the margin is all that matters for asset prices and all that follows.

#61 traderJim on 05.23.17 at 8:09 pm

Taleb, now there’s a really smart guy. At least I think so, as I can barely understand the math the guy throws out there. Actually, I can’t understand it at all.

More math: Trump is the 545th richest person in the world according to Forbes.

That puts him in the top 0.000009 percent of the population.

Even if you assumed that not a single person ahead of Trump received any kind of inheritance or help from family (obviously not true, but let’s be ultra-conservative) he still out-performed all but a few hundred folks in the entire world. He’s not the only one to get a loan or an inheritance ya know. And he beat all of the others.

Nassim Taleb is almost certainly smarter than Trump.

But Trump has accomplished far more than Taleb.

There’s more than 1 kind of smart, and Taleb, who coined the term ‘intellectual yet idiot’ knows that better than anyone.

Taleb even seems to be a Trump supporter, or at least is not opposed to him. Taleb said this about Trump:

“Trump is not an idiot. There’s a logic to Trump that you can only get if you forget about the news and you look at Trump as Trump.”

Now let me guess, Taleb is not that smart either (rolls eyes).

#62 Leo Trollstoy on 05.23.17 at 8:11 pm

BoC is in a tough spot. Surrounded by rocks and hard places. Canadian economy strengthening but too slow. Canadians more and more indebted. They’re using the only hammers they have. Low rates and low CAD. Canada is lucky the world economies are in the crapper.

#63 conan on 05.23.17 at 8:11 pm

RE#27 Fake News on 05.23.17 at 6:44 pm

When Obama said taking out Libya was the stupidest thing he had done, no one really asked him why.

England going into Majestic mode and we might see a new front in the War on Terror.

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

#64 Bobby13 on 05.23.17 at 8:13 pm

I’ve noticed a lot of foreshadowing on possibly a housing correction can it be its being used to weaken confidence in the houses go up forever belief?
Triple threat this time stock bubble bond bubble housing bubble oh and auto loan bubble almost forgot. What will they come up with next to keep all us slaves toeing the line?

#65 Leo Trollstoy on 05.23.17 at 8:16 pm

Let’s have your qualifications as an economist, dude. — Garth

He made his certification with MS paint

#66 CL on 05.23.17 at 8:21 pm

Canadians……whine, bitch, moan……then apologize for it and sit back and do nothing.

There’s a reason why prime ministers in this country can go home in a minivan after their terms are up.

#67 Rates won't rise on 05.23.17 at 8:29 pm

Sharply . Forget it , the country would fold like a cheap suit. And if the shit hits the fan , yeah, bailouts . This is a socialist country .

And Mr Trudeau will go after the well off – 1% ? Time to help out your fellow man . I’m sorry

#68 young & foolish on 05.23.17 at 8:33 pm

The “We want it all and we want it now!” generation legacy.

Maybe time for someone to hit the giant re-set button?

#69 Ron on 05.23.17 at 8:34 pm

@traderJim

Trump does make mistakes and he also treats facts with disdain, but almost always in trivial matters. He gets the big, important things right.

People who have never had an important job, let alone started their own business (or 500 of them) and become a multi-billionaire aren’t smart enough to see the importance of that.
————————————————————

Trump is like the band AC/DC. 40 years ago, they found a formula that worked and have been writing the same song over and over since then, making loads of money. Are they talented? Yes. Geniuses? Hardly.

Similarly, Trump discovered long ago that if he repeated the same thing over and over (“I’m so great, anyone who disagrees is a liar”) there would be enough idiots to believe him and buy into any scam he tried to sell, from penthouses to presidencies.

Most of us don’t go into business conning stupid people, not because we lack intelligence, but because we have a conscience and a sense of shame.

Intelligent people look for dissenting opinions, not sycophants. They also know when to keep their mouths shut. His schtick, just like a housing bubble, will work for him right up until the day it doesn’t.

#70 AGuyInVancouver on 05.23.17 at 8:37 pm

Forgot to ask, who is this Oaken Financial taking out full page ads in the Globe & Mail about their “high rate” GICs? Fine print says a division of Home Bank, is that Home Capital?

#71 all that stress about real estate on 05.23.17 at 8:39 pm

and nothing else matters
Metallica rules,,,

https://www.youtube.com/watch?v=sg-4ATrE8n0

#72 Jazz on 05.23.17 at 8:40 pm

bidding wars to low ball offers in 4 weeks.

http://www.movesmartly.com/2017/05/from-bidding-wars-to-low-ball-offers-torontos-roller-coaster-real-estate-market.html

#73 crdt on 05.23.17 at 8:44 pm

It amazes me how hard it is for some peeps to understand that “comparables” is the last price paid, as such, a bit of dirty money from anywhere skews the whole lot. 5% is massive, should be like .005%, then it would make no diff, but 1 in 20 sure as sugar matters.

#74 Andrew Woburn on 05.23.17 at 8:45 pm

I’m not one of the ban-the-carbon tribe but those who think that renewable energy is nothing but a greenie pipe dream should pay more attention.

Especially if they are investors.

– 85% of Germany’s power just came from renewable energy, setting a new record

https://www.indy100.com/article/two-thirds-germany-powered-renewable-energy-easter-day-green-7737221

#75 Dr Strangelove on 05.23.17 at 8:45 pm

C’mon smokey…”jay smokeweeden” ??? too obvious…how about “Mr Token” who likes to stay in suite 420???

#76 fishman on 05.23.17 at 8:55 pm

Dippers up by 101 votes. 1000 left to count. Not finished today. I’m smelling a Dipper Green win.

#77 waiting on the westcoast on 05.23.17 at 8:55 pm

5% margin makes the market…. I am not saying that 5% influence the market… Only that a stupid 95% can support it…

The example of some people cashing out will trickle to a degree, for sure. But again, the bulk of the market has to follow… It is still some sort of fear or ego that drives a poor decision to follow suit…

#78 AnonStar on 05.23.17 at 9:00 pm

As far back as the early 2000, no bank would lend him a dime, so he began to brand/sell his name till he got lucky and borrowed some serious money from the Khazaks who were in bed with the russian mob and some shaddy characters from the middle east.

Lucky he always was he did not know what they had in mind for him. The presidency was paid and bought for a reason we will find out before the end of the year.

History will say, without a doubt the greatest sham every perpetrated on a nation of fools.

#79 young & foolish on 05.23.17 at 9:03 pm

“Does no one want to actually pay off a house anymore!?!? It seems like people would rather just pay interest to the bank for the rest of their lives! Jesus!!”

A paid off house is trapped equity …. or “dead money”.

#80 Tony on 05.23.17 at 9:05 pm

Re: #28 powder_hound86 on 05.23.17 at 6:30 pm

Home prices in Edmonton have finally succumbed to the continuous fall in the price of townhouses and apartments. The inventory builds for detached housing is accelerating. Prices for detached homes are falling and if condos are any measure home prices have a long way down to fall.

#81 traderJim on 05.23.17 at 9:05 pm

#69 Ron

You’re partly right, Trump is a systems guy. He has a system that works, and he has had great success and he keeps using it, as any intelligent person would.

Whether the systems that do well in business also succeed in government remains to be seen. Obviously his opponents are terrified that he will succeed, and are willing to go to any lengths, including starting a new cold war, to stop him from succeeding.

Months ago on this blog I put his chances of success at 20 to 30%. I would probably raise those now, due to the opposition over-playing their hand and basing their attacks on conspiracy theories (Russia) instead of Trump’s policies.

I didn’t claim Trump was a genius, but at least one genius (N Taleb) thinks Trump is pretty damn clever.

Meanwhile, people who have never succeeded in anything at life take pot shots at a guy who has done something no man in history has ever done before.

My IQ puts me in the top 2% of the population, and on a written test I might even be able to get a better score than Trump. Maybe. When I was younger.

But Trump is wildly more ‘intelligent’ than I am in that he understands things like how to persuade 63 million people to vote for him, despite 90% negative press coverage and opposition from the leadership of his own party.

To suggest that you are smarter than the most successful person on the planet at this moment is a sign of far greater narcissism than even Trump possesses.

#82 Rexx Rock on 05.23.17 at 9:07 pm

Does anybody believe inflation is 1.6%.Come on everything under the sun has gone up huge year after year.The monkey math the central bank use just doesn’t work anymore.Every thing the goverment and central bank has done over the last 10 years is killing the middle class and making them debt slaves I can’t wait until this ponzi scheme implodes.Poloz is Canada’s Bernie Madoff.

#83 Cdn Mom on 05.23.17 at 9:11 pm

Garth, you protest the high housing costs of Vancouver and Toronto, but offer no other remedy aside from advice not to buy. As you are a former politician, this is quite disheartening, and possibly telling of how we came to be in this space of government mismanagement.

Governments at all levels in Canada have been coasting, while sucking our personal finances dry. Each new crop seems to create their own tricks, building on those before them.

It is time, in both Ontario and Canada as a whole, for geographical decentralization of both government services and businesses. The current situation of everything located in 3 or 4 cities, or small regions nationally, is unsustainable, and benefits few in the end.

In the late 80s or early 90s, the Ontario government underwent a limited program of decentralization of government services, as an aid to shrinking communities. My northern Ontario city was to become the recipient of OLG, with headquarters to be moved here. Since that “relocation” began, head honchos in Toronto OLG have slowly sucked back at least half of those jobs. Why? Because we’re not Trona. Uppity-muckities never did relocate. Funny thing is, an OLG salary likely goes twice as far here as in the GTA.

Meanwhile, more and more need to gravitate to the Big Smoke for jobs, astronomical house prices, and horrible commutes that consume years of one’s life. Add in the annual crop of immigrants, and don’t expect the GTA Crunch to change going forward.

Density can be a very bad thing. More violence and disease for certain. Quality of life? Ha. Enjoy those boxes in the sky, mortgaged for life.

Now you know what it feels like. For 20 years we’ve said goodbye to our kids as they head south for a job. You southerners will now be saying goodbye to your kids as they look for affordable housing, or tie themselves to a lifetime of debt slavery…or they will be forever in your basement.

Ten minute commutes in the Northern Ontario Hinterlands, and nice houses on a single income, for between $100,000 and $200,000. Paid toys in the garage. Welcome to the 50s.

#84 Trumpocalypse2017 on 05.23.17 at 9:18 pm

UK TERROR THREAT AT ‘CRITICAL’!!!!!!!!!

Trump is in the neighbourhood, with his angry finger on the button.

What could possibly go wrong?

More terrible news by morning.

Guaranteed :(

#85 Allah on 05.23.17 at 9:19 pm

DELETED

#86 Wrk.dover on 05.23.17 at 9:19 pm

Trader Jim, there is a Roger Waters song, on it’s album, in context it is actually the New World Anthem, and it goes like this…

“Can’t you see, it all makes perfect sense, expressed in dollars and cents, pounds shillings and pence, can’t you see it all makes perfect sense!” belted out by a big honking choir.

Waters had the likes of people thinking like you and President Gump at heart the day he wrote that ditty.

#87 Tony on 05.23.17 at 9:20 pm

DELETED

#88 Investx on 05.23.17 at 9:25 pm

But, but the US will raise rates twice this year… and the bond market forces.

So much for rising rates.

#89 TCContrarian on 05.23.17 at 9:26 pm

#31 I’m Not Poloz on 05.23.17 at 6:46 pm

Is that Kathleen Wynne for today’s blog post?

On a serious note, cutting interest rates in Canada will cause a 50-cent Loonie.

Poloz wants a 40-cent Loonie to boost exports while Canadians pay $10 for Cauliflower and $20 for those British chocolate wafers in that gold & red package.
————————————————————-

Enough already! You’ve been predicting a 40-cent Loonie forever, yet you don’t seem to have a clue of the inter-relationships which affect the $CAD, both ways.

You can’t ignore the fact that strengthening energy/commodity prices have a positive correlation with the CAD.
Moreover, the Commercials (Forex Futures), have an extremely bullish (long) exposure to the CAD.
Amongst the ‘noise’ in the financial media (and pathetic blogs), I’m far more interested what the smart money is doing than ‘not-someone’ anonymous posts.

I see a 90+ cent CAD a far more likely price level than 40!

TCC

#90 Leo Trollstoy on 05.23.17 at 9:27 pm

Harvard: Mainstream media negatively biased towards Trump

https://shorensteincenter.org/news-coverage-donald-trumps-first-100-days/

And in other news, water is wet…

#91 Leo Trollstoy on 05.23.17 at 9:28 pm

Complaining about our government is like complaining about traffic.

You ARE traffic

#92 GFD on 05.23.17 at 9:33 pm

#69 Ron on 05.23.17 at 8:34 pm

Talented. Geniuses. Stupid people. Lack intelligence. Intelligent people. Sycophants. Brb. Evil in many forms.

#93 Al on 05.23.17 at 9:33 pm

$100 invested in Bitcoin seven years ago would be worth $75 million today ! Much better return than GTA detached homes.
http://www.cnbc.com/2017/05/22/bitcoin-price-hits-fresh-record-high-above-2100.html

#94 Nothing To Worry About on 05.23.17 at 9:35 pm

Our govt will come to the rescue of home owners by reintroducing those four Flaherty measures from 2009. Why do you think they were undone? Only to have more ammunition if/when needed later on. And, once that no longer works, the govt will allow 50-year mortgages and, ultimately, like in Japan, multi-generational mortgages. At some point, Canada will come up with innovative new productive methods to revive our economy, thanks to Trudeau’s innovavation agendaa wa hhaaa HaHHaaaaa – sorry I am tearing up here. Welcome to Canada, the land of the Entitled!

#95 TnT on 05.23.17 at 9:41 pm

#69 Ron on 05.23.17 at 8:34 pm

His schtick, just like a housing bubble, will work for him right up until the day it doesn’t.

See, this is exactly what TraderJim is talking about. Mistaking his non-Political mannerisms as buffoonery. Trump is a Realty TV expert. He knows exactly how sound bites work on the American populace and the liberal left still can’t grasp that he outsmarted them all the way to the White House.

The big picture is simple. Trump is part of a billionaire club who has contacts with the Russian billionaire club through New York (Russian mobs / oligarchs all over New York funneling dirty money that gets scrubbed by Deutsche Bank into Trumps business).

Trump was never accepted into Manhattan Socialite club because of his low brow mannerisms (he hates them because they rejected him).

There are trillions of untapped resources and central banking opportunities in Russia and the Russian oligarchs have been battling Goldman Sachs, George Soros and the Clintonites Globalists agenda (working with China) since the fall of communism.

These same Russian oligarchs will do business with President Trump as this would be a serious opponent to the Globalist / China partnership.

#96 Mark on 05.23.17 at 9:44 pm

“Let’s have your qualifications as an economist, dude. — Garth”

Doesn’t take being an ‘economist’ to understand that as house prices go down, the majority of Canadian homeowners are going to be poorer. A lot poorer. And the orgy of consumption that went along with the housing bubble will turn into a dearth of consumption and an orgy of savings.

Its not rocket science. Heck, the BoC has, even without the housing bubble collapsing, and with the CAD$ depreciating 30% against our largest trading partner, still been unable to meet the 2% inflation target with current high interest rate policy. The suggestion that policy rates are going to rise anytime soon, nevermind in 2018, just smacks of nonsense. Where is the demand in the economy supposed to come from to take care of the loss of demand associated with the RE marketplace and all the consumption that is levered off of it?

#97 Ron on 05.23.17 at 9:50 pm

@traderJim

You’re partly right, Trump is a systems guy. He has a system that works, and he has had great success and he keeps using it, as any intelligent person would.

————————————————————
Sure, any intelligent person would, but so would anyone with at least a minimal IQ who got lucky.

What part of his success actually requires superior intelligence?

What really happened, is that out of all the people in the world who cheat and lie to get ahead, it was only a matter of time before one of them cheated and his lied his way to the very top.

All this talk of intelligence is really beside the point. What really alarms people about him is not a lack of intelligence, but an amorality and a lack emotional maturity. He behaves like a child, and people fear the consequences of someone like that being in charge.

#98 NoName on 05.23.17 at 9:51 pm

#69 Ron on 05.23.17 at 8:34 pm

Trump is like the band AC/DC. 40 years ago, they found a formula that worked and have been writing the same song over and over since then, making loads of money. Are they talented? Yes. Geniuses? Hardly.

—–

Are they talented? Maybe. Geniuses? YES.
i think i posted this or maybe not, basicly trump won in for same reason why rock music died. information distribution from top down collapsed. (if that makes sense, makes sense in me head…)

when it come to music formula is
verse verse corus verse coruse verse bridge repit

#99 Raj2 on 05.23.17 at 9:51 pm

You guys never listen to BOC

“raising rates is too blunt of a tool” Garth just wasted a blog post for no reason.

we all know whats going to happen

#100 So Exhausted on 05.23.17 at 9:57 pm

This indebted culture, this stupid housing market, this wussy country, it’s just all so exhausting.

#101 Smoking Man on 05.23.17 at 9:59 pm

Righteous Indignation

Took 2 glass of wine and a mickey of Canadian Club, 12 cigarettes before it hit me.

I finally tapped into the liberal mind. For some strange reason, they believe they own all the preferred shares in morality. They use deep state-sanctioned words to communicate their insanity.

When they look in the mirror all they see the purity of an illusion, but can’t see the monster looking back.

They hate and loathe anyone with a different point of view. Their brains shut down in the debate, they can’t debate, to dumb to know how. The only defense is too fire words, pre-packaged that set the scene. Your bad Something-phobe

Their invented moral superiority justifies the ends no matter how immoral. the means no matter how ugly is irrelevant. They are right in their twisted heads. Death to skeptics and none believes, I now see how they connect to ISIS.

I’m Smoking Man.
PhD Herdonomics

#102 Jonah on 05.23.17 at 10:06 pm

I am lucky to have sold my house in mid April in GTA suburbs . Since then the listings have gone up in my neighborhood like wild weed with no control but the funny or quite sad (kinda both) thing is that none of those have been sold!!! not even a single offer. One listing was taken off market because it had no showing and others as per my neighbors had no offers.

The issue of bubble is not only specific to GTA. I was in Ottawa searching for dream home and was quite surprised at the prices for the new built house. A 2600 sqft on 36X80 lot would cost around 525,000 + closing costs and also doesn’t qualify for HST rebate. A town home of meager 1100sqft with 28 by 80 lot was starting at 285K . If you go south of ottawa, in Kemptiville which is is about 20 minutes away, a 3200 sqft luxury house newly built by premium builder was around low 400K.

I cannot believe a place like Ottawa is also being impacted by the fires in GTA. I am considering waiting and renting for now until the dust settles.

#103 Myra Andrews on 05.23.17 at 10:12 pm

Paul Boenisch, a Vancouver realtor posted today’s stats for Vancouver.

New 446
Price Change 70
Sold 141
TI: 8765 (total inventory)

http://www.clivestevepaul.com

#104 DON on 05.23.17 at 10:13 pm

#74 Andrew Woburn on 05.23.17 at 8:45 pm

I’m not one of the ban-the-carbon tribe but those who think that renewable energy is nothing but a greenie pipe dream should pay more attention.

Especially if they are investors.

– 85% of Germany’s power just came from renewable energy, setting a new record

https://www.indy100.com/article/two-thirds-germany-powered-renewable-energy-easter-day-green-7737221
***************

I agree Andrew – with all the divesting in the oil sands lately and talk about alternative energy. It was only a matter of time before someone put some time and effort making green energy more viable. In BC I am still waiting for tidal power to take hold. I remember reading lately that a local university is looking into it. Now if we can find a way to capture static electricity that would be great.

Like the cowboy seeing his first car. Likely the same destiny for the oilman (to some degree).

#105 John on 05.23.17 at 10:14 pm

In the 1980s, Japan was the heir apparent making all the “best stuff.” Then it crashed. Their stock market was clocking almost 40,000 now its less than half that and worse. Housing prices in their most inflated market, Tokyo, collapsed by 50% and has never recovered. China is no different and neither is Canada. Our rapidly aging populations will no longer crave walk in closets, nor the clothes we stuff in them. Granite kitchens will become so 2016. Stuff will no longer be the measure of wealth, but a measure of a person’s wealth will be what he/she does not need. And crypto currencies, like bitcoin, will get more expensive. The lower and longer the central banks keep interest rates ultra-low on their paper monies, the more economies will function in ways that are seperate from that crappy format. People will park assets in gold braceletts, real estate, farmland and transact stuff using blockchain technology.

#106 westcdn on 05.23.17 at 10:19 pm

I was looking over the market action today as I was thinking I should raise some cash. I noticed a announcement from a company called Cannabis Wheaton Income Corp.

They were doing an expanded IPO – shares, units(share and warrant) and Convertibles to raise cash to line up suppliers for a streaming business.

Now there is something you don’t see every day. Their offering looked attractive but they have no business history to report. I just my eye on them for while.

#107 cd on 05.23.17 at 10:21 pm

every so often I look at Detroit real estate and its super ridiculous…

https://detroit.curbed.com/2017/5/23/15677176/adams-castle-for-sale

all for 2M usd

#108 akashic record on 05.23.17 at 10:21 pm

#61 traderJim

Taleb is right on the money about Trump.

Big part of what Garth describes as “the most comedic leader in living memory” is that Trump became politician without going through the socialization of being politician.

He gained top power in the most unconventional route in living and maybe past modern history. Even current kings and queens are carefully groomed for the dreaded duty.

If Trump was a lawyer, at least he would have the fundamental political lingo, instead, he is a hugely successful, wealthy real estate entrepreneur, with a corresponding lingo of his trade, which will always sound “comedic” no matter what in the politico world.

Add to this Taleb’s observation: Trump never had a boss.

Very few can truly appreciate the gravity of this.
People having lived their life this way are truly different from the rest.
It does not matter to them how other people expect them to be “presidential” or whatever similar “standard”, which is basically the end-result of how basically all politicians are socialized slowly, through many filters before they reach various levels of political power.

Trump jumped from self-nominated candidate to presidency, very fast, without grinding through the party system. In Canada that would be entirely impossible, as every candidate must be party-approved before they open their mouth in public, as aspiring politicians.

Paris Hilton, the wealthy heir of the hotel billionaire used to have a reality tv show, where she is hired to do regular jobs. Her reaction to the situations that common employees face every hour in their shifts was priceless. She was calling out any bullshit she encountered without hesitation, to the amazement of the fellow co-workers and great annoyance of the bosses, by simply not willing to comply with the assumed roles that an employee is supposed suck up with. She refused and make fun of the demands of the jobs – as only truly free men and women can, who don’t need to ‘lean in’ for the next pay check.

She was “comedic” in a very similar way.

Trump is performing the role of the president with the same attitude – driving crazy the political elite, pundits, burdened with “employee-soul”.

He is also not a political bureaucrat, but an accomplished “doer”, the presidency is not the end victory of a long soul-crashing career in politics.

Trump can and plays the role more freely to his own rules, instead of formalities than any recent politicians.

He may look “comedic” what will matter is what he does, not what he says and how he says it.

#109 Early 80s, Early 90s & 2008 on 05.23.17 at 10:21 pm

Housing prices fall during a lengthy job loss recession as in the early 80s (12% peak unemployment, 2 years) and early 90s (11.5% peak unemployment, 3 years).

Look at unemployment rates vs. HPI and you have your answer. High unemployment, large HPI drops.

2008 unemployment rate was not severe enough (8% peak unemployment, 2 years) and neither was there much of a drop in HPI (in YVR, HPI just flat lined during that recession).

Early 80s was due to slow global growth/oil shock, leading to rampant inflation stemmed by high interest rates to restrict money supply.

Early 90s was the US stock market crash.

2008 was the US financial crisis.

All 3 job loss recessions were due to external shocks.

It will not be rates that crash RE in Canada, it will be an old fashioned external shock, job loss recession as 2 of them have been and so-so in 2008.

And if a repeat of the early 80s or 90s starts in 2017, Canada will be more than just pooched due to its massive history making debt burden subscribed to by a LARGE SWATH of the population – it will be a repeat of the Great Depression of the 30s where generational wealth will be wiped out in a matter of a few years as it largely resides in RE.

I hope not, but admit it, we are ripe for the picking.

#110 Ernesto Salvi on 05.23.17 at 10:21 pm

*Ad nauseam

#111 Kool Aid on 05.23.17 at 10:27 pm

What a mess, rates up (negative for consumers) rates down (ultimately negative for consumers).

Disruption in legacy industries will ultimately crash the Canadian dream.

Policy makers are failing us, Poloz included.

Volatility coming to all assets soon, protection time.

Bitcoin trading at 2300/USD today for a reason.

#112 Smoking Man on 05.23.17 at 10:30 pm

#94 Nothing To Worry About on 05.23.17 at 9:35 pm
Our govt will come to the rescue of home owners by reintroducing those four Flaherty measures from 2009. Why do you think they were undone? Only to have more ammunition if/when needed later on. And, once that no longer works, the govt will allow 50-year mortgages and, ultimately, like in Japan, multi-generational mortgages. At some point, Canada will come up with innovative new productive methods to revive our economy, thanks to Trudeau’s innovavation agendaa wa hhaaa HaHHaaaaa – sorry I am tearing up here. Welcome to Canada, the land of the Entitled!
….

A bit too hammered to understand your post.

All I know is Shlong Zumanga, a fellow Nictonite who’s had this world all to himself with no real opposition till I put Trump in the white house.

It’s all in my book.

Shlong is an evil bastard. He invented Liberalism. put the wrong teachers in your classroom.

#113 J Shum on 05.23.17 at 10:33 pm

Howard in a comment wonders

Garth – now the question is this : How much will responsible savers with no debt, like myself, have to bail out these idiots? In what way will Poloz and the Turdo government force people like me to soften the downfall of the indebted? Because I know it’s going to happen. These people will never, ever be forced to deal with the full consequences of their poor decisions.

If the mortgages are insured by CMHC and they can’t be paid I always thought correctly or incorrectly the tax payer (including people like me who never managed to buy a house but save) will be footing the bill the cover the mortgage

#114 bigtowne on 05.23.17 at 10:38 pm

The border line-up at the Port Huron – Sarnia crossing was
non-existent on Monday at 6 p.m. The border guard was courteous; polite and we were noshing down creullers at the local Tim’s in no time. The Canadian dollar has cancelled the normal cross border shopping extravaganzas for the many.

#115 RE: Early 80s, Early 90s & 2008 on 05.23.17 at 10:40 pm

I forgot to add that is a severe early 80s/90s recession hits Canada, it will take 10 years or more for RE prices to recover to their prior amounts.

Bad news for the wrinklies due to their age.

Millennials, you will be financing underwater mortgages for that 10 years.

If, and a big if, an 80s/90s recession hits Canada in 2017…

Rates have only damaged HPI when they were in the 20% range.

Witness Mr. Turner purchasing homes at 12% plus rates…those rates did not stop him did they?

#116 Pete on 05.23.17 at 10:43 pm

to #96 Mark

Historically, Canadian interest rates track US rates, not completely in sync, but almost. The US has raised rates three times in the past year and a half. Sooner or later, Canada has to follow suit.

However, it is true that Canada cannot stand even one rate hike. However, housing bubble does not have to depend on rate hikes to burst. If a bubble is blown big enough like now, it will burst of its own volition.

#117 WUL on 05.23.17 at 10:45 pm

From the publishers of “Burnaby Condo Life” (and the BC. Supreme Court). Seems two low brow condo owners ignored an earlier court order directing them to tone down the Trailer Park Boys behaviour. So other unit owners dragged them back to court. The Learned Justice had had quite enough. Inter alia, it was ordered that Corey and Trevor vacate in seven days and list and sell. A delightful read on the joys of condo life.

http://www.courts.gov.bc.ca/jdb-txt/sc/17/08/2017BCSC0852.htm

#118 Boulderite on 05.23.17 at 10:55 pm

Mark, the change in housing price doesn’t make people richer or poorer. That only happens when they sell. Until then it is speculation.

#119 InvestorsFriend on 05.23.17 at 10:58 pm

An Inconvenient Truth

#112 J Shum on 05.23.17 at 10:33 pm said:

If the mortgages are insured by CMHC and they can’t be paid I always thought correctly or incorrectly the tax payer (including people like me who never managed to buy a house but save) will be footing the bill the cover the mortgage.

***************************************
Actually, you were incorrect. I applaud you for admitting you might be. Rare on this blog.

That is POSSIBLE in the future if there are massive delinquencies. But the inconvenient truth here is that CMHC covers the losses from the premiums it charges. Those who never had a mortgage face none of the cost. Those who who avoid CMHC fees (by having 20% down payment) pay none of the cost. Tax payers, so far, pay none of the cost.

#120 akashic record on 05.23.17 at 11:00 pm

#112 J Shum

How much will responsible savers with no debt, like myself, have to bail out these idiots?

“These idiots” are opportunists of the situation.

The situation is the liquidity collapse in 2008 when the low interest rates were introduced to save “the finance system” and still could not be raised ever since.

That’s what “you are bailing out”, that’s why your saving is relatively worthless.

You should have listened to Obama in 2008 borrow as much as you could and invest it in the equity market, as he recommended.

#121 Ron on 05.23.17 at 11:05 pm

#107 akashic record

He may look “comedic” what will matter is what he does, not what he says and how he says it.

——————————————-

His behavior bothers some people and others think it’s ‘low class’, but the real problem with Trump is that he doesn’t give a sh!t about anyone but Trump, and he doesn’t even hide it.

The relentless pursuit of rational self-interest usually works well enough in the economic sphere, but in politics it misaligns the interest of the leader with the body politic he is leading.

#122 InvestorsFriend on 05.23.17 at 11:07 pm

Imagine a run on the Big 5 banks.

Pretty much you will HAVE to imagine it. In today’s world, “cash” consists almost entirely of bank deposits which we transfer continuously amongst ourselves.

Imagine trying to remove the deposits from the the big 5 banks. Where could they go? The smaller banks and credit unions would not likely even accept the huge amounts involved.

And who would run from the big five banks to tiny ones?

Would we take out the deposits in paper cash? Doubtful as too risky and you will find that if you want more than about $4k in paper cash you need to give the bank notice. There is nowhere close to the paper cash to meet a run on deposits.

What about transferring the deposits to foreign banks? I don’t know the rules and limits but I suspect there are some and that it would not be that easy.

This worries me not at all. It simply illustrates that there can be no run on the big 5 no matter what.

There COULD be a run on one big Canadian bank but if we tried to do a run on all five I think there is simply no place to run.

#123 John on 05.23.17 at 11:14 pm

Just a few moments ago, the Chinese Yuan was downgraded. Debt and so on. Seems that rating is worse than the downgrade on Canadian banks, a little while ago. Something stinks and it ain’t just. Made in Canada. Watch Bitcoin levitate. Maybe a black swan is now flapping its wings.

#124 InvestorsFriend on 05.23.17 at 11:21 pm

Fine Print is not “fine”

#70 AGuyInVancouver on 05.23.17 at 8:37 pm
Forgot to ask, who is this Oaken Financial taking out full page ads in the Globe & Mail about their “high rate” GICs? Fine print says a division of Home Bank, is that Home Capital?

*************************************
I consider “fine print” to be unethical in all cases. No excuse for it in that full page ad, none whatsoever.

And yes Home Bank is Home Capital and given recent events it seems unethical not to make that clear in those ads.

#125 InvestorsFriend on 05.23.17 at 11:25 pm

The Meaning of the recent Downgrade on Canadian Bank Debt.

I believe the (high) ratings on Canadian big 5 bank debt indicate close to zero chance of default in the view of the rating agency. After the downgrade the chance is still close to zero but just not AS close to zero.

#126 whatever on 05.23.17 at 11:27 pm

our money will be worth nothing, but so technically, is the USA’s money. And that still happens, despite having no base in reality.

I just don’t believe housing will collapse anymore. It should have already done so like a million times so why would it? we are way passed ridiculous.

#127 InvestorsFriend on 05.23.17 at 11:43 pm

Be the Bank

Get a 5 year Mortgage at 2.36% from HSBC. Invest in 5 year GIC at Oaken paying 3.10%

Voila, you make 0.74% risk free on the first $100k. Add your wife and its another $740 free money.

Probably not worth the effort but it is interesting. If you could manage to do $500k it almost gets interesting. But you would have to pay some principal on the mortgage so not as sweet as it looks.

Strange days indeed though.

#128 Half Full on 05.23.17 at 11:44 pm

I give up. After selling in 2010, houses have only gone up. We now can’t afford a house in the smaller city we left Vancouver for. A decent place here has gone from 350K to 600K+. I’m looking to buy before it gets any higher. Without a change in interest rates, we have lost all hope. Debt, here we come.

#129 Doug in London on 05.23.17 at 11:54 pm

@Greater Fool, post #46:
I’ve got a better idea. Instead of saving in dead GICs or bank savings accounts that pay no or paltry interest, scoop up assets when they are ON SALE, like REITs and electric utility shares in 2013, or preferred share ETFs and oil and gas ETFs in 2015. That way you get to sit on your ass, put your feet up, relax, and let the dividends roll in. I absolutely LOVE living DEBT FREE without worrying about a big mortgage that could become unaffordable when (not if) interest rates go up. The ONLY time I run up debt is margin debt when assets go ON SALE (see above). When values recover, as they always do, I sell off some of those assets to pay down some of the margin debt. The rest gets paid off with those GENEROUS dividends. I will sleep in tomorrow morning if I feel like it, how about you?

#130 viorelli on 05.24.17 at 12:10 am

My good old Italian neighbor is happy and thinks that his house on a large lot in North Burnaby will soon be close to $ 3.000.000. On the other hand his newly received 3 million will be worth 1.5 million of todays junk paper. So, you will break even buddy and this is a great way to come out unharmed from this crazy black jack game that the central bank had created!

#131 I think I know something on 05.24.17 at 12:24 am

#59 Buster Baxter on 05.23.17 at 7:51 pm

How much will responsible savers with no debt, like myself, have to bail out these idiots?

————————————————–

The REAL bailout targets will be the banksters and the system they run, not the indebted. The “idiot” borrowers will also be thrown a lifeline, but that is just a consequence of saving the banksters. And let’s get real for a moment, the system (FIRE) doesn’t care a whit about savers. They consider them to be the real idiots.

#132 data on 05.24.17 at 12:38 am

“I was first elected to the House of Commons, my mortgage was 14%. But a great house cost less than $300,000. Today a fiver is 2.36% and real estate sets you back a million.”

On that argument, you are missing the whole point. Back then your annual interest was 42K a year on your house of 300k, today it’s 23K on 1M, meaning your monthly nut back then could purchase a 2M house today!!!!!!!!!! You missed the math and are making a case for homes to go higher

Also for the HSBC, try going in and borrowing anything over 1M, they want 40% down to get that rate, its only works on very low dollar loans, 25% down on first million and 40% above. Marketing.

#133 Tony on 05.24.17 at 1:39 am

Re: #115 Pete on 05.23.17 at 10:43 pm

Historically interest rates in Canada have always been higher than the interest rates in America. Historically going back in time there was no Stephen Poloz at the helm.

#134 Tony on 05.24.17 at 1:50 am

Re: #105 westcdn on 05.23.17 at 10:19 pm

My opinion is cannabis stocks will end up as bad or worst than stem cell stocks.

#135 Karma on 05.24.17 at 2:15 am

#60 FOUR FINGERS WATSON on 05.23.17 at 8:05 pm
“Argue about what matters – low rate cause high prices. The Chinese guys are a meaningless distraction. — Garth

David Rosenberg has issued yet another piece of blistering common sense (which most mainstream and sellside economists seem to lack in wholesale amounts these days), in which he explains why the action at the margin is all that matters for asset prices and all that follows.”

It’s all about the marginal buyer’s marginality: Marginal ability to borrow combined with marginal size of down payment.

#136 Dan.t on 05.24.17 at 2:53 am

Poloz is an idiot. Until money costs something then people will not respect it and that along with the fact that

Every… and I mean virtually every Canadian is a house horny speculator is why houses and condos and POS tear downs are selling for millions.

I bet on average every Canadian owns 2-3 houses, townhouses or condos..

People in the construction trade pool their money, buy 10 houses, the taxi drivers own 10 each, families pool money and buys investment condos and so on. DEBT means nothing. Somehow, debt has become money.

How many empty places are in YVR… it’s called mass speculation with free money and it is why there is limited supply and bidding wars

Buy, flip, cheat, defraud, realtors in on it, shady and fraud lending, tax free massive wind falls, criminal activity goes unpunished, government does nothing so it goes on. Because there is no other economy in Canada.

#137 Steve French on 05.24.17 at 3:14 am

But but but..

What about Killary? How many Americans has she personally executed, including S. Rich?

… what about pizzagate and… those, those emails?

Thank Dog that the US Government is finally in the hands of an adult.

#138 Mark on 05.24.17 at 3:16 am

“Historically, Canadian interest rates track US rates, not completely in sync, but almost. The US has raised rates three times in the past year and a half. Sooner or later, Canada has to follow suit. “

Canada has run trade surpluses, to the tune of $1.4B/month since 1971:

http://www.tradingeconomics.com/canada/balance-of-trade

There is no external pressure on Canada, nor latent external demand on the Canadian economy. Thus the path for Canada is clearly that of currency strengthening and deflation as the RE bubble pops. Requiring extended low interest rate policy.

The USA, however, is quite a different. They’ve run yuuuge trade deficits for quite a lengthy period, and will need to raise domestic rates in order to slow domestic consumption, particularly on imported goods.

In light of this disparity, Canadian and US monetary policy can (and arguably will) disconnect quite significantly for quite some time to come in the future.

#139 Mark on 05.24.17 at 3:21 am

“. But the inconvenient truth here is that CMHC covers the losses from the premiums it charges. “

The question, though, is just how long can the CMHC do that when they are, what, 40X or more leveraged into the sort of subprime mortgage guarantees that they write, in a falling housing market?

As things pick up steam on the downside, it won’t take long to exhaust their $20-$25B of net equity. And then the entire financial solvency of the Canadian banking system fundamentally rests on whether or not Justin Trudeau and friends decide to pass an appropriation to bail out the CMHC.

Although the doctrine of “mutually assured destruction” (“MAD”) applies here, is that really something you want to take chance on? That your investment is contingent on politicians agreeing to bail out the CMHC, and indirectly, the banks?

That’s why balance is so important.

#140 neo on 05.24.17 at 6:18 am

#94 Nothing To Worry About on 05.23.17 at 9:35 pm
Our govt will come to the rescue of home owners by reintroducing those four Flaherty measures from 2009. Why do you think they were undone? Only to have more ammunition if/when needed later on. And, once that no longer works, the govt will allow 50-year mortgages and, ultimately, like in Japan, multi-generational mortgages. At some point, Canada will come up with innovative new productive methods to revive our economy, thanks to Trudeau’s innovavation agendaa wa hhaaa HaHHaaaaa – sorry I am tearing up here. Welcome to Canada, the land of the Entitled!

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

All that won’t matter if we continue to see no material wage growth and the cost of living continue to climb eroding that income. People won’t have enough after tax dollars to support debt repayments no matter what interest rates are or the amortization is unless housing prices return to the mean.

Don’t bring up Japan, they had a huge savings rate when they started this low interest rate experiment. Canadians are the complete opposite and already on a knife’s edge in terms of cash flow and savings which are non existent.

#141 Trump's Budget Cuts on 05.24.17 at 6:25 am

“… the [budget] package contains deep cuts in entitlement programs that would hit hardest many of the economically strained voters who propelled the president into office. Over the next decade, it calls for slashing more than $800 billion from Medicaid, the federal health program for the poor, while slicing $192 billion from nutritional assistance and $272 billion over all from welfare programs. And domestic programs outside of military and homeland security whose budgets are determined annually by Congress would also take a hit, their funding falling by $57 billion, or 10.6 percent.”

https://www.nytimes.com/2017/05/22/us/politics/trump-budget-cuts.html?_r=0

#142 A Reply to #81 traderJim on 05.24.17 at 6:27 am

“My IQ puts me in the top 2% of the population….”

Jimbo, you mentioned in a previous post that you have a Masters degree. Did you graduate from Trump University or Clown College? Summa cum laude?

#143 traderJim on 05.24.17 at 6:46 am

#141 Unsuccessful person

“Jimbo, you mentioned in a previous post that you have a Masters degree. Did you graduate from Trump University or Clown College? Summa cum laude?”

I thought you were at least bright enough to know that when you are forced to attack the person (with childless insults no less) instead of attacking the argument, you prove you have lost.

Guess you’ll have to start posting under another handle now, huh?

#144 traderJim on 05.24.17 at 6:59 am

#120 Ron

“His behavior bothers some people and others think it’s ‘low class’, but the real problem with Trump is that he doesn’t give a sh!t about anyone but Trump, and he doesn’t even hide it.”

Trump of course is self-interested, as we all are. It’s how we survive. The failure to recognize this fact of human nature is why collectivist systems always fail.

Where you and I disagree is in the idea that Trump does not give a damn about others. In fact, along with adding one last great achievement to his belt, I believe Trump is actually making a great sacrifice (being president cannot be fun) in order to do what he thinks is right.

His policies might be wrong (hard to know until they are implemented and tested), but I do not assume the worst about Trump from the get-go, unlike many of his detractors.

Which is why the world is living two different movies (as Scott Adams puts it) right now.

Those who assume Trump is an evil tyrant from the beginning see confirmation in everything he does that their belief is true.

I, on the other hand, started as an anti-Hillary person, who thought and hoped Marco Rubio would be the R candidate.

I have only become a Trump ‘supporter’ when I saw the hysterical and frightening response of the left to his victory.

The fascist-anti-free-speech violent rioters and the creators of the Russia conspiracy are far more dangerous than President Trump.

Trump is a centrist pragmatist when it comes to politics. He won’t do much damage, and he MIGHT do some good. We’ll see. But his opponents are downright scary, and I am glad Trump’s win demonstrated just how scary they are. My eyes have been opened. I thought most lefties were well meaning but misguided in the past. Now I understand their true nature. It’s out there on full display, and it ain’t pretty.

#145 traderJim on 05.24.17 at 7:06 am

#107 Akashic

I agree, Taleb’s take on Trump is very good. People who can’t stand the thought of a non-politician doing a politician’s job just can’t accept that Trump supporters love that he is unwilling to play the games politicians usually play.

When Trump tweets something completely outrageous, his opponents think ‘oh, that will hurt him!’ when of course the opposite is true. His supporters love it.

And with each hysterical over-reaction by anti-Trumpers, the President gains more moderate democrats to his side.

2018 will be the first small test of reality of course, and 2020 will be the big test. It’s going to be almost as fun as 2016 was.

#146 traderJim on 05.24.17 at 7:26 am

“Childless insults” -I think that must be auto-correct ’cause Freud doesn’t make sense

#147 DRew on 05.24.17 at 7:31 am

Garth – why is it so hard to believe that it will be inflation that will save us? That is where a low CDN dollar comes in handy. All our imports go up, giving us our inflation match.

Instead of a real estate correction, people will say they were lucky to buy a home in Toronto for a million.

Wait til they allow 25 year fixed rates.

#148 Trump Praises Duterte on 05.24.17 at 7:38 am

“Trump sounds much the way he sounds in public, casing issues in largely black-and-white terms, often praising authoritarian leaders, largely unconcerned about human rights violations and genuinely uncertain about the nature of his adversary in North Korea.

“Mr. Trump placed the call and began it by congratulating Mr. Duterte for the government-sanctioned attacks on drug suspects. The program has been widely condemned by human rights groups around the world because extrajudicial killings have taken thousands of lives without arrest or trial. In March, the program was criticized in the State Department’s annual human rights report, which referred to ‘apparent governmental disregard for human rights and due process.’

“Mr. Trump had no such reservations. ‘I just wanted to congratulate you because I am hearing of the unbelievable job on the drug problem,’ he said. ‘Many countries have the problem, we have a problem, but what a great job you are doing and I just wanted to call and tell you that.’”

https://www.nytimes.com/2017/05/23/us/politics/trump-duterte-phone-transcript-philippine-drug-crackdown.html

#149 Fox News Retracts Story on 05.24.17 at 7:52 am

“Fox News on Tuesday retracted a story linking the murder of a Democratic National Committee staff member with the email hacks that aided President Trump’s campaign, effectively quashing a conspiracy theory that had taken hold across the right-wing news media.

“It was a rare acknowledgment of error by the network. But it also underscored a schism between the network’s news-gathering operation and one of its biggest stars: the conservative commentator Sean Hannity, who has unapologetically promoted the theory and remained defiant on Tuesday.”

https://www.nytimes.com/2017/05/23/business/media/fox-news-seth-rich.html?_r=0

#150 Summa cum laude on 05.24.17 at 8:07 am

#141 A Reply to #81 traderJim on 05.24.17 at 6:27 am

“My IQ puts me in the top 2% of the population….”

Jimbo, you mentioned in a previous post that you have a Masters degree. Did you graduate from Trump University or Clown College? Summa cum laude?

===

Summa cum laude of University of Natural Selection if in top 2% IQ of population.

No other degree required.

What have you got?

#151 IHCTD9 on 05.24.17 at 8:16 am

#11 Howard on 05.23.17 at 5:55 pm
Garth – now the question is this : How much will responsible savers with no debt, like myself, have to bail out these idiots? In what way will Poloz and the Turdo government force people like me to soften the downfall of the indebted? Because I know it’s going to happen. These people will never, ever be forced to deal with the full consequences of their poor decisions.
____________________________________________

I have come to realize that there is a lot you can do as an individual to forcibly limit your exposure to taxation.

New taxes are going to affect you?

Offset them: Dump more into RRSP’s, curb your retail spending and check out Kijiji and E-bay instead of Wal Mart, buy a good used vehicle that gets great gas mileage – and pay an appraiser willing to lowball the vehicle’s value, check your lifestyle inflation, work less at the tax farm if you can, curb/eliminate your use of conventional energy as much as possible.

There is a lot you can do with a little thinking, sacrifice, and resolve.

#152 crowdedelevatorfartz on 05.24.17 at 8:27 am

@#141 A Reply to traderjim

Perhaps he could only count to two?
Or that was the number of students in his graduating class?
Trumpocalypse2017 was his classmate which explains his delusional behaviour?
Or thats how many fingers and toes he has?

#153 maxx on 05.24.17 at 8:46 am

#8 The Arctic Gringo: Qalunaaq on 05.23.17 at 5:47 pm

Makes sense.
Wherever there’s money to be made…..and stupidity is a huge moneymaker – especially when underpinned by anesthetized governance and a brain-dead central banker.
Economic predation always fills the gaps left open by moronic leaders.

#154 Xbox Economist on 05.24.17 at 8:47 am

“The bank’s key rate has idled at 0.5% for the last two years. Poloz plunged it along with oil prices – which had a lot to do with igniting a real estate maelstrom in Vancouver and Toronto.”

But the overnight rate has nothing to do with mortgages because those are determined in the bond market, right? Except the yield on Canadian bonds and US TSYs have fallen off a cliff since the Fed started hiking. Quite the opposite of what was predicted here.

The reason HSBC is offering 5 yr fixed at 2.36% is because they’re betting that rates 5 years from now will be near or lower then they currently are.

Wrong on both counts. The B0C rate affects prime and HELOC rates directly, as well as determining pricing of VRMs. HSBC is merely predatory pricing to win market share. There is no attempt made to match deposit and loan costs since this falls under the heading of ‘marketing.’ — Garth

#155 economictsunami on 05.24.17 at 8:53 am

Just because you can, doesn’t mean you should.

Car loans, low rates, second mortgages: all the ingredients for a new credit crunch

“The main consumer regulator for the financial services industry, the Financial Conduct Authority, is reviewing the market for car leasing, which now accounts for more than 90% of car sales, to check for mis-selling to poorer households who will be vulnerable to default.”

https://www.theguardian.com/business/2017/may/21/car-loans-second-mortgages-ingredients-for-new-credit-crunch

How much more debt we can absorb (robbing our future earnings) and how much future demand can be robbed to drive present consumption, is truly anyone’s guess…

#156 X on 05.24.17 at 9:00 am

Speculation tax anyone…..only rich people can afford investment properties, lol…at least that angle worked against the TFSA when the Libs cut that….maybe they could proposed a speculation tax on 2nd+ properties to reduce the RE silliness.

#157 The real Kip on 05.24.17 at 9:09 am

Builder in Keswick is returning deposits to people who bought a year ago so they can resell the same unbuilt house for more $$$.

https://www.yorkregion.com/news-story/7318150-new-home-buyers-want-answers-after-builder-cancels-sales-in-georgina/

#158 The real Kip on 05.24.17 at 9:11 am

Poloz wants the Canadian dollar to drop so now all he has to do is nothing, wait for Janet and company to hike and watch Canadian manufacturing become more competitive. No rate hikes in Canada for all of 2017.

#159 Pete----Mark is wrong on 05.24.17 at 9:25 am

#137 Mark

Canada has had large trade deficit in goods for the past five years. And Canada also has huge trade deficit in services in ALL YEARS. The US trade numbers include goods and services while Canada trade numbers only includes goods.

The best measure is current account. Canada has been running a larger current account deficit than USA for many years.

#160 jess on 05.24.17 at 9:31 am

The word , “unlucky,” has synonymous meaning

https://www.bloomberg.com/news/articles/2017-05-23/in-home-capital-s-mortgage-mess-blame-the-unlucky-brokers

#161 The Technical Analyst, CSTA, CPD on 05.24.17 at 9:45 am

Bitcoin BTC$

I’m going to bring this up again as Bitcoin is a most misunderstood asset/trade.

What is it going up? 98% of BTC trades are carried out in China to avoid Yuan currency capital controls and move monies out of China. 98% sounds arbitrarily high but it is what it is.

Bitcoin is incredibly volatile in short periods and because of this it does not make a good “currency” at all as it’s nature is highly unstable.

Liquidity. Perhaps the MOST red flag item about BTC/Bitcoin. It’s not very liquid. In fact the liquidity (transactions/day) size of Bitcoin is about that of a small ETF and it gets SMALLER when it drops as buyers are scarce.

Right now BTC is a SPECULATIVE trade by retail investors riding momentum hockey stick. It is not a trade for long term hold nor those without HEAVY risk tolerance.

Trade smart, trade wisely.

#162 A Reply to #142 traderJim on 05.24.17 at 9:54 am

Let me leave you with what I consider a profound quote from a genius political analyst:

“The ideal subject of totalitarian rule is not the convinced Nazi or the dedicated communist, but people for whom the distinction between fact and fiction, true and false, no longer exists.”
― Hannah Arendt, The Origins of Totalitarianism

Despite your genius IQ, Jimbo, I am absolutely convinced that you have no idea what the above quote even means.

#163 Brian on 05.24.17 at 10:04 am

re: Landlord Math

It provides very little incentive for a landlord to pay down a mortgage at an accelerated pace with these historically low rates. Any money sitting around earning slightly north of 5% will provide enough cash flow to cover the mortgage payment (interest + principcal portions). By leveraging their investment, the landlord is also pulling in a new income stream from the renter, and can gain (or lose) spectacularly from the leveraged capital.

#164 isuckless on 05.24.17 at 10:11 am

Predicting housing crash in Canada is a fools errand. Won’t happen as it is now too big to fall.
Inflation, and I mean INFLATION, is our future, sadly.
Very few people (I hope) on this blog experienced INFLATION in their lives, I can tell you it is scary for savers. Spenders (debters) love it.

#165 Dr. Talc on 05.24.17 at 10:19 am

“I was first elected to the House of Commons, my mortgage was 14%. But a great house cost less than $300,000. Today a fiver is 2.36% and real estate sets you back a million.”


today in 416 a building lot sets you back a million, and I’m not thinking Leaside
the ‘great’ house then at 300k is 2 mill today for sure

No, that house is selling for about $800K. But you proved my point. The lower rates go the most demented people become. — Garth

#166 Stan Broock on 05.24.17 at 10:23 am

#2 Doug t on 05.23.17 at 5:28 pm
Poloz is frozen – rates won’t go up for next 10 years. Keep piling on more debt people – you know you wanna

RATM
———————–

Correct, CAD rates could actually go down.

Loonie will be killed. We have not even started deleveraging and is already down significantly.

Investment is non existent already. So what is left is the growing non-value added metastatic cancer – all flavors of financials and some services.

Explosive inflation is coming.

High chance of suburbs becoming crime ridden gethos.

No manufacturing revival is possible but Poloz is clueless, the only way to compete with Asia in labour is to have lower wages then the Asians with lower environmental standards.

Moving down the stairway from a wealthy nation (G7!) back to a resource colony.

Nothing new here. Suck it up and move on.

#167 James on 05.24.17 at 10:29 am

#151 crowdedelevatorfartz on 05.24.17 at 8:27 am

@#141 A Reply to traderjim

Perhaps he could only count to two?
Or that was the number of students in his graduating class?
Trumpocalypse2017 was his classmate which explains his delusional behaviour?
Or thats how many fingers and toes he has?
———————————————————
Trump is a lowbrow whom inherited large amounts of cash. Is has always done whatever he wanted with little or no consequence to his actions. This appears to be the same platform that he is carrying on into the Whitehouse. There is an old saying “you can put lipstick on a pig, but it is still a pig”. That spin does not work in an age of transparency, when everyone will find out the truth anyway. The problem for him now is the entire nation and for that matter the entire world is watching him make a fool of himself. He will be impeached as congress and the senate are watching and waiting for his next major bumble where he cannot lie or repudiate himself out of a delusional statement with no evidence of truth. It appears that his usual sleazy method of dealing with business may have gotten him into trouble by trying to convince officials involved in the Russia investigations to drop them. The base keeps spinning that the Russia investigations are a witch hunt by the Democrats. Unfortunately that is no the truth and no many Republicans are also asking to dig deeper into the Russian influencing of the election and Trumps campaign. Truth to Trump is whatever he can spin and feed his base followers. His official counselors have to digest his delusional crap and repackage it to make it look rational. The base swallows it all the way without even chewing it once. The interesting issue is how long it will take for the rest of the Republicans to stop supporting his delusional lies. Their careers are now on the line for supporting a low brow whack job!

#168 Stan Broock on 05.24.17 at 10:31 am

#163 isuckless on 05.24.17 at 10:11 am
Predicting housing crash in Canada is a fools errand. Won’t happen as it is now too big to fall.
Inflation, and I mean INFLATION, is our future, sadly.
Very few people (I hope) on this blog experienced INFLATION in their lives, I can tell you it is scary for savers. Spenders (debters) love it.

———————-
Correct. Highly Inflationary depression.

As for loving it: I have seen high inflation abroad.

When jobs and decent pay disappear and you can’t buy groceries to feed your family due to their prices it won’t matter that you have a house. Or a cottage.

Canada is not self-sustained country, a lot of the food is imported and it/the inflation will hurt everyone. It willbe ugly.

Retirees and savers are doomed.

I was at some point hoping for some (real) CPP income in the future but have given up recently, my strategy has been to completely diversify outside of anything Canadian, including the Canadian dollar.

Love the country/people but in the grocery store they ask for money, not memories.

#169 Xbox Economist on 05.24.17 at 10:32 am

“Wrong on both counts. The B0C rate affects prime and HELOC rates directly, as well as determining pricing of VRMs. HSBC is merely predatory pricing to win market share. There is no attempt made to match deposit and loan costs since this falls under the heading of ‘marketing.’ — Garth”

Yes, I’m well aware of what impact the overnight rate has on lending rates. I was sarcastically stating an argument that many people use to justify why mortgage rates are about to rise.

Any comment on why 10 yr yields have dropped nearly 30 bps since March?

#170 Stan Broock on 05.24.17 at 10:55 am

Got the following add on yahoo.ca

‘Get a 2.69 % mortgage that brings home the bacon with our 4 years fixed rate’ from PC Financial.

https://www.pcfinancial.ca/mortgages/?utm_source=yahoo&utm_medium=display&utm_campaign=2017_spring_mortgages

So you could be getting the bacon for ‘free’. Just get that damn mortgage. It will just work for you.

BTW clicking on the link does not work.
But hey, the bacon might.

#171 Canada is a house of cards on 05.24.17 at 10:58 am

#135 Dan.t on 05.24.17

Exactly no economy left in Canada. Drive another GTA and almost every street has one,two, three and more houses that are being renovated either gut job or starting from scratch. That is the economy. Constriction with nothing else to take its place. Canada house of cards gets bigger and bigger. This is scary. It needs to crash sooner then later. The city might become a war zone of crime if this gets to big. If prices dont revert to its mean average in the next few years then Canada faces a detroit type of crumble when it comes crashing down

#172 Simplyput7 on 05.24.17 at 11:08 am

So… how long do we pretend that Home Capital Group is a viable company?

May 22
* Liquidity and credit capacity approx. $1.46 billion including $600 million from credit facility

May 23
* Liquidity and credit capacity approx. $1.21 billion including $350 million from credit facility

If there is only $350 million left not including interest that must be paid for using this credit facility. At what point do we say that Home Capital Group may need to dissolve?

Or do the regulators and the mortgage lending industry hope that the majority of the investors holding the $7 billion in GICs maturing in the next 12 months will want to invest again with Home Capital without demanding a significantly higher rate of return for taking on more risk?

I don’t think the appetite for taking on excess risk is there anymore from investors, speculators or savers. Especially as more stories surface of investors not receiving the returns they were promised.

http://www.cbc.ca/news/canada/manitoba/investors-in-skycity-centre-development-owed-interest-as-bonds-default-1.4124954

#173 Figure it out on 05.24.17 at 11:08 am

“Let’s have your qualifications as an economist, dude. — Garth”

So show me a rich economist. Money may not be the be all and end all, but you’d think some economists whose ideas are correct would be able to accumulate quite a bit of it, just as a sort of hobby. Oh, wait…

The New York Times reported in 1995 that Mankiw “was offered a $1.4 million advance by Harcourt Brace in Fort Worth to write a basic economics textbook. That’s about three times as big as any other in the college textbook market and rivals those of all but a few celebrity authors.” Since then, more than one million copies have been sold, and Mankiw has received an estimated $42 million in royalties from the book, which is priced at $280 per copy.

Do as they do, not as they say. Efficient markets, my ass.

#174 'Explosive inflation is coming ' on 05.24.17 at 11:12 am

This chap has likely loaded up m gold , silver and canned goods

Just in case

#175 Canada is a house of cards on 05.24.17 at 11:16 am

Why are we even paying Poloz that silver spoon moron? What does he do? Say bs and keeping rates the same? Rates should of been increased years ago. He adds no value to Canada. Fire him.

#176 Game Over on 05.24.17 at 11:33 am

Party continues as rates still at .5%

Ahh, umm.. growth is good.. but maybe it won’t last? Uhhhh…yeahhh…core inflation is low but maybe that won’t last either? GDP growth is over 3% buttt..i don’t knowww… You know exports just aren’t competitive… What is Trump doing these days? I don’t know… maybe we will leave the rates alone. I’m scared.

Houses?? 30% y/y? No problem.. Keep borrowing! They are simply not rising fast enough. I don’t care about borrowers when we got oil sitting in the ground waiting to be pumped people!

There ya go, that’s our central Banker. May as well roll out a real doll with a pre-recorded tape; “Rates unchanged, we don’t know what we’re doing”. You could have done that for last few years and it would not have made a difference in anything. Probably won’t for the foreseeable future either.

Thanks BoC, have a great day.

#177 jess on 05.24.17 at 11:35 am

House Democrats seek info from Deutsche Bank on Trump accounts
Committee Democrats sent a letter to Deutsche Bank Chief Executive Officer John Cryan on Tuesday seeking details of…

mirror trades

https://www.bloomberg.com/news/articles/2015-06-05/deutsche-bank-probe-said-to-target-6-billion-of-russian-trades

“a grave yard for bankers” that is too funny

http://www.irishtimes.com/business/financial-services/former-deutsche-bank-ceo-joins-bank-of-cyprus-1.1996321

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

credit swaps
https://www.kansascityfed.org/Publicat/Econrev/pdf/2q96neal.pdf

Robert S. Neal is an economist at the Federal Reserve Bank of Kansas City. Douglas S. Rolph, a research associate at the bank,helped prepare the article

https://en.wikipedia.org/wiki/Black_Monday_(1987)

#178 Canadian banks on 05.24.17 at 11:39 am

getting trashed today. To break yet another support level.

#179 Yuus bin Haad on 05.24.17 at 11:43 am

Sorry, who’s irresponsible again?

#180 Capt. Serious on 05.24.17 at 11:55 am

#146 DRew on 05.24.17 at 7:31 am

why is it so hard to believe that it will be inflation that will save us? That is where a low CDN dollar comes in handy. All our imports go up, giving us our inflation match.

Instead of a real estate correction, people will say they were lucky to buy a home in Toronto for a million.

Wait til they allow 25 year fixed rates.

Why would lenders allow 25 year fixed rate terms if there is going to be inflation? Inflation erodes the value of future payments. Actually banks got burned by this back in the 1980s, and it’s one of the reasons it’s unfavorable to take out longer than a 5 year term mortgage.

Also, you’re forgetting the other side of the inflation/export equation. If inflation rises and the dollar is crushed, wages need to increase otherwise people can’t afford inflated real goods. (Technically a large scale inflation would involve wage inflation.) So, not as competitive for exports as you might imagine.

#181 For those about to flop... on 05.24.17 at 12:18 pm

I don’t really want to interrupt all the U.S political talk ,so I will just leave this here in case it helps someone make a decision or save some money.

I now do my Pink Snow real estate posts on the CNN blog.

Don Lemon is a big fan…

M42BC

This GIF Shows Which of America’s Best Selling Cars Stretch the Most Miles for $50 of Gas

https://howmuch.net

#182 Howard on 05.24.17 at 12:43 pm

#119 akashic record on 05.23.17 at 11:00 pm
#112 J Shum

How much will responsible savers with no debt, like myself, have to bail out these idiots?

“These idiots” are opportunists of the situation.

The situation is the liquidity collapse in 2008 when the low interest rates were introduced to save “the finance system” and still could not be raised ever since.

That’s what “you are bailing out”, that’s why your saving is relatively worthless.

You should have listened to Obama in 2008 borrow as much as you could and invest it in the equity market, as he recommended.

———————————

What is your point? That has nothing to do with my question.

I’m wondering how, in the event of a housing correction, savers like me are going to have to yet again bail out the profligate masses. You seem to acknowledge that this will indeed happen, and you actually seem to think it’s a good thing, if I interpret your comment correctly.

Turdo already brought in one measure to stick it to savers by axing the higher TFSA limit. The fact that that wasn’t more of an election issue shows how ridiculous this country has become. Harper offers $5000 more tax-free room but Turdo has great hair!

#183 Sir James on 05.24.17 at 12:45 pm

Bitcoin’s recent rise has been attributed to Japan’s official declaration of BTC as legal tender.

#184 Howard on 05.24.17 at 12:47 pm

#150 IHCTD9 on 05.24.17 at 8:16 am
#11 Howard on 05.23.17 at 5:55 pm
Garth – now the question is this : How much will responsible savers with no debt, like myself, have to bail out these idiots? In what way will Poloz and the Turdo government force people like me to soften the downfall of the indebted? Because I know it’s going to happen. These people will never, ever be forced to deal with the full consequences of their poor decisions.
____________________________________________

I have come to realize that there is a lot you can do as an individual to forcibly limit your exposure to taxation.

New taxes are going to affect you?

Offset them: Dump more into RRSP’s, curb your retail spending and check out Kijiji and E-bay instead of Wal Mart, buy a good used vehicle that gets great gas mileage – and pay an appraiser willing to lowball the vehicle’s value, check your lifestyle inflation, work less at the tax farm if you can, curb/eliminate your use of conventional energy as much as possible.

There is a lot you can do with a little thinking, sacrifice, and resolve.

————————

I already do most of that. I live in Europe at the moment and get paid in Euros, whose value seems to be holding up nicely. Since Poloz seems to want a $0.30USD peso in Canada, it will be good for me when I move back and convert my money from a real currency into Canada’s joke currency.

#185 Lee on 05.24.17 at 12:48 pm

National Post today says new detached selling for $1.8M in Toronto and builders can’t keep up with demand. Big crash.

#186 traderJim on 05.24.17 at 1:03 pm

#161 quotes guy

Quoting intelligent people does not make you intelligent, sorry. Nor do your hallucinations about what I might understand. I notice you have never made a single argument of your own, just quote after quote. Librarian?

I don’t have a genius IQ, that’s over 140. The test I wrote scored me at closer to 130.

I figure that means I am good at writing tests, and not much else. And I wrote that test a long time ago.

Test results certainly don’t predict success or happiness, and I bet that most successful businessmen probably never finished university. Waste of time for people who are entrepreneurial.

I don’t know what Trump’s IQ is, but I’d bet it’s at least 130. And he has other talents that I sure don’t have that combined with a good brain and some good luck starting out have made him a huge success.

You can pretend that he’s not successful, but reality over-rules your hallucinations.

But enough arguing, I’d like to patch things up with you, as I sure would like an invite to your yacht in the Med.

Can we go on your private jet?

#187 Rocky Mountain on 05.24.17 at 1:08 pm

Vancouver is seeing more sales this May than Last. Unless BoC raises rates, this is going to continue.

https://betterdwelling.com/city/vancouver/vancouver-is-seeing-more-sales-in-may-and-more-inventory/

Atleast the people I know have exact opposite logic for purchasing home. They want to buy while the interest rates are low so that they can lock-in 5 yrs fixed rate. The more delay by BoC to raise rates, more people will pay anything to buy a home.

My prediction is Vancouver has atleast another year of bull run.

#188 Wrk.dover on 05.24.17 at 1:13 pm

Garth, I totally respect you and your opinions.

But, it would be nicer for all of us if your predictions stopped being based on integrity and value and started being based on actual probable outcome due to incompetence in public office.

Example: there will be no interest rate rises in the grim future because of the people that make the decisions, not because of the dynamics behind a normal bonafide reason for them to be rising as would have happened with a quality decision maker calling the shots.

Poloser is a weasel and you have never taken that into account. Now, about Yellen…..same thing!

In my opinion, not raising rates is the same as cutting, when measuring outcome.

#189 Who let all the ... on 05.24.17 at 1:18 pm

Doom and gloomers in?

Garth you were right about not bothering with the comments section

Damn , my bad

#190 Stan Broock on 05.24.17 at 1:19 pm

Don’t be fooled by the CAD ‘surges/bounces’ (as of today’s non-event at BOC for example).

This sucker is going down. Big time.

#191 Stan Broock on 05.24.17 at 1:22 pm

#179 Capt. Serious on 05.24.17 at 11:55 am

We will see significant inflation of goods, on everything imported, with no inflation in wages, on the contrary, wages will shrink in nominal due to less good paying jobs.

So get used to lower wages, higher prices, no jobs and everything going to pay THE MORTGAGE.

#192 isuckless on 05.24.17 at 1:23 pm

“age of transparency, when everyone will find out the truth anyway”
Whoever believe in this I have a nice bridge to sell.
We live in a world where the truth is more hidden than anything else.

#193 Stan Broock on 05.24.17 at 1:37 pm

The more Poloz persists with his idiotic policies of suppressing rates, the more the economy goes into the swamp/becomes more unproductive;
and the less likely potential increase in rates and monetary normalization becomes.

Doomed if we act, doomed if we don’t.

Bottom line – we need experienced, strong leadership in the coming critical times at BOC, government and CMHC and we have a weak one.

How can we expect the people that created the problems in first place to have the guts and will to fix them?

Fire the incompetent suckers!

#194 IHCTD9 on 05.24.17 at 1:41 pm

Just reading the comment section on the CBC article regarding the “dial twisting” results for Morneau’s budget speech. Specifically the “tax the rich” response being long and loud to the affirmative.

Reading all the partisan bickering and finger pointing really lays bare how every future government of Canada will probably be a collection of brain-dead airheads. The drooling masses will vote in a party that appeals to their very limited scope of googly-eyed concern (themselves). The dial twisting was the same, big moves for tax the rich, free National parks for 2017, and women want even more gender equality BS.

The Canadian Citizenry is likely as dumb as its ever been. I’ll still vote, but my motives will be different than in the past. I can’t see a problem fixing government of any stripe rising from the current Canadian landscape. We voted T2 in with a majority, and we’ll do it again. I guess our quality of life will actually have to get pounded into the ground before folks come around.

Every time I decide to read the news, I come away validated in my efforts to support the government less and less, and support my household more. The less revenue these morons in Ottawa have to blow, the better off everyone will be.

#195 Contrarian Coyote on 05.24.17 at 1:44 pm

Up here in the Kawarthas, there are more and more listings appearing on mls / zolo. I’ve been watching a few in Lakefield (just north of Peterborough.) It’s funny because you can see that some people have definitely missed the peak and have dropped $$$ / re-listed after no bites.

We’re at the extreme edge of the Golden Horsehoe and things are turning. Cottages are sitting longer or being withdrawn altogether. I think Ronnie Hawkins may have waited too long as well!

$4.25mil, Ronnie? For realz?

https://www.zolo.ca/peterborough-real-estate/2250-6th-line-road

#196 InvestorsFriend on 05.24.17 at 2:10 pm

House of cards 170 complains economy is based on home renovations

Yes imagine a good part of the economy is based on people working to create better shelter. Would you prefer it be based on people manufacturing candy or something else?

#197 InvestorsFriend on 05.24.17 at 2:13 pm

Exports

Exports are not essential but if there are imports then the exports should balance in total. Absolutely no need to balance with each country however.

#198 Greater Fool on 05.24.17 at 2:23 pm

@#128 Doug in London,
You are absolutely right, I’m doing the same, I was beeing very ironic in my comment.
I love hearing about equity everywhere, ppl think I’m poor cuz I live in a basement suite, they have no idea how much money I make. We are both sitting on our asses and enjoying the chaos!

#199 Long-Time Lurker on 05.24.17 at 2:44 pm

Trump’s budget proposal came out yesterday. I was wondering if anyone had some thoughts on it.

To sum, a balanced budget via:

Big cuts to social welfare and big spending on defense and immigration control (the wall).

…combined with personal, business and corporate tax cuts.

The end result if enacted?

Economystical, I’m sure you could provide an alternative viewpoint on the matter. (Hee hee!)

#200 crowdedelevatorfartz on 05.24.17 at 2:54 pm

@#173 Explosive inflation is coming.

You stay on your side of the elevator and there wont be any trouble

#201 Entrepreneur on 05.24.17 at 2:54 pm

Have to agree with #56 CTo, #62 Leo Trollstoy and other blog dogs that the problem seems to be debt and the trade.

The tenth paragraph with “Back to Poloz” mentions about debt being the issue and trying to please the lot. Sorry, but cut the pleasing and slowly raise the interest rates. This will “pull up those socks” and “think twice” attitude.

But we have another problem and that is the working economy but as #56 CTo mentions about WTO and manufacturing slipping away. Maybe put a percentage of how much can be traded out so that the people have a chance with the resources so they can work.

Heard our log exports is over 50% here in B.C. or more like %70. I think exports should be below 50% and possibly lower to encourage internal job growth.

But where is that logical thinking? Are we not suppose to think of the people of the nation first? Is this why Brexit and Trump existed?

#202 M on 05.24.17 at 3:00 pm

HSBC is one of the crappiest banks everfrom the lefty:
https://www.theguardian.com/commentisfree/2015/jun/10/the-guardian-view-on-hsbc-a-bank-beyond-shame

from the righty:
https://www.wsj.com/articles/hsbc-how-its-making-good-in-a-bad-banking-world-1470231503

Entering CDN mortgage business now at the end of the cycle it means that either HSBC are a bunch of idiots, or the lil’ T2 promised them something.

I would not be surprised to see HSBC unloading radioactive crap on Canadian taxpayer when love turns to shit.

#203 Headhunter on 05.24.17 at 3:04 pm

Long time reader.. love the comments. The Gov’t is like a gang, if they want something they are just going to take it. Nothing you can do about it. So be smart, get a “con” or a “hustle” learn to do something that you can trade or barter with outside the system.

#204 canali on 05.24.17 at 3:13 pm

Globe and Mail:
”Sky-high condo prices aren’t a supply problem”
https://www.theglobeandmail.com/opinion/sky-high-condo-prices-arent-a-supply-problem/article35091277/comments/

EXCERPT:

”Here is the other brutal reality about the great supply argument: vast swaths of these units are being built and presold to foreign purchasers. These buyers, in turn, are either flipping the properties for a profit before they are even finished or hanging on to them as safe investments and renting them out. Sure, that might help bolster the rental stock, but why are locals who earn incomes in Canada and pay taxes here being shut out from buying these homes?
The problem is this type of foreign-investment activity is helping drive up prices. Everyone knows it and yet little is being done about it. Some of these offshore purchasers are, in fact, flipping the condos for a profit before final sale and avoiding paying the 15-per-cent foreign-buyers tax in the process.

No, there is lots of “supply” in Vancouver and Toronto. That isn’t the issue. It’s who’s getting access to that supply that is a big part of the problem. And it’s also the type of “supply” being built.

Many of the condos being constructed are designed to be purchased by wealthy investors, the Lamborghini crowd. They aren’t being built for a couple of young professionals starting a family. Not unless you consider $1-million for 1,000-square-feet on the 10th floor of a tower in suburban Burnaby, B.C., reasonable. No, somehow, some way, governments need to encourage developers, through incentives or whatever it takes, to start building housing that the middle class can afford.

Right now, developers are getting everything their way. They are putting pressure on local politicians to speed up the approval process so they can erect more towers, more quickly, but they are doing nothing – nothing – about the costs of the units they are constructing. In fact, you could argue they are engaging in activity that is helping ensure the costs keep going up.”

(read article for entirety)

It’s ridiculous.

#205 CJBob on 05.24.17 at 3:14 pm

#184 Lee on 05.24.17 at 12:48 pm
National Post today says new detached selling for $1.8M in Toronto and builders can’t keep up with demand. Big crash.
___________________
I LOVE this. Prices are going up so there is a crash coming. Meanwhile the other half of people here are posting prices are falling so there is a crash already happening.

THE definition of confirmation bias at work.

#206 TheDood on 05.24.17 at 3:22 pm

@#193 IHCTD9

“The Canadian Citizenry is likely as dumb as its ever been”

LOL! I love it!

You are 100% correct on a number of fronts!

Governments don’t care. T2 and his droogs don’t care. Poloz is too mentally challenged to care. The gravy train (for some) continues!

As for our beloved “Citizenry”,

This especially extends to finance, particularly debt and housing. When it comes to the herd mentality driving real estate, Canadians are like lemmings. All it takes is a few realtors to mutter something along the lines of “Get in now, next week might be too late”, and an hour later there’s a country wide stampede to the banks!

I live in the YVR Lower Mainland and I’m dumbfounded at how normal it all seems to everyone around me. People with average education (degree or diploma), average job, average salary (90 – 100K), all living in recently purchased (1-3 years) 3000 + sq ft homes, mortgaged to the hilt, newer cars and trucks lining the driveway, probably in debt until old age, and not worried at all because they’re in the same boat as 15 million other lemmings. And they all say the same thing – “there’s never been a better time to buy a house and we’re happy we pulled the trigger ’cause this time next year we’d have been paying even more”.

Good Lord!

#207 april on 05.24.17 at 3:50 pm

#186 – Apparently we’re in stage 2 of a housing decline so an increase in sales is no indication of a continued rise in real estate values. Over all we’re going down.

#208 Mark Baum on 05.24.17 at 3:58 pm

https://www.bloomberg.com/news/articles/2017-05-24/toronto-bidding-wars-turn-to-homebuyers-remorse-as-market-slows

“We are seeing people who paid those crazy prices over the last few months walking away from their deposits,” said Carissa Turnbull, a Royal LePage broker in the Toronto suburb of Oakville, who didn’t get a single visitor to an open house on the weekend. “They don’t want to close anymore.”

#209 Housing market to crash on 05.24.17 at 3:59 pm

http://wolfstreet.com/2017/05/24/toronto-house-price-bubble-pops/

CRASH

#210 Housing market to crash on 05.24.17 at 4:00 pm

Saw two open houses in the Annex and no one showed up. Its going to crash

#211 Housing market to crash on 05.24.17 at 4:03 pm

http://wolfstreet.com/2017/04/29/canada-house-price-bubble-what-are-homes-really-worth/

Crash

#212 For those about to flop... on 05.24.17 at 4:03 pm

When I checked on Zolo last night at about 8pm there were 10,500 listings for Greater Vancouver.

As of 1pm today Dreamland time….11,300…

M42BC

#213 Even More of Trump's Idiocy on 05.24.17 at 4:16 pm

Here are some excerpts from the Jerusalem Post:

1. In Jerusalem, Trump forgets he’s in the Middle East.

Trump praised Secretary of State Rex Tillerson’s trip organizing skills during a meeting in Jerusalem with Rivlin. “The secretary of state has done an incredible job. We just got back from the Middle East, we just got back from Saudi Arabia,” Trump said.

But there’s a problem with that statement: Israel is in the Middle East. And just after Trump makes the statement, Israel’s ambassador to the United States, Ron Dermer, is seen running his hand through his hair — a move that some have interpreted as embarrassment on the president’s behalf.

2. Melania appears to slap away Trump’s hand.

Upon arriving in Israel, Trump attempted to hold his wife’s hand — but she looked like she wasn’t having it. In a video that went viral on social media, Melania appeared to slap away her husband’s hand as the couple got off of Air Force One at Ben-Gurion Airport.

The drama didn’t stop after the Trumps left Israel, either: A second video surfaced of Melania seeming to reject her husband’s hand Tuesday after landing in Rome. This may be fodder for the administration’s next misunderstanding: Is Rome the City of Love?

http://www.jpost.com/Israel-News/The-7-most-awkward-moments-from-Trumps-Israel-trip-493738

Trump is the gift that keeps on giving.

#214 IHCTD9 on 05.24.17 at 4:17 pm

#187 Wrk.dover on 05.24.17 at 1:13 pm

But, it would be nicer for all of us if your predictions stopped being based on integrity and value and started being based on actual probable outcome due to incompetence in public office.
________________________________________

Yep – and the dingalings that vote ’em in.

What would happen if a hard ass stood up, pounded the
table wanting fiscal responsibility, lower debt, no deficit at all, and then said get ready for a good long look at all these useless programs and public sector layoffs?

Well, the same thing that happened to Hudak would happen – he’d lose like the Leafs, and douchebags like T2/Wynne would get a majority. Hate to say it, but that’s the truth.

#215 BMO blood bath on 05.24.17 at 4:21 pm

BMO down 3.3%… wow

#216 westcdn on 05.24.17 at 4:21 pm

131 Data – neat observation – “Back then your annual interest was 42K a year on your house of 300k, today it’s 23K on 1M, meaning your monthly nut back then could purchase a 2M house today!!!!!!!!!!”

But look at few other numbers. The property tax has probably gone from $1,000 to $5,000 per year, your utility bills have gone through the roof. I wouldn’t be surprised if they are $400 per month more today. Then there are income taxes. Finally there is that nasty problem of repaying the mortgage. On a 25 year amortization, a $300,000 mortgage would initially cost you $1,000 a month whereas that $2,000,000 mortgage would set you back $6500 a month. I ignored down payments to keep things simple. Millenniums (you can toss Gen-Xs in) you have my simplifies. Oh, you will also be contributing to my CPP benefits and OAS, if I get it.

#217 Lee on 05.24.17 at 4:42 pm

#204 CJBob,

I was being sarcastic. Like, “Big-Crash”.

#218 willworkforpickles on 05.24.17 at 4:56 pm

I posted here about a year ago that when real estate price declines to come have run their full course, down to the end of the current cycle , an on average 25 to 30% loss from peak real estate values would hit most everybody everywhere. 50% losses would visit distressed sellers from peak values and 70% losses from peak will come on the foreclosed.
We Us You’re …not all quite as rich as you think.
This will take quite some time to run its course this course .Suffice to say its all still good for now, considering millions of north Americans aren’t yet starving to death ……yet.

#219 Rocky Mountain on 05.24.17 at 5:10 pm

This house in Lions Bay (West Vancouver) has been on sale for nearly 2 years now. The owner keeps taking it off and then relisting without lowering the price. The bloated 2016 assessment was 1.5 Million and they are asking 2.7 !!!

I assume the owners have paid off the house and won’t mind waiting a few years for sale to happen.

If this house gets sold for anything more than assessed value this summer then the bubble is still inflating.

Let me mention though.. for houses like this people fall in love with Vancouver..

https://www.rew.ca/properties/R2133670/150-mountain-drive-west-vancouver-bc

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAyQTJSNA==

#220 Bill Grable on 05.24.17 at 5:49 pm

How are things going in China?
“That’s not supposed to happen…

With the crackdown on financial system leverage underway, Chinese banks (and securities firms) are in big trouble. As we noted previously, China’s bond curve is inverted, yields are surging, and Chinese regulatory decisions shutting down various shadow-banking pipelines has crushed securities firms’ stocks. However, as Bloomberg points out, as China’s deleveraging efforts cut into banks’ profit margins, rising base funding costs and interbank credit risk concerns have pushed banks’ cost of borrowing beyond the rate they charge customers for loans for the first time in history”.

LINK: http://tinyurl.com/k29xlte

#221 45north on 05.24.17 at 6:54 pm

Smoking Man: I finally tapped into the liberal mind. For some strange reason, they believe they own all the preferred shares in morality. They use deep state-sanctioned words to communicate their insanity.

“they believe they own all the preferred shares in morality”

great stuff!

#222 westcdn on 05.24.17 at 6:55 pm

215: I remembered how to spell sympathy while I was doing some house work. Spell check didn’t help at all while I was using an “i” instead of an of a “y”. It will happen again.

#223 S.Bby on 05.24.17 at 6:59 pm

#218 Rocky Mtn
Lions Bay is nice when the sun shines but they get massive rain and winds and lose power there in the winter. If you don’t mind living on the side of a mountain I don’t.

#224 Party On Garth on 05.24.17 at 10:19 pm

I can’t wait to see what Prime Minister Bieber comes up with to bail out the hordes of shrieking cutey pie millennials who are under water. They will be enraged, and will blame: the one percent, the patriarchy, bankers, everyone but themselves. They will demand social justice.

The financially responsible savers will get bent over again to subsidise the reckless and self entitled.

#225 Pulp Faction on 05.25.17 at 6:35 pm

Poloz won’t raise interest rates because he knows he’d be just lighting a fuse. He will wait until the market crumbles by osmosis, that way he can’t be blamed for it. Politics 101.