Last Monday it was the second-fiddle at the Bank of Canada suggesting higher rates may soon come to the land of delusional, debt-snorfling beavers. This Monday was the Fed’s turn. Just a week after the last US rate hike, a senior dude says ending the tightening cycle now would hurt the economy. So up went the American dollar along with expectations for another increase this year – number four within 12 months.
And last Tuesday we got this from Stephen Poloz himself: “The interest rate cuts we put in place in 2015 have largely done their work. So that’s very reassuring, we’re encouraged by the data.” What’s he referring to include great job creation numbers (the best in four years) and a jump in economic growth (highest in the G7).
See a pattern emerging? The days of a 0.5% central bank rate – absurd by historic standards – are nearing an end. The first Canadian hike in years is now expected on October 25th, although it might occur as early as September 6th. Coming, though, it is.
Yes, it’ll only be a quarter point. But it will mark the death of deflation, and cement what we already see taking place – the long process of normalization of the real estate market. Home equity lines of credit ($200 billion of them) will suddenly cost more to carry since they’re almost all demand loans. Also rising will be credit card costs and, of course, variable-rate mortgages. This alone won’t impact on inflated housing values, however add in new taxes on Chinese dudes, big rent controls, a CRA housing crackdown, Home Capital and a lending chill at the big banks and it’s a formula for change.
Many people, like Christina, think it’s already here. Even in Van.
“I have doubted you,” she says, “not gonna lie. I have. I have seen Vancouver prices just keep going up, and up still selling over asking.. while Toronto goes down and people backing out of deals.
“I will now say, you were right. I have a friend who has listed her house in New Westminster, the house has been listed just shy of 2 weeks. I sent her a text tonight to see if the house sold (it is beautiful and updated)… it hasn’t. It’s a beautiful house… she said that we should come by to see it…. but we politely declined as a mortgage of that amount (even with 2 incomes equaling way over $200k) scares the shit out of us, so why torture ourselves with a house we can’t afford.
“She said that they had multiple offers on offer night, but low and behold with each of the offers they had accepted, the night conditions were to be removed, BOTH buyers backed out. The third one was supposed to close tonight, and the buyer didn’t have any financing put into place … at all. 8pm, on the night conditions were to be lifted, that’s not good news. That is 3 collapsed deals in under 2 weeks.
“Think people are starting to use their brains and realize a mill for a meh house it too much? I hope.”
Check the archives (I think we have some…). This pathetic blog started channeling failed, fractured and futzed deals back in April, even as the media was trumpeting the latest realtor news about historic price gains and sizzling markets. The harbingers of change are always on the street, not in the headlines, and they’ve been in evidence now for months. Empty open houses. Conditional deals. No bidding wars and no more need to staple a $100,000 certified cheque to your offer. Buyers control hoods where they were humiliated last winter.
It will take some time for prices to moderate in any meaningful way, as 10,000 new listings pour into southern Ontario every seven days from owners trying to cash in on peak house. They’ll need 60 or 90 days of crickets before they give up and relist at a reduced price – coming within weeks of that pivotal Bank of Canada move.
If you doubt me, as Christina once did, that’s cool. But it won’t change things. “Recent events, particularly the noticeable change in the Bank of Canada’s tone, have reinforced our belief that a gradual rise in rates should begin shortly,” wrote economists at Desjardins a few days ago. They agree an October pop is likely, but it could come next month. CIBC now says the Bank of Canada will up the cost of money by the end of the year. Says the founder of Ratehub: “Rates might go up much faster than anyone is expecting…”
Now you know.
213 comments ↓
You shyster realtors are starving for money. To bad the housing crash has years to go.
http://www.ctvnews.ca/mobile/canada/early-numbers-hint-at-larger-decline-in-gta-home-sales-expert-1.3466439
Happy Housing Crash Everyone! :-)
Would a rate hike hurt stocks a great deal? The pathetic TSX down to 14,000?
Canada’s economic growth the best among G7? But that is not reflected in the performance of Canadian stocks which performed the worst among G7 since the 2008 financial crisis. On the contrary, its housing market performed the best among G7. Why is that? Garth?
Thomas Jefferson on Banks
#168 acdel on 06.19.17 at 5:23 pm said:
Best interesting quote that was ignored!
“I believe that banking institutions are more dangerous to our liberties than standing armies…If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around (these banks) will deprive the people of all property until their children wake up homeless on the continent their fathers conquered.” – Thomas Jefferson
****************************************
Well it seems unfair to judge now how wrong Jefferson was back then. He could not have imagined the stunning increase in the standard of living that would happen in the next 200 years after he said that.
The death of deflation …….hahaha you are so nuts. Have u been grocery shopping lately ?
This house of cards is going to come crashing down. Mortgage fraud is out of control.
http://vancouversun.com/news/local-news/vancouver-real-estate-in-the-red
Happy Housing Crash Everyone! :-)
I’ve been a bond bull for the past 20 years and believe interest rates will be low for the rest of our lifetimes.
Check out what the 10-year US Treasury market is doing. Yields are back down to 2.2% after a couple rate hikes. The bond market doesn’t care what the US Fed does, it marches to real life data.
Eventually, if the Fed is crazy enough, they will hike until the yield curve is flat. Then a 1-3 year recession will ensue.
But watch the bond market. Mortgage rates are back down.
Best,
Sam
B.C. remains a sellers’ market: B.C. Real Estate Association.
http://globalnews.ca/news/3538628/b-c-remains-a-sellers-market-b-c-real-estate-association/
A house by my kid’s school finally sold. Apparently they had a few offers but the deals fell through because the potential buyers couldn’t get financing.
from yesterday
===========
Would you leave your daughter alone with Bill Clinton?
Let’s get back to financial, economic and housing issues, shall we? — Garth
CAN WE PULEESE GET BACK TO THE DOGS?
On a real estate note, two people I know working directly in sales for two different builders in Ontario said, last week, sales dead. Ceased. Nada. Rien. Nothing. Zip. Zero. Stall total.
1989… ??
As interest rates go up & mortgage-holders renew at higher rates, there will be so many people who are already squeezed financially, there’s little question there will be mortgages worth more than the home & only a question of when & how deeply the pain will be felt.
Would not be surprised if oil spikes. Syria is getting serious. Russian and Syrian forces, could at some point, attack the militaristic Jihadi groups, that are sponsored by America, and that’s an F5 powder keg.
Qatar blockade still going on, and that is serious chit.
Is Donald running the ME file? Hot head alert.
http://www.independent.co.uk/news/world/middle-east/russia-shoot-down-all-flying-objects-in-syria-us-regime-warplane-isis-terror-a7797101.html
Why raise rates now.Its only been 8 years.We will follow Japan,don’t believe the hype.They’ve been crying wolf for so long,nobody believes them any more.
Sorry count me among the skeptical when it comes to murky pontificating about rate increases from bank of Canada officials. There’s no cajhones there whatsoever to do the right thing, haven’t we noticed that? Judging from their regular plays on words with their press releases they are legends in their own mind but sure appear incompetent and likely redundant.
What exactly does Stephen Poloz even DO all day? Seriously, what does he do?
We know what Mark Carney did. He spent his days taking a baseball bat to savers. Poloz can’t even do that well enough.
Mississauga is struggling, lots for sale, nothing moving in the nice hoods. Too bad, so sad you greedy sellers, even though I own a home, this crash needs to happen, because people are gorging themselves on debt, it’s like watching TLC’s 600 pound people eating themselves to death, that’s what’s happening in the GTA. This housing market needs major debt weight loss surgery.
The Canadian housing market is now undeniably falling. Consumer confidence is cratering. The Canadian job market is a mess, with a big problem becoming non-participation. The rapidly rising Canadian dollar likely will mean an extremely low, if not outright deflationary print in the next few reports. Energy prices are falling once again. None of this adds up to anything that would cause the Bank of Canada to raise, and if anything, the reasons for rate cuts are now strengthening.
It defies logic to think that Canada would be able to shrug off a collapse in its RE bubble, and just escape unscathed after everyone has seen the carnage inflicted upon the US economy. An extended period of low policy rates (ie: zero or NIRP), and even QE most likely will be necessary.
Canadian retail mortgage borrowers, however, won’t benefit from lower Bank of Canada rates or lower GoC bond market rates. Because risk in the RE marketplace is coming back, and in a big way. Incremental risk premia will easily consume the 50bp that the Bank of Canada can possibly cut.
Would a rate hike hurt stocks a great deal? The pathetic TSX down to 14,000?
Historically Canadian stocks outperform during US rate hikes. I do think that the next number of years will mark severe divergence between Canadian monetary policy (intended to fight deflation in Canada), and US monetary policy (intended to fight inflation in the USA). Financing an investment in the TSX indices could prove to be very profitable going forward.
If your budgeting is short-sighted enough that all you care about are the monthly payments, you probably also think that rising prime rates are only going to affect your mortgage. And what the hell, a quarter point on the mortgage may only work out to be an extra $100 or $200 per month, right?
What’s going to happen when ALL those monthly payments edge higher all at once? $200 more on the mortgage, and $160 more on the HELOC, and maybe another $150 on those student loans?
Suddenly you’re laying out an extra $500 per month, just to offset the extra interest cost – these values don’t even affect the principal!
And the HELOC can be called to be paid in full at any time.
Sorry Ranjeep no one wants your Mattamy shoe box house held together by particle board and hot glue at 1.7 million, guess you need to refinance that mortgage to roll in your credit card debt onto your mortgage. People in Milton need to get a clue, the party is over, the lights are on, no one in their right mind wants your 32 X 80 foot lot chip board homes anymore overlooking the Halton Dump. Welcome to the GTA’s new wasteland.
Is that Waldo?
Wow… the S&P 500 jumped 30 points today and slammed up against another new record high at closing.
Didn’t even get a mention tonight. Sleepy old news these days, I guess.
oops.. make that 20 points…
Poloz to raise interest rates?
I’m starting to wonder if someone in a high position in corporate or government was reading the comments section of my trolling about Poloz, only to respond by contacting Poloz in person, and not in a pleasant way! No one wants a 50-cent Loonie when oil prices are at $50/bbl.
A 2 acre Versailles chateaux in York Mills can apparently be bought for a buck these days.
https://www.realtor.ca/Residential/Single-Family/18310918/30-FIFESHIRE-Road-Toronto-Ontario-M2L2G6-St-Andrew-Windfields
Sold at the end of October 2016. Closed early January 2017 and watched my bank account explode with cash. Now it’s all invested in a nicely balanced and diversified portfolio. Did I mention nice? Yes. it is.
Genius. Pure genius. Who’s a genius? That’s right! Me. I love me. Rule #1 – Always be 5 steps ahead of the sheeple.
ETFs will be paying me lovely dividends in the next few days. Love it!
All right. It’s time to go back to be humble. That did feel good though.
Okay all you little debt piggies, you know what happens next, the Bank of Canada huffed and puffed and blew your house down. Better buckle up kiddies this is going to be one scary ride. I foresee a lot of Power of Sale signs in the future.
“The pathetic TSX down to 14,000?”
the tsx has been sucking all year … it needs a break
In Surrey, not only are there above asking price offers for houses; the same is true for renting too!!
What the heck is going on in this town?
Folks, any serious input is much appreciated.
By the way, in addition to net inter-provincial migration to Surrey, around Newton/Guildford area of the town, droves of international students from the Indian subcontinent are glaringly obvious. Can this be one of the contributing factors for such a hot rental market?
I am seriously curious… it may be that Surrey is unique in this whole game of RE madness and prices will continue the climb to go above the clouds.
“Last Monday it was the second-fiddle at the Bank of Canada suggesting higher rates may soon come to the land of delusional, debt-snorfling beavers.” – Garth
—————————————————–
Go ahead and ridicule all you want. I keep pointing out how well these debt-snorflers have done over the last eight years. Any rate hike (if real) related setback will never wipe out the massive gains they’ve accumulated. The only ones that will be wounded, if any, are only the most recent debt snorflers.
My guess is that every real estate agent across the land is telling sellers to cut prices or forget about it. Agents seem to have lost their willingness to site around open houses every Sunday for properties that are over priced and don’t show well.
Buyers are shunning anything that isn’t turn key.
Very few browsers as I drove around to a few of the open houses last Sunday in the toney burb of Ancaster next to Hamilton. Some open houses had no one viewing.
A shocking number of houses listed in Milton. 530 listed since May 1st, and 419 since just June 1st. In May, I actually saw some for sale homes sitting vacant. There were no curtains in the windows and the grass was going uncut.
Deer Ridge in Cambridge is also on my list. Very primo area with homes from $850,000 to $2.5M and some new customs starting at $1.5M. Twelve to fifteen well appointed used homes have sold over the last month or two, but at least two have porpoised back onto MLS.
Anything that smacks of standard builder quality or more than twelve years old without a kitchen and bath update, just sits on the market.
$1,000,000 dropping to $900,000 still sucks !!!! … not enough !!
“But it will mark the death of deflation…”
Umm, no it won’t. The millennials are the deflation generation, having overpaid (and been saddled with debt for) their biggest expenses (education and housing.) Still no major wage growth or inflation and none on the horizon, so there is absolutely no pressure at all to raise rates and lots of arguments for keeping them low. If you think interest rates should be back to “normal” levels of anything beyond 2% you’re way off Garth.
6 month reader, first time commenter, wanted to add my on-the-street observances to the growing consensus on here. Visiting TO for a weekend from New York and thought I’d perambulate around to see some of these famous open houses that nobody is talking about anymore.
Well sure enough, there were 4, count em, 4 open houses on Shaw Street between College and Queen on Saturday afternoon. That is definitely not normal from my experience of living in the area a few years ago.
I went into each of them and the pattern was basically the same. I was the only one there (save 1 house where a family came in after me) and each time the agents nearly yanked my arm off in their enthusiasm to show me around.
This ‘hood is one of the most desirable in the West End – I’d have to imagine it would be more resistant to a downturn than the hinterlands. But man, these agents sure had a whiff of desperation.
Then today i got a follow up text from one saying today was offer day and none had been received, so get mine in while i had the chance!
Meanwhile on the College & Yonge block where I am staying i count 8, yes 8 high-rise construction sites within a 5 minute walk. The entire stretch of Yonge from Wellesley to Bloor is being turned into condos.
Def. feels like Celtic Tiger 2.0 to me.
6 Happy Housing Crash Everyone! on 06.19.17 at 6:56 pm
This house of cards is going to come crashing down. Mortgage fraud is out of control.
http://vancouversun.com/news/local-news/vancouver-real-estate-in-the-red
Happy Housing Crash Everyone! :-)
—
You really brighten up my day sunshine! :-)
LOL @ Milton.
I still don’t really know where the hell the place is. I guess it’s somewhere north of Oakville (or is it north of Burlington?) and south of Orangeville. I can’t be bothered to check. Sort of like Shelburne, it’s just one of those ugly, remote, character-less places where the dumbest of the dumb think they’ve hit the jackpot.
I don’t see how any of this ends well. The reason Canadians are so far in debt is mostly because after tax wage growth has not kept up with inflation for over 20 years, probably more like 30. You can’t keep raising taxes on people who don’t have rising wages and expect that to work out well. People have resorted to credit cards, HELOC’s, and mortgages to support what they view to be their standard of living. But if they hadn’t, economic activity would have collapsed as they reigned in spending. All those shopping malls, vacation destinations, ski resorts, car & RV dealerships, and hockey arenas would have been a lot less busy. The debt is what supported the difference between what people earn after tax and what they have to spend. If that process comes to an end, expect a severe economic contraction. It would be like asking what would happen to the US college system if suddenly on mass US high school graduates determined college wasn’t worth the student loans. Crash. Burn. A lot of tenured professors out of work and the janitor too.
Even the tax revenues the government receives are going to go down if people stop borrowing. You don’t have to pay HSCT if you aren’t buying anything. The car dealership will be paying a lot less in corporate taxes if they aren’t making any money because nobody wants a car loan.
Car and RV dealerships are an excellent example, although any business will do, of how tax money is directly borrowed into existence. Almost nobody buys a car or an RV cash anymore, they borrow the money and put down a small down payment, or lease it in the case of a car (nobody in their right mind would lease out an RV). So HSCT is added to the bill and financed, and then the dealer hopefully declares a profit and is taxed, the salesman gets a commission and is taxed, but it’s all paid for by the loan the new car driver is now carrying and he hasn’t yet earned the money to pay the loan, that is “future” money assuming he can keep his job selling coffee and doughnuts to the car dealer employees. Even the mechanic who does the warranty work is paying income taxes generated by borrowed money. That’s why the government doesn’t allow cars to be built that you can fix yourself anymore. It isn’t the fuel efficiency or safety, it’s the revenue capture. There is a very specific reason the car’s computer can do GPS, store 8 megabytes of music, talk and do voice recognition, remember how you like your seat adjusted, but can’t tell you what’s wrong with it without a “code reader”. People would go back to replacing that damn relay themselves and thus pay lots less taxes.
If the debt binge stops now, the economy collapses by probably 30%. People simply do not have any more money left to pay for things. They have to put their kid’s soccer fees on a credit card, which they cannot pay off. They go to school on student loans and can’t pay those off either. And when the defaults start, all those bond holders aren’t going to be paying income tax anymore.
A real estate agent is a good example of a job where almost the entirety of it is paid through borrowing. The realty fees generally get added to the mortgage, so they are borrowed. Nobody actually pays them, they don’t have the money and it just results in a lower down-payment. Then the real estate agent pays his income taxes, all of it money somebody borrowed, buys a car on loan and the car dealer pays tax on money nobody has earned yet, and maybe qualifies for his own mortgage with money nobody has earned yet, but it all shows up as taxes payable this year, including HSCT on the car, the house if it’s new, and the realty fees themselves, all of the money borrowed. It’s a great scam for the banks.
The savings rate and the debt per household numbers tell the true state of the economy much more so than the unemployment figures. Both of these figures are horrible and indicate that many people do not earn enough money to live anymore. If and when they are forced to stop borrowing for one reason or another, everything collapses. That is the way the system is wired right now. Without increasing levels of debt at the state, provincial, civic, and household levels, there isn’t enough money to pay for everything and we will have to stop paying for a large portion of it.
I believe we are heading into the greatest financial crises since the 1930’s. Garth thinks “no”, but I disagree. But even the 30’s resolved into growth at some point, the greatest period of growth the world has ever seen actually, so perhaps a well balanced portfolio is still the best idea. You might lose a lot of money, but you will still have some left and at the bottom of a cycle that makes you the winner.
#32 RentYVR on 06.19.17 at 7:56 pm
“But it will mark the death of deflation…”
Umm, no it won’t. The millennials are the deflation generation, having overpaid (and been saddled with debt for) their biggest expenses (education and housing.) Still no major wage growth or inflation and none on the horizon, so there is absolutely no pressure at all to raise rates and lots of arguments for keeping them low. If you think interest rates should be back to “normal” levels of anything beyond 2% you’re way off Garth.
——————–
2%? Well that’s quadruple today’s rate. Of course quadruple the interest payments will do NOTHING to the real estate market, right?
The 5,000-year history of interest rates shows just how historically low US rates are right now
http://www.businessinsider.com/chart-5000-years-of-interest-rates-2015-9
Bank of England base rate since 1901
http://stockmarketalmanac.co.uk/2016/07/uk-interest-rate-cycle/
I have noticed people starting to drive old used cars. Not gently used cars, real rust buckets. I haven’t seen those types of cars in years in Toronto.
Does anyone know where they are coming from and why people have started driving used cars with rust marks again?
Also foreigners are ignoring Calgary and Montreal. Thank you G&M, it must have hurt to tell the truth about the real estate market.
https://www.theglobeandmail.com/real-estate/foreign-investors-ignoring-calgary-montreal-real-estate-markets/article35355328/
Been watching the Milton Market and boy things are looking bad, the amount of new listings piled up on top of the old listings is crazy. Just within the boundaries of a few small streets there are over 73 properties for sale since the weekend – wow, nothing is moving and for sale signs are bloating. I have seen a few price corrections on empty homes (obviously bought by speculators) but still is not creating any sales. I am so glad I sold my chip board house to a greater one and now am sitting on a big ol’ pile of real money (not the invisible “on paper” kind)!
#72 Mark on 06.18.17 at 10:44 pm
Canadian stocks (ie: the TSX) have gone nowhere in 9 years.
The TSX gained double-digits last year. — Garth
[ ] not rekt
[x] rekt
[x] really rekt
[x] tyrannosaurus rekt
[x] parks and rekt
[x] star trekt
[x] school of rekt
[x] catcher in the rekt
[x] great rektspectations
[x] rekt it ralph
[x] the shawshank rektemption
[x] forrekt gump
[x] finding rekt
[x] rektal exam
[x] shrekt
[x] rektium for a dream
[x] erektile dysfunction
I think the BoC raises on 12 July, not later. They are now three rises behind the US and that Wilkins speech was so the markets won’t be surprised next month.
I am happy to report my observations for my Oakville neighbourhood:
1 All houses have reduced asking price of 100 to 200k …still no takers
2 Open houses are as quiet as can be
3 For sale signs are being converted to for lease signs
4 new neighbour just rented house next to me after selling his house and cashed out to pay debts
Collusion among central banker will result in global meltdown in next two years
3
*HSCT is my acronym for the Harmonized Goods and Services and Carbon Tax. Carbon taxes are just another consumption tax, and “Harmonized” is just fancy talk for 2 taxes shown as one on the bill.
#17 Mark on 06.19.17 at 7:08 pm
Historically Canadian stocks outperform during US rate hikes.
Outperformed what? Cash? Canadian stocks did not even outperform cash in the new millennium. In the year 2000, TSX was at 11,300, now at 15,200, or up 34.5%. According to bank of Canada, inflation from 2000 to 2017 rose 38%. So TSX did not outperform even cash. Name one thing it outperform.
I love the housing crash party, it’s so fun to see all those sleazy realtors wondering what they will do with their high school diplomas now that they can’t sell homes anymore. Perhaps that’s why the Kia Dealerships have been extra busy ordering many new mini vans, so that when the Audi’s get repossessed, they can at least maybe afford a Kia!
Sigh, just shaking my head in the people who just do not get it.
Good blog Garth!
jobs, gdp…etc are up due to the housing boom that now ended.
When including financials (that ARE housing) and everything related to houses, cdn gdp is almost 45% housing. All that just died in the last 3 months.
Willie Coyote is off the cliff now.
Rates are going up as oil shock largely over Poloz says.
Well, BAT coming if you believe chairman of the House Ways and Means Committee Brady and supported by Ryan. US $1 Trillion in extra tax dollars to help cover planned tax cuts.
Wants to change supply chains to America and repatriate jobs.
Will effect tar sand oil to US and ultimately KeystoneXL viability. Talking about automobiles as well.
To be phased in over 5 years. Legislation to be tabled in next few months.
Well, hello new shock to Canadian economy. Rates may well come down but BAT would be a recession starting shock to Canada along with decreasing RE activity.
http://www.cnbc.com/2017/05/25/border-adjustment-tax-is-critical-part-of-tax-reform-chief-gop-tax-writer-says.html
“BAIL-IN”: LESS THAN MEETS THE EYE
I’ve been wading through the Canada Gazette “Bank Recapitalization (Bail-in) Conversion Regulations” following your mention of it a few days back.
And in the process I’m a bit concerned as it seems to me that holders of preferred bank shares could be badly affected should those securities be converted by government fiat into common shares.
By way of background, this bail-in business is an initiative that has been adopted by the US and 18 other of the G-20 countries. Changes come in the wake of the 2008 financial debacle. Canada will impose these regs later this year.
Shareholders, of Canada’s six largest banks, will carry SOME of the can should any of those experience some kind of financial failure.
What bothers me is this:
–untold numbers of people around the world own not only preferred bank shares but common stocks as well;
–how legitimate will be current and future values;
–will these changes “rhyme” with similar rules extant in other countries largest banks? In other words will other countries “play fair” with us? Ottawa must be vigilant here.
The Gazette also notes that Canadian chartered banking officials have been briefed and generally are supportive.
Of course they are. What else CAN they say?
The only saving grace, and which does not nullify what I’ve above written, is that any bail-in will, at the end of the day, have to be watered down by some TBTF bail-OUTS, by government, such would be the howls of protests from shareholders.
I blame all central banks for bringing us to this place in history.
Low interest rates, as I’ve written here ad infinitum, pervert the value of absolutely everything in our civilization.
Look what we’ve got: Trump; outrageous home prices; high rents; banks of mom and dad; huge personal family debt levels; currency “values” all over the map; wars in the Mideast heating up even more; Brexit; university snowflakes and the beat goes on.
A fine pickle is what we have here.
#15 Howard on 06.19.17 at 7:07 pm
“What exactly does Stephen Poloz even DO all day? Seriously, what does he do?”
Good question! It is all about instilling confidence. So, when he is not in a meeting, or being filmed talking, he could be playing computer games , or pontificating the mysteries of economic alchemy. No one cares. He just has to be “on,” when addressing the public and business.
https://www.youtube.com/watch?v=_q51LZ2HpbE
“#41 Leo Trollstoy on 06.19.17 at 8:09 pm ”
Please get help. My statement (as well as Garths) were both true. An examination of a chart of the TSX indicates that it has bounced around a lot in the past 9 years, but pretty much hasn’t gone anywhere. Meaning that the cash return to an investor in an ETF that comprises the index is basically just that of the dividends.
The point I was trying to make is that the TSX has a lot of catching up to do as speculative enthusiasm leaves the housing market is focused elsewhere. Balance sheets and retained earnings are dramatically better than they were 9 years ago, so, in time, this should be reflected in higher index valuations. Most of the cyclicals appear to be closer to the bottoms of the cycles, than the tops.
I think the BoC raises on 12 July, not later. They are now three rises behind the US and that Wilkins speech was so the markets won’t be surprised next month.
Not a chance. The real discussion around the BoC table is whether they need to cut or not at the next meeting. There is no need for Canada to ‘follow’ the Federal Reserve, given that Canada’s problem is that of deflation, not inflation.
John Pasalis says,
“Even the conventional model suggests that in the event the sales to listings ratio starts hovering at about 30 per cent, price declines could start hitting double digits.”
“The ratio of Toronto sales to new listings slumped to 41 per cent in May, according to Canadian Real Estate Association data Thursday”
http://business.financialpost.com/personal-finance/mortgages-real-estate/toronto-home-prices-havent-fallen-yet-but-a-major-market-indicator-says-they-will-soon
re #36 Nonplused
Nailed it.
What the vast majority of people fail to grasp is that bloated mortgages are actually a small part of the problem. These are by in large not sitting on the big 5’s balance sheets, they probably only hold 40%.
The issues is the HELOC’s, credit cards, unsecured credit etc. In all of these cases the bank is left holding the bag. I’ll tell you exactly how this is going to play out.
As soon as fear really grips the market and the first few disparate sellers take the bid – the housing market tips and the violence of the shift in sentiment takes away all economic benefits of the wealth effect.
People batten down the hatches – consumption drops – layoffs start and we look very similar to the US in 08 – except worse. Car repossessions spike, you will see a fire sell on toys and the cottage market gets blown to bits.
I hope I’m wrong.. I really do by the magnitude of the debt binge in our country is being grossly underestimated.
Out here in Vandelusional a lot of these amateur landlords must be sweating about July 2nd property tax day. I guess they can just add it to the HELOC though.
As a recent seller this is my first year in 25 not having to pay property tax. I think I’ll take a vacation instead.
Those wanna be, pretender rich people who live north of the QEW, think they are so amazing. But those million dollar mortgages are going to feel a bit scratchy soon when rates are raised and HELOCs are called in. Please you snobby fakers, wake up and smell your debt, it’s calling. If you want to come down by the lakeshore, I’ll show you how the “real” money lives. I am available for consultation on Saturday, sessions start at 8 am on my boat in the harbour. I charge $600 a half hour, minimum half hour consult, no refunds.
Wages haven’t kept up with inflation… no shit!!
I made $65 an hour during the dot com era, my last tech contract paid me $25 an hour in Edmonton at the UofA
Ya I know it’s Edmonton and oil is $44 but for Fork&Knife !!
I look at job adds in Vancouver and the wages are no better but the cost of living is triple.
story from the front – in the west end of the “6”
went to a number of open houses this weekend – crickets. Realtors in full PT Barnum mode, these same people who wouldn’t even stand up when I walked in a few months ago to their open houses are practically humping my leg as I walk through. In fact one well known realtor showed up 30 min late to his own open house and didn’t even acknowledge us or apologize – this was in early March.
Direct quotes:
“The sellers are very flexible”
“We were very surprised that there were no offers on offer night”
“Here is my card come back anytime – you can actually come by later tonight with your car to see how it fits in the garage – the seller would be more than accommodating”
I would strongly encourage my fellow dogs who are looking to buy to throw in a stink bid or two – see what happens.
correction
Direct quotes from this weekend.
They overpaid by 1 million!
It’s the Danforth ffs.
http://www.blogto.com/city/2017/06/sold-detached-houses-toronto-over-asking/
Will someone ring that bell already.
“Of course they are. What else CAN they say? “
Why would a big-5 Canadian banking executive worry about the situation? They have 40% of their balance sheet in adjustable rate, callable debt. A large chunk of their balance sheets are under CMHC subprime mortgage insurance, meaning that they can raise rates on or refuse to renew all of it, and be guaranteed repayment in full by the Government of Canada through the CMHC.
The big questions that we as bank equity investors must ask is:
a) Will the government blindly sit back and allow a windfall to accrue to the owners of bank equity at a time when the Canadian economy is comatose? Will Parliament “sign the CMHC bailout cheques” without objection? Or will there be some sort of windfall profit tax or bank surtax arising from such.
b) Are there better opportunities to invest elsewhere in the Canadian economy for the next leg of growth.
c) Have our bank equity positions become unsustainably overweight given bank equity outperformance over the past few decades? Is this position sustainable?
But bail-ins of the big-5, the mere idea, if you actually study the sheer expanse of liquidity resources available to the big-5, and the nature of the CMHC subprime guarantees for their at-risk loan book, is nonsensical. The “big risk” to Canadian bank equity owners is almost entirely political and reputational.
The stench of fear has begun to spread through the Milton area. No one at the open houses this weekend, all those baked pilsbury artery clogging cookies sat uneaten. I did take a Perrier because I was thirsty
Just did some quick math on TD’s updated forecast. They expect a rate rise in mid-October 2017, another two in 2018, another two in 2019, another two in 2020.
I know a lot of people who will be not going out to eat or going on vacation outside of Canada on the regular if that is the case…
Millennials will be in trouble…
“In 357 BC, the maximum permissible interest rate on loans was roughly 8 percent. Ten years later, this was considered insufficient, so Roman administrators lowered the cap to 4 percent. By 342, the successive reductions apparently failed to mollify the debtors or satisfactorily ease economic tensions, so interest on loans was abolished altogether.”
https://fee.org/articles/the-slow-motion-financial-suicide-of-the-roman-empire/
Garth,
Thanks for your blog. Would you be able to write something that explains the following:
– Dec 2015, Dec 2016, Mar 2017, Jun 2017: The Fed Rate is gone up by 1%. Yet the mortgage rate (Canadian which I’m mostly concern with) are still at rock bottom rate or maybe increased by .25 from the lowest rate ever.
Even Fed projection is 3% (additional 2%) to “natural rate”. So what does that translate to interest rate as main driver of housing prices?
Why is the long term (10 years) treasury rate has not moved as oppose to short term one?
Where do you see the mortgage rate going for the next 12 months without additional rate increase?
How about if we get .25 in Canada and another .5 in US in next 12 months?
#54 mathman
I’m not so sure about HELOC’s. I think the bank can take your house if you default on a HELOC. Now, I am not going to live or die by this opinion, but I think HELOC’s are secured, unlike credit cards and the tiny so called HELOC they give you with the mortgage.
I have a large HELOC against my house, none of it in actual use, but I got it to prevent title fraud. I don’t have a mortgage, but I found out the civic authorities do almost no checking when presented with a title transfer request they don’t even phone you, and title insurance is expensive, but if the bank thinks you might owe them some money they will not allow the transfer without securing their funds. At the very least they will notify you that your HELOC has been cancelled due to the title transfer so you know a fraudster is playing your property.
And that brings me back to the point. Why are so many lawyers trying to steal paid off properties from old widows? Because it’s hard to make a living these days. Most people don’t turn to crime if they have an alternative. But they don’t have an alternative. So they sell drugs, commit fraud, and launch phishing schemes. It’s all about the money and what you have to do to get it.
#57 Porsche on 06.19.17 at 8:32 pm
Wages haven’t kept up with inflation… no shit!!
I made $65 an hour during the dot com era, my last tech contract paid me $25 an hour in Edmonton at the UofA
Ya I know it’s Edmonton and oil is $44 but for Fork&Knife !!
I look at job adds in Vancouver and the wages are no better but the cost of living is triple.
….
Going to get worce. T2 opened the flood gates for TFW. To add insult to injury personal service corps will be treated like employees soon.
Buddy of mine from the old tax farm sent me a screen shot of the email org chart. 70 new hires with 40 syllable names.
Doing something else or run like hell.
Damifino on 06.19.17 at 7:17 pm
Nothing. But you can bet that when it crashes a lot of idiots will blame Trump.
MF
“She said that they had multiple offers on offer night, but low and behold with each of the offers they had accepted, the night conditions were to be removed, BOTH buyers backed out. The third one was supposed to close tonight, and the buyer didn’t have any financing put into place … at all. 8pm, on the night conditions were to be lifted, that’s not good news. That is 3 collapsed deals in under 2 weeks.
—
can we agree that you can only accept one offer at a time? and not sign a second offer until the first is released? a typical financing condition is 5 banking days. if ‘BOTH buyers backed out’ they cant do it concurrently, it would be consecutively, 10 banking days is about 2 weeks, i’m not counting the third offer
I for one would welcome a housing crash. People have become so greedy and prideful thinking that they are so clever carrying these enormous debt loads for these McMansions. People are so fake, with their leased lifestyles, I for one prefer the truth. Drive what you can afford, buy what you can afford, why does everyone walk around so entitled? People need to get real and focus on what really matters, like family, living in the moment, enjoying freedom.
#36 Nonplused
you right on, you just described trickle down economics- after 08-09 the suits decided that with ZIRP people would be willing to take on debit to kick start the economy and that was required for job creation.
see debt just pulls demand forward, thats all but it must be paid back- people with houses figured that the appreciation would cancel their debt or with the low rates, they rolled their credit card debit into their mortgage- but they then maxed out their credit cards again.
rule number 1 of debt is what cant be paid back wont be period
on a separate note, im seeing some pretty massive floors being put in place on a lot of streets in the west end (west of bathrust) in Toronto.- big news as with the ride up- those new low prices will be used by appraisers to vet for mortgages going forward- same way as the way up.
im thinking we are a 3-6 months away from total desperation in the RE market- those that are pulling their listings hoping this rebounds are foolish- as when they repost in 3-6 months prices will be lower
at some point just like FOMO, sellers will start to panic and the fear of not being able to sell will take hold, at that point things will get real ugly real fast. theres a hint of that out there now- but its not widespread enough- like Garth said at least 60-90 days out
#36 Nonplused on 06.19.17 at 8:05 pm
I don’t see how any of this ends well. The reason Canadians are so far in debt is mostly because after tax wage growth has not kept up with inflation for over 20 years, probably more like 30. You can’t keep raising taxes on people who don’t have rising wages and expect that to work out well. People have resorted to credit cards, HELOC’s, and mortgages to support what they view to be their standard of living. But if they hadn’t, economic activity would have collapsed as they reigned in spending. All those shopping malls, vacation destinations, ski resorts, car & RV dealerships, and hockey arenas would have been a lot less busy. The debt is what supported the difference between what people earn after tax and what they have to spend. If that process comes to an end, expect a severe economic contraction. It would be like asking what would happen to the US college system if suddenly on mass US high school graduates determined college wasn’t worth the student loans. Crash. Burn. A lot of tenured professors out of work and the janitor too.
Even the tax revenues the government receives are going to go down if people stop borrowing. You don’t have to pay HSCT if you aren’t buying anything. The car dealership will be paying a lot less in corporate taxes if they aren’t making any money because nobody wants a car loan.
Car and RV dealerships are an excellent example, although any business will do, of how tax money is directly borrowed into existence. Almost nobody buys a car or an RV cash anymore, they borrow the money and put down a small down payment, or lease it in the case of a car (nobody in their right mind would lease out an RV). So HSCT is added to the bill and financed, and then the dealer hopefully declares a profit and is taxed, the salesman gets a commission and is taxed, but it’s all paid for by the loan the new car driver is now carrying and he hasn’t yet earned the money to pay the loan, that is “future” money assuming he can keep his job selling coffee and doughnuts to the car dealer employees. Even the mechanic who does the warranty work is paying income taxes generated by borrowed money. That’s why the government doesn’t allow cars to be built that you can fix yourself anymore. It isn’t the fuel efficiency or safety, it’s the revenue capture. There is a very specific reason the car’s computer can do GPS, store 8 megabytes of music, talk and do voice recognition, remember how you like your seat adjusted, but can’t tell you what’s wrong with it without a “code reader”. People would go back to replacing that damn relay themselves and thus pay lots less taxes.
If the debt binge stops now, the economy collapses by probably 30%. People simply do not have any more money left to pay for things. They have to put their kid’s soccer fees on a credit card, which they cannot pay off. They go to school on student loans and can’t pay those off either. And when the defaults start, all those bond holders aren’t going to be paying income tax anymore.
A real estate agent is a good example of a job where almost the entirety of it is paid through borrowing. The realty fees generally get added to the mortgage, so they are borrowed. Nobody actually pays them, they don’t have the money and it just results in a lower down-payment. Then the real estate agent pays his income taxes, all of it money somebody borrowed, buys a car on loan and the car dealer pays tax on money nobody has earned yet, and maybe qualifies for his own mortgage with money nobody has earned yet, but it all shows up as taxes payable this year, including HSCT on the car, the house if it’s new, and the realty fees themselves, all of the money borrowed. It’s a great scam for the banks.
The savings rate and the debt per household numbers tell the true state of the economy much more so than the unemployment figures. Both of these figures are horrible and indicate that many people do not earn enough money to live anymore. If and when they are forced to stop borrowing for one reason or another, everything collapses. That is the way the system is wired right now. Without increasing levels of debt at the state, provincial, civic, and household levels, there isn’t enough money to pay for everything and we will have to stop paying for a large portion of it.
I believe we are heading into the greatest financial crises since the 1930’s. Garth thinks “no”, but I disagree. But even the 30’s resolved into growth at some point, the greatest period of growth the world has ever seen actually, so perhaps a well balanced portfolio is still the best idea. You might lose a lot of money, but you will still have some left and at the bottom of a cycle that makes you the winner.
— —
You sure use a lot of big words.
That pervert in the hedge photo is a little creepy, Garth.
An upward interest rate environment is interesting when viewed from the catbird seat. Not so much when you are carrying for example a $750,000. mortgage. If the kids started off at 2.79% over 30 years, the payment would be 3071.00. At 3.79 it goes to 3477.00, then 3909.00 at 4.79%. A mere 2% increase and monthly payments have gone up almost one thousand dollars. If they piled on consumer debt buying trendy household items or irresistible patio sets, or put the big vacation on their credit card, or had another baby, or one of them lost their job or got sick…..well…you get the picture…
Anyone who was around when interest rates were high remembers the fear and panic. Blending rates, and extending amortizations. Endless calls to the new lender at the bank. Affordability of payments isn’t even the worst of it. There must still be some mortgage contracts out there that call for interest rate differential penalties on sale versus the standard three months interest. Ouch! You get pinched on the way out even if you sell! It can be a slippery slope for some folks, and if your introduction and experience with carrying a debt load has always been in a low interest rate environment you could be in for a little surprise. The Jag’s advice: Keep your powder dry.
A note just to express my thanks to #36 Nonplused and #54 mathman.
FLOP is AWOL.
Canada 150 Birthday and they print 10 dollar NEW note
We already have a $10 note, I guess 150 dollar note was out of the question
Raise rates, BigD croaks. Sounds like a plan: clean, simple, surgical. Let me throw more popcorn in the pan, BRB :)
If I did my math correctly, this couple has more than $1 million in mortgage debt by upgrading to a bigger house every few years. Why is this celebrated by the media?
http://torontolife.com/real-estate/one-family-dove-real-estate-everyone-else-fleeing/
I wanted to elaborate on why I think the US will continue to outperform developed international markets and Canada for some time into the future.
Use XIU for Canada, VGK for Europe, VWO for emerging markets and SPY for the US.
Technology, consumer discretionary, financials and in this case healthcare are sectors that lead in bull markets.
Oil and gas (energy), precious metals, basic materials, consumer stapes, utilities, other commodities and real estate are sectors that lead in bear markets.
It’s important to realize that the 2002-2007 cyclical bull market was really a countertrend rally in a secular bear market that lasted from 2000-2012. Bear market sectors lead during this period.
It does look like more people are decreasing their prices in the Vancouver area this month (compared with last months data) according to http://www.myrealtycheck.ca
This is the world we live in now.
https://www.bcbusiness.ca/How-the-real-estate-boom-has-left-British-Columbians-feeling-bothcut-richer-and-poorer-than-they-really-are
It would be like asking what would happen to the US college system if suddenly on mass US high school graduates determined college wasn’t worth the student loans. Crash. Burn. A lot of tenured professors out of work and the janitor too.
——————————————————-
I’ve been pushing for people to do just this for years now. I write things to the web concerning it all of the time. I don’t see why it hasn’t already happened; actually I do see it, people are too cowardly to stand on their own 2 feet and take a stand. Parents know that the system is a sham but they’re unwilling to ‘risk’ their kids future by calling the system’s bluff. So the lies continue about how essential the college degrees are. And today’s kids don’t know anything.
#4 InvestorsFriend on 06.19.17 at 6:53 pm
#168 acdel on 06.19.17 at 5:23 pm
The quotation (ostensibly attributed to Thomas Jefferson) is partly spurious, according to several sources.
http://www.themoneymasters.com/wp-content/uploads/2016/04/Erratum_MM.pdf
https://www.monticello.org/site/jefferson/private-banks-spurious-quotation
http://www.snopes.com/quotes/jefferson/banks.asp
Technology, biotechnology and more recently semiconductors have been a stand out leaders since 2009. Consumer discretionary, healthcare and more recently financials (post election) have also been leading. There is reason to expect this to continue. Energy, base metals, gold and precious metals and other commodities have been lagging.
% weight of technology
SPY = 22%
VGK = 5%
VWO = 17%
XIU = 3%
If technology continues to be a leading sector, one can expect Europe and Canada to underperform.
Just a week after the last US rate hike, a senior dude says ending the tightening cycle now would hurt the economy.
———————————————————-
The senior Dud is as full of BS as the most senior dud. If lower rates are supposed to have helped the economy, how can raising the rates help the economy. The Fed is all smoke and mirrors.
Rates aren’t going up ? My contact at a major bank locked a rate for 120 days at 2.47 for five years for mt buyer . I pushed to get the commitment asap and was told not to worry rates are not going up. I call 36 hrs. later for another buyer and was told I could not get the 2.47 percent rates moved so what does the bank know.
I have noticed people starting to drive old used cars. Not gently used cars, real rust buckets. I haven’t seen those types of cars in years in Toronto. Does anyone know where they are coming from and why people have started driving used cars with rust marks again?
——————————————————–
Yes. Modern cars are crap, that’s why. I drive a 1981 Chevy Citation. My dad drives a 1979 AMC Concord. My mother drives a 26 year old Mercedes. Cars that are easy to fix, cars that don’t have many problems, cars that are comfortable. It’s funny; I’ve always driven the American cars of the 70’s and 80’s and up until about 15 years ago people would say to me “what a piece of junk you have there”, now they give me a thumbs-up or ask about where I got it and tell me how much they miss their old cars.
NonPlussed is going to be visited by Bilderburg and Davos goons with baseball bats if he keeps revealing the truth.
CBC
RBC
CIBC
Spray painting their logos with pride colors on social media.
Whats up with that. My take.
We are with you Devos and Bilderburg, we don’t know why you want us to do this, but in good ass kissing canadian tradition we will proudly follow blindly and hope for a happy ending.
Ah Gartho, another night of fevered angst over the East and West poles of Beaverville. Good thing the other 27 million of us are used to being considered godless barbarians of the hinterlands.
Like I’ve said so many times- get the hell outta TO and YVR and move to metropolitan Alberta, or god forbid even one of the ‘Skatch cities. By a Palace for what it costs for a dilapidated garage 90 minutes commute from the downtown core in TO. Then you can blow the rest of your money on lawn fertilizer and Corvettes…great lifestyle, safe communities, excellent housing, short commutes, world class healthcare and education- I could go on. The only reason to stay in the Poles is love or lust, and trust me kids you can find both out here. Calgary and Edmonton are the “hidden” gems of Canada…they’re big, modern cities with good job prospects and low cost of living relative to earning potential.
Big house, corvette, great community schools for kids OR….lifetime of debt and despair. Seems like an easy decision.
In terms of valuation, US equities (23X trailing earnings) and developed international equities (22X) are similarly valued at this time. Emerging markets are trading at a discount (16X). One could make the argument that there is little or no valuation advantage moving to overweight developed international equities (i.e. Europe) at this time. Emerging markets are undervalued relatively speaking.
#50 VICTORIA TEA PARTY
You bring up some very intelligent questions and facts. It is becoming refreshing that more people are stating and asking and presenting these types of ideals.
Things are about to change big time within the next couple of years, the more that can plan for it the better. Garth is doing his part, it is up to us to help each other out.
I was reading a Metro today and I happened to look in the back ad section, sure enough it was all debt consolidation ads. Business is booming which is kind of scary. That and seeing adds for 1st, 2nd, and 3rd mortgages everywhere!
I always thought people were blowing their brains out on credit and my buddy added to my suspicion with anecdotes of people we know. Vacations, renos, boob jobs, etc etc.. all on the HELOC. Even his wife was bugging him for one because money was tight but she wants to renovate the house. He bought before the huge run up too, so things have to be precarious for a large number of people who bought in the last couple years. Macleans is on to it too with this good article.
The question is, when do things start to get real serious?
http://www.macleans.ca/news/canada/drowning-in-debt-is-the-new-normal-in-canada/
There has been no “Trump rally”. All of the sectors that outperformed post election have given back those performance gains and/or consolidated since. Technology was weak following the election has rallied smartly since and has resumed its market leading position. The “event effect” of the election was relatively short lived.
This does not mean that financials, small caps and/or industrials will not lead the market again (they could due to the fact that recent tech outperformance has been 2:1 vs the S&P500). However, it is evident that most of the growth in the US economy is coming from this sector and this is likely to continue. It’s likely that financials, small caps and healthcare move up the ranks in market leadership soon as the bull market expands.
Bank shareholders to be repaired better than depositors?
Seems like the way things work in the modern world.
Which came first the chicken ( depositor) or the egg ( shareholder)? Who needs depositors when there are shareholders anyway?
Nothing sinister in TSFA concept introduced when we were being encouraged to consume, not hoard, to boost the economy. Nope. No one wanted your deposit enough to reward you for it. Until it disappears. ( They wanted it all along to create dividends! )
Smoking man isn’t the only one with a head exploding here.
Rodney Kings words ” Can’t we just get along? “
Christina now believes you because of “one” friend…….???? I hope your right one day Garth, but as of now your predictions for Vancouver are way off.
Investing in Canadian equities (XIU) is basically an investment in financials (39%), oil and gas (21%), materials (10%) and industrials (9%). All other sector contributions to the index are under 10%. Technology (3%), healthcare (1%) and consumer discretionary (5%) have been strong leaders in this bull market yet have very low contribution weight to the TSX.
One can make a sound argument that Canadian financials will likely exhibit subdued performance in the coming years due to the favourite topic of this blog.
The $CAD is another wild card. One can argue that it will climb to to greater than anticipated BOC interest rate increases. One can also make the argument that it will fall against USD due to USD strength, Canadian economic weakness, higher relative US future inflation, a rising US stock market, etc. Predicting currency is hard.
All things being equal, I just don’t see a sound reason to own a significant position in Canadian equities at this time or for some time in the future. Market trends tend to last a long time. The TSX lead the S&P500 during the cyclical bull market (secular bear market rally) between 2002-2007. That’s over. The secular bull market that has followed could run in to the 2030s. That’s a long time to wait for long term underperformance (of course there will be periods of TSX outperformance along the way but this is very difficult to time – it’s easier to just stay long the S&P500 longer term).
Anyway, that’s the end of my long rant. Thanks for reading. :)
See a pattern emerging? The days of a 0.5% central bank rate – absurd by historic standards – are nearing an end. The first Canadian hike in years is now expected on October 25th, although it might occur as early as September 6th. Coming, though, it is. – Garth
Can’t wait!!
The other day I broadcast a clip from the darkness of my Gazebo, conversation with #1 son. He gave up a brilliant career as a musician cause his x wife talked him into going into a straight job. It’s got the potential to be another great book that no one will buy.
The prick said I peaked, plateaued.
Ok, I’m only in Canada until August, then I will live like El Chapo before prison.
But as my parting gift to Canada, I’m going to make up a bunch of fake resumes designed to breach 3rd party fat checks to get me in front of the interviewer. That scum sucker that has no imagination to make loot and took a job trading time for crumbs. Now judging me.
The interviews will be broadcast live from my twitter account.
@SmokingMan
This is going to be good.
Like hell I’ve plateaued, just staring.
Honestly, i won’t believe it until I see it. The BoC is just so impotent I don’t believe anything until it happens. I want rates higher more than anyone too. So let’s hope it happens.
When it does happen I can’t wait to see how the economy reacts with its dependence on RE. Everyone I know that couldn’t find a decent job became a RE agent. It’d be alright with me to see them have tough times for a while.
My car is 10 years old but I love it. Some friends have had 3 cars in the that time. Does this make me a loser?
#99 Smoking Man
I would be interested to hear what you have to say but what all of us that could care less about being connected to “Twitter, Facebook” or any other social media soul sucking, documenting all of one’s data for who knows what in the future. Is there another link, like your website that one can view what you have to say?
If a person doesn’t already have 20% of their overall portfolio in USD, would this be a bad time to convert CAD to USD? Are we saying CAD is on it’s way significantly higher now? I’m confused, because I could have sworn a month ago this blog was calling for the continued decline of CAD.
#88 Smoking Man on 06.19.17 at 9:31 pm
CBC
RBC
CIBC
Spray painting their logos with pride colors on social media.
Whats up with that. My take.
We are with you Devos and Bilderburg, we don’t know why you want us to do this, but in good ass kissing canadian tradition we will proudly follow blindly and hope for a happy ending.
..
So some people are gay… who cares..
Well, I really think this baby is bursting. I’ve seen crappy little made at the print shop signs around Vancouver saying “we buy condos fast, cash, call now!”
POP!
#101 Loup
Nope, a smart one I would say!!
“Are you ready to unlock the hidden Uber economy today?” :D
https://pro.waldenpublishing.com/p/IndependendeMonthly2017/MWALT6H9/Full?a=2&o=16743&s=37012&u=1743749&l=824909&r=MC2&vid=VSpedA&g=0&h=true
The funny part about this is that chances are this marketing letter was written by a Boomer trying to profit on Millennial woes. (Hint, if you need to buy their
$59.00 manifesto, you clearly don’t know how to use this free thing called “Google”).
The Millennial, DIY, sharing economy…the only antidote to this indebtedness that we’re all in now…share out that car and house that you don’t fully own, try and squeeze out a bit of profit from that material possession that the bank mostly owns…and then try to use that money to pay off the bank…what a mess. Or, as the CFO of the gold-plated PE firm I used to work in once said, “what a circle jerk”. Lmao. (Hint, they’re in the same red building you’re in, Garth).
Being a “reducitarian” sounds really good. Minimalism anyone? Grunge part two?
@#36 Nonplused
Don’t take this the wrong way but you, sir or mam, are a genius.
“There is a very specific reason the car’s computer can do GPS, store 8 megabytes of music, talk and do voice recognition, remember how you like your seat adjusted, but can’t tell you what’s wrong with it without a “code reader”. People would go back to replacing that damn relay themselves and thus pay lots less taxes.”
Best thing I’ve read in a long time. Thank you!
#67 Smoking Man on 06.19.17 at 8:40 pm
Another thing, permanent work is in the review mirror. Everything is contract, project work. We need a job or an upgrade done and when it’s completed… see ya later.
#36 Nonplused
Could not have said it better myself…..
Good on you!!!
Excellent Post!!
#95 BK
Neither Christina nor Garth are “way off” re: the Vancouver bubble bursting.
YOU are the one who is “off”.
Nice try, though!
all lies, still NOTHING of value TO BUY…
JUST DID A MLS SEARCH IN TOP 5 HOODS IN TORONTO AND NOTHING TO BUY!!!
Just some average looking no potential houses asking 2.6-2.9MIL… and one sold 4% above asking…
Where is the price drop? Open house are packed – continuous flood of people.
TO ALL BUYERS, STAY AT HOME! DO NOT WANT TO PAY MORE THAN 2.2 MIL, ideally only $2,000,000
When is the drop happening Garth, why is CREA/TREB lying that prices have dropped?
And to avoid any competition – can’t tip you off where I am looking…sorry
Where did you encounter a ‘packed open house’? — Garth
rates can’t rise unless puppet heads betray their masters….
and it’s anarchism all over
“One can make a sound argument that Canadian financials will likely exhibit subdued performance in the coming years due to the favourite topic of this blog.”
That wasn’t the experience coming off the housing bubble of the late 1990s. Over the next decade, the big-5 Canadian banks mostly quadrupled their per share prices, with dividend thrown into the mix.
The $CAD is another wild card. One can argue that it will climb to to greater than anticipated BOC interest rate increases.
Higher interest rates imply currency depreciation. The reason a central bank raises interest rates is in an attempt to combat this depreciation. ie: they pay more interest because the currency itself is losing purchasing power. Definitely not in cards as long as Canadian consumers have little ability to consume and experience much higher savings rates.
Higher rates should depreciate the USD$ over time, or at the very least, reflect such depreciation. Rate increases in the USA are actually quite bullish for Canada and the Canadian dollar historically.
Crazy as this is… I JUST got handed to me 2 VIP tickets to the Empress Hotel… 2 FREE tickets ($147 each) to an Exclusive Live Real Estate ‘success path’ event for ONE DAY ONLY!
Now I may be dating myself here, but my first encounter with the Pyramid Empire Road Show was with the Amway circus. But this seems awfully familiar.
I am racking my brain, because I am trying to figure out how my 73 year old mom and her friends got a hold of something so dangerous.
I feel like looking through the looking glass but I am worried that the realtor crowd is so desperate, it could turn into a Tony Robbins concert. AAAGHHH
Nonplused pointed out the madness of the computers in our cars. Shaggy dog story. In 1976 I was driving my ’75 Honda Civic south from Fort Nelson to Dawson Crick after a trip to the Yukon on the Alaska Highway. The engine quit at Muncho Lake. Would have been a $700 towing bill. A white van pulled up with about seven people in it. Neighbourly. Diagnosis was quick and they had a coil rattling around the floor in the back of the van. First Nations folks. Beautiful helpful people in the wilderness. 20 minutes later I was back into happy motoring. I gave them all the cash I had in my pocket which was not much.
We have become brainless. It could have required a new motherboard like your Bosch dishwasher.
calm down people… oil crashed in AB and the real estate didn’t. 0.25% to 1% increase will not change anything…. minimum interest rate to see a reduction in prices would be 2.5-3%…. not the case…
On old cars and new houses…old cars have style because they’re not safety boxes designed to be car-like. Safety is nice but visibility is better. Houses suck: all the old ones are too old and all the new ones are built like garbage. I was worried about house prices until I realized I didn’t want to buy one anyway.
I pass by this house everyday on my way to work:
https://www.remax.ca/on/toronto-real-estate/na-97-holland-park-ave-treb_c3810716-lst/
It went up for sale in early April, and is still on the market despite being a bus ride away from the Bloor line. I have followed the three price adjustments made with great interest.
At first it was listed for 1,088,000.
Then about a month later the owners must have wanted to stir up a bidding war so it was relisted at 960,000.
And now since I’m guessing there was no bidding war they bumped it up to 1.2 million.
… Interesting developments. I wonder how much longer their closing day champagne will be sitting in the fridge for.
Nonplussed, nice post. I agree with the borrowing the only creator of money, unfortunately. And you put it out so eloquently that the message catches. Bravo. But to say the gov is demanding car makers to do that, that is giving too much credit to the retarded. It’s the manufacturer s who wised up and have dedicated engineering for Planned Obsolescence. That includes barriers to self service. It’s an economy based on denial of access as opposed to competition in offering better help. It’s a fundamental difference which is downright spiritual in its nature. Why busting my ass to help better than may competition when I can just shit them down with lobby, regulation and law. It’s not only this country.
Garth you are way off.
No way that Poloz is gonna slay the RE goose by raising rates.
Sure, the economy is picking up, but that’s mostly RE related in Toronto and Vancouver.
40% of GDP in those cities and probably 20% nation wide.
Drive down the Cambie corridor in Vancouver and you’ll count at least 4 flag person per 50 meters of construction.
Sodom and Gomorrah, that’s all I can say.
Nothing else will wipe this cancer off the earth.
Que the helicopter money.
The trend is your friend, and the interest rate trend in Canada is not rising. It has flat-lined. It will stay flat-lined for the next 5 years with only a 0.5% increase at most.
By mid-2022 interest rates will be no higher than 0.5% of their current rate.
You read it here first.
The $CAD is another wild card. One can argue that it will climb to to greater than anticipated BOC interest rate increases. One can also make the argument that it will fall against USD due to USD strength, Canadian economic weakness, higher relative US future inflation, a rising US stock market, etc. Predicting currency is hard.
Canadian economy solid. US economy solid.
Inflation solid. Deflation nonexistent.
BoC/Fed on hiking path.
CAD/USD to remain range-bound.
Easy.
I’ll join Mathman and Nonplused with another vote for concern.
The wife bought a Motorcycle a month ago at the local Yamaha dealership. While she checked it out, I was looking at the awesome 2017 Grizzly 700 SE sitting on the showroom floor. It was about 12k and had heated grips, and seat, and… ok I’ll stop.
While signing the deal, we got talking about financing. Yamaha had just cut their rate more than in half, CanAm was offering bloody 10 year financing on an ATV. Sales guy said if it was much more than 50.00/week, they’d sit on the floor. Didn’t matter if you had the best machine in the industry, uncompetitive financing would drive customers to your competition. Some businesses out there are offering financing on USED machines.
I’ve mentioned before that I have never seen so many 60-70K trucks driving around my area, I’ve been here since ’83. Not sure what’s up, but I can’t drive 12 minutes to work without passing a half million dollars worth of quad cab 4×4 monster trucks along the way.
We’ve not yet mentioned the 1.5 decade long trend of good jobs evaporating in Ontario’s industrial sector. I’ve watched all of my major customers eliminate all experienced (yes, every single one) office staff and installed fresh young immigrants. These happy folks are in way over their heads, making squat, and at this point are lucky to get a year of employment before they’re kicking pebbles. Closures continue, cost cutting on all fronts is everywhere. Numbers might be up for the quarter, but there’s no way a fudamental change is happening.
Consumer spending is like 60% of GDP. What happens if the binge borrowers get even so much as spooked?
What is government going to do for revenue when folks decide to put off that new “X”?
I’ve said it before, and I’ll say it again. Taxation. Right when we need it the least. It’s going to get real ugly on the revenue end, and cutting staff or programs won’t be on the agenda with a dingaling like Trudeau at the helm.
Those that borrowed themselves into oblivion will have to lie in the bed they made for themselves, but all of us are going to be made to bail out the various governments who will slowly become starved for cash as the wallets and purses are sealed up.
Less jobs, less pay, less revenue, more taxes, more debt, loan defaults, bigger deficit, shrinking economy, shrinking GDP. That’s it in a nutshell.
Lol look at these dirty shyster realtors with their fake news of packed open houses post #112. You shysters just look like fools. Nothing is selling and hungry for money shysters are going crazy as the housing crash keeps getting worse. You can already hear the crying and whines all over the GTA from the subway to the office. I bought a house and I can’t sell mine. My house is so nice I dont understand why its not selling. Prices went up on light volume. Now there are air pockets of no buyers and just like stocks they crash. Happy Housing Crash Everyone! Happy Housing Crash to you shysters. :-)
Interest rates going up through out the world. The drop the interests rates to nothing experiment failed as nothing was accomplished. Now they will tighten even though the economy isnt strong. They will make up numbers saying inflation targets are met when the reality is deflation. It’s the opposite of the low inflation lies. It’s over realtors. Many of you had the taste of easy money. Easy come easy go. Happy Housing Crash Everyone! :-)
#24 Victor V on 06.19.17 at 7:21 pm
Good grief – who would want to live in that place? Home sweet hotel lobby!
California may have just boosted Trump’s chances of winning in 2020
The California state legislature is giving almost $50 million to groups defending illegal immigrants.
This may play well locally, but most of America is still very worried about illegal immigration.
This move is likely to help President Trump’s mostly popular anti-illegal immigration push.
One of the great disconnects in 2016 was the fact that so many experts thought candidate Donald Trump’s focus on illegal immigration was political suicide. Instead, it’s clear it was a major boost on the way to his election.
Now, California has given him and his supporters a new punching bag that should resonate in the red and swing states across the country. The tin ear of the left has struck again, and once again it’s a self-inflicted wound.
http://www.cnbc.com/2017/06/19/californias-50-million-for-illegals-could-help-trump-2020-commentary.html
sales in east van (off the drive)are still happening, a bit slower than may , but prices are still uppa.
just went thru all july sales in my hood, sorry to say most are still going over or at ask. sfh and condo. usually under 10 dom for anything good.
actual sales this month…
1.9-2.2 – nice renos of character homes -good street
1.9 for a stunning new build on 1st ave raceway
duplex
1.0 for a couple on 1st ave
1.2 townhouse on a decent street
condo
2br at broadway and nanaimo 590
really nice 2br at the drive 925
deal of the week: someone scooped a 33′ lot w hovel over toward renfrew for 1.2.
prices on all types of housing still clearly up 50-70% from 2013.
not even a hint of desperation seen yet.
“oil crashed in AB and the real estate didn’t. “
Oh really? Tell that to the people who have had to sell their houses for 20-30% off of peak (2011) prices in Calgary over the past couple years. Or those in the actual oilpatch whose houses/housing has, in many areas, pretty much gone no-bid. Its been absolutely brutal in Alberta, even though the numbers, at least in Calgary may not show such because of significant sales mix changes.
The TSX lead the S&P500 during the cyclical bull market (secular bear market rally) between 2002-2007. That’s over.
2002-2008 was a period of rising short and long-term interest rates. 2008-2015 was a period of falling short and falling long-term interest rates. The TSX tends to perform awesomely during rising short and long-term rates, but very poorly during falling short and long-term rates. The mix of sectors in the TSX, particularly the significant exposure to very long-life capital intensive asset classes is heavily responsible for such.
If we’re truly in a rising short-term, rising long-term rate/inflation environment in the US, then the TSX should enter into a long-term bull market imminently and outperform for many years to come.
When I look at valuations, they’re awfully stretched to the upside in the USA, particularly amongst the top S&P500 components. While they’re terribly stretched to the downside in Canada, with most cyclicals scraping the bottom of their long-term ranges. So accordingly, it does seem to be an awesome time to be invested in Canadian equity indexes, and a rotation away from housing speculation and towards a more normalized stock market valuation in Canada should be quite positive going forward.
#65 moneydriven on 06.19.17 at 8:36 pm
Look up carry trade. That is what the big US banks are engaged in right now to keep interest rates artificially low right now. They have combined about $350 billion dollars worth.
People I know just bought a cottage about 1 month ago. I’ve was looking, but like houses, the prices are sky high. I wondered how they managed to afford and decide to spend so much, when my quick MLS search showed that it cost at least 650K or more in that area of Moskoka. Probably closer to a 1M since near by cottages are well over 1M and up.
I found this news in the Star. They may have used the equity in there home that has sky rocketing value. I doubt they saved the money.
“That trend is expected to hold because inventory is tight and the consumers who are shopping aren’t first-time buyers, but rather homeowners who are investing their equity in vacation properties, said Somers.”
https://www.thestar.com/business/2017/06/20/cottage-market-remains-hot-says-royal-lepage.html
If they did borrow against there home, what happens if price go down now?
This housing market is so disappointing, I can’t manage to buy a house and everyone else is buying cottages with there house money. Even if house prices go down, everyone has already taken advantage and gotten ahead by leveraging there home equity. I can’t leverage my portfolio.
I guess people like me just keep waiting…….
“Inflation solid. Deflation nonexistent.”
What do you think happens when credit expansion in Canada, particularly to masses of highly leveraged homeowners, slows/stops in response to falling housing prices.
Deflation definitely not nonexistent then.
As it stands, even before housing started falling recently (from its plateau), the Bank of Canada was chronically undershooting its 2% inflation target. With the recent strengthening of the CAD$/USD$ pair, and the taps of credit tightening down on mortgage borrowers, deflationary pressures are growing.
Next BoC policy move will be a rate cut. Mark my words.
If the BoC raises it should have to do it before the RE troubles spread and impact the economy. They may raise once or twice to build up some margin before the economy suffers (which they surely expect…), then forget it, they will again look for ways to support the failing Canadian economy.
None of this matters very much anymore, screwed is what we are, no escape and you will not believe how bad of a basket case Canada really is!
Some great posts this time around; Nonplused and IHCDT9, take a bow.
As for CAD/USD – we have an economy firmly built on an industry that’s on the verge of all-out-crisis, we have a tax-borrow-and-waste PM who will never question what sociopath Butts whispers in his hear, we have provincial governments built on ever-increasing PS labour costs and over their heads in debt, we have a dimwit BoC gov who is politically urged to suppress the CAD as the only thing driving manufacturing exports is a weak currency.
We have no backup plan.
And dogs here are claiming we’ll hold or even strengthen against the USD? Behave.
Mark, I’m all for a contrarian opinion (that’s the way I live my life), but even I’m not buying this one.
Qatar blockade?
Why Barclays came under SFO fire
Simon Jack Business editor explains
“First was a payment to Qatar Holdings – which was initially not disclosed – for “advisory” services. Barclays later admitted that £332m was paid to this company over five years. The charge is essentially that this advisory agreement sweetened the deal for Barclays’ new benefactors for non-existent advice.
Second was a loan of £2bn extended by Barclays to the Qataris at around the time of the investment. An adviser to a separate investor has claimed in court that Barclays was lending to Qatar Holdings to fund its investment in Barclays shares. The allegation essentially was that the bank was lending to itself: a very big no-no with banking regulators and today the SFO charged that this amounted to unlawful financial assistance.”
http://www.bbc.com/news/business-40327899
That looks like Mark C in the bushes. Speaking of which, who could have seen this coming (tongue in cheek).
https://www.reuters.com/article/us-britain-economy-carney-idUSKBN19B0O5
Mark # 131 So accordingly, it does seem to be an awesome time to be invested in Canadian equity indexes
Just because a price is low does not mean it’s a good buy. And vice-versa.
Low prices for Canadian equities just illustrates the lack of confidence from markets in the Canadian economy and Canadians businesses. Those equities are a bargain only if markets are currently wrong and the lack of confidence is somehow unjustified. I tend to think the market is right this time. Sometimes things are cheap simply because they are not worth very much…
And I think the market is likely right to be optimistic about the US also.
Markets may swing in many directions but in the end they always acknowledge real value (and disregard the BS). There has been a very long cycle where emerging countries, commodities and resources dominated the world, many thought the US was finished and a new world order was to take place, dominated by the BRICS (or whatever). Wrong! Capitalism is not about low wage manufacturing or who has the most resources, it’s about innovations and smarts. And the US (and US multinationals) is where most innovations are made, that’s why the US is expensive and IMO it is justified (especially relative to extremely high bond prices).
Investing in Canadian equities (XIU) is basically an investment in financials (39%), oil and gas (21%), materials (10%) and industrials (9%). All other sector contributions to the index are under 10%. Technology (3%), healthcare (1%) and consumer discretionary (5%) have been strong leaders in this bull market yet have very low contribution weight to the TSX.
One can make a sound argument that Canadian financials will likely exhibit subdued performance in the coming years due to the favourite topic of this blog.
The $CAD is another wild card. One can argue that it will climb to to greater than anticipated BOC interest rate increases. One can also make the argument that it will fall against USD due to USD strength, Canadian economic weakness, higher relative US future inflation, a rising US stock market, etc. Predicting currency is hard.
All things being equal, I just don’t see a sound reason to own a significant position in Canadian equities at this time or for some time in the future. Market trends tend to last a long time. The TSX lead the S&P500 during the cyclical bull market (secular bear market rally) between 2002-2007. That’s over. The secular bull market that has followed could run in to the 2030s. That’s a long time to wait for long term underperformance (of course there will be periods of TSX outperformance along the way but this is very difficult to time – it’s easier to just stay long the S&P500 longer term).
………………….
agreed.
you didn’t emphasize OIL enough. OIL in the 30’s will guarantee an underperforming TSX. LOng term oil is dead. Anyone who thinks OIL will see $70 is in lala land. Clean energy will continue to take greater market share. Looks what’s happening in Germany.
victim-less or less victims
“Everything is contract” and/or getting them in the future
contrast and compare
e.g. rolls royce deferred –
-agreed to pay £671m to settle corruption cases spanning nearly 30 years. A criminal conviction could have barred it from winning civil and military aviation contracts in the US.
https://www.theguardian.com/business/2017/may/04/kpmg-rolls-royce-frc-sfo
https://www.sfo.gov.uk/cases/rolls-royce-plc/
currency hedges
Warren East, chief executive of Rolls-Royce, insisted the loss did not reflect the underlying health of the business. “This has no impact on what is really going on in the business and cash, it is just an accounting measure,”
https://www.theguardian.com/business/2017/feb/14/rolls-royce-posts-largest-loss-in-its-history-after-settling-bribery-charges
barclays acknowledge and move on?
liguidity crunch 2008 and Qatar
@#121 Ponzi Fonzi
“Drive down the Cambie corridor in Vancouver and you’ll count at least 4 flag person per 50 meters of construction….”
######
That fact that its Summer road construction season has nothing to do with it I’m sure.
That and the govt”safety Nazi’s” that seem to require two flag people for one truck backing up might also have something to do with it.
What DID we do before all these flag people? Drive safely? The more flag people the worse we drive.
And the fact that Vancouver has the highest basic car insurance rates in Canada.
Gotta have flag people every 10 feet to keep the idiots from running into each other.
The uncompetitive Nanny state and the endless legions of “safety” people to make sure we’re “safe”……..
I think the only thing Canadians can make competitively anymore is maple syrup and thats only if we import seasonal foreign workers to do it
The rest of the planet is laughing at us.
If you really want too know what the Pairs climate deal/scam is all about.
https://friendsofsciencecalgary.wordpress.com/2017/06/15/outcome-of-the-paris-accord-a-re-founding-act-of-american-democracy/
“Clean energy will continue to take greater market share.”
Be careful, now: A statement like that will just rile up all the deplorables. ;)
Update to my post June 12th regarding my QEW/3rd Line area and a 3 BD house (W3837331) that was originally listed $999,900 and through a series of relistings dropped to $699,000. It sold a few days later in a flurry of bids with realtor cars lined up the street. Final selling price $880k. I’m sure the realtor will tout getting $180k over asking even though this is $120k under original asking. I believe this house would have sold for about $1MM in March and this decline is in line with what we’re seeing in the area although most sellers don’t seem to be willing to trust they can generate the same kind of bidding war and are holding asking prices higher.
Other houses around the corner I’m watching are:
2135 Bridge 4BD (30581130) originally listed $975k and now $898k and still sitting for weeks. Not sure why someone would pay $880k for the 3BD when a nicer/larger house is listed for $898. Will see if they use similar price drop to $799k hoping to sell for $900k in bidding war.
640 Trafford 3+1 (W3844928) was listed $1,288,888 and sat for more than a month and relisted a little while ago for $1,190,000. I can’t imagine this one gets $1MM in this market.
Anyone else seeing these dramatic price drops inducing bidding wars?
*********************************************
June 12th Post…
Anectode from my ‘in demand’ West Oakville area. A 3 bedroom 1960’s sidesplit has been for sale since April and I’ve watched as the sellers aggressively reprice but it seems like crickets. They must be closing on their new place as today they dramatically dropped the price.
Early April listed $999,900
About 2 weeks later $989,000
May 15 dropped to $949,000
End of May dropped to $899,000…thought for sure they’d sell.
Today they’ve listed at $699,000
MLS® Number: W3837331
https://www.realtor.ca/Residential/Single-Family/18283882/2105-SAXON-Road-Oakville-Ontario-L6L2V1-Bronte-West
I would be shocked if the house sells for less than $800k but I thought it would sell for $1.05MM 3 months ago.
This area has tear downs every 10-12 houses with an empty lot and foundation poured just around the corner and a couple recently rebuilt homes nearby that are either listed or seem about to be listed. Several other houses in area listed in the $1MM range but for 3+1 or 4 bedrooms.
Interesting times…
Rate increases will be the best thing to happen to the real economy in close to two decades. Gradual, relentless and healing.
The entire impact of milking human stupidity and greed has already passed through the economy.
It’s now time to restore value to money, get those who actually have wealth spending again and move onto the next money-making wave and that is harvesting debt service profit. This will create enormous profit for lenders, insurance brokers and will net out a lot of duds, both individual and business. The economy will heal on many levels and become more robust.
Sensible pricing on re and other goods will return, as will social cohesion.
Why does the Bank of Canada suddenly seem in such a hurry to hike rates?
http://business.financialpost.com/news/economy/why-does-the-bank-of-canada-suddenly-seem-in-such-a-hurry-to-hike-rates/wcm/0f9a60bd-b450-4f40-bbd1-959b63d16ade
“John Oliver: it’s time for Trump to stop lying to coal miners.”
https://www.vox.com/energy-and environment/2017/6/20/15831906/john-oliver-coal-miners
“If Trump can convince everyone that this whole thing is just about politics, then an impeachment debate is even more likely to divide along party lines. If it comes to a trial in the Senate, Trump is counting on gridlock to deliver his exoneration. The swamp that he promised to drain will be his salvation.”
http://www.cbc.ca/news/opinion/donald-trumps-swamp-1.4166646
“Donald Trump fails to address terror attack on London mosque and murdered Muslim woman. He’s much quicker to express condolences when Muslims attack western nations, critics note.”
http://www.independent.co.uk/news/world/americas/us-politics/trump-finsbury-park-attack-nabra-hassanen-response-muslim-girl-virginia-mosque-deaths-a7798206.html
#2 Pete on 06.19.17 at 6:47 pm
“Would a rate hike hurt stocks a great deal? The pathetic TSX down to 14,000?”
No worries mate……it will just be the healing effect of a restorative rate-hike sine wave, flowing gently through once again, returning balance to a badly mangled economy.
Way less dramatic than the GFC. Not even close.
Even stock markets will benefit as more people will be buying stuff in the medium and longer term.
Gee, there are some really nut types gleefully waiting for the housing crash. Are we that close minded and bigoted as a nation that we will cheer as our neighbours and friends lose their shirts when house price corrections starts in earnest as Garth has predicted? Once people and entire communites begin going underwater, layoffs follow, it happened with Oil and Gas and surely it will happen with Real Estate and its associate industries of Construction and Finance. There is nothing to cheer about.
not sure whats going on in the rest of canada but in toronto proper places are still selling for insane amounts, nobody is backing out of deals here. I just closed on my place last week after selling end of march. you guys had me a little worried lol
#144 A Reply to #140 re., shawn on 06.20.17 at 8:24 am
“Clean energy will continue to take greater market share.”
Be careful, now: A statement like that will just rile up all the deplorables. ;)
______________________________
I will complete that thought:
“Clean energy will continue to take greater market share, as long as government subsidies providing the artificial competitiveness hold out.”
Ask Wynne how attempting to charge actual costs for green electricity worked out…
Home Capital to sell its commercial mortgage portfolio to KingSett for $1.2 billion
http://business.financialpost.com/news/fp-street/home-capital-to-sell-its-commercial-mortgage-portfolio-to-kingsett-for-1-2-billion/wcm/722b3757-d5e7-4cf2-bbfb-e60c2c6d2927
Alternative mortgage lender Home Capital Group Inc. announced Tuesday that its subsidiary has entered into a definitive agreement with KingSett Capital to sell a portfolio of commercial mortgage assets valued at approximately $1.2 billion, giving the embattled company some much needed liquidity to pay down a pricey emergency credit line.
After the transaction, which is expected to close in two tranches during the third quarter, Home Capital says it expects to record a loss on the transaction of approximately $15 million, before income taxes.
“This transaction will help the Company further stabilize its liquidity position and highlights the flexibility and options created by the quality of our assets,” said Bonita Then, Home Capital’s interim chief executive in a statement. “Proceeds from the transaction are expected to have an immediate impact by enabling us to enhance our liquidity and reduce the outstanding debt under the Company’s $2 billion credit facility.”
#150 Toronto Dweller on 06.20.17 at 9:22 am
Are we that close minded and bigoted as a nation that we will cheer as our neighbours and friends lose their shirts when house price corrections starts…
______________________________
Uh, yeah? Where have you been? Canadians have never been more dense than they are now. Look at who was voted into running BC, AB, ON, look who we voted in with a majority to run the entire country.
Politicians who practice identity politics, and create division appeal to the bottom feeders of society. They talk about equality, promise handouts, and have been getting majorities in Canada in case you’ve missed it.
“Politicians who practice identity politics, and create division appeal to the bottom feeders of society.”
Do you mean politicians like little Donny Trump? And by bottom-feeders, do you mean the deplorables? Or have I misunderstood you yet again?
#147 Sonny-
Doesn’t it seem the least bit suspect that our central bank who has been talking down the currency for the better part of 3 years is suddenly making an abrupt shift in monetary policy just as the country is on the verge of a painful downturn in housing?
Someone, anyone?? Didn’t you guys watch Smokeys Morneau video returning from Chantily? Morneau got TORCHED at Bildeburg 3 wks ago. TORCHED. HCG was supposed to fail and take our housing market along for the ride so our globalist overlords could vulch the last remaining asset with any intrinsic value in this country.
I was truly amazed that the feds saved Home but now they have to pay the piper. You can’t deviate from the roadmap without consequence. Now we all pay.
Clearly Poloz has been instructed via Morneau via Bildeburg that rates must rise immediately to ensure the bleed in housing will continue now that HCG and EQB each remain a going concern. It’s such an obvious game, how do people not see this??
Smokey sorry this week was crazy, all sorts of client nonsense but beers soon for sure. I’ll be in touch.
-Bj
The story from Vancouver is not unique. Financing and deals fall through all the time. I just talked to a realtor that had 3 deals fall through on closing date in the Fraser Valley only to have each offer successively come in higher. The place ended up selling at the highest price to the 4th offer. I suspect this is what will happen with your friend’s house. Not to mention $1mil is a big amount of money and banks do their due diligence when lending that amount—probably a few locals struggling to get financing at that huge price. Chances are a foreigner will walk in with the necessary cash on hand and close the deal. I know, I know, accuse me of being xenophobic now. I believe this is what is happening often, and yes I live in these parts.
150 Toronto Dweller on 06.20.17 at 9:22 am
Gee, there are some really nut types gleefully waiting for the housing crash. Are we that close minded and bigoted as a nation that we will cheer as our neighbours and friends lose their shirts when house price corrections starts in earnest as Garth has predicted? Once people and entire communites begin going underwater, layoffs follow, it happened with Oil and Gas and surely it will happen with Real Estate and its associate industries of Construction and Finance. There is nothing to cheer about.
—————————————————————-
We have no one to blame but ourselves. Painful as it will be for many, a correction is not only necessary but long overdue and healthy.
if OIL goes below $40, are you still comfortable with the aforementioned increased weighting on Canada ?
Can the TSX hang on with $38-$42 oil for a sustained period?
#58 mathman on 06.19.17 at 8:33 pm
story from the front – in the west end of the “6”
went to a number of open houses this weekend – crickets. Realtors in full PT Barnum mode, these same people who wouldn’t even stand up when I walked in a few months ago to their open houses are practically humping my leg as I walk through.
/////////////////////////
What is with all the losers on this blog that go to open houses every weekend?
Get a life.
oil better hold $40 or it will be testing lows at $30
Then it’s light out for Calgary condos
#130 “not even a hint of desperation seen yet.”
Really? Nice cherry picking. Why are most listings dropping their prices then? Including E Van. You seem to be desperate to hang on to the fiction RE pumpers constantly vomit in all directions.
http://www.myrealtycheck.ca/
Actually, Listings uppa, sales downa
http://vancitycondoguide.com/new-listings-surging-in-vancouver-detached-market/
The pain hasn’t even commenced……….and prices have quietly lowered 100k.
Give it 6 months, come back and tell us all how you bought more property as a sure thing investment…….
“That is 3 collapsed deals in under 2 weeks.”
Sounds like the failed purchases had more to do with a lack of financing than it did with buyers being prudent or a sudden surge of listings. Banks tightening up on lending and Home Cap, Equitable temporarily reduced operations seems to be having an impact.
#150 Toronto Dweller on 06.20.17 at 9:22 am
There is nothing to cheer about.
There are winners and losers for every cycle in every sector, not everyone gets a “Gold Star” in this world….
Plus… how can schadenfreude not be experienced when the alarms were sounding loud and clear over the last few years.
PS… I bought & sold 3 houses over the last 10 years, profiting from each sale. Renting & waiting to buy another :)
Cheers! (& cheering)
#146 maxx on 06.20.17 at 8:37 am
Rate increases will be the best thing to happen to the real economy in close to two decades. Gradual, relentless and healing.
The entire impact of milking human stupidity and greed has already passed through the economy.
It’s now time to restore value to money, get those who actually have wealth spending again and move onto the next money-making wave and that is harvesting debt service profit. This will create enormous profit for lenders, insurance brokers and will net out a lot of duds, both individual and business. The economy will heal on many levels and become more robust.
Sensible pricing on re and other goods will return, as will social cohesion.
===
This can’t happen soon enough. It really does seem like a global financial leviathan moves from state to state seeking the greedy, gullible, and stupid. As the global finance leviathan moves into a local market, it breeds and leaves behind local leviathans that thrive on that greed, gullibility, and stupidity. It’s not even something that’s consciously driven or conspiratorial – it’s simply investment seeking a maximum return on a global scale.
A return to normal can’t happen soon enough. I know a ‘crash’ is what sells headlines, but I see things slowly melting over time. In a decade, it’ll probably happen all over again and the deniers will point to the fact that there was no ‘crash’ as proof that things are fine. All the while ignoring a slow melt in valuation and deflation. Good times!
#77 Only in GTA – it is being celebrated as I notice Toronto Life mag is a leader in social/cultural
re-programming. Making the 2% the 100%.
You are abnormal it seems.
NonPlused: If the debt binge stops now, the economy collapses by probably 30%. People simply do not have any more money left to pay for things.
that’s my feeling. I feel that the banks are playing a game – they aren’t going to get stuck with loses in real estate. They don’t make announcements so I can feel whatever I want.
nonplused: You don’t have to pay HSCT if you aren’t buying anything.
that threw me off – what’s HSCT? oh yeah you decided you would be clever – you first have to be understood.
Ray Skunk: As for CAD/USD – we have an economy built on an industry that’s on the verge of all-out-crisis, we have a tax-borrow-and-waste PM, we have provincial governments built on ever-increasing PS labour costs and over their heads in debt, we have a dimwit BoC gov who is politically urged to suppress the CAD as the only thing driving manufacturing exports is a weak currency. We have no backup plan.
“we have an economy built on an industry that’s on the verge of all-out-crisis”.
The industry being real estate. And yes I think it’s on the verge of an all-out-crisis. Bill Morneau is a money guy – the fact that he sits down on a regular basis with Justin Trudeau is a tribute to his self control.
Sonny: Why does the Bank of Canada suddenly seem in such a hurry to hike rates?
that’s my question but your link was just so much speculation – might as well gaze into the clouds
Smoking Man: from your link: The Paris Accord marks the apotheosis, not of “globalism,” but of a particular version of globalism, which one should rather qualify as socialist. Indeed, let us recall the actual content of the Paris Agreement! What does it foresee? Essentially, two things: the drastic reduction of CO2 emissions in the West, right away, with the possibility for states such as China – the world’s largest CO2 emitter – to continue to increase emissions to 2030, with no requirement whatsoever to reduce emissions. The second essential component of “Paris” is the Green Fund, which provides for the transfer of $ 100 billion a year from the West to the rest of the world. “Paris” is therefore, first and foremost, the triumph of what was called “support for the Third World” in the 70s and 80s, that is to say, a massive and permanent transfer of wealth from the West to the rest of the world.
I don’t trust these guys – the guys that organized the Paris Accord.
Mark, I’m all for a contrarian opinion (that’s the way I live my life), but even I’m not buying this one
His incorrect call on the currency shows that he can hold his breath for at least 10 years lol
#160 Penny Henny on 06.20.17 at 10:46 am
What is with all the losers on this blog that go to open houses every weekend?
Get a life.
Didn’t your recently sell your house? Surely someone who attended your Open House?
These losers will be winners in a few more months of attending Open Houses and getting a sense of the desperation.
Can’t swoop down without doing your homework.
#133 Saint Herb on 06.20.17 at 6:31 am
…This housing market is so disappointing, I can’t manage to buy a house and everyone else is buying cottages with there house money. Even if house prices go down, everyone has already taken advantage and gotten ahead by leveraging there home equity. I can’t leverage my portfolio.
I guess people like me just keep waiting…….
___________________________________________
Dude, you don’t “get ahead” by borrowing your brains out. Don’t be upset that you lack the option. Sounds to me like it’s a good thing you don’t own a large asset that you could use to bury yourself with – because evidently you would in a heartbeat.
Here’s a good goal for you to reach for, it will improve everything about your world view. Focus on yourself, and don’t worry about what others say, think, or do.
I mean you need to really not give a crap about any of it. No worries about what Bill is buying next, no wondering how Joe could afford that new Benz, no scheming how to keep up. That’s no way to live. If everyone had their real-time net worth displayed on their foreheads 24/7, it would change the world.
There will come a day when, if you did not give yourself a pair of concrete shoes in the form of a 7 figure mortgage, you’ll be bloody glad about it.
Goody goody, oil going down.
Maybe a gallon of paint thinner (varsol) will drop below $10.99 to more like the $2.99 it was at when oil was at $144/barrel. Or not.
I bought a 2 litres of 80/90 gear oil last week for the same price I had paid for a 20 litre pail a decade ago.
I love everybody that wears a suit!
In my wee corner of Oakville there are no homes for sale. When there are, they seem to sell quickly. On this just passed Sunday morning I spotted a realtor canvasing the neighbourhood looking to acquire listings (thought he was a Mormon handing out Watchtowers at first).
In other news, spotted the coyote twice this week and one very large bird (eagle I think) swooped down to get a better look at my schnoodle. Rabbits, raccoons and squirrels are plentiful so if things do go sideways at least we won’t starve. It won’t be long now until the heron makes his return to our ravine. Last year we had beavers make their home next door (until a bobcat driving Oakville parks person relocated them to who knows where).
If there is a crash or a correction sure hope it comes soon and I hope my neighbours are as prepared as I am.
Keep up the great work Garth!
#125 IHCTD9
Very interesting to read your post and what life is like in your neck of the woods as well as work in another industry. Things certainly look different from where I am. I recently moved into a FinTech role after working in Finance for many years. Fintech, along with cyber security and corporate social media, continue to be hyper-growth industries. Not only have wages been growing but jobs have been created at an astonishing rate. In Canada employers use TFWs as there aren’t enough locals to fill all the job openings. I see this less in both our New York and London offices, where I’ve worked for a number of years. Obviously companies also use TFWs to lower operating costs, which partly explains the growing wage discrepancy between Canadians and their US/UK counterparts, and this trend will continue into the future. And there’s certainly a shift from traditional manufacturing industries into service based. It will be interesting to see how things continue to evolve going forward.
It’s likely that oil trades in the $40 range for years before eventually falling into the $25 range.
It’s not going to $60-80 despite the vast majority of analysts calling for it.
The oil bubble has burst. Canadians need to move on.
#171 Wrk.dover on 06.20.17 at 12:32 pm
I bought a 2 litres of 80/90 gear oil last week for the same price I had paid for a 20 litre pail a decade ago.
_____________________________________
I’ll be pouring the dregs of a 5 year old 20L pail of hydraulic fluid into my small (leaky) ’52 track loader sometime this summer.
I think I paid 60-70.00 for that pail. I don’t want to know what the new one will run.
Last year I bought a bottle of “Genuine Honda” 80W90 differential fluid for the 350ES I had for a short while. Bought it from the Stealership – 12.95 for 1 litre!
Blogdogs, any opinions of HSBC? They are getting into the mortgage market in Canada with low rates. I locked in at 2.35% for 5 years. Current rate now is 2.39%. Dividend is 5.8%.
#160 Penny Henny on 06.20.17 at 10:46 am
What is with all the losers on this blog that go to open houses every weekend?
Get a life.
I go because I enjoy the company of realtors. They are such honest and genuine people. It keeps me in the know on the future of the market. Apparently it is going up for ever.
@#37 Howard
I’m saying 2% is likely the top and that’s probably still years away. Sorry, but rates won’t be what pushes the Canadian real estate market into a correction.
#155 A Reply to #154 IHCTD9 on 06.20.17 at 10:08 am
“Politicians who practice identity politics, and create division appeal to the bottom feeders of society.”
Do you mean politicians like little Donny Trump? And by bottom-feeders, do you mean the deplorables? Or have I misunderstood you yet again?
_________________________________
If you are trying to insinuate that there are plenty of dense Americans as well – you’ll get no argument from me.
Looks like a Global problem actually.
#102 acdel on 06.19.17 at 10:31 pm
Read this, link below, prity much boils down to “my” data, vs their data about me… My data have some some value to someone but their data about me is lot more valuable.
People are all bent out of shape over gov spying,but gov regularly buys their data about me form “them”. (Covers a lot companies that track people internet habits around) few yrs back I downloaded flashlight app for my old phone asked permission for absolutely everything.
Unfortunately all this “tracking” have polarizing effect on people without them knowing, some go business as usual transparent, and other go full paranoid and run two linux boxes as a. firewalls and rotate tor vpn…
Read about tech executives to what distance they go to protect their privacy, if you are like me you dime a dozen, ok I am bit more than a dime but let’s not go there.
https://www.socialcooling.com
#37 Howard on 06.19.17 at 8:05 pm
#32 RentYVR on 06.19.17 at 7:56 pm
“But it will mark the death of deflation…”
Umm, no it won’t. The millennials are the deflation generation, having overpaid (and been saddled with debt for) their biggest expenses (education and housing.) Still no major wage growth or inflation and none on the horizon, so there is absolutely no pressure at all to raise rates and lots of arguments for keeping them low. If you think interest rates should be back to “
____________________
Actually there’s been some very real concern inflation is being undermeasured:
“..For a taste of good, old-fashioned inflation, check your grocery bill.
Although Statistics Canada’s consumer price index says food prices have fallen a bit in the past year, there are indications from another source that the cost of some grocery items has increased a lot.
“If Canadians are thinking there’s an inconsistency between what’s being reported by CPI and what they see in grocery stores, there may be some truth to that,” said Sylvain Charlebois, dean of Dalhousie University’s Faculty of Management and lead author of a report to be released Monday on Canadian food prices at mid-year. Dal is recognized as an expert on food prices…”https://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/canadas-food-prices-offer-a-taste-of-inflation-to-come/article35320029/
“Clean energy will continue to take greater market share, as long as government subsidies providing the artificial competitiveness hold out.”
Do I understand you correctly? Are you saying that the oil and gas industry is not subsidized? Really?
“Canada gives out in annual fossil fuel subsidies about $3.3 billion for oil and gas producers (currency in Canadian dollars).
“That includes measures like reduced property taxes and special tax deductions for the industry, as well as direct infusions of cash from the government to companies.
“Both the federal and provincial governments are providing these subsidies. Examples of federal programs include the Canadian Development Expense, the Canadian Exploration Expense, and the Atlantic Investment Tax Credit, with a yearly average value of $1 billion, $148 million and $127 million, over 2013 to 2015. Examples of provincial programs include Crown Royalty Reductions in Alberta with an average value of $1.16 billion and the Deep Drilling Credit in British Columbia valued at $271 million, over the same years.
“$3.3 billion is obviously a lot of money. Let’s put it in perspective.
—That would pay for education for 260,000 students (Canada’s average annual spending per student is $12,700).
—It would provide Canadians a hospital bed for 16,000,000 days (average cost of a hospital bed per day is $202 for primary care).
—It would offer job training for 330,000 workers (Canada Job Grants provide up to $10,000 to help workers gain the right skills).
—Or it’s $94 dollars in the pockets of every Canadian each year.”
http://www.iisd.org/faq/unpacking-canadas-fossil-fuel-subsidies/
https://www.theguardian.com/world/2016/nov/15/climate-change-canada-fossil-fuel-subsidies-carbon-trudeau
Tnt – your plan is to swoop in 6 months from now and grab a house at 25% discount? Basically 2015 prices? Brilliant strategy pal. Thats what all you guys planning on scooping up houses are failing to understand, that the drop would have to be catastrophic in order to get back to reasonable valuations. And any massive drop in house prices is going to take the economy out with it. You may be able to finally have that home you so desire but you may not have a job and that fake fat stash or liquid cash you want us to believe you are sitting on will be down 5-15 points.
The irony in all the vulching posts is the folks that will get through a major crash the best are those that can afford to buy in any market, and likely have multiple properties now. They are so far ahead that any crash creates new buying opportunities. The idea that the little guy is going to be a winner in a large crash is the most embarssing thing posted here. If people could afford to buy when SFH’s were half the price they are today and money was free, how does a correction of 30% (yes I know how the math works on the way down) and rates that are almost double equal a win? If you weren’t able to get in the last 10 years I have doubts you get in the next ten.
#173 Xbox Economist on 06.20.17 at 12:52 pm
______________________
Good to hear you are in an industry where things are actually growing.
The folks I see in my industry ie. the immigrants are out of the GTA, and are not TFW’s. They are Canadians but foreign born. Some of the more established ones have kids that were born here. Just about all of them have a foreign degree, many are working on a Canadian one as well. Competition for jobs is fierce due to the sheer numbers of business and engineering degree holders moving into the GTA looking for work something in, or related to manufacturing.
Wages have suffered terribly. We can get an immigrant Masters of Engineering degree holder with one phone call, he’ll work for 45K/yr, and he’ll drive 3 hrs a day to commute to this job. He’ll then go thru hell on earth trying to keep up, and pack it in after a year or two ready to put a gun in his mouth. Back in the late 90’s early 00’s 2-3 year College grads that could run ACAD well got 60K+ out in the Hinterland.
I myself would be lucky to get 15+ more years out of my industry. My previous career position is dead. The job used to pay pretty well, but now I’d make more stocking shelves at the local LCBO – I’m not joking.
My new job is decent and has some legs, but I’m just about bloody done with this business. If the SHTF in my industry again, I’d be happy to put bottles of hard Liquor on the shelf for another 10 years or so. Might even gain some kind of pension out of the deal.
One thing is for sure: as a born Canadian, and also living a standard Western lifestyle, I would not consider even trying for a job in the GTA working in an engineering or administration / lower management office within the manufacturing industry. No point when they’re offering less than my salary circa 1996.
Another round or two of Wynne, and these will all be near minimum wage jobs. I’d gladly turn my brain off and flip burgers locally than drive out to Scarberia to sweat it out in manufacturing for the same basic pay.
Overall, it’s probably nothing more than the signs of a shrinking Industry…
#108 Hans on 06.19.17 at 10:47 pm
@#36 Nonplused
Don’t take this the wrong way but you, sir or mam, are a genius.
“There is a very specific reason the car’s computer can do GPS, store 8 megabytes of music, talk and do voice recognition, remember how you like your seat adjusted, but can’t tell you what’s wrong with it without a “code reader”. People would go back to replacing that damn relay themselves and thus pay lots less taxes.”
Best thing I’ve read in a long time. Thank you!
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c’mon guys, this is not so hard.
my code reader was 50 bux on craigslist, used once.
i’ve used it dozens of times (my friends know i have it)
nothing easier than having the car tell you what’s wrong
on sale today at crappy tire – 80
http://www.canadiantire.ca/en/pdp/innova-3030g-canobd2-diagnostic-tool-code-reader-0251094p.html#srp
Vulnerability of indebted households to hit ‘historic’ levels as rates rise, PBO warns
http://business.financialpost.com/personal-finance/debt/financial-vulnerability-of-indebted-canadians-will-be-highest-in-30-years-when-rates-rise-pbo-warns/wcm/19d05e55-3d0d-400b-b322-5e58c2627c41
OTTAWA — The expected, gradual rise of interest rates over the next few years is poised to push the financial vulnerability of indebted Canadian households well above levels seen in the last three decades, warns a new analysis.
A report released Tuesday by the parliamentary budget officer predicted that higher rates expected in the coming years will leave households exposed to economic shocks at “levels beyond historical experience.”
The study comes amid concerns that rising debt levels — largely fuelled by surging housing prices — have made households increasingly vulnerable to events like a severe recession that trigger job losses or higher-than-expected interest rates.
#150 Toronto Dweller on 06.20.17 at 9:22 am
“Gee, there are some really nut types gleefully waiting for the housing crash. Are we that close minded and bigoted as a nation that we will cheer as our neighbours and friends lose their shirts when house price corrections starts… There is nothing to cheer about.”
I cant wait for a major correction! Have lots of money saved up and will buy a property once prices are reasonable!
A study mentioned that 3/4 of owners could not pay 10% more on their mortgages. Its a house of cards. A little breeze and its already shaking. A strong wind (rate increase) and its time to pick up the cards.
You cant feel bad for anyone who should have never bought a house in the first place.
The US Fed is set to continue raising interest rates. It is also normalizing it’s balance sheet (quantitative tightening). One financial pundit reckons that it’s to get their interest rate up to 3% so that it can lower it down to 1% in the next recession. The quantitative tightening is for the same reason –so that they can do quantitative easing (money printing) again.
There’s a general consensus among the financial pundits I’ve listened to that the US stock market is going to have a big correction/crash in the next 6-18 months. These are probably 6-7 people with similar reasoning and conclusions: US stocks are very overvalued and US Fed’s credit tightening is going to slow down the economy thereby dropping stock values.
Trump might get his tax reforms passed through Congress sooner rather than later. Some Congressmen are thinking about canceling their August recess to work on getting bills finished and passed. (Source: The Hill)
Regarding Jim Rogers doomsday scenario, my guess is that he’s infering that if Red China’s economy and financial system get into big trouble, they’ll call in their US treasury notes for cash to throw at their system. Since the US is trillions of dollars in debt (unchecked), they’re going to be scrambling to come up with the money.
You’re still writing great articles, Garth. Thank you for continuing your blog.
Ad hominem attacks do not make for convincing counter-arguments.
Still lurking.
Just came back from Costco in Richmond.
An absolute Zoo, even in off-peak hours: tuesday morning.
Parking lot jammed, all registers with long lines.
So I figured, this business is booming, I should get some stock. Unfortunately, it is not publicly listed :-(
But that company must be making money hand over fist.
Super-crowded at all times, yet prices are pretty expensive, not much savings compared to retail grocery. (Other than the European Cheese, which unlike everywhere else in BC is actually affordable. $21 per kg, instead of $50 or so.)
Alas, it could have been a nice investment opportunity.
#183 Mattl on 06.20.17 at 2:00 pm
You are barking at the wrong tree…
Read my other post.. bought and sold 3 houses…
Proceeds are set and growing with a bearded oracle…
When owning is cheaper than rent the swoop away…
Rule of 90… yadda yadda yadda
Here’s an example in my neighborhood of someone swooping in on the 3rd sale.
All 3 houses are stone throw away from each other. Same square footage, lot & location etc….
Early May – House A – 2 bedroom – totally dated – list – $899k – sells $1.1 million
http://www.mongohouse.com/soldrecords/59279c5f1120cc8318fec623
Mid May – House B – 2 bedroom – totally renovated – list – $899k – sells $1.1 million
http://www.mongohouse.com/soldrecords/5930dca01120cc67df258ae2
Early June – House C – 2 bedroom – totally renovated – list – $899k – sells $900k
http://www.mongohouse.com/soldrecords/594098464df2c4c60aee33ba
Houses went from $1.1 million dollar tear down to $1.1 million dollar renovated to $900k renovated in 30 days.
~swoop~ there it is… ~swoop~ there it is…
#150 Toronto Dweller on 06.20.17 at 9:22 am
Gee, there are some really nut types gleefully waiting for the housing crash. Are we that close minded and bigoted as a nation that we will cheer as our neighbours and friends lose their shirts when house price corrections starts in earnest as Garth has predicted? Once people and entire communites begin going underwater, layoffs follow, it happened with Oil and Gas and surely it will happen with Real Estate and its associate industries of Construction and Finance. There is nothing to cheer about.
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Okay Toronto Dweller. House prices shouldn’t ever decrease because it would hurt your feelings. They should rise forever.
Feel better now?
Btw there were indeed a good many illiberal progressives who were cheering on Alberta’s oil & gas woes.
Here’s another example of a seller caught off-guard
House listed just after April housing changes for $799 holding an offer night.
On offer night crickets
Re-list $898 for 2 weeks – crickets
Re-list $699
On 2nd offer night more crickets and frog croaks
Now listed at $949
House is staged, seller furniture loaded in garage.
I suspect they bought another place and need full asking minus commission to close.
https://www.realtor.ca/Residential/Single-Family/18316364/173-SILVER-BIRCH-Avenue-Toronto-Ontario-M4E3L3-The-Beaches
The only green I see today: TLT.US (shrugging off rate hikes) and …Bitcoin/USD! (It appears headed to 2900.)
And monster move in Biotech (the Anti-Trump Admin. ETF…but lefties don’t trade), XBI.US last 2 days
#187 Asterix1
You cant feel bad for anyone who should have never bought a house in the first place.
——————————————-
I can feel bad for them. But I can’t help them.
@Shopping Zoo
Where do you check your stocks? some old ticker tape machine? Costco has been a publicly traded cult stock since the 1985.
http://www.nasdaq.com/g00/symbol/cost?i10c.referrer=https%3A%2F%2Fwww.google.ca%2F
#182 A Reply to #152 IHCTD9 on 06.20.17 at 1:40 pm
“Clean energy will continue to take greater market share, as long as government subsidies providing the artificial competitiveness hold out.”
Do I understand you correctly? Are you saying that the oil and gas industry is not subsidized? Really?
______________________________________
Sure, and the small O+G subsidies that exist help keep gas prices down in Canada a little tiny bit. All good. We buy the gas, and we’re not pitch-forking Wynne in the eye after paying the bill.
However, TRIPLE DIGIT, DIRECT subsidies on Clean Energy – Still, I repeat, STILL can’t bring the price of same in line. Not even close.
Why? Because clean energy is a COLOSSAL BOONDOGGLE for the most part. If we had to pay what it actually costs, no one would buy it. In fact, no one wants it even AFTER massive subsidies have been paid to the industry.
Wynne was paying Feed in Tariff solar producers rates of $.080/KWHR. Previously, other cognitively stunned Liberal blockheads also signed 20 year contracts with said – undoubtedly very happy – solar producers.
.80/KWHR is roughly 920% more than she is selling it back to us for – mid peak.
Even with the Province paying almost 92% of the total true cost of the Green Energy, the residual Ontario hydro rates were still SO BLOODY HIGH that Wynne’s political career was going to BLOW TO SMITHERINES like a post C-16 women’s bathroom packed with 3rd wavers after a male transgender walks in to take a leak. Her approval ratings were in the single digits, she had to act strongly.
So, Wynne started to cry, created a public corporation specifically to borrow money, and then directed them to compensate OPG for the temporary hydro price reduction she implemented to ensure her re-election next year.
Let’s make a deal my hidden anonymous friend:
You can give me a call here when we start subsidizing the Oil companies to the tune of +$460.00 per barrel while the Canadian Citizenry is foaming at the mouth and preparing to “vote from the rooftops”.
And I’ll promise to see clean energy in a completely new light.
Until then, Clean Energy is exactly what you’ve seen in Ontario – completely and utterly unable to stand on it’s own two feet – even WITH 92% of the cost removed from the bill.
This sounds familiar…
higher rates expected in the coming years will leave households exposed to economic shocks at “levels beyond historical experience.”
http://business.financialpost.com/personal-finance/debt/financial-vulnerability-of-indebted-canadians-will-be-highest-in-30-years-when-rates-rise-pbo-warns/wcm/19d05e55-3d0d-400b-b322-5e58c2627c41
Keep your powder dry folks….
Is the Canadian Oil Industry Subsidized?
Post 182 claims:
“Canada gives out in annual fossil fuel subsidies about $3.3 billion for oil and gas producers (currency in Canadian dollars).
“That includes measures like reduced property taxes and special tax deductions for the industry, as well as direct infusions of cash from the government to companies.
*****************************************
I think that is absolutely correct and HAS to be the case.
Oil is a pure commodity that faces world competition within Canada and even more so on exports.
Alberta oil sands are definitely high cost producers.
Even conventional Canadian oil is probably higher cost than available imports.
So, governments have a choice. Refuse to subsidize in any way even with tax breaks and see much oil imported into Canada. Alberta and other Canadian oil would be left in the ground and might be competitive later when other countries run dry. We would have a tiny oil industry at best.
Or, provide tax breaks and low royalties and other subsidies to allow Canadian and Alberta oil to be competitive now attracting investment and jobs now.
I suppose door number three would be to ban imports of oil but that would make it hard to export oil so probably a non-starter.
It may not be talked about much but Alberta and Canada have chosen door number two. Subsidize today to get the jobs and some taxes and some royalties and all that GDP now rather than later.
Well, that is my theory of how things are. Given a commodity business and surplus supply and (I believe) a high cost jurisdiction some kind of subsidies or tax breaks are essential to have a big oil industry today.
Does this sound correct? Anyone have inside knowledge?
#196 Dan
Thanks Dan, good to know!
I should check if US operations are booming too.
I was referring to Costco Canada, which is somehow a private company, not public like the US one.
https://www.google.com/finance?q=Costco+Wholesale+Canada+Ltd&ei=y4FJWdjxFoXqjAGGubGwBw
Are US Costco stores packed to the brim, as they are in BC?
Shawn on 06.20.17 at 12:52 pm
It’s likely that oil trades in the $40 range for years before eventually falling into the $25 range.
It’s not going to $60-80 despite the vast majority of analysts calling for it.
The oil bubble has burst. Canadians need to move on.
Oil sands worthless like coal. You blew it Alberta. The CONservatives spent all your money and now it’s all gone with nothing but a wasteland to show for it. The oil boom is OVER and WILL NEVER comeback. If your can sell your empty rental for a huge loss do it before Alberta becomes Detroit.
Its just brilliant, really. What a pyramid scheme this is. Get the house-hungry to go frothy for houses, over-extend themselves, get into their eyeballs in debt, and now that we have them, we’ll start slowly raising the prices so that we can make even more money off of these debt slaves, now that they don’t have so much disposable income to be taxed through other purchases, because they’re house poor. The government and banks are just following the money. That’s x 0.25% of profit on several billions of dollars. Of course nobody wants to regulate this market. Why stop at someone owing you $750 when you can get them to owe $1.2…
109 Porsche on 06.19.17 at 10:52 pm
#67 Smoking Man on 06.19.17 at 8:40 pm
Another thing, permanent work is in the review mirror. Everything is contract, project work. We need a job or an upgrade done and when it’s completed… see ya later.
…..
Dude I’ve rolled like that for the last 20 years and its been good easy money. But with the cheap temporary labor T2 is bringing in form off shore no point.
Now in 3 to 5 years when they make a mess of everything, then you can get good rates fixing up the garbage.
For builds for get it. They work for a 1/4 of the old rate.
Whos coming to my ice cream shop in the islands?
@ #181 AGuyInVancouver
Food prices tend to be volatile and some will rise more than others based on supply factors, but overall inflation is still low (outside of housing and education) and the trend remains down. Bottom line is no price or wage inflation pressure = lower rates for longer. And Garth proclaiming victory before the BoC has raised rates even once is a bit premature.
VIX > 11
Spread = 1%
Alarmist?
@35 Howard
Unlike Shelburne, Milton has been the fastest growing community in the country for past 10+ years. As Garth would say, stop embarrassing yourself.
#174 Shawn
When almost everyone is pessimistic about the future value of an asset, we know what happens to it going forward.. …same will happen with oil price…..it will come up.
Affordable alternative sources of energy are for future generations….not for ours.
#192 TnT on 06.20.17 at 3:20 pm
I’m seeing this too, sellers when relisting trying all different price points to try and get people to make an offer. Or several houses in a 2 minute walk radius from each other, all have prices varying tens of thousands to hundreds of thousands of dollars from each other for the same type of house.
As well as new listings coming to market at listing prices that not been seen or sold for in weeks.
I don’t know why people won’t accept that it’s over.
#169 TnT on 06.20.17 at 11:50 am
#160 Penny Henny on 06.20.17 at 10:46 am
What is with all the losers on this blog that go to open houses every weekend?
Get a life.
Didn’t your recently sell your house? Surely someone who attended your Open House?
These losers will be winners in a few more months of attending Open Houses and getting a sense of the desperation.
Can’t swoop down without doing your homework.
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Every weekend attending multiple open house’s and then they go on to say they are not interested in buying anything.
Like I said. Get a life.
#177 Vanrentor on 06.20.17 at 1:19 pm
#160 Penny Henny on 06.20.17 at 10:46 am
What is with all the losers on this blog that go to open houses every weekend?
Get a life.
I go because I enjoy the company of realtors. They are such honest and genuine people. It keeps me in the know on the future of the market. Apparently it is going up for ever.
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:)
“… …but lefties don’t trade….”
They don’t trade; they invest! They’re investors, not speculators!
APPLAUSE NONPLUSED IHCDT9 WUL!
Warning I’ve completely segued off of finance, housing here. No politix from me at least.
#36, 39, 54-
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I’ve had the 93 Eurovan dash/door partly torn apart for 2 weeks digging for said misbehaving relay. Turns out its the power door lock module backfiring as well as the relay. At least I can tear the door apart myself, get the part out in 15 mins and get one off craigslist. (not always though) Van life may be perplexing, expensive, and downright embarrassing at times (warning don’t drive a VW EV with exhaust sawn off unless you have to, even behind the CAT-thats a story for another time) but everywhere we go there’s the biker equiv of the universal wave from another VW vanner we cross paths with. And always a good conversation at a gas station about rear facing seats etc. Not to mention the consternation of friends and family when I tell them that my “p.o.s.” is worth 2k more than we paid for it and value’s only going up…and not one speck of debt over our heads as we speak.
2 monthes ago the young punk running the car wash was gushing about the van. “Dude, sweet van!” It was looking like we almost had to knuckle bump over the rear facer seats, fold up table, fold out bed, only 180k miles etc. That was certainly a first that the van got “hit on” and believe me it was the van-there’s 3 prominent carseats on the back bench and no tinted windows LOL.
Chaulk it up to #vanlife
I’m sure the kiddos will always fondly remember the perplexing solid heap of steel that is our VW. Now… fingers crossed about that little tranny check up coming up on Monday ;)
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#116 WUL
LOL! Love it and you bet those were the good old days. Some of us carried on the tradition- I’m only in my mid 30’s but grew up working on my own cars. First one was a 76 Corolla hatchback. I think there’s a resurgence of interest in “tinkering” too… hub and I had a good laugh after passing a group of youngsters hovered around the engine compartment of an old Dodge van off the side of the road. We figured that for sure all of them were younger than the van and nobody had a clue how to tell the fuel pump apart from the alternator. Looked like they were having fun anyway.
Munch Lake=awesome. Nothing like that AK to WA drive.
Okanagan dreamin…keep up the awesome blog Garth as you can see my IP pings daily at least once.
Rage Against the Machine all, Peace.
#180 NoName
Interesting link, thanks.
But for me personally; I have absolutely no interest in all this social media stuff as apposed to some good blogs that have open speech.
With all the horror stories we have read in the past about kids being bullied via this circuit and ending their lives because of it, or so many other atrocities that are linked to it. Yes, I get it there are so many good stories as well, but for me personally I would much rather enjoy what nature has to provided as opposed keeping my eyed glued to some gadget, my preference.