Sucks

First the bad news. Then the worse news. Then you’ll end up wondering why you ever started reading this post. I gave up and went directly to a single malt. Good luck.

Late Tuesday night blog dog Adam sent this note:

Garth: RBC just started laying off in their headquarters for Canadian Banking. HR has 2 floors dedicated to letting people go. Apparently it’s 500 people and it started late this afternoon. They haven’t done a wide scale cut in years. They must see it coming, growth is low and digitization is here so plenty of reasons to reduce expensive workforce. From what I’ve been told it’s mostly people close to retirement.  Sucks if folks were hoping their home would be a part of their retirement fund. This is the worst time (in a while) to sell, fingers crossed everyone will be okay.

Hours later the news hit the media and, yeah, RBC confirmed it. After posting record profits, making about a billion a month, the bank’s hacking away at its workforce. Why, when it’s a money machine? “We are making changes that focus on the capabilities that we need now and in the future to meet our clients’ evolving needs. As always, we consolidate where necessary so that we can reinvest in key areas including digital, data, new technology as well as investment in high-growth business areas.”

Well, RBC poses just one example of what’s happening to the economy. But while banking is a great business (we all use money) it’s changing. Millennials don’t go to banks. And so you can bet five years from now the Royal will no longer have 75,000 employees. By the way, Millennials don’t go to stores much, either. They’d rather get a package from Wayfair via UPS than stroll across the road to Ikea.

So Sears Canada is going paws up. The company is a short distance away from seeking creditor protection, and its share price has crumbled as a result. What was once an icon of fashion and Canadian corporate pride – Simpsons, then Simpsons-Sears, the largest retailer – will soon be dust. And so will 17,900 jobs in 155 locations.

Because we all can’t be coders or social media consultants, the death of ‘traditional’ jobs in finance and retailing – as technology displaces bodies – will take a toll. Meanwhile it looks like oil has a dim future, while manufacturing embraces automation to the extent some economists are asking if robots should start pay taxes. Add it up – banks, stores, wells, factories – and the places where people have always found employment are thinning. Seems like the future will belong to those who are flexible, mobile and adaptable.

But that’s not what people want, nor who they are. As this blog demonstrates daily, everyone – even the kids – want a Forever House, a big mortgage and to never move. It’s like the 19th Century all over again – a long-gone world in which you landed a lifetime job in the town of your birth, could afford real estate and raised a family of little people just like you. Groundhog Day. Predictable. Stable.

So it’s inevitable conflict looms between the realities of employment in a rapidly-changing economy and the way Canadians have structured their lives. An inevitable casualty of that will be residential real estate – like what happens to house values when an industrial town sees the big mill close. Suddenly there’s no reason why things should cost what they used to. I wonder if we’re coming to that point, quietly shaking our heads at what we’ve done by dint of emotion and hormones, not logic and perception.

Bloomberg

Well, the latest stats are grim if the bulk of your net worth’s in a GTA house. In April the average price was $920,800. In May it was $864,000. In the last two weeks it’s $808,900. That’s a 12.1% drop in eight weeks, at the same time sales volumes have collapsed by half from last year. Just imagine where we might be in two or three months if this pattern continues. If Toronto real estate were the stock market, the media would be freaking. As it is, the decline represents a loss of $2.5 billion in economic activity as monthly sales of more than 6,000 crash to less than 3,000.

Are we on the precipice of a hard landing that will approximate the 30% drop that Hoovered the US middle class? Even today, almost a decade later, American houses are (on average) 13% cheaper. But personal debt there has fallen while employment has risen and home ownership levels have diminished. Canadians, meanwhile, continue to nest, and borrow, with a vengeance. We looked south and learned zip.

Now interest rates will rise at a time of maximum debt and wobbly house values in a barista-condo economy. Jeez, even the bankers who made the mortgages are being punted. And it’s only started.

I warned you not to read this. Shots?

300 comments ↓

#1 For those about to flop... on 06.21.17 at 7:16 pm

CONFIRMED PINK SNOW

O.K,bc assessment has done some updates and so I will turn the info over to you guys.

I am a meathead Neanderthal ,once I catch up to something and club it over the head I don’t know what to do with it except throw it into the fire circle for the elders to dissect.

The details…

Paid 1.45 Sept 2016

Sold 1.43 April 2017

Loss of at least 6.5% after expenses…

M43BC

1237 E 64th Avenue, Vancouver.

Mar 1:$1,549,000
Apr 10: $1,349,000
Change: – 200000.00 -13%

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

#2 For those about to flop... on 06.21.17 at 7:17 pm

CONFIRMED PINK SNOW.

I talked about this one before and Adam the realtor confirmed it for me but now we have official confirmation.

The details…

Paid 645k in June 2016

Sold 605k in Feb 2107

A loss of over 11% after expenses.

Yes,a small amount of people are already losing money on condos…

M43BC

21-6878 Southpoint Drive, Burnaby .

Nov 2:$668,000
Feb 15: $580,000
Change: – 88000.00 -13%

https://evaluebc.bcassessment.ca/Property.aspx?_oa=RDAwMDAxQ1dGRQ==

#3 Victoria Real Estate Update on 06.21.17 at 7:18 pm

YEAR-OVER-YEAR DEMAND FOR DETACHED HOMES TANKS IN MAY

Sales of detached homes across Greater Victoria fell 27% from year-ago levels in May.

Remember the Victoria R/E board’s prediction at the beginning of this year?

“Demand Likely To Continue In 2017”. – January 3, 2017

Detached sales in 2017 compared to the same month in 2016 (year-over-year):

January: -18%
February: – 25%
March: – 25%
April: – 43%
May: – 27%

DETACHED HOME SALES IN MAY 9% LOWER THAN IN 2015

Forget about keeping up with 2016, Victoria’s market isn’t even keeping up with 2015 anymore. Similarly in April sales were 7% lower than in April 2015.

MAY: DETACHED SALES 10% BELOW AN AVERAGE YEAR FOR VICTORIA

2007 represents an average year for detached sales across Greater Victoria. This takes into account as much data as possible for the region and accounts for the substantial growth in population since the 1980s and 1990s. Population adjusting from 2007 to 2017 would have made this number even worse.

DETACHED SALES IN MAY SLIGHTLY BELOW VICTORIA’S 5-YEAR AVERAGE

The 5-year average includes the shockingly weak year, 2013, which contributed the second lowest detached sales total since 1984, with an apples to apples (population adjusted) comparison.

TO BE RIDICULED AND THEN PROVEN CORRECT BY THE MARKET

Last fall I began posting comments with stats that proved sales of detached homes across Greater Victoria had begun to fall at an unusually fast pace after April (approximately). Realtors posted comments ridiculing my assessment.

Then I wrote that this well-established trend suggested that we would soon see significant year-over-year monthly sales drops. Again, realtors ridiculed my assessment. This year the market proved that my assessment was correct (see above sales stats).

I’ve also written that the dramatic monthly drops in sales are a clear sign that Victoria’s market correction process has been firmly established. First sales fall, then prices.

The current (temporary) supply / demand imbalance is the only thing preventing the bust part of the boom-bust cycle from commencing. The key word here is “temporary”.

SUPPLY / DEMAND

How quickly can market conditions change from a seller’s market to a buyer’s market? Just ask those who have rushed to list in the last month in the GTA. And how much money have they missed out on by waiting a month or even 10 days too long to list? In a lot of cases a hundred to two hundred thousand, or more.

As I’ve said many times, supply and demand conditions are always temporary and never permanent. There is a 100 percent chance that Victoria’s current market conditions will change to a buyer’s market and when that happens, it will likely happen much quicker than most could imagine. As is always the case when a bubble market peaks, those potential sellers who are holding off listing in an attempt to time the peak of the market perfectly will be extremely disappointed. When a bubble market turns, it often turns quickly and decisively and doesn’t give second chances.

As is the case with all housing bubbles, listing bloat as the seller’s market quickly morphs into a buyer’s market. Sales often continue to fall even though there is plenty of supply for buyers to choose from.

When the herd senses it’s over, it’s really over.

#4 Happy Housing Crash Everyone! on 06.21.17 at 7:18 pm

Garth is always ahead of the curve. They must be greater fool followers. Happy Housing Crash Everyone! :-)
https://www.bloomberg.com/view/articles/2017-06-21/canada-s-housing-bubble-will-burst

#5 For those about to flop... on 06.21.17 at 7:19 pm

CONFIRMED PINK SNOW

These guys got more than they paid,but it wasn’t enough.

The details…

Paid 2.0 May 2016

Sold 2.05 April 2017

So after expenses a loss of around 2.5% from the outside looking in ,without any renovation information.

Most likely a loss of at least 50k…

M43BC

808 e 28th Ave Vancouver.

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

#6 For those about to flop... on 06.21.17 at 7:20 pm

CONFIRMED PINK SNOW

These guys were able to minimize the damage ,but I will put it up so it is on record.

The details…

Paid 1.5 in Feb 2016

Sold 1.56 in April 2017

So like the last guys took a small loss after expenses as long as they didn’t dump too much into the place…

M43BC

5325 Ivar Place, Burnaby

Nov 22:$1,618,000
Mar 7: $1,595,0000

Change 23k -1%

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

#7 For those about to flop... on 06.21.17 at 7:21 pm

CONFIRMED PINK DRAW.

These guys picked up this block of land with the intent to build a new house,but decided to shelve it when the numbers didn’t work for them anymore.

We’ll see what the next guys do.

The details…

Paid 1.53 Feb 2016

Sold 1.61 May 2017

So close enough to a draw ,but they did have plans and permits and if you have a look at the link the people before them made some easy money,didn’t work out for these guys but they live to fight another day.

In an ideal world it would be the other way around.

These guys would have pumped money into the local economy and created/ maintained jobs while the other guys most likely just sat on it for six months…

M43BC

845 Drayton st.North Vancouver

Oct 26:$1,749,000
Mar 7: $1,649,000
Change: – 100000.00 -6%

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

#8 Victoria Real Estate Update on 06.21.17 at 7:21 pm

OVERVALUATION RED ALERT FOR VICTORIA’S HOUSING MARKET

CMHC recently assessed housing markets across Canada and gave Victoria a code red (see first chart).

Similar to any Canadian policymaker, you likely won’t hear CMHC admit that there is a housing bubble. For them to do this would be admitting that they helped create a big problem for the country.

That CMHC gave Victoria a code red is about as close it will come to admitting that Victoria has a housing bubble.

That Victoria has a housing bubble is, of course, old news. The Economist had already declared (6 years ago in 2011) that “Canada’s Housing Market More Overvalued Than U.S. At Its Peak”. Victoria’s market was pretty much as overvalued as any in Canada in 2011 and the situation has worsened considerably since then.

Canadian policymakers began lowering mortgage lending standards after 2000. Since that time, house prices in Victoria have more than tripled while gains in incomes have added up to only a fraction of that amount over the same period. Toronto, Vancouver and Victoria are Canada’s three most severely overvalued bubble markets.

THE BIGGEST PRICE GAINERS ALMOST ALWAYS BECOME THE BIGGEST PRICE LOSERS

Housing bubble boom-bust cycles from around the world have proved this to be true.

In the US, those cities that cheered the loudest as their housing markets added more and more gains on the way to the peak were the same markets that cried the loudest as prices corrected.

Euphoria must have completely taken over in Las Vegas in 2005/06 as house values there skyrocketed in a seemingly unstoppable fashion, posting new record highs month after month.

To almost every single citizen of Las Vegas, it was proof that the sky was the limit as far as prices were concerned and anybody who objected to that was probably just angry because they didn’t “own their own home” (I like that phrase).

“THEY” WERE WRONG

To those in Las Vegas, new record price highs each month proved that “they” were wrong. The logic was that, since “they” were wrong and the market hadn’t corrected like “they“ said it would, it must mean that prices would never fall. It was definitely time to buy or be priced out forever. So the herd continued to buy. It was a no-brainer. Somehow, some way, legal or not they got into the market. They couldn’t afford to miss the opportunity to ride the gravy train to financial freedom.

The price run-up in Las Vegas was one of the biggest in the US. If you had been in Las Vegas in 2006 you likely would have heard the argument that, since prices have increased so much, a correction would only impact recent buyers. Everybody else is safe. The higher prices go, the safer everyone else is.

You hear the same lame arguments in Victoria a lot these days.

Is that how it went down in Las Vegas? Were only the recent buyers affected by the price downturn as almost everyone there predicted? Did higher and higher prices each month end up being a protective barrier even for those who bought 6 or more years before the peak?

Not so much.

Prices more than doubled in Las Vegas from 2000 to 2006.

Then prices stopped rising.

Then the unthinkable happened. Within 6 years prices in Las Vegas corrected to 10% below 2000 levels. That was beyond the point where the housing bubble started.

Those who would like to be able to prove false the facts I present will likely immediately dismiss this as nothing based on the commonly-held assumption that all cities in the US crashed, making what happened in Las Vegas unremarkable.

However, that assumption is completely false. The fact of the matter is that not all housing markets in the US crashed. It was obvious in 2006 which American markets would experience major price corrections just like it is in Canada right now. How much overvaluation is present, how big of a role speculation has played, the popularity of liar loans, etc. are some of the giveaways.

Some American cities experienced Victoria-like price run-ups and likely had Victoria-like levels of speculation during the boom. As a result, their price corrections were particularly brutal.

Las Vegas: – 62%
San Francisco: – 45%
Los Angeles: – 41%
San Diego: – 42%
(Case-Shiller index)

Other American cities experienced much smaller price gains and likely had lower levels of speculation.

Dallas: – 11%
Boston: – 18%
Denver: – 12%

A brutally destructive outcome awaits every housing bubble.

#9 [email protected] on 06.21.17 at 7:23 pm

People in suits terrorizing the Royal Bank staff, in suits!

We bought everything we eat at the grocerie store, and we bought everything we keep at Sears.

People don’t buy keepers anymore.

Jobs aren’t for keeps either, even if they make a billion a month. Who needs staff when you have shareholders?

#10 [email protected] on 06.21.17 at 7:24 pm

dang

#11 pathcontrolmonk on 06.21.17 at 7:26 pm

Much less RE hubris in Vancouver these days. More awkward silence as everyone struggles to find something else to talk about.

#12 i.see.debt.people on 06.21.17 at 7:26 pm

^^^ that! first

#13 ILoveCharts on 06.21.17 at 7:29 pm

YVR will be a disaster. TO plummets so Poloz can’t raise rates. YVR to the sky.

#14 I'M NOT POLOZ on 06.21.17 at 7:30 pm

Will that cause a 40-cent Loonie? If everything is becoming lower in price, do you call that Deflation? I hate it when Poloz causes the Loonie to go below 80 cents because everything becomes way more expensive in Canada, and when traveling to the USA.

I know positively that Morneau wants every Canadian to work for free: Sounds like a Soviet Union Gulag, only with intolerable gender relations, lower quality dating and terrible racism. You will not find love under Morneau’s Canadian utopia.

#15 Lulu on 06.21.17 at 7:30 pm

Waiter!!! Waiter!!!! Give me a tequlia pop please and a jack daniel follow. I am gonna have a drink fest tonight since the doom day is coming very soon!! lol

#16 Alberta you are the next Detroit on 06.21.17 at 7:30 pm

Now is the time to sell everything in Alberta and leave with some money in your pocket or watch Alberta become Detroit. It’s happening right now , right before your eyes. The writing is on the wall and when the slow witted masses wake up the value will be priced at a fraction of todays bubble prices. $10000 for a home in Alberta is to much.

#17 Raj on 06.21.17 at 7:30 pm

Shots?

Hahahaha, you’re so funny :)

Yes, JD !!

#18 Debtslavecreator on 06.21.17 at 7:34 pm

Lights out Canada
Only the 1st inning
The bank layoffs are much worse than advertised
2-3 years from now 30-40% of the retail staff will be gone
Stagflationary depression
Rates might bottom out or go slightly lower into q1 2018 before rising uncontrollably for years after that
Those of you who lived through 1975-1982 will relate but this version will see two or three times more inflation and even higher unemployment and last at least until the mid 2020s
Don’t worry if you are unemployed – by 2020-2022 they will train you for a few months in New Brunswick and give you a C7 and off you go to fight for our “freedom”
Thanks Bank of Canada and government of Canada and financial /political elites
Where are the handcuffs ?

#19 THREE FINGERS WATSON on 06.21.17 at 7:35 pm

Interest rate increases will be tiny and few and will take forever. Immigration will sustain the housing markets. Carry on, no worries. Your government will not allow the country to go bankrupt.

#20 common sense on 06.21.17 at 7:36 pm

Shots? Sadly, Maybe self inflicted to the sheeple who followed the herd off the cliff.

Sad to see and only just begun.

Stay safe people.

#21 Old gringo on 06.21.17 at 7:36 pm

This like watching ” the perfect storm” in slow motion

#22 J on 06.21.17 at 7:40 pm

As one of the many first responders out there I want to let the banks, the realtors, mom and dads know about financial responsibility. When any or all of the above or other reasons push people into debt they can’t or shouldn’t be entering into relationships (marriages) are destroyed. Many sign on the dotted line believing there is no way they can lose. Some take their own lives. People who promise them the financial winnings should be held accountable. I want to invite them to the homes and do my job. What is the reason many times? Money. Can we ask the realtor to walk the children to school because mom or dad can’t do it anymore?

#23 conan on 06.21.17 at 7:41 pm

My bet is robots will pay taxes based on what the produce. Even so, these robots are going to take out lots of jobs. Hopefully, the designers have a sense of humor, and make them ridiculously hot.

https://www.youtube.com/watch?v=tgeUqnv6h-Y

#24 Mark on 06.21.17 at 7:41 pm

No need to have armies of staff to originate new mortgages now that the Canadian housing market is well past peak.

RBC’s funds available for investment can be, with the help of relatively small teams, put into big-ticket loans and financings of Canadian companies. It takes far fewer people to lend billions at a time to major Canadian companies (who are generally quite under-leveraged and could easily use the money to buy back their stock), than it does to lend a billion dollars out $300k at a time as mortgages.

Now interest rates will rise at a time of maximum debt and wobbly house values in a barista-condo economy.

Rising (policy) rates at a time when the (consumer) economy is about to fall off a cliff? At a time when inflation is practically non-existent and deflationary trends are growing louder by the day (CL = $42 today!)? Doubtful.

Rising risk premia perhaps, on those residential RE-backed loans. Much of which will directly flow to the bottom line of RY shareholders. Who may even start to enjoy above-trend dividend increases as RY no longer needs to retain earnings to service loan demand that isn’t likely to exist.

#25 David W2 on 06.21.17 at 7:41 pm

Yikes. Where do we go from here?

#26 Drunky on 06.21.17 at 7:41 pm

I decided to quit drinking at the wrong time…

#27 Leo Trollstoy on 06.21.17 at 7:42 pm

Because we all can’t be coders or social media consultants, the death of ‘traditional’ jobs in finance and retailing – as technology displaces bodies – will take a toll.

Unfortunately not everyone can have that coveted tech job. But those who do are golden

Get your kids into IT where the jobs are plentiful or they will be left behind

#28 BobC on 06.21.17 at 7:43 pm

Right now all have is our personal opinions.
Only time can tell which was the better path.

Trump. Trudeau

– No carbon tax. – National carbon tax
– reduce corp. taxes. – increase taxes on
Businesses
– secure borders. – open borders

#29 Screwed Canadian Millennial on 06.21.17 at 7:43 pm

Reminder that RBC made over $10 BILLION last year in PROFITS.

That’s $10,000,000,000.00

https://www.google.com/finance?q=TSE:RY&fstype=ii&ei=xANLWen6LcWs2Aacur-wDg

When the hell is enough, enough? When is it ever going to be enough?

Years and years of corporate tax cuts, government subsidizing corporate profits, deregulation, crap wages, Temporary Foreign Workers replacing Canadians, $10 BILLION in profits and it’s still not enough.

And how do these titans of industry repay us fine Canadians? Downsizing, offshoring, outsourcing, TFW, mass layoffs, offshore tax havens and the highest banking fees in the world.

What the hell is it all for? A few shareholders at the top? The rich get richer. While so many live in poverty. This system is f*cked up.

#30 Happy Housing Crash Everyone! on 06.21.17 at 7:45 pm

Buyers who bought at the peak but can’t sell their first house are screaming in horrible financial pain. They are on the brink of losing it all . From bubble houses worth a million plus to being bankrupt. Yup they are screaming in financial pain wondering why did they trust that high school drop out realtor? Happy Housing Crash Everyone! Keep screaming In financial pain realtors, mortgage brokers and all those on the brink of bankruptcy. Happy Housing Crash Everyone! :-)

#31 lala on 06.21.17 at 7:46 pm

Going in EU for 2 months, when I come back average price it will be $630,000.

#32 WUL on 06.21.17 at 7:46 pm

Shots? Yes please. Talisker if you got it.

Sad commentary on life in Fort McMisery when this hopeless yet amusing blog is the highlight of my day. 11 days til I am southbound to balmy southern Alberta to resume my life in Calgary.

#33 Pete on 06.21.17 at 7:47 pm

Hi, Garth, you missed that:

Oil price is now at a 10 month low of $42, could go to $30 soon.

#34 InvestorsFriend on 06.21.17 at 7:48 pm

Excellent article about job losses to automation and where this is headed.

I wrote an article called the post-jobs economy. Find easily with Google.

Basic banking these days with electronic money transfer and on-line credit applications requires a giant computer system and not a lot of employees.

#35 Damifino on 06.21.17 at 7:48 pm

I like to look for products online then got to a bricks and mortar store to purchase them. Sometimes with cash.

Am I okay?

#36 RentYVR on 06.21.17 at 7:49 pm

Wait, so real estate prices are at all-time record highs yet “blog dog Adam” thinks it’s a tragedy if people are forced to sell right now? Explain that one to me please? Prices haven’t even crashed back to 2015 level yet!

#37 InvestorsFriend on 06.21.17 at 7:50 pm

Automation…

Is an example of a productivity improvement. Humans should be better off with increased productivity. But those directly affected have to be looked after. Buffett has written about this.

#38 Ace Goodheart on 06.21.17 at 7:50 pm

No one shops at Sears anymore and no one has for years. Ask your 15 year old if she wants to go to Sears to buy a dress, then hide as she alternatively laughs at you and screams.

RE: the end of good jobs: Since when was working in retail or on the line in a factory considered a good job? Even when I was in high school, only the kids who couldn’t make it went to work on the line. Everyone else either learned a trade or went to become a Socialist at one of the Universities.

There are tons, and tons, and tons of good jobs. And there always will be. You need a ticketed skill to get them. There will be 250,000 new commercial pilot positions opening up in the next 20 years. But, yes, you need a ticket for that. There are many, many jobs in programming and coding…..but sigh, you need training, a ticket and skills.

The world ain’t changing. People are just getting dumber.

#39 i.see.debt.people on 06.21.17 at 7:51 pm

:)

#40 binky barnes on 06.21.17 at 7:53 pm

Hi Garth. Any idea where the dollar might be headed in the next couple of months? Getting conflicting reports and just thought I would see what our Pied Piper thinks.

#41 SimplyPut7 on 06.21.17 at 7:53 pm

I warned you not to read this. Shots?

——————————————

I don’t need the shots, the homeowners who bought in the last couple of years do.

I have been waiting for this day, to laugh at the smug delusional homeowners with less than $10,000 to their name, who had the nerve to tell me that their cat litter box size condos are worth half a million dollars or their detached homes the size of garden sheds were each going to sell for millions of dollars. And I should take every dollar I have and borrow as much as I possibly can, to buy the most expensive house I can get my hands on, because home values only go up and mortgage rates never increase.

I would love to see the expression on their face when they meet with their bank/private lender to discuss renewing their mortgage, and they see the new mortgage rate they get, because their mortgage is now underwater and their bank/lender can charge them any rate they want because they don’t qualify to go move the mortgage to another lender to get a lower rate.

When that day arrives, then I will drink shots.

#42 Smartalox on 06.21.17 at 7:54 pm

A lot of these jobs that will be lost were held by people who were bound to retire anyway, as the largest cohort reaches retirement age. A case could be made that this is the natural order of things.

The ugly part is when people have not prepared for ‘retirement’ or, as is often the case in industries like technology, knowledge hasn’t been passed on from the generation of ‘do-ers’ to the generation of maintainers, resulting in major skills gaps, and record unemployment for some sectors of the economy.

I have a relative who is a professional engineer in his late 60s. He makes money hand over fist these days, on contracts maintaining industrial, electronic, and control systems for the US government, systems that he helped install 30 to 40 years ago.

Of course, no new engineering grads understand the technology – it’s been obsolete for 20 years – but there is no will, and there are no funds available to modernize these systems, so instead, these old guys work at maintaining them, usually at great, ever-increasing cost.

I tell you, a major industrial opportunity in the next 50 years will be developing rapid-response, flexible spare-parts services to support these aging installations.

Have you heard about the crisis in elevator controls? The manufacture of control parts like circuit boards for elevators were outsourced to China years ago, but the designs of the components were not optimized for mass-production: the market is small, design intensive and requires a lot of custom work.

Without economies of scale, a lot of basic parts are no longer in production, such that simple control components are only available as spares that had previously been stockpiled. It’s also economically unfeasible to re-start production for what may be global market for a few hundred units.

Now that 3D printing has come to metal parts, I predict a lot of opportunity for in the industry for making new (often improved) copies of otherwise unobtainable parts, and those who can find and replace them.

#43 Rocky Mountain on 06.21.17 at 7:57 pm

Nothing new. Living in Edmonton I have been seeing layoffs for couple of years now. Thousands and thousands. It doesn’t sound so bad when you hear about it in news and from friend. I only understood it when I saw the cardboard boxes packed for people who were not allowed in after lay offs. This has been going on and on. I have been lucky so far.
A friend bought a brand new duplex for 320K in 2014. His other half of duplex is on sale for 370K. Go figure.
Nothing is going to pop this bubble.. except almighty interest rate hike.

#44 Vancouverite on 06.21.17 at 7:58 pm

Garth,

Thanks for the summary regarding loss of traditional jobs in Finance and Retail, and the importance to be mobile.

#45 bob dog on 06.21.17 at 7:59 pm

Sounds like its time to raise the immigration rate. Oh Canada.

Amazon has 45,000 robots as of Dec 2016.

Happy solstice. Winter is coming.

#46 JSS on 06.21.17 at 7:59 pm

“a lifetime job in the town of your birth, could afford real estate and raised a family of little people just like you. Groundhog Day. Predictable. Stable”

But I like this life. So does the missus

#47 hmv on 06.21.17 at 7:59 pm

The sky isn’t falling.
remember a few years ago on Robson street in Vancouver closed down and you moaned? But that just paved the way for Victoria secret to take its place.

relax a bit everyone.
lots of jobs in technology and engineering, for example

#48 Dave on 06.21.17 at 8:01 pm

RBC is bracing for housing crash of epic proportions.

Huge Canada recession coming soon – forestry dead, manufacturing dead, Oil desvasted.

Make it a double

#49 little boy blue on 06.21.17 at 8:02 pm

YVR trends via Zolo: https://www.zolo.ca/vancouver-real-estate/trends

Why housing have-nots are cheering for a real-estate crash: http://www.canadianbusiness.com/economy/why-housing-have-nots-are-cheering-for-a-real-estate-crash/

#50 Howard on 06.21.17 at 8:03 pm

Bad news? This is all music to my ears.

Take it away “Happy Housing Crash”!

#51 mike from mtl on 06.21.17 at 8:04 pm

Garth, that’s what many here have been going on about, the ‘middle class’ jobs here has been sold off to foreign lands – “globalisation” as you call it.

It’s not the 1970s anymore, no high school dropout can stumble into a factory assembly job, zero ‘interview process’ found in want-ads and still have cash to party and live. Afford to have a family on one modest salary. Automation that nobody is asking for, permatemp & contract work.

What other way out of this other than thinning the heard from good ol fashioned war?

#52 boopsie on 06.21.17 at 8:09 pm

Who cares? It’s silly season. Summer. Enjoy.
The House of Commons has adjourned until Sept 18 (take that, Senate). Good riddance.

#53 Cheekmonster on 06.21.17 at 8:10 pm

This isn’t RBC’s first rodeo so I suspect (hope) they are doing the best thing for profitability.

I personally received some very poor service from Sears Furnature about 5 years ago. The sales staff was misleading and half of the stuff was delivered damaged.

I think the company started slipping long ago. In my opinion, they didn’t (or were not able) to keep up with the level of service provided by many others (Lowes, Costco, Wallmart, CTire …

#54 Count Flipalot on 06.21.17 at 8:11 pm

Future technology will become the humans greatest adversary. Just wait until software has the ability to create new software, then even the code makers are in jeopardy

#55 InvestorsFriend on 06.21.17 at 8:20 pm

Taxes on Robot Production?

#23 conan on 06.21.17 at 7:41 pm said:

My bet is robots will pay taxes based on what the produce.

***************************************
We already tax what robots produce. Corporate income tax and taxes on dividends and capital gains on shares. And sales taxes on the output as sold.

Should we throw in a tax on tractors too? They displace a lot of farm workers.

#56 Smoking Man on 06.21.17 at 8:21 pm

Attn broomed RBC employees. You Aint getting your job back, DM loves to follow his order from Davos so I say start a business. Toronto is giving out grants up to 5k

One way to get some of your money back stollen by communists.

http://www1.toronto.ca/wps/portal/contentonly?vgnextoid=4f0bf256b9dda510VgnVCM10000071d60f89RCRD

#57 TortyPapa on 06.21.17 at 8:22 pm

Wait. Why is no one talking about the nearly 8% monthly drop in overall prices in YVR? That seems like a huge number no?

https://www.zolo.ca/vancouver-real-estate/trends

#58 Arto on 06.21.17 at 8:24 pm

Now even I’ll admit today your post was a Homerun

#59 dakkie on 06.21.17 at 8:27 pm

Is The Canadian Real Estate Market Heading Towards Crash?
http://investmentwatchblog.com/is-the-canadian-real-estate-market-heading-towards-crash/

#60 crowdedelevatorfartz on 06.21.17 at 8:33 pm

@#38 Ace goodheart
“The world ain’t changing. People are just getting dumber…..”

*******

And lazier

#61 Smoking Man on 06.21.17 at 8:39 pm

#48 Dave on 06.21.17 at 8:01 pm
RBC is bracing for housing crash of epic proportions.

Huge Canada recession coming soon – forestry dead, manufacturing dead, Oil desvasted.

Make it a double
………………

Make it a triple, you forgot @gmbutts who is on record and wants to destroy our economy on purpose, and he’s proud of it too. He’s T2’s go to boy, sorry I meant go to sis

http://www.cbc.ca/beta/news/opinion/ontario-disaster-architects-1.3884108

UN stage 1 for global government, destroy culture and economy and crush the ones that will resist the most. Masculine white men, the last thing standing in the way of total submission.

Angenda 2030
………………………

#62 crowdedelevatorfartz on 06.21.17 at 8:39 pm

@#42 Smartalox
“Have you heard about the crisis in elevator controls?”
******

Yep. Know a coupla guys who work for Otis, FujiTech, Schindler, etc.
All in their late 50″s early 60’s easily pulling in 150g’s a year. Some want to retire but the money is too good. Some are divorced and have to keep working.
Eventually age will conquer all.
All with experience in old relay control systems that the kids graduating today have either no interest or clue how to fix.
There is a rapidly approaching crunch where aging technology will hit the “repairman retirement wall”
Young technology grads dont work on the stuff so they dont have the experience.
And it isnt just elevators………

#63 DON on 06.21.17 at 8:39 pm

#19 THREE FINGERS WATSON on 06.21.17 at 7:35 pm Interest rate increases will be tiny and few and will take forever. Immigration will sustain the housing markets. Carry on, no worries. Your government will not allow the country to go bankrupt.

****************
You are right – the country will not go bankrupt – but some citizens may. Case in point the US didn’t go bankrupt but a lot of their citizens had to declare. When we go into recessions – your government doesn’t come and bail you out. For them it will be a temporary hard reset (like ripping off the bandaid) but for some citizens it will feel like forever.

#64 Mark on 06.21.17 at 8:40 pm

“Will that cause a 40-cent Loonie? If everything is becoming lower in price, do you call that Deflation?”

Sure, most of us would call that deflation. A 40 cent loonie, good luck with that. In deflation, it is incredibly difficult for central bankers to suppress the value of a currency (as deflation tends to be highly self-reinforcing). And the CAD$ has inherently much stronger fundamentals than the USD$ (see my post yesterday with respect to global forex reserves), so suppressing the CAD$ down to 40 cents strikes me as a near impossibility.

Get your kids into IT where the jobs are plentiful or they will be left behind

Jobs are not plentiful in IT. They are scarce, and heavily offshored these days, with even top talent finding it very hard to make inroads to a terribly glutted sector. Terrible, terrible advice.

There are many, many jobs in programming and coding…..but sigh, you need training, a ticket and skills.

Only problem with that theory is that the number of credentialed programmers/coders, and IT people generally exceeds the demand by a wide margin. With no end in sight. Additionally, once code has been written, it is extensively re-usable. Productivity in IT has risen dramatically, where the number of individuals needed to maintain systems has dropped significantly. Many companies even rent substantially all of their IT from “SaaS” providers who manage the same sets of applications for literally thousands of other companies with relatively few administrators and developers. Coders and IT people are becoming increasingly endangered species in business, and IT salaries, stagnant for two decades, reflect such.

What the hell is it all for? A few shareholders at the top? The rich get richer. While so many live in poverty. This system is f*cked up.

Well nothing precludes you from buying RY shares if you believe they are earning disproportionate returns relative to other investments. Having said that, it does seem unlikely that the financial sector can perpetually retain its leadership position in the Canadian economy. It was once said that the Canadian government essentially answered to the CPR (railway), and if you have any knowledge of the history of western Canada, that concept is quite vivid. Today the government answers to the banks. In the future, some other sector may dominate.

#65 mathman on 06.21.17 at 8:40 pm

RBC is simply doing what all the banks are doing – looking at their business a few years out with the death of bricks and mortar banking staring them in the face. The media loves to take the piss out of the banks – it makes for a good oh poor Sally story. No-one wants to be the next Blockbuster video, HMW, Eatons etc. Innovate or die – this a fact.

I’m sure the severances were good, the benefits continued and they would all have pensions. I’m not trying to minimize that it would be crappy for an unskilled 50 year old – but unless they are a total financial dud they won’t be eating cat food.

In less than 5 years we will be cashless for the most part, maybe sooner than a few years. Ask yourself what you would need to go into a bank for today in any regular frequency?

You have millions of square feet of retail space and probably over 250k + people across the big five in these retail branches. There may be large centres that exist down the road – much like Best Buy may only have a few strategic showroom locations very soon.

Retail is a whole other story -anyone should be able to see the writing on the wall. I predict that with a few exceptions (Eaton Centre,Yorkdale, Sherway) malls will be gone – bulldozed – never to return. Retail employees, cleaners, security, mall operational staff etc all out of work.

If I did not have a marketable skill and I was 40 today – I would be worried. Fourtunatly my folks had the foresight to push STEM 20 years ago.

#66 DON on 06.21.17 at 8:42 pm

@Smoking Man – Topic of your next book – Herdonomics – Tell what you know.

@Flop – nice to have the stats back – for the summer season will “Pink Pollen” be replaced with ‘Pink Unicorns’?

#67 AB Boxster on 06.21.17 at 8:42 pm

Gee.

Canada sounds like a really great place to invest in.

Thank goodness diversity and resourcefulness will drive the GDP for the next generation.

#68 DON on 06.21.17 at 8:42 pm

Nonpulsed, Mathman and others nice breakdown the other night. I enjoyed the read.

#69 Al on 06.21.17 at 8:43 pm

Time to make stink-bids for homes in the GTA or too early for that?

#70 DON on 06.21.17 at 8:44 pm

To the disgruntled bank employee – screw the application coding and learn how to hack!

#71 SW on 06.21.17 at 8:45 pm

It’s happening out on the fringes of the known universe too.

One acquaintance has lost his job, has three kids and another on the way. Now his mortgage company won’t renew his mortgage at anything like an affordable rate because he’s on EI and is behind with his property taxes…so he has to refinance with someone else.

His solution? To buy another cheaper house out in the rural outback and rent out the first house!

#72 mathman on 06.21.17 at 8:46 pm

What people continue to fail to understand in large part is the minority of folks can cause a majority problem.

Let’s save conservatively 15% of the population does not have a pot to piss in, owns their home (with a large mortgage)carries a balance on their credit card, car loans etc. What has kept them above water for more than a decade is the ability to refinance every year to 18 months.

Lather, rinse, repeat. A year goes buy, the cc’s aremaxed, they go to the [email protected] and refinance for whatever equity they can pull out of the house. Once this is no longer an option and you have to pay the piper -15% of the population either sells for whatever they can get, walks, defaults – whatever.

this will destroy the economy and we have not tools to stimulate, when job losses become rampant and you are already at energy level interest rates- what do you do?

#73 Andrew Woburn on 06.21.17 at 8:47 pm

And if today’s blog wasn’t bad enough:

– In the future, we will all be rental serfs

“Which begs the question, what is the self-driving craze in mobility really about? Improving road safety (something not yet proven or quantified) or creating a framework where control can finally and fully be ceded from users and transferred for all perpetuity to an increasingly concentrated and faceless capital and intellectual property-owning elite?”

https://ftalphaville.ft.com/2016/11/02/2178646/in-the-future-we-will-all-be-rental-serfs/

(free subscription required)

#74 Victor Y on 06.21.17 at 8:48 pm

pathetic VAN RE, make lot less to pay lot more. what are these people are drinking each day.

#75 the Jaguar on 06.21.17 at 8:48 pm

Couldn’t help but notice that Adam specified ‘layoffs in headquarters’. Sounds like it involves redundancies or an opportunity to contract out work. Maybe ship some work out of the country. (Hello India, RBC calling…). Nothing new under the sun in that regard. 450 jobs when you employ 60,000 bums in seats doesn’t seem like a lot. If some of them are close to retirement and not up to their ears in debt it could even be a blessing. Imagine if you were just about to hand in your retirement notice and then got a nice severance package. Maybe 20-23 months. Why wallow in sentimentality or nostalgia? Like the woman in the IKEA commerical says…”Start the car….”.
There’s no denying the financial and retail marketplace is in a death spiral as we presently know it. Just consider all the retail stores that have closed in only the past five years. Those events make headlines. The Banks are a little more strategic in order to protect their image. They might undertake layoffs that are just under the number that require public reporting. Kind and benevolent masters of the game. They invented slight of hand. But they are very careful to play by the rules. Hard to fault them. They’re just trying to scratch out a living like everyone else, right?

Is poster # 29 the same one who showed such disrespect to Garth on the last Blog post? Or should I say ‘Wow. I mean like Wow.”
At your feet or at your throat, I guess.
And so incredibly predictable.

#76 SoggyShorts on 06.21.17 at 8:50 pm

#35 Damifino on 06.21.17 at 7:48 pm
I like to look for products online then got to a bricks and mortar store to purchase them. Sometimes with cash.

Am I okay?
——————————————————-
Lol, I do the exact opposite. I go to best buy, compare everything, ask all the questions I want, then I go to amazon and buy it for 20% less.

#77 the Jaguar on 06.21.17 at 8:52 pm

Got that quote wrong..here is the correction:

Wow. Just wow. I thought you were better than that. –

#78 TnT on 06.21.17 at 9:02 pm

#29 Screwed Canadian Millennial on 06.21.17 at 7:43 pm

It’s how the world works.

Buy some shares, make your money and give it to whoever you feel deserves it most.

#79 more layoffs tomorrow on 06.21.17 at 9:05 pm

Word on the street says layoffs coming to Sears tomorrow… will be 100s of people.

#80 Old Salt on 06.21.17 at 9:08 pm

Maybe I should put off car shopping a couple months. If these trends continue there may be more than a few people who need some assistance escaping their lease payments…

#81 yorkville renter on 06.21.17 at 9:09 pm

#54… WAY too early for that… I’d wait until next year, but if you must buy soon wait until September. Desperation will be great then, especially for parents with kids in school

#82 Sam the Sham on 06.21.17 at 9:09 pm

DELETED

#83 Smoking Man on 06.21.17 at 9:11 pm

If you feel you’re paying to much tax here comes the next one. This one will bury the lebrals, their only base right now is the mind fd millenials MF talked about yesterday. This will lose them. Its about time communism went extinked. On my 3rd spelling not so good. Happy longest day of 2017.

http://www.conservative.ca/cpc/stop-the-internet-tax/

#84 Ben on 06.21.17 at 9:23 pm

Mark – you don’t know what you are talking about with regard to IT supply and demand of developers in Canada.

I’m in Canada. I’m in IT. We are hiring. And I’m looking myself. We find it very hard to get good people. Recruiters are contacting me for many jobs after putting my CV online.

Mark: you don’t know what you are talking about on this topic. I’d advise people not to pay attention to you.

#85 AR on 06.21.17 at 9:23 pm

Emergency Preparedness and Emergency Response. That’s where the jobs will be.

And employment counselling.

#86 Enjoy the ride on 06.21.17 at 9:25 pm

The pink snow information is overloaded today. Thumbs up. Keep them coming.

#87 Jon on 06.21.17 at 9:27 pm

Bourbon plz. Mobile Canadian engineer in Kentucky. All the Canadians here are celebrating Canada day this Saturday. No way we can compete with july4 wknd. We are starting to get calls from companies asking to come back to Canada. Must be some structural unemployment out there! Loonie to 70 before 80. Bottoms up!

#88 Mark on 06.21.17 at 9:31 pm

“Which begs the question, what is the self-driving craze in mobility really about? “

How about “creating hype to justify sky-high (if not negative) P/E ratios amongst a relatively small group of otherwise failing tech firms.”

Reminds me a lot of 1999 when simply adding “.com” to one’s company name was good enough to score a valuation bump in the stock market.

Amazon has 45,000 robots as of Dec 2016.

All those robots, still can’t earn a meaningful profit. The problem with robots in an industry is that chance are, all your competitors will have them as well, and will buy them. So while there is a short-term “first mover” advantage, such advantage eventually fades away, and eventually the entire sector which has undergone such automation ends up in a deflationary spiral towards the bottom where nobody makes any money.

Sure, society as a whole benefits from the cheap goods, but automation in an industry often ends up becoming the kiss of death insofar as good economic returns to a sector and its participants as sectors with overcapacity have no pricing power.

This is actually what happened to tech. In the 1990s, when the industry was actually booming, IT labour was very expensive (unlike today where IT workers are a dime a dozen and a simple ad will get you 50-100 people willing to work at a pittance). So there was a huge push towards automation. The result of which is the modern IT sector which is largely profit-less and pays very little. Meanwhile, society enjoys the benefits of IT more than ever precisely because of such.

#89 waiting on the westcoast on 06.21.17 at 9:33 pm

Oh wait… we make more per capita than Americans. Err… We don’t. Oh but we Canadians get to deduct interest from our mortgages. Err… Sorry, it’s the Americans that get that.

So why is our housing bubble so large? Let’s put the blame where it belongs… Too much HGTV!

;-)

#90 Millennial falcon on 06.21.17 at 9:33 pm

What the hell is pink pollen falling? Or pink snow? What’s the reference? Any one? Can you explain this?
I read comments section just to hear happy housing crash guy or girl. It’s the funniest comment on this blog all the time.

#91 2cents canadian on 06.21.17 at 9:33 pm

RBC make billions a month ….. yah but it could be $1.1 billion a month now. Cut expenses. That’s good isn’t it? More profit is better right? Lean and mean wins right? Well it is for the top handful of CEO’s bonuses and their stock options … and the stock holders. I’m a stock holder and I (sadly) understand …… yet I also understand this system will contribute to the massive widening gap between a few top top top CEO’s (and relatively few investors) and the masses just trying to squeak out a living and live a semi-decent life raising a semi decent family.

#92 Happy Housing Crash Everyone! on 06.21.17 at 9:36 pm

Looks like housing prices are NOT STICKY. Prices are CRASHING!!!!!As Garth pointed out In April the average price was $920,800. In May it was $864,000. In the last two weeks it’s $808,900. That’s a 12.1% drop in eight weeks, at the same time sales volumes have collapsed by half from last year. Happy Housing Crash Everyone! Many will go bankrupt in this monster of a housing crash. :-)

#93 Smoking Man on 06.21.17 at 9:38 pm

#84 Ben on 06.21.17 at 9:23 pm
Mark – you don’t know what you are talking about with regard to IT supply and demand of developers in Canada.

I’m in Canada. I’m in IT. We are hiring. And I’m looking myself. We find it very hard to get good people. Recruiters are contacting me for many jobs after putting my CV online.

Mark: you don’t know what you are talking about on this topic. I’d advise people not to pay attention to you.
…….

Aggree, head hunters are after me huge. Thinking about responding and going to interviews while live broadcasting on twittet and being mischievous as hell.

No time right now, my free bestinvoice is taking off huge. I scaled back my Google AdWords can’t keep up with demand. Seams after a few days of using it and loving it. My clients want to add on features. $$$$$ their not free.

#94 Mark on 06.21.17 at 9:39 pm

“I’m in Canada. I’m in IT. We are hiring. And I’m looking myself. We find it very hard to get good people. Recruiters are contacting me for many jobs after putting my CV online.”

Pick a few major Canadian universities, contact their career centers, and put the job ads up there. Use publicly available resources like the CIPS job board, and the job boards available through the various engineering societies. If you do this, you will likely have 50-100 applicants, maybe more. Probably so many that you won’t even have time to respond professionally to all of those who are qualified.

Canada has a huge glut of IT people. But don’t believe me, believe the OSPE which studied the topic of the STEM and engineering glut in Ontario and came to some pretty profound findings:

https://www.ospe.on.ca/public/documents/advocacy/2015-crisis-in-engineering-labour-market.pdf

Figure 4, Page 10 indicates that only half of the Canadian Math/Computer/Info Science-qualified individuals are actually able to find degree-relevant work.

So it appears that you’re the one who doesn’t know what you’re talking about, if you are honestly making the claim that there is not a glut of IT talent in Canada.

#95 Dr. Talc on 06.21.17 at 9:41 pm

A free set of stake knives in the back, ‘thanks for your service’

Introducing Amazon Go and the world’s most advanced shopping technology

http://hoaxbusterscall.blogspot.ca/2017/06/introducing-amazon-go-and-worlds-most.html

#96 Renter's Revenge! on 06.21.17 at 9:42 pm

Oh no! Capitalism is operating as it should! What do we do now??

#97 AK on 06.21.17 at 9:42 pm

“By the way, Millennials don’t go to stores much, either. They’d rather get a package from Wayfair via UPS than stroll across the road to Ikea.”
——————————————————————–
McCowan Rd is bumper to bumper most of the day. Somebody is driving.

#98 Paul on 06.21.17 at 9:43 pm

Garth – “quietly shaking our heads at what we’ve done by dint of emotion and hormones, not logic and perception.”…..man, that’s nice!
M53BC

#99 Smoking Man on 06.21.17 at 9:44 pm

Attention java developers Microsoft is going to make easy for me to kick the crap out of you when they introduce the surface phone. Vba macro enabled apps on the phone. Vba 1/50 of the time to develop apps vs c# or java.

Long Microsoft

#100 Smoking Man on 06.21.17 at 9:48 pm

Building desktop apps that run on your phone via one drive and share point for sync.

Smoking Man
PhD Hetdonomics
Futurist second to none.

Long Microsoft

#101 ANON on 06.21.17 at 9:49 pm

Shots?

Thanks, but had enough of those lately, have to sober-up for the grand finale. The tribulations of contrarians… :)

#102 crdt on 06.21.17 at 9:56 pm

Real estate is where every conversation leads to in Langley. There are two camps; the “owners” (balls of steel debtors) and the renters. Each cheering the opposite side of the pendulum. Both sides are terrified; one of losing their recently un-earned and un-realized wealth, and the renters watching the light extinguish at the end of the home ownership tunnel. The number of people who are directly, every day benefited by the bubble is astounding. On the other hand, the number of people being crushed by exorbitant rent and dubious rental arrangements is bone chilling. It sucks money out of the economy, lowers the standard of living and diversity, and funnels the wealth into every more narrow expressions of wealth, such as the common place super car, seen almost everywhere these days. It scrambles priorities, either of the young couple working to make the astounding mortgage payments ignoring their children, or the flipper buying supercars supporting the local purveyors of many unsaid vices.

#103 Sam the Sham on 06.21.17 at 9:57 pm

#82 Sam the Sham

DELETED

————————

Ouch, that stings!
OK, it’s your blog.

#104 Trading Naked on 06.21.17 at 10:00 pm

It’s like the 19th Century all over again – a long-gone world in which you landed a lifetime job in the town of your birth, could afford real estate and raised a family of little people just like you. Groundhog Day. Predictable. Stable. – See more at: http://www.greaterfool.ca/#sthash.j5pOEEXo.dpuf

Garth, there is value in this Groundhog Day that you seem to despise.

First of all, of course humans want to play life in Easy mode. Owning a place means you can pretty much do whatever you want with it and not have to worry about the stomping doofus upstairs who insists on smoking in a non-smoking building, for example. For people raising children, this is a huge load off of their shoulders. Moving sucks.

And what ultimately matters in life is people. Relationships are formed when a bunch of people are in the sorta-same place for a prolonged period of time. You hear about the loneliness people experience in big cities? That’s what happens with a transient population. Yeah, I know, the Internet should make things seamless, but humans are humans at the end of the day. And I hear that Tinder sucks.

Not everybody wants to change cities every few years. There is value in investing one’s time in one place to help it grow. Familiarity can be an advantage.

I may possible be drunk right now (not as much as Smoking Man!) but I hope that sort of made sense.
That said, of course I’m not blind to reality. I’m a renter. I’ve spent all of my adult life shooting for and not getting that lifetime job that my parents insist on. I’m willing to roll with whatever this world throws at me. But a family? Not without a stable source of income I can’t consider it.

#105 The BioTech Guy on 06.21.17 at 10:03 pm

I enjoyed this blog for years and especially Garth’s prose. Love it. But on merits you guys are a highly delusional bunch.

I was thinking of moving to a different school catchment some years ago. My boy was in elementary school then. Garth’s suggestion: wait, do not buy. Crash is coming. Any day now.

Suffice it to say the kid is at University and what I did not buy then is twice as expensive now.

The reason this madness will continue in Toronto for a bit:

(1) Supply and demand. Greenbelt, incoming crowds
(2) This is truly one of the best cities in the world.
(3) Well diversified economy
(4) Foreign investors will not blink at 15% tax. Are you kidding ?
(5) People will eat dog food before they consider selling at loss. No massive unload unless the interest rates spike really high.

So, barring any drastic government intervention, I see a short intermission, then a moderate price increases in fall and well into 2018. After that, perhaps some stagnation but no crash.

I feel for young people trying to find a nice home, but do not confuse wishful thinking with hard facts.

Now, somebody suggested single malt ?

#106 crdt on 06.21.17 at 10:04 pm

#30 Happy Housing Crash Everyone!

Love your venom….

#107 ole Doberman on 06.21.17 at 10:08 pm

Gartho that was dark – this blog is right up there now with the Economic Collapse Blog or King World News.

Luckily i just picked up a bottle of whiskey. Cheers everyone and happy housing collapse.

#108 Doug t on 06.21.17 at 10:08 pm

We are entering a new era – one that involves less person to person contact, less hands on involvement in communities and less need for bricks and mortar retail. This world is on a precipice – be ready, be open and be damn careful.

RATM

#109 No Mercy on 06.21.17 at 10:10 pm

Fellow Dogs,

Regarding IT being awesome trade for your trades. AI (artificial intelligence) to replace IT jobs is where I’d recommend your kids to focus on. That’s what I’m tell my kids.

#29 Screwed Canadian Millennial

Seriously dude. Stop complaining.

You want to buy a house, enjoy being a slave.
You want to make money, by stocks (or ETFs) instead of house.
You want a job in your field of studies … move to where the jobs are.

Unless your parents taught you about investing and stock markets don’t listen to them.

Hence, you are angry about the world because as an adult you don’t get those participation medals everyone gets these days in sports.

My kids get it.

I talk about how their $1K in the bank is doing nothing.
My 12-year-old says … Dad, you told me is I owe shares in the bank I can 5% and that’s something.
Yes I said.
Dad, I want to use my money to do that.

Hence, my 12-year old gets it. The system is not broken.

The choices you make are.

Stop complaining.

#110 huh? on 06.21.17 at 10:16 pm

Sucks if folks were hoping their home would be a part of their retirement fund. This is the worst time (in a while) to sell, fingers crossed everyone will be okay.

…………..

what? or they could have sold in 2010?

geez

#111 TrumpForTheAges on 06.21.17 at 10:16 pm

Not sure Garth where you get your sources but US household debt is at all time highs with more of the debt due to autos and student loans (less from mortgages).

http://www.marketwatch.com/story/us-households-will-soon-have-as-much-debt-as-they-had-in-2008-2017-04-03

#112 Smoking Man on 06.21.17 at 10:17 pm

#95 Mark on 06.21.17 at 9:39 pm
“I’m in Canada. I’m in IT. We are hiring. And I’m looking myself. We find it very hard to get good people. Recruiters are contacting me for many jobs after putting my CV online.”

Pick a few major Canadian universities, contact their career centers, and put the job ads up there. Use publicly available resources like the CIPS job board, and the job boards available through the various engineering societies. If you do this, you will likely have 50-100 applicants, maybe more. Probably so many that you won’t even have time to respond professionally to all of those who are qualified.

Canada has a huge glut of IT people. But don’t believe me, believe the OSPE which studied the topic of the STEM and engineering glut in Ontario and came to some pretty profound findings:

https://www.ospe.on.ca/public/documents/advocacy/2015-crisis-in-engineering-labour-market.pdf

Figure 4, Page 10 indicates that only half of the Canadian Math/Computer/Info Science-qualified individuals are actually able to find degree-relevant work.

So it appears that you’re the one who doesn’t know what you’re talking about, if you are honestly making the claim that there is not a glut of IT talent in Canada.
……

There is not glut of it talent,? Nope, we have lots of computer science degrees out there. Doesn’t mean they can code. Visualize, solve problems, undetstand business. Why do you think agile coding is so popular. Because they cant think or see the big pictorial. The story from start to finish.

Business want waterfall developers but they can’t find them.

Why? most are board out of there minds by nature and take to drinking and reside writing fiction is more rewarding.

#113 mike from mtl on 06.21.17 at 10:17 pm

#67 AB Boxster on 06.21.17 at 8:42 pm
Gee.

Canada sounds like a really great place to invest in.
///////////////////////////////////////////////////

Exactly, don’t know what Garth was smoking and or drinking to suggest increasing maple exposure. At ~13% (mine) even for my taste that’s too much. Oil rebounding at say 50$ right… because that’s about all the forex traders care to know about canunkastan.

What’s the point in ‘investing’ in a bunch of oligarch banks, crappy unprofitable oil companies and consumer junk that operates in the same country?

#114 Rexx Rock on 06.21.17 at 10:19 pm

What should be done to help all the low income retirees and welfare Canadians who rent?Canada should build huge housing projects in Central America so they can live down there with at least some respect and dignity.Here you live hand to mouth with the high cost of living and just barely survive.

#115 The Technical Analyst, CSTA, CPD on 06.21.17 at 10:20 pm

I’m gonna miss Sears Canada.

I missed Eaton’s (the best of the best)

I missed Target (thanks for buying Zellers)

I missed Zellers (great products are great prices)

I missed K-Mart (and their blue light specials).

I missed Simpsons (great store)

I missed Consumer’s Distributing (great catalogue store)

one store I won’t miss… Wal-Mart.

one store I hope will close down… Amazon.ca/.com

#116 april on 06.21.17 at 10:21 pm

#36 – only if you believe MSN and real estate spin.

#117 For those about to flop... on 06.21.17 at 10:21 pm

#91 Millennial falcon on 06.21.17 at 9:33 pm
What the hell is pink pollen falling? Or pink snow? What’s the reference? Any one? Can you explain this?

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

Below is the original statement I posted when I started this project on January 8th 2017.

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

…here is some fresh blood that is being spilt in the Burnaby snow.

I know we are supposed to avoid the yellow snow ,but the pink snow these homeowners are now eating can’t taste that good either…

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

I knew I was going to have to do a lot of posting if I was going to commit to it and so I took it and ran with Pink Snow.

Spring come and the Snow turned into Pollen and just today on the previous thread I debuted Pink Lemonade.

I am not the smartest guy on here ,but I at least take the time to do my own research and do my own reporting instead of regurgitating someone else’s porridge.

I was going to do Pink Salmon in the fall but I have shelved that plan after being plagiarized which I took offence to.

I anticipate by then I will have no trouble finding some losses in the hundreds of thousands,as of right now most of the ones I have spotted are less than 100k.

Some sales recently completed in the 5/6 million range and despite asking for realtor assistance I will have to wait to show you guys what happened.

Even if they sold for what they bought the losses will be around 250/300 k in less than a year.

I can’t walk very well at the moment but I am willing to follow the trail…

M43BC

#118 Eco Capitalist on 06.21.17 at 10:24 pm

Record profits, so we’d best lay people off. Greed. Greed will bring about the end of all things.

#119 Scully on 06.21.17 at 10:28 pm

RBC is closing my branch in Vancouver in August. They are looking at the writing on the wall. Bricks and mortar becoming obsolete. RE too expensive. Making cuts is good business. Curious what the next ten years will be like. Electric cars will get cheaper as mass production platforms are fully established. Solar power tiles cheaper and more efficient, automation. Major disrupters. If you can think outside the box you will see the opportunities when they arise. I know this because Smoking Man and his buddy JD told me so. ;)

#120 april on 06.21.17 at 10:28 pm

#93 – What area are you referring to. I hate when people do that. Canada is a big place.

#121 WUL on 06.21.17 at 10:31 pm

I have spent the last couple of hours enjoying the NHL Awards show and the Vegas Golden Knights expansion draft. Oops. 47 degree temps. Climate change. They’ll be playing their home games in Inuvik to avoid ankle deep slush in the desert. The “Inuvik Very Lengthy Nights”. Tough travel schedule.

#122 crdt on 06.21.17 at 10:33 pm

#106 The BioTech Guy on 06.21.17 at 10:03 pm

Hope you are right, prices can travel way back in time to where they used to make sense. It is already blowing up, it will definitely be convincing.
The same level of certainty will be achieved for the polar opposite belief about real estate. The ONLY price increase is in the delusional head of the new paradigm buyer.
The relief must be palpable giving in to the herd group think, jumping on board, getting rich all together at the same time. Taking common sense, simple math, and modesty and stomping it to the curb.
If I had to come up with four thousand plus dollars every month simply to not get foreclosed on, to keep my family safe, how lucky would I feel?
It is simply extortion, because the native economy does not provide opportunities required for these extreme valuations.
This does not even take into account the stigma of not being rich through ownership, and the pity that is dispensed generously, in amounts usually reserved for actually rich people by the denizens towards each other.

#123 Asterix1 on 06.21.17 at 10:35 pm

So it’s been 3 month since the Toronto Real Estate Wealth Expo! But, but, you told me to buy at any price, find a broker, riches to follow.

Ha, ha! Prices down -12.1%

What a scam! No shame!

#124 The BioTech Guy on 06.21.17 at 10:38 pm

#113 Smoking Man

You are way off on CS grads in Toronto, my friend. This is CS mecca in the world now. Mainly AI and Machine Learning but also cloud computing and many others.

I can’t find the right people for my team of forty and need to resort to newcomers from Nepal and of all places! This is for pure software development where we need most thinking. Maybe IT is a bit different.

Of course not all schools and all degrees are created equal but for real work you can’t find decent grad in this city below 6 digit income.

We do agile not because they can’t think through the problem but because requirements and the world is changing way too fast for a traditional waterfall.

#125 Smoking Man on 06.21.17 at 10:41 pm

I created this. His lesbonic x wife killed it. He’s now a sales men, a good one but this is where he should go back too, don’t pay well but its what he loves.

The voice of reason in my last periscope twitter live clip.

Enjoy the second song it is called my dad

https://youtu.be/R3iX0SUQpPg

#126 meslippery on 06.21.17 at 10:46 pm

#38 Ace Goodheart
There will be 250,000 new commercial pilot positions opening up in the next 20 years.

——————-
Or the planes will fly themselfs.

#127 Rates vs Capital on 06.21.17 at 10:53 pm

VREU
‘I’ve also written that the dramatic monthly drops in sales are a clear sign that Victoria’s market correction process has been firmly established. First sales fall, then prices.’

Um, yes, sales have dropped year over year in both 2016 and 2017….and prices have increased.

So basically, it was sales fell for two Springs in a row and prices are up a minimum 20% in Victoria and the surrounding communities.

That is why you are ridiculed…

You are also ridiculed because your ‘crash around the corner’ thesis has yield dramatic price gains for many and you still have yet to answer the basic question – why did prices go up if things are so bad?

Please post an explanation before another diatribe about collapsing sales – because as it has been said before, when supply is low, sales will be low…

#128 Calgary Scared on 06.21.17 at 10:59 pm

Garth, please do Calgary again. I am in danger of having the wife buy. Yikes. Please, please, please – I’m almost sure the market here is about to collapse.

#129 Smoking Man on 06.21.17 at 11:01 pm

When you watch TV

https://m.youtube.com/watch?v=7U2E-In0DDg

#130 Courage and Poo on 06.21.17 at 11:01 pm

FinTech, Blockchain technology and Smart Contracts will compete with banks and more employees at RBC will lose their jobs. Next year, Bitcoin will be celebrating a 10 year anniversary. 10 years since the first block was hashed, and relentlessly for 10 years it has built the chain, block by block, every 10 minutes, without fail. It has built the Ledger, held by all. It’s nothing short of amazing, and its been great to bear witness.

The price of Bitcoin doesn’t matter any more than the price of electricity mattered in 1875. FinTech will destroy jobs in banks like automation destroyed jobs in factories. Bring on the pain.

#131 Vit on 06.21.17 at 11:05 pm

Dont you worry guys, very soon we all have several thousand $$$ a month regardless is if you working on not .The future looks bright .
http://www.torontosun.com/2017/04/24/three-ontario-cities-to-test-basic-income-pilot-project

#132 n1tro on 06.21.17 at 11:07 pm

Sears is dead or close to it. Good riddance.

Backstory:

They were in trouble 10 years ago when I started out as a senior financial analyst along with running a side business. Sears’ excuse back then was that Walmart was undercutting everyone with their pricing making it hard to compete. Senior management back then were just as clueless as they are now. How do I know? Calvin McDonald (ex Sears CEO). Good old Calvin was a SFA the same time as me but after 2 years made it to become a VP. Super smart?, revolutionary ideas? Good to look at?

Maybe.

But I’m sure the fact that his dad was a SVP and buddies with Gaelen Weston (CEO of Loblaws and multibillionaire) had little to do with it. Anyways, Calvin the shooting star goes over to Sears to turn things around but ends up quitting after 2 years having done nothing to help Sears’ situation.

https://www.thestar.com/business/2013/09/24/sears_canada_ceo_leaves_in_midst_of_company_restructuring.html

Point of my story:
1. Don’t be impressed by people with fancy titles like they know more than regular educated folks. They are guessing like rest of us. If anything, they know less and riding on their noteriety.

2. To have a successful business, you need to provide a solution to a problem that someone is willing to pay for.

Sears’ problem along with most brick and mortar stores?

Customers just go in to try things but then go online to buy it. Sears had 10 yrs to establish an online presence and failed to do it because they couldn’t adjust to the paradigm shift or didn’t even think about it.

As for Calvin, he is running the show over at Sephora and according to the media spin…”At Sears Canada, Mr. McDonald was credited with remerchandising the sales floor and improving the retailer’s fashion assortment, focusing on core “hero” categories such as baby gear and major appliances. He stepped down a month ago, having only reached the mid-point of his three-year transformation plan for the company.”

#133 Fake News on 06.21.17 at 11:15 pm

USED to have an RBC account. Getting gouged with record fees……..will never go back to that bank.

#134 daniel on 06.21.17 at 11:26 pm

if you like graphs: http://hh-math.blogspot.ca

#135 cd on 06.21.17 at 11:26 pm

Hey #125 The BioTech Guy…

I am looking for work… I may have plenty of the wrong type of coding experience (c++ development of simulation software), and I have a small amount knowledge on machine learning (related to principle component analysis based ML algorithms for signal processing)… but I am a hard worker and eager to learn new things. Is there a way to contact you?

#136 estCoastPatience on 06.21.17 at 11:30 pm

We sold close to the top & waiting out a correction in a rental paradise…we are sitting on cash for now. Anyone recommend investing (modestly) in Ethereum? If any one is familiar, is the smart wallet the way to buy it?

What’s the word on the street? lol

#137 Linda on 06.21.17 at 11:30 pm

Where jobs are is certainly changing & globalization means how much one can earn is affected as well. Hard to justify paying $100,000 to a computer geek here when one can hire 3 people abroad for the same sum – & since the work is digital no real requirement to have the employee live in the same country. Still, plenty of hands on work still around & growth industry right now & in years to come is home/health care – all those seniors aging in place, because no way are there going to be enough nursing homes available to hold them all. Sure glad I am not depending on the sale of my house to fund my ‘golden’ years.

#138 For those about to flop... on 06.21.17 at 11:31 pm

There has been a lot of talk about Bitcoin on here so this article seems timely…

M43BC

https://howmuch.net

#139 Lg on 06.21.17 at 11:34 pm

I shop at Sears, i miss Comsumers Distributing, i’ve been doing onlne banking for the last 20 yrs. Its all about the younger generation, but what about the older generation who dont have cell phones, or arent computer savy or who dont want to bank on line.

#140 Lg on 06.21.17 at 11:36 pm

Most older customers dont & wont buy clothes online.

#141 For those about to flop... on 06.21.17 at 11:41 pm

Here’s one for the gear-heads that they ran last week while I was taking a break from Joking Man trying to sell me stuff…

M43BC

https://howmuch.net/articles/true-cost-of-being-a-driver

#142 Nonplused on 06.21.17 at 11:43 pm

“Robots paying taxes”????

They already do. It’s called corporate taxes, HSCT on the sale and energy supply to the robots, and income taxes on everyone involved in designing, building and maintaining them. Plus all the royalties on extracted resources used to build and fuel them. Robots already have a tax on a tax on a tax, just like everything else.

Anyway you can’t raise taxes on robots, because that would just mean prices would rise for whatever they are doing even if it’s taking orders at McDonalds, and nobody has any money to pay the higher prices!!!

Oil does have a dim future, over the long haul, because we will run out. We have to, it takes 100’s of millions of years to make it and we’ve already used half of what was available. How many years it will last I don’t know, but the shale thing is temporary, as was the whole of the oil industry since inception. You can think of the oil industry as having 2 bottles of single malt with you when you go camping, and you’ve already finished off one but now all the neighboring campers are over expecting to share the last bottle. This is the largest challenge facing mankind, much bigger than climate change (although the 2 are related), and so far there is no plan B. Thorium nuclear reactors might be but I think they must not work since nobody is spending any money on them. Solar and wind are definitely not the solution, anyone that thinks they will be able to heat their house, cook, run the fridge, or have hot water in the winter using solar and wind is just uniformed. You’d have to have a 2 acre solar farm with a big windmill behind your house just to stay warm on sunny days. Not to mention the battery bank. The whole thing is a scam.

#143 Smoking Man on 06.21.17 at 11:44 pm

Face down on the concrete im the back yard.
Don’t judge me cause in the morning of the best hang over ever. A glorious rebutal. Thats my zone, thats why I drink.

https://youtu.be/vx2u5uUu3DE

#144 The BioTech Guy on 06.21.17 at 11:47 pm

#123 crdt on 06.21.17 at 10:33 pm

I wonder if you have seen these stats on price to income and price to rent in various cities:

https://www.numbeo.com/property-investment/region_rankings.jsp?title=2017&region=021

The point is Toronto is high but not THAT high. Usually in company of Boston, above Miami and well below NY, Brooklyn and SF. Far from Van prices.

So this could be a new normal for Toronto. No return to baseline. Ever.

Not everyone can afford to live on Upper East Side, NYC either. Maybe unfair but it is what it is.

#145 Smoking Man on 06.21.17 at 11:49 pm

SJW This tune is for you

https://youtu.be/6Ejga4kJUts

#146 Smoking Man on 06.22.17 at 12:01 am

To my x buddy’s on the trade floor.

https://m.youtube.com/watch?v=u9Dg-g7t2l4

Happens every time when loot, image is more important than soul and freedom.

#147 Pete from St. Cesaire on 06.22.17 at 12:04 am

“Which begs the question, what is the self-driving craze in mobility really about? Improving road safety (something not yet proven or quantified) or creating a framework where control can finally and fully be ceded from users and transferred for all perpetuity to an increasingly concentrated and faceless capital and intellectual property-owning elite?”
—————————————————
As Lindsey Williams says “the name of the game is control”. Once you can’t control your own car the powers-that-be will ‘allow’ you to go certain places at certain times if you’ve been a good boy, otherwise your car will be told that you can’t go and it just won’t take you (not enough carbon credits, former spouse doesn’t want you to be able to go near her part of town, suspicion of unpaid taxes, need to pay a premium to be able to go into certain touristy towns, automatic extra insurance charge if you want to go into the big city, etc). And guess what, even though you’re not doing the driving you will still be fully responsible for any accidents your car causes.

#148 tkid on 06.22.17 at 12:04 am

#84 Ben, you’re a nitwit. DEV does NOT encompass all of IT, and jobs are harder and harder to find in IT.

As for the thoughts of fat severance cheques, they don’t exist. The bank gives you ‘notice’, usually equalling the # of months your severance is supposed to last, and once that notice period is up, you are out the door without any money.

#149 No Mercy on 06.22.17 at 12:10 am

There is not glut of it talent,? Nope, we have lots of computer science degrees out there. Doesn’t mean they can code. Visualize, solve problems, undetstand business. Why do you think agile coding is so popular. Because they cant think or see the big pictorial. The story from start to finish.

Business want waterfall developers but they can’t find them.

Why? most are board out of there minds by nature and take to drinking and reside writing fiction is more rewarding.

>>>>

Amen brother SM.

Lots of IT folks out there.

Bright end-to-end IT folks make good coin.

Lots of dim folks in IT that will never get the end-to-end.

Hence, why independent consultants help companies and government move forward.

And the liberals are attacking us.

Shame on them.

Without independent consultants, who will solve their shared-services and phoenix problems?

Big firms (like IBM) screwed them up. Smart, independent consultants can fix it for less … but wait … they are waging a war against us … so we get work in other industries and get to hire 5 people not requiring stupid grid to get things done.

Free industry is where smart IT consultants should head for. Governments, they waste our time and don’t get it.

#150 Smoking Man on 06.22.17 at 12:10 am

https://youtu.be/8UXircX3VdM

The goal

#151 Housing Correction on 06.22.17 at 12:16 am

Wish the price of housing would drop outside of the
greater Toronto and Vancouver regions . In southern Ontario ( Durham , Halton , Waterloo, Niagara etc.) if you want a nice house you still have to put in an offer with no conditions and above asking price for the most part. I have lost out on numerous home purchases because I refuse to get into a bidding war. Many of the people by the way were from the GTA who are either retiring or making the commute to work.

#152 mouldyinYVR on 06.22.17 at 12:18 am

http://vancouversun.com/news/local-news/vancouver-real-estate-in-the-red
Well no crash in my YVR postal code….the opposite in fact…. 18 months ago a south facing (partial water view in my 20+ year old building) went for $1,000. per square ft…..now pushing $1,500. per sq. ft….instant sales…no end in sight! To the moon!!

#153 Marcus on 06.22.17 at 12:38 am

Was speaking with a friend of mine from China a few days ago. He has a confidant in the Canadian govt. He said there is a very real possibility of the Canadian Dollar hitting 40 compared to the US dollar. 40 cents. It boggles the mind if even being close to accurate.

#154 Canada is a bust on 06.22.17 at 12:41 am

Watching Cardone on YT talking about a $400kUSD house he used to own and how much he would have made on it if he had kept it. All I could think about is, 400 what!? That same house in a beautiful quiet suburb in Houston Texas that still has a neighborly feel would be worth 2mil USD in Vancouver! This bubble wont pop anytime soon, but just in case I keep saving and investing. Terrible times as CNDS are pushed aside.

#155 Leo Trollstoy on 06.22.17 at 12:44 am

#84 Ben on 06.21.17 at 9:23 pm
Mark – you don’t know what you are talking about with regard to IT supply and demand of developers in Canada.

Be careful. He likes trolling newbies. He’s wrong about everything. The assumption he makes is that if he sucks, everybody sucks

Tech is the place to be. Not enough candidates.

http://mobilesyrup.com/2017/05/02/tech-sector-tops-indeeds-list-best-jobs-canada/

#156 jay on 06.22.17 at 12:47 am

It doesn’t look like real estate price will stay low for very long http://news.abs-cbn.com/overseas/06/21/17/world-population-to-reach-98-billion-in-2050-un-says

#157 BillyBob on 06.22.17 at 12:59 am

#122 WUL on 06.21.17 at 10:31 pm
I have spent the last couple of hours enjoying the NHL Awards show and the Vegas Golden Knights expansion draft. Oops. 47 degree temps. Climate change. They’ll be playing their home games in Inuvik to avoid ankle deep slush in the desert. The “Inuvik Very Lengthy Nights”. Tough travel schedule.

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

Meh. Played for the Dubai Mighty Camels in the expat beer league for years. Multiple rinks in the city, and a lot hotter than Vegas. When they operate an indoor ski hill, ice rinks are child’s play.

I think you were just looking for a vehicle for your joke team name. I like. :-)

#158 paulo on 06.22.17 at 1:05 am

The recent news out of RBC is just the tip of the ice burg.
the coming changes,being the deployment of the data revolution with integrated advanced artificial intelligence ability’s will cause significant social and economic changes
there will be significant job displacement and real world economic change effecting all of us. the technology is advancing faster than most realize. this is effectively the 3rd major leap in technology effecting us all ,the last 2 resulted in major military conflicts,hopefully we learned our lessons and will be able embrace our new found and created technology for the greater good

#159 t-bone on 06.22.17 at 1:13 am

> The BioTech Guy on 06.21.17 at 10:38 pm

> We do agile not because they can’t think through the problem but because requirements and the world is changing way too fast for a traditional waterfall.

Hahahaha, dude, it is 2017 and you’re talking like Agile is some new cutting edge thing and people are still doing Waterfall. Half the people working in IT don’t even know what Waterfall is!!

Someone doesn’t know what they’re talking about methinks.

#160 waiting on the westcoast on 06.22.17 at 1:14 am

Mark says… “Amazon has 45,000 robots as of Dec 2016.
All those robots, still can’t earn a meaningful profit. The problem with robots in an industry is that chance are, all your competitors will have them as well, and will buy them. So while there is a short-term “first mover” advantage, such advantage eventually fades away, and eventually the entire sector which has undergone such automation ends up in a deflationary spiral towards the bottom where nobody makes any money.”

While yes what you say is true, you neglect to mention that innovation invariably gets added on top over and over as products get commoditized. Think of the changing nature of cars… First just wheels, engines and a cab. Now they play DVDs, self drive to a degree, act as I WiFi hub, and stop your car if you get to close to the vehicle in front.

Mark – as many others have pointed out tonight, please cease your lengthily and inaccurate theories and go study some new technologies that could help you find work so you can get one of those “few software jobs” :-/. that are out there.

#161 Mark on 06.22.17 at 1:15 am

“There is not glut of it talent,? Nope, we have lots of computer science degrees out there. Doesn’t mean they can code.

Well if CS grads can’t get hired (or even interviewed), how will anyone know if they’re good coders (or not)? That’s the problem out there; the sector is so glutted with talent that firms basically can’t handle the firehose of talented applicants that spray their applications into their resume queues every day.

The root cause is simply that of a glut of quality CS-qualified talent.


Visualize, solve problems, undetstand business. Why do you think agile coding is so popular. Because they cant think or see the big pictorial. The story from start to finish. Business want waterfall developers but they can’t find them. “”

There’s lots of great developers out there if businesses would just open their eyes, and be flexible with compensation. With so many highly talented people begging for jobs in IT and software engineering generally these days, the employers have the pick of the litter. The alleged ‘shortage’ is largely a concoction of employers and employer-associated industry lobbyists intended to curry public favour for TFW’s. Even though its possible to hire IT talent at rates similar to or less than that on offer 20 years ago, that’s still not cheap enough for the employers.

For instance, look at this posting of someone on greaterfool the other day:

“I made $65 an hour during the dot com era, my last tech contract paid me $25 an hour in Edmonton at the UofA” — #57 Porsche on 06.19.17 at 8:32 pm

even Smoking Man corroborates the mess that the Canadian IT sector is in:

“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.” — #67 Smoking Man on 06.19.17 at 8:40 pm

#162 Dan.t on 06.22.17 at 1:33 am

Good thing it’s different in BC and people can justify paying $899,000 for a house in Abbotsford or 1.2 mil in Langley and good thing that a 2 bedroom liveable condo only cost 480k (plus taxes, strata and so on) an hour drive to Van and 750k in Vancouver.

It is totally different in BC because people are way more delusional and actually believe that is what things should cost. Who cares about future generations, I guess insanely high rent and or unaffordable housing costs really are great for an economy. Everyone seems so happy about it.

#163 Ponzius Pilatus on 06.22.17 at 1:42 am

#34 InvestorsFriend on 06.21.17 at 7:48 pm
Excellent article about job losses to automation and where this is headed.

I wrote an article called the post-jobs economy. Find easily with Google.

Basic banking these days with electronic money transfer and on-line credit applications requires a giant computer system and not a lot of employees.
—————-
This is the kind stupid linear extrapulation stuff that mindless people use to predict the future.
Ever wonder why so many new bank and credit union branches are sprouting like mushrooms.
Banks know that they need a physical presence to interact with their customers/clients to sell them useless but profitable products like mutual funds.

#164 Ponzius Pilatus on 06.22.17 at 1:50 am

Further more to comment #135
20 years ago, Citizens Bank of Canada became the first virtual Bank in Canada.
The closed all their branches and transacted only on the Internet.
Google to find out what happened.

#165 The end is near on 06.22.17 at 1:56 am

#14 I’M NOT POLOZ on 06.21.17 at 7:30 pm
Will that cause a 40-cent Loonie? If everything is becoming lower in price, do you call that Deflation? I hate it when Poloz causes the Loonie to go below 80 cents because everything becomes way more expensive in Canada, and when traveling to the USA.

————————————————————-

I’m looking forward to coming home to Canada from a 3 week long vacation in Italy. I’m looking forward to cheap food, cheap drinks and cheap fuel. I’m looking forward to 13% instead of 22% tax. I’m looking forward to driving freely on highways, back roads and small town roads where not every single road, nook and cranny is metered for speed and all highways tolled from the south to north. I’m looking forward to being able to drive freely through city centres where photos of me are not being taken to send me a fine in the mail because I haven’t payed for a permit. All major city centers and right down to small towns have ZTL’s (zona traffico limitato) and the cost for a permit in Rome is €500 euros annually. I thought I had something to complain about until I came here, these Italians pay through the nose for everything and incomes here in Italy are the lowest on average when compared to the rest of the EU.

We live in an amazing country where we can slip into the corner store and and actually find parking within seconds and not have to worry about scrapes on the bumper from fellow motorists trying to squeeze in with their cinquecento. Our roads are wide, a beer isn’t 7 euros, a camera isn’t watching us every 2.5KM and to boot, we haven’t had deposits taken from us(yet) to bail in failing banks.

But this wretched blog just gave us the best news, real estate prices are falling. What more can you ask for?

#166 Dave on 06.22.17 at 2:12 am

Just an observation, I was in white rock on the weekend and seemed like one out of three houses was for sale and tons of open houses. Could be the geriatric demographic cashing in and going to old folks homes, but I see it as a start to the collapse. And Vancouver for sale signs are not getting new sold stickers either.

#167 Freedom First on 06.22.17 at 2:28 am

#63 Don

Don, very well put, and nothing but the truth.

It’s why the divorce and suicide rates climb so much during these times.

However, for myself, I live and plan my life to always remain invulnerable whatever I see happening around me.

I have to. I am a man.

#168 Flop: here is one for you on 06.22.17 at 2:49 am

Got this from My Realty Check web page “Multiple Change Properties”:

7511 Greenlees Road, Richmond, BC, V7A 1T8 (Overall Change= -$ 818,000, Percent: -32.75 – listed at $2.5 MM in March, then dropped to $2 MM in May and now listed at $1.7 MM in June). e-value BC assessed value of $2.4 MM and June 2015 purchase price of $1.44 MM).

#169 It is NOT ROBOTS on 06.22.17 at 3:02 am

It is Globalization and the export of manufacturing jobs to low wage rate countries like China, end of story.

This robots nonsense, is just that.

Manufacturing employment in the US (Canada similar experience – take note of WTO and NAFTA timing in chart on that web page…5.5 million US jobs lost from China joining WTO to near present day, 33% of the US workforce, Canada similar):

http://www.businessinsider.com/trump-keeps-picking-trade-battles-in-all-the-wrong-places-2017-3?IR=T

Robot penetration in automotive and general industry (clearly, low wage rate countries have very low robot usage and developed countries about the same, save automotive and in the latter, they are primarily Spot Welding robots):

https://medium.com/@Tumotech/everything-you-need-to-know-about-the-industrial-robot-revolution-c0b9448610c4

This is what globalization has done. Exported manufacturing jobs to low wage rate countries. Fattened the bottom lines of the very wealthy and displaced millions of manufacturing jobs overseas.

IT ISN’T THE EVIL ROBOTS.

#170 Balmuto on 06.22.17 at 3:37 am

#95 Mark on 06.21.17 at 9:39 pm
“But don’t believe me, believe the OSPE which studied the topic of the STEM and engineering glut in Ontario and came to some pretty profound findings:

https://www.ospe.on.ca/public/documents/advocacy/2015-crisis-in-engineering-labour-market.pdf

Figure 4, Page 10 indicates that only half of the Canadian Math/Computer/Info Science-qualified individuals are actually able to find degree-relevant work.”

I took a look at your chart. I noticed the following:

1). The data is from 2011 so it’s a little stale.

2). In not one of the categories listed were more than 50% of graduates working in their applicable field of study. Math/Computer/Info Science grads actually were second only to Business grads for getting work in their applicable field so relatively speaking, not bad.

3). It’s not as though all the ones that didn’t end up working in their applicable field were flipping burgers. Looks like quite a few were “Working outside applicable field of study but in a job normally requiring degree”. When you combine them with those working in their applicable field of study that’s about 75% of Math/Computer/Info Science grads, the best of any category.

Don’t forget that on the flip side there are also a lot of people working in IT that don’t have Computer Science degrees. In any case, when people on this board are talking about a lack of qualified candidates in IT they mean those that have some relevant experience, not just a degree. So for example, they need a software developer with some experience, you know, developing software. And that’s just for starters. Then when you look at the specifics – programming language required, type of application, industry-specific knowledge, etc. that can really narrow down the field of potential candidates quickly.

Finally, don’t base any of your perception of how hard it is to get a job in a given field on the job banks. They are a waste of time for the most part – in any field. Most hiring is done by referral – whether by recruiters or internal employees. I’m constantly being asked by people in our IT group if I know any good people. I’m sure HR has resumes on file that they could sift through if they wanted to, but they’d rather not take chances on an unknown candidate. People can look great on a resume and even in an interview and turn out to be disastrous employees. Happens all the time.

#171 Balmuto on 06.22.17 at 4:04 am

“#100 Smoking Man on 06.21.17 at 9:44 pm
Attention java developers Microsoft is going to make easy for me to kick the crap out of you when they introduce the surface phone. Vba macro enabled apps on the phone. Vba 1/50 of the time to develop apps vs c# or java.

Long Microsoft”

VBA is great for Excel and Access. But developing phone apps in VBA from scratch that look and feel as good and work as well as iPhone apps? Hard to picture.

#172 Tesaliens Unite on 06.22.17 at 4:05 am

Hey,
RBC broomed SM so they could keep increasing my dividends.. seems like good news to me!

#173 Bond Jumkie on 06.22.17 at 6:34 am

So THATs why Morneau Poloz and co are suddenly in such a rush to raise rates!! They knew Buffet was about to buy Home Cap!! Bahahahahahahaha what a ridiculous country we live in!

-Bj

#174 The Trump Effect on 06.22.17 at 7:16 am

Politics are shaping the views of millionaires on the economy and the financial markets, according to the results of the CNBC Millionaire’s Survey. Democratic millionaires are far more pessimistic. However, Democrats still plan to invest and spend in similar patterns as the more optimistic Republican millionaires.

Average asset allocation among Republican millionaires is as follows: 47% stocks, 20% bonds, 18% other, and 15% cash.

http://www.cnbc.com/2017/06/22/millionaires-are-more-politically-divided-than-ever.html

#175 Victor V on 06.22.17 at 7:38 am

Home Capital gets investment, new $2B credit line from Warren Buffett’s Berkshire Hathaway

http://business.financialpost.com/news/fp-street/home-capital-gets-investment-new-credit-line-from-warren-buffetts-berkshire-hathaway/wcm/42af6d53-c09e-402d-9d1c-756884cd4e52

#176 SimplyPut7 on 06.22.17 at 7:39 am

So Warren Buffet wants a stake in Home Capital and will replace the HOOP line of credit by providing a $2 billion credit line at an interest rate of 9%.

http://www.bnn.ca/home-capital-to-get-2-billion-loan-from-buffett-s-berkshire-hathaway-1.785898

He will get a 19.99% stake in the company, but he won’t be sitting on the board to help the company turn around but I think he likes the idea of getting 9% return and buying the stock at $9.55 when it closed at $14.94 yesterday.

I think this will be a test of his knowledge of the Canadian housing market. Yes, he is Warren Buffet and yes, he is getting a great return on the line of credit, but our lending industry have shorter terms than American and more sensitive to interest rate changes.

Unless he wants to be like the hedge funds in the US housing crash who bought foreclosed homes for pennies on the dollar, and sold them at low ball prices to their rich friends, I don’t know why he would want to take on so much risk. I think he was too trusting on the information he got from Home Capital. If Home Capital is the lender, private lenders use when nobody wants to give their customers money, then the people they lend to would be no better than the borrowers at the height of the US crash.

Our government has a bail-in method now, he won’t be getting any tax payer dollars to bail him out if Home Capital falls. Should be interesting to see what the full terms of the agreement is, if Home Capital publicly discloses them.

Take note highly leveraged homeowners! When you are house rich and cash poor, any bank/private lender/investment firm can take advantage of your situation and make your life worst not better.

#177 Luc on 06.22.17 at 7:39 am

Warren Buffet Saves Home Capital ? Can you believe it?

http://www.ctvnews.ca/business/warren-buffett-s-company-investing-in-troubled-home-capital-group-1.3470923#

#178 Stock Picker on 06.22.17 at 7:42 am

I told you Poloz would crap out….and he did the day saying “oil prices are a problem “. There ya go….no rate increase ….as I said. The rate scare won’t last.

Trudeau Liberals don’t give a crap about private sector jobs….unions bloc vote. Civil service jobs created for new arrivals are bloc votes. The economy might collapse but Trudeau is counting votes in urban religious/ethnic communities who are signing union cards and collecting welfare.

#179 Balmuto on 06.22.17 at 7:47 am

#162 Mark on 06.22.17 at 1:15 am
“Well if CS grads can’t get hired (or even interviewed), how will anyone know if they’re good coders (or not)? That’s the problem out there; the sector is so glutted with talent that firms basically can’t handle the firehose of talented applicants that spray their applications into their resume queues every day.”

A Computer Science degree by itself is never going to guarantee you a job or even an interview. That’s just not how it works. Plenty of CS grads get hired every year in IT in Canada. It helps if you’ve gone to a good school like Waterloo, already have some relevant experience gained through internships and/or summer jobs, and have a connection. Getting your foot in the door can be hard, I’ll admit. But once you’ve got a little experience under your belt, if you truly are good at what you do, it’s a great industry to be in and the opportunities are plentiful.

#180 crowdedelevatorfartz on 06.22.17 at 7:47 am

@#167 The end is nigh
“I’m looking forward to being able to drive freely through city centres where photos of me are not being taken to send me a fine in the mail because I haven’t payed for a permit. All major city centers and right down to small towns have ZTL’s (zona traffico limitato) and the cost for a permit in Rome is €500 euros annually….”
*******

You’ve just decribed Vancouver 2020.
Our greedy politicians havent realized they have some untaxed “avenues” of cash left to exploit….
Not to worry. Coming to a road near you.

http://www.google.ca/url?url=http://vancouversun.com/news/local-news/mayors-council-finalize-details-for-mobility-pricing-commission&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwjVl7zXsNHUAhVH9WMKHbg9Dv0QFggaMAI&usg=AFQjCNFJzvSWoyEZ2q_GSyLvHogRSwZSEw

#181 maxx on 06.22.17 at 7:52 am

#19 THREE FINGERS WATSON on 06.21.17 at 7:35 pm

“Interest rate increases will be tiny and few and will take forever. Immigration will sustain the housing markets. Carry on, no worries. Your government will not allow the country to go bankrupt.”

Slow and steady should be exactly how interest rates increase. And will. For the sake of Canada’s well being.

The face of Canada is changing and so is its workforce. There will be winners and losers, but probably in a much more dramatic way than we’ve ever seen.

Automation and the push to slough off expensive employees with benefits, particularly pre-retirees is relentless.

Most anyone buying re at today’s insane realtard-pumped prices is in for a very long-term world of hurt. I wouldn’t touch re now with a barge pole unless very deeply discounted.

If you’re one of the poor sods with a jumbo mortgage, start eating gruel and pay off that sucker because the future is nothing like idiot realtards bray about.

Then start saving like there’s no tomorrow. Oh wait, there is, but much tougher.

As for immigrants, they’re not stupid. I’ve learned more about saving from new Canadians than a lifetime of watching westerners support their lifestyles. If you think that the average immigrant will overpay for re, you need to revisit your assumptions.

#182 Game Over on 06.22.17 at 7:55 am

@ #127 meslippery

Commercial aviation pilots will most likely be replaced by automation eventually. Maybe they will have a human with it, but aircraft will eventually be fully automated. It will most likely be safer too.

The AI robot will have the proper decision making algorithms to know exactly what to do in an emergency situation to recover the aircraft without the stress, lack of experience and fear that might other wise impair a human pilot from making critical decisions in the heat of the moment. The majority of pilots today simply do not have the necessary skills to deal with a situation that requires quick, intuitive responses that come from years and years of flying. In my opinion, Autopilot and standard airline and RVSM routes have largely taken the skill out of it. There is an over reliance on the auto pilot and flight director because of it. While, human control is still used for take-off and landing, there is auto take-off and landing capabilities in some aircraft utilizing cat 3 approaches or can put it to less than 50ft decision height. All you have to do is remember to put the gear down and flare!

Look up ALIAS developed by the U.S military. Flew and landed a 737 perfectly. Here is a video. That is the future of airlines.

http://www.dailymail.co.uk/sciencetech/article-4514916/Footage-shows-Darpa-s-robot-pilot-flying-737-sim.html

#183 CJBob on 06.22.17 at 7:56 am

#160 t-bone on 06.22.17 at 1:13 am
> The BioTech Guy on 06.21.17 at 10:38 pm

> We do agile not because they can’t think through the problem but because requirements and the world is changing way too fast for a traditional waterfall.

Hahahaha, dude, it is 2017 and you’re talking like Agile is some new cutting edge thing and people are still doing Waterfall. Half the people working in IT don’t even know what Waterfall is!!

Someone doesn’t know what they’re talking about methinks.
_______________
Hmmm, there is nothing in his post that indicates he thinks agile is new and he describes the real world exactly as I’ve experienced it in IT for the last 20 years. By the time you get agreement and sign off on a detailed scope document and start traditional development the business has changed. I’m a PMP for what it’s worth (which is basically just a key to getting in the door).

#184 crowdedelevatorfartz on 06.22.17 at 7:57 am

@#91 Millenial Falcon

Its kinda like “pink mist” when a soldier steps on a landmine………
Or…..

https://www.google.ca/url?url=https://www.youtube.com/watch%3Fv%3DoH3zAtlcFdM&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwiWu_bkstHUAhVT02MKHRzgAYQQtwIIFzAA&usg=AFQjCNHZYDDbnZVOXlBw-ToQPle3WhLXkQ

#185 Smoking Man on 06.22.17 at 7:57 am

#172 Tesaliens Unite on 06.22.17 at 4:05 am
Hey,
RBC broomed SM so they could keep increasing my dividends.. seems like good news to me!

……

The result of refusing to wear a pink shirt on pink shirt day. PC culture alive and well at the big 5
Globalism or bust is the matto.

Screw them. I see how everyone will be if these metal cases win.

I took a bullet for the team. Their kids and grand kids will thank me one day.

Next mission. Make sure liberalism and communism go extinct.

#186 maxx on 06.22.17 at 8:01 am

#23 conan on 06.21.17 at 7:41 pm

“My bet is robots will pay taxes based on what the produce. Even so, these robots are going to take out lots of jobs. Hopefully, the designers have a sense of humor, and make them ridiculously hot.”

That will work, but only so long as they don’t become self aware…….;-)

#187 The real Kip on 06.22.17 at 8:14 am

I wonder, will MPAC lower my taxes if there is a 30% drop on home values? Seems they had no problem raising property taxes as values rose. Please tell me the government wasn’t in on this, LOL!

#188 Stock Picker on 06.22.17 at 8:23 am

Oh….and may I mention the media frenzy on EU stocks is being paid for by institutional investors aggressively divsesting themselves in a very heavy distribution cycle. The internals of EU is collapsing and headed for a religious version of civil war…..companies are bailing…..especially the Arabs. Enter the EU rotation at your peril. The boom in media is just for suckers.

#189 Smoking Man on 06.22.17 at 8:23 am

#171 Balmuto on 06.22.17 at 4:04 am
“#100 Smoking Man on 06.21.17 at 9:44 pm
Attention java developers Microsoft is going to make easy for me to kick the crap out of you when they introduce the surface phone. Vba macro enabled apps on the phone. Vba 1/50 of the time to develop apps vs c# or java.

Long Microsoft”

VBA is great for Excel and Access. But developing phone apps in VBA from scratch that look and feel as good and work as well as iPhone apps? Hard to picture.
…..

Hard to picture.? Thats why im here painting pictures with words.

Visualize this. A small biz has an excel vba tool to do quotes and estamets. Can’t afford to pay a developer a shit load of loot to build an app that does the same thing.

Along comes Microsoft surface phone. The rep now has the desk top tool on his phone.

This is going to be Huge for small biz.

#190 Trumpapalooza on 06.22.17 at 8:27 am

“How America’s friends and enemies have adjusted to the age of Trump. As US allies wrestle with what to do next, China hopes to benefit from a world in flux.”

https://www.ft.com/content/9bfb6c80-56d2-11e7-80b6-9bfa4c1f83d2

“Congressional Black Caucus refuses to meet with Donald Trump. Group representing black issues in government declines a proposed meeting, citing its view that the president’s policies will ‘devastate black communities’.”

https://www.theguardian.com/us-news/2017/jun/21/donald-trump-congressional-black-caucus-no-meeting#img-1

“Donald Trump says he doesn’t want a ‘poor person’ handling economy.” (Alexander Hamilton was not only poor but also an immigrant.)

https://www.theguardian.com/us-news/2017/jun/22/donald-trump-says-he-doesnt-want-a-poor-person-in-cabinet-roles

#191 Jim G. on 06.22.17 at 8:38 am

#168 Freedom First on 06.22.17 at 2:28 am

#63 Don

Don, very well put, and nothing but the truth.

It’s why the divorce and suicide rates climb so much during these times.

However, for myself, I live and plan my life to always remain invulnerable whatever I see happening around me.

I have to. I am a man.

———————-

You sound like you’ve got a really bad case of “penis envy.” Don’t worry about it too much, lots of fine women struggle with this, they just don’t broadcast it to the world. They tend to spend most of their time blaming the opposite sex for all their relationship problems, which it’s good to see that you’re not stooping to such a low level of conduct.

#192 milleniallmoose on 06.22.17 at 8:39 am

So yesterday a realtor and a mortgage broker gave a presentation at my work. They were talking about how to build wealth by buying real estate. Basically, the premise of the talk was buy one house, then use the equity to mortgage another house and so on… until the rent becomes your income! So easy! All of my colleagues were nodding in agreement and excited at the idea of easy wealth. The mortgage broker even mentioned if the bank won’t let you do this he will give you the loans!

After talking to some peers, many people have actually been doing this! One guy mentioned he owns 4 properties. Is why house prices have been going out of control?

#193 The BioTech Guy on 06.22.17 at 8:43 am

#160 t-bone on 06.22.17 at 1:13 am

I actually agree with you. This was just my response to some comment that agile is used because youngsters have a short attention span…

#194 The BioTech Guy on 06.22.17 at 8:46 am

#136 cd on 06.21.17 at 11:26 pm

Please send a link to your CV to Garth who can forward to me. I don’t need your personal details yet. This blog is not Workpolis so I hope Garth would be ok with it.

#195 akashic record on 06.22.17 at 9:08 am

Buffett Stuns Market After Berkshire Acquires 38.4% Of Home Capital Group, Provides C$2 Billion Loan

http://www.zerohedge.com/news/2017-06-22/buffett-stuns-market-after-berkshire-acquires-384-home-capital-group-provides-c2-bil

There you go…

#196 Bond Junkie on 06.22.17 at 9:28 am

#192 Akashic

Easy akashic, read the article before you comment. It’s only about 20% with the first capital injection of 153.2mm @ $9.55 a share. They utilized a Canuck special TSX back door on that one which did not require shareholder approval. The remainder of his purchase will however, and given that we’ll be trading north of 15$ today, I’m not sure that Warren will be granted the privilege of further dilution at $10.30. Food for thought.

-Bj

#197 Lahdeedah on 06.22.17 at 9:29 am

Never thought I’d actually see this puppy flop so significantly hard and fast. Pun intended ;)

So much going on below the surface.

#198 Ole Doberman on 06.22.17 at 9:33 am

#129 Calgary Scared on 06.21.17 at 10:59 pm

Garth, please do Calgary again. I am in danger of having the wife buy. Yikes. Please, please, please – I’m almost sure the market here is about to collapse.
——————————————————–
This is my thinking too, this last rally in oil and now turn back down has confirmed to many who have been hanging on that oil is indeed not the same as it once was.

The question is, is Calgary the next Detroit?

Gartho can you shed some light on this.

#199 Samantha on 06.22.17 at 9:39 am

Mark, I know you are a little dense, but this is a new low for you. It looks like you were in IT/tech and you didn’t make it. I’m sorry, but this is how the world works – slow to adapt/learn people are left behind. The IT industry is booming, it pays extremely well, and is one of the few industries that have a bright future. I don’t think anybody here takes you seriously with all your pathetically wrong calls for so long anyway.

So let go of your IT misfortunes and move on…hopefully to some other blog :)

#89 Mark on 06.21.17 at 9:31 pm

This is actually what happened to tech. In the 1990s, when the industry was actually booming, IT labour was very expensive (unlike today where IT workers are a dime a dozen and a simple ad will get you 50-100 people willing to work at a pittance). So there was a huge push towards automation. The result of which is the modern IT sector which is largely profit-less and pays very little. Meanwhile, society enjoys the benefits of IT more than ever precisely because of such.
– See more at: http://www.greaterfool.ca/2017/06/21/sucks/#comments

#200 Smartalox on 06.22.17 at 9:39 am

By the way:

Happy Birthday Flopsy!

I noticed that you recently upgraded from M42BC to M43BC.

Cheer, and keep that pink lemonade coming!

#201 n1tro on 06.22.17 at 9:58 am

Check out Kraken. They are a Canadian based online brokerage that lets you trade bitcoin and ethereum. A digital wallet is something you have if you want to withdraw your digital currency and hold.

#202 n1tro on 06.22.17 at 9:59 am

above post was for @estCoastPatience

#203 Headhunter on 06.22.17 at 10:00 am

OK over 25 years as a Recruiter worked I.T., Engineering, Manufacturing, Construction here are my recommendations for jr.

IF and i say IF they have the intellectual capacity Engineering is good. Civil, Structural, Mechanical, Process. No glamerous but well paid and needed long term.

Kid a free spirit and like to roam. Trades are the ticket. Old mature marketplace hungry for young guns. Electrician, Millwright, Heavy Equipment Mechanic etc

I.T. is getting beaten here today but still a good gig if you are talented and in top 10% bottom 90% is death in the microwave

#204 Dan.t on 06.22.17 at 10:07 am

#192 milleniallmoose
Yes, super easy credit and mortgage fraud allows Canadians making 50k a year access to millions so each Canadian on average owns 6 houses/ townhouse/ condos.

Just like the mortgage guy said, banks won’t give you money, he will lie on application and get it to you somehow- probably through home capital- they are back badly. Party continues.

There is limited housing supply in Canada because 32 million Canadians own 125 million homes/ town houses and apartments. And they want more at any cost.

#205 n1tro on 06.22.17 at 10:20 am

“VBA is great for Excel and Access. But developing phone apps in VBA from scratch that look and feel as good and work as well as iPhone apps? Hard to picture.”

I make some prettty wicked reports using Excel and then get developers to code it on SQL report manager. If the developers step can be skipped, maybe I can get a raise!? Game changer as long as Microsoft has a good design GUI for people like me to convert current reports.

#206 Invictus on 06.22.17 at 10:20 am

#168 Freedom First on 06.22.17 at 2:28 am

“I have to. I am a man.”

It speaks volumes. Some men should whisper this back to them self once or twice.

Bravo!

#207 Julia on 06.22.17 at 10:21 am

#187 The real Kip
“I wonder, will MPAC lower my taxes if there is a 30% drop on home values? Seems they had no problem raising property taxes as values rose. Please tell me the government wasn’t in on this, LOL!”

Don’t worry, even if house values drop your taxes will surely increase.

#208 Doug in London on 06.22.17 at 10:22 am

As I’ve said many, many, many, many times before here if you have that winning lottery ticket you should have cashed it in before it’s too late. It appears now, in the GTA it’s too late. However, from what I’ve read it’s not yet too late to cash in that winning lottery ticket in cottage country.

@millenial moose, post #192:
When it seems everyone is jumping on the wagon of any kind of investment, it’s usually a sign that it’s time to take your profits and run. Such was the case with gold in 1980 and 2011, real estate in 1989, tech stocks in late 1999 or better yet early 2000, oil companies when oil was at $100/barrel and a lot of experts said we were at peak oil, and marijuana producer stocks now. Until recently a lot of “experts” here were raving about what a great investment bitcoin is. The last I heard it took a big drop recently.

#209 InvestorsFriend on 06.22.17 at 10:23 am

Home Capital GICs given the all clear signal

Warren Buffett / Berkshire’s investment gives a green light for anyone wanting to put money into Home Capital GICs.

Many of us run with little cash / GIC investments and and many prefer to keep all investments in one place such as a big bank discount broker. In that situation we will not be investing in Home Capital GICs.

But if anyone is looking to shop for the best GIC rates I would say that the risk of Home Capital has just plummeted. Certainly anything up to the $100k limit is a no brainer. And I would not think there is almost no risk now above that. Maybe don’t put anything close to all your assets with Home but basically the all clear has been given.

I suspect the Home Capital GIC rates will decline after they grab some headlines with big inflows the next few days. GIC investors and high interest savings account seekers should act today, tomorrow.

Another brilliant investment for Berkshire. They are agile and they seize opportunities. Obviously on fantastic terms 9% for the line of credit and then their own common share investment at around $10 shores up the balance sheet and their investment gives the green light such that Home Capital is totally out of the woods now.

#210 InvestorsFriend on 06.22.17 at 10:24 am

should say I think there is basically no risk above $100k now.

#211 People are Strange on 06.22.17 at 10:28 am

“Prices in the ‘905s’ sinking”

FOMO is now replaced by FOGS (fear of getting screwed)

#212 AlbertaGuy on 06.22.17 at 10:29 am

Garth does this change your view on REITS that specialize in retail as a solid steady performer?

Buy a diversified REIT ETF and you’ll be fine. Besides, Sears is highly unlikely to walk out on leases – the landlords will be fine. — Garth

#213 Ponzius Pilatus on 06.22.17 at 10:36 am

#166 The end is near on 06.22.17 at 1:56 am
#14 I’M NOT POLOZ on 06.21.17 at 7:30 pm
Will that cause a 40-cent Loonie? If everything is becoming lower in price, do you call that Deflation? I hate it when Poloz causes the Loonie to go below 80 cents because everything becomes way more expensive in Canada, and when traveling to the USA.

————————————————————-

I’m looking forward to coming home to Canada from a 3 week long vacation in Italy. I’m looking forward to cheap food, cheap drinks and cheap fuel. I’m looking forward to 13% instead of 22% tax. I’m looking forward to driving freely on highways, back roads and small town roads where not every single road, nook and cranny is metered for speed and all highways tolled from the south to north. I’m looking forward to being able to drive freely through city centres where photos of me are not being taken to send me a fine in the mail because I haven’t payed for a permit. All major city centers and right down to small towns have ZTL’s (zona traffico limitato) and the cost for a permit in Rome is €500 euros annually. I thought I had something to complain about until I came here, these Italians pay through the nose for everything and incomes here in Italy are the lowest on average when compared to the rest of the EU.

We live in an amazing country where we can slip into the corner store and and actually find parking within seconds and not have to worry about scrapes on the bumper from fellow motorists trying to squeeze in with their cinquecento. Our roads are wide, a beer isn’t 7 euros, a camera isn’t watching us every 2.5KM and to boot, we haven’t had deposits taken from us(yet) to bail in failing banks.
—————–
Welcome home, redneck.

#214 Ponzius Pilatus on 06.22.17 at 10:41 am

#177 Luc on 06.22.17 at 7:39 am
Warren Buffet Saves Home Capital ? Can you believe it?
—————–
Saving it?
Me thinks it’s more like the kiss of death.
He’s gonna suck it dry.

#215 InvestorsFriend on 06.22.17 at 10:42 am

Buffett got a deal none of us could get. But any of us could have concluded that Home was probably safe at like 25% of book value at the bottom.

I thought about it but did not invest at $6 or $7. I worried about the leverage whereby equity can evaporate quickly. I worried too much. My mistake.

Would suck to be short Home capital today. The Berkshire association will totally restore confidence. No other partner could offer the same coating of confidence. This is absolutely the gold seal of approval. It is OVER for short sellers.

#216 Victor V on 06.22.17 at 10:42 am

A realtor friend of mine posted this update on his facebook today:

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

MARKET UPDATE FOR THE WEEK ENDING JUNE 16TH, 2017

Back in the old days of real estate the Realtors® would work hard up until the end of June and then they would take the summer off, as did most of their clients. Over the past many years the Spring market has lasted well into the summer with usually just a short break in the dog days of August. We are definitely feeling old school with the slow pace of listings and even slower pace of sales heading into summer this year. It reminds us though, as the families stop thinking about real estate and start thinking about camp, that there is a new summer real estate season driven by the tens of thousands of students who flock to the city to study at one of the many universities. The smart ones are looking for rentals already and the rest will arrive over the next few months. This puts tremendous pressure on the city’s rental stock which in turn pushes at the lower end of the condo market as desperate parents buy condos for their lovely offspring that just couldn’t find that perfect apartment. And right now in Toronto the hottest part of our market is the entry level condo market.

The Toronto Real Estate Board reported that in the first two weeks of June the value of condominiums increased 23% over last year. Prices, however, have eased off slightly from their peak in April down a marginal 3%. We are not all that surprised as we continue to see reduced inventory, especially in the sub-$700,000 range where listings in the central core are down 33% over the previous week. Overall new condo listings were down 25% over the previous week but are up 12% over the same week last year. Sales declined for the third week in a row to 134 from 143 the previous week and the number of condos selling above their list price is down to 41%. Again the most active segment of the condo market was the sub-$700,000 with 49% of sales occurring over their listed price.

Unlike the condo market, the Toronto Real Estate Board reports that the Freehold market only increased in value 10% over the same time last year. Perhaps more importantly the average price of a detached home in the 416 is down 10% from its peak price at the end of April. Listings continue to decline as we approach the summer months and were down another 10% over the previous week. Sales also continued their declined in numbers down 10% from the previous week. For the first time this year the percentage of freehold properties that sold above their advertised price was below 50% coming in at 48%. Thinking in our old school way, we will see you on the dock in July.

#217 Capt. Serious on 06.22.17 at 10:45 am

Buffet bailing out Home Capital:
https://www.bloomberg.com/news/articles/2017-06-22/buffett-follows-goldman-model-in-bailout-for-home-capital

Assuming Home Capital survives, which is probable with a 2 billion line of credit now available, Buffet makes out like a bandit.

#218 barnz0rz on 06.22.17 at 10:48 am

#38 Ace Goodheart:
The world ain’t changing. People are just getting dumber.

This exactly. People do not read, people don’t try to learn, and generally if they can avoid it, they don’t put in effort.

This is the problem with our society. If you put in an effort, you will still get ahead.

#219 Capt. Serious on 06.22.17 at 10:55 am

When people say I.T. sector it’s such a nebulous term that it is rendered meaningless. Ostensibly Intel is I.T., but’s its business is nothing like running the business info systems of, say, a bank. Be specific if you want to talk about where the jobs are and where they are disappearing.

#220 Alex N Calgary on 06.22.17 at 10:57 am

Pretty interesting news on Buffett investing in Home Capital, is this because, like you say, the banks are too rich in Canada to fail? With the new policys for bailout in for stability on the banks, and I’m gonna guess they found out a lot of the Sub-primes home capital holds are backed by CMHC, that value ain’t going nowhere.

I’ll be interested to see your analysis! My friends job at Home Trust is safe for a while, and my chances to buy a house at decreased value got set back a while!

#221 Hana on 06.22.17 at 10:59 am

Seems like deals are falling apart.
This condo was sold recently and now is on the market again for 585K.
Originally, it was listed for 699K. Does anybody has info for how much it was sold?
60 Southport St #426, West Toronto
– High Park-Swansea

#222 Calgary Rip Off on 06.22.17 at 11:04 am

This post shows the result of decision making. This points to the skill that matters, not financial worth, but the ability to think correctly and make correct decisions.

Last week in Stavanger, Magnus Carlsen was beaten by Levon Aronian. At top level competition, chess giants review games, openings, and at these levels are heavily influenced by chess engines.

Computers make decisions in chess based on brute force algorithms. The amount of time a human would take to evaluate as a computer does would take centuries. Humans make evaluations based on facts and intuition. Using a chess engine post games to analyze influences your mind to start to evaluate situations according to data, not emotion. And that is exactly what must happen to be able to survive in today’s markets.

It is faulty to be reactive to the data in the blog post. This data is the result of decisions and trends. To be financially ok needs support to be able to think fluidly, not financial liquidity, but changeable intelligence.

#223 People are Strange on 06.22.17 at 11:13 am

“Real estate prices increase in the 905s”

FOMO has been replaced by FOGH (fear of getting hosed)

#224 Alan on 06.22.17 at 11:17 am

I recently traveled to the States (Dunedin, FLA, Indianapolis, IN) and I always like to peruse the local real estate. You can get absolutely beautiful homes in the $200-400k range – homes that would cost $1.5-2MM in YVR & YYZ. There are even some pretty nice homes in the $100-200 range. I’m quickly realizing that Canadians are nuts to be paying the prices we’re paying. Even if house prices were halved, the average price in YVR & YYZ would still be too high. What a mess.

#225 Dual Citizen In Canada on 06.22.17 at 11:17 am

To all those who ridiculed T2 when he said, “And the budget will balance itself”, well, bots and automation will indeed guarantee that statement. What a visionary!

#226 TurnerNation on 06.22.17 at 11:18 am

Buffet is an insider of the top globalist cabal of the highest order. They don’t let you get this big unless you join the club.
(Else they take you down with bogus charges like insider trading or Anti trust laws.).
No he is Davos all the way.
Yet we we are to believe he still lives in a sht bung? Right. ..

Canada Will Not be spared. Home to be crashed and bought up pennies on the dollar. See: USA. Blackstone scooped them up
BX.US

#227 Calgary Rip Off on 06.22.17 at 11:20 am

“It’s like the 19th Century all over again – a long-gone world in which you landed a lifetime job in the town of your birth, could afford real estate and raised a family of little people just like you. Groundhog Day. Predictable. Stable.”

No. Read about Wild Bill Hickman in early Utah. Early Utah was like Hells Angels. People moved around a lot. And the penalty for apostasy was death. If Brigham Young got word you were leaving Salt Lake City, better take a route not on the road, otherwise you were a marked man. Things were very changeable and mobile in the 1830s-1900, the 19th century in the west, including California and early Alberta.

#228 Xbox Economist on 06.22.17 at 11:26 am

Ah, I missed my favourite topic, which was covered in yesterday’s post.

First a quick note about RBC. They’re not cutting staff because the housing market is collapsing or because they’re being greedy. They’re getting rid of positions that they no longer require and are simultaneously hiring lots of people in different areas. Where possible they will try to redeploy existing staff to new roles and where it’s not possible I’m sure that they will compensate those people far better than most other companies would. You guys really need stop with the doom and gloom, but then I suppose that wouldn’t be much fun would it?

Now about rates. People can argue about the probability of 25bps rate hikes in July or 2018 but the bond market is not buying it. The market has learned that, despite their rhetoric, forward guidance and dot plots, even central banks are at the mercy of economic data and they cannot accurately forecast the future path of interest rates. No one can tell what’s going to happen in the future, not even Garth. So if you’re going to invest defensively, which is the approach so often espoused on this blog, then you have to ignore these predictions and focus on balance. Alternatively, you can pick a side and choose a seat at the roulette table. I’ve picked mine and it’s the one that says low rates for the next 5+ years.

#229 Kostas on 06.22.17 at 11:27 am

#64 Mark
What the hell are you talking about? I work as a senior software developer, and I can tell you one thing: sometimes I receive 3-4 messages from recruiters a day! They all search for good specialists for the openings they have. About the “work being outsourced”, do you know what “Indian code” is? No? Google it. When you see code from India that comes like “if(a.ToString() == “true”)” instead of just “if(a)” (they are paid by the amount of code they write) then you’ll understand why senior devs here are paid more than 100k. All the companies I worked at, tried to outsource some work, and guess what: it was a bad experience and the managers said that they are not doing it again. Next, becoming a software dev IS A GOOD idea. All the companies I worked for (and the one I work for now) are constantly looking for good devs. You know why people don’t want to code? Because it’s not easy, and it requires thinking.

Anyway, it’s a very long subject to discuss, what I just want to say: If you can do it, go for it! It pays good money and it’s interesting. Very interesting. Today, for me the job is also a hobby (don’t tell that to my boss).

#230 Victor V on 06.22.17 at 11:27 am

Sears Canada cutting 2,900 jobs in restructuring plan

https://www.thestar.com/business/2017/06/22/trading-of-sears-canada-shares-halted-amid-report-it-will-seek-creditor-protection.html

Sears Canada was granted protection from its creditors in Ontario Superior Court this morning, allowing it to restructure, closing 20 department stores and 39 Sears Home, Sears Outlet and Sears Hometown stores across Canada.

2,900 jobs will be lost in stores and at its corporate head office in Toronto. None of the Sears Canada department stores in the GTA will be closed — most of those being closed are located in smaller communities across Canada.

Two Sears department stores in Ontario will close: in Brockville and Sault Ste. Marie.

Nine of the 15 Sears Home stores closing are in Ontario, including one in Scarborough. Ten Sears Outlet stores will close across Canada and 14 Sears Hometown stores.

#231 Dups on 06.22.17 at 11:31 am

Technology changing is one thing. But also greed of the big money is getting worst. I wish the big money all had stone castles in the sky and personal flying cars to stand out from the 99%’ers. This way they would not be jealous of the masses pretending they are rich like them too. Rich demand to be richer and poor try to catch up. Try! that is right. What a disconnect between all the classes and reality. We all are still human and will so all turn to ashes one day.

#232 Xbox Economist on 06.22.17 at 11:34 am

One more thing – if you’re trying to figure which career path (as an employee) will lead to big money, it’s not IT, social media, trades or engineering. There’s only one and it’s called corporate finance.

#233 SWL1976 on 06.22.17 at 11:47 am

That Thomas Jefferson quote about the banks seems to be coming to fruition

Absolutly disgusting. The only thing big banks are reinvesting in is more and more profits for the very few insiders

Our current economic system is broken beyond repair

It has been a long time since there has been any ethics whatsoever in business or government

Know your enemy. RATM

The banks have millions of shareholders who are all enjoying ever-rising dividends. They are actually redistributors of wealth. You’re an investor, right? — Garth

#234 bondsky on 06.22.17 at 11:54 am

#196 Bond Junkie on 06.22.17 at 9:28 am
#192 Akashic

Easy akashic, read the article before you comment.

Does not look like a comment, straight quote of the title of the ZH article.

#235 Buffet's An Idiot on 06.22.17 at 12:00 pm

Buffet’s an idiot….. I shorted HCG and now this….he must not read the Honourable Garth’s Blog….
Toronto’s housing market is going to zero…how could someone with so much money be so stupid? Geeez

#236 Ole Doberman on 06.22.17 at 12:03 pm

#220 Alex N Calgary on 06.22.17 at 10:57 am

Pretty interesting news on Buffett investing in Home Capital, is this because, like you say, the banks are too rich in Canada to fail? With the new policys for bailout in for stability on the banks, and I’m gonna guess they found out a lot of the Sub-primes home capital holds are backed by CMHC, that value ain’t going nowhere.

I’ll be interested to see your analysis! My friends job at Home Trust is safe for a while, and my chances to buy a house at decreased value got set back a while!
——————————————————-
Buffet also invested in Suncor couple years ago – it’s stabilized but no big gainer.

I remember he also sold Shaw stock around 2006 and missed a big run over 2007/2008

#237 #29 on 06.22.17 at 12:07 pm

#29 don’t talk like that…..surprized your comment got through…..there is no true banking system in Canada…just a bunch of leaches using public money for private gain….continually subsidized… that’s why it’s important to study hard in school and know the right people so you can get to the trough….

#238 Ole Doberman on 06.22.17 at 12:10 pm

#217 Capt. Serious on 06.22.17 at 10:45 am

Buffet bailing out Home Capital:
https://www.bloomberg.com/news/articles/2017-06-22/buffett-follows-goldman-model-in-bailout-for-home-capital

Assuming Home Capital survives, which is probable with a 2 billion line of credit now available, Buffet makes out like a bandit.
——————————————————-
Bank of America also did this with Country Wide – and lost big.

Garths opinion on this will be interesting

Turner vs. Buffet – may the best man win!

#239 Trading Naked on 06.22.17 at 12:13 pm

Further to my last point about your comment on people aspiring for things to be like the “19th Century all over again” – we might just be headed that way.

Homesteading is burgeoning. Like Ozzy Osbourne writes in Trust Me, I’m Dr. Ozzy, “[if you want to be 100% sure that you’re eating organic produce], you’ve got to grown your own, man.” People are petitioning to put chicken coops in their backyards. Then this lifestyle will totally be like Groundhog Day ’cause them chickens don’t take week-long breaks in Las Vegas! But I guess it’s one way around $8 cauliflower and $7/lb cherries.

#240 M-F on 06.22.17 at 12:15 pm

A few comments here to correct some glaring mistakes made in the comments, over and over.

1. Month to month real estate price declines are not GENERALLY relevant. They may be now, if we are at the beginning of a real change in the market, but that remains to be seen. There have been so many comments, here and from Garth himself which seems to show that no one understands: REAL ESTATE PRICES ARE SEASONAL. That is why year to year comparisons are usually the way to go.

2. No one can predict interest rates a year or two from now with any accuracy. People on this blog have called 18 of the last 2 rate US increases. Just stop predicting. We are already in uncharted waters in terms of low rates for an extended time. There is no guarantee they will go up over the next 10 years. Yes, they might, but no one knows.

3. If interest rates are raised, they will be raised based on the economy at the time. Everyone here seems to think that one day, they will just keep going up and up and there will be no feedback to slow that rise once it has begun if the economy gives strongly negative signals. For example, the typical person seems to think it will unfold like this: 1 point raise, market cools, another point raise, market and economy is in serious pain, regardless of serious situation, the BoC says, well rates still need to go up even if the economy is a full on disaster. No! It does not work like that! Rate increases will likely stop when the pain is moderate, and then may reverse.

4. A common comment is: “Just wait util they have to renew 2 or 3 points higher, then it will be a bloodbath.” Lets just look at a simple case:

i) Take out 5 year fixed mortgage principal value of 1,000,000 today at 2.5% with 25 year amort – monthly P&I payment is $4,486.17
ii) in 2022 the remaining principal is $843,879.37
iii) rates have moved up, and the housing market and consumers are struggling pretty hard, the new rate is 4.25%
iv) government relaxes some measures to keep people in their houses, avoid foreclosures, avoid pain etc:
v) In 2022 the person renews their mortgage, except they are now allowed to get a 30 year amort at 4.25% on $843,879.37 – so what is their new P&I payment? IT IS LOWER – it is $4,151.38. If they got a 5% interest rate it would be $4,530.12 which is 44 dollars more per month. This could easily be allowed if the housing market was struggling, whether or not it is allowed now is not relevant.

Stop thinking that the government and banks won’t act to stabilize a bad crash. They might stop raising rates, or lower rates again, or relax rules for existing homeowners. Look at the things done in the US. It didn’t prevent the crash, it helped, but they sure as hell were not raising rates or tightening rules in the midst of the collapse.

#241 Berkshire on 06.22.17 at 12:19 pm

#195 akashic record

Crazy that Berkshire does this.

My wild theory behind Warren’s play:

He is super bearish on Maple RE.
After mega crash, Berkshire will own an unprecedented amount of foreclosed Canadian homes.
A few years later, he sells them at a profit.

#242 Cogodes on 06.22.17 at 12:20 pm

Warren Buffett has saved Canadian real estate market!! Crisis has been averted. Canadians can now continue with their debt binge. Housing prices to increase forever.

#243 Cogodes on 06.22.17 at 12:21 pm

Honestly Buffett was a great guy but he’s become increasingly senile the last few years. First IBM now this

#244 to_be_frank on 06.22.17 at 12:28 pm

Simpson’s started out as a catalogue mail-order business in 1952, for the convenience people who didn’t want to go to a store. Ironically, they changed their business model to big-box store and their demise came from a business that adopted their original meme.

#245 Mark on 06.22.17 at 12:32 pm

“Next, becoming a software dev IS A GOOD idea. All the companies I worked for (and the one I work for now) are constantly looking for good devs. You know why people don’t want to code? Because it’s not easy, and it requires thinking.”

If they’re looking so hard, why aren’t salaries rising and keeping up? Why is the job board of the most prominent professional society for Canadian IT workers basically devoid of postings? Why are large numbers of CS graduates graduating without jobs, with entry-level postings being practically non-existent from the employers? Why is professionalism so much lacking that even qualified, but not selected individuals aren’t granted basic courtesies such as rejection letters?

Its easy for you to say that you’ve individually been successful at being a developer, but that doesn’t mean that everyone with the qualifications has been. Its a lot like the Realtors that show up on this blog and hype the story of the “best” house in their neighbourhood selling for 30% more than it did a year earlier, but not bothering to tell us of all the other houses that didn’t sell for anything higher than the price last year. Or the year before. Or even the year before that. You have to look beyond just individual cases, at the entire picture. And when you do this, when you look at salary data, when you look at graduation employment rates, its plainly obvious that the IT sector has been relatively comatose in available opportunities, except for a relatively small number of niches. Niches which do not even have, in most cases, identifiable or realistically realizable training pathways for newcomers.

#246 12 Pack of Weiners on 06.22.17 at 12:38 pm

Is Buffet a Weiner….?

He always seems to enter the right bun….HCG and him are now besties…good luck weiner Buffet

#247 InvestorsFriend on 06.22.17 at 12:40 pm

Will Sears Creditor Protection Hurt REITs?

Besides, Sears is highly unlikely to walk out on leases – the landlords will be fine. — Garth –

**************************************
I think in creditor protection Sears will walk away from everything it can that it wants out of.

Target Canada walked out of everything. They were grossly incompetent and also unethical in my view as the parent could have absorbed the loss and also they could have just kept the stores open at that point. RioCan had cleverly had Target USA guarantee its leases so they were okay.

I guess a difference is Sears wants to stay in business so can’t burn everyone too bad. But I saw they are closing 59 stores. There would no point to creditor protection if they were not going to walk away from a lot of debt and obligations.

So, yes, I think the retail REITs that hold Sears leases will be hurt to some extent. But as Garth says a diversified REIT will probably do okay. No fatal blows here unless some REIT is over-concentrated in Sears leases.

#248 Julia on 06.22.17 at 12:44 pm

#216 Victor V

We have the same friend.

#249 Market Watcher on 06.22.17 at 12:48 pm

I’ve been following the market since the early 90’s closely and I can tell you nothing about it is making sense these days. There is no rhyme or reason most of the time like there used to be. Nobody can convincingly explain it these days. Even the media doesn’t make sense. It contradicts itself day in day out.

Trust of the market is at an all time low for me.

#250 Tony on 06.22.17 at 12:50 pm

I shorted Home Capital Group this morning.

#251 InvestorsFriend on 06.22.17 at 12:50 pm

Home Capital and Buffett

Note that Home has no intention of actually using the 9% line of credit. But they will pay 1.75%% dtsndby fee. Buffett collects 1.75% on 2 billion that he will still have invested in short treasuries the whole time.

The big upside for Buffett is the shares bought at $9.55 and more later (subject to shareholder approval) at $10.30. This is for some $24 in book value. Buffett will do well. And Home will do well, deposits will now stream in. Watch. People will now take mortgages here again as well. I am just about 100% sure that Home Capital is now out of the woods. Share price will fluctuate. Their deposits, I can almost guarantee are swelling as I write this.

#252 Wrk.dover on 06.22.17 at 12:55 pm

Solar does work.

I live in SW Nova Scotia, and I self installed Evacuated Tube Solar Hot Water. It is that array that looks like a bunch of blue florescent light bulbs in a row. Obviously it is not the be all end all supplier of my needs, but in three years the data on the controller has logged $2400 of what it would have cost as electricity, plus the unmeasured excess hot water produced, heats my basement floor in the summer, so it doesn’t sweat and need a dehumidifier running.

Our power bills verify the savings.

The system is run by 25 watt pumps, which could just as easily be solar powered and need no controls. The hot water goes though heat exchangers to either the floor or an unpowered tank from which my electric tank draws it’s water supply to either heat up or maintain.

So, right now I have 2X40 gallon tanks of 46 degree C water standing by, and it is only 1:47pm. The basement floor is at 18.8 degrees C.

Not much goes on in the winter, so I dump all available heat into the floor too, which makes it quite bare foot comfortable because the wood heat of course goes upward, doing nothing for the basement floor.

Three more years and I break even on paper.

There was no need of Ontario paying those farmers eighty cents/KW HR for electricity.

15 cents would make solar electric very viable, for 20 cents I would be in. I’d like to get in now and cheer on energy price increases with the system set up in 2017 dollars, but we are older, and wife thinks why bother.

#253 n1tro on 06.22.17 at 12:58 pm

“The banks have millions of shareholders who are all enjoying ever-rising dividends. They are actually redistributors of wealth. You’re an investor, right? — Garth”

I didn’t know central banks gave out dividends? LoL. I believe the “quote” made by Jefferson was regarding the central banks and their power to issue currency. Regardless, I am loaded up on Canada’s big 5 suckling away at their dividends.

No central banks 200 years ago. — Garth

#254 Trading Naked on 06.22.17 at 12:58 pm

On RBC: the layoffs don’t surprise me. They closed a branch in the next neighbourhood over and they’re ripping out an ATM at the gas station nearby.

I think they shed their dead weight in waves. A few years ago, they laid off a batch of old-timer low-level clerical workers at the local “data centre”. One of them came to work at the bank I was at, on the recommendation of my co-worker. It didn’t work out. I told my boss that, “teaching this new person how to use a computer is like teaching my mom!” I have no idea how she lasted 20+ years at the RBC data centre. I guess these types hide in plain sight until HR gets around to laying them off.

It’s hard explaining to my parents that low-level clerical work doesn’t exist anymore, and that diligence doesn’t pay like it used to because we have robots for that now.

On Sears: They’ve been floundering for a while. I know a retailer is in trouble when I can get something for 20% off the 50% off clearance price, on top of the 20% off for signing up for the points card.

I still don’t completely understand this online shopping thing, though. Why would I want to pay $10 per bottle plus shipping for this: https://www.amazon.ca/Hamdard-Rooh-Sharbat-Syrup-Ounce/dp/B00D7D1FHY when I got it at a bricks and mortar store on sale for $1 (regular $4)? A new member of my extended family is an online shopping addict, and I just see him bleeding money. Good thing he can afford to, but still.

#255 Looney Baloney on 06.22.17 at 1:03 pm

So Sears went belly up.
They could have easily one upped Amazon here by leveraging their existing distribution chain, which is a hell of a lot quicker than Canada post.

Imagine this, you browse for and purchase the same product on Sears and Amazon. Your Sears purchase is available for pickup at your local Sears store the next day. The Amazon purchase will be here next week. Maybe. If the stars are lined up correctly for Canada Post.

But what do I know. And Uncle Buffet buys up a big stake in HCG. Don’t know nothin about that either.

#256 Looney Baloney on 06.22.17 at 1:07 pm

Agreed with #241 above. It is the same reason he keeps buying up IBM. It is a smart, and xtra-long bet. Wait for them to go belly up. Then squeeze the companies that rely on them for critical IT infrastructure (Banks, Stock Markets, Telcos, you name it) by the balls.

#257 RentYVR on 06.22.17 at 1:10 pm

@#117 april

“#36 – only if you believe MSN and real estate spin.”

Sorry, do you have stats that show real estate prices in Vancouver or Toronto not close to their all time highs? Prices could crash 20% and still be higher than where they were three years ago.

Look, I agree the RE is overvalued and heading for a correction, but too many on here (including the host..) are so caught up in looking for anything that confirms their biases that they lose sight of the big picture and ignore the facts.

#258 InvestorsFriend on 06.22.17 at 1:10 pm

Access to Home Capital GICs

I have never owned a GIC.

I see that you can actually buy a Home Equity Bank GIC through TD Direct. So I assume all those in big bank discount broker accounts can access. To me, the rates are still not compelling. The highest is 1.96% for five years locked in.

I thought Home and its Oaken division were a bit higher than that? (Oaken not listed at TD Direct)

I don’t think I could access Home’s high interest savings account through TD Direct. If you could I might do it as it would be a reasonably good rate and always open and cashable.

Most of the deposit money that will now stream into Home Capital will come from investors who deal with independent advisors that have access to the deposit broker world.

Some of you may have knowledge about this?

#259 Contrarian Coyote on 06.22.17 at 1:19 pm

#244 to_be_frank on 06.22.17 at 12:28 pm
Simpson’s started out as a catalogue mail-order business in 1952, for the convenience people who didn’t want to go to a store. Ironically, they changed their business model to big-box store and their demise came from a business that adopted their original meme.

===

A really fascinating study is how Sears blew their opportunity to move to move into online/e-commerce. So much fiddling with their online store in the early e-commerce days, that many simply blew past them. Beyond that, they were just a tired store that has gradually pawned off their assets one by one. Sears is going to make a good Business Strategy Case Study for MBA classes. I know a few HR managers at Sears and they are eagerly looking to get out ASAP. I imagine this week they’re going to be the least popular people in the stores.

#260 n1tro on 06.22.17 at 1:20 pm

#251 Trading Naked

“I still don’t completely understand this online shopping thing, though.”

Think of it like “Buying Naked”

#261 rates vs capital on 06.22.17 at 1:26 pm

Oh my, Home Capital, the harbinger of the collapse of subprime lending, has its share price spike with a Warren Buffet bailout.

When a subprime lender cannot even go under in this RE addicted country, you know the juggernaut is unstoppable!

Maybe can find another harbinger of the ever coming collapse….lol

http://business.financialpost.com/news/fp-street/home-capital-gets-investment-new-credit-line-from-warren-buffetts-berkshire-hathaway/wcm/42af6d53-c09e-402d-9d1c-756884cd4e52

I am sure WB doesn’t care about the Toronto real estate market. It was a profit play on a distress sale. — Garth

#262 Julia on 06.22.17 at 1:31 pm

#255 Looney Balooney

I order from Amazon a lot and I often get my purchases next day with Prime, even on weekends.

#263 Burnaby Guy on 06.22.17 at 1:40 pm

No central banks 200 years ago. — Garth

Your are wrong Garth.

There were the First and Second Bank of The United States.

https://en.wikipedia.org/wiki/History_of_central_banking_in_the_United_States

Sorry, not central banks as they are structured or mandated today. Not that anyone cares. I sure don’t. – Garth

#264 Ole Doberman on 06.22.17 at 1:41 pm

#249 Market Watcher on 06.22.17 at 12:48 pm

I’ve been following the market since the early 90’s closely and I can tell you nothing about it is making sense these days. There is no rhyme or reason most of the time like there used to be. Nobody can convincingly explain it these days. Even the media doesn’t make sense. It contradicts itself day in day out.

Trust of the market is at an all time low for me.
——————————————————-
Thats because it’s all run by trading computers and they have to do the opposite of what everyone thinks to cash in on going long or short while others take the wrong side of the trade.
Truth will come out one day years later.

#265 bdwy sktrn on 06.22.17 at 1:43 pm

#232 Xbox Economist on 06.22.17 at 11:34 am
One more thing – if you’re trying to figure which career path (as an employee) will lead to big money, it’s not IT, social media, trades or engineering. There’s only one and it’s called corporate finance.
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my younger brother is an audiologist, was not an A student, but had some connections to get in to the course.
started a small clinic without much money in the late 90’s
these days he pulls down 400-500k/yr.
profit margins on hearing aids are OBSCENE , and his prices are the lowest his area.

the joke when we were kids was that he would have to live in my basement (i was an a+ student)when we grew up!

but thx to the 604 house lotto i can keep up with him with no job.

#266 FONGO on 06.22.17 at 1:53 pm

#223 People are Strange
FOMO has been replaced by FOGH (fear of getting hosed)

FONGO – Fear Of Not Getting Out.

#267 bdwy sktrn on 06.22.17 at 2:00 pm

Why is professionalism so much lacking that even qualified, but not selected individuals aren’t granted basic courtesies such as rejection letters?
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jesus man, it’s been decades since you left school and you are STILL severely butthurt that nobody wanted you. let it go dude.
you sound like a super whiny millennial.

#268 bondsky on 06.22.17 at 2:05 pm

I am sure WB doesn’t care about the Toronto real estate market. It was a profit play on a distress sale. — Garth

How is WB going to take profit on this in a (supposedly) sharply declining RE market?

The investment is in stock, not houses. — Garth

#269 Simplyput7 on 06.22.17 at 2:06 pm

#251 InvestorsFriend on 06.22.17 at 12:50 pm

People will now take mortgages here again as well. I am just about 100% sure that Home Capital is now out of the woods.
————————————————————
Not all money is good money. I don’t ever want to owe a cent to Warren Buffett.

And I don’t think the initial mortgage rates people received at Home Capital, will be the renewal rate Buffet will allow Home Capital to issue again. These people will foreclose and he will sell their houses to get his money back. Then issue new mortgages at a higher rate to people who have no choice but to go to Home Capital as they have been turned away from every other private lender.

Also, if Home Capital plans to be a smaller company in the future, so that they don’t need line of credits at 9% or more from loan sharks, then they will have to start turning away people who cannot pay the new higher rate for these scarce mortgages. This will slow the demand for housing as lower qualified people will not be able to get enough money to buy homes.

This is not a win for the Canadian housing market, just more proof to the world that our housing market is nothing more than smoke and mirrors, that can only continue to exist when loan sharks rescue highly indebted homeowners.

#270 Johnny Boy on 06.22.17 at 2:13 pm

#190 Trumpapalooza on 06.22.17 at 8:27 am

“How America’s friends and enemies have adjusted to the age of Trump. As US allies wrestle with what to do next, China hopes to benefit from a world in flux.”

https://www.ft.com/content/9bfb6c80-56d2-11e7-80b6-9bfa4c1f83d2

“Congressional Black Caucus refuses to meet with Donald Trump. Group representing black issues in government declines a proposed meeting, citing its view that the president’s policies will ‘devastate black communities’.”

https://www.theguardian.com/us-news/2017/jun/21/donald-trump-congressional-black-caucus-no-meeting#img-1

“Donald Trump says he doesn’t want a ‘poor person’ handling economy.” (Alexander Hamilton was not only poor but also an immigrant.)

https://www.theguardian.com/us-news/2017/jun/22/donald-trump-says-he-doesnt-want-a-poor-person-in-cabinet-roles
– See more at: http://www.greaterfool.ca/2017/06/21/sucks/#comments
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The old fat guy is washed up at 71 he has little time left here on this 3rd rock from the sun. Ha, ha, ha he is a shitty gambler too. He played poker with Comey and all of us by playing up the “You had better hope there are any tapes” garbage. Today they announced there are no tapes. What a dick he is, and a lousy gambler. But then again what kind of a loser looses money as a casino owner? Only Trump could do it!

#271 Lee on 06.22.17 at 2:15 pm

I am sure WB is absolutely certain that there is sufficient equity in the properties Home Trust has as mortgage security to cover the potential Billion he could lose on the 2B line. Where did the money come from to buy the $400M in common stock? That can’t be cash from his subsidiary? Or did he buy the shares to resell them shortly? Anyone? (Great old Youtube video of WB and Gates giving a talk to some business students years ago. Gates does all the talking).

#272 Johnny Boy on 06.22.17 at 2:15 pm

#259 Contrarian Coyote on 06.22.17 at 1:19 pm

#244 to_be_frank on 06.22.17 at 12:28 pm
Simpson’s started out as a catalogue mail-order business in 1952, for the convenience people who didn’t want to go to a store. Ironically, they changed their business model to big-box store and their demise came from a business that adopted their original meme.

===

A really fascinating study is how Sears blew their opportunity to move to move into online/e-commerce. So much fiddling with their online store in the early e-commerce days, that many simply blew past them. Beyond that, they were just a tired store that has gradually pawned off their assets one by one. Sears is going to make a good Business Strategy Case Study for MBA classes. I know a few HR managers at Sears and they are eagerly looking to get out ASAP. I imagine this week they’re going to be the least popular people in the stores.
– See more at: http://www.greaterfool.ca/2017/06/21/sucks/comment-page-1/#comment-523742

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Cant wait for the Huge…………. close out sales! I need a new patio set for my backyard.

#273 The Wet Coast on 06.22.17 at 2:19 pm

I lived in the US for 9 years, and I am 56. By the end of my time in the US 75% of my purchases were made on Amazon. Amazon’s market penetration is only starting in Canada, as sad as it will be conventional retail is going to change dramatically.

#274 Johnny Boy on 06.22.17 at 2:19 pm

#254 Trading Naked on 06.22.17 at 12:58 pm

On RBC: the layoffs don’t surprise me. They closed a branch in the next neighbourhood over and they’re ripping out an ATM at the gas station nearby.

I think they shed their dead weight in waves. A few years ago, they laid off a batch of old-timer low-level clerical workers at the local “data centre”. One of them came to work at the bank I was at, on the recommendation of my co-worker. It didn’t work out. I told my boss that, “teaching this new person how to use a computer is like teaching my mom!” I have no idea how she lasted 20+ years at the RBC data centre. I guess these types hide in plain sight until HR gets around to laying them off.

It’s hard explaining to my parents that low-level clerical work doesn’t exist anymore, and that diligence doesn’t pay like it used to because we have robots for that now.

On Sears: They’ve been floundering for a while. I know a retailer is in trouble when I can get something for 20% off the 50% off clearance price, on top of the 20% off for signing up for the points card.

I still don’t completely understand this online shopping thing, though. Why would I want to pay $10 per bottle plus shipping for this: https://www.amazon.ca/Hamdard-Rooh-Sharbat-Syrup-Ounce/dp/B00D7D1FHY when I got it at a bricks and mortar store on sale for $1 (regular $4)? A new member of my extended family is an online shopping addict, and I just see him bleeding money. Good thing he can afford to, but still.
– See more at: http://www.greaterfool.ca/2017/06/21/sucks/comment-page-1/#comment-523744
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I do feel bad for the RBC staff getting the punt as it hits close to home. My next door neighbour works for them and she is on the chopping block. 15 years in with them.
On the other side we now know Smoking Mans demise… “I think they shed their dead weight in waves. A few years ago, they laid off a batch of old-timer low-level clerical workers at the local “data centre”.

#275 bdwy sktrn on 06.22.17 at 2:28 pm

Canada’s federal housing agency says the number of foreign buyers in the Montreal area surged by 37 per cent in the first four months of the year.

Buyers from China accounted for the strongest growth in Montreal, representing 17 per cent of all foreign buyers, up from less than 10 per cent in the first quarter of 2016.

The number of buyers from China more than tripled since the adoption of the Vancouver tax, while the number of French and American buyers increased by about 33 per cent.
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http://globalnews.ca/news/3548691/foreign-home-buyers-surge-in-montreal-as-chinese-continue-to-buy/

#276 A Reply to #218 barnz0rz on 06.22.17 at 2:28 pm

“People do not read, people don’t try to learn, and generally if they can avoid it, they don’t put in effort.”

Bertrand Russell said, “Most people would rather die than think; in fact, they do so.” He also said, “The fundamental cause of the trouble is that in the modern world the stupid are cocksure while the intelligent are full of doubt.”

Charlie Munger said, “Warren Buffett has become one hell of a lot better investor since the day I met him, and so have I. If we had been frozen at any given stage, with the knowledge we had, the record would have been much worse than it is. So the game is to keep learning, and I don’t think people are going to keep learning who don’t like the learning process.”

#277 Angry Mann on 06.22.17 at 3:10 pm

Meh. Nothing to see here. Move on. Even if there is a correction down to, say 2014 levels, so what? The general trend is upwards. Stop renting – it’s a waste.

#278 Looney Baloney on 06.22.17 at 3:16 pm

#262 Julia

Sure, if you live in downtown Toronto, and buy something they have in stock at their local warehouse.

Never happens in my part of the country.

#279 InvestorsFriend on 06.22.17 at 3:19 pm

Home Capital Did Exactly What They Had to Do

On June 17 at comment 136 I said:

“The first thing any bank should do if threatened with big losses, that would push its equity too low, is to issue as many common shares as needed at whatever price it can get.” – See more at: http://www.greaterfool.ca/2017/06/16/the-big-fix-2/#sthash.Rni9hRj8.dpuf

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I mentioned specifically that Home Capital should have issued shares at whatever price they could get. This is exactly what they have done now, issued shares. They had to offer a discount to get the share issue done quickly and surely.

This adds equity capital to protect depositors. Equity from ANY investor would have greatly increased confidence of potential depositors. Equity from Warren Buffett is the golden seal of approval. This is totally a win, win for Home capital and Berkshire.

Similarly, I believe it was last year when Canadian Western bank issued shares are a relatively low price. I hated to see that. But I agreed it was absolutely the right thing to do if equity was needed. Safety first. Protecting depositors is a special fiduciary obligation of banks. Common share profits must take a back seat to that. The dilution to the book value of existing share owners is tough luck. Had to be done.

Banks always claim they have excess capital. They mean more than the absolute minimum required by regulators. They NEVER really have excess capital. They are all highly leveraged.

They are also almost always profit generating machines. Temporary problems are overcome as long as they can keep operating.

#280 So Much for Chinese house horders on 06.22.17 at 3:25 pm

A real estate agent hoped Vancouver’s foreign buyers tax would help her sell some languishing Calgary homes. But despite her best efforts, Emma May hasn’t seen much interest from Chinese home buyers.

http://www.cbc.ca/news/canada/calgary/calgary-real-estate-china-1.4173021

#281 waiting on the westcoast on 06.22.17 at 3:28 pm

Mark – there are over 700 jobs listed on bctechnology.com right now specifically for engineering /IT in Vancouver. That is just one site.

Rapid training entities like lighthouse labs are cranking out 3 month programs to kids coming out of University and they are getting starting salaries between 3-4k monthly with only a few months coding practise.

In Vancouver, mid level coders are making 60-80k+ and Senior ones are all over 100k…

Nobody is hiring TFWs for software and engineering roles. That is largely being used for agriculture and trades jobs that our youth (and frankly most gen x like me) do not want to do.

#282 Corban on 06.22.17 at 3:34 pm

Foreign home buyers “surge” from 1.3 percent of sales to 1.8 percent of sales on Montreal! LOL

http://www.ctvnews.ca/business/foreign-home-buyers-surge-37-per-cent-in-montreal-on-growth-in-chinese-purchases-1.3471550

#283 jess on 06.22.17 at 3:51 pm

talk to sophie the robot teacher replacement?

https://www.youtube.com/watch?v=vtX-qVUfCKI

#284 Simplyput7 on 06.22.17 at 3:53 pm

#279 InvestorsFriend on 06.22.17 at 3:19 pm

I hope Warren Buffett’s investment give Stephen Poloz the confidence he needs to raise interest rates, so you and Buffett can see how insolvent people in Ontario really are.

#285 bdwy sktrn on 06.22.17 at 3:56 pm

#281 waiting on the westcoast on 06.22.17 at 3:28 pm
Mark – there are over 700 jobs listed on bctechnology.com right now specifically for engineering /IT in Vancouver. That is just one site.
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mark just say ‘premia’ again and it will all be better.

#286 Lillooet, BC on 06.22.17 at 4:01 pm

#250 Tony on 06.22.17 at 12:50 pm
I shorted Home Capital Group this morning.

****

it takes more than courage to bet against Buffett!

#287 Ace Goodheart on 06.22.17 at 4:13 pm

Run DMC on economics:

“Money is the key to end all your woes
Your ups, your downs, your highs and your lows
Won’t you tell me the last time that love bought you clothes?
It’s like that, and that’s the way it is”

“You should have gone to school, you could’ve learned a trade
But you laid in the bed where the bums have laid
Now all the time you’re crying that you’re underpaid
It’s like that (what?) and that’s the way it is
Huh!”

90’s gangsta rappers and their insight……

#288 bdwy sktrn on 06.22.17 at 4:14 pm

#286 Lillooet, BC on 06.22.17 at 4:01 pm
#250 Tony on 06.22.17 at 12:50 pm
I shorted Home Capital Group this morning.

————-
yikes +28% now

#289 Franco on 06.22.17 at 4:14 pm

The housing market is just taking a rest. Will not crash and prices may drop a bit, but it will just become a “normal” housing market after this. Sorry doomsayer’s for spoiling the party.

#290 WillBuffetgetBuffetted on 06.22.17 at 4:24 pm

Hi Garth,

Can 1 finance guru (namely yourself), decode the secret decision making processes of another financial guru (Warren Buffet) in pumping 2 bill into home cap?
He seems to be doing the very opposite of what you are advising with shoveling money into RE.
Isn’t this like pumping 2 bill into Sears right now?
Thanks for the analysis of such a shocking guru level move.

#291 Justin Beaver on 06.22.17 at 4:35 pm

It’s a strange time to be a Canadian. My young family and I have decided to be renters, a path that neither of our parents chose (and did well with). The way I see it, you pay a big premium to buy a house in most of the major centers. I understand why many of our friends have chosen to do what their parents did, and bought. You take on a large mortgage and you know what your life will look like for the next decade or two. They pay a premium for stability and doing the traditional thing.

Or you rent. Which means you might have to move unexpectedly. You have more spending money, but you better put a lot of it away. This is what we’ve chosen.

So far it’s been great. It’s afforded my wife to go back to work part time a year after our first child and it’s enabled me to take time off unpaid to spend with my son. We take care to live within our means but we never have to second guess a purchase. It’s nice not being house poor. Will we regret it in ten to twenty years? Possibly, but I doubt it– it’s already affording us time as a family. We’ve been able to save at a rapid pace and 7 years after uni, we’ve got over 500K in mostly tax sheltered investments. I expect to semi-retire in another 10 years.

The way I see it if interest rates reverse the course and stay low, it’ll mean we’ve gone back to a deflationary economy where a million dollars buys a lot of things. A million dollars can go a long way if you don’t blow it on a house!

#292 InvestorsFriend on 06.22.17 at 5:02 pm

Questions about Buffett and Home Capital

#290 WillBuffetgetBuffetted on 06.22.17 at 4:24 pm
Hi Garth,

Can 1 finance guru (namely yourself), decode the secret decision making processes of another financial guru (Warren Buffet) in pumping 2 bill into home cap?
He seems to be doing the very opposite of what you are advising with shoveling money into RE.
Isn’t this like pumping 2 bill into Sears right now?
Thanks for the analysis of such a shocking guru level move.

*********************************
It seems Garth left this for me to respond to.

Okay, Home has just sold over a billion in mortages with the intent of paying off that high-cost HOOP line of credit. Home still needs the line of credit in case of emergency. The intention is that they pay Buffett 1.75% as a standby fee for a $2 billion line that they hope never to use. So, Buffett expects to never inject this $2 billion. He will keep it in Treasuries just where it is now but earning this extra 1.75% now.

Buffett is buying $143 million in Home Capital shares at $9.55 subject to TSX approval and this closes on June 29 – in time for the Q2 report! He has offered to buy another $257 million worth at $10.30 subject to share holder approval. As Garth said this is NOT an investment in real estate. It’s an investment in a real estate lender at a distressed price. Buffett having actually looked at some figures apparently thinks Home capital is worth more than $10 per share notwithstanding that home prices might drop and Home will likely have some bad loans.

I have mentioned Rule Number 1: many times:

“Always assume that Buffett is correct”

He won’t always be but it’s a damn good bet that he is right because he is seldom wrong.

AND, if Buffett is wrong, this is WAY less than 1% of Berkshire’s assets. He NEVER does anything to put Berkshire’s Gibraltar-like finances in doubt.

#293 Ole Doberman on 06.22.17 at 5:03 pm

#286 Lillooet, BC on 06.22.17 at 4:01 pm

#250 Tony on 06.22.17 at 12:50 pm
I shorted Home Capital Group this morning.

****

it takes more than courage to bet against Buffett!
———————————————————
The run up was already pricing this in – inside info is rampant in the Buffet circle.

#294 bondsky on 06.22.17 at 5:06 pm

#268 bondsky on 06.22.17 at 2:05 pm

I am sure WB doesn’t care about the Toronto real estate market. It was a profit play on a distress sale. — Garth

How is WB going to take profit on this in a (supposedly) sharply declining RE market?

The investment is in stock, not houses. — Garth

Duhhh… and the underlying value/asset behind the stock is what?

Mortgage contracts and consumer deposits. — Garth

#295 SWL1976 on 06.22.17 at 5:09 pm

The banks have millions of shareholders who are all enjoying ever-rising dividends. They are actually redistributors of wealth. You’re an investor, right? — Garth

I understand that, and also understand that the retail investor will be next.

It’s not hard to understand which direction the wind is blowing

The middle class was first to be decimated…

The run up in real estate via ultra low interest rates, and CMHC backed loans followed by rising rates should do the trick.

Bail ins are next… gotta save the banks

Cashless society…

Sound fun???

There will be no bail-ins. But cash is going. — Garth

#296 Where's The Money Guido? on 06.22.17 at 5:56 pm

DELETED

#297 Keith in Calgary on 06.22.17 at 6:05 pm

Buffet is a master of exploiting the stupid and impoverished.

He’s the king of financing mobile homes for the poorest people in the US.

#298 Where's The Money Guido? on 06.22.17 at 6:38 pm

Re:
#217 Capt. Serious on 06.22.17 at 10:45 am

Buffet bailing out Home Capital:
https://www.bloomberg.com/news/articles/2017-06-22/buffett-follows-goldman-model-in-bailout-for-home-capital

Assuming Home Capital survives, which is probable with a 2 billion line of credit now available, Buffet makes out like a bandit.
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Bank of America also did this with Country Wide – and lost big.

Garths opinion on this will be interesting

Turner vs. Buffet – may the best man win!

Maybe Buffett has shorted HCG for more than he paid and got in there to make sure it dumps.
Larry Silverstein Admit to Ordering the Demolition of World Trade Centre building #7. Silverstein bought $2 billion in insurance for World Trade Centre buildings a month before the 911 horror. He was also supposed to retrofit (remove asbestos) those buildings to the tune of $2 billion. Obvious to me. Follow the money.
Makes you wonder. Not a thing happened to Larry….friends in high places.
http://www1.ae911truth.org/faqs/696-faq-10-did-wtc-7-owner-larry-silverstein-admit-to-ordering-the-controlled-demolition-of-the-building-.html

#299 Nonplused on 06.22.17 at 6:56 pm

#252 Wrk.dover

So for all that you replaced a $500 water heater? But I take it from your post you still need the water heater in the winter? Therein lies my point. Any solar or wind installation requires either massive battery storage or backup generation of some sort because it only works part of the time, as little as 30%.

Hot water panels are much more efficient than solar electric panels as well, so you aren’t going to see the same gains if you say try to run your fridge on solar. Or how about the clothes dryer? There is a way to do that with solar, it’s called a clothes line. But on solar panels? There is a reason that thing has a 220 volt plug on it.

Solar makes sense for some applications, like remote SCADA equipment and such where running power would be prohibitively expensive, but that’s about it.

There is an office in the US I visit from time to time that is literally covered in panels. The even have them on the sun shades in the parking lot. Quite impressive. But they also have a big display in the lobby showing where the building is getting it’s energy. The highest I saw was 30% in really good sun and the lowest close to zero in cloudy conditions from the panels, and the rest came from the grid. If they tried to run the building in the sun on 100% solar, first I don’t know where they would put them all they would need over twice as many, but secondly they’d have to shut down whenever it was cloudy. If they wanted to be able to run on cloudy days they would need 5 or 6 times as many panels and a huge battery bank. The grid simply cannot be disconnected, and must be available at 100% of the potential load.

#300 AGuyInVancouver on 06.22.17 at 8:08 pm

#201 n1tro on 06.22.17 at 9:58 am
Check out Kraken. They are a Canadian based online brokerage that lets you trade bitcoin and ethereum. A digital wallet is something you have if you want to withdraw your digital currency and hold.
_______________________

You’ve got ethereum in your kraken? I hope there’s an ointment for that!