Mr. Math

Thomas is the kind of guy you probably hated when you were eleven. He teaches math. He expects the world to be logical, orderly and transparent. Numbers don’t lie. They lack emotions. So if only everybody could be guided by the same data set, we’d all be cool.

“I think a key component of having the market work efficiently (on the upside and down),” he says, “is to ensure that homeowners and prospective buyers are aware of the most recent and undoctored statistics.”

His crusade now is to show his fellow Newmarket, ON citizens that they’re fools and pawns for having helped create the Hindenburg of all housing gasbags, then continuing to trade within in. He has tracked and catalogued, as only a mathematics nerd can, the last 1,136 real estate transactions in this northern GTA housing hotbed of 90,000 people.

Now, what does the official Toronto Real Estate Board data “prove” to us about the local market? Well, everything’s ducky, of course. Last month 128 properties changed hands for an average price of just under $879,000, which is $90,500 or 11.6% more than a year earlier. The sales-to-new-listings ratio was okay at 61% (Toronto was at 69%) and there was one month’s worth of inventory for sale (1.2 months in TO).

So, whazza problem, Tommy?

“I have been compiling up to date information on the market, until last Friday,” he says, “which appears to confirm all of the negative trends of late. I am appalled by the insanity.” The mathematician’s data clearly shows a market imploding, even as the real estate cartel suggests everything’s okay and people should keep buying. Given the fact Thomas is plotting actual transactions – recorded asking and selling prices, as well as the number of deals over time – it’s hard to argue this is not a stone-cold-sober snapshot of a community hemorrhaging equity. All those families who put all that wealth into a single asset? My, oh, my.

Average daily selling price down 300K in 3 months

Number of daily sales has plunged by 75%

Asking prices falling – $200K lower since March

From over-asking to below-list in 90 days

In case you question Mr. Math’s methodology or his completeness in capturing all of the relevant data, here’s the territory he’s been researching, and the 1,136 different property listings and completions included in the graphs above. This data is current to the beginning of this past weekend.

Sure, this is only one community of less than 100,000 people in an urban area of six million. But Newmarket and the surrounding hoods have typified the housing lust infecting the entire region. It’s now representative of what happens when the pendulum swings back. It never rests at neutral, but almost always shifts first to the extreme – suggesting there’s more pain and loss to come.

“My macro thesis,” adds T, “is based on a few key ideas:

1) Mortgage rates have likely bottomed – this creates an asymmetric bet on housing (rates stay flat, at best)
2) Demographics – we are currently trying to squeeze two generations into houses at once (millennials and boomers). This creates (temporary) extra demand.
3) Ownership rates are historically high (an indication of point #3) and will likely revert. If the US is a guide, ownership rates will revert, as prices start to come down.
4) Ontario affordability is peaking out (even with record low rates).”

Just as it was emotion – house lust, then greed, speculation and the irrational fear of missing out – that propelled us into a bubble, so it will be emotion that crushes it. This time buyers are afraid of catching a falling knife, walking into extreme leverage only to experience losses, or of doing something everyone else isn’t doing. The reasons they feel that way are irrelevant. We can yak all day about the mortgage stress test, foreign buyer’s tax, rent controls, Home Capital, an empty houses levy, CRA meanies, higher interest rates or an AirBnB crackdown – but in the end, real estate’s moved by emotion, not logic. That is what makes this asset class such a dangerous place to gamble the bulk of your net worth on.

So, this is not about Thomas. Or Newmarket. It’s a lesson in human nature. We buy high, we sell low. We never change.

162 comments ↓

#1 Media on 06.25.17 at 3:10 pm

But what did the median price do?

Because averages are pretty meaningless if you do not break out the SFH / TownHome / Condo categories.

Thomas needs to do a little bit more work on this.

#2 Infrared on 06.25.17 at 3:21 pm

not significant stats.
even in my relatively short history in Canada, market dropped twice and rebounded quickly.

#3 TurnerNation on 06.25.17 at 3:40 pm

KFC is offal. Just offal.

If I want a Loonie in my pocket I gotta earn a Twonie, ’cause the Crown takes 1/2 of my earnings. (Cheapest. War. Ever – of theirs. But I digress.)

The street beggar gets $1 and keeps it. Richer than I think?

The Mark of The Least. Unless your credit score is 667 or higher you won’t be able to transact in commerce.

#4 Cheekmonster on 06.25.17 at 3:55 pm

Does anyone think some (or maybe many) real estate agents are trying to convince people to sell homes for lower than market value in order to close the deal quicker?

If so, do you think that also help a housing correction (crash) along?

#5 Freedumb on 06.25.17 at 3:56 pm

#90 I’m stupid on 06.25.17 at 12:57 pm

———————————-

I love you man!

#6 TRUMP on 06.25.17 at 4:03 pm

Hey Garth…….HCG……you scarred me out of a big profitable deal…watup wit dat???

Coulda been filthy rich right now.

#7 TWO FINGERS WATSON on 06.25.17 at 4:09 pm

Immigration, low interest rates, easy financing, government enabling, and no capital gains tax will keep demand high. There will be a few blips on the radar but overall no problem folks, carry on…..

#8 nick on 06.25.17 at 4:09 pm

Id really wish he broke the stats out by house type. He did all of that great work but ignored that.

#9 Danny on 06.25.17 at 4:17 pm

Thanks Mike Ian and Garth for your picture of the Canadian flag.
We living in Canada should be grateful for our constant insistence to work for seeking a just society….it is like an ever evolving work of art…..developing with thought not just emotion.
Too bad the Canadian Senate is stalling making Our National Anthem…..gender neutral as proposed by our Canadian Parliament.
It is road blocks like this which again brings into question our form of Government….an unelected body (the Senate) that can override the will of an elected Parliament.
Some colonial imposed forces just keep us hostage.

#10 crowdedelevatorfartz on 06.25.17 at 4:28 pm

Very hot in Burnaby today.
Time to insert vodka into the jug of lemonade.

#11 Morning Garth on 06.25.17 at 4:34 pm

@landlordrescue has been saying the same

http://landlordrescue.ca/cant-sell-your-house-rent-it-out/

#12 Howard on 06.25.17 at 4:41 pm

2) Demographics – we are currently trying to squeeze two generations into houses at once (millennials and boomers). This creates (temporary) extra demand.

———————

I guess nobody born between 1963 and 1981(ish) is house-hunting?

#13 nick on 06.25.17 at 4:50 pm

Seems zolo.ca is showing detached volume of sales was high Feb/Mar, and has declined since then. So average price is expected to drop…

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

Per zolo, 3bed detached prices are 800k down from 1M 3months ago. 4bed down 100k.

#14 For those about to flop... on 06.25.17 at 4:52 pm

Pink Lemonade being sipped in Vancouver.

Condos are hot in Vancouver right?

Maybe only if your a.c is on the blink.

These guys overpaid by around 100k when they forked out 728 for this place in May 2016.

The assessment that come in later in the year come in at 622k

The photo looks respectable, but they might need to shave some more off the snow cone…

M43BC

106 388 W 1st Avenue, Vancouver

Jun 10:$808,000
Jun 24: $759,000
Change: – 49000.00 -6%

https://www.zolo.ca/vancouver-real-estate/388-w-1st-avenue/106

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

#15 WUL on 06.25.17 at 4:59 pm

Garth:

I’ve been sitting here pondering and figgeren sumpthin to amaze and amuse the gals with at cocktail parties in Fort Mac. Can you email Thomas and ask him if the following is correct:

1 X 8 + 1 = 9
12 X 8 + 2 = 98Garth:

I’ve been sitting here pondering and figgeren sumpthin to amaze and amuse the gals with at cocktail parties in Fort Mac. Can you email Thomas and ask him if the following is correct:

1 X 8 + 1 = 9
12 X 8 + 2 = 98
123 X 8 + 3 = 987
1234 X 8 + 4 = 9876
12345 X 8 + 5 = 98765
123456 X 8 + 6 = 987654
1234567 X 8 + 7 = 9876543
12345678 X 8 + 8 = 98765432
123456789 X 8 + 9 = 987654321

Gratefully,

Einstein in the Athabasca Oil Sands

#16 april on 06.25.17 at 5:01 pm

We here are saying we need someone like Thomas in the Vancouver area.

#17 Fish on 06.25.17 at 5:03 pm

The saying goes once bit, twice shy, nothing wrong in waiting

#18 WUL on 06.25.17 at 5:05 pm

Difficulty cutting and pasting here in the muskeg and black flies in the Taiga. Apologies.

#19 For those about to flop... on 06.25.17 at 5:08 pm

Pink Lemonade being sipped in Coquitlam.

Hey Crowdie, the other day you asked me to supply some Fosters.

I don’t touch that Koala pee, but I am happy to oblige on your behalf.

MF seems to think that everything is shit in Europe ,but they didn’t stuff everything up and have the best beer on the planet in my opinion.

Dos Equis lager also arouses my tonsils.

The guys at Foster’s Avenue would probably like some too after paying 1.28 for this place in April 2016.

The assessment covers this number ,but the market reckons that the brew has too much foam on the top of it…

M43BC

1591 Foster Avenue, Coquitlam

Oct 12:$1,398,000
Jun 24: $1,387,000
Change: – 11000.00 -1%

https://www.zolo.ca/index.php?sarea=1591%20Foster%20Avenue,%20Coquitlam&filter=1

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAzWE0wSA==

#20 John Mayer on 06.25.17 at 5:14 pm

haha. If we are to nerd out with a scatter plot and trend graph – we should go all the way! With this data, you can effectively get the spread of the data set like below.
https://www.studypug.com/statistics/data-interpretation/spread-of-a-data-set-standard-deviation-variance
including Standard variation and variance.

#21 John Mayer on 06.25.17 at 5:16 pm

sorry, by Standard variation, I meant Standard deviation. In my haste to make the joke, I blew it :)

#22 SimplyPut7 on 06.25.17 at 5:16 pm

Went to a sales office in my area in Toronto on Saturday. They were selling stack town homes. I have seen some in downtown Toronto where space is limited that look great, and others that were awful. This one is not in any special area of Toronto and is not a densely developed area, so prices should be somewhat more reasonable.

Each Town house has 4 units, the lowest level the “Garden Collection” wanted $505,000 for a basement unit approximately 1100 sqft. Now prices, marketing and design were prepared months before the change in the housing market in Toronto – but it’s still a basement.

The person in the sales office was nice enough to mention that you don’t get full size windows or a backyard. The brochure also stated the basement level only has ceiling heights of 8 feet 6 inches. The second level gets the entire first main floor at $510,000 – $530,00 and top unit had 2 levels split in half and cost between $615,000 – $675,000. Supposedly it’s 50% sold. Each Unit comes with 1 parking spot, and have monthly locker and maintenance fees.

Now that the market has changed in Toronto, you can get a starter detached house or full-size town house in the same area for less than the top unit price. Even before the slow down, buying a 2 bedroom condo in a popular area of Toronto would be a cheaper alternative than a basement. The developers should never have been allowed to sell a basement like that in an area of Toronto that is not densely populated – I don’t know how this development was approved by the city/province.

In a market that supposedly did not have enough supply being built to keep up with demand, we have many new houses, town homes and condos competing with resale homes that have been on the market with no offers for several weeks. Traffic at sales offices have slowed (I was the only one in the office beside the sales people on that day).

As the unit is ready for the owner to take possession, it will be interesting to see what happens when investors realize no one wants to buy their place when better options for a lower price keep popping up everyday.

——————-

Did anyone read Bloomberg’s article stating Warren Buffett is bullish on Canada but not our housing market?

https://www.bloomberg.com/news/articles/2017-06-24/buffett-bullish-on-canada-but-not-as-much-on-its-housing-globe

#23 Freedumb on 06.25.17 at 5:21 pm

The brunette in the picture is my girlfriend.

#24 rainclouds on 06.25.17 at 5:22 pm

#101 SCMD “You missed the context of my post.”

No they didn’t. You were commenting in a negative light about the relation between actual wealth and donated wealth which is irrelevant. You also implied Buffett was donating a lot less than he is. (Until it was pointed out you made it up.)

Your Quote as I assume you already forgot:

“Remember, take into account the amount of their donations compared to their net worth. If i donate 10mill to a school but have 500 mill in the bank, itll barely make a dent to my way of life. Not really that impressive”.
—————————————————————
“I resolved to stop accumulating and begin the infinitely more serious and difficult task of wise distribution. ” Andrew Carnegie

#25 TheDood on 06.25.17 at 5:25 pm

Any citizen of this country still buying real estate, especially in Vancouver and Toronto;

– probably doesn’t have a high school diploma and therefore has zero concept of basic personal finance, OR

– is in fact educated, and still has zero concept of basic personal finance.

How many people is this? Probably an embarrassing number for a G8 country.

#26 Fish on 06.25.17 at 5:27 pm

There are alot of places for sale where I’m looking, they are asking to much,I know the area, I lI will wait, for what I want, I’m in no hurry

#27 neo on 06.25.17 at 5:29 pm

#12 nick on 06.25.17 at 4:50 pm
Seems zolo.ca is showing detached volume of sales was high Feb/Mar, and has declined since then. So average price is expected to drop…

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

Per zolo, 3bed detached prices are 800k down from 1M 3months ago. 4bed down 100k.

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

The median price is tanking in Newmarket as well. Thomas wasted his time as Zolo.ca is already reporting the North Toronto carnage in real time.

#28 The Wet Coast on 06.25.17 at 5:36 pm

This was my neighbor in Arizona, in an area that is more recreational in nature. Lots of famous folks have high end “cabins” where they park their families to escape the summer heat in Phoenix. Anyway the house below is beautiful but when the crisis hit it would not sell. After 5 years it did eventually sell last year for $143,000 USD less that it was bought for in 2010. Be very wary of recreational property in a bubble.

06/17/16 Sold $305,000-6.2%
04/22/16 Listing removed $325,000
03/19/16 Listed for sale $325,000
02/12/16 Listing removed $325,000
11/10/15 Listed for sale $325,000
07/28/15 Listing removed $325,000
04/01/15 Price change $325,000+8.4%
10/09/13 Listing removed $299,900
08/14/13 Price change $299,900-3.2%
07/26/13 Price change $309,900-1.6%
06/26/13 Price change $314,900-0.3%
05/02/13 Price change $316,000-2.8%
02/02/13 Price change $325,000+8.4%
12/05/12 Price change $299,900-1.7%
10/20/12 Price change $305,000-1.6%
08/20/12 Price change $310,000-4.6%
08/13/12 Price change $325,000-3.0%
07/10/12 Price change $335,000-5.4%
06/29/12 Price change $354,000-1.4%
06/16/12 Price change $359,000-2.7%
04/21/12 Listed for sale $369,000+11.8%
05/02/11 Sold $330,000-26.5%
03/02/11 Listing removed $448,800
02/10/11 Listed for sale $448,800+4.7%
12/09/10 Listing removed $428,800-4.5%
04/24/10 Listed for sale $448,800

#29 For those about to flop... on 06.25.17 at 5:39 pm

Pink Lemonade being sipped in Vancouver.

People having trouble selling condos …Check.

People having trouble selling detached houses…Check.

What about town houses the crowd cried…Check

This townhome was picked up in February this year and seemingly put straight back on the market, but all that means is more stairs for the realtor to tramp up and down on during the lemon showings.

Paid 1.62 ,the assessment which they could have checked themselves was already logged in at 1.57.

At least it is opposite a park so they can look at all the stress free folk enjoying the summer.

April,maybe you will be more impressed by my next 5000 posts…

M43BC

6422 Ash Street, Vancouver

Feb 16:$1,630,000
Jun 20: $1,599,000
Change: – 31000.00

https://www.zolo.ca/index.php?sarea=6422%20Ash%20Street,%20Vancouver&filter=1

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

#30 I'M NOT POLOZ on 06.25.17 at 5:54 pm

What about buying US dollars with the Loonie? We have a psychopath like Poloz who causes uncertainty in the Loonie that various financial experts are predicting a 59-cent loonie, or up to a 77-cent loonie.

Janet Yellen at the US FED claims that inflation over 150,000,000% per day will boost the economy, while a USA without Donald Trump will boost exports (because of a lower US$).

Janet Yellen also wants Poloz to become LOTUS while hiring Morneau to find out where you live.

#31 mouldyinYVR on 06.25.17 at 5:57 pm

Garth, you must have a stomach of iron……anyway, thanks for your never ending hard work trying to keep us in the land of investment sanity…. a Sisyphean task if ever there was one.
Hope you are enjoying your summer..as you like to say, ‘our biggest asset is time’ – don’t blow it.

#32 Fish on 06.25.17 at 6:00 pm

Is three finger Watson, now the two finger Watson, Watson might have to change his profession, before it is just one

#33 Asterix1 on 06.25.17 at 6:06 pm

#7 TWO FINGERS WATSON “Immigration, low interest rates, easy financing, government enabling, and no capital gains tax will keep demand high. There will be a few blips on the radar but overall no problem folks, carry on…..”

You sound like the Captain of the sinking Titanic!

“Immigration”: Not all immigrants can drop $$$.
“Low interest rates”: They will be going up.
“Easy financing”: Harder to get approved.
“Government enabling”: Ontario adding rules to slow it.
“No capital gains tax”: Ontario to add speculation tax.

The writing is on the wall (charts). This will be a painful crash for many and a great opportunity for others.

PS: Another posts said who cares, its just the Average! Ok, here is the Median (All homes) for Newmarket.
https://www.zolo.ca/newmarket-real-estate/trends

March 15, 2017 = 1,050,000
June 13, 2017 = 782,500

That is a -25.4% drop! All is well :)

#34 nubbers on 06.25.17 at 6:29 pm

The average selling price may or may not be well correlated with the actual change in house prices. Presumably, the mix could change between the more expensive and the less expensive ends of the market, but we just don’t know with the data as presented.

Is is possible to do some sort of statistical correction for a possible change in the mix by finding a sample of previous selling prices from Thomas’ 1136 transactions?

Maybe some statistics nerd here could take over at this point, while I get back to appreciating today’s photo.

#35 Mike on 06.25.17 at 6:31 pm

Canadians are rich and can pay anything their realtor tell them. No crash even in Alberta after job losses. No crash in Vancouver. Up on onward !!!

#36 Dani0724 on 06.25.17 at 6:32 pm

“It’s a lesson in human nature. We buy high and sell low”. When it comes to RE, I agree is at its peak. Not a good time to buy. However, we can say the same thing about the stock market. Many say it’s also do for a down turn. They say that you shouldn’t time the market. But to Garths point, why would anyone buy high in both the RE and stock market? RE is a one asset strategy (bad). But aren’t you going to also lose money if there is a market downturn and your portfolio is invested in 60%equities? Either strategy you will lose money in the RE or the stock market. So better to just keep $$$ in cash for now until the RE and or stock market crashes.

Why would stocks crash? Of course there will be periodic corrections, but no reason to think another 2008 is coming. Even if it occurred, a balanced portfolio would float you through just as it did last time. — Garth

#37 NoName on 06.25.17 at 6:40 pm

Now that math is mentioned…

I have to admit i was never good at, to many formulas to remember… But recently on a same i came across this formula n*(n-1)/2 and jef bozos two pizza teams.

Is that has to do anything with topic, maybe a liitle, mr math team of 1, no incentives for him to be wrong and he as a group is probably correct and bit pessimistic/causionary side, where other team that we can not speak of withot circled r, is probably big team doesnt matter are they right or wrong because there is always enough team members to put a blame on. What is characteristic of beg team, they tend to underestimate and to be very optimistic. Knowing all above. jeffs 2 pizza team makes lots of sense.

Good job Mr Math.

#38 Tony on 06.25.17 at 6:45 pm

He told me on youtube about one year ago he had about $250,000 saved up for a home. On his blog he leaves out the online newspapers like the Globe and Mail as a (major) contributor to the housing fiasco.

#39 AB Boxster on 06.25.17 at 6:46 pm

I’m a numbers guy too.

Been watching the price of housing, in my area, for over 30 years.
Here’s my take on housing: It’s now a total ripoff.

Why?
Well I built a very nice house in 2000. About 2200 sq ft, story and 1/2 for 190K. (land excluded) Maple trim, solid doors, maple builtins.
About $85 per sq ft.

I have a quote today for a home of 1750 sq ft, mdf crap trim, hollow core crap doors, no wood trim, for almost 400k.
About $230 per sq ft.

Its easy to find the numbers.
Statscan shows that the average cost of living since 2000 is about 1.8%
(and stascan don’t lie, right?)
And statscan also shows that the average annual increase in family earnings from 2000 to 2012 , has been about 1.2%
(Hence why Canadian families are falling behind and living on debt.)

So if I took my home built in 2000, and added the cost of living every year for the next 17 years, guess what it should cost me to build the same home? (remember land costs are not included)

It should cost me $260K to build my old house, at about $120 per sq foot.

But construction costs are now running at $230 per sq foot for a lesser quality house.

So whats going on?

Land prices higher?
Land prices are excluded from my calculation.

Property transfer taxes?
Nope, its Alberta, we don’t have that nonsense here.

GST costs?
Nope, gst in 2000 was 7%, today it is 5%.

Statscan is a lying bunch?
Maybe.

Housing construction costs are a massive fraud on the Canadian public?
I don’t know. You tell me.

What do know is that while statscan show annuallize cost of living increases over the past 17 years of 1.8%, new home construction costs (excluding land which is often blamed for all the increase), where I live, have gone up over 5% annually. Even with the occurrence of one of the worst recessions in the past 100 years. And in a province with one of the highest unemployent rates in Canada.

As i said, housing in Canada today is a massive ripoff.

#40 TWO FINGERS WATSON on 06.25.17 at 6:49 pm

#31 Fish on 06.25.17 at 6:00 pm
Is three finger Watson, now the two finger Watson, Watson might have to change his profession, before it is just one
—————————-
Hedge trimmer…….

#41 Rook on 06.25.17 at 6:56 pm

Emotion
I’m trying to be patient and buy low but I’m starting to doubt, after 3 years of waiting, that Victoria will ever be affordable for us again.
Meanwhile we have had to move (eviction notices hurt) our family 3 times in the last 4 years, each time rent increasing by at least 400$. Now here we are again…evicted.

It’s hard not to make an emotional decision with housing. Maybe if it was treated as such, “housing”, our emotions could be better spent elsewhere.

#42 TWO FINGERS WATSON on 06.25.17 at 6:56 pm

#32 Asterix1 on 06.25.17 at 6:06 pm

Not much is gonna change and there will be loopholes and work arounds for the speculation tax…..stick around bubba, you will see. The average family with average income is priced out forever.

#43 Cdn Mom on 06.25.17 at 6:58 pm

“2) Demographics – we are currently trying to squeeze two generations into houses at once (millennials and boomers). This creates (temporary) extra demand.”

Not sure how temporary that extra demand is.

Canada 2015/16 (Stats Can)

births 392,902
deaths 269,012

current immigration per year 300,000

total est. annual population increase = 423,890

Close to half a million new bodies to house annually. Just the immigration annual number alone is four times the population of my city. Just the immigration number, assuming a family of four, requires 75,000 further two or three bedroom housing units annually. Of course, not all are families of four, some are single, some are couples, some are larger families.

Regardless, more housing will be needed with 1.5 million immigrants arriving in the next five years. FWIW

#44 Dude on 06.25.17 at 6:58 pm

#2 Infrared
Dude, since you can’t see what’s infront of you, you shouldn’t be commenting. Your “short history” in Canada is just that, short. You have no idea what the stats mean and what’s coming.

#7 Two Fingers, in his nose, Watson.
Here is another drunk realtor that thinks prices will continue to go up.

#45 Entrepreneur on 06.25.17 at 7:08 pm

I think realtors ask sellers how desperate they want to sell and then suggest to ask below other prices on the market, #4 Cheekmonster.

Also, I think the realtors know the housing market is tanking and are trying to get a deal no matter what the consequences.

It seems to me that Toronto market rose then fell quickly with the stipulations in place but Vancouver and outer areas took years for prices to decline and that is slow. I like the leaders in Toronto, looking out for the people. Out here, forget us, we are just the taxpayers.

Another thing that bothers me as a taxpayer I would like to know how much did those B.C. ferries cost to get built in Poland. On the news and newspaper the reporter only mention ferries built in Poland but not a soul mentions the price tag.

Controlled news by the Liberals or what? What happened to transparency or keep silent to keep us in the dark?

#46 WUL on 06.25.17 at 7:11 pm

Keewatin, Hogtown and Upper Canada are scuppered. There is nobody at the Argos game vs. Ticats. Glance at it. The crowd noise has to be canned and lip synched. Goodness. In-migration to Sask to sky rocket. Go Riders.

#47 april on 06.25.17 at 7:13 pm

#43 – Exactly re #2 and #7.

#48 april on 06.25.17 at 7:19 pm

#28 – I love your work though we sometimes hope you’ll show the floppers at the lowest end. Most of us can’t relate to homes in the millions, though it’s good to see those greedy people come down from their outrageous asking prices. Most of them can take the loss. No sympathy here.

#49 Lee on 06.25.17 at 7:26 pm

#42

Your numbers ignore the 50,000 to 100,000 people a year who emigrate out of Canada. In any event, even if it were 75,000 units a year that were needed in Canada, that’s about 15,000 for the GTA which Is well below the 75,000 housing starts per year in Ontario presently. So either the construction industry will have to shut down or we’ll have to start having more babies or let in more immigrants. The point is it looks like demand is falling relative to supply.

#50 Crissa on 06.25.17 at 7:38 pm

I continue on this emotional roller coaster here in the burbs of Van!! Condos in our little town we were looking at last year for 300k are now flying off the shelves at 5!! Meanwhile my friends with thier smug faces, dicissing thier latest cruise plans, gorgeous new cars, fabulous shoes, funded by equity! While I seethe inside oh so feeling the Fomo!!!

#51 Dave on 06.25.17 at 7:41 pm

Let’s use the same analysis on Vancouver

#52 TWO FINGERS WATSON on 06.25.17 at 7:53 pm

#42 Cdn Mom on 06.25.17 at 6:58 pm

Not to mention longer lineups and waiting lists at the schools and hospitals that we don’t have.

#53 TWO FINGERS WATSON on 06.25.17 at 7:57 pm

Why would stocks crash? Of course there will be periodic corrections, but no reason to think another 2008 is coming. Even if it occurred, a balanced portfolio would float you through just as it did last time. — Garth

It’s not gonna be like last time. No bullets left in the gun now.

Money does not evaporate. It flows from one asset class to another in times of change. Exactly why a balanced and diversified approach works and a one-asset strategy is so scary. — Garth

#54 Ace Goodheart on 06.25.17 at 8:00 pm

Does anyone still care about the great Canadian housing crash? This is old news. Yay mortgages and debt. Remember when your parents had depression because they thought they lost a bundle on the house?

The usual. Need to find something else to blog about

#55 Dave on 06.25.17 at 8:00 pm

Just an observation: I was driving through kerrisdale hood of Vancouver yesterday and there were a lot of open houses, and a realtor was standing on a corner lot trying to flag me down to stop and view the house. I’ve never experienced that kind of desperation and it could be a sign the feast is over, and the famine begins…

#56 For those about to flop... on 06.25.17 at 8:10 pm

#47 april on 06.25.17 at 7:19 pm
#28 – I love your work though we sometimes hope you’ll show the floppers at the lowest end. Most of us can’t relate to homes in the millions, though it’s good to see those greedy people come down from their outrageous asking prices. Most of them can take the loss. No sympathy here.

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

I guess you missed this post I put up yesterday then…

M43BC

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

For those about to flop… on 06.24.17 at 2:33 pm
CONFIRMED PINK SNOW.

Here’s one that has been a long time coming that has finally been updated.

The details…

Paid 650k June2016

Sold 620k April 2017

So after expenses a loss of around 10% on a condo…

M43BC

1401-6659 SOUTHOAKS CRES BURNABY .

Oct 15:$680,000
Jan 20: $555,000
Change: – 125000.00 -18%

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAzV0NQVA==

#57 crowdedelevatorfartz on 06.25.17 at 8:15 pm

@#18 Flopster

Well. Irony of ironies.
Speaking of Fosters and swilling Koala pee
I’m drinking vodka mixed with pink lemonade today.
Pink lemonade is on sale at Safeway.
4 or more cans for $0.75 each.
Very tasty on a hot day
The reduced price is just the added bonus……!

:)

#58 I thinks I know something on 06.25.17 at 8:20 pm

“greed, speculation and the irrational fear of missing out – that propelled us into a bubble” – Garth

——————————————————

What about massive immigration into TO of people that value RE above almost anything else? What about zirp that makes such high prices so affordable? What about the offloading of risk to the taxpayer through CMHC incentivising the banks to lend? What about lack of land for low density housing? None of these factors is about to change. Housing (SFD) in TO will be 3 times as high in 10 (or maybe 20) years time.

A Toronto SFD will be $4 million in a decade? You’re toking tonight, obviously. — Garth

#59 TWO FINGERS WATSON on 06.25.17 at 8:20 pm

Money does not evaporate. It flows from one asset class to another in times of change. Exactly why a balanced and diversified approach works and a one-asset strategy is so scary. — Garth

Money does evaporate when yer Loonie turns into a Peso. Balance that.

I have often suggested 20% of a balanced portfolio be in US$-denominated assets. Try to keep up. — Garth

#60 crowdedelevatorfartz on 06.25.17 at 8:21 pm

@#103 Devils Advocate

Cascadia?
Smoking a little reefer on a Sunday after church are we?

‘Cascadia” will occur about 1000 years after the Apes win the War …..

https://www.google.ca/url?url=https://www.youtube.com/watch%3Fv%3DUEP1Mk6Un98&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwiamt_0ntrUAhVU0GMKHe50CWcQyCkIGTAA&usg=AFQjCNHrRFPE5Ah_R_USOfxwPEMeg-btCg

#61 SimplyPut7 on 06.25.17 at 8:34 pm

#2 Infrared on 06.25.17 at 3:21 pm

In the crash in the late 1980s early 1990s, parents of a friend of mine bought at the peak, it was a brand new house in Toronto. Prices dropped and didn’t recover in their area until the early 2000s. They never moved again.

I don’t know if it was the fear of almost losing it all or the thought of going through that all over again in this housing market, but they never expressed the desire to leave the area.

—————–
#42 Cdn Mom on 06.25.17 at 6:58 pm

Your estimated population increase, does not account for how many people don’t stay. As a first generation Canadian and having many friends with parents who are immigrants, I can tell you many of our relatives go home, move to another Canadian city or go to the US, UK or Australia. Housing is needed, but not as much as you think in the beginning, as many people live with family who have already settled in Canada for years, before looking for their own place. In some cases, it’s over a decade before they leave their family’s home, as it’s easier to have family help care for small children when everyone lives in the same house, and split the bills, while the parents save for a down payment. They also usually don’t have a large down payment for their first home, which means they couldn’t afford some of the asking prices for homes in some of the larger city-centres in Canada.

The increase you are seeing is mostly likely due to people from larger cities going to the suburbs. I have a friend who is a teacher in Toronto and she’s been sent to another school because the number of students at the school have dropped significantly, from over 1000 to 700. She is going to a school at the border of Toronto and Markham. Many people with children, moved outside of Toronto as prices rapidly increased. A detached house or town house in Oshawa or Brampton costs less than a small condo in Toronto. Many of the people I have met buying condos, are investors who hope to rent it out or speculators who are holding on to the property until the price rose enough to sell at a profit, very few are home buyers.

#62 Dave from Kincardine on 06.25.17 at 8:40 pm

The only thing relevant here is all your equity in one asset. Huge win or huge loss. Propensity is a word economists like myself use. Is the propensity to win big real or the propensity to lose big. I think the later if rates start their ascent like they have done in the US.

#63 Mrs Hubris on 06.25.17 at 8:42 pm

Hi Garth, You undoubtedly know your ’emotion’ thesis is backed by behavioural economics. For anyone with an hour or so to spare it’s worth watching Robert Schiller explaining ‘Irrational exuberance’ on You Tube. Yes – he predicted both the dot com and US Housing crashes. He seems amused by Poloz’ reiteration of the ‘lack of land’ myth in Vancouver. In the meantime, for those here pumping lil old Victoria, I recommend you watch him too. He’s a Nobel Laureate.

#64 For those about to flop... on 06.25.17 at 8:45 pm

I can’t be the only mug on here that wonders why more cities down south don’t do their version of the San Antonio subterranean thing, can I ?

Maybe it’s just because I come from a land down under…

M43BC

#65 Happy Housing Crash Everyone! on 06.25.17 at 8:51 pm

Had to goto Brampton today for yet Another family event. Anyhow the for sale signs and open houses was a pure joke. Nothing at all is selling in fraud Capital of Canada. People here talk about Vancouver going up and up in price but that just cant be. My cousin computer geek left Toronto and went to the US early 2000 Went to a few different states until he ended up in Chicago. Had a huge house that he could easily afford and just having best life. Got job offer in Vancouver for $20k-$40k more. I remember thinking when he told me he was leaving the great life he had in Chicago for Vancouver
Where COL would be much higher. Left Chicago in 2007 and bought in Vancouver. Long story short they racked up LOC , HELOC ( wife and kids had to work) . They ended up bankrupt and foreclosed on since they owed more then house was worth in 2013. Now they left Canada where he works in England but wife and kids live in Portugal. They have never been happier and he tells me Vancouver was biggest mistake of his life. Its a terrible place to live (rain) with high housing and COL that they were always struggling. He told me all kinds of horrible experiences today of his time there. I thought Toronto was a terrible place but Vancouver wins hands down. Living in high Debt is a horrible way to live and even when prices go up ,people struggle. When prices go down the game of fraud is over. How many people living on the brink? Realtors are true shysters ruining lives one sale and one family at a time.

#66 InvestorsFriend on 06.25.17 at 8:52 pm

Money Creation and Destruction

Money does not evaporate. It flows from one asset class to another in times of change. Exactly why a balanced and diversified approach works and a one-asset strategy is so scary. — Garth

***********************************
Well, I hesitate to disagree with our Omnipotent host.

So I agree money does not evaporate if stocks crash. Wealth does though. It plum disappears into thin air when assets decline in value.

It’s popular to say money flows from one asset class to another. Well actually if stocks get unpopular and fall while bonds rise, what is happening is investors are bidding down the price of stocks selling for less to other stock investors. Not a single net dime escapes to flow to bonds. Whatever money one person pulls out of stocks by selling must be exactly put in by the stock buyer. Meanwhile some investors bid up the price of bonds buying from current bond holders. Not a dime of new money enters the bond market in that process.

New money can be said to enter stock and bond markets on IPOs and other sales direct from companies.

Wealth is vastly different than money, though it includes money. Assets like stocks are measured in money. But they are not money as such.

Money meanwhile as Blacksheep (he gets credit) and (later) I and others have pointed out is mostly created by banks loaning money. The bank creates a loan asset and a deposit liability. Bank deposits are the most common form of money (dwarfing cash in circulation) and transfer from person to person. Bank deposits can flow to other banks and so each bank competes to attract deposits. (See Home Capital).

Money supply decreases and money evaporates when loans are paid back.

When someone borrows money that increases the money supply but their wealth and the bank’s wealth is unchanged. Wealth is also unchanged when they pay back the loan but money itself actually evaporates. Strange but true.

As far as the lack of bullets in the gun argued by Two Fingers Watson. The bullets dry up when credit dries up. No new credit, no new money. Are we there yet?

All nice, but you ignore the basic logic of my words. Investors should own multiple asset classes precisely in order to retain wealth. There, I said it in 12 words. — Garth

#67 Smoking Man on 06.25.17 at 9:11 pm

Best pic in years.

#68 InvestorsFriend on 06.25.17 at 9:12 pm

Balanced Avoids Wealth Volatility

All nice, but you ignore the basic logic of my words. Investors should own multiple asset classes precisely in order to retain wealth. There, I said it in 12 words. — Garth

**********************************
Correct, I jumped on the money evaporation bit which was a side point. Your main point to diversify to maintain wealth over time especially in the event one asset class croaks, I agree with.

#69 Smoking Man on 06.25.17 at 9:15 pm

#34 Mike on 06.25.17 at 6:31 pm
Canadians are rich and can pay anything their realtor tell them. No crash even in Alberta after job losses. No crash in Vancouver. Up on onward !!!
…..

I will have more to say on this topic in August.

#70 Pete from St. Cesaire on 06.25.17 at 9:17 pm

Money does not evaporate. It flows from one asset class to another in times of change. Exactly why a balanced and diversified approach works and a one-asset strategy is so scary. — Garth
——————————————————
Money evaporates when loans are repaid and when debts are dismissed through bankruptcy.

Completely irrelevant to the thread. — Garth

#71 SimplyPut7 on 06.25.17 at 9:28 pm

#53 Ace Goodheart on 06.25.17 at 8:00 pm

Yeah, there’s nothing new under the sun and if you’re not directly affected by housing, it may seem boring at times, as boom and bust of asset bubbles occur throughout history.

But the hysteria that has gripped most people in large cities in Canada is shocking. I went to a sales office and they were selling basements (#21 SimplyPut7 on 06.25.17 at 5:16 pm). I have seen many things in the housing bubble but this was a new low.

How many people just didn’t care to stand up and say something about this is wrong? Couldn’t they skip the basement and make a 4 level unit above grade, with full size windows and high ceilings? Who from the development side designed and approved this project? Where was the government to say ‘No’ to this project? Who actually bought a basement for half a million dollars and thought there would a greater fool to buy this unit from them in the future? What private lender or bank provided funding to the buyer to buy this unit without looking closely at what they were purchasing?

It’s fascinating to see how many people from the government, to realtors, to buyers, to the people who were financing the project – there was no due diligence to thoroughly look at what was proposed to be built and/or pause for a moment to say this makes no sense, let’s not spend a dime on this project or protect financially illiterate buyers from these developers and shut this development down until they come up with a better design.

#72 TdotRenter on 06.25.17 at 9:30 pm

HCG, wtf just happened? Interesting article:

https://onbeyondinvesting.com/blogs/blog/home-capital-wtf-just-happened

#73 mike from mtl on 06.25.17 at 9:42 pm

#58 TWO FINGERS WATSON on 06.25.17 at 8:20 pm
Money does evaporate when yer Loonie turns into a Peso. Balance that.
///////////////////////////////////////////////////

Who cares, everything for me non-maple is foreign. Time tested strategy: ALWAYS hedge against poloz peso.

#74 Millmech on 06.25.17 at 9:50 pm

Crissa
Don’t fomo,just watch what happens when they have a slowdown at work,instantaneous panic.Our plant is going through a summer slowdown( the usual) and it is almost coming to fisticuffs to not being laid off for six weeks for the graveyard production.So many people live payday to payday,once that’s gone look out!

#75 SW on 06.25.17 at 9:52 pm

#102 crowdedelevatorfartz on 06.25.17 at 4:19 pm
@#87 SW
“Ft. Drum….just a half days Tank ride from Montreal….
Vivre le Quebec Libre!”

Last time I looked Quebec was free, or near as dammit compared to Toronto or Vancouver. Good value, certainly.

Besides, the American government clearly needs all that hardware to keep its own deplorables under control. It would hardly be sporting to bring millions more left-wing voters into their finely balanced system, would it?

#76 Mark on 06.25.17 at 9:53 pm

Why would stocks crash? Of course there will be periodic corrections, but no reason to think another 2008 is coming. Even if it occurred, a balanced portfolio would float you through just as it did last time. — Garth

Not only that, but the bank’s positioning is actually effectively ‘short’ on the housing market. Banks own bonds backed by real estate (and the CMHC, through its CMHC subprime mortgage insurance program). They own miniscule amounts of real estate. The banks themselves believe that its better to own debt, a financial asset, than it is to actually own the bricks and mortar. So in a RE crash, the banks will be in a very good position, able to convert their paper claims against RE, into ownership of RE at bottom dollar. With the equity of the previous owners largely extinguished.

Of course, banks themselves don’t want to own RE, but with no need to retain earnings in light of the likelihood of little to no credit expansion in Canada’s RE deflation, they will be able to increase their dividends significantly and let the shareholders buy up the distressed RE.

The point is it looks like demand is falling relative to supply.

Very true. Lots of people like to point out the immigration to Canada has been strong, and that’s true. However, immigrants mostly arrive in Canada with relatively little funds, and the construction industry is one of the enthusiastic employers of immigrants. So in a way, it could even be said that immigrants, rather than consuming housing supply and driving up prices, actually contribute to RE supply in a positive way and drive down prices.

#77 cd on 06.25.17 at 9:58 pm

Where does this guy get all of his numbers? Is he some sort of financial detective who can get all these numbers himself? or does he have a cousin who is a real estate agent and secretly passes them along? or is Newmarket special in that they openly publish all of their RE transactions?

#78 The Wet Coast on 06.25.17 at 10:01 pm

My neighbor is a realtor and a nice lady. She works open houses every weekend in the Port Moody/Coquitlam areas. She says detached open houses are really slow and they get 8-10 folks coming out to the better properties. Her other comment is that all the folks coming out are non-Canadians and non-permanent residents. Since she speaks Mandrin she is able to communicate directly with them. Her other comment is they just pay the 15% tax if they want the property.

She lies well, too. — Garth

#79 TWO FINGERS WATSON on 06.25.17 at 10:06 pm

74 Mark on 06.25.17 at 9:53 pm
Lots of people like to point out the immigration to Canada has been strong, and that’s true. However, immigrants mostly arrive in Canada with relatively little funds,

Hahaha. Tell that to the average Vancouver family who can no longer afford a single family home.

#80 Smoking Man on 06.25.17 at 10:26 pm

I need help blog dogs.

I’m done on bay street. It’s an orgasmic happy ending. I don’t do pride paraids. Naked men give me the creeps.

Just applied for a writing gig at swagger magazine, my cover letter was as politically incorect as posable. In the section where you attach your resume I attached my book. Lol.

Can you visualize the millenials in HR reading it.

I want to write full time now. I don’t need a pay check, well mabey some slot money for the mrs Im addicted to writing now. Never saw this years ago.

Its all Garths fault, when I had a rope around my neck and he told me stick around.

Well that created this monster.

I want a writing gig. Dogs, please help, every one knows someone.

#81 more housing yay on 06.25.17 at 10:31 pm

future: malls become condos and offices

http://www.cbc.ca/news/business/canadian-suburban-malls-need-a-makeover-1.4173250

#82 guru on 06.25.17 at 10:41 pm

i’ve been in the RE industry for long time (lived through the US crash in PHX as well) and i’ll tell it like it is. The commuter towns (IE Similar too Queen Creek in PHX during 2007) will melt away first and rapidly, i’m projecting 50-70% decrease in prices by XMAS for areas in Barrie, Milton, Brampton, Oshawa, Guelph etc. Other areas within Toronto will see drops of 30-40%. Prices will slowly go down over time by 1-2% per year for the next decade.

#83 mark on 06.25.17 at 10:43 pm

Don’t tell anyone your last name, Thomas! CREA will have their legal hitmen out looking for you.

#84 k on 06.25.17 at 10:53 pm

Garth I am not being obsequious or sycophantic (sp?) or sucking up in any fashion. But being a retired journalist and very happy. You have a great knack of stringing different words and sentences in admirable fashion ! Keep up the good work !

#85 k on 06.25.17 at 11:01 pm

#76 CD Are you a Forensic Auditor ? Yes or Know you have a great brain !

#86 Smoking Man on 06.25.17 at 11:11 pm

Pride on display
Virtue signaling nuke for politicos that hated Rob Ford. I liked ford.

I don’t care who you want to bed, animal or bird or what ever, get the old fat naked men off the street and I will show.

#87 NoName on 06.25.17 at 11:21 pm

#77 The Wet Coast on 06.25.17 at 10:01 pm

PRESS PLAY !

https://www.youtube.com/watch?v=vn_PSJsl0LQ

#88 Smoking Man on 06.25.17 at 11:35 pm

George Soros your leaving the plant soon, good riddance.

Some artist wrote a song about you. Put it in the buds and enjoy your atoms going to the beach.

https://youtu.be/fregObNcHC8

#89 Boombust on 06.25.17 at 11:48 pm

Garth, that was a good reply to Comment #77!

The market in the Tri-Cities is dead…

#90 TWO FINGERS WATSON on 06.25.17 at 11:48 pm

Garth you are in denial.
#77 The Wet Coast on 06.25.17 at 10:01 pm
My neighbor is a realtor and a nice lady. She works open houses every weekend in the Port Moody/Coquitlam areas. She says detached open houses are really slow and they get 8-10 folks coming out to the better properties. Her other comment is that all the folks coming out are non-Canadians and non-permanent residents. Since she speaks Mandrin she is able to communicate directly with them. Her other comment is they just pay the 15% tax if they want the property.

She lies well, too. — Garth

#91 age before beauty on 06.25.17 at 11:51 pm

Alberta the next Detroit? Alberta has the lowest pop of seniors and ‘strong’ pop growth both birthrate and immigration. Calgary is the ‘youngest’ city in Canada. Don’t bet against Alberta just yet.

#92 Mark on 06.25.17 at 11:55 pm

“Hahaha. Tell that to the average Vancouver family who can no longer afford a single family home.”

Almost entirely due to local speculators, often of the ‘landlord family’ types, who have gobbled up 20-30 units a piece and rented them out. In substitution of traditional employment which is often not available in Canada for professional immigrants.

The immigrants themselves aren’t bringing money in any significant quantity from overseas. In fact, as I wrote the other day, backed up by facts and figures from the trade data and the IMF, the quantity of Canadian dollars overseas is actually increasing faster than Canadians are exporting CAD$ through trade deficits. This means that there is a net divestiture of assets by foreigners in favour of Canadians.

#93 Smoking Man on 06.25.17 at 11:57 pm

In June

https://youtu.be/8SbUC-UaAxE

My is not as perfect as I make it out to be.
No better spot.

#94 Smoking Man on 06.26.17 at 12:08 am

https://youtu.be/K5Pl6S3-SYE

In the zone

#95 acdel on 06.26.17 at 12:46 am

#79 Smoking Man

Umm, stop applying for jobs and work for yourself!!!

After all, are you not the one that has mentioned on numerous occasions on how much you made on FOREX, or was that the J.D. talking?

I am such an idiot for replying to this post!!

#96 Ponzius Pilatus on 06.26.17 at 12:58 am

Thanks Garth for bringing in a new model of forecasting.
Stochastic modeling.
Time to wean off your boys off linear modeling.
Remember past performance is not a good predictor of the future.

#97 Justin Beaver on 06.26.17 at 1:27 am

This blog entry really speaks to me. For a long time now I have lamented the lack of reliable data to assess market conditions. So many anecdotes and cherry picked stats. So thank you Thomas. 1136 is a good sample size. It doesn’t tell the whole story but the trend is clear.

Whatever happened with the lawsuit about that website that was publishing sales data in TO?

#98 waiting on the westcoast on 06.26.17 at 3:03 am

Gotta love the dispersion pattern on the first graph. Obviously the price ranges are way more chaotic today. That means that people aren’t sure what the “market” price is… Could spell some pretty rapid declines if FOMO becomes FOGI (great of getting in)…

#99 Median my butt, nicely done Thomas on 06.26.17 at 3:35 am

There are only 2 things you can fault Thomas on:

1. Provide an R2 (R squared value). If > 0.9 his plots sre considered satistically significant. An R2 of 0.9 means 90% of the data is explained by his lines on the charts and the other 10% cannot be accounted for (something else is going on). This task takes 5 seconds to do, if that, in Excel.

2. Product mix changes. Did the % of SFH, Townhouse and Apartment sales mix cange drastically over time or some very cheap or very expensive homes sell during the time period (latter seems likely looking at the outliers in his Sell plot – outliers on the high side).

Thomas, post the R2 values for the naysayers.

Median is meaningless here unless the distribution is skewed which it does not appear to be. Why nearly all Boards post Avg. Price. Messy math if skewed, try Beta
distribution stats as a minimum or read HPI stats math on how to resolve.

Nicely done Thomas.

#100 neo on 06.26.17 at 6:28 am

At #81 guru

So you are saying prices are going to revert back to 2004 levels by Christmas? You’re drunk and high.

#101 Dharma Bum on 06.26.17 at 6:34 am

#11 Howard

“I guess nobody born between 1963 and 1981(ish) is house-hunting?”
——————————————————————

You guess right.

#102 Here's The Deal on 06.26.17 at 7:18 am

Here’s the deal:

A home purchase should not be factored in to your personal lifetime financial plan.

When calculating your net worth, just take the house right out of the equation.

Once you buy a house, consider that money gone.

Its value is now in $RE (Real Estate Dollars).

In other words, the value of that house is simply useable to trade within the same asset class – i.e. another house.

So, if you buy a house at $1M, and the market crashes making that house worth $600K, who cares. That $600K will get you exactly what you have now, since all the former $1M houses are now worth $600K.

Ya follow?

If you can afford the house, and need it for whatever reason, buy it, and forget about it from a financial perspective. Just live in it and enjoy. Don’t think about what it’s “worth” in actual money.

If you’re into building financial wealth, focus on other assets. Just listen to Garth Turner, or the thousands of other well informed financial dudes out there. Follow sound advice. Read books about finance and investing.

Stay balanced. Stay liquid. Stay invested.

Live in your house.

#103 miketheengineer on 06.26.17 at 7:55 am

Garth et al:

Any word on what is going on In Hamilton RE market? My Slanty Semi…in Mississauga may get ~ 600k. There are older bungalos on East Mountain in Hamilton…Selling for ~ 500k…near my inlaws.. (These are the type that are on Regular City lots, and most have 2 entrances, one for main floor, and one that can go directly to basement for inlaw appartment.

Anyone know what is going on in Hamilton.
Any risk to doing that right now?

#104 crowdedelevatorfartz on 06.26.17 at 8:16 am

@#74 SW
“It would hardly be sporting to bring millions more left-wing voters into their finely balanced system, would it?”
+++++++

The last time I checked.
Invaded “countries” didnt get to vote in US elections.
And if they were….The Donald would still be Le President de la Republic

#105 Wrk.dover on 06.26.17 at 8:30 am

#101 Here’s The Deal on 06.26.17 at 7:18 am

I wish that I had articulated that thought first.

Because that IS the deal, my deal.

#106 A Reply to #101 Here's The Deal on 06.26.17 at 8:38 am

“So, if you buy a house at $1M, and the market crashes making that house worth $600K, who cares. That $600K will get you exactly what you have now, since all the former $1M houses are now worth $600K.”

Ah, but your $800K mortgage (a monetary liability) isn’t reduced proportionately to $480K, is it? Won’t you feel the least bit foolish paying down the $800K mortgage? I know I would.

http://www.investopedia.com/terms/m/monetary-item.asp

And don’t forget the accounting equation relating assets, liabilities, and owner’s equity/deficit:

Assets — Liabilities = Owner’s Equity/Deficit

https://en.m.wikipedia.org/wiki/Liability_(financial_accounting)

#107 Smoking Man on 06.26.17 at 9:01 am

#94 acdel on 06.26.17 at 12:46 am
#79 Smoking Man

Umm, stop applying for jobs and work for yourself!!!

After all, are you not the one that has mentioned on numerous occasions on how much you made on FOREX, or was that the J.D. talking?

I am such an idiot for replying to this post!!.

…..

I think it would be cool to be live broadcasting the interview with a bad hang over and a f the machine attitude.

But even getting an interview requires a bit of a work ethic. Something that is missing in my DNA.

But I’ll keep trying.

#108 Ace Goodheart on 06.26.17 at 9:16 am

Looks like the buying opportunity in Canadian bank stocks will come as early as January 2018

#109 Tyler on 06.26.17 at 9:24 am

Where did he get the sale price data? Is he a real estate agent?

#110 Pepito on 06.26.17 at 9:26 am

#40 Rook on 06.25.17 at 6:56 pm Emotion I’m trying to be patient and buy low but I’m starting to doubt, after 3 years of waiting, that Victoria will ever be affordable for us again. Meanwhile we have had to move (eviction notices hurt) our family 3 times in the last 4 years, each time rent increasing by at least 400$. Now here we are again…evicted. It’s hard not to make an emotional decision with housing. Maybe if it was treated as such, “housing”, our emotions could be better spent elsewhere.
_____________________

You’ve hit the nail on the head. It is precisely the lack of stability and availability of quality rental housing that provides the emotional driver to buy and the speculation which feeds off that emotion. Ultimately, the lack of a socially responsible, affordable housing policy across Canada, not FOMO, speculation, low interest rates or foreign buyers is at the core of the housing bubble. Germany, a country with decades of stable housing prices is the perfect example of how to do it right. Canadian policy makers have much to learn.

#111 Ace Goodheart on 06.26.17 at 9:45 am

#70 SimplyPut7:

I find the whole thing very funny. Apologies to anyone who speculated and lost (or is losing) their shirt right now but I do.

Have had the same paid for house since 2012. It’s small, in a rough neighbourhood and I have been renovating it myself on the cheap.

I have watched it go from being worth 329,000 up to almost a million and now back down to 600k.

Last week we “lost” 50,000 in “equity”.

I find it just beyond funny. Almost insane.

We’ll never move. We love this house. Could care less what It’s worth. Have no desire to be renters. Have lots in the markets so don’t need to sell. We look poor so the govt leaves us alone. Low property taxes (small house rough hood). Drive economy cars (paid cash for them).

Watching as friends in more wealthy hoods lose their minds as they slip underwater on their mortgages.

It’s a weird life and it moves fast. If you don’t slow down and watch it every so often you’ll miss it.

Livin’ the dream ‘hood style.

#112 Calgary Rip Off on 06.26.17 at 9:49 am

“age before beauty”

In Calgary what you get for your money is ridiculous. Actually all of Canada is. Total ripoff. It is this way in the north in the USA also.

Wages are proportionate to housing in most cases, except maybe in Houston, Texas. The zoning is different in Houston. And the cost of living is cheap. Amazingly, the amount of materialism and greed in some cases in also high in Houston. At the same time, good people in Texas.

So don’t expect much in Calgary for your money. Better to buy a house in the south part of Calgary, less claustrophobic. That being said, the Deerfoot Trail is a mess going south after about 3 pm, so your 20 minute commute is now at least an hour, better to take the c train and deal with the parking hassle in the morning if you work in the north.

In the north, actually all of the city, your neighbours will be in your face. 8 foot zoning means you get an idea of what is going on with your neighbours. You have to exit the city and pay $800+K to have a normal amount of space around your property. Not so in Calgary. Pay $500K for a decent property and no space.

As far as this “crash” happening in Calgary, where is it? Many layoffs in the oil industry, and housing asks are still no where close to 2004. Unless interest rates skyrocket, a crash doesn’t seem likely here. Also, the cost of rents cause the properties to be scooped up. If you are paying around $2000K for rent, and are likely to be in Calgary for a while say ten years +, are you really going to be renting that entire time? Maybe. And these are just some of the factors, not including the emotions of why people acquire mortgages.

Calgary is a difficult place to live in terms of bodily stress: Calcified water, temperature extremes, claustrophobia, it ages you rapidly. The best thing is to get the money as soon as possible, then escape to someplace warmer and more reasonable.

#113 Tony on 06.26.17 at 9:49 am

Re: #102 miketheengineer on 06.26.17 at 7:55 am

If the market reverts two years back to the spring of 2015 those bungalows like the 3 bedroom brick detached bungalows in Oshawa will be worth $250,000 to $275,000. The bank will call your mortgage or ask for a lot more money upfront then you’ll have to make the decision depending on your net worth or if you have many rental properties to declare personal bankruptcy. The job market could also change as all the growth we’re seeing presently is from people fixing up their homes to sell. If they don’t sell that monthly growth will turn negative. I’ve seen it in Alberta a house doesn’t sell then they fix it up and it still doesn’t sell. Only time will tell if that’s what we’re seeing in the GTA.

#114 Lahdeedah on 06.26.17 at 9:54 am

This Millennial and the death of retail: I just bought a nearly new Banana Republic blazer, Banana Republic blouse and a practically unworn H&M knit blazer at Value Village…guess how much for? $18.00 after their 50% promo yesterday (and sale ends today; I might have to go back!). What a score. And at far less than 10% the original sticker price.

You gotta do what you gotta do. Ain’t no way I am spending all my paltry internship money on work clothes at retail prices. No way jose. You’re a chump to pay $130 for a Banana Republic blazer and $70 for a blouse, and $60 on a HM blazer made in Bangladesh. Result: I look like a million bucks :)

#115 Smoking Man on 06.26.17 at 9:55 am

An artist take on reality.

She’s good
https://youtu.be/XE9BdiG5y2E

#116 Ronaldo on 06.26.17 at 10:11 am

#105 A Reply to #101 Here’s The Deal on 06.26.17 at 8:38 am

“So, if you buy a house at $1M, and the market crashes making that house worth $600K, who cares. That $600K will get you exactly what you have now, since all the former $1M houses are now worth $600K.”
——————————————————————

Ah, but your $800K mortgage (a monetary liability) isn’t reduced proportionately to $480K, is it? Won’t you feel the least bit foolish paying down the $800K mortgage? I know I would.
====================================
Exactly. And at a much greater interest rate to boot. Double whammy. Plus, trapped in a house you can’t afford to sell.

#117 };-) aka Devil's Advocate on 06.26.17 at 10:13 am

That picture reminds me…

Statistics are like a bikini,
they show you what’s interesting
but hide what’s important.

If you really want to see what’s important to you in real estate, enlist the services of a professional REALTOR® you trust has your best interests at heart.

REALTORS® don’t create the market they report it. They don’t sell and/or buy houses, they help YOU make informed decisions when buying or selling YOURS.

#118 Ronaldo on 06.26.17 at 10:17 am

https://app.tmxmoney.com/news/cpnews/article?locale=EN&newsid=f80080&mobile=false
——————————————————————–
And like raising carbon taxes in Canada is going to make a heap of difference to it all. What a scam.

#119 SimplyPut7 on 06.26.17 at 10:23 am

#101 Here’s The Deal on 06.26.17 at 7:18 am

I know math is hard, but besides the fact, that you will feel stupid for paying mortgage + interest on a $1 million loan for an asset really worth $600,000; I don’t think when you renew your mortgage your bank/private lender will be happy supporting your expensive lifestyle.

When the lender realizes they gave you an extra $400,000 that could have given to another borrower with a lower credit risk at a higher mortgage rate. The lender may want to be compensated for giving your all that extra money at any rate they feel like charging, as you probably don’t qualify to move your loan to another lender; or worst, refuse to renew the mortgage for more than the current market value of the home and have the homeowner scramble to find a loan shark to give them money for a second mortgage, I believe the current is still above 10% for second mortgages due to the Home Capital fallout.

#120 SimplyPut7 on 06.26.17 at 10:49 am

#81 guru on 06.25.17 at 10:41 pm

Access to credit is still readily available, as long as there is a lender willing to give you money for the mortgage, prices won’t drastically go down over night.

Also, unlike the US, Canadians have lofty home equity line of credit to keep them afloat. When the bank/private lender stops increasing or reduces them, and people can’t move expenses, credit card debit or increased mortgage payments to the line of credit, then we’ll have a sharper fall in home prices.

For now, the areas outside of Toronto are slightly protected from double digit decreases in home prices.

#121 Victor V on 06.26.17 at 10:59 am

Next financial crisis will hit with a ‘vengeance’ and Canada is especially vulnerable

http://business.financialpost.com/news/economy/next-financial-crisis-will-hit-with-a-vengeance-and-canada-is-especially-vulnerable/wcm/a77a1946-91be-4984-80a3-991d531a7351

#122 Smoking Man on 06.26.17 at 11:25 am

You hit a certain age where the end of the road is on the horizon.

At this point of the journey back to nothingness most sain people will try and slam on the breaks. They buy running shoes and take vitamins.

Why? Its stupid.

I see the cliff on the horizon, I push the button to go into convertable mode and hit the gas hard.

https://youtu.be/pcClF730CLI

Yeah, I’m losing it. Feels good.

#123 45north on 06.26.17 at 11:26 am

Daily Number Sold ( Newmarket Ontario ): in three months the daily number sold moves from over 20 to under 10. There’s nothing to say it should be a straight line and I don’t think it is. It’s going to 0 in a month.

At which point Kathleen Wynne is going to freak out. I mean more than now.

#124 Eks dee Sipal on 06.26.17 at 11:29 am

What say ye, Garth of Belfountain? According to the Financial Post, BIS seems to disagree with your math:


By Ambrose Evans-Pritchard

The global economy is caught in a permanent trap of boom-bust financial cycles, a deformed structure becoming ever more corrosive and dangerous as debt ratios rise to nosebleed levels, the world’s top monetary watchdog has warned.

The Bank for International Settlements said the rot in the global monetary system has not been cut out since the Lehman crisis in 2008. The current, now ageing cycle could finish in much the same explosive way, contrary to the widespread belief that the financial crisis of 2008 was a once-in-a-century event caused by speculators.”

What disagreement? For those who have wealth and want to retain (and enjoy) it, a balanced, diversified and liquid portfolio is best. A one-asset strategy is pure risk. — Garth

#125 Lee on 06.26.17 at 11:32 am

Boy, stuff in the SFH category is listed for real cheap in Newmarket, and there is a lot of it listed. This is odd since Aurora seems to be holding up quite well, at least from a listing price perspective.

#126 Eks dee Sipal on 06.26.17 at 11:39 am

#81 guru …. Those are serious declines you are talking about. But according to last month’s price declines, it sounds about right if you extend the trend. I have made the same prediction. Credit is drying up.

Buffett is not saving the Real Estate industry in Canada, he admitted as such, he is making a play for infrastructure like Pearson Airport, for one. There is blood in the streets and that is why he is here….

Canada is a Banana Republic, I patented that statement many years ago right here on this blog. The government supports an institution like HCG that ADMITTED to fraud. That proves that the government itself is a fraud. Which of course I know all too well.

#127 NoName on 06.26.17 at 12:03 pm

Interesting Read

In Towns Already Hit by
Steel Mill Closings, a
New Casualty: Retail Jobs

https://www.nytimes.com/2017/06/25/business/economy/amazon-retail-jobs-pennsylvania.html

#128 age before beauty on 06.26.17 at 12:14 pm

#111 Calgary Rip Off on 06.26.17 at 9:49 am

Agreed, Calgary is pricey but folks also make quite a bit of coin here. Calgary is ‘a deal’ compared to TO and Van. I’ve lived in Calgary my entire adult life and I know the market fairly well. My former job took me to almost every corner of the city & outskirts and I see the inside of many homes from social housing to mc mansions (I’m NOT a realtor). I purchased my first (inner city) town home in 2004 and sold it privately last autumn for 1.8X OP roughly 320,000. It served me well as a single person, my mortgage payments were around $800mth plus condo fees 450ish, my immediate neighbours paid well over $1800 rent for lesser units. We purchased a SFH moments from Rocky View Hospital, walk to the reservoir etc. Partner commutes to DT via bike for the exercise. We paid 400,000ish for an awesome 7000sq ft lot with no close neighbours (the closest neighbour is about 30 feet away) and many massive trees for privacy. We looked for 5 yrs before purchasing, it was not easy with littles in a townhome. I was the typical wife/new mommy hot & pissy for a SF house but my husband turned me onto to Garth and we sat tight until a really great deal came along! (Thanks GT). Yes, last winter was brutal but winter is often ‘mild’ compared to other locales. Get yourself a water softener and get out to the mountains or foothills if you feel trapped…. Calgary is no more greedy and materialistic than any other place, I see folks in quaint small towns NS/NL spending every penny and surfing their credit cards to be able to post their toys and vacations on facebook. We drive modest vehicles (I ordered a Tesla though), shop secondhand/sales when possible and have a healthy portfolio that returned 25.7 last year! (thanks to the trump bump & my genius husband). My OP mentioned the youthful demographics of Calgary as another driver of the economy. The most coveted IP address in advertising is a mommy of a new baby (we buy a tonne of babycrap) A young population drives an economy (look at Japan’s economy and it’s struggle with aging pop). Garth never says don’t buy, he says buy/live within your means-pretty simple message. I don’t find Calgary a difficult place, we are thriving but try to be frugal (not cheapy). My kids will soon be in school full time and I will return to my career, and a second income. Calgary is definitely tough for some folks but so is Vancouver, Ottawa, St. John’s…. I agree that there hasn’t been a blanket crash here. The condos are hurting but decent properties still sell, especially inner city or ‘good hoods’ that are not overly pricey. I don’t have a crystal ball but I think Calgary and Alberta will be ok in the long run. We will have a slow and maybe somewhat deep correction in some domains but Justin Trudeau is a poser and will continue to blab about climate change but not oppose pipelines. O & G companies have become very lean and streamlined their production costs Big Time. Anyway, thanks for your thoughts, mine somewhat differ-it’s all good & just first world problems.
Kindly

#129 Jessica on 06.26.17 at 12:23 pm

Re smoking man

Somebody’s got to tell him like it is…

Do you really think you’re the first one to have written a book? Mine got rave reviews and won an award. Still didn’t make a dime unless you can count the loss I was able to claim on my tax return two years in a row.

Writing is like any other gig. If you want to make money at it, you have to write what others want to read. You have to conform to readership expectations. Free lance gigs that promote products would be one area to consider. You’d have to start by learning the basics of English grammar: who vs whom, etc.

If, on the other hand, you don’t want to conform in your writing, then you will have to find another way to make a living, outside of writing. No one makes a living by writing what they love except a handful of people in this country, and it comes down to who you are/know just as much as talent.

Writing will never pay your bills, so may I suggest a day job? There is a reason artists are dirt poor after all, and by artists I mean award-winning, peer-recognized amazing artists.

Any Joe can write a book and call himself a writer. The only way to make it as a writer, though, is to write something other people crave to read. That takes the discipline and the capacity to entertain and hold a non-narcissistic point of view.

To paraphrase Brian Fawcett, writing poetry is like standing naked on a sidewalk corner staring at your own navel and expecting someone to care.

Good luck trying to make $$$ that way.

#130 Jessica on 06.26.17 at 12:26 pm

*** and “poetry” in this context means any type of self-absorbed writing

#131 SilverSon on 06.26.17 at 12:56 pm

#116 };-) aka Devil’s Advocate on 06.26.17 at 10:13 am

Wow, I can’t believe anyone would put that in writing. It doesn’t take much thinking to realize that those statements cannot be true. Realtors have bills to pay just like everyone. Often they are higher than the average person on account of having to pay for their own expenses plus monthly rent to their brokerage to cover all the brokerage’s overheads. These costs are all at risk because they have to pay them whether they sell something or not. Then when they do sell something, they have to pay the broker’s “vig” on top of rent. I challenge anyone under such financial pressures to put someone else’s best interests ahead of their own, especially when they’re no guarantee as to when the next sale will occur. Therefore a client will NEVER EVER know if his/her interests are truly being put ahead of the realtor’s. It all depends on the financial pressures burdened by the realtor, which they’ll never admit because they have an image of success to maintain at any and all costs.

#132 Phil on 06.26.17 at 12:57 pm

Hi Garth,

You should look at this Twitter if you have not:

Scott Ingram CPA
@areacode416

#133 Interstellar dust on 06.26.17 at 1:03 pm

#129 Jessica on 06.26.17 at 12:26 pm
*** and “poetry” in this context means any type of self-absorbed writing

..

Everyone’s got one book in them. His autobiography was titled “a talking dick head”. Hope he didn’t give up his day job.

#134 LP on 06.26.17 at 1:12 pm

re: #128 Jessica on 06.26.17 at 12:23 pm

Right on Jessica! My brother, the writer, tried to make a living and support his wife/4 kids for more than 25 years. He “ghost-wrote” two volumes of memories of a local police chief. He wrote under his own name a couple of non-fiction books about subjects as varied as the birth of the Children’s Aid Society movement and the building of a Toronto-area hospital. He didn’t make a worthwhile dime from any of those projects.

He was also hired for jobs as varied as writing for television documentaries and with a partner, wrote and produced a series of audio tapes about the CRA tax system (for professionals, not the average citizen). Again, barely enough money to keep the wolf from the door.

What finally gave him a respectable income (and a small pension) was TEACHING writing to journalism students at the college level. Remember the old saying…those who can, do; those who can’t, teach? Sad to say but true.

And now our granddaughter, sixteen years old and therefore knowing everything, is hell-bent on a career as a journalist. Yes, she is a gifted writer. But she won’t hear word one about the need for a practical skill to provide the necessities until she is “discovered”. She’ll learn, just like all the others. But it kills me to know that she’ll suffer the hard knocks of all her predecessors.

If Smoking Man wants to write it should be about a subject he is expert, and I don’t mean drinking/gambling. He probably has lots to teach about software design or even a little about investing (sorry Garth). And he can even write the garbage that seems to occupy his mind and time but it better be grammatical and spelled properly.

#135 Pepito on 06.26.17 at 1:34 pm

#120 Victor V on 06.26.17 at 10:59 am

Excellent article, thanks for posting the link. Sums up my thinking exactly.

#136 Smoking Man on 06.26.17 at 2:19 pm

Jessica and LP

Later in the year when full Ufo Disclosure happens.
You will see my book sales go viral.

Let’s just say I know a bit about the topic.

#137 AGuyInVancouver on 06.26.17 at 2:25 pm

A month ago I was hopeful the GTA slowdown would be mirrored in Vancouver but I’m sad to say it is not. Homes in Richmond that languished on the market for the last 4 months all seem to have sold in the past two weeks. So the Chinese buyer is back and has either found a way around the tax or come to terms with it. Without restrictions (not just taxes) on foreign buyers, the dream of a house has slipped out of reach for all but the wealthiest in Vancouver. Rising interest rates might slow the condo market somewhat, but Poloz is too timid to make any meaningful change. The Canadian Dream is dead.

#138 neo on 06.26.17 at 2:56 pm

#124 Lee on 06.26.17 at 11:32 am
Boy, stuff in the SFH category is listed for real cheap in Newmarket, and there is a lot of it listed. This is odd since Aurora seems to be holding up quite well, at least from a listing price perspective.

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

Aurora is actually NOT holding up well. Forget listing prices. Look at sale prices.

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

Down 13.7% over previous month.
Down 16.6% over previous quarter.
Down 1% YOY.

Any way you slice it is bad, at least Newmarket is still positive YOY.

#139 Median values matter on 06.26.17 at 3:00 pm

Averages are useless. Where are the daily median values? Not impressed or influenced by Thomas’ analysis.

I personally would not hire this guy to crunch my numbers and give me guidance, but hey, that’s just me.

Who asked you to hire him? Try harder not to be a dick. — Garth

#140 Entrepreneur on 06.26.17 at 3:01 pm

#81 guru…You talk about Toronto but what about Vancouver? Victoria and other B.C. areas?

#123 Eks dee Sipel…Debt is bad and too much is evil but I don’t think many people were taught that, too much greed. Will look up Ambrose Evan-Pritchard.

#141 NorthOf49 on 06.26.17 at 3:11 pm

#102 miketheengineer on 06.26.17 at 7:55 am

I suggest you hold off from buying an East Mountain bungalow for at least a year. Most, if not all of these are overpriced. None of them are worth $400K-$500K+. Many you will find have leaky basements or asbestos flooring that will need remediating. As the flippers and wannabe landlord tycoons start to disappear, you will see average prices come back down to normal Hamilton levels. Some of the neighbourhoods in this area are hit and miss for crime, traffic, noise. If you really want to find out, find a rental in the hood (there’s enough of them) and stay for a year. Hamilton’s economy is still a work in progress and many folks with $$ are moving outside of Hamilton’s boundaries. It doesn’t make a good case for buying a $500K+ bungalow on East Mountain.

#142 Corey Muller on 06.26.17 at 3:15 pm

Hi team,
So I just received a knock at my door from a real estate pimp asking me to sell my home. Now I am a renter so this instantly changed his smile.
I told the Irish accented snake oil salesman after he told me now is a perfect time to buy…
“you should read a blog by Garth…etc. etc…

He straight away shot it down.
Then I said you guys are kidding yourself, I am from Australia and new to this area.
My statement and I quote…
“these dwellings in Oakville that are selling for 800k+ are absolute shitoles with no substance.
If interest rates go up by .5% your market will collapse!”
He then referenced Japan and how they wont raise interest rates, so why would the US or Canada.

????

Anyone that is buying a property at the moment in the GTA is an absolute retard.

Hold your cash people!

Also, if you are a parent thinking you are doing your offspring a favor by going guarantor on a loan for little Sally and Johny!!!
IDIOT!!

You are giving them a credit death sentence!!

Good luck all, wait 2 years and devour the bargains!!!

Corey

#143 Dear #105 on 06.26.17 at 3:29 pm

Nobody’s forcing you to be dumb!
Don’t buy the house!
Wait til it drops to 600k

#144 Wrk.dover on 06.26.17 at 3:32 pm

The Real Deal guy never said anything about taking out a mortgage. He talks about buying a house. So, not until you pay off your mortgage in other words have you actually bought a house.

Now write that money out of your portfolio. Period.

You now have a house worth nothing on any piece of paper listing tangible assets. You can forever trade for a house worth the same any time somewhere else.

Never use it for leverage.

Get it yet? House not equal to financial asset. But do have one for the utilising at the cost of upkeep only.

And all your other money is your portfolio.

This can be achieved on normal earnings in most of Canada, just not where lined up masses drive up costs.

#145 };-) aka Devil's Advocate on 06.26.17 at 3:35 pm

#130 SilverSon on 06.26.17 at 12:56 pm
#116 };-) aka Devil’s Advocate on 06.26.17 at 10:13 am

Wow, I can’t believe anyone would put that in writing. It doesn’t take much thinking to realize that those statements cannot be true. Realtors have bills to pay just like everyone. Often they are higher than the average person on account of having to pay for their own expenses plus monthly rent to their brokerage to cover all the brokerage’s overheads. These costs are all at risk because they have to pay them whether they sell something or not. Then when they do sell something, they have to pay the broker’s “vig” on top of rent. I challenge anyone under such financial pressures to put someone else’s best interests ahead of their own, especially when they’re no guarantee as to when the next sale will occur. Therefore a client will NEVER EVER know if his/her interests are truly being put ahead of the realtor’s. It all depends on the financial pressures burdened by the realtor, which they’ll never admit because they have an image of success to maintain at any and all costs.

Sadly there can be truth in what you speak. That is why I wrote “If you really want to see what’s important to you in real estate, enlist the services of a professional REALTOR® you trust has your best interests at heart.”

Can’t find such a trusted guide? Get a referral from a friend of family member who has such an agent. Interview the agent. If all they talk about is their greatness move on to one who asks you questions to learn what is important to you and help you determine the best path to get you there. You’ll know when you find them };-)

#146 SilverSon on 06.26.17 at 3:36 pm

#140 and #141

Where does the suggestion to wait a year or two come from? Why not recommend waiting, say, 5-7 years? Those of us who are old enough to recall the RE collapse in 1988/89 will also recall that it took around 7 years before prices stopped dropping.

Assessing the best time to put money into a balanced portfolio is way easier … anytime is the right time. Trying to assess the best time to put money into RE is just stupid if you’re doing it as an investment – that’s like trying to time your next car accident.

#147 };-) aka Devil's Advocate on 06.26.17 at 3:37 pm

#59 crowdedelevatorfartz on 06.25.17 at 8:21 pm
@#103 Devils Advocate

Cascadia?
Smoking a little reefer on a Sunday after church are we?

‘Cascadia” will occur about 1000 years after the Apes win the War …..

I’m not much of a believer in organized religion. };-)

#148 scoop on 06.26.17 at 3:39 pm

Finally a decent analysis of Warren vs Home Capital…
Even though it starts like this:

“We think shareholders and the public are still a long way from discovering the truth of what has transpired at the company. Given the evident intervention in the Home Capital drama by various arms of the Canadian government, there must be something vital to the economy at stake here.”:

http://www.zerohedge.com/news/2017-06-26/noted-short-seller-marc-cohodes-comments-recent-events-home-capital

#149 SimplyPut7 on 06.26.17 at 3:52 pm

#119 SimplyPut7 on 06.26.17 at 10:49 am

To add to my comments on #81 guru on 06.25.17 at 10:41 pm.

There is something going on in Brampton, Ontario. There is nearly 2,000 detached houses and townhouses for sale in a city with less than 600,000 people. Many of the newer semi-detached houses are pegged at a price of $599,000 – $650,000. Even though the homes have been on sale for weeks with no offers, sellers refuse to lower the asking price.

That seems a bit weird.

#150 Asterix1 on 06.26.17 at 3:52 pm

#138 Median values matter: “Averages are useless. Where are the daily median values? Not impressed or influenced by Thomas’ analysis”

Bla, bla, bla! Keep sticking your head in the sand. Thomas work is well done and pretty accurate. Keep it up Thomas!

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

Median (All homes) Newmarket:
March 15 2017 = 1,050,000
June 19 2017 = 756,000
That is a -28% median price drop.

Average (All properties) Newmarket
March 2017 = 1,071,000
June 19 2017 = 829,998
That is a -22.5% Average price drop.

The Median is looking worst that the Average! Still not “influenced”, keep buying then. Enjoy!

#151 Fish on 06.26.17 at 4:10 pm

15 or 21 year lease, I can’t believe this, in the middle of
Nowhere,

#152 Median values matter on 06.26.17 at 4:16 pm

I concede, I was being a dick with my last comment.

Thomas, if you read this – I appreciate the amount of time and effort the information you provide requires. It’s a hell of a lot easier to criticize than to create. I apologize.

Please keep up the info and if possible, is there a way to generate a daily median value for 4 main housing classes? ie. apartment, rowhouse, semi-detached, detached

Now, that wasn’t so hard, was it? — Garth

#153 chopstix on 06.26.17 at 4:28 pm

136 AGuyInVancouver on 06.26.17 at 2:25 pm
A month ago I was hopeful the GTA slowdown would be mirrored in Vancouver but I’m sad to say it is not. Homes in Richmond that languished on the market for the last 4 months all seem to have sold in the past two weeks. So the Chinese buyer is back and has either found a way around the tax or come to terms with it. Without restrictions (not just taxes) on foreign buyers, the dream of a house has slipped out of reach for all but the wealthiest in Vancouver. Rising interest rates might slow the condo market somewhat, but Poloz is too timid to make any meaningful change. The Canadian Dream is dead.
—————————

agree as would the research of Sam Cooper in a 2 part series written for the Vancouver Sun just recently…
he was on CKNW news
‘Ghost Collateral, Shadow Banking & Vancouver Real Estate’
https://twitter.com/JohnODowdIRL/status/879379638253797376

#154 Fish on 06.26.17 at 4:29 pm

Forgot to say realitor, leasing places, I will wait I don’t sign leases, month to month for the time being

#155 Howard on 06.26.17 at 5:23 pm

#136 AGuyInVancouver on 06.26.17 at 2:25 pm
A month ago I was hopeful the GTA slowdown would be mirrored in Vancouver but I’m sad to say it is not. Homes in Richmond that languished on the market for the last 4 months all seem to have sold in the past two weeks. So the Chinese buyer is back and has either found a way around the tax or come to terms with it. Without restrictions (not just taxes) on foreign buyers, the dream of a house has slipped out of reach for all but the wealthiest in Vancouver. Rising interest rates might slow the condo market somewhat, but Poloz is too timid to make any meaningful change. The Canadian Dream is dead.

————————————-

I would recommend getting out of Vancouver.

Let the place, and its thousands of empty condos, rot.

#156 Bottoms_Up on 06.26.17 at 5:57 pm

#1 Media on 06.25.17 at 3:10 pm
———————–
Sure median is important IF there is an imbalance in outliers. Looking at the graph that plots individual sales (much better than median) clearly shows the trend.

#157 Smartalox on 06.26.17 at 6:17 pm

Re: Ghost Collateral

All this talk of ghost collateral in China – the practice of using immobile assets that one does not own, to secure a loan, or to use the same collateral to secure multiple loans, and how some Canadian banks may have accepted such collateral to finance Real Estate deals in Vancouver.

Makes me wonder how much over-inflated Vancouver real estate is being used as ghost collateral for loans in China! Or how many loans each piece of Vancouver property is securing?!?

I mean, is it really 1:1? Is there any way of telling for sure? A lot of Chinese banks got burned writing loans on warehouses full of steel, in part because it was too difficult to confirm who owned the steel, or to notice when it left the warehouse.

Given how unlikely it was that the loan officers at HCG ever actually called companies to follow up on loan applicants’ employment letters, does anyone else really think it likely that any other Canadian loan officer ever actually got out of the office to confirm the existence of and legitimate title to properties in China?

Does anyone think that loan writers in China ever confirmed the existence and title to Canadian real estate assets used as collateral to secure multi-million dollar loans in China? Not including China’s well-established shadow-banking sector?

The law of organizational laziness would lead me to think not.

#158 Freedom First on 06.26.17 at 6:20 pm

No Alberta update from me in a while. Remember, it was me who wrote on the massive layoffs here when oil crashed and people called me a liar because if it was true it would be in the msm already.

Well, people in mainly Calgary who say RE is holding fine. Nobody wants to say things are not fine when holding a RE property wherever they are. Same as the media, hide the truth until they can’t.

What I am seeing is that a lot of people in AB are sure grouchy right now having been forced to sell their RE.

Really bitchy as a matter of fact.

#159 InvestorsFriend on 06.26.17 at 6:21 pm

Home capital attracting Deposits

Deposits were up about $32 million on Friday. Mostly GIC. Nothing flowing into their main High interest savings account yet. It will.

#160 InvestorsFriend on 06.26.17 at 6:27 pm

Dissing Canada and Home Capital

#125 Eks dee Sipal on 06.26.17 at 11:39 am said:

#81 guru …. Those are serious declines you are talking about. But according to last month’s price declines, it sounds about right if you extend the trend. I have made the same prediction. Credit is drying up.

Buffett is not saving the Real Estate industry in Canada, he admitted as such, he is making a play for infrastructure like Pearson Airport, for one. There is blood in the streets and that is why he is here….

Canada is a Banana Republic, I patented that statement many years ago right here on this blog. The government supports an institution like HCG that ADMITTED to fraud. That proves that the government itself is a fraud. Which of course I know all too well.

******************************
Yes, credit may be drying up. That is possible.

What FRAUD did HCG admit to? I believe they only admitted to being quite late informing the market that certain brokers were submitting fraudulent application. Is that FRAUD? maybe it is.

And would have the government shut them down? Why? Were you short the stock? They have been rescued by the whitest of Knights. Good for them.

Canada is a fine place to live and make money,

#161 T on 06.26.17 at 8:15 pm

Professor Steve Keen’s work on housing prices suggests that net immigration is a very poor predictor of house price gains over time. If domestic wage earners stop affording, who’s to say the immigrant is willing or able to pick up the full tab? Personally, I give the immigrants more credit to see our bubble (for what it is) with fresh eyes. The satellite communities (Barrie, Newmarket, etc) are in more trouble as the shortage of land is phony. Interests rates moving from 3% down to 2.5% would justify an approx. 5% increase in house prices (no more). That rate drop justifies less than 1/10th of the price gains seen of late. Many of the bull factors are old news and more than baked into current prices. In 1989, peak boomer was ~28 (i.e. boomers were the first time buyers causing the late 80’s boom). Peak millennial is about the same age now. These are the two large humps on our demographic pyramid. Millennials want in like mad, and boomers aren’t yet ready to sell (i.e. two generations). Fast forward 5-10 years and (like the 90’s) this demand will die down. The real argument for Toronto (if there is one) is based on jobs and the economy. The best factors for choking off economic growth would be no available land, and prices that only go up. Come to Ontario! a) high electricity costs b) high minimum wage c) astronomical housing costs. Finally, the next recession (perhaps global) will hit, and Canada is terribly poised to weather it.

#162 Gotta Get Out of Calgary on 06.26.17 at 11:14 pm

#157 Freedom First

It’s also the condo owners (speculators, rental investors, and the financially overextended) in
Calgary who are bitchy about their real estate NOT selling. Detached houses are selling close to asking price. Condos are tanking badly.

A few weeks ago I posted about three condo units in my converted apartment building being on the market since January.

Six months later, one unit that started at $240,000 and reduced multiple times still sits on the market at $225,000. The other unit began at $219,888 and after multiple reductions sits at the current ask of $209,900 (and is on a rental listing now as well).

Both were rental investments and the desperation to sell is almost tangible.