The slither

Joe’s back. He asked us last week if he should keep his rock-bottom variable rate mortgage in place, or lock in. The rate (1.9%) was so silly-cheap it made sense to hang on, for the reasons explained. But he’s not convinced.

“CIBC offered me 3 years locked in at 2.29% if I want to switch to a fixed,” he says now, “or 4 years at 2.34%. Should I take one of those deals and run? Appreciate the insight.“ Well, Joe, if you’re going to write to a dodgy blog every week at ask the same question, then nail it down. And if you want another 12 months of serenity for an extra five lousy basis points, go for four.

Jeez.

Well, I guess rate anxiety is about to mount for everyone, after the events of Wednesday. The Canadian dollar rocketed a full cent higher and government bond yields swelled after our central bankers left no doubt what comes next. The market’s now giving 65-70% odds that the first (of several) rate hikes will take place on July 12th – way higher than the 39% probability given the event just a day earlier.

Why is this happening?

Simply, the era of emergency interest rates – here, in the US and around the world – is coming to an end. Yeah, it’s taken nine years to recover from the biggest, baddest, fugliest financial crisis since the 1930s, but central bankers think it’s time they turned off the tap to cheap money. The economy is strong enough to withstand it, they say. Besides, when it’s too easy to borrow, people borrow too much. Household debt’s off the charts and an ocean of liquidity has created asset bubbles – none bigger, scarier or more stuffed with risk than Canadian residential real estate.

Bank of Canada boss Stephen Poloz and one of his sidekicks (Lynn Patterson) were as clear as central bankers ever get when facing the media this week.

“Rates are of course extraordinarily low,” Poloz said, taking about how the bank slashed in 2015. “It does look as though those cuts have done their job… certainly we need to be at least considering that whole situation now that the excess capacity is being used up steadily.” Added Lynn: “Two years later, it is our view that these cuts have helped facilitate the economy’s adjustment to the oil price shock and that the economic drag from lower prices is largely behind us.”

Markets reacted fast. Bond prices lower, yields fatter. Dollar up. Preferreds popping. Now the eggheads at Bank of Montreal Economics think Poloz will add a quarter point in mid-July and another in January. That may not sound like a lot, but those two moves alone will double the Bank of Canada rate from 0.5% to a full 1%. It’ll add half a point to lines of credit, taking them from (in general) 3.2% to 3.7%, tack 50 basis points onto variable rate mortgages, while increasing the prime at chartered banks to 3%.

Scotiabank now goes one better. Rates will move three times, it says, in July, October and January.

And that’s just the start. Meanwhile the Fed has jumped US rates three times in six months, has one more increase on deck for later this year (confirmed yesterday) and three more planned for 2018. The Bank of England is also, despite Brexit and a broken government, anxious to raise rates, while the spend-happy European Central Bank is considering ending its massive stimulus.

Of course, the cost of money will not spike, surge or spiral higher. No drama. Instead, it’ll just slither up until one day three years from now you’re shocked at how that old 2.5% mortgage you’re renewing turned into one costing 4% or even 5%. Meanwhile the inverse relationship between the cost of money and the value of real estate will do some crazy things to urban housing markets. It’s inevitable. The reason crap houses now cost a million is not due to shadowy Chinese dudes, but rather because your daughter can borrow ten times her entry-level salary for less than 3%.

In order to get us back from the edge of deflationary disaster in 2008, that’s what guys like Poloz did. They knew the risk of creating an asset bubble was there, but the threat of a depression was worse. So they rolled the dice. It worked. We survived. And now, reality.

For the first time in seven years, there will be an increase. Maybe in July, maybe later. But get used to the idea. More will follow. Given what some real estate markets are already doing, the outcome will be predictable.

In some hoods, we’re there already.

Months of inventory start to pile up

Source: Realosophy

151 comments ↓

#1 Leo Trollstoy on 06.28.17 at 6:43 pm

CAD/USD range bound as Canada and US trade hikes

Canadian economy getting stronger

STEM leads the way.

Easy

#2 Pop Goes The Price on 06.28.17 at 6:47 pm

Yawn…

A slithering rate hike means a successive pop in the market after each rate hike as people ‘panic’ to get in before the actual hike. So over a few years, prices actually go up more – not the opposite as is ‘supposed to happen.’

While counterintuitive, think of what has happened to date with federal measures designed to cool the market. Take the new qualifying rules where you must qualify at the new 5 year fixed rate. That was supposed to be the equivalent of a ‘doubling the interest rate’ and weed out a lot of first time buyers.

How is that ‘qualifying at the 5 year rate’ supposed market killer working out? Apparently, no so well, since prices kept going up after it was implemented…

#3 Howard on 06.28.17 at 6:51 pm

Garth, as you know, at the top and bottom of every cycle, there will be a bunch of articles that come out that just scream “end of cycle”.

I think a good candidate for such an article pertaining to the top of the RE bubble is this from the Globe on March 3rd touting Shelburne ON (yes, Shelburne) as the next big thing within the Toronto blast zone (as they call it).

https://www.theglobeandmail.com/news/toronto/toronto-driven-growth-fuels-boom-in-sleepyshelburne/article34205376/

“When Toronto-driven growth started reaching the town a decade ago, Shelburne was ready. New cookie-cutter subdivisions that look much like the ones down the road in Orangeville and Brampton have sprung up – five of them since 2003, with another two expected to break ground this year. Between them, those two will have more than 500 new houses.”

Anyone who bought one of those 500 new houses earlier this year in a pre-sale is in for years and years of pain until finally being forced to sell at a loss.

#4 Nonbuyer on 06.28.17 at 6:52 pm

I see no basis for the claim that low rates are coming to an end, other than widespread lip service. Central bank balance sheets and low rates are the only tools that generated this so-called recovery. I see more basis for the idea that central bankers will say one thing and do the opposite(or a greater problem will be created so the cure can be rates lower yet).

#5 4% interest rate Toronto houses crash 60% on 06.28.17 at 6:53 pm

It’s coming. :-)

#6 JustMe on 06.28.17 at 6:55 pm

New Brunswick real estate offers a lesson on peak housing prices

the real peril after a market peak is a logjam in sales, with sellers pining for prices past and unwilling to capitulate to wary buyers.

the real estate market simply seizes up. That was certainly the case in Saint John. After six years, sellers had finally adjusted to the unpleasant reality that if they wanted to sell their home, they would have to accept a lower price.

https://www.theglobeandmail.com/report-on-business/rob-commentary/new-brunswick-real-estate-offers-a-lesson-on-peak-housing-prices/article35459358/

#7 TCContrarian on 06.28.17 at 6:55 pm

“In order to get us back from the edge of deflationary disaster in 2008, that’s what guys like Poloz did. They knew the risk of creating an asset bubble was there, but the threat of a depression was worse. So they rolled the dice. It worked. We survived. And now, reality.” -GT
**********************************************

Some think that all this did is to merely delay things. That they ‘saved’ us from serious recession, but only to guarantee a ‘recession, worst than any since the Great Depression’.

What do others think about this? Given that debt levels are now higher and more widespread, and more asset bubbles everywhere, I tend to agree.

TCC

#8 Livin Large on 06.28.17 at 6:57 pm

Or, the BoC will nudge up only to find a negative result less agrreable than they’re willing to accept.

Personally, I’m thinking thwre’s a 50/50 chance that the BoC will find one of those unintended consequences happens.

#9 The Technical Analyst, CSTA, CPD on 06.28.17 at 6:59 pm

From our trading desk:

USDCAD in your portfolio?

CAD up 1.25% today, up 4.13% since May 5th. We have now started into a long C wave downtrend for the USDCAD that started in 2011. Oil – Raising support line will further support CAD with a price range support of $44 turns oil from bearish to neutral. Short covering in crude. As a result, a major shift in market behavior could be underway as the long-term bullish outlook for USD/CAD unravels; breaking rising trend/channel support. This is why you do not hedge a CAD portfolio in another currency at the start of a CAD bull run.

Governor Stephen Poloz argues the rate cuts from 2015 “have done their job”. CAD extends gains as Poloz and Patterson encourage view that hikes are on the table. The market seems to agree as the odds of a rate hike in 2H 2017 rose aggressively this week to 67% from 39% earlier this week according to Bloomberg.

Fresh remarks from Federal Open Market Committee (FOMC) Chair Janet Yellen have failed to generate a meaningful reaction, Fed Fund Futures still pricing a 50/50 chance for a move in December.

The psychologically important 1.30 level will remain in focus, but a rebound in crude oil could help take USD/CAD well below 1.3000 in H2 with extended downside targets at 1.28, extended target 1.24

Good luck trading out there.

#10 Mark on 06.28.17 at 7:00 pm

Raising rates when Canadian CPI is already deflating on a month-over-month basis, and such deflation is likely to accelerate as the result of the rising CAD$?

While not impossible, seems incredibly dumb to me. Especially with unemployment being so high amongst Canadian workers and employment quality being poor. The output gap is so wide you could drive a bus through it at this point.

If Poloz et al raise rates, they probably will be forced to cut them in short order. With egg on their faces. If anything, the real contemplation at the Bank of Canada should be whether to cut rates at the next meeting to get out ahead of the deflation that is increasingly gripping the Canadian economy. Now that the Realtors can’t hide behind their ‘numbers’ that largely were inflated due to sales mix adjustments, not prices rising on individual identical houses in the post-2013 peak era.

#11 rainclouds on 06.28.17 at 7:07 pm

And the red/green party here in the BPOE is poised to overthrow the Con/Libs to commence the looong overdue unwind.

Meanwhile the Con/libs express shock that their NDP clone speech was summarily dismissed .oh look, we found $2.8 billion yesterday.

What part of get out are the desperate hypocritical hillbillies not understanding ?And we wonder why people don’t vote…..

#12 i.see.debt.people on 06.28.17 at 7:08 pm

about time!

#13 G1 on 06.28.17 at 7:09 pm

Garth, you say that gold is down 30% in the last 8 years but forget to mention that it is up 350% over the last 15 years! Please don’t pick a time period just to make an argument that looks good. Gold and silver are unfortunately manipulated and the banks have admitted to this. However, more and more countries and central banks especially in Asia are catching on and the futures paper market that is leveraged 100-1 (yes it’s that big) relative to physical will sooner or later fail and we will see a big price appreciation. When stocks tanks and you don’t have gold or gold stocks your diversified portfolio will suffer and there may be no ammunition to prop up the markets like in 2009 so the crash may last much longer. If you want to hold stocks and bonds do not forget to hold gold and silver stocks as part of this portfolio. Trust me you will thank me one day just like all the people who were calling you crazy for predicting a housing downturn in Toronto and Vancouver are thanking you now

#14 shadowy on 06.28.17 at 7:15 pm

The reason crap houses now cost a million is not due to shadowy Chinese dudes, but rather because your daughter can borrow ten times her entry-level salary for less than 3%.

Who are the shadowy dudes who let the daughters do that horrible thing? Will you ever tell the world?

#15 Smartalox on 06.28.17 at 7:17 pm

So interest rates on lines of credit, including HELOCs, may go up by 0.5%, in the next 6 months, and possibly by a 0.25% as early as two weeks from now. And 40% of HELOC borrowers can’t even afford to make interest payments, instead bundling their interest payments into what they owe on the LOC, piling more debt onto their debt, until they reach the limit.

The death-spiral accelerates.

But the un-spoken consequence of rising rates is that banks and other lenders may soon find it more profitable to lend that money to businesses instead of consumers – and they may decide that they want that money BACK, NOW!

Remember, HELOCs are a class of lending called ‘demand loans’: the lender can demand payment of the loan, and interest AT ANY TIME, regardless of how current you’ve been with the payments, or how little you might actually owe, relative to your credit limit.

It’s not just housing prices that are slipping, I track the classic car markets too, and I see a lot of sweet ‘weekend’ cruisers, and half-finished hobby project cars sitting (overpriced and unwanted) on Craigslist.

Trucks, Tools and cabinets are next.

#16 Entrepreneur on 06.28.17 at 7:20 pm

About time and at long last, feels like someone broke a mirror of seven years of chaos. Now back to normal or what the system calls normal, maybe more their way of thinking.

Diverted a depression so no need to buy precious metals at this point. Ridiculous high-priced homes/houses are another matter.

On the news today “Canada is being sued the most in NAFTA agreements” doesn’t sound like these free international trades are working out for us.

#17 Average Joe on 06.28.17 at 7:20 pm

The problem here is that lowering the borrowing rate is the equivalent of trying an old trick on a new dog (couldn’t resist the canine reference).

A lower cost of borrowing used to mean an opportunity for investing in infrastructure and capital equipment, to make/move goods locally, faster and at lower cost.

But this new dog was more interested in making a quick buck by flipping houses, more often than not, without adding a penny of value along the way.

I like the frequent reference on this blog to house porn which, in this context, I understand means the creation of a fantasy world where (sometimes renovating and) flipping houses comes only with reward, and no risk.

Raising interest rates to historical norms simply moves reality out of the TV/internet realm back where it belongs.

#18 Mark on 06.28.17 at 7:24 pm

“What do others think about this? Given that debt levels are now higher and more widespread, and more asset bubbles everywhere, I tend to agree.”

I basically agree. One number, that showed GDP growth at 3.5%, which is probably going to be revised downwards anyways due to some flaw in methodology or math, and people are thinking that the Canadian economy is somehow back on its feet. Lol.

Housing is decelerating. The Canadian tech/STEM sector is comatose and is on death’s doorstep. Retail bankruptcies are accelerating. Rents are falling. Housing prices are falling nationwide. Oil and gas prices aren’t much above break-even on a cash basis, and certainly well beneath break-in on an all-in basis. The mines (coal, uranium, potash, gold) can barely even give their production away. Where’s the growth? Wherever it is, its not doing anything to trigger inflation. The Bank of Canada’s mandate is unequivocal; keep inflation in the target band. A rate hike would further damage their credibility in keeping inflation in the target range given that its rapidly falling out of the range to the downside.

#19 TortyPapa on 06.28.17 at 7:25 pm

Vancouver prices down 13% in 1 month!!

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

#20 Bdog on 06.28.17 at 7:33 pm

Rates will just tick up a little bit, like to 3.0% on a fiver, not enough to really change the market. I dont expect defaults and vulching opportunities the basement dwellers here are hoping for. Thanks for the hope tho Garth, I can always count on that.

#21 Rooskie on 06.28.17 at 7:33 pm

Supremely irratating the CAD is going up right after I go to 20% USD in my portfolio as recommended. Down a good $1000 CAD as of now. Should I be selling my USD for CAD? Stand pat?

#22 shadowy on 06.28.17 at 7:38 pm

Yellen: “I Don’t Believe We Will See Another Crisis In Our Lifetime”, 2017

#23 RentYVR on 06.28.17 at 7:41 pm

The BoC is reckless to try and raise rates when there’s little growth or inflation. No chance we’re anywhere near 2.5% in 3 years. I’m keeping my duration long and strong

#24 akashic record on 06.28.17 at 7:44 pm

Birthday present to Canadians from the Supreme Court

http://www.zerohedge.com/news/2017-06-28/top-canadian-court-permits-worldwide-internet-censorship

#25 Interest rates going Uppa UP UP on 06.28.17 at 7:44 pm

Interest rates going UPPA UP UP in crashing housing market is bad. You shysters that speculated on RE will eat it. Watching Bnn Garth and some RE shill who was crying how bad rent controls will be for renters. Th RE shill said the number of people who own more then one property has jumped over 120,000 People (using provincial government stats I believe he said). The numbers have gone straight up last few years. Basicly these people providing rentals will sell and so rental prices will go up is the deluded Thinking. To me its 120000 who could lose more then one property in a falling market.

#26 CandianOne on 06.28.17 at 7:50 pm

Folks,

As we descend into this world of abnormal world of oil and gas and by extension the fossil fuel industry some interesting take from folks at vox. Makes it for an interesting change in tunes from the big oil lads anyways…… happy reading.

https://www.vox.com/energy-and-environment/2017/6/27/15869522/exxon-carbon-tax

M39AB

#27 Smoking Man on 06.28.17 at 7:50 pm

Let’s see we have the potential for a real estate crash, Wynne’s 16 steps, listings surging and now Poloz gung-ho on starting the rate spike cycle.

For, those of you to cheap to spend a few bucks on my book. Here is Shlong Zumanga monolog to Smokey trying to pull him over to the dark side of globalism.

I wrote this chapter early 2016 long before mass awareness to globalism that Trump brought out, rebranded LGBTQ colors on bank logos on twitter and facebook. And all the other wonderfull stuff going on right now.

Excerpt from the Second last chapter:

“Shlong, how the hell can you take over the world? It’s next to impossible.”
________________________________
“Smokey just look what I’ve done in the western world. I’m worth five hundred trillion dollars. I own and control all of the mainstream media, every politician, central banks in every country. The United Nations, Agenda 21, My new religion the climate change, gender wars, race wars. LGBT. Open borders. It’s all part of my destabilization plan.

Once I economically and psychologically destroy the western world it will be easy for me to come out of the shadows and be the world’s savior. People will kneel to me and my hybrids. Humans in the western world are stupid by design. I get their kids early, my curriculum ensures the removal of critical thought and thinking. The biggest ass kissers get rewarded with the best obedience certificates.

The icing on the cake is the idiots pay for it by going into debt at my banks to pay for my schools, a win-win. I’ve made the latest generation of students soft little snowflakes, easy to control and they even police themselves. They are programmed to go hysterical if they sense someone trying to educate them, this is my best generation ever. Now the Russians and Chinese are much harder to deal with, that’s why I need your help,” he said.

#28 Fed-up on 06.28.17 at 7:52 pm

The money markets are a joke. So just a suggestion that we just might, maybe, possibly, not so sure, raise rates by a measly quarter point has the northern peso boom upward 4 cents in a month or so. And that’s with oil struggling to stay above $42.00 and the Fed actually raising rates instead of just talking about it.

Whatever, LOL.

#29 calgarytran on 06.28.17 at 7:52 pm

Convert 10% of your fiat into crypto.

#30 SimplyPut7 on 06.28.17 at 7:53 pm

While I am happy Realosophy is sharing real-time data that TREB has kept hidden for years. There’s something weird going on in Brampton. I think it will become a buyers market and look similar to King soon.

#31 InvestorsFriend on 06.28.17 at 8:00 pm

Home Capital

Deposits are up about $100 million since Buffett rescued the company last week.

http://www.homecapital.com/press_releases/2017/HCG%20Update%20Liquidity%20June%2028%202017.pdf

Someone later yester day responded to me as follows:

You shyster mortgage broker. Home Capital can going bust anytime. I wouldn’t risk locking in for a week yet alone a year or five years. Who wants to wait months or even years to get money back if and when they go bust

******************************************
Well, I am not a mortgage broker. I would have agreed with you a month ago. But after Home sold some mortgages at about par, it looked like bankruptcy was unlikely. And after Buffett rescued them last week, Bankruptcy if off the table.

A friend who had quite a bit of money (that he only recently came into) parked in Scotia Bank’s momentum interest account bought a Home Trust GIC today. This used only 10% of his money. One year at 2.5%. This was on my advice. It sucks in a lot of ways but is better than what he was getting. It’s taxable but he is in a low tax bracket. He also grabbed a restaurant royalty dividend investment for better tax efficiency. I tried to get him to buy into Garth’s total recommended weightings in ETFs but it was a bit too complicated for a total newbie at this point. But I will steer him to ETFs and those weightings over time. (This way he can blame Garth rather than me if things go wrong)

#32 Olive on 06.28.17 at 8:04 pm

LOL !!!

Did Realosophy get the sourced chart and comments from a broken crystal ball.

#33 Madcat on 06.28.17 at 8:04 pm

Maybe the US is strong-arming Canada to raise their interest rate. Perhaps something else is at play here…

#34 Chaddywack on 06.28.17 at 8:12 pm

Heard by me on a Vancouver bus today….

“I’m not worried if interest rates go up 0.5%. My mortgage payment is $4,000 a month….so that’s like 20 bucks a month more in payments……big deal.”

I guess the BC Liberals 16 years of education cuts really did affect things!

#35 dr. talc on 06.28.17 at 8:18 pm

don’t let the numbers fool you, the 10% drop since April is nothing. Morneau made it harder to buy, he gave millions of people new reasons to not sell, one of the less obvious is the upgrade market, which was killed in TO by David miller, but it’s alive elsewhere, but quess what? if you want to port your mortgage it’s a new app, that’s right, qualify all over again, and many don’t qualify, so they stay put, they’re doing renos and additions instead, less listings , add to that the green belt, ‘smart growth’ or what ever Marxist name they use, the point is- less subdivisions, I don’t know Shelburne but if I bought a pre construction house there in a subdivision, I sure wouldn’t lose any sleep over it- buying pre construction is a tried, true and time tested way to build wealth

#36 Smallfry on 06.28.17 at 8:21 pm

Got a lovely letter from Mastercard politely telling me that as of August, my 19.99% interest rate is changing to 24.99%. I was expecting this because all things are connected and have this paid off, so no big deal. Ouch to the people living off credit, this is gonna hurt a lot of people…. but you reap what you sow.

#37 Realtor and mortgage brokers are deluded on 06.28.17 at 8:25 pm

Financial pain awaits realtors shills, mortgage brokers shills , and on the brink of going bankrupt speculator. The crash in the GTA is going from bad to worse. Nothing is selling. Increased interest rates on maxed out speculators = Hard crash.

#38 AGuyInVancouver on 06.28.17 at 8:30 pm

#18 Mark on 06.28.17 at 7:24 pm
“What do others think about this? Given that debt levels are now higher and more widespread, and more asset bubbles everywhere, I tend to agree.”

I basically agree. One number, that showed GDP growth at 3.5%, which is probably going to be revised downwards anyways due to some flaw in methodology or math, and people are thinking that the Canadian economy is somehow back on its feet. Lol.

Housing is decelerating. The Canadian tech/STEM sector is comatose and is on death’s doorstep. Retail bankruptcies are accelerating. Rents are falling. Housing prices are falling nationwide. Oil and gas prices aren’t much above break-even on a cash basis, and certainly well beneath break-in on an all-in basis. The mines (coal, uranium, potash, gold) can barely even give their production away. Where’s the growth? Wherever it is, its not doing anything to trigger inflation. The Bank of Canada’s mandate is unequivocal; keep inflation in the target band. A rate hike would further damage their credibility in keeping inflation in the target range given that its rapidly falling out of the range to the downside.
____________________________
And which alternate universe Canada are you living in?

#39 Disconnect on 06.28.17 at 8:48 pm

Test, model, control, optimize, repeat. That’s basically it. Old tech meets new tech. The returns on investment are insane. Very disruptive. That’s what’s happening in many industries.

#40 Reximus on 06.28.17 at 8:49 pm

#33 Madcat on 06.28.17 at 8:04 pm

Maybe the US is strong-arming Canada to raise their interest rate. Perhaps something else is at play here…

——–
Nafta

#41 BillyBob on 06.28.17 at 8:53 pm

#35 dr. talc on 06.28.17 at 8:18 pm
I don’t know Shelburne but if I bought a pre construction house there in a subdivision, I sure wouldn’t lose any sleep over it- buying pre construction is a tried, true and time tested way to build wealth

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

hmm. Reminds me of Dubai in about 2009 when countless colleagues of mine went bust buying off-plan. Your words sound so exactly like them it’s eerie.

Hey at least in Canada they don’t throw you in jail for not paying your debts. That’s good, I guess.

#42 Asterix1 on 06.28.17 at 8:54 pm

Lots here still sticking their heads in the sand, trying to convince themselves that rates are not going up! Even funnier are the ones who believe that a rate increase will not affect the market! Business as usual.

Rates are going up and many will be forced to sell. Are some forgetting the brutal debt levels of Canadians?

Let’s not forget this Manulife survey:
“A 10% hike to mortgage payments would sink almost 3 quarters of homeowners”

Rate hikes will be the start of the end for this bloated bubble.

#43 Joe2.0 on 06.28.17 at 8:55 pm

Nothing’s changed from the banks end game tactics, QE and low interest rates haven’t miraculously resolved anything.

The cheap money dangled before the sheeple via proven marketing formulas has only enticed everyone possible into borrowing money.

Rinse and repeat.

Now that the trap has been set with the consumers taking the bait the banks will over time tighten the noose.

#44 Terry on 06.28.17 at 8:57 pm

“Yeah, it’s taken nine years to recover from the biggest, baddest, fugliest financial crisis since the 1930s, but central bankers think it’s time they turned off the tap to cheap money.”

“So they rolled the dice. It worked. We survived. And now, reality.”

So you really think we survived? Billions and Trillions in overhang off the chart debt everywhere 9 years later! FASB rule changes in March of 2009 that almost to the day put a bottom to the market bleeding. Nothing has been repaired Garth. All the bad debt is still there. They are just allowed to hide it off their balance sheets. The ship we are all sailing on has a soft bottom and it will go down and sink right to the bottom. When that will happen and when the electronic runs on the banks will begin again no one knows. I just always wonder when those who control and move around huge sums of money and securities will once again awaken in a cold sweat and decide this is the day, once again, to head for the exits?

#45 Fake News on 06.28.17 at 9:14 pm

One of these days “ACTUAL FACTS” with DATA will be available in Greater Vancouver. In the meantime……prices are still sky high and will stay that way until…..actual stats with real factual data are available in Greater Vancouver.

#46 Fake News on 06.28.17 at 9:19 pm

#38 AGuyInVancouver on 06.28.17 at 8:30 pm
#18 Mark on 06.28.17 at 7:24 pm
“What do others think about this? Given that debt levels are now higher and more widespread, and more asset bubbles everywhere, I tend to agree.”

I basically agree. One number, that showed GDP growth at 3.5%, which is probably going to be revised downwards anyways due to some flaw in methodology or math, and people are thinking that the Canadian economy is somehow back on its feet. Lol.

Housing is decelerating. The Canadian tech/STEM sector is comatose and is on death’s doorstep. Retail bankruptcies are accelerating. Rents are falling. Housing prices are falling nationwide. Oil and gas prices aren’t much above break-even on a cash basis, and certainly well beneath break-in on an all-in basis. The mines (coal, uranium, potash, gold) can barely even give their production away. Where’s the growth? Wherever it is, its not doing anything to trigger inflation. The Bank of Canada’s mandate is unequivocal; keep inflation in the target band. A rate hike would further damage their credibility in keeping inflation in the target range given that its rapidly falling out of the range to the downside.
____________________________
And which alternate universe Canada are you living in?

____________________________

Mark is correct. What….because there are a couple of VC’s like Highline that are “pushing money around” with Apps no one will ever use. And because there are a few incubators, accelerators, combinators and other “tech ators” around Vancouver that means the whole tech sector is booming?

Just like when Gordon Campbell told everyone “Become a teacher or nurse” and now there is a GLUT of them – Crusty Clark said 10 years ago “learn to code” – guess what? Now there is a glut of them.

Go look up the top ten VC’s in Vancouver. Look at their portfolio and report back and tell us how many of the useless apps they have funded sound familiar to you. I bet you its only 1 out of 100. And YES we have ALL HEARD of Hoot Suite (which is going broke and firing people by the way).

#47 will on 06.28.17 at 9:24 pm

“Yeah, it’s taken nine years to recover from the biggest, baddest, fugliest financial crisis since the 1930s, but central bankers think it’s time they turned off the tap to cheap money.”

fug·ly
[ˈfəɡli]
ADJECTIVE
very ugly or unattractive:
“I told him we all thought he was fugly”

Urban Dictionary says this is short for f***ing ugly.

Didn’t know that. Ty Garth for the usage.

#48 Ret on 06.28.17 at 9:28 pm

#34 “I guess the BC Liberals 16 years of education cuts really did affect things!”

Apparently so! I can’t make your math work. B.C. needs to look at their math curriculum.

#49 Doghouse Dweller on 06.28.17 at 9:34 pm

Saved us from the edge of deflationary disaster in 2008, that’s what guys like Poloz did.
================
No Garth, they created the disaster and bilked savers, pension funds, tax payers and retirees out of an ocean in income for the last decade.
Now its time to bleed the debt slaves.

There must be some job openings in the upper echelons of Banker Shangri-la

#50 Smoking Man on 06.28.17 at 9:44 pm

#40 Reximus on 06.28.17 at 8:49 pm
#33 Madcat on 06.28.17 at 8:04 pm

Maybe the US is strong-arming Canada to raise their interest rate. Perhaps something else is at play here…

——–
Nafta
…..

Its Zumanga, he’s pure evil. Trump is his mortal enemy, backed by someone from Zimangas home town. Deplorables are the true risistes. The SJW are products of Zumangas school system.

#51 People are Strange on 06.28.17 at 9:56 pm

Lower rates? What the @&!?!

From what to what?????????

#52 Mark on 06.28.17 at 9:57 pm

“No Garth, they created the disaster and bilked savers, pension funds, tax payers and retirees out of an ocean in income for the last decade. Now its time to bleed the debt slaves.”

As Garth has pointed out numerous times, balanced portfolio investors (including those entities you mention) have done just fine in the wake of the 2008/2009 financial crisis. What’s the problem? A few individuals with one-asset strategies have suffered, but generally its been a very positive environment, especially for pension funds, insurers, and financials who have experienced abnormally high returns on longer-term fixed income and US equity investments.

If rates hadn’t been lowered, most of the insurers and pensions likely would be completely bankrupt now, and bond market returns would have been dramatically less.

#53 Smoking Man on 06.28.17 at 9:59 pm

Math for idiots.

https://youtu.be/d7_X7heM-_E

Great channel to subscribe to.

#54 Leo Trollstoy on 06.28.17 at 10:18 pm

The great thing about tech is that the jobs are plentiful and there’s something for everybody. If you suck, you’ll still get a low paying job. If you’re good, you’ll get anything you want and job offers weekly.

With the Canadian economy improving the difficulty in finding quality tech candidates will worsen. Canada is facing a shortage of 220,000 tech jobs by 2020.

https://beta.theglobeandmail.com/report-on-business/rob-commentary/canada-cant-fall-behind-in-the-global-race-for-tech-talent/article35459472/?ref=https://www.theglobeandmail.com&service=mobile

https://qz.com/1006812/programmers-get-so-many-job-offers-search-site-indeed-created-a-special-spam-filter-to-help-them-deal-with-it/

#55 Nuke on 06.28.17 at 10:19 pm

https://www-forbes-com.cdn.ampproject.org/c/s/www.forbes.com/sites/eamonnfingleton/2014/02/02/in-worlds-best-run-economy-home-prices-just-keep-falling-because-thats-what-home-prices-are-supposed-to-do/amp/

German houses down 10%, after 30 years. Planned that we.

#56 Leo Trollstoy on 06.28.17 at 10:19 pm

Since there isn’t enough tech talent in Canada, I hope the government fast tracks immigrants to fill the void. We don’t want to fall too far behind!

#57 Pete on 06.28.17 at 10:22 pm

C$ rose not because of rate rise, but because in general, the US dollar index has dropped from 103.50 from Jan 1, 2017 to 95.75 now, a drop of 7.5%. When US dollar recovers, C$ will drop again fast.

#58 Doghouse Dweller on 06.28.17 at 10:24 pm

#52 Mark
Hey Mark TSUP, for sure we savvy investors did well , rode the bond funds to zero for hefty capital gains, picked up some distressed real estate and loaded up on div payers when Bernanke said get stock or go broke. Found the bottom and loaded up on TSE:WPM for a double hitter and dumped them preferreds before the rout.

So whats the problem?

#59 SimplyPut7 on 06.28.17 at 10:29 pm

So who in Toronto wants to bid over asking now?

#60 Mark on 06.28.17 at 10:29 pm

“Since there isn’t enough tech talent in Canada, I hope the government fast tracks immigrants to fill the void. We don’t want to fall too far behind!”

Nonsense, complete and unadulterated nonsense. Not only is there tons of tech talent in Canada, but Canadian firms are so overwhelmed with applicants that they don’t even bother to respond to all but a fraction of the highly qualified and talented people who apply.

Its pretty bad out there. Sure, there’s lots of firms who want to pay $40-$60k for tech talent, but to call those sort of jobs evidence of a tech boom or demand for talent is pretty ridiculous.

If Canada falls behind, it will be for a lack of using its own talent. And Canada imports large numbers of talented foreigners each year, and largely relegates them to underemployment or unemployment and the humiliation such entails. Many of those people, after they graduate from driving taxi cab with their foreign STEM degree, traditionally have become RE speculators. However, with the falling prices nationwide, that game is likely to end in disaster for many.

#61 Mark on 06.28.17 at 10:32 pm

“Canada is facing a shortage of 220,000 tech jobs by 2020.”

About the only truthful thing you’ve said in a long time Troll, even though I suspect it was merely a Freudian slip. Canada has a huge shortage of tech jobs, relative to the talent that’s available, able, ready, and willing to work at them.

Those articles you link are largely troll-bait by the industry that wants to bring in more immigrants to further suppress its labour costs to that of the 3rd world. Not supported by the real world facts, that of employment prospects in the industry being very poor, particularly for higher-end talent.

#62 Reximus on 06.28.17 at 10:35 pm

So who in Toronto wants to bid over asking now?

——

20% of sales in Toronto are still over ask

#63 S.Bby on 06.28.17 at 10:41 pm

#13 G1
Buffett has a stake in WPM

#64 Doghouse Dweller on 06.28.17 at 10:43 pm

#52 Mark
Hey Mark TSUP, for sure we savvy investors did well , rode the bond funds to zero for hefty capital gains, picked up some distressed real estate and loaded up on div payers when Bernanke said get stock or go broke. Found the bottom and loaded up on TSE:WPM for a double hitter and dumped them preferreds before the rout.

So whats the problem? Some did well despite what what guys like Poloz did, And plenty have been royally screwed. Ask the Chicago cops where there pension money is. To say that these people saved us from anything is a complete white wash of the facts.
All they have done is sponsor a Global Money Printing Competition
and its not over till the bearded lady sings.

#65 SO True #34 Chaddywack on 06.28.17 at 10:54 pm

$4000/mo payment at 2.6% fixed 5 year rate on 25 yr amortization means mortgage about $883K.

A 0.5% rate increase to 3.1% increases payment to:

$4225/mo.

Ya, that’s only $20/mo more…

The new YVR math.

Good one Chaddywack.

#66 Really! on 06.28.17 at 10:55 pm

Ok my friends! Here is my story! My sister-in-law sold her McMansion in GTA, sold $70k over list after 5 days, closing in 50 days! she sold early June , and she was breathing a sign of relief as she was late getting listed and was worried she missed the peak! Well she sold over list and good for her! Her closing day is tomorrow, and of course she purchased a new condo in the sky! IT is also
closing tomorrow! WELL …..as Derek would knows , or has learned…it’s not over till the “fat lady sings” ! She gets a call from her realtor yesterday,that the purchaser is having some difficulty getting his financing in order! His SChed A bank pulled his financing, and he has to seek Alt B lending! OOPS!!! I feel bad for her, as she thinks she can bridge financing on short notice! NOT going to happen! Her “vendor” (a realtor) for her new condo, said ” talk to the hand” “I’m not giving you an extension to close, I have a commercial deal closing on Friday and I need my money! I have extend my purchase already once, so NO forgiveness here! ”
I would say the TSH hit the Fan!!!! Hang on TO, there is going to be a court room filled with Derek’s and Dereka’s!!!
I’m sure that is isn’t not the first or the last story , you will hear! Unfortunately , her event causes a whole string of trauma in many people lives, and there will be a whole lot of sleep lost over the next several days! The good people will suffer and the rotten ones will declare bankruptcy and the lawyers will win with the legal fees obtained in litigation!
MY MY a purchase and sales agreement is just two layers thicker than one-ply toilet paper!
This is very unfortunate , but has become today’s realty!
OOPS typo… Should be REALITY!!!!

#67 Mark on 06.28.17 at 11:01 pm

“Ask the Chicago cops where there pension money is.”

Chicago cops would’ve seen their pension scheme collapse no matter what the interest rate environment. If I understand correctly, most of those defined benefit schemes base their pay on the final few years of work. So the cops, or public sector workers are promoted and put in a bunch of overtime, and wham, their pension contributions exceed that of the reasonable long-term returns on money by a wide margin.

Defined benefit plans, unless the actuarial assumptions are sound, and “gaming” such as described are prohibited, are basically Ponzi schemes. The cops should be mad at their union and the politicians that set up the plans in the first place with the assumptions and contribution rates used, not with the Federal Reserve for implementing monetary policy that kept the US economy out of hyperdeflation and still in some semblance of function over the past decade. If anything, the coming rising interest rate environment will prove to be absolutely brutal to the entire spectrum of FIRE concerns, particularly the insurers and pension funds which are wholly unprepared for the sort of asset deflation that comes with rising long-term rates.

#68 Really! on 06.28.17 at 11:06 pm

Correction …she sold mid May!

#69 international trades are working out for us... on 06.28.17 at 11:16 pm

Agreed. And here is the beginning of the CETA backlash?

Rumbling in Italy starting about Canadian grain tainted with Roundup and the Italians do not want this in their food system as it would threaten “Made in Italy” products and the DOC and IGP designations.

Same with Cdn. meats (presumably since we like to use growth hormone, e.g., an Italian chicken at the grocery store is the size of a Cdn. Cornish Game Hen, clearly, we used growth hormone somewhere along the line).

Salerno area urging Italian government to not ratify CETA because of this (right click and select Google translate):

http://www.ottopagine.it/sa/attualita/128608/dite-addio-alle-dop-e-alle-igp-a-rischio-il-made-in-italy.shtml

They take their DOC, IGP and Made in Italy designations pretty seriously here in Italy.

#70 GFD on 06.28.17 at 11:17 pm

Now we find out the kid failed math in high school. Where’s the $30b yhat Harper left him in the coffers?

http://nationalpost.com/news/politics/trudeau-claims-his-government-has-met-fiscal-targets-and-conservatives-to-blame-for-massive-deficit/wcm/7f2804e3-6387-413e-bdce-866dc3ae10d1

#71 GFD on 06.28.17 at 11:20 pm

Garth, is defenestration legal in 21st century?

#72 Only in Markham on 06.28.17 at 11:21 pm

370 Mingay Ave, Markham

Listing price 7 days ago: $949,000
Listing price today: $1,159,000

Increase of 22%

Only in Markham… If it doesn’t sell, increase the price!

#73 Fake News on 06.28.17 at 11:22 pm

#54 Leo Trollstoy on 06.28.17 at 10:18 pm
The great thing about tech is that the jobs are plentiful and there’s something for everybody. If you suck, you’ll still get a low paying job. If you’re good, you’ll get anything you want and job offers weekly.

With the Canadian economy improving the difficulty in finding quality tech candidates will worsen. Canada is facing a shortage of 220,000 tech jobs by 2020.

https://beta.theglobeandmail.com/report-on-business/rob-commentary/canada-cant-fall-behind-in-the-global-race-for-tech-talent/article35459472/?ref=https://www.theglobeandmail.com&service=mobile

https://qz.com/1006812/programmers-get-so-many-job-offers-search-site-indeed-created-a-special-spam-filter-to-help-them-deal-with-it/

________________________________________

Total BS.

And just how is the Fake News Media doing these days when it comes to stats, polls and “Russian Meddling”. Its not just CNN.

#74 Mark on 06.28.17 at 11:28 pm

“Now we find out the kid failed math in high school. Where’s the $30b yhat Harper left him in the coffers? “

Non-existent. Harper put an additional $200B+ in debt on the nation’s credit card from the time he entered office as Prime Minister, to the time he finally left.

You can verify this on the Bank of Canada website by looking up the T-Bond and T-Bill issuance of Canada. The debt of Canada. Partisan figures from the Department of Finance, or the former government itself are not particularly credible.

#75 MarketPundit on 06.28.17 at 11:37 pm

“Since there isn’t enough tech talent in Canada, I hope the government fast tracks immigrants to fill the void. We don’t want to fall too far behind.”
————————————————–
This is 100% BS. Just check how many U students graduate every year! Also check how many candidates per Tech job is available in Canada.

A good friend of mine left for States over 5 years ago. Simply because he was tired of working contracts here. The pay was not so good either. First, he went to Seattle. Then he moved to San Diego. He lives a great life there now. Enjoys the weather and the ocean everyday.

Another friend moved to Holland and works for Booking.com. He comes, every year, here, to select graduates from Waterloo (if I am not mistaken) and takes them to Holland. Apparently Booking.com loves our Tech grads.

When I first heard in the news that Canada does not qualified and talented people to work in Tech and such, my jaw dropped.

Absolutely terrible Government we have!

#76 joe on 06.28.17 at 11:37 pm

when declining sales numbers and prices news get to Media, speculators might freak out. rate hike or NAFTA termination will expedite the carnage.
There will be a mass bail out of sheepels with under water mortgages, FICO’s will get reset. Same thing happened in the US in 2008. people who bought multiple pre-constructions had to get cash jobs and declare bankruptcy.

#77 TRT on 06.28.17 at 11:50 pm

Real reason for the rate hike was NAFTA negotiations. Trump made it clear that currency maculation is a no no.

Canada may raise once or twice and thats it. Thats how much the USA is going to raise. no more.

Beware where you get your info on the internet. much of it has ulterior motives.

#78 MarketPundit on 06.28.17 at 11:57 pm

And, by the way, those “Tech” guys you are referring to that need to be fast tracked by immigration dept. are way under qualified and incredibly difficult to work with. That is one of the reasons Booking.com comes here. Why do you reckon RIM (may be not the best example but still), Google, McAfee, etc. set up shops in Waterloo area. Canada has most talented Tech people in the world.

#79 Tony on 06.29.17 at 12:04 am

Japan and Germany are proof zero or negative interest rates have no bearing on house prices. Like “The Economist” states in their recent publication clearly the run-up in home prices is because of the Chinese.

#80 Tony on 06.29.17 at 12:14 am

Re: #72 Only in Markham on 06.28.17 at 11:21 pm

I personally know the people that the street was named after Martha’s father. They still live in Markham and have a law practice on the Main street.

#81 Tony on 06.29.17 at 12:25 am

Re: #7 TCContrarian on 06.28.17 at 6:55 pm

Bernanke recreated the “Japan affect” for America and the rest of the world. Poloz took it one step further by cutting interest rates twice in 2015. The “Japan affect” means decades of zero or no growth… but wait. The inflation rate in America is grossly understated meaning growth after inflation has been negative after Bernanke twirled his magic wand.

#82 Tony on 06.29.17 at 12:39 am

Re: #57 Pete on 06.28.17 at 10:22 pm

True but for the next several months there will be a burst in growth from fools fixing up or remodeling homes to list on mls. Of course most of them won’t sell so they’ll plow more money into them and then they won’t sell.

#83 Mark on 06.29.17 at 12:55 am

“When I first heard in the news that Canada does not qualified and talented people to work in Tech and such, my jaw dropped. Absolutely terrible Government we have!”

Yeah I’d have to say that tech has been one of the victims of the housing bubble. In particular, CMHC’s pumping of the subprime credit sector by way of offering CMHC subprime mortgage insurance, rather than the market naturally allocating capital.

When Nortel and the tech sector collapsed in the early 2000s, it was natural for Canadians to be quite afraid of investing in it, and its revival. The housing market presented an alternative for speculative investment capital, and CMHC was more than willing to provide access to cheap leverage through the CMHC subprime mortgage insurance program.

When it was clear that housing and the O&G sector had pulled Canada out of the Nortel-collapse doldrums of the early 2000s, around 2006 or so, the CMHC and its subprime mortgage insurance program should have been shut down and the housing market left to self-sustain and compete for investment capital with, amongst other things, Canada’s tech sector. Companies like RIMM (now BlackBerry) and similar were in desperate need of capital to pay good salaries (instead of the joke of $60k offers for a few top Waterloo grads that RIMM was known for) and build out the infrastructure of becoming the world’s dominant company in smartphones.

Instead, RIMM got no love in the market, nor similar companies, talented Canadians at RIM were head-hunted to go work at Apple, and the rest is history. RIMM is now a mere fraction of what it once was, and the Waterloo tech sector is pretty much some sort of bad joke these days. Nortel, instead of being reorganized and the corrupt former management booted out and replaced with competence, was basically sold piecemeal to foreign buyers. Canadian university graduates of programs like Computer and Electrical Engineering have had scant job opportunities since the practical demise of the sector in the early 2000s.

I know Troll likes to think that the Canadian tech sector is hot, but that’s just wishful thinking at best. The Government of Canada absorbed some of the ex-Nortel people in the Ottawa area, but the hoardes that studied related subjects in the late 1990s and early to mid 2000s are still only minimally employed even to this day, if not unemployed. Modestly advertised IT/tech jobs in Canada, even in small irrelevant towns, are gathering 50-100 applicants, often with fairly advanced qualifications. The Americans, a former “relief valve” for excess Canadian talent, have reduced their hirings of Canadians dramatically and replaced them, like they’ve replaced Americans, with Indian nationals on H-1B visas (Canadians generally work in the USA on the TN-1 visa, much easier and less expensive to obtain than the H-1B!). Canada’s tech sector, structurally unable to compete due to a lack of access to capital, proceeds to fabricate nonsense about labour shortages when the real problem is that they’re trying to hire top talent for bottom dollar. You have to be a real contrarian to want to work in Canada’s tech sector these days — maybe you’ll get a few stock options and money will flow back into the sector and make it pay off. But given the high cost of business in Canada, and the structural disadvantages to operating a tech business in Canada, it will take a huge cost of capital advantage to overcome such in the future.

#84 paulo on 06.29.17 at 1:37 am

Poloz has all but telegraphed a rate increase this year remember the lock step with the us fed well there she be:
expect more to follow likely 3 in 2018. if you are early in a 5 year fixed, expect and plan for your renewal at not less than 7% assuming you come due in 2022 possibly far higher,depending on the fall out from the real estate crash we are now venturing into.
there has been much debate lately about the IT business,and teck; i am old enough to have seen a couple of generations of computer geeks and tecks find that they where redundant due to technological advances,given the coming deployment of artificial intelligence and quantum computing capabilities i think there is a good chance that many if not most “it” positions could be redundant soon so if you are looking to guide your kid or advance your career i would look very carefully at the future marketability of these skills. personally i advised my youngest son to consider the skilled trades,particularly ones that require human hands on and problem solving skills,unlikely to be replaced by a robot for the time being or foreseeable future. electrician,plumber,etc. essentially the skilled trades that require you to get your hands dirty,are required as essential services going forward with most people looking at easy money positions you will allays have gainful well paid employment going this route.

#85 BS on 06.29.17 at 2:12 am

Mark on 06.28.17 at 10:29 pm

Nonsense, complete and unadulterated nonsense. Not only is there tons of tech talent in Canada, but Canadian firms are so overwhelmed with applicants that they don’t even bother to respond to all but a fraction of the highly qualified and talented people who apply.

Mark, most companies do not respond to applicants who are not selected for an interview. The number of applications or qualifications of the applicant is irrelevant. It is not normal practice for hiring managers to respond to applicants they do not wish to pursue. I would say fewer than 5% will respond to applicants who will not going to be interviewed.

If you are not getting responses it means they are not interested in you. Either you are not qualified, don’t have enough relevant work experience or your resume is poor. Just in case it is the resume I suggest you get a professional to review it for you. Often they can help cover up you flaws so you can at least get an interview. Revise it then see what happens. At least then you know why you don’t get a response. It has nothing to do with the amount of applicants.

#86 Jonathan on 06.29.17 at 2:17 am

Surprised no one said “Poloz will be one and done, you heard it here first” =)

Interesting day tomorrow in crazyville BC…

#87 Koshy Alex on 06.29.17 at 3:26 am

72 Only in Markham on 06.28.17 at 11:21 pm
Only in Markham… If it doesn’t sell, increase the price!

Was talking to a guy who listed his house in Markham, William Grant Road, listed low for 1.2 mil, was expecting a bidding war, was hoping to get 1.5 mil. He was offered 1.3 by HAM, was advised by his realtor to take it, but thought he could get more and refused. Still listed, but no bids.

The realtor strongly advised him to take that offer and instead of buying again asked him to RENT, told him to wait for one year, said he will be able to buy two houses for that price next year in that area !!!!!

The offer is gone now, the guy who made the offer was fronting for someone in China. As long as CRA and our Bill Morneou, Minister for Money Laundering does everything possible for these people to safely launder their millions in Canada, this house may still get sold.

#88 Rook on 06.29.17 at 3:28 am

Pop goes the price : ‘How is that ‘qualifying at the 5 year rate’ supposed market killer working out? Apparently, no so well, since prices kept going up after it was implemented…’

That’s because, to a large degree, it is the “Chinese dudes” that have sparked housing bubbles across the globe after 2015’s loss of confidence in Chinese markets, among other things.

#89 Howard on 06.29.17 at 4:34 am

#74 Mark on 06.28.17 at 11:28 pm
“Now we find out the kid failed math in high school. Where’s the $30b yhat Harper left him in the coffers? “

Non-existent. Harper put an additional $200B+ in debt on the nation’s credit card from the time he entered office as Prime Minister, to the time he finally left.

————————

These left wing fantasy numbers about Harper’s fiscal record keep rising and rising. Now it’s $200B? Amateur. I say it was 200 ba-gillion!

In reality the total deficits from 2009 to 2014 totaled around 160B. This was partially offset by 40B in debt payments in 2006-2008, for a net added debt of 120B. The non-partisan PBO has confirmed the 2015 surplus numerous times contrary to Liberal protestations.

PM Prancer is on track to add more net debt in 4 years than Harper did in 10. And he’s doing it absent a world financial crisis or opposition hectoring in a minority government.

#90 Rate Fiend on 06.29.17 at 6:43 am

I don’t believe it for a second until I see it, just more talk from an impotent bank of Canada. Some people talk and some people do. Bank of Canada talks.

#91 IHCTD9 on 06.29.17 at 7:06 am

#74 Mark on 06.28.17 at 11:28 pm
“Now we find out the kid failed math in high school. Where’s the $30b yhat Harper left him in the coffers? “

Non-existent. Harper put an additional $200B+ in debt on the nation’s credit card from the time he entered office as Prime Minister, to the time he finally left.

—–

At least Harper had us on the right track into the black before wonder boy pile drove us back into the financial stoneage in less than six months…

#92 Rate Fiend on 06.29.17 at 7:08 am

Foreign buyers accounted for six per cent of the value of residential property purchased in B.C. over the past year, according to the latest data released Wednesday by B.C.’s Ministry of Finance.

Hahaha it’s going up!! That tax worked out great eh

#93 IHCTD9 on 06.29.17 at 7:16 am

#89 Howard on 06.29.17 at 4:34 am
#74 Mark on 06.28.17 at 11:28 pm
“Now we find out the kid failed math in high school. Where’s the $30b yhat Harper left him in the coffers? “

Non-existent. Harper put an additional $200B+ in debt on the nation’s credit card from the time he entered office as Prime Minister, to the time he finally left.

————————

These left wing fantasy numbers about Harper’s fiscal record keep rising and rising. Now it’s $200B? Amateur. I say it was 200 ba-gillion!

In reality the total deficits from 2009 to 2014 totaled around 160B. This was partially offset by 40B in debt payments in 2006-2008, for a net added debt of 120B. The non-partisan PBO has confirmed the 2015 surplus numerous times contrary to Liberal protestations.

PM Prancer is on track to add more net debt in 4 years than Harper did in 10. And he’s doing it absent a world financial crisis or opposition hectoring in a minority government

Mark’s already been told a hundred times, and on multiple fronts…

Besides, PM airhead’s sound feminist budget is sure to kill off his 11 figure deficit no problemo because it’s 2017.

#94 Wrk.dover on 06.29.17 at 7:57 am

Last night , someone observed that the enthusiast car market is slumping.

Attrition is the biggest factor there. Only will get worse obviously. Not many left to lust after unsafe at modern speed, obsolete crap from pre disc brake era, that needs resto modernizing that fewer people know how to do, especially for cheap.

It is hard to restore a project car in an underground condo garage too.

Each generation lusts after the cars they couldn’t get new when they were kids, or a rerun of a familiar car in their life. The youth today grew up on too fast too furious, they won’t be buying any thing old.

A quick search on the Bring A Trailer website will show you that a good first gen Cooper hit 50 grand US.

#95 Julian on 06.29.17 at 7:59 am

Mark,

Is your basic view that CHMC should not exist or should not play the role that it currently does?

#96 Bill on 06.29.17 at 8:03 am

I highly doubt rates are going anywhere in Canada. Sleepy eyes Poloz talks but doesn’t do much else.

Anyone know what colour socks justin is wearing today on his sweaty, warty feet? Maybe he can wear some with “0.5%” on them since that’s where the rates are going to stay in Canada.

I hope to be proven wrong but I just don’t see it happening.

“Low rates have done their job” doesn’t remotely imply he’s going to raise anything. His next sentence was probably “and low rates will continue to do their job of supporting the inflating the Canadian housing market”.

#97 jess on 06.29.17 at 8:09 am

Delinquency Rates
All Banks, SA
https://www.federalreserve.gov/releases/chargeoff/delallsa.htm

2006:1 1.36 ……….2010:1 10.02

=========
Within this group is a subgroup of highly indebted households, defined as those with a debt-to-gross-income ratio that is equal to or more than 350 per cent (Chart 1).10 Most of the people in this subgroup are young—under the age of 45. The size of this subgroup doubled from around 4 per cent during the 2005–07 pre-crisis period to around 8 per cent of indebted households in 2012–14.That amounts to about 720,000 households holding close to $400 billion in debt, about one-fifth of the overall household debt.

A deeper dive into the characteristics of these highly indebted households reveals that, compared with less-indebted borrowers, highly indebted borrowers tend to be younger, have lower incomes and wealth and are less likely to have pursued post-secondary studies or training. Highly indebted borrowers are also disproportionately more likely to live in British Columbia, Alberta or Ontario, provinces where house prices are the highest (Chart 2).11, 12

https://www.theglobeandmail.com/globe-investor/personal-finance/genymoney/mortgage-overload-canadian-housing-finance/article33279552/

#98 Julia on 06.29.17 at 8:21 am

#62 Reximus
So who in Toronto wants to bid over asking now?
——
20% of sales in Toronto are still over ask

***
How many of those were after a price drop? How many would have been over ask on the original price?

#99 Q2 Class 4-4-6-4 on 06.29.17 at 8:28 am

Hey Garth –

Great column, and speaking as a renter in the Big Smoke lacking any debt, I would be quite pleased to see the cost of (my) money rise to more historical norms. However, my colleagues here on Bay Street are still RE-delusional and are highly sceptical that the BOC, or the Fed or anybody will raise rates any time soon. I don’t argue with them because it’s pointless and besides, it isn’t cool. But the complacency of these individuals is astonishing. I’m afraid they may have a harsh awakening.

In the meantime, I continue to live small, simply and save my money, just like you suggested in a column four years ago. I wish I’d read that article around 1982!

#100 Consummate Pessimist on 06.29.17 at 8:28 am

I almost spit my coffee on my computer screen. This is the funniest thing you’ll read today.

http://www.macleans.ca/economy/money-economy/the-changing-face-of-retirement-in-canada/

#101 BillyBob on 06.29.17 at 8:29 am

#83 Mark on 06.29.17 at 12:55 am

Instead, RIMM got no love in the market, nor similar companies, talented Canadians at RIM were head-hunted to go work at Apple, and the rest is history. RIMM is now a mere fraction of what it once was, and the Waterloo tech sector is pretty much some sort of bad joke these days. Nortel, instead of being reorganized and the corrupt former management booted out and replaced with competence, was basically sold piecemeal to foreign buyers. Canadian university graduates of programs like Computer and Electrical Engineering have had scant job opportunities since the practical demise of the sector in the early 2000s.

I know Troll likes to think that the Canadian tech sector is hot, but that’s just wishful thinking at best. The Government of Canada absorbed some of the ex-Nortel people in the Ottawa area, but the hoardes that studied related subjects in the late 1990s and early to mid 2000s are still only minimally employed even to this day, if not unemployed. Modestly advertised IT/tech jobs in Canada, even in small irrelevant towns, are gathering 50-100 applicants, often with fairly advanced qualifications. The Americans, a former “relief valve” for excess Canadian talent, have reduced their hirings of Canadians dramatically and replaced them, like they’ve replaced Americans, with Indian nationals on H-1B visas (Canadians generally work in the USA on the TN-1 visa, much easier and less expensive to obtain than the H-1B!). Canada’s tech sector, structurally unable to compete due to a lack of access to capital, proceeds to fabricate nonsense about labour shortages when the real problem is that they’re trying to hire top talent for bottom dollar. You have to be a real contrarian to want to work in Canada’s tech sector these days — maybe you’ll get a few stock options and money will flow back into the sector and make it pay off. But given the high cost of business in Canada, and the structural disadvantages to operating a tech business in Canada, it will take a huge cost of capital advantage to overcome such in the future.

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

So uhhh..I take it you WEREN’T able to climb aboard the Bay area gravy train?

A word about the Conservative deficits. I have no love for Harper or his party, but a bit of context is in order. Little boy Trudeau hasn’t been in power during a financial crisis such as GFC 2008.

What exactly is HIS excuse for running up the debt in multiples of anything the Cons did?

Oh yeah, right. I forgot. It’s the Liberals. They literally don’t know any better.

#102 crowdedelevatorfartz on 06.29.17 at 8:38 am

Seems to be more and more business arsons in the Lowerbrainland these days…..could be a long hot Summer.

#103 Another Deckchair on 06.29.17 at 8:39 am

@83 Mark:

While I was employed helping create 3D graphics standards (ISO and W3C), and writing open-source 3D code that was distributed around, even by Apple, I found that Apple, Google and Microsoft were very open and interested (and, active!) in what 3D graphics could bring to the table.

RIM on the other hand? Not in the least interested. They had the world by the tail, or so they thought. Arrogance was all that I encountered. Not that I tried much after the first couple of “we’ve got the world covered – you don’t”…

Oh well… there’s a lesson in there somewhere…

#104 A Reply to #10 Mark on 06.29.17 at 9:08 am

“… Canadian CPI is already deflating on a month-over-month basis, and such deflation is likely to accelerate….”

No, that’s not right, Mark. CPI inflation has risen from 1.4% (2016 Q4) to 1.9% (2017 Q1).

“The output gap is so wide you could drive a bus through it at this point.”

No, wrong again, Mark. The output gap has dropped from -2.0% (2016 Q4) to -1.4% (2017 Q1).

Reference: http://www.bankofcanada.ca/rates/indicators/capacity-and-inflation-pressures/

The following discussion paper shows how the output gap is determined. Chart 8 shows the output gap from 1981 to 2013.

http://www.bankofcanada.ca/wp-content/uploads/2015/01/dp2015-1.pdf

Below is the Monetary Policy Report for April 2017 describing the global and Canadian economies generally and the economic outlook, inflation outlook and potential output growth specifically.

http://www.bankofcanada.ca/wp-content/uploads/2017/04/mpr-2017-04-12.pdf

#105 pBrasseur on 06.29.17 at 9:13 am

Canadian economy «performance» is based on debt, asset bubbles and clearly not sustainable.

Hikes are likely temporary and their purpose is simply to provide a bit of margin to be reversed later.

#106 Reximus on 06.29.17 at 9:47 am

How many of those were after a price drop? How many would have been over ask on the original price?

—-

Not sure why that matters. More re-pricings in Toronto have been to a higher $$, not lower. In any case, good houses in good locations are doing well, some over ask…crap houses, not so much, as it should be

#107 David Hawke on 06.29.17 at 9:49 am

Perhaps someone here can explain the reason for the insane interest rates asked by my local credit union here in El Salvador.
The property behind my hostel is for sale at a very good price, the building on it was never finished but won’t cost much to complete so I can expand my hostel.
My CU wanted 24% for the loan, when I complained [email protected] offered a rate of 21% making the purchase unrealistic. How can these rates be justified?

#108 Ponzius Pilatus on 06.29.17 at 10:08 am

#75 MarketPundit on 06.28.17 at 11:37 pm
“Since there isn’t enough tech talent in Canada, I hope the government fast tracks immigrants to fill the void. We don’t want to fall too far behind.”
————————————————–
This is 100% BS. Just check how many U students graduate every year! Also check how many candidates per Tech job is available in Canada.

A good friend of mine left for States over 5 years ago. Simply because he was tired of working contracts here. The pay was not so good either. First, he went to Seattle. Then he moved to San Diego. He lives a great life there now. Enjoys the weather and the ocean everyday.

Another friend moved to Holland and works for Booking.com. He comes, every year, here, to select graduates from Waterloo (if I am not mistaken) and takes them to Holland. Apparently Booking.com loves our Tech grads.

When I first heard in the news that Canada does not qualified and talented people to work in Tech and such, my jaw dropped.

Absolutely terrible Government we have!
——————-
We spend billions on educating our young and then we replace them with TFW.
Pretty sick if you ask me.

#109 Randy Belwood on 06.29.17 at 10:19 am

“Donald Trump will never become president in my lifetime” – Janet Reno.

Yellen: I ‘don’t believe’ we’ll see another financial crisis in our lifetime.

I believe that Yellen meant in ‘my’ lifetime.

She can’t have much time left.

She is correct, and will likely live a few more decades. — Garth

#110 Ponzius Pilatus on 06.29.17 at 10:32 am

Jimmy Pattison pays 6.3 million for dress worn by Marilyn Monroe.
This should keep the watercooler crowd in Vancouver busy.

#111 A Reply to #77 TRT on 06.29.17 at 10:36 am

“Trump made it clear that currency maculation is a no no.”

By maculation, did you mean defacement? Or did you mean to write manipulation?

#112 Only In Markham on 06.29.17 at 10:36 am

#87 Koshy Alex

It seems like the William Grant Road house is currently listed at 1,349,000. He should have listened to his RE agent when he was offered 1.3 million. Did he purchase a new place?

I knew a guy who listed his semi for 899,000 back in April and got a pre-emptive offer 3 days later for 1,060,000. His RE agent gave him the option to do an open house that weekend and wait for a bidding war. He might have sold the place for a higher price in a bidding war. Guess what? He accepted the pre-emptive offer. I think he was not as greedy as the guy on William Grant Road.

#113 Doghouse Dweller on 06.29.17 at 10:38 am

#107 David Hawke
How can these rates be justified ?
~~~~~~~~~~~~~~~~~~~~~~~~~
There`s the whole enchilada Senor Dave. They don`t have to justify anything. The bankrupt Italians just got taken for another 20 billion in Banker bailouts. Give you nada and charge 29% on your revolving credit.
Thats what guys like Poloz are all about.

#114 Dups on 06.29.17 at 10:52 am

http://www.google.ca/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=Linear&chdeh=0&chfdeh=0&chdet=1498747192771&chddm=8661632&q=CURRENCY:CADUSD&ntsp=0&ei=GRFVWenlNN3a2AaHhKq4Dg

During the mild housing crisis of 2000’s in Canada the Canadian dollar was the lowest ever. If history repeats itself now with the current housing problem the CAD is heading to lower territory again. The BOC sees this and it is going to take action increasing the rates in order to reduce it’s fall, but i think the RE bloating will still drag the dollar down. I am betting a 70C dollar by end of the year.

Then count on losing money. — Garth

#115 Ace Goodheart on 06.29.17 at 10:57 am

Looks like the first of at least two rate hikes is all but confirmed. I’d say the odds are now closer to 99.8%.

Anyone with a HELOC might want to start looking into turning it into a 5 year fixed, while it is still possible to get in under 3%.

It appears to be the global consensus that the days of low interest rates are coming to an end, one way or another.

#116 Julia on 06.29.17 at 11:17 am

#106 Reximus
How many of those were after a price drop? How many would have been over ask on the original price? —-
Not sure why that matters. More re-pricings in Toronto have been to a higher $$, not lower. In any case, good houses in good locations are doing well, some over ask…crap houses, not so much, as it should be

***
The repricings I have seen in my Toronto neighborhood alone have been either repriced down because of lack of interest or repriced upwards at what they would actually consider as a sale price after the attempt to get multiples on a lowball price failed.
3 houses sold on my street in the last month, all 3 at lower price than similar houses sold for last year, all 3 below original ask but reported as sold over ask thanks to a last minute price drop.

#117 Leo Trollstoy on 06.29.17 at 11:17 am

If you are not getting responses it means they are not interested in you. Either you are not qualified, don’t have enough relevant work experience or your resume is poor.

^ This

You likely suck at tech if you can’t find a job in tech. Good candidates are constantly being poached and offered top dollar. 6 figures easily if you’re good. But if you’re finding it difficult to find a tech job – well, that’s telling you something right there.

https://www.randstad.ca/hot-jobs/technology-jobs-in-demand/

#118 WUL on 06.29.17 at 11:23 am

Well, it may just have been a spring rut in Cowtown based on CREB numbers. The mild bump over the last two months is receding. Supply rose to meet that demand. Divergence condos / SFD. DOM down ~ 20%.

#119 Smartalox on 06.29.17 at 11:30 am

@Wrk.dover #94:

That was my comment about the classic car market. I also browse bring a trailer regularly, but the comment that you saw referred to Craigslist ads from the lower mainland (BC).

There are a LOT of great deals to be had, especially if paying in US dollars. Lots of exotics as well.

#120 IHCTD9 on 06.29.17 at 11:50 am

#94 Wrk.dover on 06.29.17 at 7:57 am Last night , someone observed that the enthusiast car market is slumping. Attrition is the biggest factor there. Only will get worse obviously. Not many left to lust after unsafe at modern speed, obsolete crap from pre disc brake era, that needs resto modernizing that fewer people know how to do, especially for cheap. It is hard to restore a project car in an underground condo garage too. Each generation lusts after the cars they couldn’t get new when they were kids, or a rerun of a familiar car in their life. The youth today grew up on too fast too furious, they won’t be buying any thing old. A quick search on the Bring A Trailer website will show you that a good first gen Cooper hit 50 grand US.
________________________

Yes, it’s a clear trend. I’m a Gen X’er, and what was Gen X’s muscle car? Why, it was the legendary Foxbody Mustang, aka the 5.0 which died in 1993.

Ford went back in time twice in the new millennium doing the retro Mustang in 05′ that was based on the ’66 fastback to woo the Boomers, then brought out the all new Coyote 5.0 V8 in 2011 so they could once again put those chrome 5.0’s on the fenders to get us Gen X’ers foaming at the mouth. All the while cranking out special models from the golden era everyone knew like the “Bullit”, GT350, GT500, Boss 302, and Mach1 trying to keep the nostalgia alive.

Today represents what I assume is the final stages of the original ponycar recipe. GM is doing the exact same nostalgia thing with the Camaro retro styling and models/terms from the past being resurrected (Z28, LS6, ZR1, heck the entire Camaro itself is a resurrection). Same thing at Chrysler (HEMI, Challenger, Charger, Dart etc…).

No kids anywhere are buying these cars now, some models make 700+ HP right off the showroom floor, top out over 200 MPH, and cost near 100K CAD, and then get bid up by collectors from there.

These cars became icons by originally being light, simple, tough, cheap, and easy to modify. They got results on the street and track. Now they are 4000 lb+ tanks, that cost a mint.

I expect in another 25 years or so, I’ll see about as many Mustangs on the road then, as I see Model T’s on the road now…

#121 Ponzius Pilatus on 06.29.17 at 12:00 pm

This housing boom is now about 15 years old (forget the breather in 2008).
This gotta be a record.
Now wonder, people think prices will only go uppa,uppa.
Not just the Italians.

#122 Wrk.dover on 06.29.17 at 12:02 pm

#119 Smartalox on 06.29.17 at 11:30 am

I just looked, Kijiji Halifax has 719 classic car ads.
Compared to half of that a year ago being the norm.

You are on to something.

Wait till the boomers are too old for Hogs, and you will see a real discount flood there too.

#123 People are Strange on 06.29.17 at 12:03 pm

From Vancouver Sun

“I talk to realtors in Richmond, and they are saying the foreign buyers are back. The clients are saying ‘If I’m going to pay a tax in Ontario, I’d rather buy here.”

Richmond realtor Steve Saretsky said he believes the true amount of offshore purchases in that city is much higher than the latest government data shows.

“I think 25 per cent is on the low side, and there is no way that it is 12 per cent.”

“The way (the government) is tracking it, it has loopholes,” Saretsky said. “I think you have to track where the money actually comes from, and not the passport of the buyer. People have family members in B.C. go on the title, or they have a permanent residence card.”

#124 SilverSon on 06.29.17 at 12:14 pm

What’s up with this? Aren’t we approaching a time when the CMHC is going to need that $4B?

https://www.theglobeandmail.com/real-estate/cmhc-to-pay-4-billion-special-dividend-to-ottawa/article35498518/

#125 smartalox on 06.29.17 at 12:18 pm

CMHC suddenly pumping billions back into Canadian Government coffers.

https://www.theglobeandmail.com/real-estate/cmhc-to-pay-4-billion-special-dividend-to-ottawa/article35498518/

From the article:
“The $4-billion will be paid in instalments over a period not to exceed two years. CMHC is also proceeding with separate plans to begin paying a regular quarterly dividend to the federal government, declaring its first $145-million dividend in the first quarter this year.”

CMHC may be a moral hazard, but at least the ‘stupid tax’ of CMHC fees is charged to people who shouldn’t be buying houses will provide some benefit to the rest of us.

I’d love to see a chunk of this earmarked for improving assisted living and affordable housing for those that need it. Also for addressing the quality of shelters in first nations communities.

#126 smartalox on 06.29.17 at 12:37 pm

@IHCTD9:

As fellow Gen X’er, I can’t get over the number of comparatively high quality vehicles that are available.

I just traded my 1989 BMW (that I’d owned since 2004) for a 2003 BMW. Great modern handling, with performance that is more than adequate, and turns a lot more heads than another sliver / grey / black ‘latest of the latest’ model amorphomobile, complete with ‘same-same’ styling.

For me it came down to a choice between the Bimmer, and a 2000’s vintage Jaguar XJR (X-350), for about the same cost (~$10k). The Jag is such a looker, but I’m still under 50 so maybe a bit too ‘old man’ style for me. Also, I suspected that it might be politically unwise for me to drive a significantly richer-looking car than the CEO of the company that I work for.

As for nostalgia for the family car growing up, my family’s love of boxy, full-size, wood paneled station wagons, is better left a memory.

But a late 60’s to early 70’s era Cadillac convertible, or a ’65 to ’67 Buick Riviera (any of Bill Mitchell’s designs, really), is definitely on my personal automotive bucket list.

#127 Island Girl on 06.29.17 at 12:50 pm

Well this week another house on our street posted a for sale sign. Considering the one across the street took months and months and months to sell, no idea what the final price was but it was listed for about 323 and we thought that was overpriced, so we were curious what this one listed for…$713,000. That’s more than double what we paid for ours. Supposedly it’s “Subdividable” with an ocean view, and the existing house has all the granite and fancy flooring. Only thing is, the house sits almost in the center of the lot.

Hubby and I laughed and laughed and laughed some more at that sellers delusion. But if someone actually forks out the cash, that would be enough to convince us that people really are idiots.

#128 mike23 on 06.29.17 at 1:04 pm

Garth, A blog post about ROC is in order. You talk about it in posts but never explain why its useful and a good part of a portfolio. Useful to keep income down so oldies can collect OAS and in some cases GIS. A POST on GIS might work as well. They pay out 12K per year to 31% of oldies in Canada. One would have to have $250K invested collecting a 4.8% Div to match it. Best for us to keep income down and collect the GIS and do something else with the 250K.

#129 pBrasseur on 06.29.17 at 1:18 pm

Bond market dumping Canada

Traders are dumping Canadian bonds at an astonishing rate, making them among the worst performers in developed-market sovereign debt

http://business.financialpost.com/investing/global-investor/the-bond-markets-new-strategy-as-easy-money-ends-buy-america-sell-canada/wcm/315033e5-9443-4e26-a6c1-ffda89ea5bec

Rightly so IMHO.

#130 crossbordershopper on 06.29.17 at 1:22 pm

cant wait till Ms. Whynn starts paying me $15 bucks for doing next to nothing at my job in 2019. i can live on 15 bucks no problem, i dont own anything and i just need a little rent money and smoke and weed money, i ride my bike to work , sure i am middle aged and dont have a pension, but its ok i will get a pension from the same goverment.

#131 45north on 06.29.17 at 1:25 pm

Andrew Coyne:

The prime minister may have promised to run deficits of no more than $10 billion for no more than two years, and to return to a balanced budget by the fourth. He may have instead delivered deficits of nearly $30 billion, with no end in sight. He may command a majority government, in a growing economy. But that should not be taken to mean he is somehow responsible for any of what has happened on his fiscal watch. Rather, it is all the Conservatives’ doing.

http://nationalpost.com/opinion/andrew-coyne-trudeaus-petulant-tone-deaf-performance-a-remarkable-milestone/wcm/12ac58a7-fcad-4c26-9a99-239d62cb38a2

#132 jess on 06.29.17 at 1:25 pm

A report from the Village Voice on New York. “Next month, New York’s mega-priced apartment buyers will get a chance to bid on what’s probably the biggest the biggest luxury apartment foreclosure in the city as a Nigerian energy mogul’s $51 million dollar apartment goes on the block. Kolawol Aluko defaulted on a $35 million mortgage. It’s the second giant foreclosure at One57, the 57th Street tower finished in 2014 . The building itself was funded partly by a subsidiary of an Abu Dhabi company linked to a global money-laundering investigation. Aluko’s full floor apartment was held by a shell company, as are many of New York’s highest-priced condos. Eight figure properties held by LLCs with opaque names–until, as in this case, things blow up.”

https://www.pressreader.com/usa/new-york-post/20170624/282003262430561

http://thehousingbubbleblog.com/index.html

lookback
https://www.icij.org/project/swiss-leaks/files-open-new-window-182-million-halliburton-bribery-scandal-nigeria

Director General of Nigeria’s biotechnology agency arrested over N23 million fraud
June 29, 2017Agency Report

http://www.premiumtimesng.com/news/top-news/235375-director-general-nigerias-biotechnology-agency-arrested-n23-million-fraud.html

#133 Asterix1 on 06.29.17 at 1:50 pm

Question: Is there still a need for Home Capital (and other subprime lenders) when a market is correcting/crashing?

– Why get a huge mortgage at much higher HC interest rates when housing prices are falling.
– BOC Interest rates are bound to go higher, making HC 5 year fixed rates even more expensive.

Would it not be better for those who cannot get traditional mortgages to sit tight, rent and save their cash for a future buying opportunity?

Seems HC might have a hard time getting people to sign on to their mortgages in a falling market. Would this not push these companies to go bankrupt?

#134 InvestorsFriend on 06.29.17 at 1:58 pm

CMHC profits and dividend to government

It was just yesterday at 122 that I happened to mention that CMHC was highly profitable due to low delinquencies (and therefore defaults) on mortgages. One Gold star is requested please.

#135 ugly day on the markets on 06.29.17 at 2:11 pm

qqq trying to hold on to $136.

TSX down over % ytd. Did i not call to short it? :). Just broke through support…….:

hey, gloating is healthy from time to time….

#136 InvestorsFriend on 06.29.17 at 2:13 pm

Mark and the IT jobs market

Mark has often commented that IT jobs are hard to get and this appears to come from personal experience.

Mark burst onto this blog about four or five years ago and certainly seemed smart. But quickly one noticed that he never met a statement that he would not argue with.

Admittedly I also see a lot to disagree with on the comments. Anyone with a lot of financial education would. But I also try to mention when I agree with people once in a while. Also I am not looking for a job.

In my career I will admit that it took me some years to realize that pointing out mistakes of others or always trying to look the smartest was not the best way to get ahead.

Over the years on a couple of occasions I have tried to point out that his approach of never agreeing with anyone and lecturing everyone including Garth and most recently Warren Buffett (re Home Capital) may be part of the problem. He has lectured against the Bank of Canada and just about everyone.

I am sorry to say that I think it would be obvious to anyone who has read his comments over the years why he might not make a good employee.

This is harsh and no one ever likes unsolicited criticism but I really think Mark should seek some frank feedback on his approach to others. I sincerely think he could benefit from that. Anyone who comes here, and posts their thoughts, is subject to criticism so I don’t think it is unfair for me to post these thoughts which I have held for years.

#137 Livin Large on 06.29.17 at 2:14 pm

Bob, take ghe 4%, leverage it to the hilt, take your interest only expense deduction and voila 6% or better.

#138 SilverSon on 06.29.17 at 2:14 pm

#125 smartalox on 06.29.17 at 12:18 pm wrote:

“CMHC may be a moral hazard, but at least the ‘stupid tax’ of CMHC fees is charged to people who shouldn’t be buying houses will provide some benefit to the rest of us.”

It sure would be great if that $4B finds a way to benefit the rest of us but what’s the likelihood of that happening. If rising interest rates begin a cascade of defaults and CMHC has to start doling out cash to lenders, are they not just going to go back to the gov’t requesting a bailout in excess of the $4B they’re about to turn over to the gov’t?

#139 InvestorsFriend on 06.29.17 at 2:20 pm

Need for Home Capital?

#133 Asterix1 on 06.29.17 at 1:50 pm
Question: Is there still a need for Home Capital (and other subprime lenders) when a market is correcting/crashing?

– Why get a huge mortgage at much higher HC interest rates when housing prices are falling.
– BOC Interest rates are bound to go higher, making HC 5 year fixed rates even more expensive.

Would it not be better for those who cannot get traditional mortgages to sit tight, rent and save their cash for a future buying opportunity?

Seems HC might have a hard time getting people to sign on to their mortgages in a falling market. Would this not push these companies to go bankrupt?

**************************************
Well there is no absolute need for any particular company in any competitive market. But is seems they have customers and usually make a profit. It’s an irrelevant question. There is no NEED for any on us to exist let alone companies.

No, they will not go bankrupt. That is totally off the table with Buffett’s rescue. Some people will still take their mortgages and will not wait as you suggest.

Many of us would have suggested waiting for lower prices eight years ago and seven and six and two years ago. We were wrong. They did not listen then and they will not listen now (even if we are right this time)

#140 45north on 06.29.17 at 2:28 pm

Wrk.dover: It is hard to restore a project car in an underground condo garage too.

I once helped a friend reprogram his transmission in an apartment parking lot. He used his bathtub for a degreasing station. I don’t think the girls were impressed.

#141 IHCTD9 on 06.29.17 at 2:33 pm

#126 smartalox on 06.29.17 at 12:37 pm @IHCTD9: As fellow Gen X’er, I can’t get over the number of comparatively high quality vehicles that are available.
__________________

I can’t keep up anymore. It used to be quick/nice cars pretty much came from the USA. No one else made muscle, or even big V8’s for the most part. Now Japan makes 3/4 ton trucks with 400+ hp V8’s and 4WD lol!

Several years ago I became smitten with the W211 MB E55 AMG. A pulley and a tune on slicks had you knocking on the 10 second door in a near stock sedan. Somewhere along the line, I decided there was no 10 second potential in a 99% stock car available anywhere – for less. It was a powerhouse on paper – and it overachieved. Beautiful car in all respects.

I compared the E55 AMG to the other car that was calling my name back then, also a Benz – the W204 C63 AMG. It was essentially an American Muscle car built in Germany. The sound, the power, and no damned air suspension! A canned tune will put you over 500 hp naturally aspirated. A beautiful car, that was big on bark – and bite! I could not decide!!

Man! I eventually escaped the red mist and came to my senses, but it’s laughable to think of making used car buying decisions like the above back in the 80’s/90’s – nothing like that was even available, let alone affordable for a regular schmuck like me. Benzes out on the road back then were smoky old 300D’s!

It’s also nuts that these days, you can take a 10 year old Benz that sold for 90K when new, and make it eat the usual domestic street iron at the strip and cost less doing it.

#142 IHCTD9 on 06.29.17 at 2:48 pm

#131 45north on 06.29.17 at 1:25 pm Andrew Coyne: The prime minister may have promised to run deficits of no more than $10 billion for no more than two years, and to return to a balanced budget by the fourth. He may have instead delivered deficits of nearly $30 billion, with no end in sight. He may command a majority government, in a growing economy. But that should not be taken to mean he is somehow responsible for any of what has happened on his fiscal watch. Rather, it is all the Conservatives’ doing. http://nationalpost.com/opinion/andrew-coyne-trudeaus-petulant-tone-deaf-performance-a-remarkable-milestone/wcm/12ac58a7-fcad-4c26-9a99-239d62cb38a2
____

If I could extract all the hot air and inert gasses coming out of Trudeau’s head, I could start my own welding gas company.

#143 Lillooet, BC on 06.29.17 at 2:57 pm

#135 ugly day on the markets on 06.29.17 at 2:11 pm
qqq trying to hold on to $136.

TSX down over % ytd. Did i not call to short it? :). Just broke through support…….:

hey, gloating is healthy from time to time….

*******

those funny chart guessing or reading

Should you mentioned this any more, our dear InvestorsFriend will punish you severely.

Happy Canada Day everyone!

#144 Renter's Revenge! on 06.29.17 at 3:08 pm

#142 IHCTD9 on 06.29.17 at 2:48 pm

If I could extract all the hot air and inert gasses coming out of Trudeau’s head, I could start my own welding gas company.

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

I heard he already has a deal with Praxair.

#145 Mark on 06.29.17 at 3:43 pm

“Mark, most companies do not respond to applicants who are not selected for an interview.”

But when top grads from top schools can send out significant numbers of applicants and receive few, if any responses, that doesn’t speak to a shortage in the sector. It speaks to a giant glut. If Canadian IT firms are having trouble finding the people they want, they need to engage with the pool of qualified applicants rather than ignoring them. If there are skills shortages for which remedial training would be useful, then the individuals who are applying, but are, in their view, ‘unqualified’, would probably find that information to be highly useful.

But as it stands, with the large glut of IT and STEM workers of all kinds in Canada, the employers don’t have to do any of this, that is, engage with the potential workforce professionally and in good faith, because they are buried under mountains of good applicants. Many cry the blues about being unable to hire Canadian, but that was never their intent all along — the intent was to hire cheap temporary foreign workers, and complaining was all part of a sort of shtick to curry public favour for the expansion of the TFW program.

Anyone who’s been in IT (ie: Smoking Man, as he sometimes claims) has seen a relentless downwards pressure on wages, working standards, and even the overall esteem of the profession over the past 15-20 years. Professions for which there’s shortages don’t treat their workers (or potential workers) as poorly as contemporary IT workers are treated. Therefore, there must be no shortage or even anticipated shortage.

#146 paul on 06.29.17 at 3:51 pm

138 SilverSon on 06.29.17 at 2:14 pm

#125 smartalox on 06.29.17 at 12:18 pm wrote:

“CMHC may be a moral hazard, but at least the ‘stupid tax’ of CMHC fees is charged to people who shouldn’t be buying houses will provide some benefit to the rest of us.”

It sure would be great if that $4B finds a way to benefit the rest of us but what’s the likelihood of that happening. If rising interest rates begin a cascade of defaults and CMHC has to start doling out cash to lenders, are they not just going to go back to the gov’t requesting a bailout in excess of the $4B they’re about to turn over to the gov’t?
—————————————————————–
C.M.H.C. fees are added to the mortgage, So if someone defaults the fees never get paid.

#147 Old Gog on 06.29.17 at 3:55 pm

#141 IHCTD9

Yes, you can get some potent Euro iron for cheap now. They go and handle well, just don’t ever break it when it’s off warranty. The bill will make your eyes water.
You want to go fast buy an old Fox body mustang, add some heads, cam, larger throttle body, injectors and MASS, and headers. Top with a 3:73 rear gears, now you have a road rocket for cheap. They even handle pretty good. It just won’t impress your pretentious friends, but it will show them your tail lights.

#148 IHCTD9 on 06.29.17 at 4:18 pm

#144 Renter’s Revenge! on 06.29.17 at 3:08 pm #142 IHCTD9 on 06.29.17 at 2:48 pm If I could extract all the hot air and inert gasses coming out of Trudeau’s head, I could start my own welding gas company. ================================ I

heard he already has a deal with Praxair.
_____

Well now, – that explains how they always manage to undercut Air Liquide on helium!

#149 Smartalox on 06.29.17 at 4:31 pm

Yes! The ME W211s are great cars – the 2006+ cars are definitely the ones to get, though.

Another nice feature of cars that are more than 10 years old is that the internet has documented a lot of the things that end up ‘going wrong’ with various models, what to look for, and how to avoid the really nasty issues. Cars that are more trouble than they’re worth can quickly be identified as such.

For some models, the aftermarket has done well for them, too: if you don’t like air suspension, you can get coil-over replacements; components like wheels, tires, brakes, electronics, can be upgraded. Also, there are a lot of used replacement parts available for lights, interiors, glass etc.

There are even suppliers that will sell you everything you need to build a replica of a vintage Mustang or Camaro. Though for that, I like to thank the unprecedented growth of consumer credit in boomer America, for the demand for these replica parts.

#150 SilverSon on 06.29.17 at 5:04 pm

#146 paul on 06.29.17 at 3:51 pm wrote:

“C.M.H.C. fees are added to the mortgage, So if someone defaults the fees never get paid.”

I did’t know that. Thanks for the info!!

Not exactly. My understanding is the fee is paid to CMHC, but the bank adds an equal amount to the mortgage principal, then amortizes it. In the case of a default it is the lender who is stiffed – but then compensated by the feds. — Garth

#151 WealthyBabar on 06.29.17 at 5:50 pm

Must share this definition with y’all:

“cashtration: The act of buying a home, which renders the subject financially impotent for an indefinite period of time.” [Wealthy Barber Returns by D. Chilton]

Garth do you agree with this definition of ‘good’ debt, which refers to mortgaging real estate:

“good debt” is debt: (1) taken on to buy an appreciating asset; (2) where servicing doesn’t squeeze out savings; and (3) that will be retired before you are.

Thanks for you opinion