The perfect storm. It’s here. A little later than anticipated, but as forecast
The nation’s largest real estate market is in the midst of a disorderly unwinding. It could be a soft landing, but that’s seriously in doubt now. There are just too many factors conspiring to bring this Icarus back to earth in a shower of debris.
The latest? Mortgage rate increases. TD added a few beeps last night and the Royal Bank went full bore on Thursday, upping the cost of two-, three- and five-year home loans. Remember – these are fixed-rate loans that only move with the general interest rate environment, not variable-rate mortgages immediately affected by the Bank of Canada.
That little shock comes Wednesday when the prime rate pops along with the cost of HELOCs, personal lines of credit, business loans, consumer loans, car loans and credit card balances. The current odds of this happening are 90%, which means you can stop pretending it’s different this time.
But it gets worse. The bank regulator, OFSI, this week brought down the hammer on houses selling for more than $1 million. In a few months borrowers who have over 20% to put down (required for seven-figure houses) must pass a mortgage stress test – just like people applying for loans covered by CMHC. So, if you can’t qualify for payments at a withering 2% above the current rate, no loan. In a lateral move, the regulator is also tightening up on the practice of bundling mortgages which sub-prime guys like Home Capital do to avoid the cost of mortgage insurance.
Meanwhile, the market is shredding.
Single-family home sales in June in the vast GTA plunged 45% as owners deluged the market with listings, buyers recoiled and prices started to limp. There are 60% more listings to choose from than a year ago – when the market was in the grips of bidding wars, fevered speculation and romping valuations. Suddenly horny’s turned to scary. Without relentless month-over-month price gains, potential buyers realize an offer now will likely guarantee losses by the end of the year.
GTA house prices gave up 6% in May and another 8% in June. Says realtor blog dog Ron, with decades of experience: “Amazing. Price of a detached now down $125,694 from April high, that is 13.66% – a real equity eater! Curious to know where the market finds some support. Right now to borrow a phrase from your investment activities : Nobody with any brains wants to catch a falling knife”
The sales plunge was the steepest in almost a decade. Inventory is piling up with a vengeance. This is the worst market activity since January of 2009, when the world was sliding over the edge of the credit crisis cliff.
Are the Ontario government’s anti-bubble measures introduced in late April responsible? How about the onerous 15% foreign buyers’ speculation tax? Or Toronto’s banning of AirBnB exclusive-use condos? Higher mortgage rates, now materializing? Tighter lending conditions as bankers gird for a bust?
Well, all of it, and none of it. Any market in which prices detach from economic fundamentals is living on borrowed time. As this pathetic blog has chronicled in one boring, lethal post after another, price gains were unsubstantiated, fueled by hormones, house lust and sheer speculation and built on a foundation of cheap, plentiful but unrepayable debt. Given the gossamer quality of this gasbag, it didn’t take much to prick it.
What next?
With the rapidity of the bust, that’s impossible to gauge. We’re now into one of the slowest periods of the year for house deals, so the downturn is likely to be accentuated by lower volumes. Meanwhile interest rates will continue to rise, and listings increase. If prices can drop 14% in the last 60 days, they can sure do that again in the next two months. The decline would then approximate that which ate the US middle class – and took three years to roll out. The last time Toronto saw this kind of imploding market, the recovery period was 14 years. So, your guess is as good as mine. But so far this appears to be epic.
The winners, of course, are the greedy, voracious, genius sellers who found a greater fool in January, February or March. They sold at peak house and pocketed a fat tax-free capital gain. The losers are the purchasers who bought into the buy-now-or-buy-never FOMO nonsense that permeated the deplorable comment section, and may see their equity shrink below their mortgage. Add in closing costs – double land transfer tax, legals and some renos – and this could be one of life’s greatest financial boners.
Finally, a real-life example of how a market disintegrates far faster than the official real estate board numbers can track. It’s the tale of a $1.55 million house that sold officially for the full amount but actually changed hands for $350,000 less.
Says Alex Prikhodko, founder of Real Estate Bay Realty Brokerage, in Toronto (and blog dog):
“It is a poorly held secret that a lot of buyers, who purchased in March and early April (firm of course) and have closing date approaching, are trying to either get out of closing on their purchases or asking for cash backs from the sellers. It is very typical for buyers to ask for $20, $30 or $50 thousand dollars cash back upon closing or they would walk away and forego their deposits. Most sellers comply, because nobody wants to test the market with 5-6 properties listed for sale on the same street for months without any action.
“What is shocking is that in this particular case, the buyer first asked for $150 thousand cash back upon closing via the letter of direction from his lawyer and just yesterday asked for a FURTHER $200 thousand on top, which the sellers agreed to. We are talking about a firm sale that is reported on MLS as $1.55 million, where in reality the property is sold for a mere $1.2 million, a discrepancy of 22.58%.
“The amount is exceptional here, but the practice of cashbacks is as commonplace nowadays as bidding wars used to be just 3 months ago.”
Here is the actual correspondence between agents. Remember – this is a sale for $1.2 million which was reported as $1.55 million. Makes you wonder what the real story is…
Did I ever mention this will not end well?
229 comments ↓
RBC boosts fixed-term mortgage rates
The industry leader is raising the interest rate. Rest should follow soon.
GT says– “If prices can drop 14% in the last 60 days, they can sure do that again in the next two months.”
I’m wondering how far the knife is going to drop in Vancouver and Toronto. Probably not as far as Los Vegas, Phoenix, and Palm Springs in 2006 but farther than they did in middle America. Stormy waters dead ahead.
Scream you shysters . Scream in horrible financial pain. Happy Housing Crash Everyone! :-)
So now that the OSFI has tightened credit even more, credit availability, will the BoC finally give up the charade of thinking they need to increase policy rates? Month over month, consumer prices in Canada are deflating. Year over year, the inflation is incredibly weak. Hopefully Poloz is awake and is highly aware of this.
As far as that $1.55M with $350k cash back, talk about desperation. Its bad enough what the RE boards have been doing over the past few years of stagnation by publishing sales figures not adjusted for the mix in an effort to mislead a few remaining gullible buyers, but now many participants, as Garth’s quote would imply, are turning full on scam artist.
BTW, good interview on TDN with Ross Kay this week, in case people haven’t heard it:
https://www.youtube.com/watch?v=wSnFfCrn2-4
Only one big exception I would take to Ross Kay these days, and that is, those who have followed me online would have been alerted to the 2013 peak of the Canadian market far before Ross Kay let his people know.
So many factors lead to this over heated real estate market, but it is the buyer who got in within the last 6-12 months that may end up under water.
Falling knife? how about a falling chainsaw?
Yet again, the delusion in the GTA is rampant and people are still shaking their heads saying it’s just temporary and it’s not a big deal. LOL.
I just hope that the RE sheysters don’t start putting the pressure on ON gov. and Toronto mayor to “rethink” their latest policies because that would be just crazy.
I hate to think of the hardship that all those new buyers will go through but for the love of god, the writing was on the wall for years!
Thank you Garth for standing for it for so long. it must have been so difficult to be so “wrong” for so long
Garth just proved MLS # are BS. You dirty lying shysters should be jailed for your shyster deception. You are all useless POGarbage. We all hope many of you go bankrupt and scream in horrible financial pain. Realtors and their #s are fiction.
What will be the except on the equity markets? Similar to 2009?
Oh, but …the number of homes resold and home prices are increasing in Ottawa. Cashback or is the storm slowly is moving East?
Great post, Garth! Especially about that $350k cash back. That is really hilarious considering that guy probably bought in a bidding war.
WOW this is going to be bad.
To go along with the (at minimum) two BoC rate increases we are going to have this year, here is a cheery report from Transunion to inform us that 700k Canadians will have problems with even a 1/4 point rise:
http://www.transunioninsights.ca/PaymentShockStudy/
Cue Mark to tell us that we are in an ‘absurdly tight’ monetary policy range :))
These Realturds must be punished for such misreporting! and everyone wonders why realtors are most hated!
#109 Smartalox on 07.05.17 at 3:37 am
@Flopper #53:
I’m with you! I’ve been a participant for a number of years, and while the comments section has a long varied in quality, accuracy and veracity of discourse, the ‘signal – to – noise’ ratio appears to have hit new lows recently.
Better just to ‘control F’, and search on terms that are most interesting.
<<<<<<<<<<<
Maybe Garth can remove some of the non-finance ones and send those types to facebook so we can get better info here.
#4 “those who have followed me online would have been alerted to the 2013 peak of the Canadian market far before Ross Kay let his people know.”
Uh genius, according to RK, NOBODY has his insights. Certainly not “Topper”
http://dilbert.com/strip/2017-07-02
#216 Smoking Man on 07.06.17 at 5:30 pm
. Once all the people that bought before they sold are done with. Up Up Up again. Real estate is religion in Toronto.
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Smokie most of the time I agree with you but I’m not seeing the rebound as early as Sept. Maybe next Sept.
Toronto June average/median/change/supply/demand charts posted here: http://torontorealestatecharts.com/
I’m left wondering how a buyer can demand cash back if there is a firm contract of sale. There must have been conditions of sale.
If the buyer walks and reneges on his deposit, doesn’t the seller have some recourse if they sell for less?
Some missing pieces here I think.
Nobody can make you close on a deal, nor prevent you from asking for a lower price at the last minute. — Garth
So at waht price comisson is charged 1.55 or 1.2?
Markets are cyclical so everyone is right eventually (sorry GT). If I had a fat GTA mortgage right now I would probably vomit though (from the stress and humidity). Specs holding multiple properties financed through their HELOC’s are the most vulnerable. Those that bought within their means will be fine. Sure you’ll lose equity but if you aren’t selling then who cares.
Should be interesting with these gargantuan mortgages steadily coming up for renewal. Granted those that got a 5 year fixed mortgage and are renewing in the next year are still renewing at a better rate. Stock market in the midst of a correction, a CAD housing market correction, oil in a bear market (debatable)… at least there’s Tesla… oh wait.
It is important to remember that those that may find themselves in trouble are people too, and this would not be a time for gloating “we were right” because that helps no one. People were simply misled by parents, agents, banks, media and hype. It was (is?) a powerful machine fueling this that is hard to not get sucked into. I was lucky to be raised by parents that respected money and I was taught the same thing. It is not someone else’s fault they were not. Equity isn’t everything, in fact, it’s almost meaningless in the grand scheme of things.
Time to STAMPEEDDEEEEE
True real estate numbers are sorely lacking and what has been happening for years is borderline fraud.
Where are the Feds? The Province? The city ?
Just force these realturds to report the facts without the bogus spin OR allow web based third party companies without a “piece of the action” to publicise truthful information.
The Real Estate closed shop “cartel” has got to end
Another note to Smokie.
Your closing must be coming up soon. Good Luck!
Don’t forget to clear out all the old bottles of JD
Unfortunately for home owners and speculators, this is just the very start of a long down trend. If you are up 30-50%, sell and wait it out. If you are already underwater… don’t move for another 15 years I guess.
When will you know the Canadian Housing Crash is over?
When people STOP talking about wanting to own real estate and fear it.
Given the gossamer quality of this gasbag, it didn’t take much to prick it.-GT
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Garth, with all due respect you may have been that prick you speak of.
All in fun :)
#4 Mark on 07.06.17 at 6:29 pm
Mark,
The reality is houses peaked in 2012 and those who have followed me online would have been alerted to that truth far before you let people know.
People Who Pretend to Have Crystal Balls Should be ignored:
#15 Penny Henny on 07.06.17 at 6:46 pm
#216 Smoking Man on 07.06.17 at 5:30 pm
. Once all the people that bought before they sold are done with. Up Up Up again. Real estate is religion in Toronto.
/////
Smokie most of the time I agree with you but I’m not seeing the rebound as early as Sept. Maybe next Sept.
#15 Penny Henny on 07.06.17 at 6:46 pm #216 said: Smokie most of the time I agree with you but I’m not seeing the rebound as early as Sept. Maybe next Sept.
*************************************
Not to pick on Penny but anytime someone claims to be “seeing” the future I tune out.
I laugh when people ask what others “see”. No one can see the future.
All can predict but most will be wrong. None “see”.
To Shawn Allen.
When I said what I am seeing what I am really saying is that it is of my opinion that by watching that market very closely I think that X might happen.
I am not trying to predict the future I am simply reporting what I see and where I feel the market is going.
Stop being such a Mark.
No wonder the haters hate Smoking Man.
He cashed out on the top!
#25 InvestorsFriend on 07.06.17 at 7:00 pm
People Who Pretend to Have Crystal Balls Should be ignored:
/////////////////
BTW- my balls are brass
I can finally hear the vultures rousing…
Demand for Metro Vancouver condos outstrips supply at record rate in June
New numbers from Vancouver show demand for condos outstrips supply at a never before seen rate. That demand is best visible in the the sales-to-active listing ratio, which reached an all-time high of 93.2 per cent in June. the ratio in a balanced market is is between 14 and 20 per cent.
That demand has been reflected in soaring prices, with the benchmark Lower Mainland apartment costing just over $600,000 in June, up a whopping 17.6 per cent from the same month last year, and up 2.9 per cent from May.
http://globalnews.ca/news/3576913/demand-for-metro-vancouver-condos-outstrips-supply-at-record-rate-in-june/
Most likely D. Likely Big D. But then again, it could be different this time…
#15 Penny Henny on 07.06.17 at 6:46 pm
#216 Smoking Man on 07.06.17 at 5:30 pm
. Once all the people that bought before they sold are done with. Up Up Up again. Real estate is religion in Toronto.
/////
Smokie most of the time I agree with you but I’m not seeing the rebound as early as Sept. Maybe next Sept.
#15 Penny Henny on 07.06.17 at 6:46 pm #216 Smoking Man on 07.06.17 at 5:30 pm . Once all the people that bought before they sold are done with. Up Up Up again. Real estate is religion in Toronto. ///// Smokie most of the time I agree with you but I’m not seeing the rebound as early as Sept. Maybe next Sept.
…..
Sept will be the start of the rebound. Right now its a toug of war between vultchers and stubborn sellers. The cash on closing that garth mentioned was obviously someone stuck with two properties. Its not the norm. People get financialy destroyed if they walk. So the guy had no choice.
Listing grouth has stalled, and more houses are coming off the market, still lots of demand to buy, but buyers will only pounce once they realize inventory and choice is shrinking.
Watch July and Aug active listings shrink. Even now we are still low in historic active listings.
So unless you see a huge spike in new listings. This puppy will rebound in the fall, come July 12 you may even see a surge in buying, people taking advantage of low pre-approved mortgages.
In the east end GTA I haven’t seen a lot of price movement. One by my place went down 50k and I am pretty sure they de-listed. Other than that, one place we were interested in, went in a bidding war for 100k over asking. Houses are still selling by the amount of sold signs i see, although it is taking longer. Also, it seems the inventory is shrinking. Its all local I know, but east end GTA is still selling it appears. This is just what I notice cruising around and checking MLS, Zolo…
#25 InvestorsFriend on 07.06.17 at 7:00 pm
People Who Pretend to Have Crystal Balls Should be ignored:
#15 Penny Henny on 07.06.17 at 6:46 pm
#216 Smoking Man on 07.06.17 at 5:30 pm
. Once all the people that bought before they sold are done with. Up Up Up again. Real estate is religion in Toronto.
/////
Smokie most of the time I agree with you but I’m not seeing the rebound as early as Sept. Maybe next Sept.
#15 Penny Henny on 07.06.17 at 6:46 pm #216 said: Smokie most of the time I agree with you but I’m not seeing the rebound as early as Sept. Maybe next Sept.
*************************************
Not to pick on Penny but anytime someone claims to be “seeing” the future I tune out.
I laugh when people ask what others “see”. No one can see the future.
All can predict but most will be wrong. None “see”.
#25 InvestorsFriend on 07.06.17 at 7:00 pm People Who Pretend to Have Crystal Balls Should be ignored: #15 Penny Henny on 07.06.17 at 6:46 pm #216 Smoking Man on 07.06.17 at 5:30 pm . Once all the people that bought before they sold are done with. Up Up Up again. Real estate is religion in Toronto. ///// Smokie most of the time I agree with you but I’m not seeing the rebound as early as Sept. Maybe next Sept. #15 Penny Henny on 07.06.17 at 6:46 pm #216 said: Smokie most of the time I agree with you but I’m not seeing the rebound as early as Sept. Maybe next Sept. ************************************* Not to pick on Penny but anytime someone claims to be “seeing” the future I tune out. I laugh when people ask what others “see”. No one can see the future. All can predict but most will be wrong. None “see”.
….
You must be new here, Hi I’m Smoking Man, I come from planet Nictonte, and I see the future perfectly, especially after 9pm
The neighbours are pissed. Their property taxes will be going to the moon with this sale.
MPAC (Ontario property assessment) has a sale for the property in their hood recorded at $1.55M when the actual close was only really $1.2M after cashback.
Will the seller pay comish to the agents on a sale of $1.55M or $1.2M?
This is the stuff that lawyers use to fund family Caribbean vacations!
Some great articles on Financial Post today.
1) How the low rates/low dollar strategy failed Canada:
http://business.financialpost.com/opinion/philip-cross-how-canadas-weak-dollar-strategy-flopped-and-then-backfired/wcm/8e41e47f-eacb-4c5e-aee3-4a7acde2ae1d
2) How central bankers will try to handle “the great unwind” after years of unprecedented stimulus:
http://business.financialpost.com/investing/the-feds-us4-5-trillion-question-how-to-handle-the-great-unwind/wcm/6f2effcd-00c5-4491-8e84-3e0b5c245580
Basically low rates did barely anything for “exports”, and everything to increase our housing bubble to unsustainable levels, along with the prices of everything else we consume.
Also, our central bankers are now faced with unwinding all the stimulus they injected over the past ten years. Just like how the stimulus was unprecedented and made for uneven results (asset bubbles everywhere), the unwinding will also be unprecedented and uneven. If not done delicately, rates might skyrocket as huge buyers (central banks) sell humongous quantities of bonds/securities they bought.
MF
looks like CBC.ca is censoring comments on the RE housing crash as prices and sales are crashing at a rate NEVER seen before. Realtor and mortgage broker shills are kicking and screaming and paying media to spin the negative number so they don’t look so bad. Good job by Garth to exposing realtor shills of the of buyers getting cask back. bidding wars are RE fiction. People spread the word around . Happy Housing Crash Everyone! :-) I hope you shills suffer for a thousand years for your crimes and lies.
#17 Bobby
If a deal is firm and the buyer refuses to close it is a fundamental breach of contract. Sellers may choose to litigate and sue for related damages which may include all losses incurred. The deposit will remain in trust until either the mutual release is signed or more often a judge rules on its distribution. Walking away from a firm deal is very serious and can result in financial ruin.
but none of this is market driven, or is in any way organic-
it’s a whack job by pathetic governments, shifting the blame for the mess they created, hoax management 101
‘the risk, the risk, the risk’
just keep repeating the risk mantra like a parrot and the sheeple will follow
In these collateral loans there is no risk to any of Canada’s big banks, and the credit worthiness of the borrower is irrelevant, if everything tanks, the bank has a hard asset that they did not have when they created the loan by typing it, and they can sell the asset for cash they did not have when they made the ‘loan’
Wow ive never heard of this cashback stuff. I guess its a game of chicken. Will the seller go the legal route, or settle for less? Is the buyer willing to take a stand and say they wont fulfill their contract obligations, and risk losing the deposit and paying the difference of any home price drop?
Wow.
https://m.youtube.com/watch?v=hqOn5XEm86A
Anyone following energy stocks?
CPG is down considerably in the last few months. Tahoe resources down 33% today. Even Suncor is down.
Anyone picking these up with their play money?
MF
It is a supply issue, need more inventory, people are starved for listings, can’t keep up with demand, everyone wants to live here, can’t build fast enough, zoning is holding back supply. SUPPLY
We need way more supply here in BC, prices are too high, need more supply, more supply, more units, more building more of more, give us more…
I second the query “How the **** is this cashback stuff legal?”.
Isn’t it just adding temporary leverage in the buyer’s favour, founded on the seller’s fear that they couldn’t sell for nearly the same price again right away?
The post already states that in other words, but why is there no legal instrument to protect other people that may have participated in the bidding competition for the property in question?
I sometimes think that central Canadians still have a 1950’s view of the Western provinces – that they mainly populated by knuckle dragging loggers, cowboys, roustabouts and field hands. Certainly, many comments on this site have suggested Alberta is “finished” because oil prices returned to something like historical averages.
Some may therefore be surprised that the Google Artificial Intelligence affiliate, Deep Mind, has set up a research lab in Edmonton. But if you think about it, oil exploration and production is one of the most technologically intensive activities in Canada so finding such expertise in Edmonton is not that surprising. Perhaps the slow down in the oil business simply means Alberta tech resources will be redeployed.
http://business.financialpost.com/entrepreneur/deepmind-goes-to-alberta-for-its-first-international-lab/wcm/a73f66a7-84a3-4e4e-96e6-515c2328aca3
Here is further info from OFSI regarding the proposed mortgage lending rule changes:
“Today, OSFI is releasing draft changes to Guideline B-20 for public consultation. The changes align language throughout the guideline with OSFI’s July 2016 letter and clarify and strengthen expectations in a number of specific areas, including;
-Requiring a qualifying stress test for all uninsured mortgages;
-Requiring that Loan-to-Value (LTV) measurements remain dynamic and adjust for local market conditions where they are used as a risk control, such as for qualifying borrowers;
-Expressly prohibiting co-lending arrangements that are designed, or appear to be designed to circumvent regulatory requirements.
OSFI is inviting feedback”
http://www.osfi-bsif.gc.ca/Eng/osfi-bsif/med/Pages/B20_dft_nr.asps
Question: What is the advantage to this “cash back” scheme other than the sellers formally agreein to a lower price? The only part I can see benefiting is the realtor through inflated commission fees.
“If prices can drop 14% in the last 60 days, they can sure do that again in the next two months.”-GT
—————————————————————–
And if they can fall 28% in 4 months (120 days), they can fall 58% in … oh, let’s say 24-36 months!
Whatever happened to the ‘slow melt’ you were predicting a year or so ago?
Has GT ever said, “Hmm, I guess I was wrong on that one”?
{I had made a comment that prices could drop ~60%, which you had found ‘baseless’ and ‘ridiculous’}
But it’s OK, you’re only human… :-)
TCC
Here’s how the game works:
There is reality and there is television.
There is ‘risk’ because Morneau and the OFSI say so on television and press releases.
Trump says, on television, there is terror everywhere, so pay up.
T2 says we have astronauts, puts them on television, says were going into outerspace, so pay up.
Queens Park sister and T2 say ‘carbon’ on television, so pay up.
No proof, no evidence, no debate, just television stagecraft and acting.
It’s really that simple.
If you disagree or demand proof you are called a ‘denier’
which is just more perversion of language, because you never affirmed anything in the first place. Kind of like unsubscribing to junk email you never subscribed to.
“But it gets worse. The bank regulator, OFSI, this week brought down the hammer on houses selling for more than $1 million. In a few months borrowers who have over 20% to put down (required for seven-figure houses) must pass a mortgage stress test – just like people applying for loans covered by CMHC.”
——————————————————————
Gee. I wonder what triggered this move. #HCG.
#37 Happy Housing Crash Everyone! on 07.06.17 at 7:30 pm
looks like CBC.ca is censoring comments on the RE housing crash as prices and sales are crashing at a rate NEVER seen before. Realtor and mortgage broker shills are kicking and screaming and paying media to spin the negative number so they don’t look so bad. Good job by Garth to exposing realtor shills of the of buyers getting cask back. bidding wars are RE fiction. People spread the word around . Happy Housing Crash Everyone! :-) I hope you shills suffer for a thousand years for your crimes and lies.
#37 Happy Housing Crash Everyone! on 07.06.17 at 7:30 pm looks like CBC.ca is censoring comments on the RE housing crash as prices and sales are crashing at a rate NEVER seen before. Realtor and mortgage broker shills are kicking and screaming and paying media to spin the negative number so they don’t look so bad. Good job by Garth to exposing realtor shills of the of buyers getting cask back. bidding wars are RE fiction. People spread the word around . Happy Housing Crash Everyone! :-) I hope you shills suffer for a thousand years for your crimes and lies.
….
Too bad Warren Buffet never had a relationship with you before he went long on Canadian Real Estate by buying Home Group Capital.
Ontario is in a MONSTER of a bubble. 29% of the economy related to housing. We need an economoc depression to correct this malinvestment http://business.financialpost.com/news/ontario-economy-too-dependent-on-housing-bubble-new-study-warns/wcm/7baf7302-0236-4f53-a002-bc6b4be7169d
#42 MF on 07.06.17 at 7:43 pm
Anyone following energy stocks?
CPG is down considerably in the last few months. Tahoe resources down 33% today. Even Suncor is down.
Anyone picking these up with their play money?
MF
===============
Well, yes, obviously. How else would a stock be “down” if someone didn’t pay the last market price to buy the stock?
@#30 Just me
“Demand for Metro Vancouver condos outstrips supply at record rate in June….”
******
Sooooo.
Either the “greaterfools” cant afford a $1 million + mortgage OR they dont qualify…..
Hence the rush to buy anything…..which in this case is….. Condos.
Stupid is stupid.
Catching a falling knife whether its a house or a condo is a greaterfools errand
One of the enduring mysteries for Canadians is, if the US healthcare system is supposedly so much better than ours, why does it cost so much more to run. I have attached a fairly nerdy article from the WaPo about how to fix Obamacare. To me the most interesting part was something that would never have occurred to a Canadian.
“9. Finally, tort reform should be included. Abuse of malpractice suits is not as costly as Republicans claim, but it is a real issue because it provides a reason — and an excuse — for hospitals to over-treat and over-test. If tort reform shaved just half of one percent off of health-care costs, that would yield close to $200 billion over a decade. Democrats need to stand up to their trial lawyer patrons on this one.”
https://www.washingtonpost.com/opinions/nine-ways-to-really-fix-obamacare/2017/06/30/dc5a8fc4-5cfc-11e7-a9f6-7c3296387341_story.html?stream=top-stories&utm_campaign=newsletter_axiosam&utm_medium=email&utm_source=newsletter&utm_term=.691f94d36e12
Omid aka the Cash Me back outside thinks he is smart for getting the house for 1.2mil. He is still a GREATER FOOL like Rob Kardashian! His 1.2mil loot will slide down to 1m in no time. How bout dat?
Hey Garth I’m going off topic again but can you please do a post on credit cards? Rewards, how to use and all of that. Thanx.
And Vancouver ticks on……but for how long?
I need some of flop’s pink lemonade. Feeling a bit of dry mouth since being back in Vancouver.
Hey guys,
I just wanted to clarify a couple of things. A lot of people here in the comments are blaming the agent. This has nothing to do with the agent. Once the transaction goes firm the status on mls is changed from SC (sold conditionally) if there was a condition to Sld (sold), after which point the listing cannot be modified.
Secondly, there is nothing illegal going on here. The buyer and the seller can agree to whatever they agree. This is typical when there are problems with the mortgage and the closing date gets extended even though the transaction is firm. It also happens when the bank pulls the mortgage the last second and both parties sign a mutual release, even though the transaction is technically firm. When this happens, the transaction is still reported as sold, even though no transfer of title took place.
Third, as i pointed out to Garth, realtors do believe their own crap. They are not intentionally trying to mislead the client. Even now, a lot of realtors are believing in a “return to normal”, despite all evidence to the contrary.
So who is responsible for the situation we are in?
You! A promise of free money leads to a bubble every time… And Bank of Canada of course with their 0.5% rate. But at the end of the day people who showed up to 50-70 offers offer presentations did so voluntarily and the illusion of free money forever made them lose all caution.
Sorry, but it’s the speculators, amateur landlords (who are also speculators) and “money grows on trees” mentality that combined for the perfect storm.
#47 TCContrarian on 07.06.17 at 7:58 pm#47
Slow melt, quick boil, fast drying paint, two minute epoxy… All relative depending on your heart rate, for some quick is slow, and slow is quick…
It is easy to predict when you are repeating the latest stats… My theory is that it will slowly melt, then come to a quick boil, then slowly freeze followed by a gentle thaw..
So is “doug” taking note of this development?
He of the house that sold at peak with a contract in place but buyer balked and is now relisted. Law suit or capitulation?
#37 Happy Housing Crash Everyone! on 07.06.17
I hope you shills suffer for a thousand years for your crimes and lies.
_________________
I’m really sorry that your wife cheated on you and left you for a real estate agent. It has to really hurt to have him (or her) raking in the commissions while you moved back to your parent’s basement. Try to get over it and move on, you’re only hurting yourself.
#20 Fartz
The only true numbers are at land registry. MLS numbers are bogus.
So how long can Vancouver condos continue on their upward climb. According to Ross kay what’s happening in the Lowermainland at present is a “contraction bump” which happens in every housing cycle, and where a small number of buyers will continue to jump in to the market unaware that they are being fed wrong market intelligence.
#50 Smoking Man
You know WB is not “long on Canadian real estate” C’mon now.
Moved to BC 5 years ago, been renting in Maple Ridge, waiting patiently, and all I have to say is…
WHEEEEEEEEEE!!!!
YOY Ottawa prices up 9% and sales up as well.. Coincidence?
If a buyer askes me for cash back, Id say thanks for their deposit and see ya later. it’s a bluff
One of the enduring mysteries for Canadians is, if the US healthcare system is supposedly so much better than ours, why does it cost so much more to run.
———————————————————–
US system has better quality care than that of Canada but the US system is rife with corruption.
The Swiss system is the best in the world.
64 S.Bby on 07.06.17 at 8:44 pm #50 Smoking Man You know WB is not “long on Canadian real estate” C’mon now.
……
Buffet is savey, not by his looks but his bets. Do you think if he thought cad real estate was going to go 2008 usa he would buy HCG.
No one is always right, but I’m pretty sure he has a PhD in Herdonomics leading his research team. There’s only 4 of us on earth.
Barrington I’m thinking.
Aside from the fear and greed taking place right now. We still have a housing shortage. 100k people come to GTA every year.
Buyers will pounce once they feel there choices for property are dwindling.
Globalists want to make an example of post modern Canada, crazy loot is flowing to our tech sector. Jobs galore if you want one. Thats why rates are going up. Its never been about the price of things, its always been about the price of labour.
Supply and Demand bitches. Its never wrong for long.
Yeah right . Instead of buying for $2.1 million you get it for $1.7 mill
Ship sailed . Sorry
Please review:
3050 Ellesmere Rd 708
Toronto Ontario M1E5E6 MLS#: E3732749
Sold: $370,000
List: $285,000
Contract Date: 3/18/2017 Sold Date: 3/23/2017
RELISTED DEAL DID NOT CLOSE:
3050 Ellesmere Rd 708
Toronto Ontario M1E5E6 MLS#: E3787960
Sold: $330,000
List: $285,000
Contract Date: 5/04/2017 Sold Date: 5/09/2017 362
Another listing:
Bellamy Rd N
Toronto Ontario M1H 1E8 MLS#:E3733303
Sold: $820,000
List: $649,000
Contract Date: 3/20/2017 Sold Date: 3/27/2017
RELISTED DEAL DID NOT CLOSE:
362 Bellamy Rd N
Toronto Ontario M1H 1E8 E3836801
Sold: $650,000
List: $649,000
Contract Date: 6/09/2017 Sold Date: 6/19/2017
Realturds…just as bad as used car salesmen.
67 yorkville renter on 07.06.17 at 8:55 pm If a buyer askes me for cash back, Id say thanks for their deposit and see ya later. it’s a bluff.
..,…
No shit but some uneducated fool who is stuck with two properties my cave. Vulching time. But if the seller doesn’t need to sell. The Buyer walks, their life is going to be in a world of pain. Only chance for a loan. The payday store. No leverage no prosperity.
Thats why in the next two months is the time to vulch. Come Sept, bidding wars are coming back.
Watch wee grasshoppers.
So at some point someone might realize that there is more than one way of valuing a house.
It has a cash value.
However it is also somewhere that a person can live.
Nothing else we buy, is treated with this same amount of speculative intent. If this was the case, no one would ever purchase a new car (you lose 20% when you drive it off the lot) no one would attend a College or a University (takes years of hard work to get all the money back you spent on that ticket), no one would purchase an appliance (have you looked at the nearly new listings on Kijiji?) no one would take a vacation (like literally throwing your money out the window of the airplane) no one would purchase any food that did not have pure nutritional value and only nutritional value (why buy something that tastes good if you don’t get maximum benefit from it?).
Seriously. People need to get over the desire of always having to live in an asset that increases in value every year. Most things that we own, don’t do that.
Stop being a Debbie downer garthadauraus. It’s like zero hedge negstivity level man
Your in confirmation bias mode.
Price up 6% yoy.
That is a better mid term gauge to watch. Once that goes negative…then it’s on.
Al
Year/year pricing is meaningless after a 30% rise in March, then a plop. Market momentum is negative. — Garth
Well. Shiver me timbers. Cash back after sale, huh?
It would be interesting to get a legal opinion on whether the utilization of this cash back practice was in essence a ‘shell game’ that possibly results in a contravention of the Bank Act.
Those poor old Banks (doing their level best to scratch out a living), provide mortgage financing based on purchase price or appraised value, whichever is the lesser. Appraisers probably go to the listing information in order not to sink too many deals. But if the ‘real’ purchase price’ based on cash back was less, the mortgage financing the Bank provided could exceed 80% -contravening the Bank Act.
In the scenario above they might provide 80% of 1,550,000 or a mortgage for 1,240,000. But if the real price is 1,200,000 and they are unaware of the back end deal, they have provided 103% financing.
Did the realtor advise the customers Bank of the arrangement? Was it written into the purchase agreement or on a “side contract” perhaps not distributed to all interested parties. Maybe drawn up long after the original purchase agreement had been provided to the Bank. Do all mortgage instructions now need to put lawyers on notice to this effect and remind them that they act not only for the buyer but for the Bank? Can the realtor be held legally liable if a lack of disclosure is confirmed? If it’s a side agreement the realtor appears to be the beneficiary in the scenario. No wonder we need OSFI. Hope they remember to wear their steel underpants as they dive through all this mayhem. Maybe the CRA needs to put on some steel underpants as well since it could complicate their capital gains revenue if they have to do a deep dive on every sale to find out the “real truth”.
Someone is always lying to someone else about something. All with the motive of preserving the current shell game being played. Then the rules have to come into play in order to punish everyone for the sins of a few. Never mind the prick of a gossamer gas bag. I prefer the imagery of the Hindenberg.
“Cash back on closing,” doesn’t sound like, “price reduction on closing.”
It is my understanding that “cash back’ on a new car sale is often used as al,l or part of, the down payment on the car loan. Is that what we are talking about in this RE phone conversation?
Something about this “cash back” terminology applied to RE transactions is setting off my crap detectors.
If prices can drop 14% in the last 60 days, they can sure do that again in the next two months. The decline would then approximate that which ate the US middle class – and took three years to roll out.
I’m saying twice that – 28% in the next 60 days:
the reason is debt. Too many people are in debt. They’re afraid.
In the US, as the market crashed , the US Fed cut interest rates from 5% to 0% and the Bank of Canada followed. The cut that saved the US, propelled Canada even higher. Now when the market crashes, the Bank of Canada is raising rates.
In the US, the standard mortgage is 30-year fixed term. No such thing exists in Canada.
I’m surprised that prices have followed sales so quickly. In the US sales collapsed, a year later prices followed.
So far:
20% drop in sales year to year in May
40% drop in sales year to year in June
The-powers-that-be have done a masterful job of media control: Stephen Poloz: “low interest rates have done their job” – masterful. The fact that the housing crash is only starting to become apparent in July – masterful.
#36 MF on 07.06.17 at 7:30 pm
Basically low rates did barely anything for “exports”, and everything to increase our housing bubble to unsustainable levels, along with the prices of everything else we consume.
/////////////////////////////////////////////////////
Precisely, what exactly did poloz accomplish with TWO rate cuts other than outright currency depreciation? That, and rampant domestic borrowing. Exactly the outcome anyone with a brain to put two and two together.
Now all of a sudden, their (own magical) data states the need to raise rates back to 2015 levels because inflation is getting too hot. Kinda strange don’t you think given true inflation is probably closer to 10%? /sarc.
Haha screen grab of text reminds me of this meme:
https://www.instagram.com/p/BQ3ywmUhx70/
Ps. GTA Girl I spotted an idiotic son of sorts at Lavelle (paps is in the $ biz)…not sure how many there are out there.
Mark: So now that the OSFI has tightened credit even more, will the BoC finally give up the charade of thinking they need to increase policy rates?
no
Mic: Oh, but …the number of homes resold and home prices are increasing in Ottawa. Cashback or is the storm slowly is moving East?
Ottawa is the most stable housing market in the country. There could be a reverse effect:
Somehow, Georgetown comes to mind. If you have sought-after skills and you don’t like the street you are on you will sell to get out. And move to Ottawa.
http://www.greaterfool.ca/2017/06/26/the-unwind/#comment-524545
#66 Lefty on 07.06.17 at 8:54 pm YOY Ottawa prices up 9% and sales up as well.. Coincidence?
No coincidence… They move the problem around by not adopting a national house policy… First Vancouver, then Toronto and Victoria, now Ottawa and maybe Montreal or Calgary… They put the local tax to move the money from one location to another until nobody will afford a house in a city or everybody gets in debt … There is a lot behind the scene you can’t even imagine…
My reason for selling Shlong Branch
https://youtu.be/Q3mgapAcVdU
I want to be ingulft with smokers, drinkers and gamblers. My true people.
Its not Canada.
Is that the Dundas/6th line Oakville home?
It was listed at 1.2 and went for 1.55 in a bidding war, Can verify that?
#37 Happy Housing Crash Everyone!#37 Happy Housing Crash Everyone!
–
CBC is not a news source, they are the propaganda arm of the Globalists.
Is it just me or is Alex and the other broker come off as a$$holes? The 2 are “laughing out loud” at the misery of others. The seller obviously knows he made a huge mistake so trying to justify things lowballing last minute. The seller knows they missed the peak and may be hard up to take a $350K haircut. No winners here other than the 2 jackasses chatting on whatsapp and splitting 5% on $1.5M or $1.2M.
Was the property in question http://realestatebay.ca/listing/38-fieldflower-cres-richmond-hill-589880.htm#listing ?
I hope the buyer and seller find this site and sees how classy these 2 guys are given their situation.
Throw away every last cent because you see the future.
Its called love. Humans won’t get it.
Wheeeeee! Thankfully the market has taken a dive and put some sanity back into the market.
I’m currently looking for a new rental in the downsview or Bathurst manor area, I was hoping to rent a whole house but that seems impossible.
My current landlords have used our place as a piggy bank and bought even more houses, one last year even. Now they are overextended and I get the sense they want us out to hike the rent.
Yesterday they tried to demand an extra 560/mon supposedly in extra utilities. I’m done.
There is no way a tiny bungalow costs 700/mon in electricity. Should have fixed up the place instead, the basement floods constantly and the wiring was never done properly so breakers trip all the time. It’s not worth it now.
“It could be a soft landing”
..lol… at no time the housing bust in North Gringo was supposed to be anything else but: BIG.SMOKY.Whole.
..dragging the entire economy with it.
70% of the entire North Gringo economy IS housing via construction, financials services and retail. Yeas..when you add EVERYTHING that has to do with housing…it comes up to 70%.
That 6-8% as a result of shacks changing hands means nothing. Banks that lent, morons that remortgaged, cars that were financed with HELOCs, retail that went with granite and other zillion things…THAT my friend is what makes the 70% of the North Gringo economy.
Perfect storm indeed.
There is actually the best opportunity of a lifetime.
My Wife and I earn a combined annual salary of about $150,000. We’re in our mid 40’s with one young child. We have about $1,000,000 invested. But we also have another $750,000 cash allocated for a home. Lots of saving over the years and some inheritance.
It’s time we put down something permanent and we have the flexibilty right now of relocating to many different places in Canada. We’ve been renting but have been booted out twice now because our units were sold.
Our budget is $750,000. Is it better to pay all cash or put 20% down, get a mortgage for $600,000 and put the rest into investments? We won’t be buying either in Vancouver or Toronto.
Please excuse my naivete, but what’s the deal with the cashback? Why would the seller do it and what’s the attraction for the buyer?!
To my lesbonic fans with a brain. I love you. The brainless not so much.
https://youtu.be/HHjKzr6tLz0
#90 Jesse
1. Put it all in a balanced portfolio with Garth
2. Draw 113,750 preferentially taxed income
3. Rent cause you’ll be free
4. Retire or work part time and enjoy the middle years of your life without the burden of full time employment
“Precisely, what exactly did poloz accomplish with TWO rate cuts other than outright currency depreciation? That, and rampant domestic borrowing. Exactly the outcome anyone with a brain to put two and two together. Now all of a sudden, their (own magical) data states the need to raise rates back to 2015 levels because inflation is getting too hot. “
Inflation was a little over 1% YoY, and negative Month over Month, ie: deflation. Deflation appears to be accelerating with the YoY numbers likely to get even weaker as time goes on.
What did the BoC accomplish? They kept the economy going despite stagnant RE prices over the past few years.
“Question: What is the advantage to this “cash back” scheme other than the sellers formally agreein to a lower price? The only part I can see benefiting is the realtor through inflated commission fees.”
It helps the RE sell side, who is loaded up with RE that they’re trying to sell, keep the allusion of stable (and rising) prices alive. Given that the perception of risk highly hinges on stable or even rising prices, they’re trying to portray housing as a lot safer of an asset class than it really is.
Of course, as readers of my comments know, anyone that is marking their books to the Realtors’ “2017” non-sales-mix adjusted numbers probably is being dishonest. The market basically called “BS” when HCG tried to do that, for instance.
Yawnnnnn
This is just a transfer of wealth. The only winners at the end of the day is going to be the bankster…
Because they made up all the rules. They cheer as they sold their mortgages backed by the government.
When Mortgage sales slow they spread fear and I’m sure they are in on raising the rates.
They winning going up and they win going down.
They will buy your freaking houses back for “PENNIES ON THE DOLLAR”
BC Government’s Subprime Loans Fueled Almost 7% Of Vancouver Real Estate In Q1
The BC government will give a first-time buyer up to 5% of their down payment, on a high-ratio mortgage of up to $750,000. The loan is interest and payment free for the first five years, and you have 25 years to pay it off.
In the first quarter of 2017, the BC government received 1,208 applications for the Home Partnership program. Metro Vancouver was just over half of those with 610 of those applications, 503 of them approved. This is the equivalent of 6.6% of sales logged through the Real Estate Board of Greater Vancouver (REBGV).
On Banks, Get Educated
Number 39, I don’t believe television said:
In these collateral loans there is no risk to any of Canada’s big banks, and the credit worthiness of the borrower is irrelevant, if everything tanks, the bank has a hard asset that they did not have when they created the loan by typing it, and they can sell the asset for cash they did not have when they made the ‘loan’
*************************************
This illustrates how a little knowledge is a dangerous thing.
Yes, banks have little risk when mortgage guaranteed by CMHC and by the real estate. Score one point.
On your second point, you forget that when the bank made the loan (an asset receivable) they gave the borrower a deposit (a liability of the bank). The buyer then spent the deposit on the house and then the seller owned the deposit or (more likely) the deposit was transferred to the seller’s bank.
What if the house falls to half value and (assume no mortgage insurance) the bank has the full obligation of the deposit and an asset worth half the deposit liability.
Do you not believe that loan losses are a thing?
Did the near collapse of Home Capital not teach you that your theory of loan receivables created from thin air must be missing something?
But whatever, most people are not interested in learning anything or correcting their mistaken views so why do I bother?
You are correct though that a bank does not need cash as such to make a loan. A loan is credit. A bank together with a borrower creates what we think of as cash.
Get over the notion that cash is that stuff that a few people still carry around in a wallet. Paper cash is the tip of the iceburg.
Maybe Black Sheep can explain it though he still seems to think it is in some way nefarious, which is dead wrong.
I watching with interest the G20 meeting in Hamburg, Germany.
While you guys are watching dogs leaping in the air.
Anyway, here’s my take from what is going on in the real world.
Here’s the new world order:
China and Russia will form an alliance.
Japan and the EU have signed a trade agreement.
Trump and May will be isolated.
The end of Anglo Saxon dominance.
Trudy will have to decide quickly and wisely.
Merkel the leader ( albeit reluctantly) of the free world.
How is that more relevant than dogs? — Garth
Year/year pricing is meaningless after a 30% rise in March, then a plop. Market momentum is negative. — Garth
I totally agree with you Garth, but many investment advisors and portfolio managers say the same thing about the TSX. It got thrashed in 2015 came back in 2016 to close only about 4% higher than it did in 2014!!! And now down again since the beginning on 2017. Yet industry shills are quick to point out a 17% gain in 2016 and how it’s up 7 or 8% in the past 12 months.
Let’s leave the cherry picking to realtor scum shall we?
No comparison. You cannot rebalance a house. — Garth
Hard as it is to believe there still are a couple of greatest fools who will still pay double what a 3 bedroom detached brick house on a 50 x 150 lot in Oshawa sold for exactly two years ago (July 2015). I’ll track those houses (that just sold) and see if the new owners lose them to the bank.
#89… if you’re for real, then good for you. To have $1.75mm on $150k family income is outstanding. You should definitely live a little though.
I would take out a mortgage… at these rates, it’s basically free money when you consider inflation. But, to appease your fears, put down more than 20%
BUT the best mive is to wait. the tide is turning, why swim upstream?
On Banks
I too could lend you $one million with no need for me to have cash under the following conditions:
You agree to buy a house with the money (and secure the loan with the house) and you get the seller to agree to hand the proceeds back to me (I will pay interest and will acknowledge that I owe the seller the $1 million).
So you see I charge you 2.5% and I give the seller 1% and I make the spread. Where is my risk? Well what if you default on the loan I still owe the seller the $1 million he deposited with me.
In banks the seller can take away his deposit at any time so each bank must work to attract deposits.
Regulators require banks not to lend only depositor money, rather they need to have a bit of owner’s capital in there such as 8%. Thus a bank can only lend say 12.5 times its capital. Capital here is common equity, preferred shares plus bonds outstanding.
This can be spun to be nefarious. Ooh they lend way more than their capital! Ooh they don’t keep your deposit in the vault!. There is nothing nefarious about it and our economy would grind to a halt without banks.
Check any bank balance sheet you care to. You will almost always see that deposits are actually higher than loans. (Some of the deposits and capital are not loaned out but are in other assets including a deposit at the central bank.)
All this hubub, and yet, I see zero detached houses in Mimico selling for less than $750K. Zero. Prices are still stupid-high for the regular folk.
Comfort, the future less one.
https://youtu.be/9FCBg3GmzQM
Re: #91 Nick on 07.06.17 at 10:30 pm
The buyer/buyers can declare personal bankruptcy.
#90 Jesse on 07.06.17 at 10:24 pm
I’ll sell you my Toronto condo loft for $750,000.
DM I know you are thinking lets kill the revenue pipeline to making love count.
God is my pall even thought im not a beloved yet.
Ageism and alchole abuse. A force that Is worthy.
https://m.youtube.com/watch?v=eJlN9jdQFSc
A world of potential, financial ruin awaits so many.
#56 will on 07.06.17 at 8:19 pm
“Hey Garth I’m going off topic again but can you please do a post on credit cards? Rewards, how to use and all of that. Thanx.
#56 will on 07.06.17 at 8:19 pm Hey Garth I’m going off topic again but can you please do a post on credit cards? Rewards, how to use and all of that. Thanx.”
Lots of info online.
http://www.rewardscanada.ca/choosing-a-travel-credit-card.html
http://www.flyertalk.com
http://www.redflagdeals.com
#75 Al on 07.06.17 at 9:31 pm
Stop being a Debbie downer garthadauraus. It’s like zero hedge negstivity level man
Your in confirmation bias mode.
Price up 6% yoy.
That is a better mid term gauge to watch. Once that goes negative…then it’s on.
Al
Year/year pricing is meaningless after a 30% rise in March, then a plop. Market momentum is negative. — Garth
0000000000000000
Mr Garth, I’m not saying you are wrong but it if we are looking back at this in one years time we might see Jan, Feb, Mar and Apr prices as a overshoot on a ever rising slope. Smokie says,
#102 yorkville renter
“#89… if you’re for real, then good for you. To have $1.75mm on $150k family income is outstanding. You should definitely live a little though.”
———————–
My wife used to make a bigger salary, but now she works only part time and she likes it – looks like it will stay that way.
We owned a home in East Vancouver and sold it 3 years ago. I thought the market was topped out. I was wrong, but we still did ok. But now we can’t afford to buy back into the Vancouver market and have decided to leave.
We also saved a lot, living frugally and inherited some dough.
Thanks for the advice.
#76 the Jaguar on 07.06.17 at 9:32 pm#76 the Jaguar on 07.06.17 at 9:32 pm
Thank you Jaguar for your prespective, In my mind you are a Cougar. Meow
Hey Garth, the website is fubarred. Everything copied (see above) is duplicated
#88 Shortymac on 07.06.17 at 10:17 pm
Wheeeeee! Thankfully the market has taken a dive and put some sanity back into the market.
I’m currently looking for a new rental in the downsview or Bathurst manor area, I was hoping to rent a whole house but that seems impossible.
My current landlords have used our place as a piggy bank and bought even more houses, one last year even. Now they are overextended and I get the sense they want us out to hike the rent.
Yesterday they tried to demand an extra 560/mon supposedly in extra utilities. I’m done.
There is no way a tiny bungalow costs 700/mon in electricity.
/////////////////
You rent a house with the utilities included in the rent?
Who let you on this website?
Smokingman #50
Your wife must be a realtor. You seem worried about the RE crash. btw buffet bought HCG for 37 cents on the dollar. He has no faith in Canadian RE and has stated such. When Prices crash 50-60% , Buffet can picks up alot of toronto RE on the cheap. Ever think that is his plan? go read up on the “deal” buffet made and see how clueless you look. Realtors are such shills they will stay anything regardless how stupid they sound. Happy Housing Crash Smokingman. :-)
#100
No comparison. You cannot rebalance a house. — Garth
Not really, no.
But you can do something that comes close:
Scenario: family owns $1M home, 1$M stockportfolio and 0.1M mortgage: assets are 50/50 RE/TSX.
Takes out HELOC of 0.5M and puts it in TSX.
Now assets are 40/60 RE/TSX.
Amazingly: Rebalanced at the cost of more debt!
The reverse probably happens more: liquidate stock portfolio to kill mortgage.
Dollarama is stocking up on large stickers of CASHBACK and UNSOLD, handy supplies to be carried in Audi trunks. They won’t be undersold.
Garth- So the average sale price is down 14%…what portion of that is due to product mix and people choosing cheaper properties and how much is attributable to “same house” price drops? Anecdotal reports of buyers demanding cash back on closing aside, an average price drop doesn’t necessarily mean any given property declined by 14%, or even 1%, although it likely does, and it certainly indicates a faltering market.
Curious to know how those stats look when you get more granular.
T-Dog
Did the near collapse of Home Capital not teach you that your theory of loan receivables created from thin air must be missing something?
——————————————————-
What you are missing is that HC is just an expendable entity of the whole charade which is the Canadian economy. It would be allowed to fail if that was required to maintain the illusion that our economic system is a tight ship of capitalism, and not the ponzi that it had to become as we neared the end of the current fiat-currency cycle.
About time that market gets back to the normal. Thanks Garth for keeping us updated. However at times I feel as if you missed out on the opportunity when the market was getting hot and now all your blogs are aimed to create panic so that people start selling or you can go ahead and say “Didn’t I tell you?” :)
@#99 Pee Pee
“Anyway, here’s my take from what is going on in the real world….”
******
Sorry Ponzi Pee you missed the real news about whats going on….
Kelly Ripa LUVS Vancouver!
http://www.google.ca/url?url=http://vancouversun.com/entertainment/celebrity/kelly-ripa-vacations-in-beautiful-pristine-unspoiled-vancouver&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwjmzZfstvbUAhVCxGMKHemJDH0QqQIIFzAA&usg=AFQjCNHx5PMvD9G1NHJTertbAjQHQg4xGg
But back to reality.
Remember a few weeks ago when we were talking about Sears pensioners having to wait at the back of the bus after the Taxman, the banksters, creditors, suppliers, etc….?
Fan meet feces
http://www.google.ca/url?url=http://www.cbc.ca/news/business/sears-pension-severance-employees-court-restructuring-1.4191520&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwif88q5t_bUAhUF1WMKHXDKCX8QqQIIFzAA&usg=AFQjCNGOBdFAVe1BUHUSquWz2oADvvwiPg
But it gets worse. The bank regulator, OFSI, this week brought down the hammer on houses selling for more than $1 million. In a few months borrowers who have over 20% to put down (required for seven-figure houses) must pass a mortgage stress test – just like people applying for loans covered by CMHC. So, if you can’t qualify for payments at a withering 2% above the current rate, no loan.
——–
Once again, this is a huge bear tease for the prudent amongst us. This change will be ‘epic’ – just like last summer’s new stress test rules of qualifying at the 5 year rate. Right….
Yes, that stress test measure was heralded as epic and a game changer. It was ‘supposed’ to knock out 15-20% of buyers as it amounted to having rates hiked at 2.5% – all those poor moisters would be unable to secure a loan at 4.5% instead of the usual 2% – because they were already seeking the max amount at 2% mortgage rates.
And how did that work out? Right, markets in the GTA took off and Vancouver recovered and reached some new highs in the condo/townhouse segment.
And we are now supposed to think a 0.25% hike next week and some minor guidelines – that were supposed to be enforced but were not – are going to make a dent in the YVR market?
Come on, fool me once, shame on you, fool me twice, shame on me…
Its the constant, ‘you only have to wait a few more months’ meme behind all of these announcements. For 5 years, a series of toothless measures have been enacted that were supposed to cool the market – and all they did was stimulate further price gains.
The reality is that the housing crisis has spread like a cancer throughout BC and Ontario – emanating from the centres, so that everyone is paying stupid money for rent and mortgages. Some heads better roll when this finally plays out in another 5-10 years….until then, game on for RE.
Oh, I hope no one uses the tired cliche of ‘gee, when the bears finally capitulate, then the top is in’ – because that has been referenced here for the past 5 years…
If the sale is officially recorded at $1.55M and the seller then “gives” the buyer $350K, isn’t this taxable income?
Garth, people are mostly uneducated fiends so I think this thing will drop then they will go horny again thinking it’s going to recover and they will be rich then it will inflate again and then finally totally collapse and wither once rates go up.
People just don’t have anything else other than housing. That’s all they know. I don’t think they’ll give up this easily. Hey maybe Poloz will even lower rates next week to reinflate this beast.
#56
I have TD Cash Back visa, no annual fee because of my chequing account type, I get about $400 back a year i pay zero interest always pay the balance. Also when renting cars it covers the insurance.
So they pay me $400 a year on average to use their card. I may be on the banks hit list.
My wife and I have a combined income of $75,000. She is a retail clerk and I’m a garbage truck driver. We are in our late 20s and We have about $3,500,000.00 in investments and savings.
Just waiting for a good time to enter the housing market, hopefully prices keep coming down. For now we are renting and counting down the years until we can finally retire.
Should we use the $3.5 million to buy only preferred shares?
These cashbacks are unethical and highly deceptive. Luckily I have known about them for a while . One truly must be careful when reading the MLS stats. Thank you for educating the rest of us once again, Garth !
Demand for Metro Vancouver condos outstrips supply at record rate in June
New numbers from Vancouver show demand for condos outstrips supply at a never before seen rate. That demand is best visible in the the sales-to-active listing ratio, which reached an all-time high of 93.2 per cent in June. the ratio in a balanced market is is between 14 and 20 per cent.
That demand has been reflected in soaring prices, with the benchmark Lower Mainland apartment costing just over $600,000 in June, up a whopping 17.6 per cent from the same month last year, and up 2.9 per cent from May.
http://globalnews.ca/news/3576913/demand-for-metro-vancouver-condos-outstrips-supply-at-record-rate-in-june/
——–
Lol, remember all those people that slammed condo owners has being stuck – unable to move up the property ladder as detached home prices went parabolic. And criticized them for owning nothing – just air – and being liable for assessments.
Looks like those condo owners now have enough equity to purchase the detached market that softened, just in time to keep the overall market hot and alive.
Of course, Vancouver realtors have come under fire and scrutiny for having 80% of their condo units pre-sold overseas all the while saying they are ‘targeting’ local buyers. It does not help that they get caught with advertising materials in other countries…well just one country….
Remember, condo pre-sales are not subject to the BC Foreign Buyers Tax and no names on titles when you sell your assignment. This was a deliberate loophole to stimulate the one segment of the Vancouver market that was largely dormant…and the one segment that was dominated by the BC Liberal fundraising chair – the ‘condo king’ Bob Rennie.
Its not Christy Clark’s BC Home Buyer Program as the driver for the condo craze – only 400 people have secured loans to date under the new program. And geez, we all know here that such a small number – about 10% of one month’s sales – cannot make the market….
Lol, people can keep wishing and hoping but RE has been angled and gamed and exploited to such a degree that its unstoppable in YVR.
Its like a drug cartel – you can take out one boss, but 2 more step up to take his place…
Don’t worry, in 5 years we will still be debating the root cause of Vancouver’s massive price to income disconnect and still scratching our collective heads as to why prices are still rising….
Freedom First is the only way. I have held that thought since I struck out on my own at 17.
I have been Blessed my whole life. And it keeps getting better.
Not everybody has been happy for me.
I don’t care.
Freedom First
Master of Freedomonics
Its my life
“Maybe Black Sheep can explain it though he still seems to think it is in some way nefarious, which is dead wrong.”
Investorsfriend, don’t lose too much sleep trying to explain how the banking system works. Banks have no special powers that ordinary people do not. You or I could start a bank tomorrow if we wanted, reaching out to our friends, family, and the public for sources of funds, and seeking out investments. Our ability to leverage our own equity only being constrained by our credibility.
Its for this reason that banks and the banking system essentially has no ‘moat’. Yes, even a guy who never leaves his basement and spends his days in his soiled underwear can start and run a bank. Commercial banks like RBC, CIBC, TD, etc., are able to access funds at a very low cost because they go through the trouble of enhancing their credibility with audited financials, dress codes for their staff, a track record of never defaulting, and shiny branches/websites.
“Check any bank balance sheet you care to. You will almost always see that deposits are actually higher than loans.”
If you define equity to be part of the base of ‘deposits’, sure, but otherwise, the typical constraint is that assets = debt + equity. A bank that wants access to deposit insurance to reduce its cost of funding further, and wants to call itself a ‘bank’ (see my comment yesterday whereby provincially regulated credit unions have been threatened with legal action for calling themselves “banks”) has to maintain that credibility in the eyes of the OSFI, CDIC, etc., by maintaining certain capitalization ratios, ie: equity that is substantially > 0.
Does anyone remember Marc Cohodes? He spent decades studying and analyzing housing bubbles before they burst.This is only going to get worse:
http://bc.ctvnews.ca/all-hell-is-going-to-break-loose-in-vancouver-ex-trader-s-real-estate-forecast-1.3222636
I’ll wager there are still people who are unaware of the crash for a year or more after the bubble bursts in their area. People who are looking for a house are probably not reading ‘Debbie Downer’ financial blogs, but excitedly following realtor spin, where the crash never happens.
#88 Shortymac
“There is no way a tiny bungalow costs 700/mon in electricity. Should have fixed up the place instead, the basement floods constantly and the wiring was never done properly so breakers trip all the time. It’s not worth it now.”
——————————————————————-
Here’s the deal:
https://www.youtube.com/watch?v=-JLbAePwoHQ
#127 Mark and Wendy
“My wife and I have a combined income of $75,000. She is a retail clerk and I’m a garbage truck driver. We are in our late 20s and We have about $3,500,000.00 in investments and savings.
Just waiting for a good time to enter the housing market, hopefully prices keep coming down. For now we are renting and counting down the years until we can finally retire.
Should we use the $3.5 million to buy only preferred shares?
My wife and I have a combined income of $75,000. She is a retail clerk and I’m a garbage truck driver. We are in our late 20s and We have about $3,500,000.00 in investments and savings. Just waiting for a good time to enter the housing market, hopefully prices keep coming down. For now we are renting and counting down the years until we can finally retire. Should we use the $3.5 million to buy only preferred shares?”
——————————————————————-
Garth,
I thought you were going to ban idiots from the comments section.
#127 Mark and Wendy on 07.07.17 at 1:44 am
My wife and I….
———————————-
Mark, married? More fiction.
Handy little chart illustrating the GTA price plop in this article.
http://www.cbc.ca/beta/news/canada/toronto/gta-treb-real-estate-interest-bank-of-canada-rate-1.4193071
After this sears (pension and benefit) fiasco i would surprise me to see run at the pension funds (porting acumulated pension funds) with all people that are retiring in next few…
I know exactly how those people feel, when i sow my pension enlistments in 2009 and 2010, monthly benefit went 3400 in 2009, down to 750 in 2010.
Now i wonder what kind of penson plan rexmax provide for its working farce, is it dc or db… and on a side note can you collect EI if you are RE.
answers please
Perhaps the lagging TSX and financial sector has been pricing in real estate bear market.
$CAD bounce seems over done.
So the next few years will be a good time to buy a house or shares in a Canadian bank.
But of course no one will be buying. So for the serious contrarian investor out there, who is also a professional landlord, times are good. And likely to get better.
But the big question is, what asset is everyone going to flock to now? What is the next big short? My guess is technology stock. Looks like another tech wreck is on the horizon. People have short memories.
There is going to be a lot of Harvey’s, luxury/sports cars, boats, and homes on the market as people realise we cant afford this 850k townhouse anymore and are forced to dump other luxuries….so glad we bought within our means and I won’t have to get rid of the Harley haha
forget all the hullabaloo around who’s right, timing what, vancouver is never gonna fail b/c the Chinese are buying it all up and Toronto is still hot and nothing trades for less than a million – how about how 2/3’s of an economy can be in the hands of these two clowns texting each other with emojis and LOOOLLLS. We all know these d-bags….the ones that get dolled up for THursday night in TO, pretending to be hustlers b/c some greaterfool just handed over a nice commish cheque for these colluding losers.
@#127 Mark and Wendy
No you should convert all the investment money into cut, dry, split wood.
Then move to the boonies ( Apocalypse2017 should be able to recommend a secluded spot).
You will have firewood for the rest of your life.
An excellent long term investment. But , unfortunately, you will have to quit your day job.
T2 can forgive. Canadians won’t forget.
http://www.foxnews.com/world/2017/07/07/omar-khadr-ex-gitmo-detainee-who-killed-us-soldier-receives-millions-from-canada.html
SM is calling for a bounce in the fall, I respect that opinion, it makes sense to me too. But it would only be the «return to normal» stage of the bubble.
In the long run that market is doomed, there is no doubt in my mind.
#11 Ian on 07.06.17 at 6:39 pm
“WOW this is going to be bad.
To go along with the (at minimum) two BoC rate increases we are going to have this year, here is a cheery report from Transunion to inform us that 700k Canadians will have problems with even a 1/4 point rise:”
Sorry, NO SALE.
To borrow a noun from our illustrious BOC governor, there is a sizeable “buffer” in most Canadians’ budgets, such as they are – all Canuckleheads need do to adjust to a much-needed rate hike (I’d love to see a return to 7% on 5-year GIC’s, MINIMUM) is cut back on the endless, full-retail CRAP they buy. Too much telecom (an average of 10 devices per home? Get bloody real), processed food, flashy cars, designer garbage, travel, restaurants, bars, entertainment they can’t afford…….Oh yes, Canadians CAN stand much higher rates.
I call BS. Government at all levels should stand fast and follow through on rate rises to HEAL a very sick and debt-dependent economy.
#18 NoName on 07.06.17 at 6:53 pm
“So at waht price comisson is charged 1.55 or 1.2?
That crock of tears emoticon wasn’t for the realtard.
#20 crowdedelevatorfartz on 07.06.17 at 6:55 pm
“True real estate numbers are sorely lacking and what has been happening for years is borderline fraud.
Where are the Feds? The Province? The city ?
Just force these realturds to report the facts without the bogus spin OR allow web based third party companies without a “piece of the action” to publicise truthful information.
The Real Estate closed shop “cartel” has got to end”
Hear, hear!!
#123 Rates vs Capital on 07.07.17 at 1:26 am
“Some heads better roll when this finally plays out in another 5-10 years….until then, game on for RE.”
___________________________________________
Your magic ball (or melon) is broken if you think this will go on for another 5-10 years! At least try to be analytical with all the info that is out there.
All I see is another ostrich with its head deep in the sand!
#62 S.Bby
#76 the Jaguar
So does anyone know the answers? Is this cashback a side deal that is not recorded?
If so, the sale price is officially $1.55MM which impacts:
1. Buyer paying land transfer on the higher amount;
2. Buying paying higher property taxes as MPAC assessment at higher amount;
3. Capital gain in the event it is not a primary residence – could be higher or lower depending if it’s the buyer or the seller that is an investor;
4. Impact on banks financing a greater loan to value;
5. Realtors getting higher commission;
6. Market statistics.
Got the below e-mail from a realtor today from Hamilton, Ontario. “Correction”, LOL!!!!!
We are seeing some interesting data from the Real Estate Board. At face-value, some of this data would appear conflicting. I have a theory, and I think you will be very interested so read on.
– In June 2017, the average Days On Market was 18 days – lower than the 22 DOM in June 2016
– From January to April 2017 the average sale price went from 100% of asking price to 107% of asking price. In June, sale prices returned to 99.6% of asking price
– The average sale price for a detached home in June was $544,585 – down 9.5% from April’s $601,695
– HOWEVER, the average sale price for a detached home in June 2016 was $483,585 … so Hamilton is still up 13% year over year for detached freehold homes
– June 2017 saw 28% more listings than the 10 year average
2017 STATS (freehold detached homes)
Month Average Sale Price Median Sale Price
Jan $499,976 . $443,000
Feb $538,808 $481,800
Mar $575,882 $525,000
Apr $601,695 $551,000
May $597,321 $535,000
Jun $544,585 $485,000
My theory is this:
If sellers are still getting 99.6% of their asking price in a market that, by all other stats, appears to be in a correction… how is this number so high? There seems to be a consensus between Buyers, Sellers, industry professionals and banks, that the market increases we had seen were unsustainable, and Sellers appear to be lowering expectations by listing lower and accepting lower than they may have in April. Buyers still appear to be willing to pay on average 99.6% of asking price … so it appears to be the extra supply and the Sellers’ listing prices that are pushing down values. The best homes are still getting multiple offers, however we are back to a market in which the worst homes will sit longer, sell lower, and potentially not even sell.
At the end of the day, solely based on the average sale prices (June vs. May), we ARE in a correction.
#130 Freedom First on 07.07.17 at 2:30 am
Freedom First is the only way. I have held that thought since I struck out on my own at 17.
I have been Blessed my whole life. And it keeps getting better.
Not everybody has been happy for me.
I don’t care.
Freedom First
Master of Freedomonics
Its my life
#130 Freedom First on 07.07.17 at 2:30 am Freedom First is the only way. I have held that thought since I struck out on my own at 17. I have been Blessed my whole life. And it keeps getting better. Not everybody has been happy for me. I don’t care. Freedom First Master of Freedomonics Its my life
…….
Ha I recognize this form of writing. Message from a bottle.
#90 Jesse
1. Put it all in a balanced portfolio with Garth
2. Draw 113,750 preferentially taxed income
3. Rent cause you’ll be free
4. Retire or work part time and enjoy the middle years of your life without the burden of full time employment
#90 Jesse 1. Put it all in a balanced portfolio with Garth 2. Draw 113,750 preferentially taxed income 3. Rent cause you’ll be free 4. Retire or work part time and enjoy the middle years of your life without the burden of full time employment
……..
they r in their 40’s with a YOUNG child.
It’s time we put down something permanent and we have the flexibilty right now of relocating to many different places in Canada. We’ve been renting but have been booted out twice now because our units were sold.
…….
gee, and here i thought renting is paradise….:)
1. Put it all in a balanced portfolio with Garth 2. Draw 113,750 preferentially taxed income 3. Rent cause you’ll be free 4. Retire or work part time and enjoy the middle years of your life without the burden of full time employment
…..thankfully, you’re not an advisor. They’d run out of money with that withdrawal rate.
All over BC seems to be doing just fine.
Who cares if a 2.4 mil piece of s&$• house in YVR goes down to 1.9mil. Limited amount of Canadians can even consider that affordable so it will be sold to someone from outside.
Condos rising year after year, don’t see any changes here. Prices keep going up.
Canada adds 45,300 jobs in June to ‘cement the case’ for July rate hike
http://www.bnn.ca/canada-adds-45-300-jobs-in-june-1.798928
Only one big exception I would take to Ross Kay these days, and that is, those who have followed me online would have been alerted to the 2013 peak of the Canadian market far before Ross Kay let his people know.
@#4 Mark, nobody follows you online. Your long-winded comments are universally scroll-worthy. You keep repeating the same myths to yourself and delude yourself into believing that you’re educating others. I only caught that little passage I quoted because someone else quoted it in their own comment.
Interest rates are going up. They need to go up. Even with zero or negative inflation, having interest rates this close to zero creates all kinds of malinvestment and resource misallocations, and that needs to be corrected, even at the expense of economic growth over the next few years.
If you were old enough you’d remember the early 1990s when interest rates – which were already high – were raised further in the face of a severe recession. It was even more extreme a decade prior, in the early 80s, when the BoC did the same thing. Back then it was inflation they were fighting. Now it’s asset bubbles and severe malinvestment. But the result is the same. Interest rates must go up, even if that stalls growth, hurts the job market and your feelings. Deal with it. Not every single decision made by central banks has to abide by the discredited and useless “Phillip’s curve”.
#83 Smoking Man on 07.06.17 at 10:06 pm
I want to be ingulft with smokers, drinkers and gamblers. My true people.
—————————
Then you have to go back to Melmac.
even in the third world they now tell us, not to smoke indoors.
#135 Dharma Bum on 07.07.17 at 7:01 am
“I thought you were going to ban idiots from the comments section.”
Lol
#144 Ret,
If an election were held today, Trudeau would likely hold all 184 seats he won in 2015. Lot of crazy people around Toronto in whose eyes he can do no wrong. As long as he keeps his 80 seats in Ontario and the 35 out east and up top he will be very hard to beat. The Bloc will have to go away for the Conservatives to have a real shot at winning. I am sure Trudeau will be PM until at least 2024.
@ #99 Ponzius Pilatus, you think something can be learned by watching the news? You think something important happens at G20 meetings?
News is noise. Summitry is pageantry. If you want to improve your understanding the world, you must learn to completely tune out both. You must also accept that you will never truly understand more than a teensy, tiny bit of the world around you, and that’s perfectly OK. You’ll know you’ve achieved this blissful state of maturity and wisdom when over-educated idealistic youngsters start calling you “ignorant” and “cynical”.
Today’s smoking hot jobs report likely sealed the deal for a rate increase next week.
Is 8% the official decrease in value or is Ron our only reference point? Did Treb also say June was down 8%?
If it’s actually a cash back at closing and it’s disclosed, the lender will for sure lower the mortgage amount. If it’s not disclosed = just slightly fraudulent…. #Justsaying
I hate to say it,but Canada is now the joke of the world. Countries that i didn’t realize had money, are investing in our land as a stock. Apparently, we’re idiots. It was Australia first; now Canada. Sorry Garth. The foreigners are screwing us, but it is; or was, a good investment. But don’t blame one country.
BTW – if you get them drunk, they talk!
This story of cash backs on closing does not surprise me
however the TREB recording full sale price and failing to disclose the cash back is in effect knowingly providing false information with the expectation of realizing a financial gain ie higher sale prices leading to higher broker commissions maybe these people should look at the criminal code of Canada particularly section 230 its called commercial fraud.
as for the purchaser i wounder if the mortgage is based on the original sale price or the true purchase price? in either event the 350K is taxable income at the marginal rate 50% this situation only underscores the depth of greed graft and corruption in the real estate market.
#103 InvestorsFriend… Do you honestly believe your own rubbish? I’m actually curious how someone who seems to be able to string sentences together, doesn’t understand that the “deposits” held as obligations to depositors, or in the case of fractional reserves, the supposed ‘deposits’ held with the central bank, are actually real. They are not, and that is the nature of the nefarious scam. What part of this do you not understand?
The immaculate balance sheets kept by the banking monopoly is not the question. Keeping a set of books with numbers typed on them is absolutely meaningless.
This is easily proven when the supposed ‘deposits’ are required, especially as was the case in 2008-2009 when the central bank provided ‘liquidity’ to the commercial banks to save the economy (i.e. bank bailout). The fallacious argument is that the banks did not use any of the cash, but obviously, that cannot be actually true.
#132 Oh Canada on 07.07.17 at 2:58 am#132 Oh Canada on 07.07.17 at 2:58 am
Does anyone remember Marc Cohodes?
I follow Marc on Twitter and he is all about negative publicity to help his short positions.
His gamble did not factor in that Canada is different than the US when it comes to banking.
Marc did not expect the big 6 banks & Gov. to prop up the alt lenders, this is something that would never have happened in the US which makes his short positions a riskier bet.
#120 Chaudhrya…”…I feel as if you missed out on the opportunity when the market was getting hot…”
Ummm, no. I don’t think Garth missed out on anything. I estimate his net worth at 8 figures (like mine), difference being I am about two and half decades younger:)
Anyhoooo, it appears my predictions are coming true. An average or typical single family detached home anywhere in Canada should not cost more than 300K, based on average or typical wages. That amounts to about a 75% depreciation before all is said and done. Give or take based on local area.
BofC will raise rates now that they got their fudged employment data across the media platform and into your heads. Attempting to react to coming wage inflation, less jobs but more specialized and higher paid, and the automation revolution. Greater divide between economic classes and a reset of the broad economic spectrum. There is a disturbance in the force. Even Warren Buffett the mob boss seems afraid.
still LOTS more to go.
i’ll keep reminding
Mark and Wendy: My wife and I have a combined income of $75,000. She is a retail clerk and I’m a garbage truck driver. We are in our late 20s and We have about $3,500,000.00 in investments and savings.
i believe the first part. Okay I believe the middle part too. By the way, garbage truck driver is a damn hard job. If you have the kind of savings that you say you have then you can afford to get some training in a field you might like.
Jesse: It’s time we put down something permanent and we have the flexibilty right now of relocating to many different places in Canada.
I’d suggest Truro NS but rent. After a year, you’ll decide that it’s not the best spot in the world but you can change your mind. A couple bought in Sackville NS but found out it’s easier to buy than sell.
Mark: Of course, as readers of my comments know, anyone that is marking their books to the Realtors’ “2017” non-sales-mix adjusted numbers probably is being dishonest. The market basically called “BS” when HCG tried to do that, for instance.
The banks don’t make announcements but their reaction to Home Capital Group pretty much revealed their thinking.
#164 People are Strange#164 People are Strange
you realtors are strange with your fiction. This housing crash will be epic and funny to watch as it unfolds before the uneducated realtor.
http://www.cbc.ca/beta/news/canada/british-columbia/ofsi-mortgage-rules-1.4194012
http://www.cbc.ca/beta/news/business/osfi-bundled-mortgage-loan-ban-1.4192727
Either you know or you don’t want to know the government created the housing bubble and now they are taking it away. prices going back to mean average. Happy Housing Crash Everyone! :-)
Global Citizen. I just want to puke right now.
http://www.cbc.ca/beta/news/politics/trudeau-g20-concert-protests-1.4193814
The S&P500 to outperform Europe and EMs Q3 and Q4. $CAD top is in. Buy VFV.
#136 Wrk.dover on 07.07.17 at 7:10 am
#127 Mark and Wendy on 07.07.17 at 1:44 am
My wife and I….
———————————-
Mark, married? More fiction.
[ ] not rekt
[x] rekt
[x] really rekt
[x] tyrannosaurus rekt
[x] parks and rekt
[x] star trekt
[x] school of rekt
[x] catcher in the rekt
[x] great rektspectations
[x] rekt it ralph
[x] the shawshank rektemption
[x] forrekt gump
[x] finding rekt
[x] rektal exam
[x] shrekt
[x] rektium for a dream
[x] erektile dysfunction
Here is how the TSX and DOW have performed since their highs that occurred around Oct of 2007, just before each of them plunged due to the financial crisis of 2008-2009.
DOW – high of 13,930
DOW – 21,400 today
TSX – high of 14,625
TSX – 14,956 today
So over this time frame the performance of the respective indexes is:
TSX – total growth from 2007 to 2017 – 2.25%
DOW – total growth from 2007 to 2017 – 53.6%
This is index growth alone and does not take into account any dividends.
Greater Fool recommends that balanced equity portfolios hold about the same in each country, recently recommending that a move to more maple is prudent.
Well, over the past 10 years, the US market has massively outperformed the Canadian market.
And Canada is now severely hobbled by not only low energy prices, but continued flight of capital to other regions,
(http://business.financialpost.com/commodities/energy/apache-corp-sells-off-canadian-assets-in-strategic-exit-from-country/wcm/bac6476c-1c6e-4bcb-99ea-5e3013396efc)
blocked resource projects,
feel good, do nothing, insane ideological carbon taxes that drive up the cost of energy for consumers and businesses,
(http://business.financialpost.com/commodities/agriculture/what-about-photosynthesis-ontario-greenhouses-are-getting-charged-for-carbon-their-plants-consume/wcm/25eefb26-e011-4505-9d96-bc9f65f565c6_
a housing market set to implode, and a consumer base that holds the largest amount of personal and mortgage debt in history.
Oh yeah, and a Bank of Canada strategy which has been a dismal failure in terms of spurring domestic business and export growth. Though it’s been a smashing success at creating huge real estate bubbles, and encouraging a fully indebted population.
(http://business.financialpost.com/opinion/philip-cross-how-canadas-weak-dollar-strategy-flopped-and-then-backfired/wcm/8e41e47f-eacb-4c5e-aee3-4a7acde2ae1d
So why is Greater Fool, or anyone frankly, bullish on the Canadian economy and the Canadian markets?
#168 TnT… I guess you didn’t hear the news yesterday or actually read today’s blog or maybe you just don’t get it… Alt lenders like HCG have been dealt a death blow. Read this above what Garth wrote:
“The bank regulator, OFSI, this week brought down the hammer on houses selling for more than $1 million. In a few months borrowers who have over 20% to put down (required for seven-figure houses) must pass a mortgage stress test – just like people applying for loans covered by CMHC. So, if you can’t qualify for payments at a withering 2% above the current rate, no loan. In a lateral move, the regulator is also tightening up on the practice of bundling mortgages which sub-prime guys like Home Capital do to avoid the cost of mortgage insurance.”
And Mark/Shawn of the Banks: No, you and I cannot start a Schedule 1 bank. Such foolish / childish comments on both of your parts.
I just got two credit card offers from RBC and CIBC on CC I never use. They sent me cheques that I can use to access the credit for 0% with a 1% fee to May 2018. Don’t need any debt, but that seems like a desperation move. Or maybe buy some crypto and see where I am at in May.
#42 MF
“Anyone following energy stocks ? ……………. Anyone
picking these up with their play money? ”
The Canadian energy industry is as dead as a doornail.
Two big tells are Shell and Conoco getting out in a big way. They spent billions and were very proud of the long term reserves they were building but it didn’t hurt that Conoco got an eye watering price from their sale.
The shallow gas industry in SE Alberta is in the process of outright well abandonment now with crews working 24/7 abandoning wells, many of which might have more life to them in ordinary times.
The Canadian and Provincial ” Elite ” are laying waste to the industry and the carbon tax regime is just starting.
There is NO pride of ownership in the private sector any more and i think there is a whole lot more damage to come from a fundamental point of view.
I just signed off my ( formerly significant ) interest in a shallow gas project in this area for $ 1 back to a former partner in the project and the project probably has another ten or so years of ” normal ” economic useful life.
I’m out and have been in the business for close to fourty years and there is nothing i would touch from a fundamental point of view, even with Mark’s money.
However, for a stock trader, you may have some luck.
I’m not a stock trader, so good luck to you..
Every pump has to have its corresponding dump. I think Tesla proved that “law” in one of his labs or something. (Otherwise – – what’s the point?) The show is just beginning. You’ll see. Men crying, politicians lying, bogo sales on low-end pot pies… It’s gonna get “medieval” once the gimp is freed.
#89…good on you for attaining such a net worth. Here’s my $.02:
Keep in my buying it renting is a lifestyle choice and not a right as some posters have been shinning about lately. If you must buy, and as you’ve stated Sodom and Gomorrah are out of the question, then I would look for a property well below the $750k you have available and pay cash.
Yes, money is effectively free right now, so math wise putting down 20% and investing the rest makes sense. But any money going to the bank (or a landlord) is money you’re not using for your own enjoyment or to add to your savings. All the best.
The great financial crisis of 2008, foreign buyer tax, regulations, empty home taxes – nothing slows down Vancouver real estate. This city is fueled by money laundering, drugs and venture pumps and dumps – and nothing will ever stop real estate here. It’s a beast that knows no boundaries
So the TSX in a slow-motion melt. The Canadian dollar surging higher, now 1.286 and perhaps will be 1.27-1.26 in a week. Deflation on a month over month basis. The market is absolutely and utterly screaming at Poloz that rates need to be *cut*, not raised.
What a mess one man can create just by opening his mouth. Wow…
The market is not asking for a rate cut. A bizarre statement. — Garth
Great posts Garth! I had to look up mortgage bundling, holy moses! is this happening? how many of these “shadow” lenders exist I wonder. My friend who works at home Capital told me that people are mostly relieved with the Buffett bailout. But he told me a lot of employees have left, on their own accord, makes sense. I think even though they caught a few agents reporting false income, that people in the know at Home Capital, know their assets are in much more danger and are jumping off the boat.
Could it be? actual gov. regulations, insane bid wars in Toronto, property prices in Peterborough surging, that spells an actual decline? not just an adjustment and more surging, could it finally be here?
A lot more jobs posted here in Calgary, but let me tells yah about the last two interviews I went too (IT Administrator, 10yrs exp) First one was commercial real estate company (Colliers International) they were the most arrogant people maybe i’ve ever met? Told me they have 100 brokers who work on commision who will yell at me all day long, they wanted to run through scenarios where a guy is super rude to me and how I’d respond. I asked given the depressed Commercial leasing in Calgary how they were doing, you’ll love the 30yr old girls response… “me make a LOT of money when things are going up, we make a LOT of money when they’re going down, its in between when its a bit of a problem” I could not run out of their polished office lobby fast enough.
2nd was a IT services job, description was good, a job I’ve done before. Show up at interview, great guy, 20min goes well! then he takes, no lie, a 15 second pause, before he launches into the pitch, the IT nerds work like 4:30am until 2pm or so, no real reason, just because they want to avoid dealing with people. Isn’t that our job I ask?….what a waste of time.
There are jobs out there, but they ain’t good ones. A good friend just took over as a pipeline corrosion supervisor at a big company, I can’t imagine the stress as oil and gas run out of money and sour-gas lines don’t get the maintain they need. You should check out the pipeline map of Alberta sometime in PDF form, its alarming, almost crashed my computer its so massive.
Keep up the good work sir! apologize for my ramblings.
I love how nobody wants to mention that prices are still6% higher this month than this time last year. Things were crazy a few months back everyone knows that. Year over year is a better indicator of things I believe
http://www.cbc.ca/beta/news/canada/toronto/gta-home-sales-1.4192531
For a buyer that could be a fatal mistake. — Garth
Didn’t Garth’s firm decrease US weighting, increase Canadian weighing ?
Doug ? Ryan?…. like a mutual fund sometimes your calls aren’t right . Time humbles all
We don’t make tactical changes for timing reasons. That’s a DIY fail. — Garth
Bank Deposits Are Money
#167 Eks dee Sipal on 07.07.17 at 10:24 am responded to me:
#103 InvestorsFriend… Do you honestly believe your own rubbish? I’m actually curious how someone who seems to be able to string sentences together, doesn’t understand that the “deposits” held as obligations to depositors, or in the case of fractional reserves, the supposed ‘deposits’ held with the central bank, are actually real. They are not, and that is the nature of the nefarious scam. What part of this do you not understand?
***************************************
Yes, I believe what I write. Always.
In our system today almost all money and cash is in fact bank deposits. There is also paper currency but bank deposits that are also considered cash dwarf that.
Think of a typical person’s pay cheque. If a physical cheque they cash it and the employers deposit is reduced and the employees deposit increases. Same happens in electronic deposit.
The employee certainly considers the deposit in his or her chequing account to be cash and money. Typically a good chunk of this money will be transferred to various corporate deposit accounts to pay the mortgage, credit card, car loan, utility bills and other bills. Typically only a tiny fraction will be taken out as actual paper cash.
The employee certainly considers that deposit to be real money and so do all the stores where the money can be spent with a debit card.
Money was never meant to be a physical concept although it can and historically did take a physical form. At heart, money is a claim check on real goods and services. It is the goods and services that are real and money at heart has always been an intangible thing that represents your claim on real goods and services.
The total amount of real wealth in the world remains far lower than the amount of money. Money is something we use to trade goods and services with each other. Through specialization of labour almost no one is self sufficient on the land anymore and everyone needs money to transact with each other.
Banks and bank loans help greatly in the process of creating money so that real goods and services (including labour) can be traded.
For hundreds of years we have had an ever expanding financialization of the economy. This has facilitated specialization of labour and world trade of all kinds.
Banking is a key feature in the incredible prosperity of most of the world’s population.
All hail banks!
P.S. Those with closed minds cannot learn.
Oops, correction
The total amount of real wealth in the world remains far lower than the amount of money.
Should read that real wealth remains far LARGER that the total amount of money.
All money is wealth as it is a claim on real goods and services.
Most wealth ie stocks, houses, and land is not money but is measured in money.
Haven’t we seen this movie before ?
More On Money
Consider what is the value of all the valuable land and buildings and everything real in Canada? (Not sure about services since they have value in the moment as provided but any enduring value created should be embedded in some real asset I think).
Now to this value of all things real would you add all of the money in cash and bank accounts. No, that would be double counting as money has value only as a claim check on real goods and services and we already added up the full value of all of that in step one.
So, it seems money has value to the holder but collectively to a country it is just an intangible thing that accounts for claims on real goods and services.
Money facilitates the creation of real goods and services and trade but money itself is an intangible.
Obviously, this whole matter is very complicated.
Today’s smoking hot jobs report likely sealed the deal for a rate increase next week.
======
37K p/time jobs do not a ‘smokin’ hot jobs report’ make
On top of the last six months, hot enough. — Garth
no guns needed :accounting weapon along with a recipe
https://www.youtube.com/watch?v=-JBYPcgtnGE
How to rob a bank | William Black | TEDxUMKC
William Black is an associate professor of economics and law at UMKC. He has held many prestigious positions, including executive director for Fraud Prevention. He recently helped the World Bank develop anti-corruption initiatives and served as an expert for OFHEO in its enforcement action against Fannie
OMG !! 1900 new listings just today !!
Looks like those who were not getting the message earlier got it yesterday !!
The average resale price in April was $920,791 which was about 26% above December 2016. Now June’s average is $793,915 which is up 8.7% over December. So there was a ridiculous spike in April followed by a couple months of moderation. All this really shows is how stupid it is to claim the April number “says” anything at all. Not that this will stop (or even slow down) the breathless permabears.
A decline of 14% in 60 days cannot be rationalized away. Market sentiment has turned negative. Risk on. — Garth
The Fed Audit
Thursday, July 21, 2011
The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. “As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world,” said Sanders. “This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.”…
read more @
https://www.sanders.senate.gov/newsroom/press-releases/the-fed-audit
=============================
“She also made a bold prediction: that another financial crisis the likes of the one that exploded in 2008 was not likely “in our lifetime.” The crisis, which erupted in September 2008 with the implosion of Lehman Brothers but had been stewing for years, would have been “worse than the Great Depression” without the Fed’s intervention, Yellen said.”
http://wallstreetonparade.com/
Hicksville: The Canadian and Provincial ” Elite ” are laying waste to the industry and the carbon tax regime is just starting.
that is what I fear: political elites at war with the people they govern (us)
Shares of alternative mortgage lenders dip as investors digest latest efforts to cool frothy housing market
http://business.financialpost.com/investing/stocks-of-alternative-mortgage-lenders-dip-as-investors-digest-latest-efforts-to-cool-frothy-housing-market/wcm/7fd2c264-3b1a-468d-a248-4a4583a0eb8c
#9 Mic on 07.06.17 at 6:36 pm
——————————
Ottawa is fairly insulated…200k 3-br townhouses and 350k singles…we don’t get the large gains and don’t get the crashes
Uh-oh
GTA avg prices June week 4 2017 change from June week 3 2017
Halton ⬆️3.8%
Peel ⬆️3.8%
Toronto ⬆️0.2%
York ⬆️0.1%
Durham ⬇️5.1%
Weekly changes during a holiday period are meaningless, of course. Hope that didn’t take you too long. (But I know things are slow at the brokerage.) — Garth
Couldn’t help noticing the buyers name is “Omad”.
What are the odds the sellers are buckling under fear of being labelled racist / xenofist / whatever is the flavour today (sorry, can’t keep up with the labels)
Zero. — Garth
#177 Eks dee Sipal on 07.07.17 at 12:28 pm
HCG and EQB are propped up by the Gov & Big Banks. <– period
There will be no catastrophic Alt lender crash.
You will have big fish eat little fish – that's all…
“Not every single decision made by central banks has to abide by the discredited and useless “Phillip’s curve”.
Tout au contraire! Even Milton Friedman conceded that there is a tradeoff between unemployment and inflation in the short run!
https://en.m.wikipedia.org/wiki/Phillips_curve
PLEASE DONT READ TH IT”S SCARY !!!
article mentions global recession
http://bit.ly/2uzPaW4
#176 AB Boxster on 07.07.17 at 12:27 pm
I’ll take a stab at it:
Stable government and markets, plus other areas have their own issues that are worse (crime, corruption, refugees, natural disasters etc.)
MF
Weekly changes during a holiday period are meaningless, of course. Hope that didn’t take you too long. (But I know things are slow at the brokerage.) — Garth
——
Fair enough but I’d just say that in a supposedly “crashing market”, prices should not be up, regardless of the timeframe…houses aren’t stocks with short-covering moves
And I assure you, I ain’t no RE-dude
We are a bunch of idiots in Canada! We laughed at the USA in 2008 for the sub-prime collapse. We now have the ‘alternative mortgage lenders’, which are essentially the same thing. I guess Ann Coulter was right after all.
Reximus; What are you smoking? Can i buy some?
#193 Raj on 07.07.17 at 3:18 pm OMG !! 1900 new listings just today !! Looks like those who were not getting the message earlier got it yesterday !!
……
What do expect you have communist province that came out and said no real estate appreciating for you. We won’t allow it.
Still going with mid augest before Wynee pulls the foreign buyers tax.
#170 short the TSX on 07.07.17 at 10:48 am
still LOTS more to go.
i’ll keep reminding
——————————————————–
Picking up pennies in front of a plane that will take off any moment (month) now.
I often eat my words or regret talking stocks but I think we’re in a phase similar to 1984, 1994, or 2004, shaking, rattling, and boring weaker investors before a runup.
Garth I have a Q: on a 1.55mil house deal, how much down-payment is expected? When I bought (18 years ago) I was ‘required’ to put up 10%, but that was just a ‘rule of thumb’, I believe. (TD actually bounced it for no reason, and the sellers freaked on me but I digress)
Shouldn’t sellers demand more down-money now, as a new ‘rule of thumb’ to avoid this buyer’s game?
“Tout au contraire! Even Milton Friedman conceded that there is a tradeoff between unemployment and inflation in the short run!”
Yeah you need some inflation, to create the impetus for investment (inflation is a symptom of inadequate supply relative to demand).
The US can create demand by destroying confidence in the US dollar — ie: USD$ will be sold from foreign reserves and come back to the USA to be spent on US produced goods and services.
Contrast this with Canada, for which there are very limited CAD$ (relatively speaking) outside of Canada, so a demand collapse in Canada means that inflation will be very hard to induce. Especially in light of falling domestic demand due to the housing implosion now in progress.
This is why the CAD$ is gaining, as I explained a few weeks ago. Month over month deflation, a rising currency, falling asset prices, a falling stock market — it all *screams* that the next move of the BoC needs to be not a rate hike, but actually a rate cut.
Interest rises obviously lead to lower house prices!
Except when you look at the Canadian data over the last 40 years, which shows that periods of rising interest rates are usually correlated with higher housing prices. Many factors set house -prices, and interest rates rising in an improving economy historically has been a positive for house prices.
http://www.greaterfool.ca/2008/07/25/perfect-storm/
Report from The Toronto
Star : everage rent in Toronto
Is now over $2000 /month
Ouch
renting in Toronto #214.
realtor fiction. thousands of empty rentals desperate for renters. go see how easy it is for yourself
One thing I can say is peeps have to try mortage and debt free. And don’t all say you can’t do it, while you’re driving around in your luxury cars with car payments, living in houses you can’t afford, buying this that and the next thing on credit.
Ten years of financial discipline and you are set. That’s all it takes. Then it is peaches and cream for the rest of your existence. It becomes obvious once you do it and you use it as a baseline for your expenditures for the rest of your life.
Seriously. Two incomes, 300K per year and no expenses other than food, utilities and car insurance. You have no idea how good life can be.
Pay off your houses, and stop borrowing. In ten years’ time, if you really try, things will become amazing. Beyond your wildest dreams……
Reximus; What are you smoking? Can i buy some?
—-
Are you suggesting the stats are wrong….they come from the same place that states sales / prices have fallen 40% / 14% since april. Are those wrong too? could be!
And btw prices are down 10% since april, if you use the same housing mix in June as from march/april…that’s still a lot in a short time, but it’s pretty different from 14%
Report from The Toronto
Star : everage rent in Toronto
Is now over $2000 /month
Ouch
====
everyone wants to live in a sexy d/t condo, whether they buy or rent
Did Trump let Putin off the hook? Russian foreign minister Sergey Lavrov claimed afterward that Trump had accepted Putin’s assertion that Russia did not cyber-attack the US election. Tillerson declared the two sides had an “intractable disagreement” on the matter and Trump wanted to “move forward”.
https://www.theguardian.com/us-news/live/2017/jul/07/trump-meets-putin
If you followed the stats over the last couple years for Fraser Valley RE sales / listings etc you would conclude that the market is at its top and starting to roll over.
The goose is cooked.
file:///C:/Users/Dirk/Downloads/Package201706.pdf
Prices will come down to meet buyer’s affordability. Not immediately and not by a landslide but it will be a steady decline from here on out.
Median home price for Langley 750,000 again by 2020.
Oversupply of beaver barf condo boxes and chicken coop townhouses coming online everywhere across the Valley. It looks like crap. No new roads but more and more commuters, residents and so on.
If you really desperately need to own here give it a couple years and buy with 10% to 15% discount from today’s prices.
I’m being conservative and not pricing in any meaningful rate increases or employment changes.
This is why the CAD$ is gaining, as I explained a few weeks ago. Month over month deflation, a rising currency, falling asset prices, a falling stock market — it all *screams* that the next move of the BoC needs to be not a rate hike, but actually a rate cut.
—
Sorry but This. Makes. No. Sense
That cashback arrangement, especially at that magnitude is most likely mortgage fraud if the funds loaned via a bank were directed to the cashback. A lot of people could get into trouble, including the lawyers.
At a wedding the other night – the officiant accidently said “enjoy the recession”….
#4 Mark on 07.06.17 at 6:29 pm
Only one big exception I would take to Ross Kay these days, and that is, those who have followed me online would have been alerted to the 2013 peak of the Canadian market far before Ross Kay let his people know.
—————
Who is this Mark? Never heard of her. Where can I find her blog?
Can some one explain me why scrolling over June sold properties in my east Mississauga area I dont see any reduction in price more than 10 k
http://www.mongohouse.com/soldrecords?location=43.632560455720515,-79.58377648713383&zoom=14&sold_day_back=30
Hey Garth… It’s almost 8 and you haven’t posted today’s blog… I trust all is ok. I ask only because I follow and look forward to each day’s blog.
Sears Canada will back in court again next week, seeking permission to stop $3.7 million in special payments. For Sears employees and retirees, this means struggling to make mortgage payments and delaying trips to the dentist for their children.
Garth, is Smokie a guest blogger tonight and we are waiting for him to get a buzz on?
Hope everything is okay with you and yours.
Are u okay Garth? No new post, i am starting to worry
Re: #224 Vit on 07.07.17 at 7:42 pm
Wait ’til the banks won’t refinance their mortgage because their income was false. Then they try the Alt A lenders and find they won’t give them a mortgage because now they don’t qualify. Mississauga is ground zero for the biggest percentage losses on residential real estate.