The prelude

Plus ça change, baby. That’s what sexy French people say when they remind you that the more things look different in the world, the more they’re actually the same. When it comes in assets, money and financial security, it’s worth remembering.

Like Kardashians, investment fads come and go. People, being people, always fall for them. But be careful.

For example in April when GTA houses cost 30% more every month than the year before, cash was trash and nobody cared about their TFSA. The panic was on to buy into the market before being priced out forever.

Now houses in many parts of the region have lost a quarter of their value, yet balanced portfolios are ahead 9% in ten months. Scads of house deals never closed and are grinding through litigation. In a few days we’ll get official numbers showing sales in October were down a withering 30% from year-ago levels, and that the market is getting more and more skewed. Condos are up, detacheds are down. What everybody was slobbering over in the spring – $2 million McMansions in the 905 boonies – sit unloved, unsold and devaluing daily (see below).

Now it’s November with lower sales, higher inventories and a giant sword hanging over the one asset most families have hung their futures on. Not just in southern Ontario, either. The same pattern is being repeated in the Lower Mainland, Victoria and elsewhere as markets position for what is likely to be a riotous 2018. So what can we expect over the critical 180 days lying ahead?

Fearless predictions:

Modestly higher sales from early November through eggnog season with almost all of the action concentrated on the bottom end of the market. Condos, a few townhouses and slanty semis on dodgy streets plus the odd SFH built on an old landfill site. Just the stuff moisters love, and don’t know enough not to purchase. Many will regret.

Agents and brokers will continue to turn up the heat, using the universal stress test as 100% of the motivation to get pre-approved and buy, “while you still qualify.” Of course, suckers will be qualifying for elevated debt to buy houses at an inflated price. Once valuations drift lower, the mortgage will remain. The agents and brokers will not call again.

Inventory levels will erupt right after the reindeer pull out, especially if the winter proves to be anything like the last one. Thousands of owners yanked their listings over the last few months as the market for once-hot properties virtually collapsed, unwilling to believe the decline was structural. Big mistake. It was. Supply will overwhelm demand by March.

Mortgage rates will rise again, at least at the long end. The US economy is in third gear with the Fed guaranteed to drive its key rate higher for the fourth time in 12 months in December. While the Bank of Canada may skip its rate hike next month, it will not do so on January 17th or March 7th.

The stress test will be, well, stressful. Nobody escapes. By forcing all buyers to qualify at the current rate + 2%, it means we’ve effectively achieved 5% mortgage levels, doubling them in eight months. Just as significant will be the trapping of millions of borrowers inside the bosom of their current lenders. Anyone switching companies will be forced to pass the test, while renewers need not. So much for competitive rates. No wonder the bankers love this.

Less credit due to a higher mortgage bar will eventually impact values. Spring prices should be flat, summer ones faded and by this time next year many newbie buyers will wish they’d never listened to mom or Hoovered their TFSAa. People who always thought leverage was a good thing will learn otherwise.

The government will take credit for a successful soft landing. With croissant crumbs on his cravat, M. Morneau will send a message from a favourite patisserie outside his villa in Oppède, Provence, that, voilà!, fairness has returned to the middle class. With $2 trillion in household debt, rising rates and submerged Millennials, it won’t feel that way.

The next six months will prove critical. If the stress test does its job, almost everyone who bought real estate between the end of 2015 and Easter of 2017 will regret it. If the stress test fails, Toronto houses will quickly climb to $8 million. This blog will start celebrating cats.

Meanwhile, thanks to veteran GTA realtor Alex Prikhodco, here’s a preview of what to expect when the real estate cartel releases its numbers later this week (maybe). Is this what a melt looks like, or the prelude to an abyss?

Click to enlarge
Data from: https://toronto.listing.ca/detached-home-price-history.htm

201 comments ↓

#1 Amateur Forex Investor on 11.01.17 at 5:42 pm

What happens to our beloved Loonie from 6 months from now? Please, I dont want any advice from Im not Poloz or Mark, 2 sides of the same coin.

#2 Stan Brooks on 11.01.17 at 5:50 pm

CAD interest rates will NOT rise from here. It was made abundantly clear by Poloz.

They will stay low for the foreseeable future and potentially be cut again in a severe downturn which for sure is coming.

Not to worry:
Superman will save us
https://ca.news.yahoo.com/vote-think-trudeaus-public-image-184059994.html

#3 Stan Brooks on 11.01.17 at 5:52 pm

Ah, T2 is apparently a charismatic leader and media darling.

#4 wallflower on 11.01.17 at 5:53 pm

And for those oh so few who bought with offshore funds, the dollar now descends…

#5 paracho on 11.01.17 at 5:57 pm

We are living in very interesting times . I am 44 and remember the last melt down or crash in the early 1990s well . It took close to 15 years for people in my neighbourhood to get back to the value they paid for at peak . Many in my Woodbridge neighborhood lost their houses then .
I fear the potential for a similar or worse outcome this time around .

#6 Stan Brooks on 11.01.17 at 5:58 pm

Liberal scumbags.

https://ca.news.yahoo.com/morneau-tories-swap-numbered-company-190601953.html

Morneau must resign.

#7 crowdedelevatorfartz on 11.01.17 at 5:58 pm

Lotsa red ink on that graph…..

Happy Housing Crash Everyone :)

#8 Kat on 11.01.17 at 6:00 pm

Any stats on Vancouver or just T.O? I don’t see any cooling here and no one seems worried much about the stress test. As long as they stick with their lenders most will whether it out seems to be what I hear from the owners I know. I am betting instead of worrying about the stress test Co signing with parents will become much more popular.

#9 TRUMP on 11.01.17 at 6:02 pm

Don’t worry about a thing Garth.

Turner Investments own finance minister Ryan L says everything is going to be just fine.

Buy, Buy, Buy

#10 Steve on 11.01.17 at 6:03 pm

I like cats

#11 Ronaldo on 11.01.17 at 6:05 pm

Those are some serious price drops. And only the beginning. Methinks the stress tests being applied will be at the local drop in clinics.

#12 okay so a house on 11.01.17 at 6:06 pm

in Richmond Hill was $1,680,000 is now selling for….

ONLY $1,200,000?

LMFAO

ship sailed folks

#13 Zapstrap on 11.01.17 at 6:07 pm

That dog is troubled

#14 Jungle on 11.01.17 at 6:11 pm

The loonie should keep swinging 5-10 cents every 6-8 months. lol

#15 Stan Brooks on 11.01.17 at 6:13 pm

Canadian finance minister can not be a lair and a cheater.
Fire Morneau.

firemorneau.com

#16 Felix on 11.01.17 at 6:15 pm

“This blog will start celebrating cats.”

Smartest thing you’ve ever written.

(Now please delete that moronic pooch pic.)

#17 Smartalox on 11.01.17 at 6:15 pm

Those % reductions in GTA SFH sales are similar to the year over year stats I’ve seen at the Real Estate Board of Greater Vancouver. Drops in the 30% to 40% range from 2016 to 2017 are not uncommon.

Unfortunately the depressed sales comparisons are only year over year, and not decline from the peak.

When the stress test becomes mandatory after Jan 1st, the % reduction in sales will compare glacial 2018 with super-slow 2017. A 10% reduction between 2017 and 2018 will camouflage the severity of a 50% or 60% reduction in sales compared to ‘the peak’ – whenever that was.

Can we pick a peak in Vancouver?

#18 Stone on 11.01.17 at 6:15 pm

Funny thing over the last few weeks. Checked MLS for houses for rent. Called the listing agent (I’m starting to understand why they’re called shysters) to want to take a look. Agent sets appointment and then cancels a few days later. Doesn’t attempt to reset the appointment or call back. I did just to make sure and left her a message on her voicemail. No return call. Actually get to visit another place through another agent, rent is negotiated and just need to sign paperwork. Agent doesn’t call back. I follow up. Agent finally calls back to say their client decided to delist the rental. Rental is still up on MLS weeks later. I call another agent for another rental. Flat out tells me he’s not interested to show the place. Says he’s waiting for his client to break and list the property for sale versus for rent.

I’m not desperate and can stick to where I’m renting for now. I just find the behaviour strange. The agents (ahem…shysters) are deliberately sabotaging their own clients. I had my credit score (in the 800s range) and letter of employment ready so that’s not it.

I decided to check kijiji instead and see about dealing with owner direct. Guess what! It’s shysters listing the same houses! What’s up with that?

It does beg the question: what are our dear shysters up to? Would be nice if some nice reporter from the mainstream media took a closer look and reported it on the news. I wonder what would happen then?

Here’s my shout out to the homeowners. Don’t believe what your shyster agent tells you that no one has called regarding your rental. They’re actually trying to make you believe a lie. I recommend you list yourselves and just get the credit bureau score and employment letter yourself to confirm your tenants renting worthiness. The shysters sure aren’t doing it.

I guess the shysters still want to play high and mighty even though the floor’s already fallen under them. I didn’t have an issue with your ilk before but I do now. I’m 100% behind HHCE. Now you shysters are in trouble.

Now, onto more important things. My lovely balanced and diversified ETF portfolio remained at 8.51% today. It was up to 8.81% in the morning but it came back down. That’s ok. It’s allowed to have a break too sometimes. There’s always tomorrow. LOL.

#19 april on 11.01.17 at 6:15 pm

For a couple of youngsters in their 30s who are anxious to buy [baby on the way] ask when can we expect condos in the Lower Mainland to start lowering their prices???

#20 David W2 on 11.01.17 at 6:26 pm

Interesting. So when will it be wise to begin looking at real estate again, fall 2018, 2019? Any predictions for price drops in Ottawa and rural Ontario?

#21 Andrewski on 11.01.17 at 6:45 pm

We should hope it’s a slow decline & not precipitous.

#22 RudyGQ on 11.01.17 at 6:52 pm

“If the stress test fails….this blog will start celebrating cats.” That’s pretty ballsy of you. Although I know I cannot predict the future I would like to add my 2 cents (that’s $CAD) to the prediction pile. Over the next 2-3 quarters we are likely to see many sellers pull their For Sale signs as the disbelieve of contracting prices particularly at the high end of the sales mix percolates into the Canuck coconut. This may have a temporary boost to the market as a “shortage of inventory” will provide some short term price stability/increase. However, this will be like holding your breathe. Eventually you will have to exhale and so will the market. The stress test once applied to banks AND credit unions should have a slow but methodical impact to the psyche and purchase ability of buyers. The math is universal. Once credit is reduced in the system prices always eventually fall.

Garth, will a rise in interest rates have an appreciable impact on the car/truck/SUV industry? Seeing there is no comparable ‘stress test’ for vehicle purchases as there is for housing, I would love to hear a blog on the auto industry with respect to interest rates. Thanks.

#23 the ryguy on 11.01.17 at 6:55 pm

Ive noticed between gmail & twitter (I dont use FB, gross) more ads for quick possession homes from builders here in & around Edmonton. Ive clicked on a few and I gotta say the offers have been pretty reasonable; especially when it seems like just 2 years ago the prices were absolutely absurd. Its almost like they know something. Still not buying though, Im off to Cabo for the winter, Canadian winters are the WORST.

#24 Second Class on 11.01.17 at 6:57 pm

Garth,

What if things don’t land softly?

Plane looks like it is coming down for a landing but did the pilot put the landing gear out?

#25 Tri State Pat on 11.01.17 at 6:58 pm

I like all cats!

Also most dogs.

As for people?…its a different story.

#26 Tom S on 11.01.17 at 7:02 pm

What do the stats look like MoM?

#27 Ian on 11.01.17 at 7:04 pm

It’s Jerome Powell!!!

I like this choice. And I think it means continued rising rates in the US and Canada, even though he his not ultra hawkish.

US Fed raises in December for sure.

#28 Mark on 11.01.17 at 7:07 pm

“What happens to our beloved Loonie from 6 months from now? Please, I dont want any advice from Im not Poloz or Mark, 2 sides of the same coin.”

Reduced domestic demand should be great for the loonie. But currency traders could try, at least temporarily, to push the currency against fundamentals, as they did last year.

Not sure where Garth comes up with the idea that the Bank of Canada is almost certain to hike in the near term. The GDP data recently released showed a contracting economy. Inflation data was quite weak, but temporarily a little stronger than expected. Points to more holding, if anything, especially as the consumer impact of decreasing RE prices and shrinking credit lines starts bubbling up to the forefront in a more serious way.

#29 Paul on 11.01.17 at 7:10 pm

Ouch. Lowest October sales volume since 2008? That’s gotta be tough for TREB to spin. I’m sure they’ll figure out some way to do it though.

#30 Cristian on 11.01.17 at 7:10 pm

“balanced portfolios are ahead 9% in ten months”

Actually my balanced portfolio is ahead almost 11% for the year (I got a bit over 10% physical gold and a bit over 10% cash – I know you hate both but they give me peace of mind plus I got cash on hand if something worth buying comes along)

#31 LOL on 11.01.17 at 7:14 pm

Now, onto more important things. My lovely balanced and diversified ETF portfolio remained at 8.51% today. It was up to 8.81% in the morning but it came back down. That’s ok. It’s allowed to have a break too sometimes. There’s always tomorrow. LOL.

……..

this poor guy is watching it daily. During the down months got a hunch he’ll stop watching.

investor psychology tells us loses affect us 2x more so than gains. It’s a reason why during a correction the chart is more vertical

#32 conan on 11.01.17 at 7:18 pm

Watch a sleeping cat, they look very much like a croissant.
A wide awake cat will want to eat croissant , and no one knows why. Intelligent design?

https://youtu.be/b6V6idiAORw?t=27

#33 Doug t on 11.01.17 at 7:21 pm

What goes up……….

RATM

#34 Linda on 11.01.17 at 7:22 pm

Interesting chart – certainly shows that despite some news articles that prices in the GTA are coming down. I also noted the increase in DOM, but while the recent normal was selling in less than a week, selling in less than three weeks is hardly the end of the world. Now if the coming Housepocalypse results in properties languishing on the market for 1, 2 or more months, now that might be a tad difficult to deal with…..

#35 Orca Odds on 11.01.17 at 7:23 pm

Sne Ny Mo did it again in October. Those ferry humpers from the lower mainland love waiting in the line ups for the Triple O and cheap homes in paradise.

http://www.vireb.com/assets/uploads/10oct_17_vireb_stats_package_64292.pdf

#36 re., Stone on 11.01.17 at 7:24 pm

Funny thing over the last few weeks. Checked MLS for houses for rent. Called the listing agent (I’m starting to understand why they’re called shysters) to want to take a look. Agent sets appointment and then cancels a few days later. Doesn’t attempt to reset the appointment or call back. I did just to make sure and left her a message on her voicemail. No return call. Actually get to visit another place through another agent, rent is negotiated and just need to sign paperwork. Agent doesn’t call back. I follow up. Agent finally calls back to say their client decided to delist the rental. Rental is still up on MLS weeks later. I call another agent for another rental. Flat out tells me he’s not interested to show the place. Says he’s waiting for his client to break and list the property for sale versus for rent.

I’m not desperate and can stick to where I’m renting for now. I just find the behaviour strange. The agents (ahem…shysters) are deliberately sabotaging their own clients. I had my credit score (in the 800s range) and letter of employment ready so that’s not it.

I decided to check kijiji instead and see about dealing with owner direct. Guess what! It’s shysters listing the same houses! What’s up with that?

……………

easy

they don’t like you

#37 Dolce Vita on 11.01.17 at 7:26 pm

Prelude to an abyss.

Headwinds in the economy. NAFTA is all America First. Job losses soon to follow. Unprecedented Residential RE bubble. Unprecedented levels of debt.

We are headed for the largest Residential RE Asset devaluation in Canadian history.

It will crash fast as in a year or less.

Just a gut feel.

#38 crowdedelevatorfartz on 11.01.17 at 7:30 pm

@#28 mark
“Not sure where Garth comes up with the idea that the Bank of Canada is almost certain to hike in the near term”
+++++

So if the Interest rate rises in the first week of Dec. you’ll apologize?

#39 nick on 11.01.17 at 7:30 pm

those prices look consistent with prior months. So i guess October was flat as well.

#40 CL on 11.01.17 at 7:40 pm

MARK “Not sure where Garth comes up with the idea that the Bank of Canada is almost certain to hike in the near term.”

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

because the FED told them to.

#41 Crazy millennial on 11.01.17 at 7:42 pm

Looking forward to the cat pictures

#42 Mark on 11.01.17 at 7:44 pm

some Ottawa stats and predictions please. anyone?!

#43 ben on 11.01.17 at 7:46 pm

Don’t ask if BoC want to hike: they don’t. Ask if the USA is going to hike again, dragging the spawn of Carney with them. They will.

If USA rates are 4% and CAD is 1% who is going to keep their savings in CAD?

They are led by the Fed. Anyone just thinking about what is ideal for BoC is living in a dream world.

#44 AGuyInVancouver on 11.01.17 at 7:48 pm

Former BoC Governor David Dodge slam Poloz’s timidity in raising rates. Maybe we can bring back Dodge and pitch Poloz:
http://business.financialpost.com/news/economy/former-governor-says-poloz-caution-a-mistake-canada-eco-watch

And in other news foreign buyers are on the rise with “only” 10% of sales in Richmond going to foreign buyers. And that’s just declared foreign buyers, not those who used friends or relatives who might be citizens or PRs to buy:
https://beta.theglobeandmail.com/news/british-columbia/foreign-home-buyers-on-the-rise-in-vancouver-area-figures-show/article36793677/

#45 ben on 11.01.17 at 7:48 pm

To add, it’s okay for BoC to have rates *above* USA but not the other way round.

Look at this graph of what happens when the Fed raises rates, is BoC ever far behind?

https://www.bdc.ca/PublishingImages/publications/lem/june-2016-graph01-big-en.jpg

Maybe someone has a longer time series that contradicts this, however recent times are surely a better guide.

#46 Ex-Cowtown on 11.01.17 at 7:51 pm

Garth, will a rise in interest rates have an appreciable impact on the car/truck/SUV industry? Seeing there is no comparable ‘stress test’ for vehicle purchases as there is for housing, I would love to hear a blog on the auto industry with respect to interest rates. Thanks.

++++++++++++++++++++++++++++++++++

A good friend of mine works at a local dealership. The thing he keeps marveling at is how many people are coming in and buying a new vehicle while their still upside down from the lease on the old one.

They’re just rolling the excess debt into the new purchase price and stepping out the lease term to seven or even eight years. Dealership doesn’t care as they get paid out immediately by the lease company.

Consumer over-extension is epic. What could possibly go wrong?

#47 Mark on 11.01.17 at 7:51 pm

“So when will it be wise to begin looking at real estate again, fall 2018, 2019?”

8-9 years after the peak was probably the optimal time to trade the TSE index for GTA/GVR housing in the last big RE crash episode of 1990-2000. So given that the Canadian market peaked in 2013, you’d probably looking at 2021-2022 as being optimal.

A long-term TSE/TSX trendline has the index in the ~50,000 level in the early to mid 2020s. Given how badly the TSX index has been suppressed over the past decade relative to historic returns, and the outperformance of housing, the amount of housing a Canadian stock investor ultimately should be able to exchange his stock for should be quite fantastic.

#48 Dolce Vita on 11.01.17 at 7:57 pm

#8 Kat

You and your scientific survey of 5 friends do not understand that refinances account for only 21% of the mortgage market.

50% of the mortgage market is for NEW mortgages and they will be affected by B20, fewer will qualify and for less money. That will drive RE prices down.

Despite what your friends tell you, Mommy and Daddy are not all wealthy (most of that in RE and that will drop) nor do many have the cash flow.

The vast majority of Canadians retiring do not have an employer pension plan, have totally inadequate retirement savings and Canadians ages 55 to 64 without pensions, 50% have only enough savings to last for 1 year.

Go to Twitter and subscribe to a debt & insolvency agent and read how well Mommy and Daddy are doing thanks to co-signing a large mortgage for idiot savant Junior (Hint: one of the fastest growing insolvency sectors).

BTW, BC lost 12,400 jobs from Aug to Sept and strangely, not reported by the La La Land MSM, heaven forbid that the “it is different here” narrative be interupted by economic reality.

We’ll see how gung ho your buddies are when one or more of them lose their job and Mommy and Daddy are left holding the bag.

#49 dakkie on 11.01.17 at 7:57 pm

Canada Economy Crashing as Stock Market Still Hasn’t Surpassed Level Prior to the Financial Crisis!

http://investmentwatchblog.com/canada-economy-crashing-as-stock-market-still-hasnt-surpassed-level-prior-to-the-financial-crisis/

#50 akashic record on 11.01.17 at 8:02 pm

BTC YTD > 500%

#51 Stone on 11.01.17 at 8:07 pm

#30 re., Stone on 11.01.17 at 7:24 pm
Funny thing over the last few weeks. Checked MLS for houses for rent. Called the listing agent (I’m starting to understand why they’re called shysters) to want to take a look. Agent sets appointment and then cancels a few days later. Doesn’t attempt to reset the appointment or call back. I did just to make sure and left her a message on her voicemail. No return call. Actually get to visit another place through another agent, rent is negotiated and just need to sign paperwork. Agent doesn’t call back. I follow up. Agent finally calls back to say their client decided to delist the rental. Rental is still up on MLS weeks later. I call another agent for another rental. Flat out tells me he’s not interested to show the place. Says he’s waiting for his client to break and list the property for sale versus for rent.

I’m not desperate and can stick to where I’m renting for now. I just find the behaviour strange. The agents (ahem…shysters) are deliberately sabotaging their own clients. I had my credit score (in the 800s range) and letter of employment ready so that’s not it.

I decided to check kijiji instead and see about dealing with owner direct. Guess what! It’s shysters listing the same houses! What’s up with that?

……………

easy

they don’t like you

——

Shysters don’t like anyone. They’re shysters after all. They don’t even like themselves. You must be one of them. LOL. Everybody else loves me like a cuddly teddy bear. And if it was me, why are the listings up weeks later. It’s definitely them. Not me. LMAO!

#52 For those about to flop... on 11.01.17 at 8:11 pm

April 6:15 pm
For a couple of youngsters in their 30s who are anxious to buy [baby on the way] ask when can we expect condos in the Lower Mainland to start lowering their prices???

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

April,I have helped you out in the past and since you are pregnant I will step up to the plate and try to help you again.

This is what I want you to do.

1)Go to myrealtycheck.ca

2) Click on the word New Westminster at the top.

3) Click on all changes this month and it will show all sorts of price reductions in your city of choice.

4) Write down the addresses of the ones in your price bracket and go to zolo and see if any peak your interest.

This is the only way I think you are going to be able to find anyone to grind down.

There are condos on there below 350k but I chose this one to show you as an example of someone who has been struggling for 6 months and might be will to accept a lower bid.

See how that works out for you and I’ll be here if you need some more help…

M43BC

New Westminster
Apr 30:$412,000
Oct 23: $399,000
Change: – 13000.00 -3%

#53 Graph is up on 11.01.17 at 8:12 pm

Erm….

If i click on that Data From link,
All i see is graphs going straight up and nothing going down yet.

So what am i missing?

#54 Dolce Vita on 11.01.17 at 8:21 pm

#44 AGuyInVancouver

Still, even by the wildest estimates that 25-33% of sales are to Asia and Middle East buyers, that still leaves 67-75% of buyers being home spun.

B20 and the 67-75% home spun buyers will dictate what happens to the residential RE market in La La Land.

If it becomes an abyss, and I think it will, that foreign money will leave YVR fast since it will take 10 or so years for prices to recover and none of them will want to stick around and see that happen – nobody would.

That, will make residential RE crash.

The foreign buyer broom sweeps both ways.

It will not end well.

#55 45north on 11.01.17 at 8:29 pm

Inventory levels will erupt right after the reindeer pull out, especially if the winter proves to be anything like the last one. Thousands of owners yanked their listings over the last few months as the market for once-hot properties virtually collapsed, unwilling to believe the decline was structural. Big mistake. It was. Supply will overwhelm demand by March..

families will be overwhelmed by their financial situation and there’s really no rescue possible unless they give up their idea of advantage

Garth on the flight back from Saskatchewan: I thought about that as my return flight circled over the vastness of the GTA, as I heard an American forecaster had just predicted a 25% decline for Canadian housing values, and as word trickled in that Vancouver’s premier condo development is now bankrupt. It all confirms my growing conviction there is no rescue possible. If most people cannot see what’s coming yet, well, they’ll be forced to live it.

http://www.greaterfool.ca/2010/11/17/no-rescue/

#56 Meth on 11.01.17 at 8:39 pm

Just try me.

#57 crowdedelevatorfartz on 11.01.17 at 8:41 pm

Smell vs Strength

https://www.google.ca/url?url=https://www.youtube.com/watch%3Fv%3DoglTwZ63yr8&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwjpsaDo057XAhVT3WMKHeGUDFEQtwIILTAI&usg=AOvVaw1bkDs_9CMZr1DEj16BefYN

#58 Steve French on 11.01.17 at 8:42 pm

but but but….

What about pizza gate, and what happened in Benghazi?

What about Killary and Seth Rich?

Surely the great Smoking Man will have a new conspiracy theory that he lifted from Breitbart.

Soros is behind everything….

And teachers are engaged in a conspiracy against virile red blooded men.

#59 yorkville renter on 11.01.17 at 8:45 pm

it’ll be a blood bath in April 2018, as peak prices are gone and were now flat to 2016… the metric will be “prices down 30% from last year”. that’ll sting.

also, I love croissants… call me bougie, I don’t care.

#60 Mark on 11.01.17 at 8:45 pm

“So if the Interest rate rises in the first week of Dec. you’ll apologize?”

Sure, if that’s in order. The standard of debate however here is that we don’t apologize for literally everything that we get wrong, if that’s the case. Otherwise all many of us would be doing all the time is apologizing. But if at the next BoC meeting, the BoC hikes, by all means, demand my apology, and it will be forthcoming.

“If USA rates are 4% and CAD is 1% who is going to keep their savings in CAD?”

The interest rate is just one part of the overall total return on an investment. Currency appreciation or depreciation is also a significant factor. If the US needs to raise its rates to 4% to quell inflation, it means that there is an inflation problem in the US. If Canada can run, for instance, 1% interest rate policy and have minimal to no inflation, or even deflation, investing in the CAD$ may very well be a better option.

So I wouldn’t get too hung up on interest rates as determinants of relative currency valuations, or relative investment returns. You can probably get 1000%/annum right now in Venezuela, but I don’t think you’d consider that to be a very good investment when inflation is 2400%/annum (for instance)!.

Canada Economy Crashing as Stock Market Still Hasn’t Surpassed Level Prior to the Financial Crisis!

True, so there’s probably lots of catching up to do going forward, especially since the past decade has featured significant retention of earnings, debt pay-down and strengthened balance sheets.

So probably best to look at such as an opportunity for nice gains going forward after a lengthy consolidation period.

#61 Trs on 11.01.17 at 8:47 pm

Nice blog, interesting small community but will take a while until Canada will graduate from kindergarten and keep in mind that everyone is responsible for this mess:real estate and the whole Canadian economy.But what the heck?Everyday another greater-fool is born and another greater-fool will immigrate to Canada and will foot the final bill.

#62 45north on 11.01.17 at 8:48 pm

Dolce Vita: referring to Kat: Go to Twitter and subscribe to a debt & insolvency agent and read how well Mommy and Daddy are doing thanks to co-signing a large mortgage for idiot savant Junior (Hint: one of the fastest growing insolvency sectors).

that got my attention

#63 akashic record on 11.01.17 at 8:49 pm

The 100th year anniversary of the Great October Socialist Revolution, led by Lenin is on November 7th.

An estimated 80-100 million people were murdered in the name of Communist ideology.

When Hitler took over the power and banned all political parties only member of the Communist party were allowed to join the German National Socialist Party.

On the 100th anniversary on November 4th across North America Antifa and other radical leftist groups are promising that a series of protests will begin.

“We will gather in the streets and public squares of cities and towns across this country, at first many thousands declaring that this whole regime is illegitimate and that we will not stop until our single demand is met: This Nightmare Must End: the Trump/Pence Regime Must Go!

Our protest must grow day after day and night after night—thousands becoming hundreds of thousands, and then millions—determined to act to put a stop to the grave danger that the Trump/Pence Regime poses to the world by demanding that this whole regime be removed from power.”

Maybe even Vladimir Ilyich Lenin will raise from the dead, after all he was never buried 7 feet under, his body remains on public display on Red Square.

#64 Vancouverite on 11.01.17 at 8:50 pm

#8 Kat on 11.01.17 at 6:00 pm
Any stats on Vancouver or just T.O? I don’t see any cooling here and no one seems worried much about the stress test. As long as they stick with their lenders most will whether it out seems to be what I hear from the owners I know. I am betting instead of worrying about the stress test Co signing with parents will become much more popular.
____________________________________

It’s one thing for parents to give money to kid (hopefully one and done).

It’s another to co-sign a 25 yr mortgage — kids doesn’t make mortgage payments, bank comes to parents looking for money!!!

Garth, any chance you can do a topic on the pros and cons of parents helping kid buy a home by:
(1) giving money
(2) lending money
(3) co-signing mortgage

#65 april on 11.01.17 at 9:01 pm

#52 – Thanks Flop, your a sweetheart. Not me that’s pregnant, too old for that, but a couple of young friends. Sorry if I gave the wrong impression.
Thanks for the info. New West condos have gone up alot but not worth anywhere near what people are now asking.

#66 rainclouds on 11.01.17 at 9:08 pm

Probably 5 yrs ago had a beer in Portland with a local. He was laughing at Vancouverites (the BC ones) and the stupid house price run up. They were just coming out of their 30%+ meltdown.Carnage everywhere.

Vanstupid kept chugging higher. My how things have changed, or not. Seattle, Portland, Boston, LA, Denver, blah blah ……..all higher than the previous pre meltdown highs.

Time for the architects of this mess to do whats needed and seriously jack rates. Of course the BOC braintrust will delay, let the $ drop, encouraging yet more foreign purchases…….screwed

https://wolfstreet.com/2017/10/31/the-us-cities-with-the-biggest-housing-bubbles-3/

#67 Karma on 11.01.17 at 9:13 pm

Garth,

I know you don’t like immigrant bashing. But I hope you don’t mind immigration minister bashing.

What are they thinking! These Liberals are insane for wanting nearly 1% of the population to be immigrants each year. They don’t give a crap about the middle class! It’s going to be perpetual debt enslavement for Canadians and high rent.

#68 Dave on 11.01.17 at 9:17 pm

It’s interesting that you haven’t mocked bitcoin recently. Is it because of the 1000% increase in the past year?

Block chain actually is a paradigm shift and Bitcoin will be $200,000 within 5 years.

Or zero. – Garth

#69 IHCTD9 on 11.01.17 at 9:18 pm

#46 Ex-Cowtown on 11.01.17 at 7:51 pm

A good friend of mine works at a local dealership. The thing he keeps marveling at is how many people are coming in and buying a new vehicle while their still upside down from the lease on the old one.

They’re just rolling the excess debt into the new purchase price and stepping out the lease term to seven or even eight years. Dealership doesn’t care as they get paid out immediately by the lease company.

Consumer over-extension is epic. What could possibly go wrong?
——-

I can tell you this about the used market; there is a bubble in the under 10 grand pickup truck market.

I’ve been trying like crazy to get a decent deal on an old beater truck. The minute a good deal pops up it’s sold in an hour or two. I’ve been reduced to camping out on Kijiji every night refreshing the new listings every half hour or so, but I’m never quick enough. I feel like I’m trying to buy an SFD in the GTA circa April 2017. Just about everything out there is a 300K km rusty pc of crap that’s asking 8K. No value for the dollar at all. One old truck that was priced well under the rest sparked a bidding war. Seriously, a bidding war on a 1987 F250, sold for “over asking”. Sound familiar? I’m not making this up.

I finally had to move into the 10K and up market were the trucks sat for days and weeks and I was able to find some great bang for the buck, and wiggle the price down some even.

If anyone needs evidence that it ain’t Chinese folks going wild bidding up houses, and sailing in with “consider it sold” without even looking at the thing – or even having the cash on hand – have a look on Kijiji.ca (unless the Chinese folks have an obsession for half tons I don’t know about…)

#70 Leo Trollstoy on 11.01.17 at 9:20 pm

#28 Mark on 11.01.17 at 7:07 pm
Inflation data… stronger than expected.

Bingo!

Just like I called it!

No deflation anywhere!

#71 Nonplused on 11.01.17 at 9:23 pm

While I am not sure that Garth ever said conclusively whether the stress tests were a good or a bad thing, I will offer my humble opinion:

They are a good thing. They are trying to introduce the concept that there are other things you need to buy including food besides your mortgage payment.

All testing at 2%+ does is ensure you can pay for electricity at the current mortgage rate. If mortgage rates ever do go to 5%, which who knows they may they have in the past, you will have to qualify at 7%.

But folks, that 2% is what pays for your booze. Always remember that having booze is more important than having a crummy house on a crummy street. You can sleep in a tent. That’s why they make them.

#72 Rexx Rock on 11.01.17 at 9:24 pm

In B.C.,many millenials are moving back to their parents house.Its a fact from a inside source and many just can’t afford the rent on their wages here in Victoria and Vancouver.One coworker quit her job in Victoria and moved back to her Northern Vancouver Island town because the cost of living is just to high in Victoria.Many coworkers are working to get more of a pension and all over 67 .I know 2 seniors over 70 working at grocery stores just so they can afford to pay the rent.I lived in Victoria for 21 years and I never seen it so bad.Housing inflation,food,fuel,utilities,insurance and taxes seem higher then the goverment 2% inflation rate.Who are they kidding?

#73 Leo Kolivakis on 11.01.17 at 9:26 pm

Garth,

The problem is global. Here is a scary comment on housing bubbles in Canada and elsewhere:

https://www.theautomaticearth.com/2017/11/the-biggest-ponzi-in-human-history/

Give la différence! Gulp!

#74 Cat Blog coming soon on 11.01.17 at 9:27 pm

Garth, time to start planning for your Cat blog.

Toronto Star says:
“In 2017, Canada has a population of 36.5 million people and will welcome an estimated 300,000 newcomers. Of those, roughly 58 per cent or 172,500 of newcomers are expected to come under the economic class, 28 per cent or 84,000 through family reunification and the rest, some 15 per cent or 43,500, as refugees or on humanitarian and compassionate grounds.”

https://www.thestar.com/news/immigration/2017/11/01/canadian-government-to-raise-annual-immigrant-intake-by-13-by-2020.html

Refugees and family reunification are good for us. Unfortunately, 58% of all newcomers are the economic class, which is the government’s code word for “wealthy people”.

So this pause in housing prices is doomed to be short lived. Sadly, your joke about $8 Million homes in Toronto will be a reality within the decade. Time for average folk to prepare for life near the Arctic circle where homes are still affordable. Time for Garth to start seriously thinking about that Cat blog.

#75 Kat on 11.01.17 at 9:30 pm

@dolce vita, you sound like one angry sarcastic person. Sad on you.

#76 rainclouds on 11.01.17 at 9:31 pm

Of course the OSFI could have implemented the stress test immediately but they aren’t concerned with the consumer………aka moisters

Lambs to the slaughter sanctioned by industry oversight. Nice.

Getting hard to keep track of which decision makers/ industry manipulators are more venal ..(BOC, Politicians,FIRE,OSFI)

the poor schmucks who have “o” influence. Rely on blatant fabrications posed as “data”, overseen by no one, and will take the financial axe to the forehead as “collateral damage”.

When reversion to the mean comes the anger will be EPIC.

#77 Smoking Man on 11.01.17 at 9:31 pm

Duke of Westminster 5pm Sharpe tomorrow.

Only for bay street dogs. Hotties from the burbs allowed.

#78 Alex P on 11.01.17 at 9:39 pm

#53 “Graph is up”

As per https://richmond-hill.listing.ca/detached-home-price-history.htm

The graph represents a 365-day running median for Richmond Hill.

The graph represent a seasonally adjusted long term valuation trends and may not immediately reflect short term market fluctuations. If you are interested in raw monthly real estate market statistics and short term market fluctuations, please see the tables.

Tables are raw monthly medians, FYI.

#79 tbone on 11.01.17 at 9:39 pm

Watched a house sell in Toronto yesterday .
They got more than I thought the house was worth
and just missed out on a competing bid.
Closed too quick . They would of got 20 – 30 k more .
This house was not worth 20 percent more than what it sold for . It just took about 4 to 5 weeks to sell .
Had one small price reduction and away it went .
From what I saw , its a normal market out there .
Every other house in the area also sold prior to this one as the were renovated . This one wasn’t and it sold last.

I sold off my rentals and was sitting on a pile of cash that I was going to buy a GIC with , but I think I will hold off and see if we do have a happy housing crash next year.

Maybe I may pick up a bungalow for myself at fire sale
prices . I’m pretty sure I can pass a stress test .
Rent it for 10 years , then renovate and move in .

#80 crowdedelevatorfartz on 11.01.17 at 9:40 pm

6pm News….and on the politically correct CBC no less.

“Foreign ownership of Vancouver real estate 5%, Richmond 10.6%, Burnaby 10% in 2017….”

Leader of the Green’s Andrew( I will do and say anything for a few more seats) Weaver is calling onto the NDP to raise the Foreign Ownership Tax or an outright ban…….

This WILL be a political issue rolling forward towards the next(12 – 24 months) provincial election.

#81 Happy Housing Crash Everyone! on 11.01.17 at 9:41 pm

34 Linda on 11.01.17 at 7:22 pm
Interesting chart – certainly shows that despite some news articles that prices in the GTA are coming down. I also noted the increase in DOM, but while the recent normal was selling in less than a week, selling in less than three weeks is hardly the end of the world. Now if the coming Housepocalypse results in properties languishing on the market for 1, 2 or more months, now that might be a tad difficult to deal with…..

________________________

I hate dirty lying SHYSTERS. This https://www.rew.ca/properties/C3930113/132-laurelcrest-avenue-toronto-on has been on sale for MONTH’S. Since July its been sitting on the market after it sold in March for $2118000 in 5 days and now CAN NOT SELL @ $1850000. Lol you dirty SHYSTERS are true scum of the earth POS.

#82 Bitcoinnaire on 11.01.17 at 9:50 pm

The dog appeals to cheap and facile emotions; the cat to the deepest founts of imagination and cosmic perception in the human mind. It is no accident that the contemplative Egyptians, together with such later poetic spirits as Poe, Gautier, Baudelaire, and Swinburne, were all sincere worshippers of the supple grimalkin.

The dog on the other hand appeals to the audiences of the NFL and garden variety connoisseurs of bread and circus.

BTW, Bitcoin at its all time high again. Every day unti, the 16th of November. Free money.

#83 FOUR FINGERS WATSON on 11.01.17 at 10:00 pm

#72 Rexx Rock on 11.01.17 at 9:24 pm
In B.C.,many millenials are moving back to their parents house.Its a fact from a inside source and many just can’t afford the rent on their wages here in Victoria and Vancouver.One coworker quit her job in Victoria and moved back to her Northern Vancouver Island town because the cost of living is just to high in Victoria.Many coworkers are working to get more of a pension and all over 67 .I know 2 seniors over 70 working at grocery stores just so they can afford to pay the rent.I lived in Victoria for 21 years and I never seen it so bad.Housing inflation,food,fuel,utilities,insurance and taxes seem higher then the goverment 2% inflation rate.Who are they kidding?
……………………….

It’s because they are not excising their marginal propensity correctly. Just ask The Lewnza.

#84 Smoking Man on 11.01.17 at 10:01 pm

Life is a basket of surprise. One day you are really thinking about, calculating the amount of time from jumping from the penthouse to ground. Then all of a sudden youre loved again.

Life is worth the delay in judgement.

#85 For those about to flop... on 11.01.17 at 10:03 pm

Well with Jeff Bezos passing the Ol Billy Goat for the worlds richest person it is as good as anytime to have a look at this map…

M43BC

“This Map Shows The Richest People on Each Continent

New reports show that the Billionaire Club is growing faster than ever before, welcoming 145 new members in 2016. Though you and I are unlikely to be among the über wealthy, there are extremely rich people all over the planet.

This map shows the richest person on each continent.”

https://howmuch.net/articles/richest-person-on-every-continent

#86 OttawaMike on 11.01.17 at 10:10 pm

If the stress test fails, Toronto houses will quickly climb to $8 million.

That’s not as far fetched and satirical as you meant it to be.

#87 -=jwk=- on 11.01.17 at 10:10 pm

Ottawa has been a flat line for 10 years. Will be a flat line for the next 10 too. On the one hand you don’t make 100’s of thousands on your house every year. On the other hand you can actually afford a house. When you sell you get your inflation adjusted money back. That is all.

#88 Max P Webster on 11.01.17 at 10:16 pm

Plus ça change, baby. That’s what sexy French people say when they remind you that the more things look different in the world, the more they’re actually the same.”

Garth, it was actually Geddy Lee who said that and the French copied him.

#89 Prairieboy43 on 11.01.17 at 10:19 pm

Your blog should celebrate Skunks. This is one tough Skunk, punching way above his weight class.

https://youtu.be/qDGO1MTJIUE

PB43

#90 ben on 11.01.17 at 10:20 pm

Mark – but CAD would tank further if they ran at -3% to the USA, creating even more of a push from CAD to USD.

You can see for yourself that’s how it works on the provided graph. Or perhaps it’s something else. Either way when the USA rises CAD keeps at their heel. Ergo people asking “what will Poloz do” are deluding themselves.

#91 Millennial905er on 11.01.17 at 10:31 pm

Richmond Hill woman caught in house squeeze.

https://globalnews.ca/news/3838290/richmond-hill-woman-caught-in-house-squeeze/

Claims to have lost 200k. Also claims that no one informed her this could happen… Because like y’know, house prices always go up right?!?

Perhaps one of many to come.

#92 Where's The Money Guido? on 11.01.17 at 10:31 pm

House prices are going to go uppa uppa uppa, since the gov’t of both BC and Ontario are doing nothing (Ontario gov’t is actually welcoming it) to curb the money laundering scam that is foisted on us plebes.
You think the money launderer cares about the 2% stress test. Not when they can roll a $million in $20s through the door of any casino in a couple days.
My thoughts are it will end up being a fight between gangs to see who can launder the money and buy the house first.
I also believe the gov’ts are also putting taxpayers’ money into housing and leaving them empty, then blaming foreigners, just to keep the ball rolling.
The ol’ rope-a-dope. And we’re getting ko’d.

#93 LivinLarge on 11.01.17 at 10:42 pm

“I sold off my rentals and was sitting on a pile of cash that I was going to buy a GIC with , but I think I will hold off and see if we do have”…have you learned nothing from this blog??? A GIC??? Really?? Why not just burn it?

Why keep coming back if you’re not going to take any of Fearless Leader’s free advice?

#94 Where's The Money Guido? on 11.01.17 at 10:44 pm

Re: #69 IHCTD9 on 11.01.17 at 9:18 pm
#46 Ex-Cowtown on 11.01.17 at 7:51 pm

A good friend of mine works at a local dealership. The thing he keeps marveling at is how many people are coming in and buying a new vehicle while their still upside down from the lease on the old one.

They’re just rolling the excess debt into the new purchase price and stepping out the lease term to seven or even eight years. Dealership doesn’t care as they get paid out immediately by the lease company.

Consumer over-extension is epic. What could possibly go wrong?
——-

I can tell you this about the used market; there is a bubble in the under 10 grand pickup truck market.

I finally had to move into the 10K and up market were the trucks sat for days and weeks and I was able to find some great bang for the buck, and wiggle the price down some even.

They are shipping the trucks down to the states because they get more money for them. Been happening for a couple years now. I tried to buy used in BC 2 years ago and absolutely no 8 foot bed trucks anywhere. A dealer friend told me they all go south.

#95 Happy Housing Crash Everyone! on 11.01.17 at 10:53 pm

Don’t buy a house. People are now losing their houses after buying another house at peak ans not able to sell first house. Spread the news. Tell buyers to wait for people to go bankrupt. https://globalnews.ca/news/3838290/richmond-hill-woman-caught-in-house-squeeze/

#96 PastThePeak on 11.01.17 at 10:58 pm

#44 AGuyInVancouver

Yep, glad to see old Dodge speak out about the financial stability risks associated with these ultra-low interest rates with how it drives debt levels too high. Finally someone speaking some sense. Wish he was the governor instead of that flip-flopper Poloz. He is a disaster as BoC gov.

Normally I would put my money on the BoC raising rates at some point in the Q1 2018 (following the US Fed increase expected in Dec), for a few reasons. The dollar won’t shoot up too high as we are trailing the fed. It is prudent to get some normalization of the rates prior to next down turn. And, per above, it is absolutely a must to improve financial stability. However – Poloz is a wild man and no one knows what he might do.

If rates are cut again, it will drive debt accumulation into the overdrive we saw back in 2015, making the eventual correction, while further in the future, that much worse. That seems to be what the majority want, but to quote George Carlin:
“think about how stupid the average person is, and then realize that half of them are stupider than that…”

#97 PastThePeak on 11.01.17 at 11:09 pm

Garth, what is your thoughts on the Ontario wide min wage increase to $14/hour and its effect on inflation. On the surface it would seem to be so, given Ontario has about 40% of the Can population, and the increase will drive wage increases beyond the min crowd.

But there will be less such min wage jobs as well. So interested in your insight. Thanks.

#98 Spectacle on 11.01.17 at 11:23 pm

#93 LivinLarge on 11.01.17 at 10:42 pm
“I sold off my rentals and was sitting on a pile of cash that I was going to buy a GIC with , but I think I will hold off and see if we do have”…have you learned nothing from this blog??? A GIC??? Really?? Why not just burn it?

Why keep coming back if you’re not going to take any of Fearless Leader’s free advice?
———————————-

Umm, the skunk videos?

Oh, and the related comments on Agenda30 that indicate how screwed real estate buyers are going to be.

http://www.abovetopsecret.com › thread1085891

#99 Gravy Train on 11.01.17 at 11:39 pm

The following excerpt is from remarks by President Trump in a Nov. 1 cabinet meeting, as per the Office of the White House Press Secretary:

“I am today starting the process of terminating the diversary lottery program. I’m going to ask Congress to immediately initiate work to get rid of this program. Diversary and diversity lottery. Diversity lottery. Sounds nice. It’s not nice. It’s not good. It hasn’t been good. We’ve been against it. So we want to immediately work with Congress on the Diversity Lottery Program, on terminating it, getting rid of it.”
https://www.whitehouse.gov/the-press-office/2017/11/01/remarks-president-trump-cabinet-meeting

Are there any deplorables out there who think that diversary is a word? I bet SM does! (Hint: no, it’s not.)
https://www.merriam-webster.com/dictionary/diversary

Trump cannot even correctly read a speech specially prepared for him! Trump is too ignorant to even know that he’s an ignoramus!

#100 Chelsea on 11.01.17 at 11:43 pm

Well, looks like I was right about the BC NDP. The gal in charge of RE is looking like a huge failure. The RE here in BC is NDP/Green Party’s meal ticket for revenue. Watch out for the NDP’s slogan “home owners less than 5 years will be slapped with a 2% levy on the BC Assessment …) it is coming … they are not confirming it as yet. I emailed them about this, no response! Now this is getting pretty scary, and I thought Halloween was over, NOT for BC it isn’t.

#101 Dead Cat Bounce on 11.01.17 at 11:49 pm

Not all realtors finish school …

https://kelowna.craigslist.ca/reb/d/cozy-home-on-huge-lot/6370168783.html

#102 NVLandlord on 11.02.17 at 12:09 am

Enormous SFH in West Vancouver are NOT selling at all. The British Properties neighbourhood with ocean views to die for, have masses of homes for sale and none are moving. There are even open houses during the week days. Surely prices will drop soon..

#103 Karma on 11.02.17 at 12:15 am

#74 Cat Blog coming soon on 11.01.17 at 9:27 pm
“Refugees and family reunification are good for us. Unfortunately, 58% of all newcomers are the economic class, which is the government’s code word for “wealthy people”.

No it doesn’t. It means people who qualify on the points system. Aka people with educations and qualifications. The wealthy ones you speak of were “Investor Immigrants”.

#104 Entrepreneur on 11.02.17 at 12:15 am

Have to go back to the article after reading the comment section to refresh my memory, must be getting old. Oh, not that old, three o’clock chased a cougar away from our truck but the wild beast took a swipe at our new 8 year old dog. She died.

The cougar looked very lean. Being hunters we noticed less deer and other animals, almost like a dead forest, eerie feeling.

I believe VREU in that we are in for a “hard landing.” I think anyone else is just trying to calm the situation.

The “next six months” we will see.

#105 guillaume on 11.02.17 at 12:32 am

CETA should bring more growth and a lot of European company will invest in Canada. Canadian economy will go up and the rates up too, no matter what the timing is !

#106 Inconvenient Truths For Some on 11.02.17 at 12:52 am

Prior to the BC foreign buyers tax, foreign buyers were over 20% in places in Richmond and Burnaby – two of Metro Vancouver’s biggest cities. Now – about 10%.

Of course, the realtors and developers all said that foreign buyers only constituted less than 5% of purchases and had no impact.

If 8% of buyers in the US caused a 32% decline in prices, how is that 10-20% of foreign buyers could not cause price increases.

Also interesting to note that the percentage of foreign buyers in Victoria went up over 800% – from 0.6 in 2015 to 5% now.

What did prices do in that time when the economy was, and is, stagnant with anemic population growth? Yes, over a 25% price increase with prices holding steady despite the stress tests.

These are inconvenient truths for some.

https://beta.theglobeandmail.com/news/british-columbia/foreign-home-buyers-on-the-rise-in-vancouver-area-figures-show/article36793677/

#107 bdwy sktrn on 11.02.17 at 3:32 am

#2 Bdry sktrn on 10.21.17 at 3:53 pm
Tesla . Finally time to short this bloater.
Mod3 no help. Crap numbers to come.

I’m calling a top.
—————————
this was 11 days ago (stock around 350)- the crap numbers came , 304 in after hrs.

this is a dog with fleas.
250 next stop.

——————————–

speaking of dogs, when our pup lays curled into a circle we call it the dognut.
———————————-
further – vancouver remains more highly desirable tham manhattan, sf and la. when i got here in ’91 and saw house prices it was explained to me that bc means ‘bring cash’ – not much has changed. except rents have skyrocketed now too.

#108 Happening now on 11.02.17 at 4:12 am

When even the “stress test ” fails to correct West Coast house prices back to anything even remotely close to “economic fundamentals”,then maybe, just maybe you may want to look at the huge effect on World wide real estate markets that Ham has had….it’s a accepted FACT that 100’s of billions of dollars has flooded out of China and been parked in housing markets all over the world.

https://www.bloomberg.com/news/articles/2017-11-01/auckland-house-price-drop-brings-kiwi-property-boom-to-an-end

#109 Howard on 11.02.17 at 6:31 am

#74 Cat Blog coming soon on 11.01.17 at 9:27 pm
Garth, time to start planning for your Cat blog.

Toronto Star says:
“In 2017, Canada has a population of 36.5 million people and will welcome an estimated 300,000 newcomers. Of those, roughly 58 per cent or 172,500 of newcomers are expected to come under the economic class, 28 per cent or 84,000 through family reunification and the rest, some 15 per cent or 43,500, as refugees or on humanitarian and compassionate grounds.”

https://www.thestar.com/news/immigration/2017/11/01/canadian-government-to-raise-annual-immigrant-intake-by-13-by-2020.html

Refugees and family reunification are good for us. Unfortunately, 58% of all newcomers are the economic class, which is the government’s code word for “wealthy people”.

So this pause in housing prices is doomed to be short lived. Sadly, your joke about $8 Million homes in Toronto will be a reality within the decade. Time for average folk to prepare for life near the Arctic circle where homes are still affordable. Time for Garth to start seriously thinking about that Cat blog.

———————————–

I agree. I’m actually no longer lamenting this. I am now cheering it on. My parents own a SFH in the 416. If I won’t be able to afford a home in the city of my birth (and rents are soaring, so that’s not a better option), at least some of my family will benefit from this madness.

Bring on the money-launderers and the $8-million homes! Make my Mom and Dad super super rich!

Oh and SCM, remember this come election time. But you’ll still vote T2 anyway because he’s, like, soooo cute!

#110 Dharma Bum on 11.02.17 at 6:47 am

None of this need have happened, had the people all listened to Garth, the Guru of investing and real estate.

I listened.

Now, I am free.

“Maybe I’ll be rich and work and make a lot of money and live in a big house.” But a minute later: “And who wants to enslave himself to a lot of all that, though?” – Kerouac

#111 Wrk.dover on 11.02.17 at 7:26 am

#69 IHCTD9 on 11.01.17 at 9:18 pm

Just about everything out there is a 300K km rusty pc of crap that’s asking 8K. No value for the dollar at all.

——————————————————–

Friends don’t let friends buy older Ontario, Quebec, Maritime vehicles. Don’t you have any friends?

Phoenix Craig’s List full of 100% rust free beaters.

If you can’t afford a week to fly and drive, you can’t afford to waste time on this blog either. Buying rust to save a week? Is your life a dress rehearsal, or do you actually adventure beyond playing follow the leader on the local ATV trail?

Arizona issued me a title and 90 day permit for $17 no tax charged, with no proof of insurance or inspection last five times around. How hard do you need that to be? Got to have a broker at both sides of the border now though. And, date of manufacture should be older than 15 years to the month, to prevent a $200 pony show at the Canadian end from developing.

I have not lit my torch to work on a vehicle since the eighties, which was just before I bought my first $600. Arizona 3/4 ton van, which I still have, undercoated of course. All of my beaters have been well worth the 60 hour drive to bring home to the East Coast.

Or tell us you are too busy to wisely save money and time in the long run on the biggest recurring expense in your life, beyond real estate.

#112 Victor V on 11.02.17 at 7:52 am

Toronto home sales sink 26.7% as policy fallout ‘starting to unwind’

http://www.bnn.ca/toronto-home-sales-sink-26-7-as-policy-fallout-starting-to-unwind-1.903456

#113 Gravy Train on 11.02.17 at 7:56 am

Hey, folks. We may be setting an all-time record today. Garth hasn’t had to castigate anyone, not one comment has been deleted, and no one has been banned!

Either Garth’s become more lenient, or we’ve somehow cleaned up our act. If the latter, then keep up the good work! :)

#114 crowdedelevatorfartz on 11.02.17 at 8:19 am

@#98 Spectacle

http://www.abovetopsecret.com/

======

You turn up your nose at an awesome skunk vs cougar video and then post a link to a rumour blog that stinks even worse? Yeesh.

#115 crowdedelevatorfartz on 11.02.17 at 8:26 am

@#107 Happening now
“it’s a accepted FACT that 100’s of billions of dollars has flooded out of China and been parked in housing markets all over the world….”

******

That’s not politically correct….true…..but not politically correct.

One wonders when the spineless gastropods that are supposed to represent the majority of voters and not big money will perform a kneejerk 180 reversal in foreign ownership policy and slam the door shut to the rampant rule breaking that has gone on in Vancouver, BC and the rest of Canada.

If $1.5 million in shrinkwrapped $20’s laundered again and again and again and again at Casinos and then used to buy $100’s of millions in BC real estate wont do it…….. what will…….

#116 not in the cold months on 11.02.17 at 8:26 am

You can sleep in a tent. That’s why they make them.

……..

but you go ahead and try

#117 IHCTD9 on 11.02.17 at 8:27 am

DELETED

#118 re., Where's The Money Guido? on 11.02.17 at 8:28 am

he is the last guy to worry about

likely sitting on 5 investments properties that have doubled. All cash flow positive– and providing a roof over your head….:)

#119 crowdedelevatorfartz on 11.02.17 at 8:32 am

@#109 Dharma Derrierre
““And who wants to enslave himself to a lot of all that, though?” – Kerouac”
*****

Just curious. Did Kerouac say that before, during or after he dropped LSD with Dr Leary?

#120 crowdedelevatorfartz on 11.02.17 at 8:35 am

@#112 Gravy Boat
“Either Garth’s become more lenient, or we’ve somehow cleaned up our act….”
+++++

Neither.
And judging by # 116….you jinxed us.

#121 re., Stone on 11.02.17 at 8:45 am

Shysters don’t like anyone. They’re shysters after all. They don’t even like themselves. You must be one of them. LOL. Everybody else loves me like a cuddly teddy bear. And if it was me, why are the listings up weeks later. It’s definitely them. Not me. LMAO!

……..

you seem very childish?

‘Shysters don’t like anyone’– okay, seems like you know them well. BUT, why in the previous rant you conclude with;

‘what’s up with that’?

that’s a question. I answered. You didn’t like my answer? :) You need a roof over your head- it is what it is. SOME folks may not get a good vibe from a potential renter, candidly, flat out say ‘ NO WAY i’m renting to this chap’.

so , in a silly round- about-way, they told you off. This is not what you want to hear, I know… cause in your world you’re a lovable, great guy

#122 Leo Trollstoy on 11.02.17 at 8:45 am

#38 crowdedelevatorfartz on 11.01.17 at 7:30 pm
@#28 mark
So if the Interest rate rises in the first week of Dec. you’ll apologize?

it doesn’t work that way.

he disappears and pretends it didn’t happen

rofl

#123 C.H on 11.02.17 at 8:50 am

@Mark, Post #28

Recent GDP figures did not show a contracting economy, rather just a levelling off from the red hot growth Canada saw in the first half of the year – a coming back down to reality if you will.

#124 Tater on 11.02.17 at 9:14 am

#31 LOL on 11.01.17 at 7:14 pm
Now, onto more important things. My lovely balanced and diversified ETF portfolio remained at 8.51% today. It was up to 8.81% in the morning but it came back down. That’s ok. It’s allowed to have a break too sometimes. There’s always tomorrow. LOL.

……..

this poor guy is watching it daily. During the down months got a hunch he’ll stop watching.

investor psychology tells us loses affect us 2x more so than gains. It’s a reason why during a correction the chart is more vertical
—————————————————————-

The really fun time will come when all these folks with “balanced” portfolios discover that stock and bond prices aren’t as negatively correlated as they think.

#125 MF on 11.02.17 at 9:17 am

#108 Howard

Yes. I am on board with that. That’s our reality.

My parents bought their SFH’s with zero mortgages in the 80’s and early 90’s. When (not if) houses cost 8 million at least my family will benefit too.

Agreed to soaring rents. Waste of money for someone else to benefit from. Just buy then get parents to give you some of their equity.

If your parents are like mine, they are offering you the help. Take it! Our cohort that have are way ahead.

MF

#126 Todd on 11.02.17 at 9:38 am

Hmmmmm….

http://www.bnn.ca/toronto-home-sales-sink-26-7-in-october-1.903456

http://business.financialpost.com/real-estate/toronto-home-sales-fall-year-on-year-prices-down-15-1-pct-from-pea Sharp rebound in Toronto home sales signals market may have hit bottom

http://www.cbc.ca/news/canada/toronto/toronto-home-sales-up-12-in-october-real-estate-board-says-1.4383589

“Facts are meaningless. You can use facts to prove anything that’s even remotely true. Facts schmacts.”
“Aw, you can come up with statistics to prove anything, Kent. Forfty percent of all people know that.” – Homer Simpson

#127 Howard on 11.02.17 at 9:49 am

#112 Gravy Train on 11.02.17 at 7:56 am
Hey, folks. We may be setting an all-time record today. Garth hasn’t had to castigate anyone, not one comment has been deleted, and no one has been banned!

Either Garth’s become more lenient, or we’ve somehow cleaned up our act. If the latter, then keep up the good work! :)

——————————–

It looks like he’s now distinguishing between posts are truly racist and those that are simply politically incorrect. A welcome change.

#128 Senta on 11.02.17 at 9:51 am

The FUD machine just rolled in ….to trap the last of the suckers.
https://www.bloomberg.com/news/articles/2017-11-02/toronto-realtors-see-market-stabilizing-with-october-sales-gain

#129 IHCTD9 on 11.02.17 at 9:52 am

#110 Wrk.dover on 11.02.17 at 7:26 am

Friends don’t let friends buy older Ontario, Quebec, Maritime vehicles. Don’t you have any friends?

Phoenix Craig’s List full of 100% rust free beaters.

If you can’t afford a week to fly and drive, you can’t afford to waste time on this blog either. Buying rust to save a week? Is your life a dress rehearsal, or do you actually adventure beyond playing follow the leader on the local ATV trail?

Arizona issued me a title and 90 day permit for $17 no tax charged, with no proof of insurance or inspection last five times around. How hard do you need that to be? Got to have a broker at both sides of the border now though. And, date of manufacture should be older than 15 years to the month, to prevent a $200 pony show at the Canadian end from developing.

I have not lit my torch to work on a vehicle since the eighties, which was just before I bought my first $600. Arizona 3/4 ton van, which I still have, undercoated of course. All of my beaters have been well worth the 60 hour drive to bring home to the East Coast.

Or tell us you are too busy to wisely save money and time in the long run on the biggest recurring expense in your life, beyond real estate.
_______________________________________

Hello Wrk.dover,

Not only can I afford a week to fly and drive to Arizona to buy an old clunker, I can amazingly actually afford to buy a pristine truck right here in Ontario!

Talking about Arizona – I just sold a 31 year old 4×4 from Arizona that I had owned for 5 years, and purchased in South Western Ontario for 1000.00 CAD. The drive home was 5 hours, no plane ticket required, no broker either. Yes it was rust free, but anything that wasn’t made of steel was burnt to a crisp, door seals, window seals, seats, headliner, dash was insane, paint was dust, it was not a hop in and drive proposition, it still needed a lot of work and expense to be nice.

I didn’t buy rust to save a week actually, I bought a pristine condition, low mileage, oiled since new, original owner truck. Was used to haul a 5th wheel down south every winter, almost no salt in 14 years, just over 100K on the clock, brand new tires, absolutely ridiculous mint top to bottom, inside and out. It’s in MUCH BETTER overall condition than an Arizona truck would be of the same age. Yes it cost more than $600.00 – I’m cool with that.

Driving is surely not even close to my largest reoccurring expense in my life beyond real estate (you must not have kids). My current beater cost me 1300.00 and it’s on year #5. I probably spend more on coffee than driving a car.

Don’t get me wrong, I love keeping costs low, and I too drool over the rust free southern vehicles on CL and even plan on checking some of them out someday. Above all – I am a value shopper. I can spot a great deal in any price range, and I’m happy to spend more if I’m getting good value for the dollar. I just happened to notice there was zero value under 10K on trucks right now. Never experienced a truck mania before, I stepped out of that market zone once I realized what was going on.

#130 I’m stupid on 11.02.17 at 9:59 am

#110 Wrk dover

I’ve imported 2 vehicles from the US, the last one was in 2012 I think. I never used a broker, I don’t understand why you need one now. It was a very simple process when I did it. Has something changed?

The last car I bought was from Florida. I had the dealer fax the bill of sale, title and recall letter to the point I was crossing at 72 hours before I planned to cross. I flew to Florida stayed 2 days then drive back. Had no problems. Has something changed?

#131 Gender Identification Certificate' on 11.02.17 at 10:02 am

been volunteering as a coach in minor hockey for years.

‘Gender ‘Identity Training’ is an online course I need to take for my minor hockey badge, the privilege to be behind the bench.

I missed the deadline to complete this nonsense and was thrown out by the refs yesterday. This is on me as i’ve been sickened at the thought of reading these modules

one more time…..

‘Gender Identity Training’

as a Canadian i’m embarrassed. It’s sad …… Vodka on the rocks, I got a course to take..7:00pm

#132 IHCTD9 on 11.02.17 at 10:04 am

#112 Gravy Train on 11.02.17 at 7:56 am
Hey, folks. We may be setting an all-time record today. Garth hasn’t had to castigate anyone, not one comment has been deleted, and no one has been banned!
___________________________

Sorry man.

#133 Ian on 11.02.17 at 10:14 am

# 46 Ex-Cowtown

That is really important, because the figure in the US for auto loans is completely out of control, past 1.3t now. All the nonsense from the US housing debacle is repeating.

Guaranteed the picture in Canada is not good either, the same nonsense must be occurring given interest rates and stories like yours. Although, I have not seen any data on it.

It makes sense that if Canadians are going to be so stupid about housing, they will with other big credit items too.

http://money.cnn.com/2017/05/19/news/economy/us-auto-loans-soaring/index.html

https://www.cnbc.com/2017/06/12/auto-loan-delinquencies-rise-as-drivers-splurge-on-pricey-cars.html

#134 Ian on 11.02.17 at 10:26 am

Duke of Richmond 5pm tonight!!! Hope anyone in downtown TO can make it! Full report tomorrow!

#135 Tbone on 11.02.17 at 10:33 am

# 93 Livin Large

I took the leaders advice a long time ago .
I have plenty of balanced mutual funds , etfs, index funds and stocks
In four different institutions .
I also have a pile of cash that I don’t want to put into the market.
You know …. diversify .
I could burn it and wouldn’t miss it .Maybe I’ll take a couple of points
in a gic instead, but thanks for the advice.
You don’t need to be fully invested.Just depends on how much you have.
If the market went to zero I could live off the cash.
Glad I listened to Garth a long time ago .

Why do I keep coming back ? Just want to confirm that I did the right things, … so far , so good.

#136 When the Stress Comes on 11.02.17 at 10:38 am

#105 Inconvenient Truths For Some on 11.02.17 at 12:52 am
Prior to the BC foreign buyers tax, foreign buyers were over 20% in places in Richmond and Burnaby – two of Metro Vancouver’s biggest cities. Now – about 10%.

Of course, the realtors and developers all said that foreign buyers only constituted less than 5% of purchases and had no impact.

If 8% of buyers in the US caused a 32% decline in prices, how is that 10-20% of foreign buyers could not cause price increases.

Also interesting to note that the percentage of foreign buyers in Victoria went up over 800% – from 0.6 in 2015 to 5% now.

What did prices do in that time when the economy was, and is, stagnant with anemic population growth? Yes, over a 25% price increase with prices holding steady despite the stress tests.

These are inconvenient truths for some.

https://beta.theglobeandmail.com/news/british-columbia/foreign-home-buyers-on-the-rise-in-vancouver-area-figures-show/article36793677/

—————

In a few short months, once the new market killer stress test is in, and we have rising (or risen and holding) rates, we will know if domestic demand and local speculation are the key forces behind prices utterly detached from local incomes in places like Vancouver and Victoria.

It will be great to see the explanations as to why prices have not changed and keep going up in hot spots like Victoria and Vancouver after domestic demand gets crushed.

I totally look forward to people spitting coffee out of their noses as they read that prices remain the same or keep going up, and saying WTF, everyone told me it was low interest rates and cheap credit that drove the market…

Of course, many of us in the trenches know that rising rates and the stress tests will do nothing as they don’t target the source of price increases.

#137 refuseit on 11.02.17 at 10:39 am

i dont believe it, but i want to believe! housing prices should have fallen a thousand times since 2006 but didn’t.

Luckily i got into a co-op last year and so can sit back and watch from the sidelines, while thinking of the gulf island property I will one day be able to retire to!

#138 Ian on 11.02.17 at 10:45 am

#99 Diversary

That is absolutely crazy!!! Wow.

#139 Howard on 11.02.17 at 10:47 am

#124 MF on 11.02.17 at 9:17 am
#108 Howard

Yes. I am on board with that. That’s our reality.

My parents bought their SFH’s with zero mortgages in the 80’s and early 90’s. When (not if) houses cost 8 million at least my family will benefit too.

Agreed to soaring rents. Waste of money for someone else to benefit from. Just buy then get parents to give you some of their equity.

If your parents are like mine, they are offering you the help. Take it! Our cohort that have are way ahead.

MF

———————————

I live overseas so I’m watching the Toronto madness from afar. I don’t know when or if I will move back to Canada, and then whether it’ll be the GTA.

I wouldn’t be inclined to take money from my parents in order to buy a home. And I would absolutely never ask them to take out a HELOC just to finance my down payment. I have to wonder about the consciences of young people who actually ask their aging parents to do that. That said, when they do eventually sell and bank a few million, I wouldn’t say no to an interest-free loan from them. Less profit for the banks.

It’s funny how my perspective on this has shifted 180 in a matter of weeks. Maybe it’s of a sign the top, when people like me simply accept it and shrug? With our massive immigration rate (3x the US intake per capita), I just don’t see how RE in Toronto or Vancouver can go down much. At best it’ll be flat with mild fluctuations up and down the next few years.

#140 Old Ron on 11.02.17 at 10:52 am

TREB OCTOBER SALES 7,118 up over 700 units from September. Prices up a tick. Folks that is almost 10 sales per hour 24 x 7. for a whole month !!!

NOT enough to support half of the 48,000 TREB agents but very decent numbers in my book.

#141 fancy_pants on 11.02.17 at 10:54 am

the world is awash in debt. you think savers are being devoured by monetary policy now, wait for the fallout. When it all unravels and we experience severe inflation and/or rate increases (think Venezuela), fiscal policy will be sure to devour the rest of your wallet all in the name of equality.

#142 Ian on 11.02.17 at 11:23 am

Smoking Man has overruled me, we are meeting at Duke of Westminster in First Canadian Place on Adelaide St side.

#143 Hamilton on 11.02.17 at 11:27 am

Posted today

Toronto home sales fall year-on year, prices down 15.1 percent from peak
Reuters Reuters 4 hours ago
Reactions Sign in to like Reblog on Tumblr Share Tweet Email

FILE PHOTO: A sign advertises a house for sale as Canada’s central bank announced its first interest rate hike in nearly seven years, on a residential street in midtown Toronto, Ontario, Canada July 12, 2017. REUTERS/Chris Helgren
(Reuters) – Toronto home sales tumbled in October from a year earlier and prices were down 15.1 percent from their April peak, but sales rose sharply from September, suggesting the housing market in Canada’s largest city may be steadying, data showed on Thursday.

Sales fell 26.7 percent from October 2016, the Toronto Real Estate Board (TREB) said in a report. It was the seventh straight month of declining year-on-year sales after a years-long boom that sparked fears of a bubble.

The average selling price was up 2.3 percent from a year earlier, while new listings and days on the market both rose, TREB said.

Sales volumes from September to October rose nearly 12 percent, an above-average increase that points to stronger autumn market conditions, TREB President Tim Syrianos said in a statement.

“While the number of transactions was still down relative to last year’s record pace, it certainly does appear that sales momentum is picking up,” he said.

The average selling price for all home types combined was C$780,104 ($606,330), up slightly from C$775,546 in September, but still down 15.1 percent from a peak of C$918,285 in April of this year.

The Ontario government in late April introduced multiple measures, including a foreign buyers tax, in a bid to cool the Toronto region’s surging housing markets.

New listings rose 11.8 percent from a year earlier, while active listings were up 78.5 percent as properties sat on the market longer.

The Bank of Canada has begun what most analysts believe will be a gradual process of raising interest rates from near historic lows, which has in turn boosted mortgage rates and other borrowing costs.

The central bank raised its key rate by a total of 50 basis points to 1.00 percent in two back-to-back moves in July and September, although its more dovish tone in recent weeks has tempered bets it will hike again in December. [BOCWATCH]

#144 james on 11.02.17 at 11:31 am

#77 Smoking Man on 11.01.17 at 9:31 pm

Duke of Westminster 5pm Sharpe tomorrow.
Only for bay street dogs. Hotties from the burbs allowed.
………………………………………………………..
I guess that leaves your wife the crazy assed old gambling hag out of it?

Ha, the CRA can collect some of your back taxes now that you are officially working again.

#145 SimiplyPut7 on 11.02.17 at 11:32 am

#139 Old Ron on 11.02.17 at 10:52 am

While I’m sure there are some realtors who are happy for the breadcrumbs from the extra home sales, B-20 is effective in 59 days.

The rate hikes that were never supposed to happen in the next 5 years took place.

Do you know how many families and speculators in Toronto overextended themselves on the lies their banks, media and mortgage brokers told them?

What do you think will happen to their monthly expenses when the banks realize they can’t leave them to shop around for a better mortgage rate at renewal?

Or the realtors who have never experienced a downturn, many who quit their well-paying jobs for easy money in real estate, and thought that their salary would always be steady or keep increasing to pay for all of their family’s needs for the rest of their working life.

Where did all the foreigners and immigrants who were buying up all the real estate to go? Shouldn’t they have stopped the decrease in sales?

It’s game over, even BNN didn’t mention the 12% month-over-month jump in their headlines.

#146 TheDood on 11.02.17 at 11:42 am

#79 tbone on 11.01.17 at 9:39 pm
……I sold off my rentals and was sitting on a pile of cash that I was going to buy a GIC with , but I think I will hold off and see if we do have a happy housing crash next year.

Maybe I may pick up a bungalow for myself at fire sale…..
________________________________________
LOL! Sitting on a pile of cash and thinking of buying a a GIC??? If not, gonna wait for a crash and buy back in.

Good Lord!

#147 Happy Housing Crash Everyone! on 11.02.17 at 11:43 am

#139 Old Ron on 11.02.17 at 10:52 am
TREB OCTOBER SALES 7,118 up over 700 units from September. Prices up a tick. Folks that is almost 10 sales per hour 24 x 7. for a whole month !!!

NOT enough to support half of the 48,000 TREB agents but very decent numbers in my book.

____________________

You dirty SHYSTER. Sales dropped 26.7% as this with people rushing in to buy. Sales fell 26.7 percent from October 2016, the Toronto Real Estate Board (TREB) said in a report.

#148 I’m stupid on 11.02.17 at 11:43 am

I was on vacation recently, while there I was looking at some of the souvenir shops. Nothing in them was made from the country I visited. Everything made in China. What’s the point of buying something imported from China as a souvenir and paying a huge premium for it?

#149 MF on 11.02.17 at 11:45 am

#138 Howard

We are similar. I used to believe this market would go down, even crash. I read about the top being in in 2014. I read that interest rates would rise, some stress test would kill it, or that debt levels were too high.

I now believe none of those things will happen and the status quo will continue (house prices will rise further). Osfi is hot air.

Too many tail winds.

When it comes to money nobody cares about nobility. If I had taken the cash my parents were pushing me to use for a down payment on a condo in 2012, I would be much better off with some equity (more than a 6% increase on a portfolio of 50k) and similar monthly payments to boot. The only thing that has risen has been my rent, which I cannot stand paying.

Lesson learned. Timing a market does not work (sadly).

MF

#150 kbeancan on 11.02.17 at 11:52 am

Dear Mr. Turner:

Given that you do not pick individual stocks, you must pay a decent amount of attention to macro economic factors that affect the market. I was wondering what you and your team think about Steven Keen’s theory:

He “proves” that once credit stops to grow (not necessarily decline) in a credit-driven economy a recession is the outcome. He goes back several decades and compares different economies in a book of his I recently read. He outlines several economies that are at the highest risk, unfortunately Canada is one of them.

Thanks for your excellent blog,

#151 Tony on 11.02.17 at 11:53 am

Re: #96 PastThePeak on 11.01.17 at 10:58 pm

Poloz will never raise the Bank of Canada rate above 1.00 percent and the next move will be a cut to the Bank of Canada rate. I bought 30 year Government of Canada bonds and shorted the Canadian dollar. If there’s one person I have faith in it’s Stephen Poloz.

Rates will not be cut. Your ‘analysis’ on this blog is a continued failure. Take up professional vaping. — Garth

#152 cto on 11.02.17 at 11:53 am

CBC latest report from TREB!!!

Toronto home sales up 12% in October, real estate board says

Increase from September to October typical, according to TREB, but more pronounced this year

So…get out there and buy! NOW!

#153 Tony on 11.02.17 at 11:55 am

Re: #1 Amateur Forex Investor on 11.01.17 at 5:42 pm

One cent for each month or 6 cents lower than today for the loonie.

#154 Tony on 11.02.17 at 11:58 am

Mortgage rates will rise again, at least at the long end. The US economy is in third gear with the Fed guaranteed to drive its key rate higher for the fourth time in 12 months in December. While the Bank of Canada may skip its rate hike next month, it will not do so on January 17th or March 7th.

I’ll be back on this blog those two dates asking what happened? How come the Bank of Canada rate is still 1.00 percent March 7th in 2018 and March 7th in 2019 is lower than 1.00 percent?

#155 Hamilton on 11.02.17 at 11:59 am

Governments attempt to create a soft landing for housing is simple.

Canada will welcome nearly one million immigrants over the next three years, according to the multi-year strategy tabled by the Liberal government today in what it calls “the most ambitious immigration levels in recent history.”

Canadian immigration levels by year
The number of economic migrants, family reunifications and refugees will climb to 310,000 in 2018, up from 300,000 this year. That number will rise to 330,000 in 2019 then 340,000 in 2020.

The targets for economic migrants, refugees and family members was tabled in the House of Commons Wednesday afternoon.

Hussen said the new targets will bring Canada’s immigration to nearly one per cent of the population by 2020, which will help offset an aging demographic. He called it a historic and responsible plan and “the most ambitious” in recent history.

“Our government believes that newcomers play a vital role in our society,” Hussen said. “Five million Canadians are set to retire by 2035 and we have fewer people working to support seniors and retirees.”

Boost integration strategy or risk backlash
Liberals prepare to unveil 2018 immigration targets
Canada immigration explained: 9 questions answered
In 1971 there were 6.6 people of working age for each senior, Hussen said, but by 2012 that ratio had gone to 4.2 to 1 and projections show it will be at 2 to 1 by 2036, when almost 100 per cent of population growth will be a result of immigration; it stands at about 75 per cent today.

#156 LivinLarge on 11.02.17 at 12:06 pm

A sincere “good for you” Tbone.

Of course no one ever “needs to be” fully invested and maybe in the grand unified universe there are times to be cash loaded instead but that’s market timing at its core and I stay away from it just like I stay away from earning interest like the plague. Markets go up and markets go down but over the long term good markets go up and being out of them just requires me to make a value decision about when to get out and in and I don’t know what I’ll have for dinner in 6 months let alone when a market will turn south or north.

As must be obvious by now I am old git and subscribe to the maxim “buy fantastic quality and hold it” Ride the ups and downs for sure but there are always great buying ops in high quality assets on the downs.

Personally, I understand the Canadian Banking industry and although the 09 through 11/12 wasn’t at all pretty, none of the 5 sisters cut their divdends once. Hell, none of the top 4 sisters have ever cut or suspended a dividend payout so there in is quality personified. On top of that, since the Bank Act changes in the early 80s our banks have so diversified their revenue options and business units as to be unrecognizable with the pre 80s banks. Something I think almost everyone fails to consider when lookng at bank equities is that our banks have a wonderful history of splitting their shares with some predictable regularity. Royal split in ’06 and still less than 10 years after the credit crisis they’re back over their pre split price and slidding over $100.

One falacy I think you are however buying into is the “if markets went to zero you can live off the cash” if all the markets go to zero, your cash is worthless.

#157 Fish on 11.02.17 at 12:08 pm

# 46 Ex-Cowtown
#132 Ian

Agree, We aren’t there yet, it going to get bad (((ugly)))
Remember what Garth has previously mentioned, be prepared

#158 Linda on 11.02.17 at 12:11 pm

#67 (Karma) – what the government is thinking of is demographics. Canada’s population is aging – in 2016 the number of Canadians aged 65+ exceeded the number of children aged 0-14 for the first time. Our birth rate has been less than replacement rate for quite some time, it is only immigration that has allowed our population to grow. So basically the government is looking to immigration to replace the working population that is slowly being drawn off by retirement/death. Yes, retirees pay taxes but usually the amounts paid are lower than a worker does, because the retiree income base is lower. The government is trying to preserve & even grow their tax base & since the birth rate is too low, immigration is the only other option. They don’t really want the adult immigrants, but their children? Those, they want.

#159 cto on 11.02.17 at 12:11 pm

#152 Tony
“Poloz will never raise the Bank of Canada”

Not sure if rates will be cut, but one thing I can be sure of:
these central bankers will never run out of excuses why they shouldn’t raise rates…
they have created their own little trap were they have had them at near 0 levels for so long, the population is now hooked like cocaine addicts. they are terrified at the prospect of raising.
It will be one excuse after another every year into the distant future.

#160 Wrk.dover on 11.02.17 at 12:14 pm

#129 I’m stupid on 11.02.17 at 9:59 am
#110 Wrk dover

I’ve imported 2 vehicles from the US, the last one was in 2012 I think. I never used a broker, I don’t understand why you need one now. It was a very simple process when I did it. Has something changed?

The last car I bought was from Florida. I had the dealer fax the bill of sale, title and recall letter to the point I was crossing at 72 hours before I planned to cross. I flew to Florida stayed 2 days then drive back. Had no problems. Has something changed

———————————-

Yes, unfortunately something has changed, again.

First three times I did an import, there was no three day notification either. Then there was, and now there is brokering required. Just because.

#161 I thinks I know something on 11.02.17 at 12:18 pm

#138 Howard on 11.02.17 at 10:47 am

With our massive immigration rate (3x the US intake per capita), I just don’t see how RE in Toronto or Vancouver can go down much. At best it’ll be flat with mild fluctuations up and down the next few years.

—————————————————————–

Agree! Immigration to the GTA is massive. Also agree that RE values can’t go down much and will, at worst (or best?), fluctuate for awhile. However, years from now they will be much higher than current. I predict that in 10 years, the average SFH in Toronto will be at least 2 million. I just don’t understand how people don’t see this. It was just as obvious 9 years ago what would happen to Toronto RE values. I guess some people will always be in denial.

#162 IHCTD9 on 11.02.17 at 12:37 pm

#148 MF on 11.02.17 at 11:45 am
#138 Howard

We are similar. I used to believe this market would go down, even crash. I read about the top being in in 2014. I read that interest rates would rise, some stress test would kill it, or that debt levels were too high.

I now believe none of those things will happen and the status quo will continue (house prices will rise further). Osfi is hot air.

Too many tail winds.

When it comes to money nobody cares about nobility. If I had taken the cash my parents were pushing me to use for a down payment on a condo in 2012, I would be much better off with some equity (more than a 6% increase on a portfolio of 50k) and similar monthly payments to boot. The only thing that has risen has been my rent, which I cannot stand paying.

Lesson learned. Timing a market does not work (sadly).

MF
____________________________________

Have you thought at all about commuting? I know it sucks sitting in traffic, but you seem to hate renting just as bad, so it’s a choose the lesser evil proposition.

I live a good 1.5 hrs East of the GTA, and the car pools here are full during the week. That’s a hellish amount of time on the 401, but the payback is a pretty decent lifestyle including home ownership, the ability to keep on investing, and the cash flow to buy nice vehicles and toys if desired.

#163 Asterix1 on 11.02.17 at 12:48 pm

The 300,000+ new immigrants arriving per year in Canada will not affect RE prices in Toronto.

A little more than 1/3 will end up all over southern Ontario (incl. Toronto, GTA). To think that all of these new individuals and families have the money to purchase a property is laughable.
__________________________________________
Info from Statistic Canada: The median employment income of immigrant tax filers who landed in 2004 was estimated at $16,800 in 2005 (one year after landing). The same cohort’s median income increased to $26,000 in 2009 and $33,000 in 2014.
___________________________________________

Now add the new B20 stress test to those salaries and you will not have a buying bonanza! This is classic RE industry scare tactic to get people to buy.

People dissing immigrants on this blog, and elsewhere, should be ashamed of themselves. — Garth

#164 Oncebittwiceshy on 11.02.17 at 12:58 pm

Tony……..the next move will be a cut to the Bank of Canada rate. I bought 30 year Government of Canada bonds and shorted the Canadian dollar.

<<<<<<<<<<<<<<<<<<<<<<<<<

Tony, I can’t help but question why you would choose to invest in 30 yr. bonds when the greatest upside to that investment would have been any other time over the last 30 years ….. not when the upside is minimal and the downside so huge. Go to Vegas.

#165 tulips on 11.02.17 at 1:12 pm

#68 Dave on 11.01.17 at 9:17 pm
Bitcoin will be $200,000 within 5 years.

—————————————————————–
Please do tell, why $200,000? Why not $400,000?

#166 Deja Vu on 11.02.17 at 1:37 pm

Hmm….
Where have we seen this before?

Detached Toronto home prices fall, while condo prices soar in October

https://www.thestar.com/business/real_estate/2017/11/02/toronto-home-sales-up-12-in-october-treb.html

I guess Toronto is just doing a mirror of Vancouver now, just delayed a little.
That would mean that Toronto is heading up soon again.
Vancouver’s dip was very very short.

#167 AGuyInVancouver on 11.02.17 at 1:41 pm

People dissing immigrants on this blog, and elsewhere, should be ashamed of themselves. — Garth
_ _ _
Garth if I may be so bold: the problem is you and others denied foreign buyers were an issue for too long, when people on the ground could see that wasn’t true. People no longer believe that and they’re unfortunately tarring every immigrant with a brush that real only applies to HAM.

Blame me for others’ bigotry. That’s rich. — Garth

#168 X on 11.02.17 at 1:52 pm

I am not int the position where I will need to apply for a morgtage so I am a little unfamiliar with the proposed rules….but everyone will need to qualify at the 5 years posted fixed rate (currently at the big Green this is 4.99%) plus 2% (as per the new rule), so about 7%, and by April this could be 7.5%? Correct?

No, the offered contract five-year rate (now about 3.2%) plus 2%, or the benchmark Bank of Canada rate (4.89%), whichever is greater. — Garth

#169 IHCTD9 on 11.02.17 at 2:08 pm

#162 Asterix1 on 11.02.17 at 12:48 pm

Info from Statistic Canada: The median employment income of immigrant tax filers who landed in 2004 was estimated at $16,800 in 2005 (one year after landing). The same cohort’s median income increased to $26,000 in 2009 and $33,000 in 2014.
____________________________________

This is why the Libs are putting the pedal to the floor. IMHO, immigration is about economics – ie. tax revenue maintenance. There’s very little in the way of income tax to be had from these new folks, thus the need for big numbers. Even 10 years later incomes are still too low to tax much off of them. I would expect that not too many will end up making, or spending very much at all – ever. That’ll be up to their kids (if they decide to have kiddies).

As the boomers with their big spending and tax bills settle into a low income, low spending (or debt ridden) retirement, there is going to be a corresponding drop in tax revenues generated. I expect that Gen X could see a lot of early retirees as well if they didn’t go nuts with RE in their 40’s. Could be a long dry spell if the economy doesn’t go gangbusters somewhere along the line.

#170 N on 11.02.17 at 2:16 pm

“From what we can identify, the only reason today to buy or sell bitcoin is to make money, which is the very definition of speculation and the very definition of a bubble,” he said on Thursday.
https://beta.theglobeandmail.com/globe-investor/investment-ideas/bitcoin-skyrockets-above-7000-for-first-time-ever/article36806310/

Replace “bitcoin” with “housing” and one would say the same about housing.

#171 jess on 11.02.17 at 2:17 pm

============================
Dmitry Rybolovlev Is Persona Non Grata in Monaco – Text messages surrendered as part of an ongoing legal battle illustrated overwhelming links between the oligarch, policemen, and high-ranking magistrates and politicians in Monaco. The scandal has resulted in the arrest of Prince Albert’s right-hand man, Philippe Narmino. The billionaire collector, meanwhile, is no longer welcome at the palace; he recently left the country for a holiday in Los Angeles. (Journal de Dimanche)
https://news.artnet.com/art-world/monaco-justice-minister-resigns-1084301

https://www.thetimes.co.uk/article/minister-quits-over-art-fraud-link-to-as-monaco-oligarch-dmitri-rybolovlev-w6qms8l3f
https://news.artnet.com/art-world/yves-bouvier-swiss-tax-charges-1072205

Monaco’s Justice Minister Resigns After Texts Reveal ‘Vast Influence Peddling’ in Billion-Dollar Art Fraud Case

The French press has dubbed the scandal “Monaco-gate.”

Eileen Kinsella, September 15, 2017
https://en.russiangate.com/policy/scandal-in-monaco-how-russian-billionaire-rybolovlev-muddied-the-waters-of-the-principality/

=======
http://www.mypalmbeachpost.com/news/national-govt-

#172 Hamilton on 11.02.17 at 2:38 pm

MY post is not dissing immigrants it is to point out that by adding a steady supply of renters, who will be subsidized by the government (welfare ) the government can create a continued demand for housing so that housing can have a softer landing than without this increase in demand.

All newcomers with welfare recipients? Find another blog to display your ignorance on. — Garth

#173 Tazi Bnu on 11.02.17 at 2:40 pm

#150 Tony on 11.02.17 at 11:53 am
Re: #96 PastThePeak on 11.01.17 at 10:58 pm

Poloz will never raise the Bank of Canada rate above 1.00 percent and the next move will be a cut to the Bank of Canada rate. I bought 30 year Government of Canada bonds and shorted the Canadian dollar. If there’s one person I have faith in it’s Stephen Poloz.

Rates will not be cut. Your ‘analysis’ on this blog is a continued failure. Take up professional vaping. — Garth
__________________________________________
Lol, love it. The idiotic bet, and the vaping wit. It you truly believed that a rate cute was coming you would go with infinite duration preferreds instead of 30 year duration bonds. Still though, you rate cutters in the blog dogs don’t seem to understand that rates are going up whether the BOC raises theirs or not. The Federal reserve’s overnight rate is the reference rate for the whole world. The entire investment world sees the US 90 day treasury paper as the risk-free rate and all expectations are derived off of that. So your attention should be on whether the US are raising rates or not, and I can tell you that they don’t care about the housing situation in Canada.

#174 Penny Henny on 11.02.17 at 2:51 pm

#150 Tony on 11.02.17 at 11:53 am
Re: #96 PastThePeak on 11.01.17 at 10:58 pm

Poloz will never raise the Bank of Canada rate above 1.00 percent and the next move will be a cut to the Bank of Canada rate. I bought 30 year Government of Canada bonds and shorted the Canadian dollar. If there’s one person I have faith in it’s Stephen Poloz.

Rates will not be cut. Your ‘analysis’ on this blog is a continued failure. Take up professional vaping. — Garth
////////////

He is consistant though

#175 isuckless on 11.02.17 at 3:20 pm

DELETED

#176 buy buy buy!!!!!!!!! on 11.02.17 at 3:24 pm

http://business.financialpost.com/real-estate/toronto-home-sales-fall-year-on-year-prices-down-15-1-pct-from-peak

#177 LivinLarge on 11.02.17 at 3:24 pm

1HCTD9, have you been living a cave for 40 years? “As the boomers with their big spending and tax bills settle into a low income, low spending (or debt ridden) retirement, there is going to be a corresponding drop in tax revenues generated.” First, yes current expenses should and can drop in retirement but history has shown that with inflation, it is always more costly to live next year that it was last year so the Boomers “may” slash their current costs, imflation continues to have its higher tax implications.

You also don’t seem to have grasped that for decades all of our governments have been encouraging taxpayers to sock money away in RSPs and giving them an incentive to do it. Why? Simple, since the first day of the first RSP, the gov. Has known that they will collect significantly higher tax revenue in the future than they forgo in the present. Why do you think there are rules about when you have to draw down your RSP and exactly how you can draw it down? The gov knows it’s coming out at the highest marginal rate.

No, the Feds are chuckling all the way to the bank now. The Boomers have billions in RSPs that are coming out in the highest marginal rates.

#178 Asterix1 on 11.02.17 at 3:55 pm

#162 Asterix1 on 11.02.17 at 12:48 pm

People dissing immigrants on this blog, and elsewhere, should be ashamed of themselves. — Garth

__________________________________________

Garth, I have no idea why you would respond in such a manner. Did you read my post?

By the way, my parents (sister) are immigrants + my wife. I am truly shocked that you would consider this “dissing” immigrants! Not cool…

#179 Mark on 11.02.17 at 3:57 pm

“Why do you think there are rules about when you have to draw down your RSP and exactly how you can draw it down? The gov knows it’s coming out at the highest marginal rate. ”

I have to disagree here. The minimum RRSP withdrawal rules force retirees to deregister money annually at lower tax rates, rather than dying with an abnormally large RRSP which attracts the highest marginal rates of taxation.

Simple, since the first day of the first RSP, the gov. Has known that they will collect significantly higher tax revenue in the future than they forgo in the present.

I’m personally not a fan of the RRSP (and would personally end the RESP/RRSP/RPP/TFSA programs if put in charge for reasons of systemic economic policy), but are the financial planners that encourage RRSP contributions all these years completely and utterly wrong? I find it hard to believe that so many people are systemically wrong. There are situations, particularly for low-income earners for which the RRSP isn’t an optimal structure, but generally such plans are of benefit to investors when used appropriately.

#180 Tbone on 11.02.17 at 4:00 pm

#155 Livin Large

I already have a sh*t load of TD , RY , BMO and ZWB for the 5% dividend
Cash flow. Oh ya and ENB for the almost 5 % dividend.
I kept buying TD , but you get to a point where you have to ask yourself
How much exposure do you want . It’s had a nice run lately.

Who knows , if banks ever drop 50% again then I am all in.
I didn’t buy enough back in 09 .

#181 LivinLarge on 11.02.17 at 4:09 pm

Since I haven’t railed n about RSPs for a few months now let’s explode a few myths again.

RSPs were never created and have never been an altrustic attempt by any government to help Canadians provide a lucrative retirement nest egg. When have we ever had an altruistic Federal government?

That’s not to say that RSPs don’t contribute to a retirement income stream just that the Feds didn’t create the system out some kind hearted patronly altruism. They are no different than a car maker giving you an incentive rate on a car loan. The mfr knows they are better off to subsidize your interest rate and sell a car they have already in stock rather than have that car sit in stock. Just a cost of doing business.

Why do you think RSPs have contribution limits governed by your income while TFSAs only have an egalitarian contribution limit fixed for everyone? Simple, the government isn’t really concerned that you have enough to retire with, they’re just investing in their own future income stream. If they truly cared about our security in retirement then there would be the capacity to over contribute to your RSP (by a considerable sum) but get no immediate tax return support on the over contribution.

Oh, and why do you think that the TFSA contribution limit is such a political football while RSP contribution limits are soooo stable from government to government? Simple, TFSA weren’t created to be principally a retirement saving instrument.

Both RSPs and TFSAs are serious economic stimulus programs for the Canadian domestic economy. All those billions in RSPs and largely invested in the Canadian markets keeps the wheels from suddenly falling of the domestic markets. So the Feds support the domestic markets while also minimizing potential market volatility because…you guessed it, the RSPs aren’t constantly churning in and out of different asset classes.

#182 Smoking Man on 11.02.17 at 4:18 pm

#175 buy buy buy!!!!!!!!! on 11.02.17 at 3:24 pm
http://business.financialpost.com/real-estate/toronto-home-sales-fall-year-on-year-prices-down-15-1-pct-from-peak
….

Pre approved trying to beat the stress test. Jan Feb going to ugly. Dead cat bounce.

#183 Victor V on 11.02.17 at 4:29 pm

One of Toronto’s nicest new condos just went bust

http://www.blogto.com/city/2017/11/museum-flts-condo-project-cancelled-toronto/

About 150 people bought units in the 10 storey Museum Flats building (stylized Museum FLTS,) some of them for well over $1 million. In January of this year, Castlepoint noted on its Lower JCT blog that the entire building was nearly sold-out.

Now, the developer says that it has not”obtained the necessary approvals and a building permit.”

“Despite our team’s best efforts and the expenditure of millions of dollars to launch this phase, lengthy delays in the approval process have made it now impossible to finance this building,” reads a post on its website. “To those who purchased a unit, we are truly sorry.”

#184 Blacksheep on 11.02.17 at 4:38 pm

Happy # 146,

#139 Old Ron on 11.02.17 at 10:52 am

TREB OCTOBER SALES 7,118 up over 700 units from September. Prices up a tick. Folks that is almost 10 sales per hour 24 x 7. for a whole month !!!
NOT enough to support half of the 48,000 TREB agents but very decent numbers in my book.
____________________
You dirty SHYSTER.

Sales dropped 26.7% as this with people rushing in to buy. Sales fell 26.7 percent from October 2016, the Toronto Real Estate Board (TREB) said in a report.
———————————-
Did RE sales not in fact increase, from Sept/17, to Oct/17?

Of course they did. The info was taken from the same TREB report you quoted.

Why soooo bloody angry?

Haven’t you learned, that the debate along with your credibility is lost, the second you lower yourself to YELLING and calling others names while in conversation?

I know it happens out of frustration on your part, because what you lack in actual content, you attempt to make up for in volume and insults, hoping to trigger your debating opponent into an emotional outburst, thus degrading the whole convo to a lower level where nobody wins.

Poor anything but Happy is clearly too emotionally invested in this, come spring time when his desperately needed housing correction fails to materialize, B-20 or not, is gonna absolutely lose his shit.

I have to admit though I cant look away, kinda like when you drive by a nasty car wreck. But don’t kid yourself HH, your venom spitting has many laughing at you, not with you….

#185 IHCTD9 on 11.02.17 at 4:41 pm

#176 LivinLarge on 11.02.17 at 3:24 pm
———

If boomers earn less and spend less in retirement, they pay less taxes. I doubt boomers will earn more and spend more in retirement than they did while working.

I also seriously doubt anyone will be drawing out the RRSP’s at the max rate unless they happen to have millions socked away in which case who cares? The whole idea of RRSP’s is to sock it away during high income times and draw it out during the low times. Mr T has gone over this many times.

On top of that, all stats show most Canadians aren’t stuffing their Retirement funds as Garth has also stated 1000 times here. These folks will not be taxed hardly at all as they will be living off of CPP and OAS. They won’t be out buying brand new F250’s either.

The Government is not chuckling all the way to the bank, they’re broke, in debt up to their ears, hoping that the budget will balance itself while trying to rip off small businesses and professionals. IMHO, all governments have it rough on the revenue end for a myriad of reasons, and it’s going to get worse before it gets better.

#186 Blacksheep on 11.02.17 at 4:55 pm

Wait for it….

“Blacksheep is clearly just another, dirty LYING SHYSTER!!!”

#187 IHCTD9 on 11.02.17 at 4:56 pm

#180 LivinLarge on 11.02.17 at 4:09 pm
——

If you’ve read any of the tripe I post on here, you already know I’m no fan of big government. But if I were to make a short list of things that Government has allowed that I consider helpful to Canadians, the RRSP and the TFSA would be on that list big time.

Most of the funds that will exist in my RRSP’s upon retirement will be gains. Even if I only pull half of the total out and the gov takes half of the rest when I check out, I still come out way ahead compared to having never took advantage of it. Thanks to the RRSP, I have received 10’s of thousands worth of my income taxes back over the last 2 decades that would have been gone forever otherwise.

I’m not talking hypothetically here, this is actual experience.

#188 Newcomer on 11.02.17 at 5:06 pm

#138 Howard on 11.02.17 at 10:47 am

With our massive immigration rate (3x the US intake per capita), I just don’t see how RE in Toronto or Vancouver can go down much.
————-

This is an example of having your analysis hijacked by a sparkly piece of data. In Canada, as in most first world countries other than the US, the natural growth rate has been decreasing steadily. People have fewer kids. So we have been increasing immigration to keep the overall growth rate at about 1% per annum, which is very low for Canada, and about the same as the US.

Immigration is good for population growth for two reasons: it brings in more bodies, and immigrants have more kids than natives. If we didn’t have high levels of immigration, we would end up like Japan, where houses sit empty and schools are closed. This will eventually happen everywhere, as more and more countries pass peak population. In the meantime, we are lucky that we have a gas pedal that we can push at will to keep population growth from falling too far. Our economy has always been built on population growth and it will take a lot of adjustment when that eventually stops.

In the meantime, in terms of housing, the bottom line is that population growth and household formation rates are currently well below historic norms.

#189 LivinLarge on 11.02.17 at 5:44 pm

Mark, I think was you I kicked the RSP issue around with in the early summer but you asked some salient questions above so I’ll answer as best I can but first I’ll refer toma fact that Fearless Leader mentioned a couple of days ago. There is about 11 times the amount of dollars in Mutual Funds as there are in ETFs. That’s actually important.

So, there are a huge proportion of RSPs invested through mutual funds and to qualfy to sell mutual funds all you need to have dne is pass the IFIC test. If you haven’t written the IFIC test (I have), it’s a multiple guess test with 4 answer choices and two of each of those are ludicrously foolish choices. The test is designed so that anyone who has passed grade ten can pass it. As I recall a pass is 60% correct where if you’re not an idiot, the odds are 50/50 you can guess correctly. So, not to put too fne a spin on it, you have to be trying to fail not to pass. These are the folks charged with selling RSPs. They’re not paid to question or even understand the government’s underlying rationale for creating the RSP program, they (the vast majority) are paid to sell what their employer is offering or promoting. These are this site’s much loved [email protected]

So, it isn’t that these mutual fund sales people are deluded, it’s that knowing isn’t any prerquisite for their job and possibly a hindrence to their jobs and incomes because the government offers an incentive to have these things sold so why talk a client into buying a non reg mutual fund if you get them to buy more in a registered account and maybe even toss in an RSP loan to boot.

Now to your first comment about mandatory collapsing of RSPs at 71. Your comment presumes that the government is fundamentally altruistic and really don’t want to hit a dead taxpayer with a high tax bill. When has any government ever given a crap about how much they tax someone unable to vote? Like, never? No, the government’s own stated reason for forcing collapse of RSPs at 71 is to avoid the more wealthy from keeping the money in the sheltered instrument and untaxed for longer. If they really cared about our well being then they’d tax the money in the form it was earned rather than always as interest/wages. They want the highest marginal rate as soon as reasonably possible.

Now, here’s the most important evidence behind the real purpose of RSPs being domestic economy stimuli rather that altruistic retirement benefits. For the longest time, to have any significant foreign content in your RSP you had to have a self directed plan and pay a minimum of $100 per year to have it as well as signing a waiver at the bank that you took 100% responsability for investment decisions. If the Feds wanted us to retire with the best nest egg then limiting foreign content options was ludicrously counter productive. Hell, all plans are registered and recorded in Canada so there is no avoidance concerns. No, the Feds created RSPs to be a stable long term domestic Canadian economic stimulus and a forward investment in the Boomer’s future tax liability hense the tax incentive and income based contribution limit.

Now, IHCTD9, you don’t understand RSP withdrawals rules. At 71 you are forced to collapse RSPs into RRIFs (or maybe an annuity) whether want to or need to. Then the rules require you to take the income out of the RRIF at a proscribed and accelerating annual rate again whether you need it or want it. The government absolutely do not want you hoarding your money and therefore depriving them of their orderly scooping of taxes. This is also why the money comes out of the RSP into an entirely different registered product. The money comes out of the RSP/RRIF taxed as interest/wages at the tax payer’s highest marginal rate which BTW is goosed because of the obligatory withdrawal rate of theRRIF increases your gross income, again whether or not you actually need it for your lifestyle. So, regardless whether the RSP earned the income as interest, capital gains or dividends, you pay tax on it as if it all interest.

One last thing, lifestyle costs in 2017 for example are dramatically higher than in 1980 when I started contributing to an RSP so to maintain anything like my current 2017 lifestyle I have to have a much higher income than in 1980 so the RSP or RRIF income required is higher and therefore also taxed at the 2017 marginal rate rather than the 1980 marginal rate. Yes , on a notional basis, retirement usually reduces lifestyle expenses compared to the last few years before retirement but compared to when I originally put the money in, the lifestyle cost are tremendously higher…that in a word is incidious harm of inflation.

#190 Bob Dog on 11.02.17 at 5:49 pm

@Newcomer

Baby boomers are going to die off at a far greater rate than 300,000 per year. I have read that even now people are leaving BC faster than people are arriving.

Homes are out of control because of speculation. Check out the bitcoin chart. Why wasn’t it worth $7000 in 2013. Same technology, same economy.

The only thing that changes is speculation.

The average boomer is 65. Your mass-death scenario is a tad hopeful. — Garth

#191 Dan.t on 11.02.17 at 5:55 pm

#91 Millennial905er on 11.01.17 at 10:31 pm
Richmond Hill woman caught in house squeeze.

https://globalnews.ca/news/3838290/richmond-hill-woman-caught-in-house-squeeze/

Claims to have lost 200k. Also claims that no one informed her this could happen… Because like y’know, house prices always go up right?!?

Perhaps one of many to come.
—————————————–

I don’t get it?? I thought all you had to do is buy a house at any price and get rich. She is Canadian so she probably makes like 400k a year so why not buy 2 houses.

And that is news???

What if this was a financial asset…imagine what people would say, it’s your own fault for being so stupid…

how about when I make an investment in XYZ corporation,
who says they have big things planned,
it’s price has been on a tear for 18 months,
I read in the paper about it,
all my friends talk about it,
and saw online that I can ‘t lose…
but it tanked… Can I run to global and tell my story?

My fictional story:

“I really believed this could never happen, that price would never correct and only go up forever….if I had to tell people about taking all your savings (which I have none), leveraging my 22k I borrowed from Pete’s bakery and discount loans, to buy XYZ stock, I would say be careful! I mean price dropped like 75% and now I m so screwed, that stock sales man, who makes his living on commission, never really told me this could happen.”

Where is my sympathy?? My Global news segment?

This is why the powers to be will do everything in there power to keep the party going. Otherwise, the economy tanks.

It is religion in Canada that housing is super smart investment! Power in numbers, everyone is doing it so if it goes bad, everyone will be in the same boat so it’s all good. Herd is strong. Bailout coming. Wait for it. Debt pigs will be right again, I hope not, but I lost all faith long ago.

#192 Dan.t on 11.02.17 at 6:04 pm

#169 N on 11.02.17 at 2:16 pm
“From what we can identify, the only reason today to buy or sell bitcoin is to make money, which is the very definition of speculation and the very definition of a bubble,” he said on Thursday.
https://beta.theglobeandmail.com/globe-investor/investment-ideas/bitcoin-skyrockets-above-7000-for-first-time-ever/article36806310/

Replace “bitcoin” with “housing” and one would say the same about housing.

——————-

exactly! Housing awesome and smart. No matter that it makes zero fundamental sense. Everything else, risky and dumb and for gamblers.

#193 TheDood on 11.02.17 at 6:47 pm

#160 I thinks I know something on 11.02.17 at 12:18 pm
#138 Howard on 11.02.17 at 10:47 am

With our massive immigration rate (3x the US intake per capita), I just don’t see how RE in Toronto or Vancouver can go down much. At best it’ll be flat with mild fluctuations up and down the next few years.

—————————————————————–

Agree! Immigration to the GTA is massive. Also agree that RE values can’t go down much and will, at worst (or best?), fluctuate for awhile. However, years from now they will be much higher than current. I predict that in 10 years, the average SFH in Toronto will be at least 2 million. I just don’t understand how people don’t see this. It was just as obvious 9 years ago what would happen to Toronto RE values. I guess some people will always be in denial.
___________________________________________

Really? Does your prediction take into account Canada’s household debt levels – which exceed our GDP?

Good Lord!

#194 I thinks I know something on 11.02.17 at 7:10 pm

“Average prices holding steady and running 15% below the peak of last April, when the industry told you to buy because prices would go up forever.” – Garth

—————————————————————

Prices WILL definitely and absolutely go up forever. CMHC, massive immigration, government protected industries (i.e. banks), continued low interest rates, over regulated building industry, etc. all mean that housing will always go up. In 10 years, I predict that the average SFH in the GTA will be at least 2 million smackers. Only if we experience a depression, or some other upheaval, will this not come to pass. That does not mean that we won’t experience some ups and downs in the years to come. Nothing goes up in a straight line.

#195 LivinLarge on 11.02.17 at 7:26 pm

Tbone, far be it from me to arrogant to the point of trying to tell you where to save your coin but to take that latge cap gain from selling your properties and park it in a treasury with the lowest interest rate and taxed the highest is not IMO prudent compared to parking it in a common share paying 5 or even 3-4% dividend at a reduced tax rate. Unless you’re dropping it in for less than 90 days at the max. That 4% dividend is the approximate equivalent of 6% interest and you aren’t getting .5% for 89 days anywhere I know of. Just my fiscal opinion.

Another point for Mark (who luvs ya baby?). Without a Federal White Paper clearly stating that the primary purpose for creating the RSP in the first place was economic stimulus and enhance future tax revenue collection rather than any altruistic the
intent must be inferred. To that end I will point out one of most time honored estate planning instruments…testamentary and inter vivos trusts. I’m no trust agent and have never been one but I do know some facts about some forms of trust as they relate to taxation.

In 1999 the Feds created a new type of inter vivos trust generally referred to as a “Joint Partner Trust” enabling a tax payer to roll over their estate into the trust on a tax defered basis while allowing the income from the JPT to be taxed in the trust’s hands rather than the remaining spouse’s hands. While, like a testamentary trust such as a Spousal Trust, the trust could elect to tax the income in its own hands, the trust did not get any of the standard personal deductions from income that the living spouse could employ, the trust was allowed the dividend tax credit allowance and (I think) the preferential treatment of capital gains. Now, as of 2016 tax year, those preferential tax treatments based on income source type has been removed and the income goes to the surviving spouse gross as simple interest and therefore taxed at the surviving spouse’s highest marginal tax rate. This can and has as much as doubled the surviving tax hit on that income in many cases. So, any presumption that the Feds don’t want to tax the dead as much as possible is IMO impossible to conclude. Hell, just this trust change has a very serious negative impact on elderly surviving spouses. No altruism there and I can’t see any reason to presume that any Federal government in Ottawa ever has been that kind of altruistic.

I don’t whether the income attribution rule change applies to testamentary spousal trusts.

#196 Tony on 11.02.17 at 8:34 pm

Re: #163 Oncebittwiceshy on 11.02.17 at 12:58 pm

I see the 30 year rate dropping to around one percent in Canada.

#197 akashic record on 11.02.17 at 10:23 pm

The endless daily revelations about Clinton, DNC, Democratic Party make Trump a saint.

#198 akashic record on 11.02.17 at 10:43 pm

#187 Newcomer on 11.02.17 at 5:06 pm

#138 Howard on 11.02.17 at 10:47 am

With our massive immigration rate (3x the US intake per capita), I just don’t see how RE in Toronto or Vancouver can go down much.
————-

Immigration is good for population growth for two reasons: it brings in more bodies, and immigrants have more kids than natives. If we didn’t have high levels of immigration, we would end up like Japan, where houses sit empty and schools are closed. This will eventually happen everywhere, as more and more countries pass peak population. In the meantime, we are lucky that we have a gas pedal that we can push at will to keep population growth from falling too far. Our economy has always been built on population growth and it will take a lot of adjustment when that eventually stops.

——

Completely outdated view about the current and more importantly the coming economy.

The world does not need further population growth.
Especially not for economic purposes.

Declining population no longer means declining economic output, the imaginary gap is more and more easily filled by increased productivity of automation, robotics.

Declining population with the same economic output means potentially more wealth, as it is shared by less people.

Countries with declining population are and will be the leaders, main beneficiaries of leading edge in technology driven productivity and wealth creation, accumulation.

Countries with growing population will have the opposite.

Immigration is no longer an economic necessity.

Immigration today is a political, ideological dogma, which is used primarily for custom shaping voter demographics.

Study Japan. – Garth

#199 Mehdi on 11.03.17 at 5:44 am

Hey Garth;

I read a lot about GTA and YVR.
Is it possible to have an insight on the Montreal market?
What impacts can we expect there?

Thanks

#200 Jeff on 11.03.17 at 12:07 pm

Plus ça change, plus c’est pareil.

#201 Shortymac on 11.03.17 at 3:02 pm

@Stone (http://www.greaterfool.ca/2017/11/01/the-prelude/#comment-551961)

Many rentals on the MLS will not see you without your own realtor for some reason. You can get a Realtor to show you these places.