Monday should be interesting.
Realtors in Van and the Big Smoke are set to release February numbers. Expect sales declines plus that yawning divide to continue between detacheds and condos – which is seriously masking overall trends. Has the B20 stress test started to hose down the house-horny moisters yet? Have rising mortgage rates curtailed overall credit? Or has an unusual lack of spring supply fed competition for available listings, keeping prices aloft? And how about the giant discrepancy growing between urban and suburban markets – across the GTA and the LM?
As far as Toronto goes – if you believe Zolo – we have an unfolding disaster for people who bought in the last year. Did any of them ever expect these price hits?
Markham, Stoufville, Bradford, Georgina, Richmond Hill, Vaughan, Unionville – quel mess! – all with 20% or more declines in appraised values or sale prices. There are double-digit drops also in Mattamyville (Milton), Oakville and Pickering, while Mississauga and Ajax have shed close to 10%. Toronto is flat. Caledon is up, so the hipsters and horses are okay.
Toronto broker and number-cruncher John Pasalis is sure tweeting up a doomstorm this week. He figures prices overall have plunged 12% from last year – with the non-condo part of the market taking a 17% hit. Values haven’t changed a lot from January, but energy is sure being sucked out of the marketplace. Even condos sales are being clobbered – down by about a third – while detached sales have crashed closer to 40%.
Here is his summary of the carnage. He confirms there is mucho wailing, gnashing and crashing going on in the northern burbs. Soon we’ll be sending UN relief workers into York Region.
Let’s see what February looks like in official stats, but also try to figure out what comes next. In BC, Victoria, Kelowna and the nether regions are now no-go zones as the new spec tax scares off foreign dudes and Canadians with second properties. Expect big consequences. (Sales in Victoria, by the way, crashed 19.25% in February to merely 545.) In Calgary sales last month dropped by almost 20% over last year, while prices are down a little and listings are rising. Compared to the LM, still a bargain.
Montreal is doing okay, as is most of southern Ontario – but with lagging sales year/year. Nova Scotia prices have picked up in the last year as more Upper Canadian refugees discover the place (still cheap, with lobsters). Regina, Saskatoon and the other flat places – meh. Boring and provincial as usual, little price change and no reason whatsoever for appreciation.
In short, real estate as an investment asset class is in a spiral. If you need a home, can afford it without Hoovering your net worth, plan to stay there a long time and won’t freak when the price plops, go ahead and buy. Otherwise, forget it. Having said that, all real estate is local. Some places will see no decline in values and continued competition for good listings. In other places, not far away, the buyers will be relentlessly in control. But overall, spring 2018 will bear absolutely no resemblance to last year’s rutting season, and the people who bought then no longer wish to discuss it.
Here’s more to weird you out:
Stock markets tanked again Thursday for two reasons that impact Canadian residential real estate. First, interest rates are rising. The new Fed boss has made that abundantly clear this week, and Mr. Market is now factoring in four increases, which has bond yields bulging and equities falling. Our CB will follow eventually and in the meantime the debt market will goose mortgage costs.
Second, steel. Trump. Tariffs. The guy is out of control with a 25% duty being slapped on shipments into the US. Not only will this inflate manufacturing and construction costs in the States, but it kicks the poop out of the Canadian industry with an immediate impact on places like Hamilton and the Sault.
And when March expires in thirty days, so will a lot of mortgage pre-approvals that were granted near the end of 2017 before the B20 stress test came into effect. Thus, buyers re-applying for loans in April will have to qualify at the whiz-bang level of 5.14% – which may actually be 5.4% by then. Just one year ago delusional bankers were dishing out fivers at barely more than 2% while the Bank of Mom was giving moisters down payment loans designed to get around the newbie stress test in place at that time.
The change in 12 months is epic. Credit has shrunk. Prices and sales are in freefall. Mortgage rates are advancing. Stress everywhere. Buyers remorseful. Sellers scared.
But, fortunately, some things never change. There’s always a greater fool
219 comments ↓
Garth,
What about condo oversupply that was supposed to happen in TO? How come there is no affect seen?
It’s coming. – Garth
What a difference a year makes. This time last year I had to hear about how all my friends were paper millionaires. That or running out to buy before prices were so expensive they’d never have a chance to buy again. I shudder to think about that absolute hysteria people were in last spring. People were putting sticky notes on my Mom’s door offering her cash for her house because it was across from an elementary school. She should have taken the offers when she had a chance (and listened to me). I’m glad I didn’t get caught in the FOMO. That fear has now transforms into something entirely different. And living your life based around fear is a terrible mistake. Why must people make their lives so much harder and stressful than they need to be? What a world.
That cast of characters have nothing to do with Realestate. It’s like taking healthy eating advise from a morbidly obese person.
i kinda like it out here now
we are reverting back to a
one horse province
with 2-bit cities
and a semi-pro football team
nice….
Wow! Early today Garth. I see you mention Kelowna in your column. Hope everybody is ready here but I don’t think they are. The Blinders are thick here. I agree with you – it’s coming.
Thanks
When is Tom Vu coming back on the air, we need to go to a seminar to learn how to make money from residential real estate.
https://youtu.be/iQNdi-fRExc
“Quel mess” is not French enough. It should be “Quel borden! or Quelle pagaille! or if it’s dire in Toronto and Vancouver, the B-word or the M-word!
TD bank raises common share dividend…by…11.6%!!!!
Looks nice in the TFSA. Drip. Drip. Drip.
Rub tummy
#6 Mean Gene on 03.01.18 at 5:38 pm
I miss TOM VU:
I always imitate him when making fun of get rich quick infomercials
i like expos with pitbull. the most reliable sign of top rolling over. example, last march 23rd.
My only real concern is inflation, interest rates have been so low for so long and prices haven’t gone up nearly as much as they should have in such a low rate environment. With rates going up will we see deflation? Good time to go into cash?
That TTC ad is funny.
I got dragged to that big real estate thing with Pitbull in downtown Toronto a year ago by a permabull friend who owns three properties. I was already well in the bear camp so was just amused by the whole thing. I remember thinking this really must be the top. It sure was.
I guess this year Pitbull can rev up the big Bitcoin meeting!
From today’s photo I see that that car has the optional ‘small dog pass through’.
I don’t put a lot of stock in Y over Y comparisons, at this time. We all know the market bubble popped last April, and prices fell around $200k. So comparing early 17 to early 18 is going to tell a dismal story.
Lets check out Fall 2017 to where we are right now. I think that is what potential buyers and sellers are concerned with, because that will tell them about current trends.
If we string 4 to 6 months together of stable house prices maybe we have found a bottom. But I want to see the numbers first before I declare “peace in our time”
You realtors had no such qualms about comparing April of 2017 with April of 2016, just to whip up maximum FOMO. Suck, blow, Ron. – Garth
Garth, given that this is a financial blog you would be remiss to not have boots on the ground at this expo to report back on the “100’s of money making classes” which are all, oddly enough, somehow scheduled on April 7th… How convenient.
Dibs not it.
Stock markets tanked again Thursday for two reasons…
First, interest rates are rising…
Second, steel. Trump. Tariffs…
GT
——————————————————
Come on Garth! These have been ‘known’ by the markets for some time. However, as long as the major Indexes were rising most of 2016/2017 and in January/mid-February 2018, apparently they weren’t a problem.
Now that the trend has (clearly) reversed these are being touted as ‘the’ reason. How convenient!
Face it, Garth – ALL trends come to an end, especially overextended ones. Bull markets turn into Bear-markets, and vice-versa, ever since markets have been in existence.
Again, I’m baffled that you see it clearly as an inevitability in RE, yet the same ‘rules’ don’t apply in other markets.
QE lead to asset bubbles; QT will crush them! That’s the condensed version.
TCC
Wrong (again). No bear coming. The correction may not have ended easily, as stated here earlier. But this is no bust. – Garth
Recent Sale Report/ Realtor Assistance Needed.
I just drove along 33rd ave and saw this very basic looking starter house had a sold sticker on it.
Sold 21 days ago.
I just showed one the other day which sold at 958 e 38th ave the other day that sold for roughly 25% or 300k less than what it could have sold for in spring 2016.
This one was the next step down on the ladder and pretty much the first step on the detached ladder in Vancouver proper.
If the decline continues at this pace it won’t be long before you will be able to pick up a block of East Vancouver dirt for under a million again…
M43BC
772 e 33rd ave ,Vancouver.
Sold on February 8 2018
https://www.zolo.ca/vancouver-real-estate/772-e-33rd-avenue
http://www.andrewsgroup.ca/mls-properties-detail.cfm?sysid=262196486
$$$$$$$$$$$$$$$$$$$$$$$$$$$$
Feel free to make a donation.
Flop For Fox Fund…
http://www.terryfox.org/get-involved/ways-to-give/
Yo, Adrian , Its Rocky .
I had a dream (maybe due to the whisky) of SFHs in Toronto at 250 K Euro and condos at 120 k Euro with no buyers.
Rates at 8 %. Inflation at 15 %, wage inflation at 1 %.
Let me get another glass.
I’m sticking with my prediction that when RE markets tumble, everyone will take a hit. The vulchers that were going to swoop in and pick up GTA bargains are going to be in for a shock when the massive liquid wealth they always tell us about is back 10-15 points and borrowing is twice as expensive. And homes are only back to 2014 levels. There is just no scenario whereby balanced funds continue to pull 9 points and houses crater. Both were tied to cheap money and both will get beat up. RE more, but the returns on RE should crumble, the gains have been astronomical.
I fully expect the value of my home to drop. I also fully expect to not give a shit. The payments will continue to get made, the dog will continue to get daily walks on the Lake and in 12 years we will burn the Mortage. And we will continue to load up RRSP and TFSA’s.
Garth,
Please go to the Real Estate, Bitcoin Wealth Expo. Your reporting will make an entertaining read. You could probably get several months worth of material plus stats don’t tell the whole story.
No mention of Brampton?! Caledon and Mississauga got a shout out!
@#254 KLNR
“since when is enjoying your youth while you have it anti RRSP? It is possible to take a nice yearly holiday, own a decent ride, a home and max your RRSP”
+++++
Nah.
I enjoyed my youth a bit too much.
That’s why Im still workin.
Hence the “party on dude” warning to those young’uns
Been Maxing my RSP’s an FSA’s for years.
Unlike the average canuck
5 more years . Im done
Garth I’m fine with you laying the permaban on posters but I don’t understand how Mark hasn’t yet got an IP ban when he continues to come on here and flat out lie about the Toronto market saying it peaked in 2013.
It’s flat out trolling at this point, why should he keep getting to spew lies?
Here’s a stat for ya Mark …. I’m on Yonge beside a subway station …. 2014 1br 550 ft^2 condos were selling for $325,000 …. in 2018 the same units are now going for $500,000.
FOH troll
GONE
Not this Realtor Garth. I have been fair and accurate in my comments here. As you may recall, I was one of the first to predict a major correction last spring. Of course I can’t speak for the other 49,999 registrants.
So sad, but so very true:
https://www.thestar.com/opinion/contributors/2018/03/01/canadas-richest-citizens-give-the-least-to-charity.html
This is why the budget this week is just the beginning. Tax fairness will revolutionize Canada over the decade ahead.
The 1%ers only are in it for themselves.
A bigger vision awaits us all.
#14 Old Ron the Realtor on 03.01.18 at 5:48 pm
I don’t put a lot of stock in Y over Y comparisons, at this time. We all know the market bubble popped last April, and prices fell around $200k. So comparing early 17 to early 18 is going to tell a dismal story.
Lets check out Fall 2017 to where we are right now. I think that is what potential buyers and sellers are concerned with, because that will tell them about current trends.
If we string 4 to 6 months together of stable house prices maybe we have found a bottom. But I want to see the numbers first before I declare “peace in our time”
You realtors had no such qualms about comparing April of 2017 with April of 2016, just to whip up maximum FOMO. Suck, blow, Ron. – Garth
///////
I don’t know Garth.
Old Ron has been pretty even with his calls thus far.
Just because TREB was spewing biased stats I don’t think that Old Ron should be bunched up with their one sided comments.
My TSX exposure is 5% .
Trump will crush the Canadian materials sector
Add our housing sector and bye bye TSX
are the TSX bulls still breathing ? :)
One of our national newspapers printed an interview with the chief risk officer of one of the big five banks earlier this week with pointed questions about his views on the real estate market and impact on banks. His response seemed to center on employment numbers as being more significant, i.e. as long as people had jobs the fact that some of the equity in their homes did a quiet evaporation wouldn’t impact their ability to make payments. It struck me that he was not taking into account the total household debt level they might be carrying and how it might be impacted by interest rate increases and whether they were using their homes as ATM’s due to the ongoing popularity of the HELOC lines of credit, etc. People with steady jobs go bankrupt all the time, and pretty sure even the stupid ones can see the writing on the wall when they add up all their debt and realize their gas bag backstop asset just deflated and they are in a deep, deep hole. The problem with folks in ivory towers who only hear the sound of sweet music played in their ears all day by those around them with talent in the sweet music department as well as the blowing smoke up arses department is that they really don’t know what is going on at the grass roots level. Until the Tsunami hits, of course. I think it happened in somewhat the same way when oil and gas tanked overnight in the middle of some oil and gas extravaganza where everyone was assured the fun would never end. But it does. The music stops.
I love that little dog in the blog photo. He’s so alert looking and dignified. A dog like that goes anywhere its owner goes. Bandit is like that, but wouldn’t be comfortable in such a small space.
Garth, I think you should do a post on momentum, value, low volatility, and liquidity tilts. They’re all the rage in the “smart Beta” arena. The question is if the 30-40 bps expense ratio vs <10 bps for traditional cap weighted indexing is worth the trouble.
#16 TTC
I agree….perhaps no deep bear market (yet) but this correction is far from over….only just begun…
Say another 35% for starters?
i thought the topic said tax shelter, man i miss those days.
i find today very boring, no movie deal i loved those, and the real estate deals, all now is labour sponsered and flow through. flow through is good still, people still think they buy lp etc. thats totally wrong.
anyway.
we should be talking about taxes not leveraged real estate, its too much focus, people should talk about other things,
st patty coming up.
#19 Stan Brooks on 03.01.18 at 5:57 pm
I had a dream (maybe due to the whisky) of SFHs in Toronto at 250 K Euro and condos at 120 k Euro with no buyers.
Rates at 8 %. Inflation at 15 %, wage inflation at 1 %.
Let me get another glass.
///////////////////
Hey Stan,
Just like Blondie said
Dreaming is Free
https://www.youtube.com/watch?v=IJyCAdIn_eo
Here in Greater Vancouver, the latest buzz is that SFD sales were at a 27 year low for February, 2018 and that condo sales are down 6% year over year. So, it will be interesting to see the REBGV data dump on Monday and the way they will try to spin things.
If you are interested in sharing “News and views” about what is REALLY going on out there, feel free to join my FB site, “Metro Vancouver Housing Collapse”.
We now have 342 members (and counting!) since the site began on November 11, 2017.
Go Cash While You Still Can!
Think back to a day in 2008, when in a measly six and a half hours, $1.2 trillion disappeared from the US stock market. It was the worst single-day drop in nearly three decades, and it’s left many investors with permanent scars.
That crash might be a breeze compared to the storm that’s coming, according to veteran investor Jim Rogers. He says that we’re going to have another bear market, and “it will be the worst in our lifetime”.
No, investors will not “snooze” through this crisis, still earning 5%, no matter how balanced and diversified.
More:
https://www.fool.ca/free-stock-report/the-next-bear-market-is-coming-are-you-ready-for-it/?source=cx9kwecl10000235&utm_source=keywee&utm_campaign=CA_SA_BBN&utm_content=bearmarket&utm_medium=social&kwp_0=707699&kwp_4=2505654&kwp_1=1060934
Rates at 8 %. Inflation at 15 %, wage inflation at 1 %.
Let me get another glass.
Sounds like you’ve already had a few too many. Inflation at 15%, and 8% rates without wage inflation would basically be impossible in Canada.
The Pricking Of The Canadian Real Estate Bubble?
http://investmentwatchblog.com/the-pricking-of-the-canadian-real-estate-bubble/
Re. SCM I think s/he sneaked into this weblog the other day though the gender gap.
Kanada is so done. The laughing stock of the world; No company will do business here amidst the carbon taxes, coming gender taxes, hiked min. wage, sky high utilities prices, embarassing and nonsensical actor PM. Rationality, has been dispensed with.
I declare this British tax slave camp a Shthole. Crumbing roads, fetid and full hospices; permanently stoned passive-aggressive dour citizenry.
I’m buying time at Bay. St tax farm, saving.
Once again we see Gold is a hedge against…nothing.
We’re the money going to? Hint see chart of JJG.US
A year from now, sellers will be so desperate, this blog will run a post with the title ‘Take MY Shelter… Please!’
The fool is the one buying a ticket to that “wealth expo”
RATM
@Bamabroker: Just STOP.. only a new traders and a monkey would believe today was steel tariffs.. just like the FEB early drop was vol algos… the levels people are looking for excuses are beyond silly…. its ALL 100% liquidity withdraw by FED causing all this…
“We have an unfolding disaster for people who bought in the last year.”
So what is that, like less than 10% of all homeowners? Wake me up when prices crash back to 2013; until then nearly everyone is still up huge on their RE assets.
It’s going to be interesting to see if this experiment in house price manipulation by the Federal and BC governments works, and what the effect will be.
In the past, it’s always been the job of the central bank to control inflation via interest rates, and of course housing factors into the inflation rate through “owner’s equivalent rent”. However with inflation being relatively absent since the great financial crises, rates stayed low and house prices exploded (even though rents did not, so the inflation effect was minimal).
Now, the experiment is to try and control the price of one thing, specifically housing, by adding effects on the other end of the deal if you will. Instead of raising interest rates, slap on stress tests, raise down-payments, transfer fees, and in the case of BC try and drive out all the Alberta money with onerous property taxes. Sooner or later they are bound to come up with enough measures to get the job done. Why stop at 2%? If that doesn’t prick the bubble raise it to 4% in 2020. Why not? That’s how these governments think, just look what they did with carbon taxes. Which by the way along with all the other tax rises the government is implementing are also going to reduce the amount of money people have left to pay mortgages as well, also effectively acting as a constraint on the other end of the deal. The people aren’t getting raises to keep up with inflation, let alone rising taxes, which is one reason inflation remains so low. Nobody has any more money, so they can’t buy any more stuff.
The problem is that house prices in and of themselves only have so much effect on the inflation measure, and that will be both up and down, so if these “back end” measures are successful and house prices collapse, it won’t necessarily trigger an immediate response from the central bank. They aren’t targeting house prices specifically. Otherwise they would have raised rates a long time ago.
The other problem is that the housing market doesn’t turn on a dime. It’s going to take a while for the effect of these measures to be fully felt. But eventually these nuts will get what they want, which is significantly lower house prices. That would be a good thing I suppose except for all the people who are over leveraged. They are going to get killed. But by the time they realize it it will be too late. I know people who own property in BC who were not even aware of these changes until I told them, and at first they didn’t believe me. They don’t read this blog.
Also if the politicians get what they want, which I am not sure exactly what that is, but let’s say it’s a 30% correction in housing prices in Vancouver and say 20% in Toronto, the wealth effect is going to be substantial. A lot of equity is going to go “Poof”. Hard to see how that alone wouldn’t put Canada into recession. Markets are funny that way. You only have $1,000,000 in equity in your house if someone is willing to pay you $1,000,000 (and you have no mortgage). If the best bid you can get is now $700,000, $300,000 of after tax money just went “Poof”. Literally. It didn’t go to another person, unless I guess you could say the guy bidding saves $300,000, but in your case it disappeared. And because prices are set on the margin, the “imaginary” wealth we all think is there in our homes market wide goes “Poof”, not just the people who have to sell.
When gold went from it’s high of $1950 down to whatever it is now around $1350 or so, very little of the world’s actual gold changed hands. Central banks didn’t sell all their holdings, in fact they kept buying. But they had to pretty drastically rethink how much value they had in the vaults. Housing works exactly the same way.
While I agree R/E is facing many hurdles, this blog post I don’t think is accurate (yet maybe). I bought a townhouse in Mississauga that closed Nov 2016 so 15 months ago. 2 weeks ago a property identical to mine sold for 17% more than I paid. Maybe prices are down from that insane peak in March 2017 but it is a miniscule amount of Canadians that have experienced this decline.
Unrelated note, Enbridge shares now yielding 6.4% and starting to look juicy, thoughts?
Flipped the willowdale 2/2 condo I picked up when ppl started getting scared late last summer
A quick $70k after tax haul
Bowmore tastes sweeter this week
It’s all just a repetitive game
I disagree, the changes in 12 months are by no means feel epic to me.
The way the prices went up … that felt epic.
#14 Old Ron the Realtor on 03.01.18 at 5:48 pm
Don’t like YoY comparisons no more?
Lol
Rekt
“[…]all real estate is local. ”
…welll… it’s actually…provincial. And it will be obvious when it’ll start coming crushing down when the morons that bought4,3,2 years ago will go to renew.
it will be the same subprime dynamic that we’ve seen in the states with a bit longer time on the fuse.
..the morons that bough at 350k in Nowheresville on will be exactly same stressed out as the ones in Tor at 850k since the income ranges accordingly.
..and since the law of over-expansion (bubbling) is an exponential… the down side will be logarithmic. Initially. Then going negative exponential
Get the boze close, sit tight and short often.
Once unemployment picks up, all banks are free season with 50 to 80% down over the next few years. Watched CIBC lately ?
It’s happening :)
Cheers
“Wrong (again). No bear coming. The correction may not have ended easily, as stated here earlier. But this is no bust.” – Garth
I didn’t thing the bear was coming before this comment.
Brexit, Trump, now it’s bear :)
I’ll go to prepare.
Re comments about Hamilton RE dropping off because of the proposed tariffs.
I call BS.
Anyone who still works at those steel mills has probably at least 15 seniority, house prices are going nowhere because it is the Toronto refugees that are driving those prices.
http://www.richmond-news.com/news/richmond-librarian-allegedly-assaulted-with-flying-bruce-lee-kick-at-homeless-housing-meeting-1.23188161
I guess this guy hates homeless people or librarians ?
By far, the best picture yet.
“rump. Tariffs. The guy is out of control with a 25% duty being slapped on shipments into the US. ”
..I beg to differ…Trump does what he said he will during the elections. Yes indeed…it will negatively impact the stock market. But unless we forget… the stock market disjointed the real economy long ago.
When P/E ratios will go back to 6-9 across the board… then NYSE will resemble the real economy.
Buying own shares as a method of “showing” profit is excellent financially…but is nada for the real economy…no production, no services no new employee, etc. This is the root of the problem…artificially low interest rates.
And yes… gringos should pay attention to the relation that makes a nation tick: the relation between the dead, the living and the unborn.
I.E…. the surplus and flourishing economy inherited from the dead generations, squandered by the living to the detriment of the unborn.
Check the generational debt cycle :)
Hell to pay
“…some things never change…There is always a greater fool.” above article.
And encouraged by the realtors, banks and government to sign on the dotted line. Not nice to do the youth who think that people with power and important positions must be in the know. The schools should be teaching how ruthless and corrupt it can be out here in dog-eat-dog world, and to be careful of signing anything.
As for the Bank of Mom I wonder if the down payment by mom a loan with interest or a gift. If a gift I do know that over $500. that gift amount has to be reported on income tax. Or use other methods?
#James…My take on Smoking Man…an investor who pretends to be a alcoholic, addicted to gambling, and a hit with the women. Fictitious character for his book writing. And wants our reaction.
We are so lucky here in Alberta, our deficit will only be 9.1 billion instead of 10.5, plus another foot of snow coming our way, lol!!!
But at least we have those responsible dancing Libs in power, oh wait!! We are so screwed…
Mattl’s prediction:
Everyone will suffer except for Mattl.
That’s a big change from 2 weeks ago when he was insisting that “95% of homeowners will be just fine.”
With the perma-bulls capitulating so publicly, can there be any doubt where the real estate market is headed?
#35 Bill Ferguson on 03.01.18 at 6:28 pm
Here in Greater Vancouver, the latest buzz is that SFD sales were at a 27 year low for February, 2018 and that condo sales are down 6% year over year. So, it will be interesting to see the REBGV data dump on Monday and the way they will try to spin things.
//////////////////
Hey Bill ,I compiled these numbers from zolo last Saturday,so not complete but you get the idea…
M43BC
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
Here are some stats for detached sold listings yoy in the sort of places that matter…
M43BC
Richmond…..-79%
Vancouver….-56%
Surrey…..-64%
Burnaby….-47%
West Vancouver….-66%
Delta….-44%
Coquitlam….-62%
Langley….-50%
#40 TurnerNation
‘Once again, we see gold as a hedge against nothing’
Yep, that’s why gold recovered $10 in the last 1.5 hours of trading, and is up a further $13 now after hours, even though the USD is in a bit of a countertrend rally (until it started getting killed around 2pm).
Hedge that!
Mr. Trump needs to be told his top quality armour plate comes out of the Sault.
I personally think he won’t whack us with steel tariffs. Other countries maybe, but not us. Just look at his bluff and bluster pattern. I think I need to read his book.
“Here’s a stat for ya Mark …. I’m on Yonge beside a subway station …. 2014 1br 550 ft^2 condos were selling for $325,000 …. in 2018 the same units are now going for $500,000.”
The mix of units transacting in 2018 is significantly different than the units that existed in 2014. Much nicer units on average today than were in 2014 due to the construction onslaught. Add in normal measurement error, subtract incentives (offered now, but not commonly then), and its not hard to understand how GTA RE has gone nowhere on individual identical properties since the 2013 apex.
Its a common rookie RE mistake, merely comparing average selling prices, without understanding that the ‘average’ unit being transacted today is significantly different than it was in the past. Unfortunately the GTA residents who deluded that they’ve seen appreciation, and have convinced their bankers of such are going to be exposed to a rather rude surprise in the not-so-distant future of rising risk premia and even a significant difficulty in renewing underwater now minimal equity or underwater mortgages.
Garth it off topic but if you ever buy used clothing from a second hand shop make sure you wash it first because you never know what on it
“So what is that, like less than 10% of all homeowners? Wake me up when prices crash back to 2013; “
Wake up, wake up, prices are back at 2013 levels! Which were similar to 2014, 2015, 2016, and 2017 levels. On individual identical units.
Just as changes in the sales mix exaggerated average selling prices on the way up, due to the supply onslaught of brand new undepreciated luxury units, the same factors will exaggerate the downside in average selling prices. Especially as depreciated long-held and hoarded units come to market.
Trumps got Canada by the shorten Curleys and he’s not gonna let go ….he knows our real estate situation ….Canada , we created the nation of slaves people buying million dollar homes when they are not millionaires go figure
I don’t think Trump is crazy for the 232 thing.
Globalization didn’t occur quite the way people thought.
The impact on the cost of finished goods has been proven minimal. Except for auto. That is going to be silly. Canada exporting steel to the US with 25% tariffs, to have finished goods shipped back for assembly….
…but I have a pile of X! go Trump go!
At least the Trumpster is trying to accomplish some campaign promises…I think the guy is a loon, but a super genius compared Mr. “Rocked” India.
JTisms of the month: Canada is 100 years old, and we signed a 1Billion dollar trade deal…er…..ummm…250M..
Hard things are hard! Like numerical recognition.
the tide is going out..
#44 RentYVR
B20 has been in effect for only 2 months and the NDP Budget a week or so.
You’ll see your 2013 rollback. It’s just starting to unravel in YVR land. Give it a chance.
As for “nearly everyone is still up huge on their RE assets”, on paper and for now.
It’s just talk until they monetize as in “BS walks and money…”.
If you are indeed a renter, you’ll have a smile on your face by year end and as for talk from the boastful, hubris, RE self-proclaimed genius investor crowd…you’ll hear a pin drop.
#45 Nonplused
Good post!
Outside of the West Coast; the interior, S.E. and N.E. quadrants of B.C. realizes how important Alberta investments are towards there economies. I understand there are arguments to both sides of the story but once Albertan’s realize on how much of a hit they will take on taxes I can see many selling and leaving and investing elsewhere.
We are already being bombarded by radio adds, etc, to spend our vacation money in that over priced province, um, no thanks, not worth it any longer. I can spend the same amount and explore the East Coast!
Phoenix pay system planned to fail, imho and the Ottawa Citizen concurs.
Our gov’t is out to bankrupt every citizen in Canada and turn us into Venezuela.
http://www.cbc.ca/news/canada/ottawa/phoenix-pay-problems-deliberate-default-settings-not-fixed-1.4482944
“I can’t believe that a Google search wasn’t done on ‘IBM’ and ‘payroll,'” Mohle said.
http://www.cbc.ca/news/canada/ottawa/phoenix-payroll-australia-queensland-experience-1.4543784
and….
A recent Globe and Mail investigation identified people connected to the local fentanyl trade who are also private lenders, using Vancouver-area real estate to clean their cash….
In all, The Globe identified 12 private lenders associated with the illicit drug trade and other crimes…..
https://www.theglobeandmail.com/news/british-columbia/laundering-linked-to-drug-trade-a-structural-issue-sfu-criminologist/article38140964/
Wow, just think of the amount of money that would be laundered by these 12 alone….it has to be enough to shake the market from these Asian gangs, and it’s not accounting for local drug trade from the HA-Independent Soldiers-East Indian Gangs.
No wonder the same casino company (Great Canadian) is now operating in Ontario, they have all the expertise to launder the windfall passing through their casinos now and they can prop up their Bosses re-election purse.
Canada is a picture of slime running the pig pen.
Even dead Sr. Rizzuto’s kid got off on trafficking charges: http://montrealgazette.com/news/local-news/how-was-alleged-mafia-boss-leonardo-rizzuto-acquitted-of-gangsterism
The old is new again, the banks are trying for 40 year amortization again. But it’s in the discussion stage on the quiet.
@#25 Sorry….Im SCM
Methinks thou doth whine too much.
Wikipedia definition of a Troll
https://www.google.ca/url?url=https://en.wikipedia.org/wiki/Internet_troll&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwiE7qHUtczZAhUr5IMKHfD5CO0QFggcMAI&usg=AOvVaw1WDM9vMcA1BSPnLMe1_nI2
The picture of SCM Troll was …… enlightening…. to say the least
gender neutral…..of course.
http://www.google.ca/url?url=http://monster.wikia.com/wiki/Troll&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwiE7qHUtczZAhUr5IMKHfD5CO0QndQBCHYwEQ&usg=AOvVaw2znkNBR9duIKnAeS9eANF5
poor people always pay more, for everything:
https://www.youtube.com/watch?v=vK9aN4BYELk
Michael Hudson recounts his personal experience with mortgages.
#46 Catalyst on 03.01.18 at 6:46 pm
Unrelated note, Enbridge shares now yielding 6.4% and starting to look juicy, thoughts?
================
Agree. Already bought some. Also Riocan.
I’ll predict Calgary prices drop 5-10% & Kelowna 15% in a year’s time. Kelowna’s falls have ensued Toronto’s in recent decades, but without a “recession” and no blow up doll price increases Toronto saw of latter years, Kelowna won’t get lynched near as bad. Hoping?
One trend I have noticed in my collection of folders is that a lot of speculators that took their properties of the market for the holidays and have yet to re-list.
Early to mid December 2017 I had roughly about 75 cases go off market,whether to the listing naturally expired of was removed is another thing ,but at last check only less than a handful of these were back up and competing in the market.
I know it is an easy out to say not everyone needs the money ,but these houses were on the market last year for long periods of time at less than 7% more than they were purchased for,mainly in 2016.
If they sit this Spring season out in the hopes that 2019 is brighter and better it is probably fair to say that a lot of these folks are in for a big surprise.
I could show many examples but I will just show one.
These guys paid 5 million and after trying to make it out with a bit of a profit after expenses in January 2017 ,they dropped it to 4.98 in June and had it on for most of the year and now it sits on the sidelines…
M43BC
4006 w 34th ave Vancouver paid 5 asking 4.98 old sold
2017-01-23 : $5,680,000
2017-04-01 : $5,580,000
2017-06-07 : $4,980,000
https://www.zolo.ca/vancouver-real-estate/4006-w-34th-avenue
https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAwMEpaSw==
$$$$$$$$$$$$$$$$$$$$$$$$$$$$
Feel free to make a donation.
Flop For Fox Fund…
http://www.terryfox.org/get-involved/ways-to-give/
Just sold my 40 y.o condo in Van. 5 offers, 70 over asking, and 200 over what I paid 1.5 years ago for it (excluding realtors and 10k in renos). Neatly dodged a 40k special levy, as well.
Seems the lusty millenials (of which I am a part) are still as desperate as ever to be close to downtown. But evidence the condo market is still pretty nutty. I wash my hands of it all, I’m off to the Kootenays.
Garth, any mortgage-y words of wisdom? Would you advocate for a variable, even in a rising-rates environment (this one in particular), since they historically will beat any fixed?
I liked enb at 47 .
Bought a bunch , waiting for it to bounce back .
Dividend is nice.
#64 Mark on 03.01.18 at 7:27 pm
“So what is that, like less than 10% of all homeowners? Wake me up when prices crash back to 2013; “
Wake up, wake up, prices are back at 2013 levels! Which were similar to 2014, 2015, 2016, and 2017 levels. On individual identical units.
_ _ _
Have you been doing first hand research on weed stocks? Cuz it sounds like you’re high.
#59 Flop
Yup, that looks about right.
Like I said, it will be interesting to see the REBGV spin after the Monday data dump!
Of course, Joe and Jane are still yammering away about “The Chinese” and all that other nonsense…
At their peril.
People in YVR will be shocked by the price collapse just as much as they were with the run up.
BTW, I was on a two road trip in Ireland; just got back last night in fact. The horror stories I heard over there about the RE bloodbath 10 years ago are about to be repeated here
Wrong (again). No bear coming. The correction may not have ended easily, as stated here earlier. But this is no bust. – Garth
————————————————————
Just wondering, when is it ‘officially’ a bear market?
How does the ‘average joe’ know?
TCC
The average joe should have a balanced and diversified portfolio, in which case s/he wouldn’t notice much. – Garth
er,…”two week” road trip.
Hey Leo Tolstoy. This market is no longer spec friendly. It was like fish in a barrel for the last few years, congrats on your $70k score. Sounds like a lot but it is only 60 cases of Bowmore (15 year old) And if this low volume/flat price, market persists, you may run out.
Forgive me for not feeling rekt.
#29 Thank God on 03.01.18 at 6:20 pm
My TSX exposure is 5% .
Trump will crush the Canadian materials sector
Add our housing sector and bye bye TSX
are the TSX bulls still breathing ? :)
—————————————————————-
This one is. The TSX is hardly in bubble territory as others are. Position yourself in sectors that are lagging and wait. Everything is temporary and can change faster than T2’s costumes. For example these 3 etf’s from their highs: XMA minus 48% XEG minus 62% XGD minus 60% HEP minus 77%. I own HEP which I bought in Jan. 2016 for 18.25, now 22.59 up 24% and pays a nice 7% dividend. As FDR once said, “Only thing we have to fear is fear itself”. A diversified balanced portfolio should be about even YTD. Mine is after a 2.8% decline in February. The media made the 500 point drop in the DOW sound like a major catastrophe which it wasn’t. Had it taken the same percentage drop as it did in 1987 they would have had something to crow about. I sure do miss Louis Rukeyser’s show. That was one cool dude.
Global Toronto news at 6 PM showed a narrow house for sale in 416 which they reported was not as wide as a subway car. The price…$1.5 mil!
Message from the news is that insane house prices are still rocketing up. What slowdown? What downturn? Full speed ahead!
Nova Scotia. Real Estate looking good.
Prices set to boom.
MURMURATION!
There is a fascinating analogy in nature called “murmuration” that very much resembles the herd mentality one sees in the stock and real estate markets today . Starlings gathering in the evening to roost will often participate in what is called murmuration , a huge flock that shape shifts in the sky as if they were one swirling liquid mass. It would appear that the real estate birds are still swirling looking for a safe place to roost. Unfortunately a great number will hit an air pocket , look out below, for banker cats are pacing back and forth.
Garth humour us. Bring in Al Sinclair as a guest blogger for just one day . I’m betting you would set a record with several thousand hits on your blog but you might have to sensor one or two comments. April 1st would be the perfect time.
#46 Catalyst on 03.01.18 at 6:46 pm
Unrelated note, Enbridge shares now yielding 6.4% and starting to look juicy, thoughts?
————————————————–
lots of big TSX names are looking juicy these days. Is it time to load up or wait for larger forces to play out? Time will tell.
Interesting day today, with two anecdotal observations I’d like to share about Toronto today:
I was at my bank twice today for different reasons, last time just a few hours ago. I remember when the last day for RRSP contributions was a madhouse, with lineups galore. Not today. Crickets. Nobody there. I asked the bank rep, and he said the same. They don’t even bother to extend hours anymore on this day. People are just not contributing as much, way too much debt.
Earlier, my spouse and I both had to attend different city civic centres separately during our lunch breaks. We both saw lineups of frustrated people around the corners, lining up at the last minute to pay property tax installments to avoid late charges which are pretty small. Lots of angry, frustrated people, some yelling at the clerks. My significant other has two friends who work in the tax department, and they say that things are starting off crazy this year, with an alarming number of property tax defaults and people begging to extend their payment times for tax arrears.
Two sides of the same coin, perhaps…?
Wait until the first week of May… then people will wake up to the fact that R.E. is severely pooched.
April 18 / April 17 will be FUGLY. Volumes will continue to plummet, Listings will soar, and prices will be 25% – 35% lower, yoy (GTA)
Plus, rates will have gone up once more.
THEN we’ll start to see panic – especially among those still holding the bag.
Poor lady !! What did say ? https://www.castanet.net/news/BC/220099/Elderly-librarian-assaulted
DELETED
Hey Bill, yes the Irish have different take on real estate than most around here.
I was working on a renovation in Point Grey in the Autumn and I had an Irish guy help me for a few days.
He almost collapsed when I told him that they were thinking of putting it on the market for $18 million.
One day I said to him. “You know I’ve been here for nearly 4 months and after looking at the view I still haven’t worked out what they want the other 17 million for”…
M43BC
#52 Penny Henny on 03.01.18 at 7:00 pm
Re comments about Hamilton RE dropping off because of the proposed tariffs.
I call BS.
Anyone who still works at those steel mills has probably at least 15 seniority, house prices are going nowhere because it is the Toronto refugees that are driving those prices.
—
When i worked in a area back in 99 there were lots places to get decent paying job, i remember way back when i got trade job for 21.22 and dude i knew got simple labour job for 15cad an hour to place stickers on products, 20 yrs ago, welder were paid on pcs work close to 21, or 19 if they miss quota. and that place i worked for when i left there were 4 working robots and 4 were to be commissioned in future, now tons of welding and material handling robots.
Fast forward to now now are only few left open for business.
as for toronto refugees, they were buying stoney creek last year, now not so much…
#80 Bill Ferguson on 03.01.18 at 8:39 pm
”BTW, I was on a two road trip in Ireland; just got back last night in fact. The horror stories I heard over there about the RE bloodbath 10 years ago are about to be repeated here”
—————————————————————–
Was wandering around the green hills there last August and came across many vacant homes/cottages in the rural areas. Asked the locals what that was all about and they said that those were the remnants of the housing bubble. In Dublin though, prices appear to have returned to their bubble highs and they are having same problems with sky high rents. They have their own problems with drugs and homelessness as well. Beautiful country and people very friendly. And their beer is great, especially the Guinness.
I’ll sell my US apartments when I’m 70
Just milk dat real money and pay Canada Monopoly money expenses
Toronto condo prices accounting for sales mix still rising for the last 20 yrs. good for condo investors . Maebe I sold too erly
Detached prices peaked 2017
Sucks if u bought last yr
Nova Scotia u sai?
Are they as good Republican states at kicking out tenants?
I have something special for SCM’s ‘safe space’:
Higher minimum wages only encourages us engineers to find more and better ways to grow our capital, discover new ways to automate, and make capital more efficient.
That’s one for your safe space! Vaseline was sold out at Shoppers Drug Mart.
Enjoy the ride!
#61 joblo on 02.28.18 at 8:03 pm
“Michelle Rempel wants you to get ANGRY!
https://youtu.be/5qxpTLx7rRg
$200 million for what?….”
For having imperiled trade between Canada and India – compute the value of that and add it to the vacation tab. I’d also hazard a guess that the same computation (granted, projections, but well worth crunching) could be run for China, the Philippines, the US and anywhere his eminence has wafted.
#58 – my prediction is the same, 95% of homeowners will be ok. You and others overestimate how many homes were bought at peak and underestimate how many people have significant equity and can weather out a 20 or 30 percent drop in home prices. I haven’t looked at foreclosure rates in a while but I think they ran well under 5% in the US in 2008. Maybe we will see multiple foreclosed homes om every Canadian block but I doubt it.
Mortgage default rates have always been an indicator of nothing in Canada. The issue is the effect on confidence, consumption and employment of a sustained housing correction. Maybe you have never lived through one of those. Sounds like it. – Garth
#74 Andrew Woburn on 03.01.18 at 8:02 pm
#46 Catalyst on 03.01.18 at 6:46 pm
Unrelated note, Enbridge shares now yielding 6.4% and starting to look juicy, thoughts?
================
Agree. Already bought some. Also Riocan.
************
Go here and look at payout ratios for last 6 years:
http://quote.morningstar.ca/Quicktakes/stock/keyratios.aspx?t=ENB®ion=CAN&culture=en-CA&ops=clear
Then ask yourself if it is sustainable in a rising rate environment. Then go here:
Someone Saved My Life Tonight https://g.co/kgs/SKKyLE
Lotsa good stuff for sale on the tsx. Buy now or buy never.
Trudeau further isolates Canada and doubles down on unfounded accusations against Indian and reiterates his support of Khalistan terror…..all to try and salvage the few Sikh votes that went to Jaggy Dipper coronation.
https://m.hindustantimes.com/world-news/justin-trudeau-backs-theory-of-rogue-indian-hand-behind-presence-of-khalistani-terrorist-atwal-at-his-event/story-dAMFy3xkVMt92TuBtd5ywK.html
BTW….I touted Priceline a year ago….bought at $1200 US …broke $2000 yesterday…..omg
On the 25% steel tariff imposed by trump.
Canada imports as much steel from the US as it exports.
http://www.risktopia.com/2018/03/canada-buys-almost-as-much-steel-from.html
#83 Old Ron the Realtor on 03.01.18 at 8:45 pm
Forgive me for not feeling rekt.
thats the beauty of gettin rekt… the person who gets rekt never feels it!
#46 Catalyst on 03.01.18 at 6:46 pm
Unrelated note, Enbridge shares now yielding 6.4% and starting to look juicy, thoughts?
================
Agree. Already bought some. Also Riocan.
+++++++++++++++++++++++++++++++
Buying REITs heading into the coming RE sh*t storm? I realize the danger is not the same as the housing market, but I would expect a lot of TSX collateral damage.
I fully agree with Garth that a diversified portfolio is the way to go, and you want to ride out the storm and not panic, but I don’t agree with the assessment that there is nothing “bubbly” about the equity markets.
If (when) housing gets creamed in the bubble markets of Canada, the TSX will feel it as well, as RE & its tentacles had become a much larger part of our market. Investment in energy and resources is leaving the country, and financials are going to get hit with RE decline (buying opportunity for sure, as our banks will be quite fine).
In the US, the stock market rise since 2009 has been highly correlated with debt & money growth. Yes, finally in 2017 some good corporate profit growth, tax reform, and global economic growth. That would be great if equities since 2009 had reflected the anemic US and world growth over those 7 years. But they didn’t – equities rose far above profitability and the economy (cause free money) – and then blasted yet higher with some real growth.
Any attempts to take away the accumulated QE (and ongoing QE around the world) causes the markets to have a fit. The growth finally arriving looks to be bringing inflation with it. The US tax cuts + tariffs are likely to add to the inflation, bringing in the increased Fed rates. Which is of course how recessions come on (not likely this year with so much momentum…not so sure about 2019).
At some point, Mr. Market is not going to like the never ending debt growth (or CB’s & countries can’t do it anymore) + recession, and there will be a sizeable stock correction.
I am staying invested right now through this correction, but I have been keeping my new powder dry.
Garth has explained this a million times, but I liked the simplicity of this approach. It may even be short enough for the smartphone addict.
“How do bond prices affect mortgage rates?”
“The exact mechanics of the relationship depend on which country we’re discussing, but in most places the rate at which a bank will lend you money depends upon the rate at which the bank itself can borrow money. Since those rates are, loosely, based on the rates that the national government can borrow at (i.e. government bond yields), the bank effectively passes through rising government bond yields to you in the form of higher mortgage rates.”
– Found at Finimize.com
#94 Flop
It is so ridiculous: i have people on my site saying that $600K seems “reasonable” for a Metro Van house.
I tell them that even that is in “bubble territory” given the fundamentals.
A price like that only seems “cheap” compared to what we have seen, so people need to be careful not to catch a falling knife.
This downturn is going to be as brutal as what the Irish experienced; when I was over there, they just shook their heads.
Oh, and the exact same stories that have made the rounds here were common over there 10 years ago.
Funny, less than 2 months with the new stress test & not even 2 for the latest rate increase (let alone probably 2 more this year), and people are gloating that the market hasn’t rolled over, and therefore is highly resilient.
B20 + rates will cap the market, keep the sales #’s falling, and lower prices. But right now Kanukistan is still coming off of really good 2017 growth and unemployment is very low.
Add in rising unemployment to the two factors above, and lets see how this market holds up. Losing a job + reduced equity = panic. I think it will fold like a cheap suit.
#80 Ronaldo
Yes. Dublin appears to be “coming back” just as many cities are in the US.
I was struck too, by the large, beautiful homes that dot the countryside over there; however, as you say, they were built during the height of the bubble and lost most of their “value” when everything collapsed.
Re: Dublin…there are still thousands of homes sitting either half-built or a else fully completed (empty and still unsold) in large “ghost estates” from that time. The builders went broke and simply walked away.
#102 Sir Elton John on 03.01.18 at 10:09 pm
#74 Andrew Woburn on 03.01.18 at 8:02 pm
#46 Catalyst on 03.01.18 at 6:46 pm
Unrelated note, Enbridge shares now yielding 6.4% and starting to look juicy, thoughts?
================
Then ask yourself if it is sustainable in a rising rate environment.
————————-
Not an unreasonable question. Depends on your time horizon.
Having lived through inflationary times, I saw that pricing power can quickly compensate for rising costs. If you own big chunks of downtown real estate in major cities or a pipelines in a world that doesn’t want more, you can get your revenues up.
Mortgage default rates have always been an indicator of nothing in Canada. The issue is the effect on confidence, consumption and employment of a sustained housing correction. Maybe you have never lived through one of those. Sounds like it. – Garth
Well ya, and I said as much above. Everyone is going to feel a RE crash, no one gets out unscathed. Point remains that most homeowners will weather the storm and be fine. As foreclosure stats indicate. And nope, never lived through one but we are well prepared.
#105 Leo Trollstoy on 03.01.18 at 10:20 pm
Need something rekt. Go here. They’ll do the job for you.
https://www.youtube.com/channel/UCETEqk3eDILFcu8p6YncjQw
Just a question for all you old-timers who remember the 1990’s Real Estate Downturn. I’m in my early 40s living in Vancouver, and I was too young to remember, but did Vancouver condos fall further than detached houses during the 1990s housing correction?
I figure we should be into peak Vancouver condo prices in the next few months, and then the full effects of B-20 + rate hikes + NDP/Green anti-speculation legislation will be felt and drive down condo prices, but I wonder what happens when condo prices fall? Will Lower mainland condo prices fall further than detached house prices because of greater supply of condos? Thanks.
#77 Ryan – the ndp are doing away with the Lib govs 5 yr interest free loan of $37,500 this April. That has been helping the condo market.
Garth,
Some payback advice for all the free advice,
https://www.mirror.co.uk/news/uk-news/safe-walk-dogs-snow-top-12108095
Even some cat stuff there, but is only advice for the animals. No tips on what happens when Bandit decides to send you as^ over teakettle!
Wealth Expo advertising on a bus?
Hey Garth, if you could tap even a small percentage of the discretionary income of transit riders you could retire from the investment gig and devote yourself to the blog full time.
Happy 10th blogiversary Garth!
Congrats…and thank you.
Your insights and advice over the years has made real difference for my family.
“If (when) housing gets creamed in the bubble markets of Canada, the TSX will feel it as well”
Nice theory, but when the housing market got creamed in the 1990s, the TSE did just fine. Tripling from 1990-2000, including the banks, on average, being solid quadruplers of an investment made in 1990.
The reasons why this might repeat itself are intuitively obvious. Sentiment is extremely negative towards the TSX and “the stock market”. Credit spreads are expanding against consumer credit which is extremely positive for the banks. The Bank of Canada will be forced to keep rates low to deal with the weak consumer economy. Very little of the TSX is actually directly consumer exposed. And as speculators lose interest in housing, they’ll move on to other asset classes, and what better of an asset class than one that hasn’t really moved in a decade, yields approximately 7% at current prices after-tax, and has historic earnings growth above that of inflation in the long term.
I often find its RE sell-siders who keep advancing the theory that the stock market will crash if RE falls. A lot of self-interest at play there when such a claim is made, but there’s not a lot of evidence to back such up. Canadian RE isn’t particularly in a lot of overcapacity, so while the credit-induced RE boom has certainly stimulated a lot of supply and probably has driven the economy to suboptimal growth (as opposed to natural allocation of capital), its pretty hard to argue that RE has been malinvestment, or that we’re facing square miles worth of empty neighbourhoods and empty housing units as they did in some locales in the United States where there clearly was severe overbuilding.
“Vancouverites are, on average, Canada’s most indebted people in major cities, data shows”
lots of pain on the horizon
divide to continue between detacheds and condos – which is seriously masking overall trends.
——–
Ok but when your stats say unemployment is low. Its seriously masking overall trends.
2 20hr jobs @ min wage instead of 1 40 hr job with full benifits kind of what I keep saying.
The public is not aware of this yet…it is bad.
Really bad.
East 33rd sold 1.075.000 soon detached will be under 1 million again…later this year
I moved from Toronto to Montreal 6 years ago. Can’t even describe how much better it is here. I thought about buying but have been renting instead – $520 a month for a huge 1 bedroom in a 100-year-old building.
Taxes are higher but hydro is 1/2, transit pass is 1/2. If I decide to go there, car insurance is 1/2, child care is 1/10 (!), tuition is 1/3. The city has an identity, it’s beautiful, it’s fun and it operates on a human scale.
And I can pop across the street a quart of milk and some beer!
You idiots who pay outrageous sums to remain in Toronto are just that: IDIOTS
Toronto housing market takes a February nosedive!
https://twitter.com/Mr_Silbergleit/status/969457863327285248
Dream Casting Call for my movie based on a true story book.
Smokey played by Bruce Willis.
Ashman is George Castaneda or blog dog happy housing crash.
Barington played by Garth Turner only if it’s ok with Dorathy.
The crazy lesbitonian in the elevator screen by our treasured blog dog James with Kate Maroney as her submissive lover.
Clair played by Uma therman.
Jeremiah Jones by my friend Yoda.
Mark Krunt. Gerry butts perfect for the role.
CIA guy hands down Turner Nation.
Shlong Zumanga. It’s got to be George Soros.
Smokey wife. My real wife with real hot flashes. Impossible to act it out. Got to see one for real.
Isaac hands down Conrad Black
#69 acdel
To be nit-picky, Garth, Ryan, and Doug post. I comment. I’d love a (paid) gig posting for Garth once a week but as this is a free unadvertised service he’s offering and he doesn’t totally approve of my ideas I’d say that’s a snowball’s chance in Harvey Weinstein’s shorts.
However I do appreciate that you liked my comment!
No surprise. Vancouver with highest debt
https://globalnews.ca/news/4057149/vancouver-highest-debt-transunion/?utm_source=Article&utm_medium=MostPopular&utm_campaign=2014
Garth,
I took the dare, clicked on the image; suddenly my computer started smoking, I saw flashing lights, my biceps started bulging, and suddenly I felt like Rocky from Rocky1
Fresh G-RE-ater fool Alert from Coquitlam:
1518 GROVER AVENUE
Assesed July 2017: $1,277,000
Relisted March 1st 2018: $1,299,000
Dec 2017: $ 1,399,000 (~75 days on mkt)
Sold 25-Aug-2015: $936,000
Sold 8-Jul-2012 $559,455
https://www.remax.ca/bc/coquitlam-real-estate/na-1518-grover-avenue-na-wp_id194669926-lst/
http://royallepagecoronationwest.ca/officelistings.html/listing.v745429-1518-grover-avenue-coquitlam-v3j-3g5.6897582
https://www.bcassessment.ca/Property/Info/QTAwMDAzWExRNg==
Compare the photos in all the listings with the newest ones and it appears like the property has been vacant for a few months.
From the latest description is sounds like the home was renoed but picture comparison shows little change over the years.
Personally I don’t feel like adding to some people’s coffers.
#110 Bill Ferguson on 03.01.18 at 10:43 pm
I had the chance to work with an Irish team, from Dublin in 2008 and 2009.
At that point Ireland was the Eu headquarter for all major US companies.
A lot of high wages work.
Their prices at the height of their bubble based on conversations, research on my part were around 40-50 % of current prices in GTA/Vancouver.
So our current bubble is around 2-2.5 times higher than at their peak. And their prices declined by 50-70 % in Dublin, 40-50 % elsewhere.
The deflation of the bubble almost bankrupted Ireland and their banks.
Canada was in housing bubble in 2009 that was comparable to the Irish at that time, and we kept inflating another 200-250 % from there in Vancouver and GTA.
Why? Because there was nothing left in the economy except some subsidized declining manufacturing and housing with all financial services around it.
At this point GTA house prices, even friggin Vaughan and Mississaga are 3 times more expensive than Frankfurt Germany and probably surpass lake Geneva houses in Switzerland, where the wealthy of the world live.
Short stroll around GTA and you see nothing but relatively very low paid workers, even downtown, the pay specially after taxes is pathetic.
People might not know but in the last 2-3 years housing was subsidized with loans from abroad, CMBs issued in EURO and USD.
CAD has been tanking against the Euro and with projected interest rate increases in US due to the inflation that they start recognizing things are not looking good.
I was hoping for correction in monetary and mortgage policies since 2005-2008, for the sake of the economy and the next generation but in wanes.
No one on this blog has no idea what could and will happen when this gasbag called housing explodes. There will be no implosion. Explosion.
Leaders will calm down the public but the numbers don’t lie, housing in GTA and Vancouver is 4-5 times overpriced and will correct.
The problem is we have no other economy left except some consumption.
Even commodity boom impact will be limited to some agriculture, dirty oil has no future in our lifetime.
Gold and mining profits does not spread around in the economy.
I personally prefer another 5-10 years of this insanity in order to liquidate assets gradually, but I do not see how it could happen.
One reaps what one sows.
I do not want to sound the alarm but the bank bailout legislation is there for a reason. If there was no reason it won’t not be there.
Yea, I hear no bank will fail (I am not saying it will but some banks will have troubles), affordable housing at 2 mil in friggin Vaughan and Mississauga, up 7-10 times (?!?) from 20 years ago with the economy in much worse shape.
It seems we are kings of wishful thinking, even now I read articles on how steel tariffs imposed by US will hurt them as well, how we can also impose tariffs as US also imports to Canada.
We are a fly on the back of an elephant.
It worked for a while, it stops now. I don’t think US has any other option other than tariffs in order to protect their interest.
The tide is receding, we will see who is swimming naked.
The T2 guy and his budget french villa buddy are clueless to a degree I have never seen and I have seen a lot.
God help us.
#40 TurnerNation on 03.01.18 at 6:39 pm
Once again we see Gold is a hedge against…nothing.
We’re the money going to? Hint see chart of JJG.US
—————————————–
Gold up against USD which is up against CAD.
If you can short Canadian housing in gold, do it.
A shack in Vaughan or Mississauga ‘worth’ 40-50 kilos of gold. 3-4 tons of silver.
BOC has 0 ounces in reserves.
Canadian banks have 0 legislated deposit reserves, only capital reserves.
Sure.
Wow…
Postmedia News
Philip Cross: Statscan’s latest report shows how badly our governments demolished business investment
http://business.financialpost.com/opinion/philip-cross-statscans-latest-report-shows-how-badly-the-governments-demolished-business-investment
Canada now has the second-lowest level of business investment as a share of GDP.
http://business.financialpost.com/opinion/philip-cross-statscans-latest-report-shows-how-badly-the-governments-demolished-business-investment
Agree with others here that you should have someone scout out that wealth conference. Think of it as an anthropological expedition, studying the brainwashed and house horny in their natural environment.
If you’re too recognizable to go yourself, maybe you could send that analyst dude you hired a few months back?
The Irish real estate fiasco is a cautionary tale to be sure . There was no sustained population growth to support the overbuilding . The development loans were non recourse liar loans , neatly packaged and bundled syndicated CDO’s and when combined with the exogenous event of financial markets melting , the whole house of cards came down.
The shock to the system in Canada will either be a severe recession or rapid and sustained rise in rates . The question is , what is the tipping point for rates that causes forced selling.
#30 the Jaguar on 03.01.18 at 6:25 pm
I love that little dog in the blog photo. He’s so alert looking and dignified.
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Dignified yes. The dog in the photo is a Welsh Corgi, the preferred breed of the British royals.
#106 PastThePeak on 03.01.18 at 10:28 pm
#46 Catalyst on 03.01.18 at 6:46 pm
Unrelated note, Enbridge shares now yielding 6.4% and starting to look juicy, thoughts?
================
Agree. Already bought some. Also Riocan.
+++++++++++++++++++++++++++++++
Buying REITs heading into the coming RE sh*t storm?
Any attempts to take away the accumulated QE (and ongoing QE around the world) causes the markets to have a fit. The growth finally arriving looks to be bringing inflation with it. The US tax cuts + tariffs are likely to add to the inflation, bringing in the increased Fed rates. Which is of course how recessions come on (not likely this year with so much momentum…not so sure about 2019)……..
************
Unfortunately, such sound reasoning is always negated by human instincts. The business cycle shows that there is always someone willing to build the 5th gas station at an intersection. When the stock market switches mode from wealth creation to redistribution the number of investors actually increases. Short-lived recessions are the new invisible hands of the sheep shearer keeping everything in check. Debt expansion just means that someone else is getting rich on the interest, and being cash flow positive instead of profitable reduces corporate taxes.
The US is no longer king of the jungle, and despite the shrieks of the orangutan, a replacement will soon be found. Upheaval is certain, but Canada is resource richer than you think. Everyone needs food and energy to heat or (maybe) cool their homes. The TSX will eventually thrive, but the only thing I’m buying now are seeds to plant in my Victory Garden for the coming trade war. Four-twenty or fight!
“We don’t want to fight but by jingo if we do…
We’ve got the ships, we’ve got the men, and got the money too!
We’ve fought the Bear before… ” G.W. Hunt
#29 Thank God on 03.01.18 at 6:20 pm
“My TSX exposure is 5% .
Trump will crush the Canadian materials sector
Add our housing sector and bye bye TSX
are the TSX bulls still breathing ? :)”
They’re bunched up in one corner of the field looking outward and scared.
It is, perhaps, an open question as to whether Conrad Black will finally attempt to perambulate a fine line in the National Pest, vis a vis the Trudeau/India entanglement. He had an opportunity to do last week, but demurred. I submit that his acolytes will be expecting something astute and verbose, this day or next, to emphasize the enormity of Justin’s faux pas. The fine line, of which I alluded to, is with respect to Conrad’s unwarranted incarceration and subsequent mislabelling as an ex-convict. This moniker was as contrived as the extemporaneous charge, and is without substance and therefore irrelevant. I expect the ex-Order of Canada, ex-Privy Council, ex-con to unleash a a barrage of party poop unlike the world has never seen. Or maybe prison taught him something.
Clue is in my name, don’t think this city will feel much in terms of RE price drops or steel mills. Most of our higher paying jobs are in biotech, medical industry, and lots of lower paying service jobs which will carry on in a downturn. Houses still selling here at 1/3 the cost of the big Toe, just staying on the market longer.
We would buy more but tighter lending regs mean we have to wait until that next sweet spot comes again (loose lending but house prices still low)
Of course our jobs will be affected as richer folks put the brakes on big spending on their properties but moving here means a cheaper cost of living while swimmin with smaller fish makes one less anxious about being swallowed up and more thankful for all we have. (Very hard to find that lifestyle in Toronto unless you make big bucks but live in say, Queen west) We are battening down the hatches but in general feel this place won’t be hit as hard as To or Van. Unlike some, I’m not looking forward to a crash or watching folks’ lives explode – i share whatever I’ve learned with whomever is interested but you know, Canadians are too polite to discuss money most of the time. Glad i can come here for my ‘fix’ and some learnin’
Hmm. Seems like premarket here we are finally returning to something resembling a proper risk-off environment.
Stock futures down sharply, 10 year US yield down to 2.80%, and gold up $19. USD index below 90 again.
The next piece of the puzzle is for bonds to ALSO sell off, and gold to absolutely rocket. We’re getting a whole lot closer to that.
There is no reason for gold to ‘rocket.’ It reflects US$ weakness. A bad place to invest, as always. – Garth
From today’s Globe and Mail:
Toronto market takes a February nosedive
The Toronto area’s real estate market appears to be losing energy in February after a microburst of buying as the new year kicked off. John Pasalis, president of Realosophy Realty Inc., says the momentum he was seeing up until about the third week of January has dissipated. Sales have dropped in recent weeks compared with this time last year and the declines are becoming steeper. “They’re trending down, and that’s what’s interesting,” Mr. Pasalis says, adding that his analysis is revealing sharper sales decreases each week. He isn’t sure of the reason for the shift in tempo but he suspects some potential buyers are feeling priced out of the market after interest rates started creeping up and a new “stress test” on uninsured mortgages came into effect on Jan. 1. Others, he suspects, are trying to time the market in anticipation of negative numbers from the Toronto Real Estate Board in the months to come. “Some of them are almost hoping for that – for some panic – to take advantage of that.” Market watchers have been expecting sales in the first quarter of 2018 to show a marked slowdown from the unharnessed run in the opening months of 2017. But Mr. Pasalis says sales so far in February are below historical norms. Sales in the Greater Toronto Area plunged 33 per cent in the first two weeks of February compared with the same period last year. Once again, detached houses led the decline, Mr. Pasalis says, with a 40-per-cent drop. Sales of condo units fell 27 per cent in the first half of February compared with a year earlier. Delving further into the numbers, Mr. Pasalis says, sales decreased 28 per cent in the 416 area code of Toronto and 36 per cent in the surrounding 905. The average price in the GTA dipped 12 per cent in the first two weeks of February compared with the same period last year. New listings rose 6 per cent in the GTA in the first half of February compared with a year earlier. Mr. Pasalis says the mood is completely different from this time last year when prices were climbing at such a dizzying rate that “fear of missing out” gripped the market. Buyers would accept huge compromises because they were petrified that waiting would mean they would have to settle for even less a few weeks down the road. This year, buyers have a different mindset because sales are slower and, while values are lofty, they’re no longer soaring. “When you’re spending 100 per cent of your budget and you don’t love the house, there’s reason to be more patient.” David Madani, senior economist at Capital Economics, is seeing tentative signs that the tightening in mortgage rules and increases in interest rates more recently are beginning to slow the growth in household spending. He is seeing signals that some households are already beginning to struggle with rising borrowing costs, adding that heavily indebted Canadian consumers have obviously become accustomed to extraordinary low interest rates. Mr. Madani points to retail sales data that suggest household spending softened considerably at the end of last year. And while there’s no evidence of an upswing in consumer bankruptcies yet, it does appear that debt restructuring has risen significantly. Jimmy Molloy, an agent with Chestnut Park Real Estate Ltd., believes some buyers at the entry level are feeling restrained by the mortgage “stress test” that banks and some other lenders began applying on Jan. 1. “When you’re making that first plunge into the pool,” you’re nervous. The market works from the bottom up, he says, so when buyers in the low to middle segments are hesitant, move-up buyers also move more slowly. Higher interest rates, the stress test and the large price gap between other housing types and detached houses makes the leap difficult for many potential buyers. The detached house market in the 905 area has a fair amount of inventory, he says, and some areas of the 416 also have a good supply. “Detached houses are not flying off the shelves,” he says. “It’s not like we’re being swamped but the absorption rate is a bit slower.” People in the middle of the market are often looking at the high cost of jumping from a three-bedroom house to a larger one and deciding to stay put and renovate, he says. Meanwhile, he has several buyers looking in the $4-million-and-up range, and they are having difficulty finding something to buy. In the carriage trade neighborhoods of Rosedale, Forest Hill and the Annex, there are very few properties to show. He has been talking with many homeowners who plan to downsize from large houses in those areas but they can’t find a condo unit that provides the right blend of size, character and location. “I have a bunch of people who would like to buy great condos and there’s not a lot of product out there.” Robin Pope of Pope Real Estate Ltd. says the Toronto condo market is on fire. He has sold several units in recent weeks, with eight to 10 bidders typically vying for each property. Mr. Pope cautions, however, that the marketing strategy is important. In some cases, sellers haven’t done as well as they might have because of poor tactics. He points to a condo unit listed for sale this month on voguish King Street West with an asking price of $449,900 and an offer date one week later. Two days before the scheduled offer date, a condo of similar size was listed at the same asking price in a neighboring building. The second unit had a parking space, which typically adds $40,000, Mr. Pope says. That property also had an offer date set for one week after listing. A bully quickly stepped forward and put a bid of $508,000 on the table for the second unit and the seller accepted, Mr. Pope says. Two days later, the unit without parking sold on its offer date for $504,000. Mr. Pope figures the seller who listed and then snatched at the bully offer acted too quickly. By waiting to see the result of the other contest, he or she could have held out for more. “Although the asking price for both was the same, clearly the unit with parking was worth more,” he says. “In hindsight, it seems they should have waited two days to see how it played out before listing or considering a pre-emptive offer.” The market for houses in central Toronto – especially for any property up to $1-million or so – is still quite competitive, Mr. Pasalis says. Very desirable houses along the subway line are still attracting multiple offers, he says, but the bidding frenzies of last year have diminished. In the 905 areas beyond Toronto, buyers and sellers are in a standoff. One agent in his office had a listing in York Region with an asking price of $1.7-million. The property languished for months but the sellers insisted on trying to achieve the same price that neighboring houses sold for last spring. After a series of gradual cuts, the asking price was lowered to $1.4-million. That was still too high for the buyers, Mr. Pasalis says, and the sellers eventually settled for $1.33-million. “It’s a big decline from where they originally were and a slow process.” Mr. Pasalis says a lot of sellers are adamantly sticking to their price and buyers are just as stubborn in waiting for them to adjust their expectations. That’s the reason inventory is so high in the 905 area, he says. “It’s frustrating for buyers because you don’t want to overpay,” he says, but they can’t move forward if sellers won’t budge. As for prospective sellers, some homeowners are considering listing but they’re worried that the market is soft. Mr. Pasalis knows of some who think they might fetch a higher price in May or even next fall. Mr. Pasalis says he is advising homeowners – especially those who need to sell – to list while the competition is fairly light. It’s impossible to predict where the market will be later this year, he warns. “It’s not always great to time the market.” He points to the plight of sellers in the spring of 2017 when the market went from a parabolic rise to almost a dead stop in a few weeks after the Government of Ontario introduced new policies aimed at taming the wild run. Homeowners who are hoping for a return to the rich values that properties were trading at this time last year may not see those numbers for a long time, he says. But people view declines from those levels as a loss, even if the profits were only on paper. “This loss aversion that people have is kind of playing out. That’s the psychology of the seller right now.” Mr. Molloy hopes that the spring market will pick up with more listings. At the moment, homeowners are reluctant to list an existing property because they know it will be hard to find the next one. “People are always asking: ‘Is this the right time?’ ” he says. “Sometimes you deal with people for years and they’re not psychologically ready. They’re selling the family home. It’s trying to price someone out of their house to list it.” Mr. Molloy has tried to bring buyers and sellers together when he knows that a buyer is very keen to be on a particular street and a homeowner might be tempted to sell privately. But such deals can be difficult to arrange because the sellers tend to have lofty expectations. “Everyone knows there’s a premium when there’s a lack of supply or something’s not on the market.” Mr. Molloy says sales statistics showing big drops from this time last year may unsettle some consumers but he calls early 2017 an aberration. “Last year was so overheated for the first four months, that it was never going to be repeated,” he says. He doesn’t expect the same frenzy this year, even when more properties begin to arrive on the market. “The market is pretty stable. It shouldn’t have increases of 20 per cent year over- year. That isn’t stable.” While the Toronto area remains in a holding pattern, few are calling for more government intervention. Looking to British Columbia, where the government recently brought in broader taxation and more policies aimed at reining in investors, Mr. Pasalis says Ontario may have to consider similar measures in the future. “Their policies really target speculation.” He points out that the Vancouver market has homes in the $3-million to $4-million range that sit empty while speculators wait for them to rise in value. The new policies will make that practice less profitable. “It’s just way more expensive to sit on those properties.” He believes speculation is more rampant in Vancouver than in Toronto at the moment, but that could change. When the B.C. government introduced a foreign buyer’s tax, for example, investors increasingly looked to Toronto. “It just pushed so much money over here.” He cautions that the pattern could be repeated if overseas buyers view Toronto as a more affordable alternative. “There’s so much money and greed, and people want to make money any way possible.” Meanwhile, he believes overseas investors are getting around the foreign buyers tax in the Toronto area by sending their children to school in Canada and buying a place for them to live in. “There’s a lot of money flowing in through students.” Mr. Pasalis doesn’t think that foreign buyers are leaving a lot of houses vacant in Toronto and other Ontario cities, but he adds that it’s hard to detect how prevalent the gambit is. He points out that towns such as Markham and Richmond Hill have attracted a lot of Asian buyers and there is the possibility that some of the houses in those towns are empty for long periods of time. One clue Mr. Pasalis looks at is how prices in an area compare with local incomes. In Markham, for example, the median income is $90,000 and the median price to buy a home is $1-million. In Pickering, the median income is $100,000 while the median price for a home is $680,000. “Who do you want your housing market to be for?” is a question that politicians need to grapple with, he says.
You read this here yesterday. (Next time use a link.) – Garth
Bruce Willis? I thought Cosmo Kramer was the ideal cast for the Smoking Scam role. They enter the room alike.
#132 Midnights on 03.02.18 at 4:49 am
Wow…
Postmedia News
Philip Cross: Statscan’s latest report shows how badly our governments demolished business investment
http://business.financialpost.com/opinion/philip-cross-statscans-latest-report-shows-how-badly-the-governments-demolished-business-investment
…….
If you dident see this coming a mile away 1/2 drunk and stoned your probably a Starbucks Philosopher.
Capital goes to were it is welcomed and flees from places it’s not.
I’m sure SCM would have a CBC link dispelling this logic.
Unicorns , Tidepodds and trophies for all.
#125 Smoking man.
Actually now reading this book. Are we not living in something of an open air tax debt prison?
https://www.amazon.ca/gp/aw/d/1945572418/ref=mp_s_a_1_1?ie=UTF8&qid=1519999329&sr=8-1&pi=AC_SX236_SY340_FMwebp_QL65&keywords=doing+time+like+a+spy
All the readers here know that owning part of the financial world is better than being owned by it. (as tough as it is to get your foot in the door, especially the millennials and cohorts)
An interesting column from a tech columnist who has been writing for decades:
“The American Dream changed somehow in the 1970s when real wages for most of us began to stagnate when corrected for inflation and worker age. My best financial year ever was 2000 — 18 years ago — when was yours? ”
https://www.cringely.com/2018/02/26/win-lose-wall-street-screwed-middle-class/
#64 Mark on 03.01.18 at 7:27 pm
“So what is that, like less than 10% of all homeowners? Wake me up when prices crash back to 2013; “
Wake up, wake up, prices are back at 2013 levels! Which were similar to 2014, 2015, 2016, and 2017 levels. On individual identical units.
Just as changes in the sales mix exaggerated average selling prices on the way up, due to the supply onslaught of brand new undepreciated luxury units, the same factors will exaggerate the downside in average selling prices. Especially as depreciated long-held and hoarded units come to market.
—————————————————————-
You’re either trolling or an idiot. In case it’s the latter, how many examples do you need to see to change your mind? If I find 100 houses that sold in the GTA in 2013 and then sold in 2016 or 2017 for more money (with no renos) will you admit you are wrong and just stop with this nonsense?
Is this what they mean when they say the ides of March? Do I start stocking water, cans of soup, and gold in my Bunker?
UN relief workers in York Region…good thing I saved my tent.
My Grey Dog is good at hauling firewood, great at finding dead bodies (skunks, beaver, raccoon, etc. It is always me reporting this to Town of Markham).
I am in the process of writing every single Ontario PC MPP, and the four candidates, this morning, to ask that this verification process for online voting be WAY extended past 5 March.
This is an absolute scandal. We have the right to vote for our leader.
#119 Mark on 03.01.18 at 11:33 pm
“If (when) housing gets creamed in the bubble markets of Canada, the TSX will feel it as well”
Nice theory, but when the housing market got creamed in the 1990s, the TSE did just fine. Tripling from 1990-2000, including the banks, on average, being solid quadruplers of an investment made in 1990.
+++++++++++++++++++++++++++++++++
Wow! Cherry pick much? So you had to take the top of the 2000 market (just before it burst) to make your triple comment. You must hope no one looks up the data and calls out your bull sh*t.
The TSX dropped 25% at the time the housing turned (it was a recession). It then recovered and went higher sure – but it took 3 years before it hit that level again.
You can blabber on about resources all you want, but we have gov’ts in power that want nothing to do with them. Canadian energy companies are looking outside of Canada to invest.
Mattl, at the peak of the US housing bust, 8% of mortgages were in default. Just 8% – and that was enough to sink not just the US economy, but the global economy. How do you suppose the other 92% of American homeowners who didn’t default came out of it? Do you think all of them are just fine? Some of them are still underwater, 11 years later. They never defaulted, just kept paying that mortgage, yet they still owe more than their house is worth, more than ten years into their 30 year term. Stuck in the same place, unable to move without for a job or downsize without triggering insolvency. Other than that, they’re just fine.
Yah, no kidding everyone is going to be hit. Precisely what some of us have been warning for years. There are more losers than winners in any bubble, and housing is no exception. Yet until now, you have argued repeatedly that most people who participated in this decade-long housing bubble, as long as they got in more than 2 or 3 years ago, will come out just fine.
Only recently have you started to change you tune, warning that “everyone will be hurt”. While it’s a positive development that you finally see the writing on the wall, you can drop the “I told you so” prattle. Because you didn’t.
Oh, and by the way, stating that “95% of homeowners will be OK” is entirely inconsistent with “when RE markets tumble, everyone will take a hit”. They are mutually exclusive events. You can’t believe both statements to be true without suffering from cognitive dissonance. If you wonder why people here get annoyed with you, that’s why.
#125 Smoking Man on 03.02.18 at 1:42 am
Dream Casting Call for my movie based on a true story book.
Smokey played by Bruce Willis.
Ashman is George Castaneda or blog dog happy housing crash.
Barington played by Garth Turner only if it’s ok with Dorathy.
The crazy lesbitonian in the elevator screen by our treasured blog dog James with Kate Maroney as her submissive lover.
Clair played by Uma therman.
Jeremiah Jones by my friend Yoda.
Mark Krunt. Gerry butts perfect for the role.
CIA guy hands down Turner Nation.
Shlong Zumanga. It’s got to be George Soros.
Smokey wife. My real wife with real hot flashes. Impossible to act it out. Got to see one for real.
Isaac hands down Conrad Black
….
Telly baby .. surely.
Kelowna is like a entitled kid that needs a punch in the mouth. Tantruming around with snot drooling out of one nose hole and nothing but garbage between it’s ears. The love child of Vancouver and Arkansas pontificating about wine aftertaste in a jacked up truck. Blearghhh!
#141 Ian on 03.02.18 at 8:39 am
Hmm. Seems like premarket here we are finally returning to something resembling a proper risk-off environment.
Stock futures down sharply, 10 year US yield down to 2.80%, and gold up $19. USD index below 90 again.
The next piece of the puzzle is for bonds to ALSO sell off, and gold to absolutely rocket. We’re getting a whole lot closer to that.
There is no reason for gold to ‘rocket.’ It reflects US$ weakness. A bad place to invest, as always. – Garth
************
100% agree with the analysis Garth, but the herd needs another bad asset to pile into, and I think this will be the shelter from the storm, rightly or wrongly. I don’t see a huge pop ahead, but I am exceedingly confident that won’t go down as much as say, JC Penney who’s revenue missed by 0.5% and the stock is down 11.25% today. Some chatter about junk bond ETF liquidity is getting some airplay, and well….. maybe I just prefer shiny things to derivatives.
#139 Empire Penguin on 03.02.18 at 8:03 am
It is, perhaps, an open question as to whether Conrad Black will finally attempt to perambulate a fine line in the National Pest, vis a vis the Trudeau/India entanglement. He had an opportunity to do last week, but demurred.
^-^-^-^-^-^-
WTF does that even mean ? Can’t you read? Conrad already covered Trudeau’s costume changes in last week’s column. Sure, he still has his 18th century Ermine robe from his Dominion Days, but now he can only wear it when he plays Lord of the Castle. How do you think Barbie stays so slim?
So where’s the beef – eater?
#215 Smoking Man on 03.01.18 at 1:25 pm
While T2 was in costume doing additions for the next Ballywood Hit movie.
The USA was getting ready to Imposes 10% Traiff on Alum. 25% on Steel. They just dropped the hammer. USDCAD on fire.
Good bye Hamilton real estate.
Oh well thank our lucky stars , atleased we have a woman and indigounous budget.
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Obvious sarcasm here, what is with the racism here Garth?
What racism? – Garth
Love the ad in the transit bus!
#156 Sheppewwa on 03.02.18 at 10:23 am
#215 Smoking Man on 03.01.18 at 1:25 pm
While T2 was in costume doing additions for the next Ballywood Hit movie.
Oh well thank our lucky stars , atleased we have a woman and indigounous budget.
————————————————-
Obvious sarcasm here, what is with the racism here Garth?
What racism? – Garth
********
We all know he was attempting to write “indigent”.
There is no reason for gold to ‘rocket.’ It reflects US$ weakness. A bad place to invest, as always. – Garth
————————————
You are wrong, but I still love you in a platonic way.
I believe, after this next financial crisis that will be the largest ever, that the world will return to a Bretton Woods type system, and I’m hardly the first to say that.
Look at the graph below about this topic. ZERO financial crises between 1944 and 1971. Why? Because the western monetary system was backed by gold and was stable.
https://en.wikipedia.org/wiki/Bretton_Woods_system
What happened immediately after the Nixon Shock in 1971 when we stopped Bretton Woods? A full decade of out of control inflation and instability.
And ever since, banking crises have skyrocketed.
https://en.wikipedia.org/wiki/Nixon_shock
How are things going on your planet? – Garth
dakkie: from your link:
http://investmentwatchblog.com/the-pricking-of-the-canadian-real-estate-bubble/
first of all investmentwatchblog has sacrificed clarity and professional standards to get clicks. It has dropped an article about curling, right in the middle of the real estate article. The author is not obvious. Kevin Nielsen is the author of the curling article and Kevin Muir is the author of the real estate article.
Kevin Muir has written a good article. Here are some quotes:
talking about the BC speculation tax: This has to be one of the stupidest decisions I have ever seen a government make
This isn’t just a slight turning of the screws on housing credit, but more of an attack on real estate.
but I would like to comment on his conclusion: This means that financial bubbles will not be burst by Central Banks. Let me repeat that again. Central Banks will not be bold enough to get out ahead of financial bubbles. Canada is a perfect example. Instead of putting interest rates to levels that would cool the overheating housing market, governments are forced to address the bubbles at a micro-level. As these financial bubbles morph into real problems, governments will try desperate solutions like the B.C. government’s aggressive program.
He has a right and there is evidence to make the conclusion “Central Banks will not be bold enough to get out ahead of financial bubbles. “ but it’s too general and really misses the relationship between the two relevant central banks – the US Federal Reserve and the Bank of Canada. The Bank of Canada doesn’t exactly have a free rein. Interest rates are largely determined in the US. In the years 2006-2008, the US Fed dropped interest rates from 5% to 0% in response to the housing crash in the US. The Bank of Canada followed suit and Canadian real estate soared higher. But now the US Fed has raised rates. It will raise them again on March 21. Billions will be sucked out of real estate and it’s the banks that will do the sucking – when they send a letter to the homeowner saying the rate on your HELOC is going up a quarter point. B20 and declining assessments will reduce the money going back into housing. Where’s the money going to go?
This is the deflationary spiral Mark is talking about. The government promises to spend more on social justice but it doesn’t advance or even protect the lives of the Canadian middle class. In fact the opposite. At both the federal and provincial level ( at least in Ontario ) government attacks small business – part of the social fabric. At the federal level, my personal peeve is Shared Services which is expensive and wasteful. It’s simply an exercise in bureaucratic control.
There is no reason for gold to ‘rocket.’ It reflects US$ weakness. A bad place to invest, as always. – Garth
——————————————————————–
Great American dollar weakness, where does that leave us Canadian dollar .78 cents and dropping.
Not a bad thing in a trade war. – Garth
#156 Sheppewwa on 03.02.18 at 10:23 am
#215 Smoking Man on 03.01.18 at 1:25 pm
While T2 was in costume doing additions for the next Ballywood Hit movie.
The USA was getting ready to Imposes 10% Traiff on Alum. 25% on Steel. They just dropped the hammer. USDCAD on fire.
Good bye Hamilton real estate.
Oh well thank our lucky stars , atleased we have a woman and indigounous budget.
————————————————-
Obvious sarcasm here, what is with the racism here Garth?
What racism? – Garth
*******************************************
dfw.cbslocal.com/2018/02/28/gorilla-statue-removed-after-complaints-it-was-racially-insensitive/
I really don’t get how a Gorilla is Racially Insensitive but it sure triggered some people enough….
Garth… next up are Dog Statues unless they have Male Anatomy. “Bitches” would be gender insensitive…
Dang.. Come to think of it… Canada would ban Male Dog Statues as well as they are not “Gender Balanced”….
This world has gone absolutely insane…
GONE
#153 Steve on 03.02.18 at 9:57 am
Kelowna is like a entitled kid that needs a punch in the mouth. Tantruming around with snot drooling out of one nose hole and nothing but garbage between it’s ears. The love child of Vancouver and Arkansas pontificating about wine aftertaste in a jacked up truck. Blearghhh!
Excellent summary!
Economy slows more quickly than expected, lowering bets of Bank of Canada rate hike next week
http://business.financialpost.com/news/economy/canada-economy-slowed-more-quickly-than-expected-in-second-half
Although fourth-quarter growth fell below the Bank of Canada’s forecast of 2.5 per cent, economists said they still expected policymakers to raise rates again in the coming months.
“They are going to make sure this more moderate growth rate is maintained, so eventually I think you will see further tightening by the Bank of Canada,” said Paul Ferley, assistant chief economist at Royal Bank of Canada.
The central bank has raised rates three times since last July. Markets see a 72 per cent likelihood of an increase in May, while a hike in July is fully priced in.
Nobody really expected a BoC increase in March. – Garth
#122 Floppy on 03.02.18 at 12:54 am
East 33rd sold 1.075.000 soon detached will be under 1 million again…later this year.
///////////////////
Thanks for confirming my suspicions.
This sale follows the trend down of these types of houses that I have been showing the last few weeks.
They were after 1.25 at one stage and then lowered it to 1.09 but still couldn’t get it.
Big bucket of cold water has hit detached…
M43BC
$$$$$$$$$$$$$$$$$$$$$$$
#17 For those about to flop… on 03.01.18 at 5:53 pm
Recent Sale Report/ Realtor Assistance Needed.
I just drove along 33rd ave and saw this very basic looking starter house had a sold sticker on it.
Sold 21 days ago.
I just showed one the other day which sold at 958 e 38th ave the other day that sold for roughly 25% or 300k less than what it could have sold for in spring 2016.
This one was the next step down on the ladder and pretty much the first step on the detached ladder in Vancouver proper.
If the decline continues at this pace it won’t be long before you will be able to pick up a block of East Vancouver dirt for under a million again…
M43BC
772 e 33rd ave ,Vancouver.
Sold on February 8 2018
https://www.zolo.ca/vancouver-real-estate/772-e-33rd-avenue
http://www.andrewsgroup.ca/mls-properties-detail.cfm?sysid=262196486
$$$$$$$$$$$$$$$$$$$$$$$$$$$$
Feel free to make a donation.
Flop For Fox Fund…
http://www.terryfox.org/get-involved/ways-to-give/
#149 Ian on 03.02.18 at 9:25 am
I finally got my letter and finished my verification process.
All of the candidates seemed very concerned about the delay, I don’t know what the party will do if not enough people vote because of missing letters.
They should come up with a plan B, just in case everyone doesn’t get their letters by Monday.
I’m not sure there’s a significant correction in detached prices in the nice TO neighborhoods. Look at this one:
158 Briar Hill Avenue
Asking: $1,599,000
Sold: $1,728,888 (wonder who bid the four 8’s :))
The sold price for this is plain crazy, I don’t think you could get that high a year ago.
So come on Mark, is this a 2013 price, or simply the sellers renovated to the tune of half a million dollar and the same property IS SO MUCH BETTER now? (Hint: you don’t have to answer, it was a rhetorical question).
It’s all about a paucity of listings in demand areas. Case closed. – Garth
As I said, 1 rate increase this year in CAD max.
No increase in march.
https://ca.finance.yahoo.com/news/canadas-economy-grows-1-7-percent-annualized-fourth-133528895–finance.html
Get as far as you can and stay away from the northern peso and TSX.
GDP increase 1.7 while currency declines 3 % in a week?
The BoC doesn’t focus on growth, but inflation and currency instability. – Garth
#56 Entrepreneur on 03.01.18 at 7:05 pm
“…some things never change…There is always a greater fool.” above article.
And encouraged by the realtors, banks and government to sign on the dotted line. Not nice to do the youth who think that people with power and important positions must be in the know. The schools should be teaching how ruthless and corrupt it can be out here in dog-eat-dog world, and to be careful of signing anything.
As for the Bank of Mom I wonder if the down payment by mom a loan with interest or a gift. If a gift I do know that over $500. that gift amount has to be reported on income tax. Or use other methods?
#James…My take on Smoking Man…an investor who pretends to be a alcoholic, addicted to gambling, and a hit with the women. Fictitious character for his book writing. And wants our reaction.
__________________________________________
Pretends, you should have seen his twitter Periscope escapades. This guy was fall down drunk and a real low life. No acting there, no pretending. I downloaded it for fun to show my brother. He couldn’t believe the things this guy does. We laughed pretty dam hard until days later I realized that this guy is an alcoholic with huge mental problems. It is still out there on the net in one of those you tube vids now.
Says the man who helped create the largest housing bubble in Canadian history…
Bank of England chief Mark Carney slams cryptocurrencies; urges action
http://www.cbc.ca/news/business/bitcoin-cryptocurrencies-carney-1.4559143
Calgary has been a snowy frozen wasteland since the New Year — most snow fallen in 25 years, and more this weekend.
Selling into winter isn’t optimal, but where there have been no chinooks? People are hibernating. Part of the reason for the 20% drop.
The rest? Calgary is picking up a bit, but not like it was. It’s still the place to go for jobs and to raise families, just not for engineers and not in O&G.
Donald JTrump is an uneducated goofy con man and a bully. He can not orchestrate anything decent in trade deals unless he has all of the chips plus a few card up his sleeve. So who the hell wants to play poker with a cheater? There is fair an equal trade both ways for CAN/US. The United States also runs a surplus in its iron and steel trade with its northern neighbor. For nearly a quarter-century under U.S. law, Canada has been considered part of the U.S. defense industrial base, as if its factories were American.
“Applying tariffs to Canada, despite its being part of the U.S. defense industrial base since the 1940s, will strengthen WTO claims that this decision is not really about national security,”
He is going to hurt himself and the rest of the USA in the long run.
President George W. Bush last applied sweeping steel tariffs in 2002, but he exempted Canada and Mexico because the US has a critical trade agreement with them, NAFTA. (Those tariffs were dropped a year later when the World Trade Organization ruled them illegal.) Lets see how this one goes.
I’m glad Sylvester Stallone is coming to give insight into the secrets of making money.
Bitcoin and realestate haha
Go Rocky!!
How are things going on your planet? – Garth
———————–
It is actually quite funny, I read on yahoo ‘advisers’ telling people not to invest in gold but in real estate as they are afraid of the rising inflation.
Gold is so old fashion.
I think true contrarians will consider gold at this point.
Nothing else relatively cheap out there.
Go ahead. Lose money. By the way, your posts will be limited from this point on. Be concise. – Garth
Mortgage fraud issues starting to head down the pipe now that prices are compressing.
Look for the big 5 to start making headlines with their “oops we didn’t realize that the customer was lying/falsified their docs/ had secondary financing rather than a down payment etc etc.” Going to be a rather messy year.
York region is about to blow up. Lots of speculation up there and many million dollar crap shacks bought with no equity and lots of credit.
The dark side of real estate. Yes the “big boys” play here. But little kids with no money should not be engaging in high stakes gambling on credit
As someone who has profited handsomely by renting and aggressively investing, I beg to differ. I want to see the Kelowna market crash so hard it will take a generation or two to recover.
You see, I’m a humanitarian. I am ready to save the hapless “homeownever” (aka mortgage ower) by buying their underwater shack from them for pennies on the dollar.
Love, Ogo the Vultch
112 Mattl on 03.01.18 at 10:50 pm
……Well ya, and I said as much above. Everyone is going to feel a RE crash, no one gets out unscathed. Point remains that most homeowners will weather the storm and be fine….
____________________________________
I admire the confidence in Canadian homeowners, however, I disagree completely most homeowners will weather the storm. After all, most are financial idiots.
Most are in debt WAY over their head, and don’t make the kind of money needed to weather such a storm. As bad as the crash south of the border was, it has potential to be WAY WORSE here. We live in Canada remember? We make about half of what our neighbors to the south do AND we pay more tax. The rapidly unwinding RE market is going into a chasm from which it will not return for quite some time, those who are planning to hold on and pay their mortgage no matter what the consequence will only confirm their financial illiteracy.
#138 maxx on 03.02.18 at 8:02 am
#29 Thank God on 03.01.18 at 6:20 pm
“My TSX exposure is 5% .
Trump will crush the Canadian materials sector
Add our housing sector and bye bye TSX
are the TSX bulls still breathing ? :)”
They’re bunched up in one corner of the field looking outward and scared.
—————————————————————
As Mr. Buffett once said, “Be fearful when others are greedy and greedy when others are fearful”.
I’m feeling greedy right now because so many are fearful of the TSX. Upping my exposure in certain sectors.
GONE
#33 the Jaguar – I love that little dog in the blog photo. He’s so alert looking and dignified.
__________________
Love that comment!
Of course, he (she) is dignified! He (she)’s a dog.
But also, isn’t he (she) a corgi?
Go ahead. Lose money. By the way, your posts will be limited from this point on. Be concise. – Garth
———————————-
No problem. It is your blog. I respect that.
“Wow! Cherry pick much? So you had to take the top of the 2000 market (just before it burst) to make your triple comment. You must hope no one looks up the data and calls out your bull sh*t.”
Actually 1998-ish or so probably was optimal for doing the swap. GTA house prices had already started seriously accelerating out of the slump by the time Nortel peaked.
But the data is out there. Yes, the TSX declined, but if you want a parallel, the TSX has done practically nothing in the past 5 years since the 2013 peak of Canadian RE.
You’re right though, nobody ever sells or buys at the perfect time. But the point remains, someone who bought the (then undervalued in retrospect) stock market instead of housing in the 1990s did extremely well and was able to convert their gains into housing at relatively attractive prices. I personally believe that the opportunity to do so this time around will prove to be even more extreme than the results of the 1990s.
Hey SimplyPut…I’m glad you got your verification done!
Soooo I’m hearing from a few PC friends that they actually GOT their voting letter today in the mail. The wonders never cease.
I guess I will find out when I go home later? Draaaamaaa
Not before I hit PJ OBrien’s after work though. Wish Smoking Man was still in town.
#179 TheDood on 03.02.18 at 12:17 pm
112 Mattl on 03.01.18 at 10:50 pm
……Well ya, and I said as much above. Everyone is going to feel a RE crash, no one gets out unscathed. Point remains that most homeowners will weather the storm and be fine….
____________________________________
I admire the confidence in Canadian homeowners, however, ……. As bad as the crash south of the border was, it has potential to be WAY WORSE here. We live in Canada remember? ………
************
I was nodding along with you until I read today (Economist, Feb 22nd) that the US Gov. guarantees more than $6 Trillion of Fannie’s and Freddie’s Big Mac mortgages. Luckily it isn’t the old British Trillion. Student debt is another $1.5 Trillion, but higher education costs more in the US – ergo the rise of the Trumpanzees. Charlton Heston was trying to warn people about “Those damn dirty apes” when they shot him in the throat.* Karma, eh?
* (Original “Planet of the Apes”, 1968 – so bad it’s good)
Hey Pinocchio Pitz, you probably wouldn’t get laughed at so much with the 2013 peak statement, at least if you excluded the GTA and GVR.
Yeah, I know you’ll respond that they were flat too ,but everyone knows that has observed the market ,like for like,unlike for like,20 million dollar Shaughnessy mansion, 20 year old Abbotsford condo,didn’t matter it all went up until late spring/ early summer 2016.
Detached hit the wall in Autumn 2016 and condos carried on their way up.
Mainly people who bought pre-sale condos in areas surrounding Vancouver proper that developers wanted and got Vancouver type prices have been burnt,otherwise most have done o.k.
Still a lot to be written in that story as well though.
Anyway that’s enough time wasted on you…
M43BC
Alistair – if your annoyed with me I’d suggest you are too invested in a housing crash. Hey maybe you are right, there will be blood in the streets and whole blocks of homes in YVR will be in foreclosure. I have my doubts.
I have ALWAYS maintained that folks that bought what they couldn’t afford would get beat up. Personally, I am a RE bear. Could have bought a SFH in Van in 2010 but moved to Valley waiting for the inevitable crash. Which might be here, maybe. Thankfully we stayed in the market, and there is no RE crash that can put us in trouble. I chalk that up to luck, and my belief that middle class Canadians should buy and , hold for it, pay off homes. We bought a home to raise a family in and have done well.
I get that that annoys doomers like yourself, but I am in the majority. You’d think reading this blog that every homeowner is tapped out and that a 10-20% correction would be end times. I guess I don’t see my home going down in value as being the end of the world. Gains and losses are only realized on sale. You think the homeowner that bought at the gta peak in 89 and sold in 2016 did poorly?
I feel bad for the doomers that are waiting for the big one. There is no scenario where by houses take a massive nose dive and the markets, jobs don’t follow. And good luck timing the dip, when do you buy in? When homes in your area hit 30 percent declines? Wait for 40 right, don’t want to catch a falling knife. Is that a dead cat bounce or are homes coming back? Uh oh, homes are up 15% from the bottom, can we afford anymore honey?
How are things going on your planet? – Garth
//////////////////
I thought we were only allowed to ask Mark that?
#168 Samantha @ LifeOnCredit.ca on 03.02.18 at 11:26 am
I’m not sure there’s a significant correction in detached prices in the nice TO neighborhoods. Look at this one:
158 Briar Hill Avenue
Asking: $1,599,000
Sold: $1,728,888 (wonder who bid the four 8’s :))
///////////////
four 8 in Mandarin sounds like ‘death fortune’
ZZZ is up 15% today! I’m reporting this guy for insider trading:
#181 Sound as a Pound on 03.01.18 at 10:26 am
#175 };-) on 03.01.18 at 9:50 am
I tend to agree with #39 Dave on 02.28.18 at 7:26 pm
I don’t trust the government not to change their stance on RRSPs and tax the crap out of them.
An irrational fear. – Garth
***********
I keep everything in cash. $1000 dollar bills stuffed in my mattress. The Feds won’t be screwing over my retirement savings.
Ogopgo – prices in Kelowna were soft forever. They only really took off recently. You could have bought an acreage with a lake and modern house with view 3 years ago for 600k. Those homes are 900 now with very little inventory. You going to storm in when they hit 600 in 5 years and declare victory?
You are my exhibit A vulcher. You missed an opportunity to buy an affordable home, in a nice market, with free money and now you want us to believe you are going to swoop in and smash a 50% off deal with all your liquid investments intact?
Hoping this doesn’t trigger Alistair but thats nuts to believe that folks that missed a phenomenal buying opportunity are going to be the ones that profit from a market correction of crash.
“There’s always a greater fool.”
Possibly but not necessarily an unlimited supply of them.
http://retheauditors.com/2018/02/10/kpmg-the-indictments/
Tuesday, January 23, 2018
5 Former KPMG Executives And PCAOB Employees Charged In Manhattan Federal Court For Fraudulent Scheme To Steal Valuable And Confidential PCAOB Information And Use That Information To Fraudulently Improve KPMG Inspection Results
A Sixth Defendant — Former KPMG Partner and Former PCAOB Associate Director Brian Sweet — Has Pled Guilty to His Role In the Scheme and is Cooperating With the Government
https://www.justice.gov/usao-sdny/pr/5-former-kpmg-executives-and-pcaob-employees-charged-manhattan-federal-court-fraudulent
Why Ambac was one of the KPMG clients that got a second look after inspection tip-off
https://www.marketwatch.com/story/why-ambac-was-one-of-the-kpmg-clients-that-got-a-second-look-after-inspection-tip-off-2018-01-29
Published: Jan 30, 2018 2:46 p.m. ET
Justice Department description of what happened to ‘Issuer-2’ is a dramatic example of how KPMG partners allegedly cheated with stolen regulator data
KPMG indictment suggests many who weren’t charged knew regulator data was stolen
Published: Jan 30, 2018 2:48 p.m. ETSEC chairman says despite an ongoing investigation, companies and investors can continue to use KPMG audit reports
https://www.marketwatch.com/story/kpmg-indictment-suggests-many-who-werent-charged-knew-regulator-data-was-stolen-2018-01-23
====================================
Justice Dept. fines Deloitte $149.5 Million for Taylor, Bean & Whitaker audits
Published: Feb 28, 2018 4:04 p.m. ET
Under HUD’s Direct Endorsement Lender program, TBW was authorized to originate and underwrite mortgage loans insured by the FHA. When a borrower defaults on an FHA-insured loan underwritten and endorsed by a Direct Endorsement Lender such as TBW, the holder of the loan can submit a claim to the United States to recoup losses resulting from the default. To maintain its status as a Direct Endorsement Lender, a lender is required to submit to HUD annual audit reports on its financial statements and related reports on its internal controls and its compliance with certain HUD requirements.
Deloitte served as TBW’s independent outside auditor, and issued audit reports for TBW’s fiscal years 2002 through 2008. The United States alleged that during that time period TBW had been engaged in a long-running fraudulent scheme involving, among other things, the purported sale of fictitious or double-pledged mortgage loans, and as a result, TBW’s financial statements failed to reflect its severe financial distress. The United States alleged that Deloitte’s audits knowingly deviated from applicable auditing standards and therefore failed to detect TBW’s fraudulent conduct and materially false and misleading financial statements. The United States alleged that Deloitte’s audit failures extended to the specific financial arrangements through which TBW carried out its fraudulent conduct. By failing to detect TBW’s misconduct, Deloitte’s audit reports allegedly enabled TBW to continue originating FHA-insured mortgage loans until TBW collapsed and declared bankruptcy in 2009.
“HUD relies on auditors to ensure the soundness of participants in HUD programs. When CPA firms and auditors fail to detect fraud, waste or abuse the consequences are significant to federal programs, and, ultimately, to the American taxpayer and must be addressed,” said Helen M. Albert, Acting HUD Inspector General.
It’s all so local.
“Benchmark price for a single-family house in Greater Victoria reached $710,500 in February, up by 10.6 per cent from the same month a year ago.”
In Canada’s Hawaii, where folks spend much of their waking hours wondering why anyone would live anywhere else in this forsaken winterland of a nation, real estate is doing just fine.
Anyway, off to til the garden. Green stuff everywhere. Yup, even that green stuff.
“We certainly anticipated that we would see some lower numbers this year compared to last,” says Victoria Real Estate Board President Kyle Kerr. “Right now prospective home buyers are met with many hurdles as they start shopping for their new home. They’re in a market that’s experienced long-term low inventory, which means more price pressure and competition on homes. Buyers are navigating increasing interest rates and the new mortgage stress test. These factors all combine to constrain our market.” Doesn’t sound too robust, does it? Sales cratered 19%. – Garth
shelters of a different kind
Beginning in or about October 2016, an Undercover Agent contacted Kyriacou and stated that he was interested in opening brokerage accounts at Beaufort Securities from which he could execute trades in several multi-million dollar stock manipulation deals.
Friday, March 2, 2018
Six Individuals And Four Corporate Defendants Indicted In $50 Million International Securities Fraud And Money Laundering Schemes
Defendants Proposed that Undercover Law Enforcement Agent Purchase a Pablo Picasso Painting to Launder Fraudulent Profits From Stock Manipulation Scheme
https://www.justice.gov/usao-edny/pr/six-individuals-and-four-corporate-defendants-indicted-50-million-international
Wertkin is a former Justice Department lawyer who stole sealed whistle-blower lawsuits and offered to sell them to companies named in the cases. After pleading guilty, he now says the demands of succeeding at a high-powered Washington law firm and providing a better life for his family left him depressed and pushed him down “the wrong path,” according to a legal brief.
https://www.bloomberg.com/news/articles/2018-03-02/whistle-blower-suit-thief-a-doj-lawyer-saw-scam-as-escape
Hi Garth,
SCM is clearly enjoying the obvious loophole of posting in this blog and you are letting him do it. Just pointing in case you didn’t notice :)
Nothing against you SCM, I never read your posts anyway.
Also, I really don’t understand why you let Mark post here.. He thinks Canadian home prices peaked in 2013!!! What planet is he from? I remember you mentioned he has been banned from other blogs too.. why do you allow him here?
I rarely post but I am a regular reader.. just my 2 cents
— Rocky Mountain
#183 Stan Brooks on 03.02.18 at 12:51 pm
Go ahead. Lose money. By the way, your posts will be limited from this point on. Be concise. – Garth
———————————-
No problem. It is your blog. I respect that.
——————
Stan, that short leash can chafe and you don’t get nine lives around here. I don’t know what put the bee in your bonnet, but if you need another outlet see if there’s a quilting club near you. Are you near the Khazakstan-ian border? Quilting aficianados call it “stitch & bitch” (their term, not mine), and they say it can be quite cathartic
Isn’t working with Trump so much fun! Just ask everyone who rides the Donald bus,
Michael Flynn
Sean Spicer
Reince Priebus
Anthony Sacamucci
Steve Bannon
Katie Walsh
Micheal Dubke
Sebastian Gorka
K.T. McFarland
Tom Price
Omerosa Manigault
Dina Powell
Hope Hicks
Rob Porter
Rick Dearborne
Keith Schiller
Josh Raffel
H.R. McMaster ?????
Ivanka Trump?????
Jared Kushner ????????
#161 paul on 03.02.18 at 10:54 am
There is no reason for gold to ‘rocket.’ It reflects US$ weakness. A bad place to invest, as always. – Garth
——————————————————————–
Great American dollar weakness, where does that leave us Canadian dollar .78 cents and dropping.
Not a bad thing in a trade war. – Garth
________________________________________
My point exactly, during the trade war the looser is the one with the highest costs and sell price! So go ahead knock our $$ down trumpian dumb, dumbs.
@186 Fannie
“Charlton Heston was trying to warn people about “Those damn dirty apes” when they shot him in the throat.”
+++++
Ahhh yes
Charlston Heston and his ” B” movie career.
Actually.
You have it backwards.
Heston was shot in the throat when he was first captured by the Apes.
Rendered speechless like all the other humans……
He shocked al the chimpanzees when he shouted out,”Keep your hands off me you damned dirty Apes!”
It was all downhill after that.
“Omega man” was another stinker from the early 70’s starring our overacting hero.
Wil Smith’s movie 30 years later was much better.
Speaking of remakes
Whats the poop on Bruce Willis in a “Death Wish ” remake?
#198 A stitch in time….. on 03.02.18 at 3:35 pm
#183 Stan Brooks on 03.02.18 at 12:51 pm
Go ahead. Lose money. By the way, your posts will be limited from this point on. Be concise. – Garth
———————————-
No problem. It is your blog. I respect that.
——————
Stan, that short leash can chafe and you don’t get nine lives around here. I don’t know what put the bee in your bonnet, but if you need another outlet see if there’s a quilting club near you. Are you near the Khazakstan-ian border? Quilting aficianados call it “stitch & bitch” (their term, not mine), and they say it can be quite cathartic
————————
You are mistaken that restricting my posts is putting me on some sort of a leash/or punishing me in some form ‘around there’ in order to ‘behave’ whatever that means in your mind.
You are also mistaken that I am writing here as I have something to prove and need audience/like Mark.
I consider it charity work and behavioral research.
Overheard somewhere in Toronto on or about April 10, 2018…
“Yeah, and you will make like twenty percent a year. I got Stallone’s autograph, he invests in it too!”
01 crowdedelevatorfartz on 03.02.18 at 3:55 pm
@186 Fannie
“Charlton Heston was trying to warn people about “Those damn dirty apes” when they shot him in the throat.”
+++++
Ahhh yes
Charlston Heston and his ” B” movie career.
Actually.
You have it backwards.
Heston was shot in the throat when he was first captured by the Apes.
**********
Have you never heard of “artistic license”? Don’t you ever watch the Parliamentary channel?
#188 Mattl on 03.02.18 at 1:57 pm
You think the homeowner that bought at the gta peak in 89 and sold in 2016 did poorly?
—————————————————————
Why speculate when you can just look up the numbers?
If you bought at the 89 average and sold at the 2016 average you made 3.7% per year. So that’s pretty awful when you factor in the cost of financing. Likely that first mortgage would have been 10% ish, the next on a 7 handle, the next 6 something, then 4 ish and finally in 09, sub 4%. I’m assuming a 2-3% discount from posted on these, as it’s close enough.
So, no, the peak buyer in 89 in Toronto didn’t do well. At all.
#198 A stitch in time….. on 03.02.18 at 3:35 pm
#183 Stan Brooks on 03.02.18 at 12:51 pm
Go ahead. Lose money. By the way, your posts will be limited from this point on. Be concise. – Garth
———————————-
No problem. It is your blog. I respect that.
——————
Stan, that short leash can chafe and you don’t get nine lives around here. I don’t know what put the bee in your bonnet, but if you need another outlet see if there’s a quilting club near you. Are you near the Khazakstan-ian border? Quilting aficianados call it “stitch & bitch” (their term, not mine), and they say it can be quite cathartic
————————
You are mistaken that restricting my posts is putting me on some sort of a leash/or punishing me in some form ‘around there’ in order to ‘behave’ whatever that means in your mind.
You are also mistaken that I am writing here as I have something to prove and need audience/like Mark.
I consider it charity work and behavioral research
********
Do you work for the CNIB? meow….
@#204 Fannie
“Don’t you ever watch the Parliamentary channel?”
+++++
ahhahahah
Only when Im suffering from insomnia
If the current POTUS hangs around, and actually gets his trade war underway, it may give the B of C some cover for maintaining their current interest rate levels. The US Fed has promised 3 or 4 hikes this year, which could push our Loonie down by 10 to 12 cents, if we don’t hike our rates. And that is not a bad thing.
Hey Gold Bugs. I like the metal, its shinny and makes a great paper weight, but for every ounce of physical gold there are 15,000 ounces of paper gold traded. If you think it is undervalued don’t complain just load up, but don’t expect it to do anything, because unlike say oil, there are no fundamentals at work here.
Speaking of oil. Today the USA bought 3 Million barrels of Western Canada oil at $38.80 (Canadian Crude Index) WTI is almost $62 !!! Opponents of the BC pipeline are heavily funded by smoke and mirror interests in the USA. A nice payback for Tariffs would be offering a choice : pay world price or get your oil elsewhere. But we can only do that if we can get our oil to salt water.
Time to put our Nehru jackets away, we may soon be in an economic war.
@#205 Tater, throw in property taxes, home maintenance and insurance costs. 3.5% looks more like 1% ROI.
That’s not to say the Toronto buyer in 1989 did poorly. If he’s got a paid off house today, then he’s certainly better off having bought than rented all those years, even if he did buy at exactly the wrong time. But I’m betting he had some pretty lean years from 1990-96. And likely watched a lot of his neighbours go under in that time. He took a risk and it ultimately worked out OK for him. Results will vary.
#199 James on 03.02.18 at 3:47 pm
Isn’t working with Trump so much fun! Just ask everyone who rides the Donald bus,
Michael Flynn
Sean Spicer
Reince Priebus
Anthony Sacamucci
Steve Bannon
Katie Walsh
Micheal Dubke
Sebastian Gorka
K.T. McFarland
Tom Price
Omerosa Manigault
Dina Powell
Hope Hicks
Rob Porter
Rick Dearborne
Keith Schiller
Josh Raffel
H.R. McMaster ?????
Ivanka Trump?????
Jared Kushner ????????
…….
Don’t think anyone cares. Stick to chirping me the greatest drunken mental loser that god ever created.
Haha.
More clips from Vegas on Easter Weekend.
Academy award coming.
Looks like the Wailing and gnashing of financial teeth is beginning.
There are two times in a man’s life when he should not speculate: when he can’t afford it and when he can.
Mark Twain, Following the Equator 1897
Breaking: Vancouver home sales tumble amid mortgage, interest rate changes
https://www.bnn.ca/vancouver-home-sales-tumble-amid-mortgage-interest-rate-changes-1.1016015
VANCOUVER — Home sales in Metro Vancouver fell more than 14 per cent below the 10-year average in February as buyers contended with stricter mortgage rules and higher interest rates, according to statistics released Thursday.
The Real Estate Board of Greater Vancouver’s data showed that 2,207 homes sold last month. That’s down nine per cent from the same time last year and 14.4 per cent from the 10-year February average.
Detached homes experienced the biggest drop, down 39.4 per cent compared to the average. Townhomes fell 6.8 per cent, while condos rose 5.5 per cent.
This is a joke. They listed the house in this great condition for only 995K in this area. Of course it will sell for more than asking. Houses around there worth at least 2 millions.
https://www.blogto.com/city/2018/03/three-bedroom-goes-650k-over-asking-uptown-toronto/
” Gains and losses are only realized on sale. You think the homeowner that bought at the gta peak in 89 and sold in 2016 did poorly? “
A homeowner that bought in 1990 and sold at the GTA peak in 2013 did roughly equivalently to a stock buyer who bought in 1990 and sold in 2013.
And since 2013, both have been roughly flat, as was the experience in the immediate post-peak era in the 1990s.
The problem today is that Toronto RE is priced as though its a stock with a P/E of 50+, and a paltry dividend yield of maybe an equivalent of 1% with a 100% payout ratio. The TSX, in contrast, can be purchased with a P/E of 15, and roughly a 3% dividend yield at a 40% payout ratio.
So a lot of upside to the stock market. A lot of downside to the housing as the speculators lose interest in housing and credit tightens. As it has been in the post-2013 peak era quite consistently with B20 and other spread expanding measures being the latest salvos.
#212 650K over asking. on 03.02.18 at 5:02 pm
This is a joke. They listed the house in this great condition for only 995K in this area. Of course it will sell for more than asking. Houses around there worth at least 2 millions.
https://www.blogto.com/city/2018/03/three-bedroom-goes-650k-over-asking-uptown-toronto/
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Do you know how much they put down on it?
If it’s CMHC insured I call dibs on the art.
Re #93 GT I’ve never seen you delete HHCE before , was he off his meds today or something ?