Seriously

Shortly after I finished writing yesterday’s blog post about interest rates going up, they went up.

So two of the Big Five have increased the cost of mortgages and you can bet the other guys will follow. Toronto Dominion was most aggressive, adding almost a half point to its five-year home loan, pushing it out to 5.59%. RBC was gentler, adding 20 bips, for a posted rate of 5.34%. This suggests the Bank of Canada will soon up the benchmark rate it uses for the B20 stress test, currently sitting at 5.14%.

Why did this happen? Will it continue?

The Government of Canada five-year bond had a yield of just 1.6% six months ago, and this week it touched a seven-year high of about 2.2%. That’s an increase of almost 40% in a flash, and happened while the yield on 10-year US Treasuries (the Stormy Daniels of the debt world) touched 3% for the first time in years.

The cost of money, in short, is going up. No surprise there, since the world is inflating again. Global growth is on its way to 4% in 2018. The US economy’s doing pretty good. The Chinese trade war rhetoric is winding down. Kin Jung Un turns out to be a jolly little elf who just wants to be hugged. American corporate taxes have plunged and business profits are romping higher. Unemployment numbers are way down and the States is at technical full employment.

So, bonds are hot. The yield on risk-free government debt is now rivaling the dividends stocks pay, which is why a bucket of money is flowing from equities to fixed income. The election of the Trumpster is widely viewed as the moment in time when the switch was flipped from deflation to inflation, from contraction to growth, and from a low-yield, low-rate world to one in which the poor moisters are lost. Yes, kids, the Eighties are coming back. You’ll love it. Seriously. Lower house prices – but fatter rates.

Of course the posted bank mortgage rate is not the actual rate offered to customers. Five-year mortgages are still available for about 3.3% to renewers, but (a) that will soon change and (b) new borrowers have to prove they can pass the stress test.

So I’ll say it again. We are in the middle of a rate event, not at the end. The Fed has increased six times since the end of 2015 and five times in about the last year. The Bank of Canada has moved three times, and markets are betting the next comes in July.

The broad expectation now is for four Fed hikes this year, rather than the three anticipated a few weeks ago. The next one won’t occur on Wednesday, but like mid-summer, with another in the autumn. The Bank of Canada is expected to go twice by the end of the year, depending on the economic data – especially the pace of job creation.

Those who argue the cost of money will stay put because the central bank is afraid of the housing market are misguided. The bank cares about what you owe, not what you own. Household debt is out of control, with mortgage borrowing at unheard-of levels and HELOCs mushrooming monthly. Policymakers can’t afford to worry about average house prices in Vancouver or Toronto when keeping them aloft means family balance sheets continue to deteriorate. The greatest economic threat is excessive snorfling. Gradually and relentlessly higher rates are designed to throttle that. Besides, governments at all levels – from the feds (B20) to the provinces (anti-foreigner taxes) to the cities (empty houses levy) – have enacted laws to put the brakes on real estate. Forcing mortgage rates higher is entirely consistent.

Finally, remember that roughly half of all mortgages in Canada come up for renewal in 2018 – a quirky coincidence caused in part because so many people opted for cheaper two-and three-year loans when house prices started to explode in 2015. Thousands of families who borrowed at barely more than 2% will be renewing at a 50% increase – plus with B20 in effect most won’t dare switch lenders, seeking a better deal.

No, rates like these will not cause a recession or collapse the economy, as happened in the early 90s. There’ll be no tsunami of defaults. No jingle mail. No mattresses on the front lawn as bailiffs change the locks. No drama. Just the slow drip-drip loss of equity, as buyers are squeezed for financing and sellers get lonely.

By the way TD – while raising its fixed-rate mortgage rates – just dropped its variable by 15 bips. Be careful. This is the banker equivalent of a Victoria’s Secret push-up bra.

Can I still say that?

153 comments ↓

#1 For those about to flop... on 04.27.18 at 5:50 pm

Recent Sale Report/Realtor Assistance Needed.

This house in Coquitlam sold 25 days ago.

It was always borderline Pink Snow as after they took 30k off the held firm until the sale.

The main reason I kept this one in the folder was that despite asking 1.56 it was only assessed at 1.35 with detached falling out of favour in a lot of places.

Is their mood improved or did it just get a lot Fowler…

M43BC

807 Fowler Court, Coquitlam paid 1.41 April 2016 ass1.35

Jun 29:$1,598,000
Jul 27: $1,568,000
Change: – 30000.00 -2%

https://www.zolo.ca/coquitlam-real-estate/807-fowler-court

https://www.bcassessment.ca/Property/Info/QTAwMDAzWE44NA==

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

Feel free to make a donation.

Flop For Fox Fund…

http://www.terryfox.org/get-involved/ways-to-give/

#2 Ian on 04.27.18 at 5:53 pm

Dogs, QE4 will not play.

When the US Fed had to deal with the stock market collapse in 2000, the Fed Funds rate was 6.5%.

In the housing gong festival in 2007, the Fed Funds rate was 5.25%.

Lots of ammunition to reduce rates, kick the can down the road, and create a further bubble.

Now Fed Funds are 1.25%. That’s only five bullets in the chamber to reduce rates.

Millmech sorry I didn’t get back to you sooner. Post 163 yesterday.

#3 Penny Henny on 04.27.18 at 6:01 pm

Hey Garth, that dog in today’s photo looks just like you

#4 Penny Henny on 04.27.18 at 6:04 pm

The Government of Canada five-year bond had a yield of just 1.6% six months ago, and this week it touched a seven-year high of about 2.2%. That’s an increase of almost 40% in a flash, and happened while the yield on 10-year US Treasuries (the Stormy Daniels of the debt world) touched 3% for the first time in years.-Garth

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

so this begs the question why are CPD and ZPR down so much lately?

A better question is why you bother tracking the daily valuations of assets that are bought to provide tax-efficient income? – Garth

#5 Robert B on 04.27.18 at 6:05 pm

Kin Jung Un turns out to be a jolly little elf who just wants to be hugged

Hilarious….

#6 Kelsey on 04.27.18 at 6:08 pm

This business expansion is among the longest in history and we are potentially only a few rate hikes away from an inverted yield curve. Despite the long expansion, the US has to fund $1.2T deficits with a balance sheet unwind of $600B annualized starting October. Global debt-to-GDP is about 325%. Unfunded liabilities make official government debt look like child’s play. State and local pensions teeter during the peak of a bull market.

What happens during the next recession?

#7 JWF on 04.27.18 at 6:23 pm

Why not raise the posted rates? They know who can and can’t move due to B20. This way people that could move get a big discount on the posted rate and feel good while those that can’t move increase the bank’s bottom line.

#8 Mark on 04.27.18 at 6:23 pm

US at ‘technical full employment’, yet employers are still inundated with job applicants, and college grads can’t find jobs?

Doesn’t add up. And why is US retail basically dying if there’s all these people with jobs and the economy is at alleged ‘full employment’?

Something is very broken with how the stats are being kept and/or are being interpreted. We know that even a single mile driven for the UBER taxi cab service (who literally will hire anyone), or a single pizza delivered, makes a person, according to the BLS, “employed”. Job quality is pathetic. Most firms who advertise even remotely reasonable quality jobs are buried beneath mountains of applicants. The housing market is levitating again based on debt, not personal household earnings. The yield curve is basically flat, which means US banks (which depend mostly on yield curve arbitrage) are going to be on death’s doorstep sooner or later.

Meanwhile Canadian RE is in a slow-motion collapse. Consumers are rapidly losing borrowing power. And a lot of people who, 5 years after Canadian RE peaked, have to refinance this year are about to be bent over and forced to renew at very high real rates of interest given the practically non-existent inflation in Canada, and soon to be deflation.

#9 Immature Canadian Millenial on 04.27.18 at 6:26 pm

The dog has the face of Garth Turner. Did Garth Turner evolve into a puppy?

#10 Howard on 04.27.18 at 6:32 pm

Yes, kids, the Eighties are coming back.

——————————————

Will you be getting a perm?

#11 Lawnboy on 04.27.18 at 6:33 pm

Debt? Let’s talk about them leafs….and the Stanley Cup debt.

Q: Why did Hamilton not get a franchise?
A: Because Toronto would want one!

#12 Penny Henny on 04.27.18 at 6:40 pm

#4 Penny Henny on 04.27.18 at 6:04 pm
The Government of Canada five-year bond had a yield of just 1.6% six months ago, and this week it touched a seven-year high of about 2.2%. That’s an increase of almost 40% in a flash, and happened while the yield on 10-year US Treasuries (the Stormy Daniels of the debt world) touched 3% for the first time in years.-Garth

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

so this begs the question why are CPD and ZPR down so much lately?

A better question is why you bother tracking the daily valuations of assets that are bought to provide tax-efficient income? – Garth

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

I find it interesting.

#13 20 more years on 04.27.18 at 6:41 pm

The year is 2037 and the Bank of Canada may possibly raise rates above the 2% mark, while warning people not to buy houses.

#14 Briana on 04.27.18 at 6:41 pm

I disagree with you Garth. The Ontario economy is headed for a major recession. The liberals have an 11.7B deification according to auditor general and are still spending like crazy. The general population has record debt and the main factor supporting GDP has been housing…which has incurred a major downturn. All the businesses and agents that rely on housing will continue to be hurt and this will impact the entire economy. Business closures and job losses are soon to come which will only exacerbate the housing downturn and more and more people are forced to file for bankruptcy… stay tuned folks!!! This won’t end well….

#15 JSS on 04.27.18 at 6:41 pm

Excellent blog tonight

#16 Whatcha Minnie on 04.27.18 at 6:41 pm

Last Saturday I woke up at 6:30, and went for a morning walk. I spent 2 hours over there and after that i came back to my house. And i got fresh and took my breakfast.Then i worked on my PC for some time.

After that i went to my relative’s home and after spending a good time there i just came back to my home and took my lunch. After that i took a short sleep.
I spent my evening with my family.And after that i played games on my PC and around 9pm i took my dinner and at about 11 pm i slept.

#17 john m on 04.27.18 at 6:43 pm

TD is also increasing the rates on credit cards effective May 1 2018.I have a TD emerald card (the lowest interest) which is presently at TD prime+1.5%< it is rising to TD prime + 4.5% …it rises all the way up the ladder depending on one's credit score.

#18 Goldie on 04.27.18 at 6:43 pm

It’s nice to see the blog getting back to its classic style these last couple of posts. Keep up the good work big guy.

#19 MF on 04.27.18 at 6:44 pm

#6 Kelsey on 04.27.18 at 6:08 pm

“What happens during the next recession?”

#2 Ian on 04.27.18 at 5:53 pm

“Lots of ammunition to reduce rates, kick the can down the road, and create a further bubble.

Now Fed Funds are 1.25%. That’s only five bullets in the chamber to reduce rates.”

-That is the REAL reason for rising rates. We need to have a cushion for the next recession (a 100% inevitability).

The growth story I don’t really buy.

MF

#20 Interest Rates? on 04.27.18 at 6:45 pm

What happens when interest rates rise?

BC House prices rise because interest rates have no bearing on BC money laundering through real estate.

I am going long Lamborghini on Burrard St.

#21 Debtslavecreator on 04.27.18 at 6:46 pm

Government debt in our textbooks is “risk free” but any study of financial history even the last 10 years confirms that government debt is not risk free. It is in fact always being defaulted on. Most typically through ongoing currency debasement as massive debt bubbles flood asset markets with a huge supply of currency units created via borrowing then in many cases governments default in nominal / outright terms via haircuts
Junior bond holders in Greek debt already had this happen in the last 7 years
Most common though the default is handed in real terms as the currency loses most of its buying power and many governments simply force shorter bonds into long bonds at much lower coupon rates
So while technically most govts don’t default by not paying principal , they do default through forced actions and by destroying the currency
Over the next 3-4 years we will see a historic sovereign debt and currency crisis
Government debt IS NOT risk free
It is in fact an unsecured high risk asset

#22 good thing on 04.27.18 at 6:50 pm

Garth speaks in vagueness…’rates are going higher’

he never says how high. What to know why?

LOL

we have gone from a 1.6% yield to a WHOPPING 2.2%… this causes excitement , for some…

In the bond world, that’s yuge. You sounded smarter when we couldn’t hear you. – Garth

#23 Linda on 04.27.18 at 6:52 pm

Does anyone know what dog breed is in today’s blog picture? Very handsome though definitely requires lots of room to roam or a very dedicated owner who is willing to take the dog walking considerable distances on a very regular basis.

#24 it's a mess on 04.27.18 at 6:52 pm

The GVRD RE market is a mess. The prices for entry level shoe box “homes” today are the equivalent of what a nice McMansion in a desirable beachfront community cost 15 years ago. Wages have barely gone up during this time. New buyers have to take on a crap load of debt just to afford a roof over their heads.

The McMansions with $3 million + pricetags are lingering on the market while investors are gobbling up anything in the $500 to $800 range and manipulating the prices up to breaking point. We’re talking shoe boxes the width of a single garage on 3 floors with little sound proofing sprouting everywhere like mushrooms. Entry level prices are 600s in Surrey, Langley and Abbotsford. Those are much smaller units than our first unit 15 years ago at a 3rd of the price. How a family is supposed to live in those boxes is beyond my imagination. When multiple families are living in all these places, the noise levels must reach painful thresholds.

It’s a complete disaster. We’re not meant to live like this. Instead of preaching affordable housing in the GVRD, the Provincial government should push for investment in and around Kamploops and setup government shops and offices there to attract people away from this mess. It’s not healthy to live in the Lower Mainland.. even when the sun is out!

#25 crowdedelevatorfartz on 04.27.18 at 6:53 pm

What, in all that is Holy, is THAT breed of dog?

#26 well with real estate .. on 04.27.18 at 6:54 pm

correcting, at least we have the TSX to increase our wealth? lol, sorry….was kinda funny

#27 Waiverless on 04.27.18 at 6:55 pm

“Those who have come here for years to say rates would never increase have been proven wrong. There’s more to come. No recession (except in BC). -Garth Yesterday”

Sales are cratering in BC. Richmond alone is down 70-80% YoY for the detached market. How you can have a decline like that and not shatter the bull RE momentum.. in 2-3 months the devastation will be apparent. Garth probably had it right yesterday – no recession, except in BC

#28 Camille on 04.27.18 at 6:56 pm

Hi. CPD, ZPR. Maybe some are moving out of preferreds to buy bonds? I am not worrying about that, not speculating with my preferreds.

#29 ANON on 04.27.18 at 6:56 pm

Lemme guess, interest rates rise because of unstoppable growth&inflation. Happy Days R Us!

I did NOT peek into the article, scout’s honor! Cross my heart and stuff :)

#30 pay your taxes on 04.27.18 at 6:59 pm

“A better question is why you bother tracking the daily valuations of assets that are bought to provide tax-efficient income? – Garth”

Doesn’t the price of those assets affect their yield? People who bought them back at their peak took quite a capital hit, is their income down too? That would be a bitter pill to swallow when everyone else has been making out like Bandits (had to get your dog’s name in there).

I wonder how many people are slowly being boiled alive by the rate increases, property tax increases, fuel price increases, and inflation in general. It’s going to be a long, hot summer.

#31 Mike on 04.27.18 at 7:00 pm

“This is the banker equivalent of a Victoria’s Secret push-up bra.

Can I still say that?”

Classic….absolute literary genius Garth! Well put sir.

#32 Zapstrap on 04.27.18 at 7:07 pm

#10 Howard on 04.27.18 at 6:32 pm

Yes, kids, the Eighties are coming back.

——————————————

Will you be getting a perm?
—————————–

Will Bill Cosby be popular again?

#33 Nonplused on 04.27.18 at 7:11 pm

As I went into much more detail yesterday than I have time to do today (Friday, have to hit the pub), rising interest rates will not at this point contain Canadian debt expansion, they will exasperate it. The interest, at this point, can no longer be serviced by earnings or taxes at all levels from the individual right up to the government and any interest charged must be met with new debt. Not for the 0.001% of course, but for the government and the 99% this is the case.

So, as interest rates rise, as they must if we want to avoid a currency collapse which would be a very bad thing, Turdeau’s deficits will also rise because the tax revenue just isn’t there to balance the budget now, let alone fund higher interest rates on the current debt. Joe Blow Canadian is going to be faced with pulling Johnie out of hockey or just borrowing another $2000 from his HELOC. You know what he’s going to do? He’s going to borrow another $2000. He knows he can’t pay it off anyway. Strangely, what most people do when they realize they have no way out of their debt problems is to borrow more, not to stop. Why would you? One last party before the flood comes. Kind of like those people in the movie “Independence Day” that were partying under what turned out to be the alien phaser guns.

The logic proved itself in the 2008 collapse. People in the US who had used HELOC’s to buy RV’s lost the house but they kept the RV, so they had a place to sleep. So, perversely, the smart thing to do when eventual bankruptcy is inevitable is to go out owing as much as you can and use the proceeds to buy thing the lenders can’t take back. RV’s, motorcycles, quads, fishing rods, anything that isn’t part of the house title.

Ever wonder why in a country where debt is at such historic levels everyone seems to have not only a quad but a Skidoo too? And a toy hauling/camper trailer? HELOC’s. The bank gets the house back but not the trailer and not the toys in it. It’s devious, but desperate times call for desperate measures.

It kind of reminds me of those bumper stickers that used to be popular years ago: “He who dies with the most toys wins”, and something along the lines of “When I die I hope my banker has a lot to cry about”.

The average person has a fairly short term planning horizon. It was years ago the average person stopped thinking about “paying off” their mortgage. Debt has now become for all of us just a number on a statement.

#34 pay your taxes on 04.27.18 at 7:11 pm

#8 Mark

“And a lot of people who, 5 years after Canadian RE peaked….”

A thought provoking post until this line popped up. Then it went off the rails. Even well educated people can be afflicted with cognitive dissonance.

The engineers I know are highly paid and love their work. I sincerely hope that you can find employment in your chosen field and experience what they’ve got. You have to be willing to start at the bottom though and probably move out to the middle of nowhere for a while.

#35 mark on 04.27.18 at 7:11 pm

if you had a mortgage due for renewal next year, what would be your best advice. Thank you

#36 Doug t on 04.27.18 at 7:14 pm

Bankers and politicians – u gotta love the way they wield power at their whim

RATM

#37 Fake News Again on 04.27.18 at 7:15 pm

Un-employment WAY down? HAHHAHAHA what a joke.

First of all 30% of the population works for the govt directly or by proxy (roads and bridges or 100 BILLION dollar email contract rip off IT artists). These people DO NOT put any cash into the economy. Then you have 15% of people on welfare, disability, can’t find work etc. Then you have the McJobs of which there are plenty. Again no car/house payments from 12 bucks an hour…….

Can’t imagine why the first world keeps digging its own grave when it believes “EVERYONE” is working.

#38 ShawnG in TO on 04.27.18 at 7:18 pm

funny, td is also unilaterally raising Heloc rates

https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-how-the-interest-rate-vise-is-closing-on-people-with-home-equity-lines/

from prime+0 to prime+0.2 on their best clients, to prime + 1 to prime +1.5 on lesser clients.

pictures of the td letters are popping up on social media like alleged suspicious house fires during housing downturn.

sure, economy will not crash, just squeezed really really really hard.

#39 Ian on 04.27.18 at 7:20 pm

#19 MF

The problem is there is no cushion to raise rates.

We are on verge of recession today and if we do a ‘sell in May and go away’ on the US stock market, this discussion is well and truly over. No more rises, and no QE4.

The bullets in the chamber have well and truly run out.

#40 burnaby guy on 04.27.18 at 7:26 pm

“a quirky coincidence caused in part because so many people opted for cheaper two-and three-year loans when house prices started to explode in 2015.”

Hey 2013 peak/apex RE Mark – Garth is saying it again – RE did not peak in 2013. I know you’re going to post a long reply and link to Ross Who so I better get my mouse ready.

#41 figus makum on 04.27.18 at 7:28 pm

Millenials and first time home buyers, Tim Hudak and OREA has your back with their new advocacy campaign. Just in time for the Ontario provincial election.

Please see below:

Good afternoon,

For many young Ontarians today, the Canadian dream of home ownership is slipping away.

OREA wants to help keep the dream of home ownership alive. That’s why we’re launching one of our biggest public advocacy campaigns yet called, Keep The Dream Alive (KTDA)!

This Monday, April 30th at 10 a.m. we’re unveiling a brand new ad that will run for the duration of the 2018 Ontario Provincial Election Campaign (April – June). We’ll also share with you a link to our new website where you can take action by emailing your local candidates who are running for political office in the upcoming Provincial Election.

Kicking off the launch are Tim Hudak, OREA CEO, and Nick Nanos, Founder and Chairman of Nanos Research Corporation, via a LIVE broadcast available here. (https://www.orea.com/Townhall/Keep-The-Dream-Alive)

During the broadcast, Nick Nanos will be presenting new research that looks at the state of the real estate market from the perspective of millennials and first-time home buyers. Nik will also be previewing the latest polling information on the Ontario political parties heading into the June election.

We want the KTDA campaign to let candidates in all 124 Ontario ridings know what young families are up against. We want political parties to commit to making home ownership more affordable.

Please mark your calendars for Monday, April 30th at 10 a.m. and tune in here!

Together, Ontario REALTORS® are working to Keep The Dream Alive!

Sincerely,

David Reid
2018 OREA President

#42 conan on 04.27.18 at 7:29 pm

“Can I still say that?” -Garth

Yes. That still passes as witty banter IMHO.

https://www.youtube.com/watch?v=dGu6v2OjW8s

#43 FOUR FINGERS WATSON on 04.27.18 at 7:33 pm

…….So get the lower variable rate mortgage. Chances are rates will not go up much if at all and may even drop again. Zzzzzzz

#44 Juve101 on 04.27.18 at 7:41 pm

“Kim Jung Un turns out to be a jolly little elf who just wants to be hugged”

God I love this blog

#45 Wallflower on 04.27.18 at 7:43 pm

#22 Linda on 04.27.18 at 6:52 pm

Portuguese mountain dog?

#46 Juggernaut on 04.27.18 at 7:47 pm

Sorry, but on Vancouver Island, B20 and rising rates have been a nothingburger. Buyers were cautious post January, and demand was brought forward, hence the 40% decline in sales. Now that B20 is full effect, April has been on fire with quality homes sold between 1-4 days and many over asking. Buyers now know that B20 is not the big ‘boogey man’ and supply remains limited, so its game on again for RE.

The BC market is an unstobble juggernaut with 9 lives And no, this is not some RE pumper – my access to listings gives me the data, which is depressing.

Perhaps all those years of saying rising interest rates, changed mortgage rules, massive increases in supply would soften market are moot. Perhaps they are extraneous to the true driver of prices…

It seems that after a decade, the true speculators and greaterfools are those that sat on the sideline renting, and investing in meagre 5% returns on unleveraged balanced portfolios.

They are true ‘speculators’ as they are speculating that prices will come down from rising rates, mortgage rule changes, and changes in supply.

Always nice to hear from Re/Max. – Garth

#47 Reynolds531 on 04.27.18 at 7:47 pm

I second the job quality motion. I can probably list 20 former colleagues, in their forties who should be earning top dollar who now work in low end survival jobs.

And as mentioned before by Garth, that degree from 1994 is worthless. So is your experience. You better “know someone” or you’re screwed.

#48 Cheesetoast on 04.27.18 at 8:01 pm

Caucasian shepherd dog

#49 Reynolds531 on 04.27.18 at 8:09 pm

Someone above asked for advice for a mortgage renewing in the next year.

Respectfully if Garth doesn’t mind, and if you’re resolved to stay in the house….

Most banks allow early renewal. 150 days. That policy can be your friend.

#50 D C on 04.27.18 at 8:18 pm

Pretty sure it’s a Leonberger. I’ve met one as a service dog and they are really great.

#51 Willy H on 04.27.18 at 8:20 pm

Normalized interest rates are long overdue.

We are in this asset-bubble mess because of artificially low interest rates distorting markets.

The potential impact on the housing sector in GTA is enormous.

It’s risk-on.

Builders have not had to control costs or capital asset acquisition for years because they could increase prices 5-10% annually as near insatiable Greater Fool demand stampeded through their showrooms! It was a licence to print money.

Those days may be over as higher interest rates moderate housing values and the ability of consumers to take on debt.

The icing on the cake, gas-prices have hit near record levels. This price shock will work it’s way through our economy at all levels. This reality, barely mentioned in the business media.

#52 Trump $1 trillion annual deficits on 04.27.18 at 8:22 pm

Hey Garth, where does the government get the money to pay this guaranteed 3% to “””bondholders”””?

Done your taxes yet? – Garth

#53 When Will They Raise Rates? on 04.27.18 at 8:25 pm

It should be crystal clear to anyone paying attention that rates will continue to rise unabated until something breaks south of the 49th, irrespective of the Canadian economy or Canadian RE.

Canadian RE bulls benefited wildly while they did QE, ZIRP and NIRP, and now as the CBs normalize rates and unwind their balance sheets, Canadian RE bulls are gonna get rekt.

Simple as that.

#54 Millmech on 04.27.18 at 8:27 pm

#2 Ian
I believe we are an upward trend and it is best to prepare and plan for rates close to 10%, the banks don’t care about people just profits.Even if the central banks lower rates the big5 will not pass those rate cuts along.I am surprised that they didn’t go a full point because real estate is a religion in Canada and people wil work 16-18hrs a day to keep their house and the banks know it.
The overtime/cleanup sheet at our plant is now full and the main people signing up are the real estate investors, so I am assuming they are either going to get ready to vultch or they are getting in dire straights(I posted a while back about our plant 2 week shutdown and how people lost it because they couldn’t afford to miss a payday).

#55 mike from mtl on 04.27.18 at 8:30 pm

No, rates like these will not cause a recession or collapse the economy, as happened in the early 90s.

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

We’ll see about that, BoC is only doing the bare minimum and the FED is doing their usual play before the next ‘big one’. Gotta have some spare bullets.

Rates are going up (relatively speaking) true but we are so far off from say a decade ago that will not return without consequences.

FED always raises into the enviable that it is already too late, nothing new here.

#56 Comrade on 04.27.18 at 8:37 pm

For those wondering what the breed it is
https://en.m.wikipedia.org/wiki/Šarplaninac

#57 D C on 04.27.18 at 8:37 pm

@ #47 Cheesetoast: yes, you could be right.

#58 Inflate on 04.27.18 at 8:39 pm

Officially, inflation rate is still low.
Prices on the street, not so sure about actual prices on the street.

Anyways, w the figures so low, how can BoC justifty more increases?

My guess is that we did see last increase fir a while.

#59 Jerry on 04.27.18 at 8:41 pm

“Sorry, but on Vancouver Island, B20 and rising rates have been a nothingburger. Buyers were cautious post January, and demand was brought forward, hence the 40% decline in sales. Now that B20 is full effect, April has been on fire with quality homes sold between 1-4 days and many over asking. Buyers now know that B20 is not the big ‘boogey man’ and supply remains limited, so its game on again for RE.”

You sound like someone who is terrified of what is really happening here. Let me get this straight because there has been 2 weeks of average sales your calling “game on” We will still end up down about 20% in sales from 2 years ago at least in the capital regional district. If you haven’t figured it out yet corrections don’t happen overnight and inventory continues to build. The reason why there are more sales this month is because those buyers who were on the sidelines the past 2 years because of no selection finally have more inventory to choose from. I also believe that the spring market in BC is covering up how bad things really are. Close to the end of the year we will begin to see the real effects of all the new regulations. I’m guessing your Realtor firm has already written up the spin for that time period

#60 Deplorable Dude on 04.27.18 at 8:49 pm

Yesterday…..’I didn’t see Trump at the DMZ. Kim has assumed the role of hero. Who knew?-‘Garth

Trump applied economic pressure (aka trade tariffs) to China..and sanctions to NK……it worked…..both the Korean President Moon, and his Foreign affairs minister both publically attributed this historic success to Trump.

Sucks I know….Trump is literally fixing the world…..Iran is next.

#61 Ustabe on 04.27.18 at 9:13 pm

What, in all that is Holy, is THAT breed of dog?

While it may be a Šarplaninac as posited above, it looks too large to me for that.

years ago there was a fellow up Island who played with wolves and wolf hybrids. The largest animal being used as a dog I have ever seen was a wolf/St Bernard cross that he produced.

Trouble with a dog hat size is you need a trebuchet to remove the turd piles and they don’t live very long.

They sure can deal with those emergency back up dogs that so many folks seem to like today…the yappy ones.

#62 Bob on 04.27.18 at 9:19 pm

Dog is Russian Ovcharka breed.

#63 Conn Smythe on 04.27.18 at 9:20 pm

#153 Proof
There will be no housing collapse in this great city.”

Why not ? – “Because I said so.”

“…great city” – How many great cities have you ever visited? I am guessing very few. Or, you could just be legally blind I suppose.

Your comments crack me up. Shall I list some of the cities I have visited? Went to school in LA for four years, yearly visits to Manhattan, I have visited Paris, London, Rome, Milan, Amsterdam, Copenhagen, Stockholm, Oslo, Helsinki, London as in England, Berlin, Geneva, shall I continue?

The reason there will not be a housing collapse is simple. The world’s largest greenbelt was put around Toronto in 2005. 7500 sq km worth and it may be expanded. Further, demand is huge for housing. 60,000 immigrants a year plus local demand. Economics 101. Low supply high demand equals what? Even you should be able to figure that one out.

#64 Paddler on 04.27.18 at 9:27 pm

So lots of people have to renew their mortgages this year . Pretty easy decision lock in for 5 more years for around 3.3%. A deal. Turn off the noise about interest rates for another 5 years.

#65 Tony on 04.27.18 at 9:36 pm

Re: #38 Ian on 04.27.18 at 7:20 pm

The central bankers also know the phrase “sell in May and go away”. If I ever wanted to be long stocks one month of the 12 months in a year May would always be the month I’d want to be long.

#66 soost on 04.27.18 at 9:41 pm

Hey Garth, you don’t think that the rate increase will cause recession or major defaults but do you still believe in the inverse correlation between mortgage rates and Real estate purchase price? Do you think that it will hold predictably true in the gta?

#67 pytrgez on 04.27.18 at 9:53 pm

Garth,
Great blog.
What is a better preferred ETF option for a 5-10 year horizon, CPD or ZPR?

#68 INTO THE SUNSET on 04.27.18 at 9:54 pm

#90 WM on 04.27.18 at 12:18 am
——————————————————————Only #90 WM did the research about #74 I submitted on last night’s blog.

It’s totally UNTRUE !!
Congratulations WM ! One out of 122 !!!
I wanted to see how many would do the research I suggested.

#69 mark on 04.27.18 at 9:57 pm

Is that Bandit Snr?

#70 crdt on 04.27.18 at 10:01 pm

So I just learned of a young man with a very long truck loan term at $500 a month till death, just got approved for a $750K mortgage. He is being “cautious” and only using $590K. Party on… I was actually trying to guess how long it will be before he gets into trouble with the truck. Imagine getting out bid by one of these kids…

#71 Cheesetoast on 04.27.18 at 10:12 pm

As I said, it is a Caucasian Shepherd also known as Caucasian Mountain Dog. The breed can reach 200 pounds. https://www.europuppy.com/blog/the-truth-about-the-caucasian-mountain-dog/

#72 Hugh jassel on 04.27.18 at 10:18 pm

Garth

If you consider US treasuries as risk free, you’re deluding yourself.

Their debt situation has never been worse and they just reduced tax receipts.

Fed can’t unwind the balance sheet without pushing bond yields up and everyone is leveraged. Corp debt, munis the works

Fed is playing chicken only a matter of time.

#73 LP on 04.27.18 at 10:18 pm

I think the dog in the photo is a Caucasian Shepherd. Send my prize to …

F70+ON

#74 Leo Trollstoy on 04.27.18 at 10:23 pm

Interest rates going up

Inflation ramping up

Told ya so

You’re welcome

#75 Leo Trollstoy on 04.27.18 at 10:24 pm

Remember when Toronto real estate prices peaked in 2017? Pepperidge Farm does

I wonder when Toronto condo prices will peak

I say next year!

#76 Leo Trollstoy on 04.27.18 at 10:26 pm

US economy BOOOOOMING

Coastal middle class @$300k/yr household driven by tech and other high pay jobs

https://www.cnbc.com/2018/04/27/sam-dogen-a-middle-class-lifestyle-now-costs-over-300000-a-year.html

$US all day every day!

You’re welcome

#77 BCWally on 04.27.18 at 10:38 pm

Hi Briana read your post and I think you have something there. I’m beginning to to think that things will end badly too but I’m not sure how bad.
My thoughts aren’t so much about real estate as they are about the staggering debts Canadians have amassed.
The math gets really bad because large increases in monthly payments aren’t too hard to reach when you start at such a low number like 2%.
Do you read Bloomberg? There have been a few articles on the possibility of your scenario recently.
Granted, those articles can be overdone but this is exactly the way we are seen in the US.
As far as a real estate crash, I have read that only 8% of a defaults crushed the US housing market over a period of several years. Is this true? If so, then what percentage would start such an event in Canada?

#78 Dead Cat Bounce on 04.27.18 at 10:42 pm

The dog in the photo is a Chow and German Shepard cross. The photo is taken at a lower angle with a vertically challenged chap to give the illusion that the dog is a larger size.

#79 Nick on 04.27.18 at 10:49 pm

“The yield on risk-free government debt is now rivaling the dividends stocks pay”

So a few percent on a bond rivals 5% on a Canadian dividend stock? Not sure how this computes.

#80 Truth Deliverer on 04.27.18 at 10:56 pm

So basically Poloz is a useless nerd that is irrelevant.

Maybe he should comb his hair.

#81 morris lutzluckily on 04.27.18 at 11:01 pm

The Government of Canada five-year bond had a yield of just 1.6% six months ago, and this week it touched a seven-year high of about 2.2%.”

Garth how can the average investor profit from this via an ETF?

#82 Doug in London on 04.27.18 at 11:02 pm

The yield on risk-free government debt is now rivaling the dividends stocks pay, which is why a bucket of money is flowing from equities to fixed income.
———————————————————-
Yes, that explains why utility stocks are down but what about REITs? They seem unaffected by these increasing interest rates. Any idea why?

#83 morris lutzluckily on 04.27.18 at 11:03 pm

Ok blog dogs, which pooch ressembles the great leader of this blog more? Exhibit A in the blog or exhibit B in the link below.
https://kiwikidsnews.co.nz/dog-looks-like-human/

#84 Big Kahuna on 04.27.18 at 11:21 pm

Caucasian Ovcharka-scary combo of innate aggression and size https://www.youtube.com/watch?v=hYCpON2c4PA

#85 Ronaldo on 04.27.18 at 11:33 pm

#22 Whatcha Minnie on 04.26.18 at 6:39 pm

Well, we flew to Denver, rented a truck & trailer, then camped all over the Colorado Rockies. Then we drove to Utah & have visited “The Arches”, “Zion National Park”, and today “Bryce Canyon”. Utah has amazing rock formation sites and people come here from all over the world. It’s been a great vacation. I just hate driving inches from cliffs!
—————————————————————
Glad to hear you had a good holiday Ruthie V. – nice of you to keep everyone up to date. When you heading back home to San Jose? Wow, 463 friends and 703 reviews, that’s impressive!

https://www.yelp.com/topic/san-jose-where-did-you-go-on-your-last-vacation

#86 Fake News Again on 04.28.18 at 12:24 am

Reynolds531 on 04.27.18 at 7:47 pm
I second the job quality motion. I can probably list 20 former colleagues, in their forties who should be earning top dollar who now work in low end survival jobs.

And as mentioned before by Garth, that degree from 1994 is worthless. So is your experience. You better “know someone” or you’re screwed.

_______

Or be a slave owner……I mean entitled Govt Worker.

#87 FOUR FINGERS WATSON on 04.28.18 at 12:29 am

Kin Jung Un turns out to be a jolly little elf who just wants to be hugged.
………………………

He killed his brother. Remember ?

#88 Scully on 04.28.18 at 12:31 am

I am going to take a guess – Tibetan Mastiff

#89 MF on 04.28.18 at 12:42 am

#63 Conn Smythe on 04.27.18 at 9:20 pm

How dare you?! You are violating one of the main unstated rules in the comments section:

-NEVER praise Toronto.

You are only allowed to praise small towns with no economy or life.

You may get a pass this time, but next time I doubt you will be so lucky.

MF

#90 Fuzzy Camel on 04.28.18 at 12:59 am

Financial Post just had a stern warning to everyone, expect an oil shock in the new few months.

Canadians are commuting further and further to buy cheaper houses outside Toronto.

They are about to get pinched, rising fuel costs, and rising interest rates.

Things are about to get interesting.

#91 Smoking Man on 04.28.18 at 2:32 am

Hello world

#92 Dolce Vita on 04.28.18 at 2:39 am

The days of unlimited and near free money are gone – as in Quantitative Easy finished. Less money awash = higher premium for that money. Supply Demand most simple.

Fixed rates going much higher than many expect. TD 7 year rates are at 5.8%, a 0.5% jump (the bank signaling where it thinks rates will go to, at the very least).

Variable rates are set to increase per BoC – Poloz has already said this (surprised people are assigning probabilities to this). Their prime directive is to keep inflation low and NOT to maintain house prices and manageable RE debt loads.

You have to be a RE fanatic to think somehow the BoC and major banks are going to save your debt-ridden and/or RE speculator butts (recall, fanatics cannot be reasoned with and it will be their undoing in the end, as always).

One thing Garth.

I believe you underestimate just how debt-ridden and speculative (get rich quick in RE) Canadians have become.

Bankruptcy advisors say over and over again that Canadians will do anything to save their principal residence. This means cut back on all non-essential expenditures and liquidate whatever they can towards this end (as in speculative properties).

Why I think we are staring down the barrel of a deep recession later this year – as in October to December.

April has been a non-event in RE sales. May will be too. September will be when panic selling begins to take hold (the “it will turn around” RE fanatic crowd) – when prices will start to really drop. Price drops so far in 2018 nothing more than testing the waters. More to come September.

Add at least 1 rate increase by then. As you say, 50% of all mortgages being renewed, last Qtr. of 2018 will be when the stark reality of much higher monthly expenses will have set in, variable or fixed.

When consumer spending rolled back, when speculative RE properties dumped for whatever they can get.

I have posted this before and will again:

The greatest RE asset devaluation in Cdn. history about to unfold. All I said would happen thus far, has happened.

Bad for Canada in the short term but good overall as bad economic actors purged from the economy for about a decade (the RE speculative get rich quick crowd). The economy will be better for it in the long run.
_________________________________

#46 Juggernaut

Always nice to hear from Re/Max. – Garth

…good one. Without a doubt, HHCE would be proud and you said it without being condescending…nice.

#93 Buy? Curious? on 04.28.18 at 2:57 am

Hey Garth!

I don’t know if you know this but as much of a fan I am of yours, I’m an even BIGGER fan of David Foot, author of Boom, Bust, and Echo. Ever since I’ve read the book, I’ve been comfortable in my financial planning. What am I do to prepare for my financial future, you ask while scratching your head? Nothing! How is that possible? One word: inheritance! The Boomers (parents) have greedily amassed asserts that have grown over 570% and they take it with them, so who’s next in line to cash in? Generation X! Or in my case, Generation $$$! Haha, Suckers! Millennials, the only way you can compete is to not play the game. Don’t take on any debt, in any form.

#94 Dolce Vita on 04.28.18 at 3:05 am

…as RE continues to go down be it sales or prices and rates going up…here we have T2:

Making gender equality his prime focus at G7 and making Gates’ wife happy in the process (and sort of Bono, but to keep him happy will require more money than Canada has to wipe out poverty…just ask Lyndon Johnson how that went in America).

This year alone the Federal deficit will be $4 billion more than the projection of $18.1 billion in the federal government’s February budget – per the PBO. So much for election promised $10 billion deficits.

Another reason why we are doomed this year for a deep recession with a gender equality, minority and wardrobe obsessed, Robin Hood steal from the rich – give to the poor, PM.

Asleep at the wheel, head buried in the sand or just plain arrogant like Dad?

Regardless, Big G will not rescue anyone this year from what is to come economically as in a recession…nor will it be able to in the years to come.

#95 mohammed sakandari on 04.28.18 at 4:29 am

The businessman slammed the Fed for seeing no signs of an impending crisis, saying that it was similarly blind ahead of 2008 crisis. “So the Fed has already proved when it comes to warning signs and seeing them in advance, they’re like Mr Magoo. They have no idea what’s going on. And in fact, just like Mr Magoo, they create all kinds of havoc all around them as they blindly move through the economy having no idea what’s going on, and there’s just all kinds of carnage,” Schiff said, warning that a massive financial crisis is coming.

#96 Gravy Train on 04.28.18 at 6:02 am

The greatest economic threat is excessive snorfling. Gradually and relentlessly higher rates are designed to throttle that. — Garth

#33 Nonplused on 04.27.18 at 7:11 pm
“… [R]ising interest rates will not at this point contain Canadian debt expansion; they will exasperate it.”

You’re using an obsolete definition of the word exasperate. Did you mean to write the word exacerbate? Did the autocorrect mess you up?

BTW, Garth’s right, and you’re wrong! Suck it up, buttercup! Go read an introductory economics textbook! :)

#97 Conn Smythe on 04.28.18 at 6:03 am

#87 MF

Thanks for the heads up. I have come to that conclusion on my own as well. I had to respond to the outrageous comments that were made.

#98 Ian on 04.28.18 at 6:32 am

#54 Millmech

That definitely sounds like the dire straits scenario. I think the stress on peoples’ health and relationships who are caught up in the real estate bear will be a major nightmare.

#99 Gravy Train on 04.28.18 at 6:53 am

#78 Nick on 04.27.18 at 10:49 pm
The yield on risk-free government debt is now rivaling the dividends stocks pay, which is why a bucket of money is flowing from equities to fixed income. — Garth

“So a few percent on a bond rivals 5% on a Canadian dividend stock? Not sure how this computes.”

To see how this computes, check out the capital asset pricing model. :)
https://en.m.wikipedia.org/wiki/Capital_asset_pricing_model

#100 KLNR on 04.28.18 at 7:32 am

@#23 Linda on 04.27.18 at 6:52 pm
Does anyone know what dog breed is in today’s blog picture? Very handsome though definitely requires lots of room to roam or a very dedicated owner who is willing to take the dog walking considerable distances on a very regular basis.__
_________________________________

Looks like a tibetan mastiff.

#101 Gravy Train on 04.28.18 at 8:04 am

#87 MF on 04.28.18 at 12:42 am
Re: #63 Conn Smythe on 04.27.18 at 9:20 pm
“How dare you?! You are violating one of the main unstated rules in the comments section: NEVER praise Toronto. You are only allowed to praise small towns with no economy or life. You may get a pass this time, but next time I doubt you will be so lucky.”

Give it a rest, buddy boy. Get off the pot, and borrow a million dollars to buy a Toronto teardown! Put your money where your mouth is! Put up or shut up!

Or, alternatively, listen to what Garth is telling you to do. Buy only what you can afford. The choice is yours. So make it already! And quit whining! :)

#102 maxx on 04.28.18 at 8:15 am

#33 Nonplused on 04.27.18 at 7:11 pm

Coming soon to a bank near you, Joe Blow Canadian will be informed that his borrowing days are over. The toys will end up on the lawn during sunny afternoons at pennies on the dollar.

JBC should have been living within his means for decades now and is about to learn that when you get down to your last few bucks, they take on immense value.

The siren song of low rates have put the likes of Joe Blow Canadian into a very uncomfortable place – perhaps for life. “Toys” are no salve nor solution to his dire predicament as they are the disease.

JBC is a twit and should stop pigging out on money he doesn’t have.

Maybe he can cry on the shoulders of the [email protected]

#103 Proof ? on 04.28.18 at 8:45 am

WOW !!!

The regional new home builders associations report that 1/3 up to 1/2 of the costs of a new built home are “soft costs” (fees, development charges, filing, land transfer tax, HST, approvals, interest on money while waiting multi-years for approval, etc., etc). Actual soft costs depends on locality / home type / dwelling size).

This does not include ANY cost of land, materials nor labour.

Just let that sink in.

#104 crossbordershopper on 04.28.18 at 8:46 am

today i am going to talk about going to los algondones mexico which is walking over from the Yuma arizona border.
you will be surprised on how good their dentists are, they are americans, working there, dentist that i use is certified in California, has a large office there because all of her clients were going there for their restorative dental work.
advice fly into pheonix and drive down, park and litterly walk over the border. you can youtube the route.
anway, implants and high end crows etc are 20% of the cost compared to up here. These are not local dentists these are all high tech us certified dentists who operate there, litterly millions of americans go and get all their dental work there. Canadians too. many many thousands.
nothing against the local dentists, but the price differential is crazy.
not to mention, meds, a fraction of the price, all licensed pharmacies, same meds you get up here.
and hearing aids, i see people pay crazy prices for hearing aids in Canada, like 5 to 8 grand, you can get them for 1 grand all in high end hearing aids and of course optical services, glasses exams etc.
so if your getting older and dont want to pay for any of these items, simply take a trip down once a year, load up of your dental work, years supply of meds, get your eye exam if you need it and your hearing check.
Like i have said, Canada is a great country to live in, well reside in, but live your life elsewhere. I see people now with bad teeth then i have ever seen, not that i am looking at peoples teeth like a bad fetish or something, its just wow, there pretty bad teeth.
what a lousy life people in Canada have, interest rate concerns traffic issues, bla bla bla, America is where its at to make money and pay low taxes, mexico you can get all your health care needs done cheap, and you can live in a safe clean place for cheap, like 1000 bucks a month. all in.
life is about living not surviving and in Canada the system is set up to simply survive, done it most of my life, its bs. pack your bags and scam the system in Canada by simply leaving and coming back like the guys on border security, the egyptian guy who visits the old country 5 times a year, like really, he is Canadian, he is doing his business there and living off the canadian system
the number of east indian punjab people i know who live 5 months in the old country and collect every governemt program in Canada is huge, in brampton and mississauga everyone has a parent in the winter who is either looking after their grandkids as their children go to work or are in the old country with better weather, some doing business some not, but either way collecting a canadian cheque.
dont play these stupid canadian games, claim poverty sign up for all the goverment freebee’s and live a great life elsewhere, and of course visit Canada in the summertime its beautiful.

#105 dharma bum on 04.28.18 at 8:54 am

No drama. Just the slow drip-drip loss of equity, as buyers are squeezed for financing and sellers get lonely. – Garth
——————————————————————–
https://s3.amazonaws.com/lowres.cartoonstock.com/medical-hospital-patient-drip-dripping-drip_therapy-jco0140_low.jpg

https://www.youtube.com/watch?v=X8nJyU6B5HI

#106 NoName on 04.28.18 at 9:05 am

people are losing it, but animals are that far behind…
definitely good red both articles

https://www.vice.com/en_ca/article/mbxyn8/florida-man-kicks-swans-practicing-karate-vgtrn

https://sports.vice.com/en_us/article/ne9gbg/the-animals-are-coming-for-us

#107 Proof ? on 04.28.18 at 9:05 am

to # 63 Conn Smyth

In the last analysis , Re pricing is dependent on local AFTER TAX incomes ( the ability to service debt), credit availability and interest rates.

Let’s review;

1) after tax income is / will decline/ing with increased fees, income taxes, carbon taxes, inflation of prices of necessities, TFW workers, property taxes, etc., etc

2) credit is being restricted (B20 for example)

3) interest rates are rising (see article above that Garth just posted.

Even you should be able to figure that out.

#108 MF on 04.28.18 at 9:12 am

#99 Gravy Train on 04.28.18 at 8:04

The comment section thanks you for enforcing de facto rule number 6:

-Anyone under 45 who directs the smallest of discontent at current house prices, the economy, or the job market shall hereby be declared “a whiner”.

MF

#109 Proof ? on 04.28.18 at 9:17 am

to comment # 63 Conn Smyth

forgot to add,

You have lived in the US and “visited” a few cities ?

I have lived (i.e apartment, job, relationships, paid taxes there, etc. – you know LIVED) for the past 35 years in 20 (twenty) different countries / cities thoughout the EU and Far East in my career. I have been an ex-pat for all my career and reside now in a rich EU country.

Living in 20 major capital cities is a lot different than being a tourist for a few days /weeks or living in (gag) L.A. You have no “experience” to speak about.

Toronto is a cultural backwater full of immigrants who hold their own cultures in a “cultural mosaic”. There is no “premium value” to Toronto with its pathetic public transit , crippling traffic, pollution and very poor and parochial planning, not to mention ridiculous PC culture.

Oh , and by the way, don’t embarras yourself calling yourself Conn Smyth.

Typical parochial Torontonian – you live in a shitty city period and no amount of your sugar coating will change that.

#110 toronto1 on 04.28.18 at 9:26 am

#92 Dolce i agree

Rates will move up fast from here on out- my prediction is that fixed rates will be in the 7% range by year end with variables in the 4.5-5% range.

right now everyone is waiting for the spring-summer market to arrive- well its not coming and after that realization hits most, the panic will start in Oct-Dec were the same RE speculators that out bid each other last year will now race to price their properties lower then the next lowest property.

#111 NoName on 04.28.18 at 9:54 am

amazon prime up form 99 to 119 but what is more interesting is this

http://money.cnn.com/2015/08/28/investing/amazon-cash-flow/index.html

#112 crowdedelevatorfartz on 04.28.18 at 9:58 am

@#48 CheeseToast
“Caucasian Shepherd Dog”
*******
Somewhat racist “labeling” in this PC mad world
You should have called it a
Caucasian Shepherd Canine

#113 Nature Girl on 04.28.18 at 10:04 am

RE: #23 Linda – My guess is the dog may be a Caucasian Mountain/Shepherd (Ovcharka). It is a Russian breed.

#114 Conn Smythe on 04.28.18 at 10:24 am

#91 Buy Curious

“I don’t know if you know this but as much of a fan I am of yours, I’m an even BIGGER fan of David Foot, author of Boom, Bust, and Echo.”

You are lucky the bearded sage, all knowing all wise, mystic reader of financial tea leaves, great oracle from the east, debunker of fraudulent politicians, Harley riding bad ass and all round jolly good fellow doesn’t boot you from this site for that comment. Liking someone better than the mighty Garth! The nerve of you… Sheeesh!

#115 IMHO on 04.28.18 at 10:47 am

Nothing bursts a bubble faster than rising rates – but the 80’s aren’t coming back…sorry Def Leppard fans.

In the 80’s the Fed fought inflation at a time when the US national debt was 900 billion (that’s with a B). Reagan and Volker understood the evil’s of inflation, but maybe more important for this discussion, higher interest payments on the debt could be managed.

Fast-forward to today where mainstream economists consider inflation (this blog’s author included), as a necessary ingredient to economic growth. The US Nat’l Debt is now 21 Trillion (with a T). To put that into perspective, the interest payment on 900 billion were higher (I said higher) in in 1980, than today at 21T.

A 1% rise in interest rates in the US results in 1T dollars of additional interest payments at a time when they are already running 1T/yr deficits – combined with tax cuts.

And there is the box the CB’s are in and why, subtly… overtime….they have brainwashed the public that inflation is good :) when their parents knew it was bad :(

#116 Ace Goodheart on 04.28.18 at 10:50 am

Bigger question about all of this is what is the Province of Ontario, which according to its current government, can “afford” to borrow itself poor ($348.79 billion owing to date), going to do about rising interest rates?

Liberals: “we balanced the budget (once, which is actually a fake balancing, but whatever), so now we are going to start borrowing again, and “track back to balance” in like 10 years or so.

You cannot add much more to $348.79 billion. We are going to be heading towards the half a trillion dollar mark, which is unheard of for a sub-sovereign entity.

So if they can never pay it back, and they can’t even work within their current take, how are we going to keep this mad, social service machine afloat when rates start to rise?

Governments only have two options when they get themselves hopelessly into debt, and interest rates start to rise:

1. Print money

2. Raise taxes.

Ontario cannot print money……

#117 50 YEARS OF MAPLE LEAF INCOMPETENCE! on 04.28.18 at 10:51 am

Leafs out in the first round. More than a half century of total incompetence, mediocrity at best.

And Toronturds say:

“Hey, but it’s different here, a new rule says the Leafs still get to go the Stanley Cup Finals! Just like our house prices, they always go up! Toronto is special!”

Your Leafs, your city of Toronto, a complete wannabe fake.

And Toronto’s economy is now getting pulled to pieces, with your crapshacks circling the drain.

https://www.thestar.com/news/canada/2018/04/28/beach-business-strip-vacancies-a-concern.html

“The blocks west of Muttonhead reveal a count of 30 vacant storefronts, and some notable absences including the venerable Whitlocks, which closed in February after 27 years serving up food in the Beach. Although the waterfront community has a reputation as one of the most attractive and desirable neighbourhoods in the city, significant parts of its retail strip resemble a Rust Belt ghost town.”

Toronto = a Rust Belt ghost town (!)

“When it comes to shopping locally and supporting locally, the money isn’t there,” said Cooke. “A lot of people are probably house poor. They spend most of what they have in their home.”

Toronto = ready for retail collapse (!)

Delusional Toronto home “owners” are being flushed right down the toilet with Leafs fans.

Bwaahaahaahaahaaahaahhaaaahhaaahaahaaaaa!!!!!!

51 YEARS AND COUNTING!

#118 Doug in London on 04.28.18 at 11:01 am

@Fuzzy Camel, post #88:
Yes, I’ve also read predictions of a coming oil price shock. Meanwhile, the best selling vehicles have been fuel guzzling SUVs and trucks. Ford Motor Company will stop selling some car models because most of the demand has been for SUVs and trucks. Hasn’t anyone learned anything from past oil price shocks like in 2008, 1990, 1979-80, or 1973-74?

As I’ve said before, I’ll hold on to my XEG fund.

#119 T on 04.28.18 at 11:12 am

#8 Mark on 04.27.18 at 6:23 pm
US at ‘technical full employment’, yet employers are still inundated with job applicants, and college grads can’t find jobs?

Doesn’t add up. And why is US retail basically dying if there’s all these people with jobs and the economy is at alleged ‘full employment’?

Something is very broken with how the stats are being kept and/or are being interpreted.

——————

The only thing broken is you.

Jobs are plentiful. US retail is being disrupted by Amazon and a few others.

I have family in the US and spend quite a lot of time there, just got back from spending winter in Cali.

Where do you get your information from?

#120 Big Kahuna on 04.28.18 at 11:22 am

In terms of outraging the precious snowflakes, Doug Ford is the closest Canadian version of Donald Trump-it appears that shortly Doug Ford will be the premier of Ontario. We can expect the MSM to inform us daily of Ford’s supposed misdeeds from thirty years ago.

#121 SunnyDays on 04.28.18 at 11:29 am

No, rates like these will not cause a recession or collapse the economy…

Agreed. Collapse of the economy will come from our best performing industry: bureaucracy. 7% of Ontario GDP is Public Administration, which is in the business of preserving itself and producing more bureaucracy.

Good luck to us all.

In 2009, ‘Gov’t, Health & Edu’ was 17% of GDP, while in 2016 ‘Gov’t, Health & Edu’ was 20%.

See Slide 19:
https://www.ofina.on.ca/pdf/presentation_q4_2017_en.pdf

And Page 2 here:
https://www.ofina.on.ca/pdf/IFS_Mar09_en.pdf

#122 45north on 04.28.18 at 11:32 am

Fuzzy Camel: Canadians are commuting further and further to buy cheaper houses outside Toronto. They are about to get pinched, rising fuel costs, and rising interest rates.

There’re getting pinched right now – rising gasoline prices, bigger payments on their mortgages. The picture I see is Highway 400 north bound on a busy afternoon.

nowhere to run, nowhere to hide

https://www.youtube.com/watch?v=RQRIOKvR2WM

#123 45north on 04.28.18 at 11:33 am

Dolce Vita: The greatest RE asset devaluation in Canadian history is about to unfold.

Big Government will not rescue people from what is to come /i>

As the economic reality sinks in, the image of Justin Trudeau will shift from the social justice crusader to the head of the ruling class. Most people will be okay with this shift but Justin Trudeau himself will not.

#124 45north on 04.28.18 at 11:35 am

please add the proper html end code

#125 For those about to flop... on 04.28.18 at 11:51 am

I am really starting to think that my Pink Snow Project is paying dividends.

Out of the first 100 posts.

Number of people that responded with an answer to my post at number one = Zero

Number of people that commented on the dog photo I submitted = 13

Garth we shouldn’t have bothered writing anything and just put up the dog photo and went to the pub…

M43BC

#126 NoName on 04.28.18 at 12:00 pm

interesting read

https://www.strongtowns.org/journal/2018/4/23/bon-ton-gone

#127 Kevin on 04.28.18 at 12:10 pm

The dog is an ovcharka. Also known as a caucasian shepherd dog.

The Russians breed them up here in FSJ BC…. Huge dogs. I want one but the wife says no :( (“how am i gona walk it?!?!”) excuses…

#128 Niagara Region on 04.28.18 at 12:20 pm

Re: #41 figus makum
Millenials and first time home buyers, Tim Hudak and OREA has your back with their new advocacy campaign. Just in time for the Ontario provincial election.
__________________________________________
Tim Hudak is a former MPP in my region: Niagara West-Glanbrook. Everyone I know in this region hated the guy. He promoted low wages, worked to slash public sector jobs, and stomped on workers’ rights. (Oh yeah, and he’s a pro-lifer.) So, millennials and first-time homebuyers, Hudak has a track record of not caring about Ontarians who lack deep pockets.

#129 Salted on 04.28.18 at 12:23 pm

I really love your weekly call. Thanks for those. xoH

#130 Salted on 04.28.18 at 12:27 pm

Blog Dogs.

I’m refinancing to pull out equity.
What are your thoughts.. fixed or floating?

#131 Quebec Is Great on 04.28.18 at 12:29 pm

Garth, I’ve found that your comments recently have achieved a heightened level of clarity. I look forward to them so much, I dare not miss an “epsiode”!

Thank you for all you are doing and have done – from a grateful long term reader of greaterfool.ca

By the way, Smoking Man – where are you? Yes, you get a lot of heat, but don’t let it get you down. The divisiveness of your posts, if nothing more, show that interesting & engaging. I suspect you have given many readers pause about their assumptions and preconceptions (right or wrong) – in my mind there is great value in this.

#132 toohytimiiyless on 04.28.18 at 1:03 pm

Like i have said, Canada is a great country to live in, well reside in, but live your life elsewhere. I see people now with bad teeth then i have ever seen, not that i am looking at peoples teeth like a bad fetish or something, its just wow, there pretty bad teeth”

Starting to sound like England with the bad teeth thing!

#133 Ace Goodheart on 04.28.18 at 1:07 pm

RE: #115 50 YEARS OF MAPLE LEAF INCOMPETENCE! on 04.28.18 at 10:51 am

“And Toronto’s economy is now getting pulled to pieces, with your crapshacks circling the drain.”

The Beaches are a bit of a “has been” neighbourhood in Toronto. Hot areas for the young folks are the new build ‘hoods down by the lake on the west side near the distillery district, anywhere in Leslieville (which now encompasses Moss Park, among other surprises), the rapidly expanding area known as “The Junction” (which now reaches almost to Mount Dennis in the North and expands every year), and the new build condos in the warehouse entertainment district.

If you are old and you want to go for the fuddy duddy rich folk look, head to Bloor and Yonge for the ultimate condo experience.

The Beaches have a street car that is always late, hills you can hardly park a car on, and houses with no backyards, or backyards that are so hilly you can’t do anything with them.

What has happened to the Beaches “entertainment and restaurant strip” can be explained rather simply: High property taxes combined with a municipal rebate for keeping your storefront empty. In other words, if you run a business out of your storefront, you are going to be financially raped by the City. If you don’t do that, they will give you rebates. So a lot of the owners are just renting the upper levels as apartments and just leaving the main floor vacant.

The same thing happened to Yonge Street. The property taxes just got so high, that no business could afford to operate there. They cleared everyone out with massive tax hikes, and now they are bulldozing everything and building sky scraper condos.

But yeah, I wouldn’t judge the financial health of Toronto by looking at the Beaches. That neighbourhood is sooooo been there, done that. The kids are not buying houses in there. It is an old folks’ zone. Not trendy or popular.

#134 no bid on 04.28.18 at 1:15 pm

To see what’s coming the best place to look in global oil prices. Consumption is roaring and will surpass 100m barrels a day next year if not this year. With the lack of investment in new barrels over the last 3 years we have the possibility of seeing higher and higher prices for oil and thus….inflation. Oil makes everything cost more. Heaven help the middle class that borrowed like an elite. I have deep concern for the those who are on the edge.

#135 vatodeth on 04.28.18 at 1:16 pm

Landlord recently decided to sell in Calgary, so I will be moving. Haven’t looked at the rental market in a long time. At a glance, one can see the tide has turned. Amazing how much things have changed in only 2 years.

Stuck to the plan. Stayed out of the market and changed to a career that isn’t oil-dependent. Don’t have a lot of equity, but zero debt. Bought American REITs when the dollar was strong. It’s been a long ten years of waiting and readjusting, but the payoff is coming soon.

Thank you Rich Dad (Garth), for keeping the journey entertaining and helping me plot the course.

#136 Calgary Rip Off on 04.28.18 at 1:33 pm

Yes, kids, the Eighties are coming back. You’ll love it. Seriously. Lower house prices – but fatter rates.

The eighties are only coming back in the form of housing. Negotiations and thinking has changed. The internet has allowed people to talk like spirits where time and space are no longer an issue. People talk with people they haven’t met in reality. So the world is becoming more segmented and more resembling the astral plane.

Music simply isn’t like the eighties at any level. Metal music and pop music alike are very different.

If housing goes down in Calgary for prices I will be floored as that still hasn’t happened since this blogs beginning. Calgary remains a big ripoff of overpriced shacks with mortgage owners boasting about their overpriced shacks.

“Homeowners helping homeowners with expert advice” That commercial makes me want to puke. First, they own a mortgage. Second, it isn’t expert advice, its mostly Sh!tty.

#137 LP on 04.28.18 at 1:53 pm

#123 For those about to flop… on 04.28.18 at 11:51 am

Garth we shouldn’t have bothered writing anything and just put up the dog photo and went to the pub…

#72 LP on 04.27.18 at 10:18 pm
I think the dog in the photo is a Caucasian Shepherd.

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

So Flop, if you sent Garth the pic, maybe you know what breed the dog is? If so, please share. Also, I just noticed the baby carriage standing behind the man. Could be the dog is a family pet.

F70+ON

#138 Exilled on 04.28.18 at 2:09 pm

Sir Garth

Your Welcome!

#139 Ace Goodheart on 04.28.18 at 2:17 pm

RE: #126 Niagara Region on 04.28.18 at 12:20 pm

“Tim Hudak is a former MPP in my region: Niagara West-Glanbrook. Everyone I know in this region hated the guy. He promoted low wages, worked to slash public sector jobs, and stomped on workers’ rights. (Oh yeah, and he’s a pro-lifer.) So, millennials and first-time homebuyers, Hudak has a track record of not caring about Ontarians who lack deep pockets.”

I’ve always had problems with Canadian politicians just because they mix “sh*t” in with their politics.

It is hard to identify with a political movement in Canada, when you are being asked to endorse stuff that shouldn’t be part of a political movement.

My politics: Don’t tell me what to do, don’t tell me what “gender” I am or what that means, don’t tell me how to live my life, don’t tell me about your “morals” I don’t care, I don’t have any, don’t be my “Dad” or my “Mom” I grew up a long time ago, don’t need that.

Spend as little of my money as possible, build stuff I need, keep out of my life and provide services that are useful to everyone.

It is so incredibly hard to find a political movement that will do that.

Conservatives inevitably end up preaching “morals”, ie, family structure, “pro-life” (whatever that means), traditional “roles” for “gender” (who is a government to tell people what their “gender” is, we tell YOU what our “gender” identification is, or we decline to identify, and we tell you what that means), and they end up being all rigid and stiff. They usually spend less money on socialist “causes”.

Liberals tend to allow more social self identification, but they spend massive amounts of money on “causes” and they designate “interests” based on pre conceived ideas of need and scale of importance.

NDP are communists in waiting.

So I always have this weird problem with figuring out what government I want. I do not want to be financially raped, as I am quite well off and I like money, I enjoy my lifestyle and I don’t want some nutty government taxing the crap out of me to pursue some warped “socialist” cause. So Liberals are a problem.

I also don’t want to be told by a bunch of Conservatives what morals and values I need to have and put into a box based on stereotypes and designations.

I need a government that will leave me be to do as I please, and not concern itself with my “morals”, and at the same time, spend as little of my money as possible.

That government is hard to find in Canada….

#140 Penny Henny on 04.28.18 at 2:21 pm

#118 Big Kahuna on 04.28.18 at 11:22 am
In terms of outraging the precious snowflakes, Doug Ford is the closest Canadian version of Donald Trump-it appears that shortly Doug Ford will be the premier of Ontario. We can expect the MSM to inform us daily of Ford’s supposed misdeeds from thirty years ago.

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

I heard from a friend of a friend that back in high school at a high school dance Doug Ford pinched the bum of a girl he was dancing with while Stairway To Heaven was playing.
Now supposedly this ‘girl’ is now his wife but like whatever. That was some serious sexual harassment if you ask me. /sarc off

#141 Lost.....but not leased on 04.28.18 at 2:39 pm

Dog in photo is a chihuahua from Chernobyl.

#142 MontesPython on 04.28.18 at 2:41 pm

To all those folks who wonder where rela estate is going?

Ask yourself this question.

How many people do I know who derive most of their wealth, income, or jobs from how well real estate does?

Closely look at your peer groups, your family, your friends.

You may be shocked to find that 50-70% of these people rely on real estate for their livlihoods. Don’t forget publci sector workers who salaries are linked to property taxes, inspections, regulations, etc.

I’m an old buzzard who has invested in real estate for 40 years and am now out of the market.

I own my house only. A small unassuming house in a small town, far from the zombies who will appear when this bomb goes off.

We are also witnessign the death of socialism. Sovereign debt crisis will be the buzzword of the next decade as soevereigns collapse under the reverse of QE and liquidity trap they face.

Joe average, which is most people here, don’t even understand what I just said.

You will soon enough

#143 Ace Goodheart on 04.28.18 at 2:58 pm

Re #138 Penny Henny on 04.28.18 at 2:21 pm

“I heard from a friend of a friend that back in high school at a high school dance Doug Ford pinched the bum of a girl he was dancing with while Stairway To Heaven was playing.
Now supposedly this ‘girl’ is now his wife but like whatever. That was some serious sexual harassment if you ask me. /sarc off”

Girls pinch my bum all the time.

I kind of think of it as a complement.

#144 For those about to flop... on 04.28.18 at 3:06 pm

#135 LP on 04.28.18 at 1:53 pm
#123 For those about to flop… on 04.28.18 at 11:51 am

Garth we shouldn’t have bothered writing anything and just put up the dog photo and went to the pub…

#72 LP on 04.27.18 at 10:18 pm
I think the dog in the photo is a Caucasian Shepherd.

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

So Flop, if you sent Garth the pic, maybe you know what breed the dog is? If so, please share. Also, I just noticed the baby carriage standing behind the man. Could be the dog is a family pet.

F70+ON

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

Hey LP, I get the photos from an image sharing website,sometimes I read the text underneath, sometimes I don’t.

In this case I didn’t,but I think you and a lot of other posters is correct.

The reason I chose this one is for some the reasons that have attracted at lot comments,it was a different breed and beside the size I tried to pick one that the dog wasn’t just being a goofball.

I don’t know which of the photos the boss of the blog is going to use and when ,but I try and send him 4 photos each day to try and free up some of his time ,and then he rewards me with spending the saved time arguing with idiots on his blog.

Speaking of dogs, and it’s been a while, so I am trying to remember the name ,but do you still have Robin…

M43BC

P.S Thanks for the GAP Code support…

#145 Ace Goodheart on 04.28.18 at 3:26 pm

One interesting item that is going to start making its appearance in residential real estate is “flood prone status”.

We used to have “slow melt” periods where winter gradually turned into summer. We used to have “rainy days” followed by sunny days.

Now what we have is “it’s minus 10 degrees” one day, and “it’s plus 22 degrees” the next. Winter and summer are separated by a day. We are getting this “hard” climate transition from seasons that we never had before.

Added to that, we are getting wet weather that stays around longer. So when it used to rain for a day, and then sunny the next day, now it rains for a week.

The result of this is a change in how buildings built on flood plains are valued.

Traditionally, a “water front” property was worth more. People spent millions of dollars extra, to be able to claim that their house or cottage was directly abutting a river or a lake.

This situation is about to become a liability as millions of houses and cottages built directly on flood plains become submerged during spring thaws and summer precipitation events.

Look for insurers to start excluding these properties from coverage.

Once you have lived through a few floods, look for people to start avoiding these properties like they were infected with the ebola virus.

#146 Rargary on 04.28.18 at 3:51 pm

#134 Calgary Rip Off… If housing goes down in Calgary for prices I will be floored as that still hasn’t happened since this blogs beginning. Calgary remains a big ripoff of overpriced shacks with mortgage owners boasting about their overpriced shacks….
______________________________________________________________
I too live in Calgary. Got smart and left Toronto 12 years ago. Less smog, mountain views, cleaner lakes, less traffic… Maybe in the NW prices seem unchanged but I’m by Macleod Trail and Southland Dr in the south and prices plummeted here!

Regardless what CREB might say, house prices definitely dropped in our past Alberta recession. At least by $50,000!

#147 Lost...but not leased on 04.28.18 at 4:00 pm

#134 Calgary Rip Off

Re Music:

Suggest aka strongly recommend GOOGLE
Adorno, Beatles, Tavistock,Dave McGowan ETC.

The powers that be realized that “Rock” and non classical forms/genres of music had subliminal (negative)affects on the brain via their inherent frequency range.

Classical music had a different frequency range, and more in tune with other natural frequencies.

” Sex ,Drugs and Non Classical music”

Pop quiz: WHO was the original 007

#148 LP on 04.28.18 at 4:20 pm

#142 For those about to flop… on 04.28.18 at 3:06 pm

I’m afraid I had to take Robin back to her original owners one day after returning home with her from our last camping trip. I depend on a walker (rollator) to get around and my husband was just 4 weeks away from his passing and was too weak to look after her. It was a sad day and I cried all the way home after saying goodbye to her.

But two weeks later the kennel called to say that she had been re-homed to a family with lots of experience with collies so she’s in a good place and I’m at peace about it.

Dogs…what a horrible world this would be without them. And Felix, cats are pretty okay too, in my book!

#149 Linda on 04.28.18 at 8:08 pm

Thanks all for dog information – much appreciated!

#150 45north on 04.28.18 at 10:09 pm

Ace Goodheart: talking about the debt of the Province of Ontario: So if they can never pay it back, and they can’t even work within their current take, how are we going to keep this mad, social service machine afloat when rates start to rise?

I don’t know.

The Junction which now reaches almost to Mount Dennis in the North and expands every year

my aunt lived in Mount Dennis. In the summer I used to work at Gliddens Paint Factory on Wallace Avenue. The factory is gone now.

One interesting item that is going to start making its appearance in residential real estate is “flood prone status”.

I remember Hurricane Hazel. Near Wilson Avenue, a concrete bed was poured to keep Black Creek in its banks. In the summer, it would dry up. The concrete bed was a fun place to ride a bike.

#151 TRUMP on 04.29.18 at 10:45 am

MAPLE LEAFS…

The game is rigged. NHL does it on purpose every year.

#152 DM in C on 04.29.18 at 11:25 am

Closed on our NW Calgary home on Friday — Sold for $50k more than we bought five years ago.

Most houses in the community overestimating listing prices, and sit unsold and unloved. Daily ‘price reduced’ emails from realtors coming in. Ones that are sold are priced right, and down about 5-10% from four years ago.

Signed a long term lease for $1000 less than monthly mortgage/tax payments. Still have a yard to putter around in. Dog is happy.

Pretty content here. Going to relax and enjoy life.

#153 Doug in London on 04.29.18 at 11:27 am

@Ace Goodheart, post #137:
Wow, your post looks like something I would say. I also am not sure who to vote for in this next provincial election. If the Conservative Party brought back Conservatives from a long gone era like Bill Davis, Brian Mulroney, Joe Clark or Ralph Klein, they would easily get my vote. They actually appeared to care about important issues and weren’t bothered with all that religious rubbish.