Nesting

When RBC and the green guys raised mortgage rates a few days, this was inevitable: the others would follow. Now it’s happening. CIBC on Tuesday became the third of the five to move. The next step will be for the Bank of Canada benchmark five-year to increase, bumping up the stress test threshold. Almost on cue, real estate sales in Calgary took a big turn downward with prices also falling. The numbers for other markets, including the GTA and YVR, will be out shortly. Won’t be pretty if you’re a seller.

An entire generation of people have entered their hormonal and nesting years without knowing a housing downturn. The last serious one in Toronto, for example, happened 27 years ago. The economy soured. Sales plunged. Prices dropped 33% and took about 13 years to recover. When you factor inflation into the mix, a buyer in 1991 didn’t see her money back until almost 2010.

So for many people housing sucked as an investment. Rather it was a cost – a place to live. The last decade stands in awesome contrast to that experience, thanks almost entirely to two things – cheap money and moister fear. When central banks decided to save the world from the credit crisis they crashed rates, stimulated borrowing, and ignited a housing orgy in Canada that ended up with shacks selling for seven figures. Meanwhile the 55% collapse in stocks markets in 2008-9 – just as the Millennials were becoming sentient – scared an entire generation away from financial assets. Instead they got house-horny.

And it sure continues.

This week pollster Nik Nanos had new numbers showing the moisters still believe houses = solid investments. A survey (commissioned by realtors) found 91% think owning a home is a “smart financial investment” which shows the failure of math and logic in schooling. (In the absence of rising house prices it can cost twice as much to own as to rent, as this blog has oft shown.)

However Nanos also found 70% of the kids understand real estate’s unaffordable. So, guess what? They expect the government to fix it, with seven in ten agreeing politicians need to help young people to buy. Yup, more social engineering. More subsidies. With an election looming in Ontario next month, the kids are asking for an exemption from land transfer tax, for example. And they like that crazy Doug Ford guy who wants to scrap the foreign buyer tax and open up protected lands so they can be paved and covered with attractive particle board-&-glue palaces, decorated with minivans.

Well, the fact remains most people want real estate. Especially when they marry and breed. It’s in the genes. Turns out we’re not much different than woodchucks or finches. Or prairie gophers.

“My wife and I are 29 and looking at getting into a house in the near future as we are hoping to have kids soon,” Tom writes me. “We can afford to put 20% down on a decent place while still following your rule of 90 (the remainder of the money invested in ETFs). With interest rates on the rise this will put pressure on housing prices, as you have stated many times on your blog. I was wondering what your thoughts are on the housing market in Saskatoon and if rates will have a large impact on house prices here.

“As you have said many times every market is local and RBC says affordability is basically in line with the historical average, so I’m just wondering if I’m better off waiting or if now is as good as ever to pull the pin. Thanks for everything you do for us freeloaders and thanks even more if you find the time to answer me.”

Yes, location matters. The average property in Saskatoon cost $336,222 last month, which is 7.5% cheaper than a year ago. To buy it takes a downpayment of just $67,000 with mortgage payments barely over $1,300. Given the fact the median family income in Saskabush is more than $94,000, it means the average family can afford the average house. So, knock yourself out, Tom.

In Vancouver (or Toronto), a vastly different story. Families earn less and are faced by insurmountable housing costs. Without the promise of constant capital appreciation, it makes no financial sense to buy at this time when mortgage costs are rising and the correction has just begun. The only relative bargains, as detailed here, are in the thickets of McMansions growing in the northern burbs, where $2 million houses are now $1.6, and populated with desperate sellers who will take less when pushed. Not exactly what the mills seek.

So, when 91% of moisters think it’s a swell time to buy, and seek help, politicians would be fools to encourage them. More pro-housing incentives would shove a lot of vulnerable people into epic debt at a time when a decade-long real estate gasbag is ripe to split.

Will our leaders do the responsible thing, or sell out for votes?

Can’t believe I asked that.

186 comments ↓

#1 For those about to flop... on 05.01.18 at 4:57 pm

Well ,since we continue to rinse the Wet Ones on this blog this week, I will submit this offering from howmuch from last December.

The first paragraph reinforces what Thor Turner was talking about last night regarding move-up buyers.

The data is from the U.S as we don’t actually collect much in Canada anymore,we just talk about the possibility of collecting it and perhaps doing another study…

M43BC

This Map Shows Where Millennials are Buying Houses (and for How Much)

“Millennial homeownership rates are essential to understanding the housing market because they facilitate additional home sales for other people. How does this work? Suppose you make an offer on a house. The current owner is also probably on the market, and he or she likely has a contingent offer on another house. This sets off a chain reaction throughout the economy. Millennial homeownership rates are therefore an easy way to judge the economic vitality of any given area. That’s why we created this new map.

Our viz takes millennial homeownership data from Abodo and maps it by metro area across the country. Abodo adopted the data from the U.S. Census Bureau, which regularly collects a variety of information about the population, including the age of homeowners, the estimated value of their homes, and how long it would take to accumulate a 20% down payment. Our numbers are from 2015. We then overlaid this information across metro areas with bubbles representing the portion of millennial homeowners in each market: the bigger the bubble, the more millennial homeowners there are. We also color-coded each bubble to represent the median value of their homes—dark red circles mean the homes are worth over $500k, and dark blue means under $200k. This gives you a quick snapshot of the overall economy and the housing market.
The first trend you can see on the map is a clustering of red circles on both the West Coast and along the Northeast. The most expensive city in the country for millennials is San Jose, CA, where the average millennial buys a home worth $737,077. Seattle, WA in the Northwest is also relatively expensive at $342,769. These are population-dense areas with booming tech sectors. At the other end of the spectrum, you can see clusters of blue bubbles across the Midwest in old manufacturing cities like Detroit, MI ($148,404) and Cleveland, OH ($160,251). Memphis, TN is the cheapest place for millennials at $142,795. Southern states like Texas and Florida are also relatively affordable thanks in large part to their suburban sprawl, which Zillow predicts will expand next year.

It’s no surprise that homes are more expensive in California (think Silicon Valley) than the industrial heartland, but consider how homeownership rates change based on affordability. The red bubbles all tend to be smaller than the blue bubbles. This means that as homes get more expensive, millennials become increasingly unable to afford them. It’s not like there’s a surplus of ultra-rich millennials buying up all the houses in California and New York. Millennials are just as sensitive to high prices as everyone else.

Let’s break the map down into a top ten list of the urban areas with the highest rates of millennial homeownership, combined with the average price of their home. A full 42% of the millennials living in Minneapolis-St. Paul, MN own their own home, the highest rate in the country.

1. Minneapolis-St. Paul-Bloomington, MN-WI: 42.4% and $222,528

2. St. Louis, MO-IL: 40.2% and $167,791

3. Detroit-Warren-Dearborn, MI: 40.2% and $148,404

4. Louisville/Jefferson County, KY-IN: 38.5% and $158,974

5. Pittsburgh, PA: 37.5% and $152,731

6. Indianapolis-Carmel-Anderson, IN: 37.4% and $161,856

7. Kansas City, MO-KS: 37.1% and $170,254

8. Nashville-Davidson–Murfreesboro-Franklin, TN: 37.0% and $213,090

9. Oklahoma City, OK: 36.7% and $172,485

10. Baltimore-Columbia-Towson, MD: 36.3% and $272,805

Buying a home is often the biggest financial decision anybody makes, and that’s especially true for young people. And there’s a lot to consider when buying your first home, but one thing other than affordability to keep in mind is how many other millennials are in the same situation. If you’re a millennial looking to buy a home, and you want to live next to other young people, you just might have to move to the Midwest.”

https://howmuch.net/articles/millennial-homeownership-large-cities

#2 paul armstrong on 05.01.18 at 4:59 pm

how about talking about investing in emerging markets

#3 Gulf Breeze on 05.01.18 at 5:03 pm

The government isn’t going to risk creating an even greater disaster by raising rates. No way. Won’t happen.

#4 TurnerNation on 05.01.18 at 5:12 pm

Tony areas of Toronto to be rifled though by tawdry tenants? Planned destruction and demoralization of our neighborhoods?

#5 Ian on 05.01.18 at 5:12 pm

This Ontario election can’t get over soon enough. I worry Ford will start pandering to these idiots who bought at the top of the market, and no one should be doing that.

92+ seats for the PCs, let’s finally solve this big government debacle.

M48ON – UltraBlues

#6 TurnerNation on 05.01.18 at 5:12 pm

The link >>>>>》 http://www.postcity.com/Eat-Shop-Do/Do/May-2018/Shelter-approved-near-Shops-at-Don-Mills/

#7 FOUR FINGERS WATSON on 05.01.18 at 5:15 pm

Will our leaders do the responsible thing, or sell out for votes?
……………..

They will sell out for votes. Can’t believe you asked that.

#8 NoName on 05.01.18 at 5:16 pm

google vs waze

Some time ago trial version of sirius “stopped working” so i was in a need of traffic update to avoid traffic jams, so misery index life/work/commute stays a same. I tried android auto and waze, works ok but map gets bit fuzzy after a while, don’t know why gets like that, but did same thing with 3 different android phones. Direction are ok google keeps you on a hwy as much as possible, but if you don’t stay in slow lane comute mizery index goes of the chart. Don’t know why google don’t tell people slow lane gives you options. Waze is different, it calculates route different, keeps you moving, so there is perception of progres is there but commute time is 5-10 min longer. Waze map works much better, does not get fuzzy.

#9 kommykim on 05.01.18 at 5:19 pm

Will Poloz hike or hold? Hard to tell, after reading this:

https://www.bankofcanada.ca/2018/05/canada-economy-household-debt-how-big-the-problem/

#10 Lee on 05.01.18 at 5:27 pm

Great article by Gary Mason in the Globe today about insider sales of pre-construction units in condos. His best observation is how despicable it is that the industry has said nothing about it and just allowed it to happen. Interesting how the real estate industry pleads customer privacy when fighting the Competition Bureau and then is more than happy to screw everyone selling initial units to privileged insiders.

#11 Ian on 05.01.18 at 5:33 pm

#6 TurnerNation

This being where the debacle that is downtown Toronto starts exporting its problems in an ever-expanding radius to the very jurisdictions that it didn’t even want to include as part of Toronto, you know, due to the suburbs’ such absurd policies of wanting small and reasonable government, and not having crackheads and crack hookers on every corner.

#12 MF on 05.01.18 at 5:35 pm

#8 NoName on 05.01.18 at 5:16 pm

Hey NoName,

I use Waze everyday. Best app ever. I really recommend everyone to try it.

MF

#13 The Technical Analyst, CSTA, CPD on 05.01.18 at 5:37 pm

ICYMI: Real estate is a SINGLE class asset. Like any other single asset it is volatile (that means it can experience wild price swings) and you need to know when to BUY and when to SELL.

Real estate is NOT diversification, even if you hold 20 homes, it is still a single asset. It is not 20 different stocks/companies, it is one asset.

So what do you do? SELL and get diversified. Skim off that profit, buy a cheap home, invest the rest.

#14 Honey Dripper on 05.01.18 at 5:39 pm

Nobody wants to build affordable housing because it costs too much. They all (politicos) talk a good story but meanwhile in Whistler even doctor’s are shuttering their doors. Resident living costs are too rocky mountain high.

When did Canada become so smug and un-affordable in a snowy mountain wasteland in the Rockies? Sheesh!

Our RE market is so screwed for awhile yet.

#15 Reynolds531 on 05.01.18 at 5:43 pm

Is that one of those “we have a kid now now no time for dog” couples?

#16 NoName on 05.01.18 at 5:43 pm

addendum to my previous post

Science and not plagiarized. Take that Watcha Minnie.

#17 Vancouver on 05.01.18 at 5:47 pm

In Burnaby today….

6363 Buckingham Drive, Burnaby just dropped $388,888 (-10%) today.

6389 Elgin Avenue, Burnaby just dropped $809,000 (23%) today.

5661 Willingdon Avenue, Burnaby just dropped $501,000 (-18%) today

5891 Mckee Street, Burnaby just dropped $441,112 (-15%) today.

#18 X on 05.01.18 at 5:51 pm

Sell out for votes. LOL. Didn’t realize there was another way for them…

‘The only relative bargains, as detailed here, are in the thickets of McMansions growing in the northern burbs, where $2 million houses are now $1.6, and populated with desperate sellers who will take less when pushed. Not exactly what the mills seek.’ Garth

Exactly what we have been considering in Toronto. We would prefer to buy for less. Simply because we really can do with less. That and we are cheap. But the higher the price, the better the deal we are finding. It is a good dilemma to have I guess. Although I do feel our frugality will win out.

#19 MF on 05.01.18 at 5:51 pm

I want to say this housing addiction is far from a millennial obsession. From what I have seen its Gen x that is the most delusional of all, having experienced no housing downturn either, and buying right at the best time (2005-10). Gen x is the worst of them all (serious).

Anyone who works with gen x families will probably agree all they talk about is their home renovations and moving.

The boomers have profited handsomely from the bubble as well. We can blame them for instilling the real estate bug into we, their millennial offspring. How many boomers are diversified and balanced VS how many are in real estate? We know the answer.

If anyone of them are diversified, its usually after a huge RE windfall anyways.

So you really can’t blame us.

In our world anything decent house-wise costs 1 million, renting has major drawbacks, and stocks are dangerous feeling/too complicated to learn.

How did it all get this way? Capital appreciation of course. And it was capital appreciation for people who really don’t deserve it (since the bubble is basically policy manufactured through ZIRP). That’s probably where the idea that policy can fix this mess originates from. Policy built it, policy can end it.

Those are some of my thoughts and observations.

MF

#20 Vision123 on 05.01.18 at 5:56 pm

in 1990, we bought a house for$200,000 in Toronto.. Our mortage was only $40,000. Actually, it was a loan as we used a line of credit. We paid it off in two years.
Consider that it went down 30% until 2010. That house was affordable . We did not have to eat tuna sandwiches and went on vacation every year. we raised kids there and had money to spare.
Consider today. That house is over a million.We could not afford it now, even though we make $100,000 each.
No way we could pay it off.
So , you cannot compare today’s house prices , and salaries to 1990 prices. It is crazy to buy a house now and owe that much money.
People like me will be downsizing soon.
It will be the greater fool who buys our house.

#21 Shawn on 05.01.18 at 5:57 pm

No more rate hikes for the BOC in 2018. 1 more for the FED.

#22 paul on 05.01.18 at 5:59 pm

#10 Lee on 05.01.18 at 5:27 pm

Great article by Gary Mason in the Globe today about insider sales of pre-construction units in condos. His best observation is how despicable it is that the industry has said nothing about it and just allowed it to happen. Interesting how the real estate industry pleads customer privacy when fighting the Competition Bureau and then is more than happy to screw everyone selling initial units to privileged insiders.
—————————————————————–
It’s not the real estate industry,it’s the building industry. Those units are sold long before they put up the sales site,to get units committed to so project can get financing. Most of that sales people/order takers at the sales site work directly for the builder.

#23 crowdedelevatorfartz on 05.01.18 at 6:03 pm

@#10 Lee
” how despicable it is that the industry has said nothing about it and just allowed it to happen. ”
+++++

Yep, Realtors and their “closed monopoly” on information….when it suits THEM.

Their sleazy tactics are just begging for new govt regs to gut their monopoly on sales/price info

I can dream cant I?.

Where is Happy Housing Crash on this one?
I’m vvery disappointed in you Happy….you’re slipping!

#24 young & foolish on 05.01.18 at 6:07 pm

We hear that chap money has inflated the value of more than just shelter (the “Everything Bubble” talk) and resulted in mega debts across the board. Would not higher rates just bring down stocks and bonds along with RE?

#25 Daveyboy on 05.01.18 at 6:09 pm

I moved from Toronto to Arkansas. What a world of difference. Life’s great!!

#26 MGTOW Canadian Millenial on 05.01.18 at 6:10 pm

Canadian marriage is a scam! Funny how the woman reaching her 40s suddenly got married and now wants to pop out a baby using the stork? These women hated your guts when they were in their 20s and 30s. MGTOW for life!

#27 Dani on 05.01.18 at 6:16 pm

what would be the lesser of two evils? To vote conservative means to vote for Ford. This would be a disaster. As demonstrated when he was a city counsellor for Toronto, …. He’s a bully who is all talk, no action because he can’t get along with anyone to get anything done. The circus he and his brother made of Toronto will just be the same but on a provincial scale. NDP or Liberal would be the lesser of 2 evils this time around. As for real estate and stock markets, they are both at a peak. But as Garth says, if the stock market crashes, it would take way less time to recover than real estate, so a balanced portfolio would also be the lesser of 2 evils if there is a crash.

#28 Headhunter on 05.01.18 at 6:19 pm

you would think Doug Ford kills Polarbears.. most likely we all live over land that was once “protected” no stopping this train may not be Ford but some of that protected land will be developed … world class city remember

what that would do to markets all over the golden horseshoe? Affordable housing (single family homes) closer to the GTA?

Now you know who made all those calls to cease and desist

#29 Wallfower on 05.01.18 at 6:20 pm

This listing MLS® Number: 30653627 has probably had four numbers since August. Started at $499,000. I see this all over Barrie. Then when the agents sell, they demonstrate 98.5% of list price. HAHAHAHAHAH. Creeeeeeeeeeeeeeeepy industry.

#30 Homeless in BC on 05.01.18 at 6:23 pm

What’s with all these peeps that want to have kids? You do realize that you are legally obligated to look after them until they are old enough to go to prison!

#31 Reximus on 05.01.18 at 6:32 pm

Tell me when it’s ever happened that anyone bought real estate and held it for 20 years in GTA and didn’t do just fine…these ‘moisters’ may just have the right long-term perspective and be smarter than you market timers

#32 When Will They Raise Rates? on 05.01.18 at 6:34 pm

#3 Gulf Breeze on 05.01.18 at 5:03 pm

The government isn’t going to risk creating an even greater disaster by raising rates. No way. Won’t happen

———————

I assume the above was sarcasm… Central banks and the bond market control rates, not the gubmint.

#33 Balmuto on 05.01.18 at 6:37 pm

#150 Ian on 05.01.18 at 3:03 pm
#144

Which President did stop Vietnam then?

President Ho Chi Minh.

#34 april on 05.01.18 at 6:45 pm

Garth, according to Aussie Durock, BC real estate prices will only continue to increase ’cause of increasing government taxes on new developments. Could he be wrong in his prediction? The government has always increased taxes and real estate has still seen busts following booms regardless. He is in the business of making money of real estate.

#35 Debtslavecreator on 05.01.18 at 6:47 pm

The majority of these moisters are intellitectuak yet idiots class
They have been indoctrinated by left wing professors
And the majority are nothing more than indentured debt slaves who can’t do basic math – unfortunately most of them are about to find out over the next 24-36 months that many of the great Canadian Financial myths they believe in were totally wrong
Many of these modern day debt slaves chose to borrow an extraordinary amount of debt at record low nominal and real rates with the homes valued at record nominal and real prices. Now over the next 2-3 years the majority will be left broke and many unemployed as the irony of their poor financial choices hit them. They helped finance an old persons retirement by enslaving themselves and ensuring that most of them will never retire
In keeping with the bizarre logic that most of these left leaning suckers believe in, they’ll vote in some corrupt left wing demagogue who’ll tax and rob the rest under the guise of fairness.
Don’t be surprised when we get a majority ndp government by the mid 2020s
At that point the path to certain collapse will accelerate as whatever is left of our nation is taken away
Hold on folks
The ride is just starting and it’s going to get real interesting

#36 Whatcha Minnie on 05.01.18 at 6:52 pm

Yes, location matters, I was at the orphanage till I was 18, then I got my job at a souvenir stand. Oh, and once I saw a blimp.

#37 Al on 05.01.18 at 6:53 pm

The way our society handles housing is so ridiculous when you think about it. People who need larger living spaces (young families with kids) can least afford it, and people who least need it (retired/empty nesters) rarely give it up!

Another example of “free market efficiencies” I guess.

#38 Nonplused on 05.01.18 at 7:00 pm

“Yes, location matters.”

I don’t think I’d be buying in Alberta right now. Oil prices do not seem likely to go up meaningfully in the near future and we are landlocked by referent rabid lefties on every boarder so we can’t build new pipelines and increase volume. Hence, revenue cannot be expanded. So the job market isn’t exactly robust. The days of graduating from high school and getting a $100,000/year job on a drilling rig are over.

And then we have the carbon taxes. According to this calculator I have been slightly over-estimating the cost of carbon taxes but not by much:

http://www.cbc.ca/news/canada/edmonton/alberta-carbon-tax-2018-1.4444573

Remember this $1,000+ tax is after other taxes so it comes straight out of your HELOC if you are in the 99% or savings if you are in the 1%. Plus I thin the true amount is double that becasue the calculator only considers carbon taxes you pay yourself directly. It doesn’t include the amount Safeway and McDonald’s and everyone else also pays and has to bake into their prices. Your plumber has to gas his van so he has to bake that into his fees too. Everyone uses carbon, and they don’t have any money to pay it either so it gets baked into prices.

So if we say the total amount is $2,000/year approximately for a family, where are they coming up with the money?

What Alberta companies there are that export their products are now at a competitive disadvantage because they also have to bake the carbon taxes into their products. Even Alberta companies that don’t export are now under increased competition from imports. Why make potato chips in Taber (uses lots of carbon to heat the friers) when you can move the plant a few miles east to Saskatchewan?

So on all fronts things look bad for Alberta.

Can’t sell our oil, can’t sell our lumber, can’t manufacture anything, even potato chip makers have incentive to leave, and we are taxed to death. We are screwed. Don’t buy a house in Alberta.

#39 Vance on 05.01.18 at 7:00 pm

Whatcha Minnie, i love you almost as much as Garth!!!

#40 Reximus on 05.01.18 at 7:12 pm

When I was a ‘Moister” and bought my little Toronto house in 98 @ 4k over asking…my dad said I had to be the “worst real estate investor ever”…who pays over ask?

Then he sold his west Van townhouse 100k over ask, and then he was the smartest seller ever…lol

#41 I’m stupid on 05.01.18 at 7:12 pm

#3 gulf breeze

If they don’t raise rates the dollar tanks, increasing the cost of everything. Anyone saddled with massive debt is going to feel the pain. It’s a double edge sword. If we enter a recession, I think we will since households will reduce spending, then the party will really start.

Canada made a mistake, they should’ve let the market correct in 2008-09 at least every central bank was working together to stave off deflation. Now we’re on our own. The biggest problem with housing debt is that it takes a really long time for households to get out of debt. This increases the length and depth of a recession.

#42 akashic record on 05.01.18 at 7:14 pm

#29 Homeless in BC on 05.01.18 at 6:23 pm

What’s with all these peeps that want to have kids? You do realize that you are legally obligated to look after them until they are old enough to go to prison!

You are legally obliged to look after other people’s kid with your taxes.

You might as well give a try to raise your own.
If you are lucky, you get a ROI that can exceed all your expectations.

#43 Leo Trollstoy on 05.01.18 at 7:15 pm

Given the fact the median family income in Saskabush is more than $94,000, it means the average family can afford the average house.

Saskabush ppl don’t wanna stay in Saskabush

#44 crossbordershopper on 05.01.18 at 7:15 pm

why saskatoon, i can get you a house for 10 grand in lots of small towns in saskatchewan, the problem is your in the middle of nowhere, and a good drive to any meaningful city with services.
if you want a quiet out the way place to grow some weed no problem no one would know your even there

#45 Reximus on 05.01.18 at 7:20 pm

FYI Garth…I cant believe you published #25

Bad taste and adolescent? Yes. But not delete-worthy. – Garth

#46 akashic record on 05.01.18 at 7:21 pm

#36 Al on 05.01.18 at 6:53 pm

The way our society handles housing is so ridiculous when you think about it. People who need larger living spaces (young families with kids) can least afford it, and people who least need it (retired/empty nesters) rarely give it up!

Another example of “free market efficiencies” I guess.

Changing zoning regulations to support multi-generational dwelling would solve this easily.

There is “single-family” zoning in Ontario even if you own a 100 hectare property.

#47 Rexx Rock on 05.01.18 at 7:23 pm

Prices in Toronto,Vancouver and Victoria have the highest prices for real estate because of the booming economy.Along with higher wages stick with these three cities for your investment in real estate.It hasn’t failed for the last 20 years,just get your best deal and ride out the small pullback that may come or not.I know everybody in Victoria feel very confident that this city will eventually have the same avg house prices as Vancouver.Little Dubai is still rocking!

#48 Garf on 05.01.18 at 7:24 pm

Can anyone help me understand court ordered sale listings in Toronto? They all give nearly zero info about the listing and are followed by this statement below.

“**Court Ordered Sale** – Property To Be Sold “As Is”, “Where Is”, No Access Will Be Granted By Order Of The Courts. Vacant Possession Not Available. Buyer Must Assume The Property As Per The Court Order.”

Can these listings ever be a good opportunity?

#49 Paradigm Shift on 05.01.18 at 7:26 pm

When people sit down and do the match adding up all their monthly outgoing costs to own a roof over their head instead of renting one – including interest charges from their banks, property taxes, strata fees, interest and fees from credit card companies, car finance charges/ loans etc. They will wake up.

#50 You know val on 05.01.18 at 7:28 pm

impeach Doug and Kathleen … give the green a go… let’s add a little spice to the mix… shake things up a bit… really what’s there to loose anyway… come next election they will get the steel toe anyway…. [email protected]&$”$

#51 crowdedelevatorfartz on 05.01.18 at 7:28 pm

@#33 april
“Garth, according to Aussie Durock, BC real estate prices…”
+++

Actually you misspelled a few things.
It should read ” According to Ozzie Jurrock, BC real estate pimp…..”

Ozzie Jurrock has been on the BC Real Estate scene pimping “Its ALWAYS a good time to buy!” for about 1000 years.
When prices go up OR down because…its always a good time to be a commissioned real estate huckster making commission money on the backs of buyers(greaterfools these days?) or sellers (when the markets tanks).
I remebemr him in the 80’s, 90’s, 00’s, 10’s ….always, always, always pumping real estate.
Its always a good time for Ozzie………when YOU buy.

#52 Reality is stark on 05.01.18 at 7:32 pm

The 407 government scam.
Now that housing tax revenue is on the decline the government must face the music and hit up the average Canadian dolt for more money.
The 407 is an example of superior stealing.
The private sector builds it so it doesn’t cost the government a nickel. More motorists get on the roads which results in higher gas tax revenue for the government. The gas tax revenue is supposed to go for new roads but it ends up in general revenues. This is ideal since the government doesn’t have to be accountable. It allows the government to continue to embellish risk averse public servants at a time when you need entrepreneurial zeal to create jobs.
These are the types of issues Canadians should be concerned about but the Wynne government deflects the dolts towards trivial social justice issues. When coffee shop jobs are the result of your $50,000 student loan you have just been had.
Enjoy bolstering government employee pensions.
By the way the government is busy working on other long term scams. Do you really believe your water bill will decline once they complete relining the water lines?
It will be a cash cow.

#53 Lawnboy on 05.01.18 at 7:39 pm

@ 24: Daveboy

#1 selling birthday card in Arkansas ?

“ Happy Birthday Uncle Daddy! “

Good luck with your new place.

#54 mitzerboyakaQueencitykidd on 05.01.18 at 7:52 pm

Will our leaders do the responsible thing, or sell out for votes?

Can’t believe I asked that.-GT

ill give ya 3 guesses and the first 2 dont count.

#55 palebird on 05.01.18 at 7:57 pm

#144 and #150

Wow is all I can say. The US got run out of Vietnam. No US president stopped that war, they lost. The so-called Communists took over and look at Vietnam now. I know quite a few Vietnamese people and they don’t even talk about the war.

#56 Unumizer on 05.01.18 at 7:57 pm

Garth, I think what so many are missing is natural selection. MIL just passed need to sell home. Will accept what we can. This will accelerate and prices will subside. It will ALWAYS be a balanced market. Just depends on forces in play.

#57 Real estate on 05.01.18 at 8:03 pm

Has been by far my greatest financial decision.

That said , got lucky as no one could have predicted the extent and duration of chronically low interest rates . If ever there was a time to leverage its been the last 10-13 yrs

Looking back , just wow

Garth I’d add govt policy not just rates /fomo

#58 Victor V on 05.01.18 at 8:04 pm

Ford has reversed his position on the Greenbelt.

https://www.thestar.com/news/queenspark/2018/05/01/wynne-denounces-fords-plan-to-develop-greenbelt-as-wrong-on-so-many-levels.html

#59 waiting on the westcoast on 05.01.18 at 8:05 pm

Had lunch yesterday and listened to two late 20s servers chatting about stocks and Bitcoin versus houses. A main point expressed… ‘But at least with a house, you have something real’.

I’m not debating that btc is real or not but the fact that housing is so ingrained that it doesn’t matter how expensive it is because you can use it… Crazy!

Lots of hard lessons to come.

Also, I have a couple of friends who are top mortgage brokers and realtors in Vancouver. Very slow…

Any realtors out there should migrate to Sutton Realty… Lower overhead / more variable costs… this could be a long haul for your Audi payments. Of course, you can always use leasebusters. ;-)

#60 Smoking Man on 05.01.18 at 8:08 pm

DELETED

#61 T on 05.01.18 at 8:09 pm

#19 MF on 05.01.18 at 5:51 pm

Just some food for thought.

1. I don’t believe anyone has witnessed a generation so entitled to their parents pockets; bills, sudden expenses, home downpayments courtesy of the parents. Even you admit to your parents offering you your down payment several years ago, but declined decided to rent. Good on you btw. I did the condo buying in Toronto thing, it’s not the incredible dream with endless appreciation and no maintenance or costs as you seem to believe.

2. Man babies. Look around at your peers. I had an eye opening experience the other day in an MTO office. A rather large line, as usual, however I noticed more than several late 20s to early 30s men in line with their mothers. I witnessed a few mothers making sure they brought the right documents and funds for their sons. It made me sick. I also experienced some very real racism and bigotry by a few of these man babies, who while making racist remarks were too involved in their phones to look up to who their were speaking to, hiding in their screens. Pathetic.

3. House lust is not specific to a generation.

How did we get this way you ask and infer some reasoning. I take it a bit further. It is not just rate policy, it is clear there is a serious problem with self righteous entitlement developing in this country. Furthermore it is clear this is developing from the bottom up, younger generations to old. Maybe it has to do with technology echo chambers creating small herds all following and feeding off each other. As generations adopt technology and various tech eco systems (Reddit, Facebook, etc) the attitudes and beliefs flow upstream.

#62 SoggyShorts on 05.01.18 at 8:11 pm

#19 MF on 05.01.18 at 5:51 pm
I want to say this housing addiction is far from a millennial obsession. From what I have seen its Gen x that is the most delusional of all, having experienced no housing downturn either, and buying right at the best time (2005-10). Gen x is the worst of them all (serious).

******************************
Don’t forget, most people don’t live in LM/GTA.
I actually feel bad for the Gen Xer’s I know who bought in that time period because they all lost money doing so.

MAB38

#63 FOUR FINGERS WATSON on 05.01.18 at 8:12 pm

#35 Whatcha Minnie on 05.01.18 at 6:52 pm
Yes, location matters, I was at the orphanage till I was 18, then I got my job at a souvenir stand. Oh, and once I saw a blimp.
…………………………

I saw one too ! I was amazed at how big it was but when you straightened up i realized it wasn’t a blimp !

#64 dr talc on 05.01.18 at 8:21 pm

#57 Victor V on 05.01.18 at 8:04 pm
Ford has reversed his position on the Greenbelt.

https://www.thestar.com/news/queenspark/2018/05/01/wynne-denounces-fords-plan-to-develop-greenbelt-as-wrong-on-so-many-levels.html


proof positive: you do not have, and will not have a government that represents you
you have an occupying regime- aka the UN, and they are up to no good

#65 S.Bby on 05.01.18 at 8:24 pm

#17 Vancouver

In Burnaby today….

I can confirm your observations. Asking prices are dropping like a stone in the South Burnaby area. Some stuff is selling but not at last year’s prices.

#66 april on 05.01.18 at 8:27 pm

#50- I’m with you!

#67 Balmuto on 05.01.18 at 8:28 pm

“#57 Victor V on 05.01.18 at 8:04 pm
Ford has reversed his position on the Greenbelt.

https://www.thestar.com/news/queenspark/2018/05/01/wynne-denounces-fords-plan-to-develop-greenbelt-as-wrong-on-so-many-levels.html”

I find it funny because you so often get this argument on this blog that Toronto housing supply is constrained by the greenbelt, it seems almost a truism. But as soon as a politician floats that trial balloon, it’s a blowback of epic proportions and he has to recant. A classic example of the echo chamber effect – what seems reasonable and palatable within the chamber is political kryptonite as soon as you go outside of it.

#68 Millmech on 05.01.18 at 8:31 pm

#3 Gulf Breeze
Governments don’t have to raise rates,banks are taking care of that themselves,want to bet that they raise rates another .45% before the end of the year?
I am still sticking to my prediction of 7% by year end!

#69 T on 05.01.18 at 8:37 pm

#36 Al on 05.01.18 at 6:53 pm
The way our society handles housing is so ridiculous when you think about it. People who need larger living spaces (young families with kids) can least afford it, and people who least need it (retired/empty nesters) rarely give it up!

Another example of “free market efficiencies” I guess.

—————

Another example of entitlement culture. Al being the entitled.

#70 Lawnboy on 05.01.18 at 8:41 pm

#60. T

Beautiful…well said…. I call em clickers!!
Too much tech junk….no good data going in head.

Btw….CBC says Ont math scores have dropped w.r.t. ALL other provinces.

#71 young & foolish on 05.01.18 at 8:42 pm

everybody wants to be a rebel … a disruptor ….

#72 arfmoocat on 05.01.18 at 8:43 pm

Everything goes up in price, from auto insurance to Supercuts.

The only thing that hasn’t gone up in 4 years is my rent and my wage.

#73 Disgruntled on 05.01.18 at 8:50 pm

“The next step will be for the Bank of Canada benchmark five-year to increase, bumping up the stress test threshold.”

Poloz? Dream on.

It’s automatic. – Garth

#74 young & foolish on 05.01.18 at 8:52 pm

grandad assures me housing was always relatively expensive in large centers where people concentrated for work and social life …. so, what’s different this time?

#75 Disgruntled on 05.01.18 at 8:53 pm

“The last decade stands in awesome contrast to that experience, thanks almost entirely to two things – cheap money and moister fear.”

You’re forgetting one more thing but then again that’s not allowed to be stated on this blog.

#76 Gravy Train on 05.01.18 at 8:57 pm

#59 Smoking Man on 05.01.18 at 8:08 pm
DELETED

You’re having your problems today, aren’t you? Life isn’t easy for you, is it? It’s a shame! :)

#77 What can I say about that? on 05.01.18 at 8:58 pm

Just for the sake of full disclosure, it wasn’t just cheap money and moister FOMO that caused a parabolic price jump. It was also immigration, CMHC, foreign investment and media coverage, etc.

Also, the cheap money was primarily to save the banksters and the top 1%.

#78 Arctic Gringo: Qalunaaq on 05.01.18 at 9:10 pm

Garth is right – real estate is local.

In between public housing, federal staff housing, territorial staff housing, and corporate staff housing (all subsidized, BTW) and large population and limited economic growth and supply and demand laws, there remains a small, local SELLERS market in Iqaluit.

The views of Frobisher Bay can be spectacular:

https://atiilu.com/homes-for-sale/
http://www.iglurealty.com/1647-qimminguat-court.html
https://propertyguys.com/search/?k=Iqaluit%2C+NU

Snap’um now. These prices won’t go down as rates go up.

#79 dr talc on 05.01.18 at 9:13 pm

When Doug Ford wins he will be introduced to ‘the Fockers’
he will become unrecognizable
he will salute every false flag he sees
globally, there is only one politician who seems to represent his constituents: Victor Orban

#80 Rexx Rock on 05.01.18 at 9:25 pm

DELETED

#81 The Secret Code on 05.01.18 at 9:26 pm

Vancouver market is doing something I have never seen it do: completely die.

Like dead. No spring market. Frozen. Lights out.

Condos are even rolling over and fast. Developers pulling a 180 and offering incentives.

The numbers just out have broken records for the least sales ever recorded in W.Van and Richmond.

The clamp down on money laundering is taking effect. Eby has his sleeves rolled up behind the scenes.

Get ready to witness the biggest RE crash Canada has ever seen.

#82 Financial Orchid on 05.01.18 at 9:27 pm

“the moisters still believe houses = solid investments.”
pretty much ingrained in the DNA or runs in the blood whichever.

As humans continue to breed and greed for homes as innate in the genes that you have pointed out, these living, breathing creatures will continue to creep and crawl about for pockets of opportunities such as the GTA crash that you mentioned a few weeks ago – unless they’re still on the way and see approach.

#83 The Secret Code on 05.01.18 at 9:32 pm

Entire province seeing price drops and the morons who are trying to sell their place without realizing this yet won’t be selling their place.

Big surprise inventory is ramping up big. What do you think happens when stuff does not move?

Weaver let it slip a couple of weeks ago. They see the data before me. They are worried about economic fall out.

They seem to be hinting that the BC market is crashing as of right now.

Well, we can now confirm that. For how long and how violent will this get?

#84 Want to know how bad Vancouver is right now? on 05.01.18 at 9:36 pm

David Eby has cancelled tonight’s town hall on school tax b/c of safety concerns. Real estate firms & opposition groups threatened to storm the room, acc to Eby release. “Ads were run by 2 real estate agencies encouraging non-constituents & people w/o tickets to attend.”

Apparently Liberals supporting this.

#85 West Coast Thumping on 05.01.18 at 9:39 pm

Vancouver Detached average sales price declined 5% year over year in April.

Vancouver Detached Home Sales fall 31% year over year in April. Fewest sales recorded for the month of April.

West Vancouver registered a new record of it’s own, just 33 detached sales, a new low for the month of April. And a 48% decline from last year

Richmond, the highest concentration of foreign buyers and money laundering, registered just 65 detached home sales in April. The lowest total on record and a 58% drop from last year.

#86 Gulf breeze on 05.01.18 at 9:46 pm

Woops, I meant Canada’s central bank will not raise rates. And yes, the banks can raise rates all they want, but if they do the math, they will keep them low, if they can. Why would they want to foreclose on a bunch of houses in a depressed market and a self created depressed market , at that? That would be really stupid.

#87 LP on 05.01.18 at 10:05 pm

#51 reality is stark

I’m almost certain that the 407 is foreign owned. The provincial government MAY see some revenue benefit but the greater profit goes to the owners and that ain’t us.

#88 Ian on 05.01.18 at 10:09 pm

#32 Bal

Hahahahaha sure. Move to Cuba, Memories Varadero.

I’ll ask Foreign Affairs if they can deliver there. It’s on me. Believe me you need it. I’ll pay for your subscription.

Which President has submitted more articles to Foreign Affairs than anyone else?

Don’t let reality get in your way!

#89 Unhinged Trader on 05.01.18 at 10:10 pm

I feel this streak of vile dog-posting is aimed at me specifically.

Let me just remind everyone. Famous cat-admirers:

Victor Hugo
Mark Twain
Winston Churchill
Catherine the Great of Russia

Notable dog people:

Michael Vick
Adolph Hitler

Need I go on?

#90 the Jaguar on 05.01.18 at 10:23 pm

One had to have lived in the early 90’s to really understand it. Astronomical mortgage rates, fast and furious, a mad rush to lock in blended rates if you faced the uncertainty of what was ahead or if your mortgage was not due for renewal for one, two, or maybe three years ahead of the constant rate increases. It was end of days. A race against time to lock in options that were closing in like gravity on melons.
It’s been quite a run. A good run for those who were fortunate enough to be in the right place at the right time (rate wise and location wise), but timing in life is everything. And you can never go wrong exercising restraint and discipline, especially when it comes to money. But if the party is over and the herd is spooked, particularly in this new age of digitalization and social media, it seems it might be quite the new experience. If the herd ran to the exit 25 plus years ago in a more or less orderly fashion, whatever will they do when the tweets are deafening? If Kim Kardashian’s ass can crash the internet, so might other less provocative things…

#91 the Jaguar on 05.01.18 at 10:26 pm

Jag also meant to compliment the harbour shot of lunenB, NS. Nothing like looking out over the water at sunset.

#92 SaskabushMill on 05.01.18 at 10:29 pm

Garth, where did you get the declines year over year for Saskatoon?

Wifey and I are considering upgrading our home in the coming years and I’d like to keep an eye on our local market. Don’t worry – we’re doing alright. Early 30’s, engineer and dentist, debt free, mortgage free, RRSP’S and TFSA’s maxed out plus money in prof Corp.

If the market here is down 7.5% in the past year I’d expect the same in the next year as well is all and I’d like to keep an eye on it but haven’t been able to find non-realtor biased numbers.

#93 Listing Alert on 05.01.18 at 10:43 pm

6,313 listings just flooded the West Coast in the past 24 hours.

Compare that with 4.492 in the GTA over the past 24 hours.

This 24/7 real estate gong show is getting good.

#94 Millmech on 05.01.18 at 10:51 pm

#86
No foreclosures because of the bank of Mom will not let junior become a Facebook failure,how could they live with themselves knowing they lost the holy grail of Canadian sucess.
The bank knows everything about them and just how hard to squeeze, people will work 2-3 jobs to just keep the home.
No massive foreclosures in the eighties at 18%+ mortgage rates, you just cut back, took on whatever extra work you could for that five year period,it sucked but peopled learned.Time for another lesson on living within your means!

#95 crowdedelevatorfartz on 05.01.18 at 11:16 pm

@#84 …….how bad IS Vancouver right now?
“Real estate firms & opposition groups threatened to storm the room…..”
+++++

Gee.
The Real Estate Cartel finally realize they cant politically buy their way out of this mess in the Lower Brainland?

May they all rot in financial Hell.

#96 crowdedelevatorfartz on 05.01.18 at 11:23 pm

@#85 West Coast Thumping

Sales numbers dropping like a rock….
++++++
Good.
I hope its historical and prolonged.

#97 paracho - reply to #87 on 05.01.18 at 11:31 pm

Highway 407 was sold off long ago . The provincial government gets a nice chunk of the revenues and does a great job enforcing for a foreign publicly traded company .
The company that owns it is Grupo Ferrovial . A company from Spain . I own a small amount of shares in my rrsp . Good dividend . Ticker FER in Berlin exchange . Currently at 17.74 Euro with a 4.03% dividend .
They own bridges, ports, roads all around the world .

#98 NoName on 05.01.18 at 11:47 pm

@Unhinged Trader

Victor Hugos, Les Miserables, and Hunchback dude. Nice…

@WM

Orfanige and blip.

You are ether most brilliant mind the world has ever seen, or crazy as &@$#+.

#99 whynot mickey on 05.02.18 at 12:01 am

my favourite way to decorate a new place is to cover it with mirrors. it makes my place look bigger and i have several rooms. i’m just careful not to invite people who a a predilection to rocks.

#100 Tony on 05.02.18 at 12:13 am

Re: #9 kommykim on 05.01.18 at 5:19 pm

Straight from Poloz’s speech:

“However, given the lingering effects of the shocks we have faced, the economy still requires stimulus.”

Can you believe this? Canadians have the highest debt levels in the entire world and Poloz prints something like this taken in context.

#101 Tony on 05.02.18 at 12:42 am

Re: #86 Gulf breeze on 05.01.18 at 9:46 pm

The banks make a profit on the spread between what they pay in deposit rates and bond and debenture rates and on what they charge for mortgage rates. The higher the spread the more the banks make. As you can see it’s in the best interest of the banks to charge the most possible for a mortgage.

#102 Oft deleted much maligned stock picker on 05.02.18 at 12:49 am

Just left Richmond behind for sunny Asia on the tail of a sale in my T/h complex selling in two days for $50,000 over list. Good to have that airport so close by. Buyers galore. Like shooting fish in a barrel when only one kind of buyer insist on all buying in the same place. All cash sale btw.

#103 mousey on 05.02.18 at 12:58 am

Not much to say these days beyond the Libs (federally) and the NDP (provincially in BC) have got to go. These two parties have lost hold of the kite strings. Can we just vote them out already.

#104 rargary on 05.02.18 at 1:18 am

It’s about time interest rates go up… and plans to keep going up… for housing prices, this needed to happen years ago! Can’t cry now for our debt woes, as it’s no accident the warnings have been front page news for years. Investors need to be making more money with higher rates and houses needn’t be more than just homes. Homes as our biggest priority investment to get rich shows how uneducated and greedy our nation has succumbed to… bankruptcy trustees are rubbing their hands together!! lol! and so are real estate lawyers cashing in on both the swinging door of desperados to buy to desparados to foreclose! Old adage states: don’t *$#@! where you eat! hasn’t gotten through thanks to gov’t enabling of greed!

#105 dee on 05.02.18 at 1:21 am

grandad assures me housing was always relatively expensive in large centers where people concentrated for work and social life …. so, what’s different this time?
—————–

does “grandad” have any ratios of incomes vs price tag? If he bought 30+ years ago, there were many times where people were purchasing at 1:1 or 2:1 house price to house hold income. The word expensive is subjective. A plane is cheap to bezos & a kia is expensive to a high schooler.

#106 Smoking Man on 05.02.18 at 1:35 am

5 years past my shelf life.

I ain’t complaining. The train Rudy is on. The view from my eyes is good

https://youtu.be/QYf84Xar0qw

#107 Smoking Man on 05.02.18 at 1:36 am

This clip is my life story.

https://youtu.be/HYjgWTctQR0

#108 NoName on 05.02.18 at 1:41 am

Interesting watch
(Tiny bit it of a bad language)

https://youtu.be/tY3ZVmkAKyM

Today I learned what is pipe piper strategy.

#109 Dolce Vita on 05.02.18 at 1:46 am

“Vancouver condo sales fall 18% year over year in April. A five year low for the month.”

“Average condo sales price sits at $968,456 in April. Up 12% year over year but price growth virtually unchanged over the past four months.”

-Steve Saretsky, Twitter, 12 h ago, REBGV data.

There it is, THE LAST BASTION of YVR RE good news beginning to unravel.

As predicted, peak April-May RE sales a non-event (you too 416).

September is when the price discounting fun begins by Prom Dance spurned April-May sellers.

But wait, 3000 YVR Amazon jobs over the next few years will save RE there, you know, at the lowest average Software Engineer wage in all N. America “High Tech” centers ($60K/yr), even lower than drop your underwear Toronto’s – about 25% lower than in the USA. Could that be why YVR was chosen?

https://i.imgur.com/d38x014.jpg

Let the RE grasping at straws and polishing of sinking ship port holes begin.

#110 Mark on 05.02.18 at 1:54 am

“#86 Gulf breeze on 05.01.18 at 9:46 pm
Woops, I meant Canada’s central bank will not raise rates. And yes, the banks can raise rates all they want, but if they do the math, they will keep them low, if they can. Why would they want to foreclose on a bunch of houses in a depressed market and a self created depressed market , at that? That would be really stupid.”

Have a listen to Ross Kay’s comments on TalkDigitalnetwork yesterday. Basically, in a nutshell, the banks have a pretty good idea, through data analysis and simply the mortgage application process, of the personal finances of individual borrowers. They know which groups of customers, in which areas of the country, are likely to be in situations in which they are ‘captive’ to a lender. And which customers likely are able to shop their business around, and hence, the bank legitimately needs to be competitive to retain the business.

If a particular borrower’s situation does not lend itself to any further extraction, then it certainly is in the bank’s interest to not extend a renewal of a credit facility on criteria that can be met by a borrower. In other words, force them into foreclosure. In most cases, such loans would be subject to CMHC subprime mortgage insurance, so there’s really no downside to the bank exercising its right not to offer a renewal of a loan.

However, for those who are able to continue making a loan payment and have some equity (keeping in mind that individual identical Canadian RE has not appreciated since 2013 on average!), not only is the entirety of an individual’s discretionary cashflow on the table, but the banks can even fashion renewal offers and arrangements to burn into existing equity through a process known as “negative amortization”. So your person who, say, bought a house in 2008, earned some equity through mortgage principal repayment and through appreciation in the 2008-2013 timespan, might end up, after everything’s said and done, not only making higher payments, but also losing a chunk of the equity that they earned through ‘appreciation’. Independent, of course, of whatever losses that may take place in the overall housing market as the result of houses dropping beneath the 2013 plateau.

Of course, all this extracted wealth and equity ends up in the hands of the bank, and ultimately its shareholders. Since such activity is likely to be systemically implemented over the entire spectrum of leveraged RE ownership, and since leveraged RE ownership is so common in Canada at record levels, the Canadian economy is likely to enter a systemic consumer-led deflation. Thus, the Bank of Canada will likely be forced to keep policy rates abnormally low, and even cut them going forward to maintain its 2% inflation policy target. Of course, home owners will not be helped by lower Bank of Canada policy rates as a spiral of diminishing creditworthiness will beset the housing market now that there is significant physical oversupply and demand exhaustion basically coast to coast. The result of the extreme supply onslaught brought upon by prices much higher than replacement cost in the 1998-2013 era.

#111 Mark on 05.02.18 at 2:14 am

“Also, the cheap money was primarily to save the banksters and the top 1%.”

Yet “the banksters” have been telling their shareholders that higher rates would help their profits. Nearly every big bank CEO has made such claim in the United States. And at least temporarily, they seem to be doing well.

The problem is, higher policy rates, by definition, are intended to slow the economy. The economy is slowed through limiting the formation of bank capital which can be leveraged to borrow additionally, and make additional loans within regulatory limits.

So in a nutshell, the bankers have a credibility problem. They needed the 0% rates to bail them out and restore health to their balance sheets. But now they’re claiming that high rates would help them. Only one of the two claims is actually true, and we know that the banks have done swell in the era of low interest rates.

We know what the low rates did to the US stock market — hyperinflated it to record valuations based on P/E, P/B, etc. It logically follows that higher rates may very well produce an entire generation of underperformance in US equities.

Fortunately in Canada, the Canadian stock market behaves rather the oppositely — it is hurt by low rates, and does much better in the rising/higher rate environment. This is why the TSX is so intriguing as an investment these days — not only does it trade at very modest, well below long-term average multiples, but there is extreme upside in earnings due to the inversely correlated positioning of a large percentage of index participants. Canadians are basically being handed a gift on a silver platter (pun intended) in the TSX being so darn cheap, but the vast majority of the country is obsessed and severely over-invested in RE. Ironically such unbalance in portfolios is creating a generational investment opportunity in the TSX index.

#112 Myra Andrews on 05.02.18 at 3:30 am

Greater Vancouver Stats from realtor Paul Boenisch

May 1 New 363 Sold 134 TI 10420
April 30 New 375 Sold 163 TI 10349

April 16-27 New 2453 Sold 1224 TI 10,347
April 3-13 New 2111 Sold 916 TI 9727

Mar 19-29 New 1834 Sold 1072 TI 9032
Mar 5-16 New 2248 Sold 1224 TI 8743

#113 Moister Miller on 05.02.18 at 4:02 am

Poloz between a rock and a hard place. Protect the debt snorfler (sp?) or the Canadian Dollar ?

https://www.msn.com/en-ca/money/topstories/canadian-households-owe-dollar2-trillion-poloz/ar-AAwBeaH?li=AAgh0dA&ocid=mailsignout

#114 Fake News Again on 05.02.18 at 4:30 am

Gulf Breeze on 05.01.18 at 5:03 pm
The government isn’t going to risk creating an even greater disaster by raising rates. No way. Won’t happen.

_____

Govt does not control rates – the market does. Govt only “thinks” it does……just like it “thinks” its job is to control people (slaves).

#115 Proof ? on 05.02.18 at 5:58 am

According to today’s Globe and Mail, Poloz’s chief concern in raising interest rates is the indebtedness of Canadian households, particularly mortgage and HELOC debt.

He created this problem by holding rates too low for way too long and now he wants to prolong the conditions (of too low interest rates) that cause it ?

If he is so “concerned”, why haven’t the rates been raised in anticipation of such an outcome ?

Funny how new home buyers don’t seem to share his opinion.

#116 Proof ? on 05.02.18 at 6:08 am

to comment # 107 Smoking Man

The fact that you know of, like and understand what Quadrophenia means there is still hope for you.

Every man has a “Dr. Jimmy” in them.
Even if they don’t know it.

If you don’t or can’t let him out at some point, then you are not much of a man.

#117 Proof ? on 05.02.18 at 6:23 am

comment to # 94 Millmech

Don’t bet on it.

The mortgages are too big and the equity too small.
People will walk and go bankrupt.

The number one reason that people “lose” their house is they won’t make payments into a negative equity position when the prospect of prices going back up are remote.

See the USA experience of 2007 to 2011.
And yes, Canadians will do the same – it will be an economic decision, not an emotional one.

#118 Barrie from Barrie on 05.02.18 at 7:23 am

#26 Canadian marriage is a scam! Funny how the woman reaching her 40s suddenly got married and now wants to pop out a baby using the stork? These women hated your guts when they were in their 20s and 30s. MGTOW for life!
—————————————————————

Is your name Alek? Dude, you need help, like now!

(OMG Garth – seriously? Allowing this kind of stuff here?)

#119 Tater on 05.02.18 at 7:38 am

#31 Reximus on 05.01.18 at 6:32 pm
Tell me when it’s ever happened that anyone bought real estate and held it for 20 years in GTA and didn’t do just fine…these ‘moisters’ may just have the right long-term perspective and be smarter than you market timers
—————————————————————–
89-09. That was easy.

#120 Victor V on 05.02.18 at 7:39 am

‘Financial strain’: Interest rate angst most severe for homebuyers in Ontario and B.C.

http://business.financialpost.com/real-estate/financial-strain-interest-rate-angst-most-severe-for-homebuyers-in-ontario-and-b-c

#121 Gravy Train on 05.02.18 at 7:44 am

#88 Ian on 05.01.18 at 10:09 pm
“Don’t let reality get in your way!”

You’re a fine one to talk! The Vietnam War ended on April 30, 1975, with the fall of Saigon. Richard Nixon resigned his presidency on August 9, 1974, as he’d have otherwise been impeached. Sound familiar, genius?

Oh, and don’t let facts get in your way! :)

#122 Steven Rowlandson on 05.02.18 at 7:50 am

The dog says,” mom and dad are getting me a human.”
Is there enough room in the dog house?

#123 SimplyPut7 on 05.02.18 at 7:51 am

In a speech in Yellowknife Tuesday, Poloz sounded the alarm, stating that about eight percent of indebted households owe 350 percent or more of their gross annual income, and that group is carrying about a fifth of total Canadian household debt.

https://www.bnnbloomberg.ca/stephen-poloz-delivers-wake-up-call-to-most-indebted-canadians-1.1070098

————————————————-

I don’t think these people get it, and never will. I wonder if his numbers include the 60k condos under construction in the GTA and the 40k sold that haven’t been built? Or the low-rise homes that have not been passed to homeowners, but who have no way of paying for them like the Mattamy projects?

BNN (Bloomberg) seems to think these people are Gen Y who will be bailed out by their parents. From what I have seen in Toronto the people are not just Gen Y, they are Gen X and Boomers as well who thought rates would never rise and we are running out of land and bought speculative properties, investment condos and put cars, vacations, and renovations on the credit line.

https://www.bnnbloomberg.ca/pattie-lovett-reid-canadians-are-more-financially-vulnerable-than-they-think-1.1069617

Now that prices outside of the core Toronto area are falling to back 2015 prices, I wonder if these people realize there is no get rich quick scheme with housing in Canada.

People need to stop worrying about the foreigners, they will be gone when they see what happens next.

#124 crowdedelevatorfartz on 05.02.18 at 8:03 am

@#102 Oft maligned stock picker
“Like shooting fish in a barrel when only one kind of buyer insist on all buying in the same place. All cash sale btw.”
+++++

What IS the exchange rate on Renminbi these days?

#125 jess on 05.02.18 at 8:08 am

social housing vienna

Vienna effortlessly tops the world’s most liveable city surveys, and for good reason. Its citizens – 1.8 million at the last count – enjoy affordable public transport, abundant greenery and rents UK citizens could only dream of. In fact, acccommodation in Vienna is plentiful and cheap, making it one of the most affordable places to live. In this compact city, dominated by four- and five-storey, walk-up mansion blocks, tenants have been known to snag flats with palace views, free heating and Alps mineral water on tap. More than 80% of residents rent, and two-thirds of Viennese citizens live in municipal or publicly subsidised housing. Eight out of ten flats built in the city today are financed by Vienna’s housing subsidy scheme. This quality and range helps push down rental prices, meaning low-paid workers can afford to live in the Austrian capital, even in the city centre. They often live centrally and enjoy its cheap amenities, short commutes and, thanks to a sound economy, jobs – even when renting on the partially regulated private market.”

https://www.theguardian.com/society/2017/dec/12/vienna-housing-policy-uk-rent-controls

#126 thebarold on 05.02.18 at 8:42 am

The pre-condition that created the perception for that real estate could never go down was the last real estate correction.

I’ve been a real estate bear for too long. Am now resigned to believe that there is no way people will return to a world where laminate countertops are acceptable. People will continue to overspend on housing despite what the fundamentals say.

#127 The Late Great Jim Lahey on 05.02.18 at 9:04 am

The blog dogs waited at the base of the hill for the bearded mystic sage, all knowing, all wise, financial tea leaf reader, oracle from Caledon, denouncer of inept politicians and all round jolly good fellow to speak. He arrived on his Harley, dismounted and walked up the Caledon hill. His eyes gazed on the crowd and they fell silent. He began to speak:

“Blessed are the poor in debt,
for theirs is the kingdom of financial heaven.

Blessed are they who mourn the loss of financial sanity,
for they shall be comforted.

Blessed are the meek savers in balanced portfolios,
for they shall inherit the earth.

Blessed are they who hunger and thirst for financial righteousness,
for they shall be satisfied.

Blessed are those who don’t give a damn about keeping up with the Jones,
for they shall have the last laugh.

Blessed are those not strangled to financial death by an overpriced home,
for they shall be free.

Blessed are the blog dogs,
for they shall be called children of Garth.

Blessed are they who are persecuted for the sake of financial righteousness,
for theirs is the kingdom of wealth and early retirement.”

#128 HaHaHa on 05.02.18 at 9:14 am

5 weeks until freedom 55. Gonna sit back and watch the train wreck. Oh and for reality sake cheap rates have also caused the stock market run since 2008. Company valuations are B.S. Yield curve is flattening like 2007. Watch the bond market people and ask yourself who is propping up this fake market. Sorry this is probably over everyones understanding of market reality. And I consider myself not that bright.

#129 T on 05.02.18 at 9:18 am

#110 Mark on 05.02.18 at 1:54 am

Give it up moron. Prices did not peak 5 years ago in 2013.

All the writing, so much time spent, loving life in your parents basement. What a life!

#130 CJBob on 05.02.18 at 9:24 am

#28 Headhunter on 05.01.18 at 6:19 pm
you would think Doug Ford kills Polarbears
_________________
Nope, the problem is he is making it up on the fly, not smart enough to run a province and doesn’t play well with others. He’s already back-tracked on his greenbelt comments:

https://www.huffingtonpost.ca/2018/05/01/doug-ford-greenbelt-kathleen-wynne_a_23424550/?utm_hp_ref=ca-homepage

#131 Q2 Class 4-4-6-4 on 05.02.18 at 9:45 am

‘An entire generation of people have entered their hormonal and nesting years without knowing a housing downturn.’

I would add that they have never heard of the Soviet Union or the postwar Russian Empire. Nor are they familiar with the manifold crimes of communism. It scares me to see students proclaiming a new communist dawn and parading images of Marx and Lenin and Stalin. Having been subjected to leftist bilge all through their school years, it’s no surprise that millennials now expect the government to ‘do something’ about ‘unfair’ housing prices.

I am not even remotely envious of the young. The future looks grim, with a heavy dose of stupid.

#132 Duke on 05.02.18 at 9:46 am

#21 Shawn on 05.01.18 at 5:57 pm
No more rate hikes for the BOC in 2018. 1 more for the FED.

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

It’s your wish that will NOT come true. It sounds like you have a debt issue. LOL

#133 Lonely in Montreal on 05.02.18 at 9:48 am

I am still amazed that Garth thinks that this Canadian housing debacle: a) Won’t lead to a long-term economic mess, and b) Won’t end up tearing a big fat hole in his precious 60/40 portfolio. Putting aside Canada, the US and China are also at the end of a global synchronized Credit Bubble of magnificent proportions. So when this thing blows, it can easily be a worldwide phenomenon. It will be fun to check back in a year or two once the you-know-what has hit the fan!!

If a balanced portfolio can survive the global quasi-depression of 2008-9 (which it did) then a Canadian housing correction is a piffle. – Garth

#134 Armchair analyst on 05.02.18 at 10:23 am

If a balanced portfolio can survive the global quasi-depression of 2008-9 (which it did) then a Canadian housing correction is a piffle. – Garth

The only reason the balanced portfolio survived the financial crisis is because of unprecedented fiscal and monetary stimulus unleashed on a global scale. There is no more fiscal or monetary room to do this again, and you can bet that another crisis is brewing with the amounts of debt festering worldwide, while interest rates and energy prices grow, and will most definitely have to slow consumption.

#135 TurnerNation on 05.02.18 at 10:24 am

Note uranium is having a nuclear rise here.
URA.US. One of those ETFs people ask What does it do?
This is what.

#136 X on 05.02.18 at 10:26 am

Garth, for the building in Lunenburg, are you doing the reno on the end unit original portion, and/or the part that now extends down teh street as well. Just curious as to how big a reno project you are undertaking this time. (not that these old buildings need to be big to have complexities)

I enjoy being able to click on the instagram pics despite not being on instagram.

#137 Newcomer on 05.02.18 at 10:40 am

#126 thebarold on 05.02.18 at 8:42 am

I’ve been a real estate bear for too long. Am now resigned to believe that there is no way people will return to a world where laminate countertops are acceptable. People will continue to overspend on housing despite what the fundamentals say.
—-

Possibly. But if we change “overspend” to the more accurate “overborrow” the picture changes slightly. Now the decision is not made by the consumer alone.

#138 Brett in Calgary on 05.02.18 at 10:48 am

#38 Nonplused

“Plus I think the true amount is double that because the calculator only considers carbon taxes you pay yourself directly. It doesn’t include the amount Safeway and McDonald’s and everyone else also pays and has to bake into their prices.”

Very true.

#139 Shawn Allen on 05.02.18 at 10:51 am

Forget the 1%, Meet the 8%

The 8% of Canadians that apparently owe at least 3.5 years of annual income before taxes.

Think about it. At 3.5% average interest rate (it’s likely higher) that would be 12.25% of gross pre-tax income to interest as well. Let’s say they manage to devote another 10% of pre-tax income to paying down the debt. At that rate debt would reduce by 3.5% per year so on tack to pay off in something like 35 years at that rate!

In other words that level of debt can be serviced but is almost impossible to pay off. Once a wage earner is in debt to 3.5 times annual income, good luck paying that off.

Luckily, this reflects the 8% and not most Canadians. And certainly not the elite 1% who frequent this blog. Hey, someone’s gotta be on the other side of that debt. That’s where the 1% come in.

#140 Gravy Train on 05.02.18 at 11:02 am

#106 Smoking Man on 05.02.18 at 1:35 am
“[Five] years past my shelf life.”

Not bad, Smokey! Quite clever actually!

Here’s my favourite quote along those lines:
“Had I known I was going to live this long, I’d have taken better care of myself.” — Mickey Mantle

#141 For those about to flop... on 05.02.18 at 11:05 am

Auto Insurance?

It’s a car crash…

M43BC

These States Have the Highest Auto Insurance Premium Increases After a Claim

“Auto insurance companies portray themselves as friendly and forgiving in television commercials, but they are less friendly than you might think. After filing just one claim, car insurance premiums increase by an average of 41.81%, according to an annual study by insuranceQuotes and Quadrant Information Services. Just how much insurance rates are increased depends on the state where you live. See how your home state compares to others in the chart below.

To create our graphic, each state was given its own line graph, with additional lines for D.C. and the national average. The first point represents the average annual premium for each state, the second point represents the average annual premium after one claim, and the gap between the two points shows the average increase after making one claim. We also color-coded each line to show the significance of the increase in terms of the dollar amount being paid by the drivers in each state. The data we used came from insuranceQuotes and the National Association of Insurance Commissioners (NAIC). To generate their averages, insuranceQuotes looked at the impact of one new claim of $2,000 or more on a married, 45-year old woman with a job, an excellent credit score, no lapses in coverage, and no previous auto insurance claims.

States with Highest Rate Increase After one Claim

1. New Hampshire: 65.9%

2. California: 63.2%

3. Rhode Island: 61.7%

4. Massachusetts: 60.9%

5. Iowa: 56.5%

States with Lowest Rate Increase After one Claim

1. Kentucky: 19.4%

2. Tennessee: 20.1%

3. Michigan: 22.2%

4. Oklahoma: 23.4%

5. West Virginia: 27.8%

New Hampshire is in a league of its own. Although the state’s average annual premium of $733 is below the national average of $841, it more than makes up for it with a 65.9% rate increase after filing one claim, the highest percentage increase in the nation. After the rate hike, premiums in New Hampshire average $1,216.

For overall premium cost, however, Rhode Island has New Hampshire beat. After just one claim, America’s smallest state has the seventh-highest average premium at $1,066 thanks to the third-highest percentage rate increase of 61.7%. That means drivers in Rhode Island will pay an additional $657 per year on car insurance after one claim, the highest increase in the country dollar-for-dollar.

When looking at our chart, an interesting pattern emerges—all of the largest increases in premiums occur in states that start out with higher premiums, even without any claims having been filed. In most of the states where the premiums start out below the national average, their average rate increases are also lower. Unfortunately for drivers in states like Texas (53% increase after a claim) and Connecticut (43.8%), their premiums start out high and only get worse. Other places, however, start out so low that, even though they have a big jump after a claim, their premium still isn’t too bad compared to some of their neighbors. In Iowa, for example, our hypothetical driver starts out with a premium of $572. After a claim her rate is increased by a whopping 56.5%, but she’s still only paying $895 every year.

The pattern seen with Iowa is particularly exemplified by four other states. Even after making one claim the happy residents of Wyoming ($826), South Dakota ($834), Indiana ($797), and Idaho ($734) are still paying premiums below the national pre-claim average of $841.

Auto insurance rates vary throughout the country, as do insurance premium increases after filing one claim. But in some states, like Iowa, filing one auto claim won’t increase your insurance premiums by too much because of the state’s already low average insurance costs. Nobody plans to get into an accident and file a claim, but when in one of the more expensive states, make sure to drive extra carefully!”

https://howmuch.net/articles/auto-insurance-premium-increase-after-claim

#142 Ontario... vote for...? on 05.02.18 at 11:10 am

I’m finding the upcoming election in Ontario very challenging. During the federal election, you said to vote, and to vote for something vs against something.

Do I vote for the Liberals and their spend-spend-spend and Hydro billion dollar incompetence/lying? Do I agree with their policies so much that perhaps let’s go with free dental, pharmacare, and childcare? Debt and taxes be damned? Or do I vote for a clown of Doug Ford who will destroy the greenbelt, or will say just about anything to get elected?

#143 Capt. Serious on 05.02.18 at 11:54 am

>> #141 Ontario… vote for…? on 05.02.18 at 11:10 am

Or do I vote for a clown of Doug Ford who will destroy the greenbelt, or will say just about anything to get elected?

I am thinking: vote for the Conservatives and hope Ford needs to step down due to some kind of scandal before he can do any real harm. The status quo of spending like it doesn’t matter can’t go on.

FOMC day everyone. Grab a drink and see what happens! (Probably nothing at this meeting.)

#144 IHCTD9 on 05.02.18 at 12:00 pm

#18 X on 05.01.18 at 5:51 pm

‘The only relative bargains, as detailed here, are in the thickets of McMansions growing in the northern burbs, where $2 million houses are now $1.6, and populated with desperate sellers who will take less when pushed. Not exactly what the mills seek.’ Garth

Exactly what we have been considering in Toronto. We would prefer to buy for less. Simply because we really can do with less. That and we are cheap. But the higher the price, the better the deal we are finding. It is a good dilemma to have I guess. Although I do feel our frugality will win out.
________________________________

This is a strong trend right across the board these days.

There is a price point on just about anything expensive and desirable whereby below it – the market is jammed, the price is bid up, and the bang for the buck is low. Above this point there is some real value for the money.

A couple years ago, a really nice place sold nearby for about 450K. Beautiful, indoor pool, cathedral ceilings, wood and stone. At the time rates were stupid low, low end was high priced, and I could have got ~300K for my old farmhouse (very low bang for the buck imho).

I could have sold and bought it with a mortgage payment in and around 650.00 lol! The only thing that stopped me from putting in an offer was the ~7K annual tax bill.

The fact that I could move from my humble abode to a house fit for a King for peanuts is a testament to how lower end houses were bid up high, and high end houses were suffering in value.

I think bargain interest rates turbocharged the low end of the market. Low value/cost homes became a hot commodity as folks started realizing en-masse that they could get approved for a mortgage with these current low rates, where it was not an option before. Once the herd was formed, it took on a life of its own.

Cars, trucks, atvs houses, you name it, same story. I went shopping for a cheap truck last year. Under 6K nothing was even worth looking at, while the ones that were, sold in hours; even minutes. I talked to one guy who had a bidding war break out on his old 3/4 ton. I did not see a drop of value for the money until the price was over 10G’s. This experience made me look at brand new trucks in a brand new light.

A word of warning on frugality from someone who’s been there. If it’s a cheap house now, it’ll be a cheap house later too unless you put a pile into it. If you get great bang for the buck now, you may well be able to cash out full value on it later even if you spend 50% more than a cheap house in the present day. Just watch those property tax amounts.

We bought for 123K 17 years ago. We looked at another house back then that was near new, and very nice for 175K. We said that was too much. If I could go back in time, I would buy the 175K one. It still looks great today, no major renos have been done, and it would likely fetch 400K right now with the owner having sweated very little for the gain (unlike me!).

#145 PastThePeak on 05.02.18 at 12:04 pm

#141 Ontario… vote for…? on 05.02.18 at 11:10 am
I’m finding the upcoming election in Ontario very challenging. During the federal election, you said to vote, and to vote for something vs against something.

Do I vote for the Liberals and their spend-spend-spend and Hydro billion dollar incompetence/lying? Do I agree with their policies so much that perhaps let’s go with free dental, pharmacare, and childcare? Debt and taxes be damned? Or do I vote for a clown of Doug Ford who will destroy the greenbelt, or will say just about anything to get elected?
++++++++++++++++++++++++++++++++++

Do you really need to ask? Anyone that votes Liberal in the next election is endorsing a party and leader that have been the most deceitful, corrupt, contemptuous, and economically destructive in the province’s history. They made Bob Rae look like a reasonable fiscal manager.

That cannot go without blowback. Ignoring all of the 15 years of Liberal disasters is to be just as bad as they were/are.

So, vote for PC or NDP, but not Liberal.

IMO it doesn’t really matter much economically, long term. Ontario has been put on a disastrous financial trajectory the last 15 years, and 4 years of PC rule, even a majority (unlikely) is not going to right the ship.

The work required is too much, and the Ontario voter (especially GTA, core Ottawa and London) will not stand for any cutbacks in their “entitlements”. PC’s want to get re-elected as well, and while they may trim some fat in a few places, and try to change some incentives in others – in the end, they know what the populace wants (gov’t services that “other people” will pay for).

#146 leslie on 05.02.18 at 12:12 pm

Keeping the price high helps create more spending and credit so there will be more money in the system.

You put 100k down borrow 400k (builder or seller) grabs that 400k and spend it / invest it somewhere else

without this…it wont be as much fun.

#147 Blacksheep on 05.02.18 at 12:21 pm

Shawn 3 138,

“Hey, someone’s gotta be on the other side of that debt.”
————————————————
Yes, a bank.

“That’s where the 1% come in.”
——————————————–
Shawn, buddy, please don’t mislead the children.

These chartered banks ‘create new deposits’ (money out of fresh air) when a debtor gives a mortgage to said, chartered bank.

You know well, over 95 % of all moneys circulating in our economies are created this way.

The 1% may be, the majority owners of said chartered banks, but they in no way, personally finance the lending of private $’s, to parties seeking credit.

#148 Mark on 05.02.18 at 12:35 pm

“#128 T on 05.02.18 at 9:18 am “

Are you unwell? There’s people out there that can help you.

#149 IHCTD9 on 05.02.18 at 12:35 pm

#144 PastThePeak on 05.02.18 at 12:04 pm
#141 Ontario… vote for…? on 05.02.18 at 11:10 am

Do you really need to ask? Anyone that votes Liberal in the next election is endorsing a party and leader that have been the most deceitful, corrupt, contemptuous, and economically destructive in the province’s history. They made Bob Rae look like a reasonable fiscal manager.

That cannot go without blowback. Ignoring all of the 15 years of Liberal disasters is to be just as bad as they were/are.

So, vote for PC or NDP, but not Liberal.

IMO it doesn’t really matter much economically, long term. Ontario has been put on a disastrous financial trajectory the last 15 years, and 4 years of PC rule, even a majority (unlikely) is not going to right the ship.

The work required is too much, and the Ontario voter (especially GTA, core Ottawa and London) will not stand for any cutbacks in their “entitlements”. PC’s want to get re-elected as well, and while they may trim some fat in a few places, and try to change some incentives in others – in the end, they know what the populace wants (gov’t services that “other people” will pay for).
_____

I’m no Liberal, but I’ll be voting for Wynne. I have an even more pessimistic view of the prospect of fixing Ontario’s finances than you do: It ain’t getting fixed at all until the Ontario voter changes their priorities.

Thinking on that idea, I’ve come to the conclusion that only big pain will cause a change of heart. That could be preemptive austerity measures by a sitting Liberal government, or taxes piled on a mile high. Eventually it will be both.

Wynne is an ideal candidate if financial annihilation is the goal, she’s well demonstrated her utter contempt for financial stewardship, and seems generally stupid overall. Perhaps she will offer more perks via the formation of public corps with the sole mandate of absorbing debt to conceal the real costs of same like she has with hydro.

I aim to keep the Libs in until the SHTF. They’ll bring it on sooner than any other party, and they alone most deserve the mud on their faces.

I have been preparing since last year, I suggest everyone here at least start thinking about the potential tax and fee assault that has only just begun.

#150 Reddy on 05.02.18 at 12:37 pm

It appears the gov does look out for us….

“Poloz said Tuesday that the volume of what Canadians owe is one of the key reasons why the bank has been taking a cautious approach to raising its trend-setting rate”

https://ca.finance.yahoo.com/news/poloz-says-canadians-owe-2-184747691.html

#151 Gravy Train on 05.02.18 at 12:40 pm

#138 Shawn Allen on 05.02.18 at 10:51 am
“And certainly not the elite 1% who frequent this blog.” Good one! :)

#152 Reynolds531 on 05.02.18 at 12:56 pm

#144 past the peak

I’m in London and the Ontario government hasn’t done anything here I know of. An entitlement would be an upgrade.

#153 SimplyPut7 on 05.02.18 at 12:56 pm

#135 X on 05.02.18 at 10:26 am

Garth, are you diversifying your real estate portfolio because the end is near for Ontario?

#154 Tony on 05.02.18 at 1:12 pm

Re: #149 Reddy on 05.02.18 at 12:37 pm

Does Poloz even remember that interest rates were always higher in Canada than in America until he got the job? Maybe that has something to do with Canadians being the most indebted in the world.

#155 KLNR on 05.02.18 at 1:12 pm

@#19 MF on 05.01.18 at 5:51 pm
I want to say this housing addiction is far from a millennial obsession. From what I have seen its Gen x that is the most delusional of all, having experienced no housing downturn either, and buying right at the best time (2005-10). Gen x is the worst of them all (serious).
____________________

So true MF. Most of my fellow gen Xers cashed out to millenials last spring. Past 20 years has been a great run. Not sure we’ll see anything like it again.

#156 Millmech on 05.02.18 at 1:19 pm

#117
Most people don’t realize that a lot of jobs now run credit checks,especially financial/accounting firms, any US owned company that has Canadian subsidiaries, most processing plants that have proprietary processes.Some smaller businesses are also doing credit checks to see another aspect of their future employee that isn’t revealed in the interview or reference check procedure.
So yes they can go bankrupt but that will be a black spot on their employment opportunities for the next seven years,so if your job competition is a little less skill qualified but isn’t deemed as much of a risk credit wise guess who gets the job?

#157 TurnerNation on 05.02.18 at 1:28 pm

The latest GF in Toronto. Just an SFH on a crowded street of 100 year old stock.

https://torontolife.com/real-estate/houses/toronto-house-sold-77-hastings-avenue/

…one street away from this new homeless shelter. Enjoy down and out, unstable, or addicted men rambling past your place and valuables.

https://www.thestar.com/news/gta/2018/01/11/salvation-armys-new-hope-leslieville-shelter-opens-its-doors.html

#158 Alistair McLaughlin on 05.02.18 at 1:29 pm

Gen-Xers weren’t obsessed with real estate in the eary-to-mid-90s because we couldn’t afford it. Jobs sucked. Wages sucked. (Those aren’t new developments by the way – crappy employment prospects and low wages have been plaguing young people since the mid-1970s, and certainly since the early 1980s.) Unemployment was punishingly high. Interest rates were high. We had no money. Pessimism was ubiquitous. For us older Gen-Xers (born 1965-75) our parents were of the pre-boomer generation, and many of our parents didn’t have money to begin with, so we never knew any other reality. Buy a house in my 20s? The idea was laughable. Not ever a serious consideration. Others my age did, but they were the minority. And they had parental help. (that’s not a new thing either). Things only started to change in 1998.

However, Gen-Xers certainly have caught the housing bug over the past 20 years, and in most ways surpass Millennials and boomers on the house lust scale. Most people my age (late 40s) are totally obsessed with real estate. Some remember high rates. Others conveniently forget them or ignore the lessons with “it’s different now”. Some remember the early 90s recession, some skated on it, and therefore their memory of that period is of cheap assets and good times. I find that one’s memory of recession depends entirely on how the recession – which lasted 6 years for most of us – affected you. If you skated on it by being in the right field or having the right connections, you don’t remember the recession at all. It was something you saw on the news and have long since forgotten. Others remember it, but have decided it will never be like that again.

Most rock star realtors are Gen-Xers. HGTV wasn’t invented by Mills. Those programs were produced and populated by Gen-Xers and boomers. The Mills have only taken them over in the past few years. Millennials didn’t get here in a vacuum. They had a lot of help, and two generations of house-humpers to set the example.

In most ways, Gen-Xers have less of an excuse to be house-horny, because they should damned well know better. For the most part (but certainly not for me specifically) our collective memory of hard times seems to have disappeared up our collective butts.

#159 Lee on 05.02.18 at 1:29 pm

So our budget deficit in Ontario will actually be 12B in 2018. California has a budget surplus of 6B for 2018 (I guess 8B in Canadian dollars). So who’s doing the funny accounting? How can California look so rosy when all we have been hearing for the last 10 years is it is an economic disaster yet Ontario is in the ditch? Something is not adding up. And why are all the accounting offices so at odds with how Wynne calculates her deficits? I thought accounting was base don generally accepted practices?

#160 Waiverless on 05.02.18 at 1:36 pm

#112 Myra Andrews on 05.02.18 at 3:30 am

Thanks for your posts Myra. The TI numbers are interesting to watch to see the climb up as sales fall.

#161 Wrk.dover on 05.02.18 at 2:11 pm

Mr. For Those About To Flop:

For some real fun, perhaps a map showing the concentration of mobile homes in US States.

I have googled it, the info is there but not in the easy to view format that you are so good at presenting.

It is a very big part of US housing in most states actually, unlike Canada with the particle board houses dominating the scene.

Seeing how Americans are supposed to be so affluent, it is mystifying to me, why there is not so much of that cheap alternative here.

If mobiles work in Ft. Mac, they should work anywhere, though on the east coast in some wind conditions it is not possible to retain heat in them at times. Or keep them grounded! Not that I would want one.

#162 Ace Goodheart on 05.02.18 at 2:22 pm

What I’m waiting for is the 1990s to repeat themselves. Back then, there were all these leveraged property management companies that bought Toronto houses and rented them out. Most were just mom and pop type operations financed by savings and home equity loans.

These little companies had strung themselves out to the limits with rooming houses, split up former single residences and were either just breaking even or losing a bit every month on their rental operations.

Most of the rentals and former rentals now being restored for single use again in Toronto’s various “Victorian Wonderlands” can trace their origins to this period in time.

When these things blew up it was like raining cheap houses in Toronto. The deals were unbelievable. Court ordered sales, power of sales, bankruptcies. It was amazing. No one had any money. You could pick up a house for a song and a dance.

Hoping those times come back. They were good times indeed.

#163 WUL on 05.02.18 at 2:32 pm

#156 TurnerNation on 05.02.18 at 1:28 pm

“…one street away from this new homeless shelter. Enjoy down and out, unstable, or addicted men rambling past your place and valuables.”
****

Neither here nor there I suppose but. A simple poster caught my eye at the Fort McMurray Food Bank a couple of years ago when I helped out post Horse River Wildfire. It had an impact.

It was a photo of a down and out fellow and it read (more or less):

“When you look at me, don’t see an addict or mentally ill person (etc.). See a human being.”

It stuck with me. Made sense. Some of us are a job loss away.

Anyhoo.

#164 PastThePeak on 05.02.18 at 2:49 pm

#151 Reynolds531 on 05.02.18 at 12:56 pm
#144 past the peak

I’m in London and the Ontario government hasn’t done anything here I know of. An entitlement would be an upgrade.
++++++++++++++++++++++++++++++++++

I referred to those 3 cities as they are solidly red/orange – vote for left wing parties all the time, and so can make/break the election due to their combined populations. It isn’t that these areas are treated differently.

The entitlements are what the gov’t has increasingly doled out – increased govt’ benefits, “free” tuition, “free” pharmacare, etc.

#165 PastThePeak on 05.02.18 at 2:56 pm

#158 Lee on 05.02.18 at 1:29 pm
So our budget deficit in Ontario will actually be 12B in 2018.
+++++++++++++++++++++++++++++++++++

Ontario (true) deficit hitting an average of $10B/year is here now, and while it might get a little better under a PC gov’t, when the next recession hits it will quickly be $20-$30B.

No one seemed to bat an eye as Ontario’s debt passed $300B. I don’t expect much more interest at $400B (in about 5 years or less). Maybe when it hits $500B the population will start to notice…

#166 jess on 05.02.18 at 3:03 pm

…”A coalition of 17 states and the District of Columbia is suing the Trump administration for blocking greenhouse gas emissions standards for vehicles that aimed to reduce air pollution and curb US drivers’ contributions to the global climate crisis.

“Enough is enough,” California Attorney General Xavier Becerra said Tuesday. “The evidence is irrefutable: today’s clean car standards are achievable, science-based, and a boon for hardworking American families. But the EPA and Administrator Scott Pruitt refuse to do their job and enforce these standards.”

http://www.truth-out.org/news/item/44344-states-representing-44-percent-of-us-population-sue-trump-s-epa-for-blocking-auto-emissions-standards

======

more hogs than people
https://www.rollingstone.com/politics/news/why-is-china-treating-north-carolina-like-the-developing-world-w517973

“Finally, Somebody Heard What the People Were Saying Was Happening to Them”
Millions of gallons of manure from industrial hog farms has made life miserable for North Carolina residents.

Leah DouglasMay. 1, 2018 6:00 AM
Bladen County houses 9 million hogs and just 1 million people. All those hogs produce about 15.5 million tons of manure each year.
The hog industry has followed the broader trend of consolidation in agriculture, and today just four hog processors control over 60 percent of the sector. Hog farmers are also following the trend of poultry farmers toward contract-based growing. That means that processors, such as Smithfield, own the animals, feed, trucks, and other inputs, while the farmers own the waste and capital-intensive farm structures required for hog farming. Contract poultry farmers have spoken out against the abuses of the contract system for years and have warned other livestock farmers of the dangers of the system.

Nuisance suits have often been used by neighbors of confined animal feeding operations (CAFOs) to challenge negligent management, but a spate of state laws have made it much harder for farm neighbors to bring those types of cases. In 2017, after a cumulative 26 lawsuits from over 500 residents had been brought against Smithfield, North Carolina passed an expansion of the state’s right-to-farm law that restricts farm neighbors to suing only for loss of property value, not for a loss in quality of life as a result of living near a CAFO. Similar right-to-farm expansions have been passed in Missouri, Arkansas, Indiana, Iowa, and other agricultural states.

Danielle Diamond, executive director of the Socially Responsible Agricultural Project, says that such legislative changes are in part a reaction to growing community pushback to industry farming across the country. She says these are “common tactics that the industry is using to pass these types of laws to make it harder for people to assert their rights.”

The next of the 26 lawsuits is set to go to trial next month.
Jury Awards Neighbors of North Carolina Hog Farm $50 Million In Nuisance Case
jurors awarded more than 50m. to 10 plaintiffs who live near the hog farm

#167 Steven Rowlandson on 05.02.18 at 3:07 pm

I might have interpreted the message on the sign wrong.

On the other hand the 2 plus one humans and the dog might wind up in the dog house if interest rates go up high enough or if houses become affordable via price collapse.

#168 Steven Rowlandson on 05.02.18 at 3:18 pm

RE #145

“Keeping the price high helps create more spending and credit so there will be more money in the system.”

The problem is that not all wage earners are elite wage earners.
Therefore keeping home prices sky high just makes life impossible for people and that is genocidal if not under section c then certainly under section d of article 2 of the genocide convention. Homes must be a place to live and have families and not be an investment or some kind of get rich scheme. If you want to get rich try to do so by other means that are not so socially destructive.

#169 For those about to flop... on 05.02.18 at 3:19 pm

Recent Sale Report/Realtor Assistance Needed.

While it’s shaping as a bad day for realtors ,maybe this house in Surrey will show one that got out alright.

Sold 20 days ago.

They were ambitious with the ask compared to the assessment.

Let’s have some Green Snow for once…

M43BC

5964 140 Street, Surrey paid 1.36 April 2016 ass 1.06

Oct 12:$1,558,888
Mar 2: $1,548,888
Change: – 10000.00 -1%

https://www.zolo.ca/surrey-real-estate/5964-140-street

https://www.bcassessment.ca/Property/Info/QTAwMDA3NzZXTA==

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

Feel free to make a donation.

Flop For Fox Fund…

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

#170 Reynolds531 on 05.02.18 at 3:55 pm

#157 Alister

Spot on comment, brought back memories

#171 Shawn Allen on 05.02.18 at 3:56 pm

Who Finances Debt?

#146 Blacksheep on 05.02.18 at 12:21 pm responded to me:
Shawn 3 138,

“Hey, someone’s gotta be on the other side of that debt.”
————————————————
Yes, a bank.

“That’s where the 1% come in.”
——————————————–
Shawn, buddy, please don’t mislead the children.

These chartered banks ‘create new deposits’ (money out of fresh air) when a debtor gives a mortgage to said, chartered bank.

You know well, over 95 % of all moneys circulating in our economies are created this way.

The 1% may be, the majority owners of said chartered banks, but they in no way, personally finance the lending of private $’s, to parties seeking credit.

*************************************
True, the vast majority of “money” is created by banks together with their customers creating loans and bank deposits .

But who owns the bank deposits? who does the bank owe the created deposits to? That’s right, the 1% (and not shareholders)

To review the process:

Stan dies with a paid off house. Stan junior inherits the house and sells to to Joe who buys it with borrowed money.

Joe’s bank approves Joe for a $500k mortgage and puts $500k in Joe’s checking account. The bank needed no cash at the moment to do this. It created a loan asset from Joe of $500 and for the moment this is financed by the created deposit of $500 in Joe’s account.

Joe completes the house purchase and the deposit gets transferred to Stan junior. Let’s say he is part of the 1% and just hangs onto the $500k for now. And let’s say he is at the same bank as Joe.

In this way Stan junior is on the other side of Joe’s $500k mortgage debt, albeit with the bank in the middle. The bank can finance the loan to Joe with Stan junior’s deposit but only as long as Stan junior does not remove the deposit by spending it whereby it will end up likely with some other bank.

Despite the way banks create loans and deposits: One man’s debt is another man’s savings. Believe me.

Despite the way they are created, bank deposits are owned by bank customers and not the bank and not its share owners and the deposits finance loans. Read any bank financial report.

Anyhow, you Blacksheep can believe whatever you want. Why should you be any different in that regard?

#172 Dups on 05.02.18 at 3:59 pm

Garth are we do for a US stock market crash soon? It sure seems that way looking at the charts. What do you recommend?

Why would it crash? – Garth

#173 Stan Brooks on 05.02.18 at 4:03 pm

El Incompetente discovered that Canadians have record indeptedness, while hugely taxed.

https://ca.finance.yahoo.com/news/poloz-says-canadians-owe-2-184747691.html?guccounter=1

Due to :
1. low rates (not Poloz fault apparently)
2. record insured debt due to government guarantees (not CHMC fault)
3. high taxes (not T2 and his incompetent corrupt finance minister fault as well)

So the economy is f..ked but no one is guilty,

Pay up, debt slaves.

#174 Sonny on 05.02.18 at 4:15 pm

Vancouver single-family home sales see weakest April in decades

“Vancouver saw its weakest April for single-family home sales in nearly 30 years last month, data shows.”

http://www.cbc.ca/news/canada/british-columbia/vancouver-real-estate-single-family-home-average-price-1.4645040

#175 Mike in Edm on 05.02.18 at 4:22 pm

For anyone that cares about the Saskatoon RE market, google “Norm Fisher Blog”. He’s a RE agent and runs a fantastic blog with excellent YoY stats that updates weekly every Monday…And for those of you too lazy, i’ll sum it up like this… Things are NOT pretty in Saskatoon right now.

#176 SimplyPut7 on 05.02.18 at 4:38 pm

#156 TurnerNation on 05.02.18 at 1:28 pm

Toronto homeless, addicts etc. stay within their invisible borders. You can walk sections of Yonge Street in downtown Toronto, and the street will be filled with people who you can tell live on the streets, and further down the street (e.g. Yonge and King) or one street over (such as Bay Street) will have very few or no homeless people or addicts.

Same with high crime areas and/or low income areas of Toronto, prices may be low for one reason or another and further up/down the street there are multi-million dollar homes.

I find home prices in Toronto/GTA are very subjective and sometimes make no sense (e.g. Leslieville homes or houses that only come with street parking, that you need a permit for). I have seen the exact same cookie cutter house, layout and similar renovations sell for 800k to 1 million more than the same house in a different community or different part of GTA.

I think some flippers will be burned because they bought a home in an area they didn’t understand and are now trying to sell a newly renovated home for 1.8 million in an area currently only demanding a maximum of 700k – 900k for a detached house, in a slowing housing market with rising mortgage rates.

#177 Stan Brooks on 05.02.18 at 4:39 pm

#170 Shawn Allen on 05.02.18 at 3:56 pm

Despite the way banks create loans and deposits: One man’s debt is another man’s savings. Believe me.

Despite the way they are created, bank deposits are owned by bank customers and not the bank and not its share owners and the deposits finance loans. Read any bank financial report.

Anyhow, you Blacksheep can believe whatever you want. Why should you be any different in that regard?

———————————

You are a very confused individual.

House hold debt is over 2 trillions. household savings are 900 billions, Who holds the rest?

Same for all levels of debt. even half of it is not hold by deposits but is created by the fractional reserve banking system. Read the Bank of England article on the topic/google it.

Who holds the corporate debt? the government debt?
Canadian savers?

Sure. I wish I was that stupid.

#178 T on 05.02.18 at 4:46 pm

#147 Mark on 05.02.18 at 12:35 pm
“#128 T on 05.02.18 at 9:18 am “

Are you unwell? There’s people out there that can help you.

—-

You could help by providing relevant data points to back up your claims. If you can’t, you could maybe just… stop with the nonsense.

So instead of trying to infer mental illness, which is a very sad and immature thing to do by the way, which speaks to your likely age and experience in life. Back up your claims.

#179 Stan Brooks on 05.02.18 at 5:00 pm

Oh, that spectacular idiocy is finally unwinding.
It was overdue for 15 years.

Do the idiots in power really think that they can tax and squeeze more from the overtaxed, indebted due to their policies populace/slaves in order to subsidize T2 idiotic economic domestic and foreign policies.

And how much more hope the oligopolies to extract from the straggling working poor?

It will be absolutely spectacular inflationary depression style crash that will leave a wasteland,

#180 Waiverless on 05.02.18 at 5:03 pm

#168 For those about to flop…

5964 140 Street, Surrey paid 1.36 April 2016 ass 1.06

Oct 12:$1,558,888
Mar 2: $1,548,888
Change: – 10000.00 -1%

Asked my friend about this one a few days ago flop….

Sold for 1,500,000

So PTT on 1.36 = 25,200
RE Commissions on 1.5 = 67,200
So tax and commissions = 72,800

Assuming 20% down so 1.088 Mortgage = ~4600-5000 a month payment so let’s say 4800
Let’s say it was rented for 2500 a month so 2300 * 24 months the difference from the mortgage payment is (4800*24 – 2500*24) = 55,200 holding costs for 2 years

So total cost 72,800+55,200 = 128,000

Therefore 1,360,000 + 128,000 = 1,488,000 with the new sale at 1,500,000 for a difference of 12k

They made 12,000 in 2 years by my rough estimate – though that rental income got added on to their taxable income.

If it wasn’t rented their holding costs was 188,000 and they lost 48,000.

Either way you slice it I think they’re happy they found a greater fool… nice sized lot though.

If they put that 20% down payment in a balanced portfolio that returned 6 percent a year..they’d have 33.6k in income for those 2 years (assuming they leave it for the long hall) – likely tax advantaged. Garth has the right of it…

Anyone please poke holes in my math… I could have it all wrong :)

#181 Waiverless on 05.02.18 at 5:11 pm

#168 For those about to flop…

Oops I fudged it..here are my revised numbers.. you can delete the old post Garth

5964 140 Street, Surrey paid 1.36 April 2016 ass 1.06

Oct 12:$1,558,888
Mar 2: $1,548,888
Change: – 10000.00 -1%

Asked my friend about this one a few days ago flop….

Sold for 1,500,000

So PTT on 1.36 = 25,200
RE Commissions on 1.5 = 42,000
So tax and commissions = $67,200.00

Assuming 20% down so 1.088 Mortgage = ~4600-5000 a month payment so let’s say 4800
Let’s say it was rented for 2500 a month so 2300 * 24 months the difference from the mortgage payment is (4800*24 – 2500*24) = 55,200 holding costs for 2 years

So total cost $67,200.00 +55,200 = $122,400.00

Therefore 1,360,000 + $122,400.00 = 1,482,400 with the new sale at 1,500,000 for a difference of $17,600.00

They made $17,600.00 in 2 years by my rough estimate – though that rental income got added on to their taxable income.

If it wasn’t rented their holding costs was 188,000 and they lost 42,400

Either way you slice it I think they’re happy they found a greater fool… nice sized lot though.

If they put that 20% down payment in a balanced portfolio that returned 6 percent a year..they’d have 33.6k in income for those 2 years (assuming they leave it for the long hall) – likely tax advantaged. Garth has the right of it…

Anyone please poke holes in my math… I could have it all wrong :)

#182 Gravy Train on 05.02.18 at 5:36 pm

#180 Waiverless on 05.02.18 at 5:11 pm
“Anyone please poke holes in my math… I could have it all wrong! :)”

When will we get the executive summary? :)

#183 Oft deleted much maligned stock.picker on 05.02.18 at 9:11 pm

Crowdwd E Farts….exactly……the Loon started last year buying 5.5 Yuan……today it only buys 4.4…..making Canadian real estate 20% cheaper for a buyer from China. But don’t hate the Chinese…..look at what the buyer from EU or UK gets…..the UK Pound us killing the CDN and makes it a bargain bsmt giveaway for those guys. Meanwhile CDN taxes keep going up while other jurisdictions go down and there is no way in this universe that locals can compete.

#184 crdt on 05.02.18 at 9:40 pm

Reading the posts I see how badly forums like this are needed. With the media reporting through the rear view mirror, continually amplifying the cognitive dissonance with the present. Lots of people are drinking the RE cool-aid, and will continue to double down for that ‘for sure pay day’ just around the corner. We lost out on mind numbing appreciation, and many will lose mountains of cash in a flash. People got used to talking in millions without the requisite sustainable income, playing with astounding leverage predicated on a monetary experiment about to be completed.

#185 stompingStormy on 05.02.18 at 9:48 pm

“It made me sick. I also experienced some very real racism and bigotry by a few of these man babies, who while making racist remarks were too involved in their phones to look up to who their were speaking to, hiding in their screens. Pathetic.”

No race baiting please…

#186 anti social, social club on 05.03.18 at 9:47 am

# 172 So the economy is f..ked but no one is guilty,

wow really? People were so stupid and borrowed and borrowed to buy shit they couldn’t afford and it’s not their fault? Someone has to be guilty? That is so stupid it’s not funny.