Huh?

There’s no 20% go-away foreign buyer’s tax in Washington States. No speculation tax punishing people from, say, California or New York who want to own a property there. Seattle, a bustling and growing city, has no empty houses tax forcing owners to become landlords. No luxury tax on high-end homes. No socialist state government, either. But the governor and senators are Dems while the Congresspeople (as we say in Canada) are red.

So here’s the news: 26% of all apartments in downtown Seattle are empty, while across the line in Vancouver there’s a vacancy rate of about zero. In Washington state’s premier city tenants are in the driver’s seat, as landlords are giving away free rent, gift cards, free cable and other incentives to attract them. In one week a local reporter found 112 area apartment buildings offering free rent.

A year ago Seattle had the fasting-rising rents in America, thanks to its thriving tech industry and the incredible buzz the city has generated among young workers, supported now by a world-class entertainment zone. But no more. Out of 25 top US markets for rent growth, this city now ranks 22nd. Rents, in fact, are dropping – after soaring over 7 years to the extent the average two-bedder now goes for $2,000 a month.

Vancouver comparison? Well you’d be lucky to find a nice one-bedroom place in downtown VYR for two grand, with two-bedroom units averaging $3,100 – a 50% increase over Seattle. The average house in that city, by the way, costs less than $850,000, or about half that in the delusional metropolis to the north, now being made even more expensive by Comrade Premier Horgan and his tax-and-spend disciples.

The vacancy rate in Seattle is not because the city’s in the decline, by the way. Quite the opposite. The home of Amazon (the second most valuable company on the planet) has the 4th strongest economy in the US, and the third-highest wages. With a metro pop of 3.8 million, it’s about 50% bigger than Vancouver, and yet manages to have more affordable homes. The median household income in Seattle now tops $80,000 U$, while the media in Vancouver is under $67,000 in Canadian Tire money. And foreign (mostly Chinese) buying has been as big an issue in Seattle as in the Lower Mainland. Despite that, governments have resisted a kneejerk call to restrict people from Beijing (or Vancouver) from purchasing there.

So here’s a bigger city with a better economy, a larger population base and more affluent families, and yet taxes are lower, houses 50% cheaper, and landlords are showering tenants with freebies. Huh?

Draw your own conclusions. But it’s hard to escape the obvious – markets correct on their own, and are only made worse by political interference. In Seattle when lease rates hit that $2,000 threshhold, they met resistance, especially with a lot of new supply coming on stream. In other words, supply and demand allowed rents and house prices to increase dramatically, then correct just as intensely.

In Canada, and especially BC (Bring Cash), governments for years tried to stimulate, promote and goose real estate with a bevy of incentives, freebies, grants, tax credits and deductions, and now are skewing everything with an onslaught against housing. Obviously, it ain’t working. Cheaper properties now cost more and expensive ones cost less, but are still unaffordable. Sales are plunging and listings swelling amid record family debt plus a vast number of people with all their net worth trapped inside house equity. The bottom line is that nothing gets cheaper by taxing it more.

How did we lose our way?

Well, so much for the argument rates won’t jump in a few days. An increase in the cost of mortgages and lines of credit is now a certainty on the 11th, as the central bank pulls the trigger for the fourth time in recent months. Concerns that Trump would eat Canada have been overshadowed by the economy itself, which just increased for the seventh time in eight months.

That shot the market odds of a rate increase back up to 80%, goosed the loonie almost a cent, and threw some gas on Bay Street. The performance surprised most economists (they are easily startled) who had expected thoroughly crappy Spring weather across most of the country would depress activity. Plus, of course, Donald. He turned Canada’s crank over the last couple of months by dragging out the NAFTA talks, slapping on steel tariffs, dissing our government and musing about destruction of the domestic car business. Despite that, this proud nation of aquatic rodents and birds named after a foreign-owned parka company soldiered on.

By the way, in Seattle they can lock up a mortgage rate for 30 years, and write the off the interest from family taxes that just went down.

Yeah, me too.

158 comments ↓

#1 Jin on 06.29.18 at 4:46 pm

First

#2 Matt L on 06.29.18 at 4:47 pm

Considering the recent news about the report on money laundering in BC, is it plausible that played a significant role inflating property values here?

Of course not. – Garth

#3 crowdedelevatorfartz on 06.29.18 at 4:50 pm

@#132 Le Sheep Noir
“Since we are discussing (I feel like we are friends now) honesty and real-estate, what type of residence do you own?
+++++++
To be perfectly honest I sold about 5 years ago. Tripled my money in about 15 years.
Invested in a balanced and diversified portfolio.
I may buy in a few more years after prices drop.

But since were friends.
If, on the extremely remote chance….
, I marry your daughter.
I have to ask you two questions.
Can I call you “Dad”?
Can I name the first born “Floppie”?

#4 Stan Brooks on 06.29.18 at 4:56 pm

Let me guess:

Because Van City is the best place on earth?
They are not making any more land here?
Everyone wants to live here?
Free health care?
Rich Chinese?
Best weather on earth?
The best companies on earth?
The best illegal/soon to be legal drugs on earth?
The smartest people om earth live here?
Buy now or be priced out forever?
Housing always goes up?

LMFAO

#5 Mike on 06.29.18 at 5:04 pm

Garth,

I have been looking for place to rent in Seattle. Can you please tell who is offering free rent or other freebies you mentioned. Also, the reporter’s post referring to all those low rent, free gift card properties.

Thanks!

#6 Lawnboy on 06.29.18 at 5:06 pm

“Help is on the way”. So don’t worry.

#7 Shawn Allen on 06.29.18 at 5:11 pm

Mortgages, American Style

“By the way, in Seattle they can lock up a mortgage rate for 30 years, and write the off the interest from family taxes that just went down.”

**************************************
Quite right. Americans normally lock in an interest rate that can’t increase for 30 years.

The going rate at the moment: 4.625%.

But it gets better, WAY better. These mortgages are normally completely open for repayment at the option of the borrower. If rates drop you can refinance down to the lower rate upon paying a modest fee. The humongous interest differential fees that apply in Canada are not applicable.

Under the system used in the U.S. when it comes to rate changes it’s heads, the customer wins (interest rises and the customer is locked in and protected), tails the bank loses (rates fall and the customer is allowed to refinance down to a lower rate).

This would normally be too risky for the banks so the system is that the bank securitizes and sells the mortgages to investors who bear the risk of early payoffs (refinances).

For home owners in the U.S. it is a completely wonderful system. Far better than we have in Canada.

Granted securitization got a very bad name in 2008 when bad behavior nearly took down the world’s banking system. That was not a flaw of securitization as such but of poorly managed securitization. I don’t think there was even even a hint of banning securitization and the benefits it brings.

Some years ago I tried hard to explore what barriers there are to setting up the same wonderful system in Canada. Is is NOT the Bank act which mandates mortgages to be open after five years. U.S. 30 year mortgages are open from the start or close to it.

If interest rates rise substantially, then at some point we are going to look back and wonder why our banks and regulators failed to be able to offer Canadians locked in rates for 25 years and yet relatively open mortgages like they have in the U.S.A.

CMHc may be the entity that has blocked a more customer-friendly system of 25 year fixed rates and yet open for repayment. This system requires a strong securitization market and CMHC and related government entities control that market in Canada and the market is just not anything like that of the U.S. for mysterious reasons.

#8 dakkie on 06.29.18 at 5:12 pm

The China housing crisis builds up steam

http://www.investmentwatchblog.com/the-china-housing-crisis-builds-up-steam/

#9 deceived on 06.29.18 at 5:19 pm

first

#10 xyz on 06.29.18 at 5:38 pm

Interesting data point. Today I searched Vancouver craigslist rentals available with the search term ‘July 1’ and got 1307 listings.

I also searched All Greater Vancouver with the same ‘July 1’ search term which netted me a whopping 2492

Seems to be alot available out there on the second to last day of June.

Of course the majority of prices on these units are waaaaay out of whack.

Hopefully soon we will see prices start to crumble.

#11 Red_falcon on 06.29.18 at 5:40 pm

Washington! I mean, first!

#12 Dirty Liberals on 06.29.18 at 5:44 pm

BC has had a massive money laundering issues for over a decade thanks to the dirty dealings of the Liberals. This is no all over the MSM now. They are focusing on the casinos but that is chump change to the laundering and illegal money transfers supported by the real estate industry. Solve the laundering problem and you solve the home prices and rent problem in Vancouver. May the spirit of an honest culture support the NDP.

#13 Brian Ripley on 06.29.18 at 5:44 pm

Global USD denominated debt has recently reached new record total amounts. To service that debt, U.S. dollars are required. Demand for USD is rising.

A rising USD will be deflationary for Canadians because the cost of our consumption to maintain lifestyle rises because most of the stuff we consume is imported.

I chart Single Family Detached Houses in Vancouver, Toronto and Calgary in $CAD and $USD
http://www.chpc.biz/canadian-housing-in-usd.html

According to that chart, the value difference began in earnest 5 years ago and we are now on the cusp of even more “widening”.

#14 Danny on 06.29.18 at 5:45 pm

Garth you say “write the off the interest from family taxes that just went down.”.

Isn’t this government involvement in the housing market as well?

Overall your presentation brings up some very good observations….and yet the reasons why Seattle is…..are not clear. The housing market is very complex as you have often noted. The sociological condition of America cities these days are becoming even more complicated.

How long now….do we have to wait until Doug Ford and family friends makes an impact on housing in Ontario and then you can write a similar piece on whatever the Conservatives will do…..obviously no public plan during the election…..but surely a plan behind the scene somewhere.

I guess Doug has already talked to his buddies in the Toronto Real Estate Board to give him talking points?

I often wonder why investing in other markets have many regulations to avoid people loosing ” their shirts “….but not the real estate?

Also Tridel at Bloor and Islington……just raised the few not built condos still for sell from mid $700,000 to $800,00 to $850,000…….why not…..they are up in Etobicoke nearby.
When will condo prices go down? I guess now with Doug and Real Estate friends probably more than a year….or more. It’s payback time for those campaign donations!

#15 ex-pat canuck on 06.29.18 at 5:51 pm

I seriously doubt that many Canadians are contemplating a move to Seattle or anywhere else in the states at this time in America’s history. Conversely, many, many ex pat Canadians are in the process of returning home. No idea why : ) I’m sure there are many opportunities for you here in the states, Garth, let us know how it goes for you!

#16 PeterL on 06.29.18 at 5:52 pm

Was it the horrible socialist governments who goosed the real estate market, or the noble capitalist conservative governments? The NDP reaction might not be ideal, but they didn’t create the situation.
(This is a trick question because the situation was created when there were no NDP governments, and the “liberals” in BC were really conservatives.)

You might enjoy this: https://www.vox.com/2016/8/8/12390048/san-francisco-housing-costs-tokyo

One detail left out is that in Japan, tenants have very strong rights (it’s difficult to evict a tenant, for example). Tenants in Washington or California have far less rights than those in Vancouver, who have less rights than those in Tokyo.

#17 Where is Coleman? on 06.29.18 at 6:02 pm

Where is @colemancountry? Doors locked + lights off at his constituency office in Langley. Has not answered CBC calls in the last 24 hours. Lots of questions about bc liberals role in casino money laundering. Dirty Money BC Liberals say he won’t be available at all again today.

#18 Coleman Running for Surrey Mayor on 06.29.18 at 6:08 pm

Hopefully this is the end of even thinking of Coleman runing for mayor of Surrey.

In my opinion, he is doing the only kind of running he is good at: for the hills.

#19 Mike on 06.29.18 at 6:08 pm

Technically Seattle is not the capital of Washington state, Olympia is.

One other major difference between the US and Canada is that the primary residence exclusion is limited to 500K for couples (250K for individuals).

Excessive primary residence “investment” in Canada amounts to tax avoidance.

#20 VanIsle Retiree on 06.29.18 at 6:11 pm

Oops. Don’t tell the people of Olympia that Seattle is now the capital of Washington State. The capital is actually Olympia, about 100 km south of Seattle.

#21 Bob Dog on 06.29.18 at 6:13 pm

Dont forget Google and Facebook are in Seattle as well. Had an interview there this week.

The USA has a legitimate government that actually represents the people who live there.

Vancouver is what happens when you elect a pack of Ferengi to run the country.

Sitting on pins and needles waiting to hear if I can get out of this nightmare of a City and go back to Seattle.

#22 ColemanCountry Has Been Spotted on 06.29.18 at 6:17 pm

Looks to be a white Bronco headed down the #1 HWY.

http://gph.is/1LcKtHC

#23 TheDood on 06.29.18 at 6:21 pm

#15 ex-pat canuck on 06.29.18 at 5:51 pm

I seriously doubt that many Canadians are contemplating a move to Seattle or anywhere else in the states at this time in America’s history………

I seriously doubt most Canadians would hesitate moving south if given the opportunity to do so. Better climate. Better salaries. Better everything.

Conversely, many, many ex pat Canadians are in the process of returning home………

If this is the case, they won’t stay long. Once you get a taste of the world, Canada seems like such a cold, expensive, boring place. We moved back after 15 years overseas and have regretted it since. If opportunity comes up, we’d leave without a second thought.

#24 DON on 06.29.18 at 6:23 pm

http://www.cbc.ca/news/canada/british-columbia/q-a-andrew-wilkinson-money-laundering-1.4727755

How about this one?

Liberal/Harper Conservative/BC Socreds allowed this to happen by conviently looking the other way, see no evil, hear no evil, speak full of sh$t.

Now Christy Clark is on the Board of Shaw Communications. Yes I will be switching to another provider.

What’s up with the rate rise.

80% a couple of weeks ago to 60% (and not gonna happen) to surprise! Good optimism on the business survey and better than expected April GDP…back up to 80% again. Hmmmmm….

Oil up on sanctions to Iran, Turkey and India indicating a middle finger to the US. Hmmmmm….

House listings increasing, slow but consistent. Trump trade wars…….

Geezus…can’t wait for the late fall…literally!

#25 Reporter Looking for ColemanCountry on 06.29.18 at 6:23 pm

Trying to find colemancountry – minister in charge of BCLC in 2011 when recommendations were made to combat money laundering in BCcasinos. Also looking for Mike de Jong – minister of finance then.

Yesterday BC Liberals put up rookie MLA Jas Johalbc re: Dirty Money.

I finally spoke with BC Liberals leader Wilkinson on yesterday’s report on money laundering. I asked about a dozen times why we can’t talk to colemancountry and where he is – each time Wilkinson deflected and stayed on his prepared message.

Also asked Wilkinson if the BC Liberals will admit any fault on the issue of money laundering in BC. He continued to ask when BC NDP is going to prosecute those responsible. He also emphasized his party made changes that showed results.

Results for who? Someone got fat pockets. Now those are some real crooked results.

#26 bing on 06.29.18 at 6:24 pm

The price of Real Estate can also affected by property tax. Just Google it. In Seattle, the total 2018 rate was $9.56 per $1,000 in assessed value, a 3.4% increase from 2017.
In Vancouver, the rate is $2.46826 in 2018.

#27 VanMan on 06.29.18 at 6:26 pm

2 Matt L on 06.29.18 at 4:47 pm
Considering the recent news about the report on money laundering in BC, is it plausible that played a significant role inflating property values here?

Of course not. – Garth

______

Umm, come again? Could you please explain how this has not had a role in inflating Vancouver property values?

The question was: a ‘significant’ role? Unlikely. – Garth

#28 DON on 06.29.18 at 6:29 pm

#17 Where is Coleman? on 06.29.18 at 6:02 pm
Where is @colemancountry? Doors locked + lights off at his constituency office in Langley. Has not answered CBC calls in the last 24 hours. Lots of questions about bc liberals role in casino money laundering. Dirty Money BC Liberals say he won’t be available at all again today.
******************

Under a rock somewhere or a closest.??

#29 DON on 06.29.18 at 6:35 pm

DELETED

#30 Happy Housing Crash Everyone! on 06.29.18 at 6:37 pm

Why has the communist Conservatives not got rid of CMHC? I thought they hate government interference? Oh they like socialism for the rich but not the poor? Hypocrites. No one in Canada is more socialist then a Conservative. They hate free markets for themselves but want free markets for everyone else? Why not one cry from the cons? Why??

#31 BC House Sold between 2 people 18 times in past 14 months on 06.29.18 at 6:38 pm

So, the house sells at a premium between two people 18 times over the past couple of month, increasing it’s price tag each time for the benefit of crime and……….this has no effect on BC Home prices?

#32 Casino Money on 06.29.18 at 6:40 pm

This hot money comes from USA and Canada to park all the time, ending up not always in Real Estate, but sometimes its used for financing it, within a separate legal entity. The hot money in time is washed clean, and then goes elsewhere to parts unknown.

#33 Vancouver West on 06.29.18 at 6:41 pm

Vancouver West currently has 486 properties listed that are $5M+.

Please explain to me who (aside from criminals and the .001%) are buying these properties?

Nobody, apparently. – Garth

#34 Run it Like Christy on 06.29.18 at 6:43 pm

Former B.C. premier Christy Clark named to Shaw Communications board.

Perks to be had. Now we need to figure out if/how Shaw is connected to the money laundering business.

https://www.cbc.ca/news/canada/calgary/calgary-shaw-christy-clark-board-1.4728396

You people are obsessed. Get over it. – Garth

#35 For those about to flop... on 06.29.18 at 6:44 pm

Recent sale report.

This Westside condo just sold.

302 2020 Highbury st,Vancouver.

Originally asking 988k

Reduced to 888k

Just sold for 880k

Assessment 911k

So the price adjustment did the trick ,went below ask and assessed value but still Highbury…

M44BC

2018-05-24 : $988,000

https://www.zolo.ca/vancouver-real-estate/2020-highbury-street/302

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

Feel free to make a donation.

Flop For Fox Fund…

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

#36 Place Your Bets on 06.29.18 at 6:46 pm

#17 Where is Coleman?

At RiverRock Casino. Craps table.

******************
#17 Where is Coleman? on 06.29.18 at 6:02 pm
Where is @colemancountry? Doors locked + lights off at his constituency office in Langley. Has not answered CBC calls in the last 24 hours. Lots of questions about bc liberals role in casino money laundering. Dirty Money BC Liberals say he won’t be available at all again today.
******************

#37 ozman on 06.29.18 at 6:50 pm

I’m an Australian that moved to BC 5 years ago. Immediately I saw the same ‘buy property now or get left out forever man!’ mentality that has plagued my countrymen for decades. I saw the market go crazy there from the 2000’s onwards – the GFC did absolutely nothing for house lust, in fact, it fueled it (safe as houses!). There’s nothing overly special about Australia either, but the locals all seem to feel its the best place on earth and feel the prices are justified. Was weird to see it here too. Its like a plague…..

#38 Dave on 06.29.18 at 6:51 pm

DELETED

#39 The Real Mark (not the imposter) on 06.29.18 at 6:53 pm

“#7 Shawn Allen on 06.29.18 at 5:11 pm “

In reading your post, I don’t think you fully understand the role that ‘securitization’ plays in the US market. “securitization” allows loans to be packaged, against which, Fannie Mae/Freddie Mac can provide, with a long-term implied subsidy from the taxpayer, a guarantee of performance. Securitization is merely a conduit through which Fannie/Freddie place their guarantee on such loans, and is not, minus the guarantee, required for the functioning of the market.

In the Canadian context, do we really want to place the federal government on the hook for interest rate risk that would be correlated to an increase in public sector financing costs? Of course not. The government should not be subsidizing the private endeavours of individuals, and should merely be a government — regulations, enforcement, social programs, and taxes.

Its bad enough that we have CMHC subprime mortgage insurance in Canada, where the government theoretically uses its balance sheet to backstop nearly $1T of mortgages against default. A system that is going to come under extreme stress going forward as accounting reserves are minimal relative to the amount of subprime debt insured in a falling house price environment. But the effective expansion of such a system, to facilitate a US-like system of guaranteeing the performance of long-term debt, sounds like something that taxpayers simply should not, and probably cannot “afford”.

I am, however, in favour of repealing legislation relating to mortgages that currently exists in Canada, the 5-year period, so as to provide greater consumer choice and an ability for lenders and borrowers to enter into consensual and informed contracts. As a bank shareholder though, I find the current system to be quite satisfactory however.

#40 The Real Mark (not the imposter) on 06.29.18 at 6:54 pm

“A rising USD will be deflationary for Canadians because the cost of our consumption to maintain lifestyle rises because most of the stuff we consume is imported.”

Sure you don’t mean inflationary?

Typo, right?

#41 Tim on 06.29.18 at 6:55 pm

DELETED

#42 Don on 06.29.18 at 7:00 pm

DELETED

#43 Nonplused on 06.29.18 at 7:00 pm

Seattle is one of the few American cities I’d actually consider living in. It is everything Vancouver is, only better in almost every way. Probably the only thing they need is an NHL team and then it would be the best city in NA.

Right around the housing crash, say about 2008-2009, I was doing some work for a company in Portland, so I flew through Seattle a lot. 2 things struck me from the air that are different than Vancouver: First, they have roads in Seattle. Real roads designed to move a lot of people. Second, there were a lot of paved culdesacs with no houses (remember this was the peak of the American housing crash). What this means is that in Seattle when property prices rise, they build more housing. That is why Seattle doesn’t have a housing crisis.

The other thing I noticed, which probably isn’t all that relevant, is soccer teams. If you go through the Seattle airport on a Friday or a Sunday the place is lousy with soccer teams, at least during the season. There are a lot of parents in Seattle who have the money to put their kids on teams that FLY to soccer tournaments and games on the weekend. And it wasn’t just soccer. Sure, in Canada you occasionally see a team in the airport going somewhere, but nothing like Seattle. They were everywhere. I never saw anything like it, not even at Newark or Chicago. Definitely not at YYC or YYZ or sleepy little YOW. There are a lot of teams flying in Dallas and Houston but not like Seattle. Why on earth is this relevant? Because it means they have disposable income their. But yet their houses are more much more affordable than a few miles North of the border.

#44 akashic record on 06.29.18 at 7:01 pm

What’s not obvious from the comparison is that exactly what factors led to different outcome in the two, supposedly somewhat comparable cities.

The government meddling with the market in Vancouver is fairly recent, the two cities seem to have been on a different paths before that.

Without dissecting the fine details, we don’t really know.
The low hanging “Canadians are stupid” explanation might be too easy conclusion.

Maybe Canadians are stupid, but that must have it’s own reason. Unless there is such thing as low investment IQ population, what smells fishy, not just rotten.

#45 akashic record on 06.29.18 at 7:07 pm

#2 Matt L on 06.29.18 at 4:47 pm

Considering the recent news about the report on money laundering in BC, is it plausible that played a significant role inflating property values here?

Of course not. – Garth

Of course not,
– as in it did not play role at all or
– as in we have no idea where the money went or
– as in there was no substantial money laundering in BC that could have effected the market?

#46 TS on 06.29.18 at 7:18 pm

It isn’t that hard to figure out why there is a big gap. Hint, it has to do with a few big differences between the US and Canada in tax policy, immigration, financial oversight.

1. Primary residence is free of capital gains tax. This has allowed speculators to flip real estate without paying any tax on the gains. Uncle Sam takes a bite of every transaction. You are also subject to estate tax and income tax on rental income even as a non-resident in the US. Canada’s real estate incentives are practically tailor made for tax evasion while the US incentives provide a tax deduction for US tax paid.

2. No side benefits. If you own a place in the states, you just get a house on a piece of dirt. If you buy in Canada, you get public education and healthcare for your whole family and an easy path to immigration. If you want more in the USA and become a green card holder, you have to file a US tax return every year for the rest of your life no matter where you live on your GLOBAL income.

3. Property taxes are 3 or 4 times higher in the US and pay for more local services. In Canada, many multimillion dollar homes declare only poverty line levels of local income. They pay almost nothing for some of the best public services in the world. The USA frowns on free loaders.

4. Canadian banks will issue mortgages to foreign buyers with no income verification if you put more than 25% down. US banks will laugh in your face if you are a foreigner and ask for any kind of mortgage without US taxable income.

5. The USA has very restrictive gambling laws and makes it much harder to launder money. Canada has become a world leader in easy money laundering as recent reports have pointed out.

There, I did your homework for you Garth!

Wrong, in part or whole, on every point. – Garth

#47 Rargary on 06.29.18 at 7:21 pm

#26 bing… yah really… what’s up with Vancouvers low property tax rates? If the govt there isn’t willing to make money off the high property values in taxes, how else are they doing it? Enough that for years they did nothing to curb the high cost of housing for the poor and middle class?

#48 DON on 06.29.18 at 7:44 pm

DELETED

#49 Screwed Canadian Millennial on 06.29.18 at 7:48 pm

Seattle also has a $15/hour minimum wage. That’s over $20 Canadian. Conservatives and corporatists promised economic apocalypse. All Seattle got was soaring employment, strong wages and a 3% unemployment rate. Are inconvenient facts still allowed here? They always seemed to get me in trouble. Happy Canada Day weekend everybody.

#50 Cdn Mom on 06.29.18 at 7:55 pm

Not surprised downtown Seattle has a 26% vacancy rate. I’ve been reading for months that people are leaving Seattle in droves, for various reasons. Cost of living, homeless, municipal politics, etc.

I was there briefly about 7 years ago. Couldn’t pay me to live there. Of course, I also lived in Van burbs and Abby. Couldn’t pay me to live there again, either. Cesspools all.

#51 Ford Prefect on 06.29.18 at 7:56 pm

Shaw’s putting Christy Clark on board may be a huge mistake. I too am looking at changing ISP. It is grinding to be contributing to the well being of a woman that many of us consider to be a crook at best.

And no, I am not an NDP supporter.

#52 Shawn Allen on 06.29.18 at 7:57 pm

Rising Demand for U.S. Dolalrs?

#13 Brian Ripley on 06.29.18 at 5:44 pm said:

Global USD denominated debt has recently reached new record total amounts. To service that debt, U.S. dollars are required. Demand for USD is rising.

A rising USD will be deflationary for Canadians because the cost of our consumption to maintain lifestyle rises because most of the stuff we consume is imported.

***************************************
Maybe… The world’s economy is growing at a real rate of 2 to 3% and around 4 to 5% in nominal U.S. dollars. The U.S. economy is growing maybe 1% less than that. So, the total of global U.S. debt (you mean U.S. debt held outside of the U.S.?) can be expected to reach new records on a regular basis. So what?

I don’t know about this demand for U.S. dollars to repay. Why would it ever be repaid? The U.S. government debt can rise forever as the economy grows.

Did you mean to say a rising U.S. dollar (lower Canadian) is inflationary (not deflationary) for Canadians due to imports?

I’d be wary of ANY prediction of currency levels.

Over the longer term the Canadian dollar does not really move all that much against the America. Try calculating the compounded annual increase or decrease over 20, 30, 40 years. It’s tiny.

#53 TS on 06.29.18 at 8:04 pm

Wrong, in part or whole, on every point. – Garth

————————

You don’t care to specify how and where exactly? I think those 5 points are a pretty good start.

#54 TRON on 06.29.18 at 8:06 pm

Garth your research dept. is slacking off. There is one huge difference between Seattle (home of Microsoft and Boeing) and Vancouver that makes Seattle uninhabitable; that is it rains on average 1.3 inches more per year in Seattle.

#55 jwilson on 06.29.18 at 8:08 pm

Yes, the difference between Seattle and Vancouver is pretty vast. The latter has a moribund employment scene, particularly for highly educated professionals.

Mortgage interest and property tax being tax deductible, zero state income tax, better jobs by far, and houses that are more reasonably priced.

However, there are SOME misconceptions here on this blog. First, there is no world class entertainment district in Seattle. It is pretty dismal these days.

Second, SCM seems to think that the minimum wage was all roses. No, in fact the city govt commissioned a study from UW that showed the negative impacts of the minimum wage. The city quickly shushed it up and went to UC Berkeley to get an opinion with better PR value.

Now, there are certainly affordability issues in Seattle, and although rents might be declining, many working people are still not happy with devoting such a huge chunk of their earnings to housing.

#56 Shawn Allen on 06.29.18 at 8:08 pm

The Real Mark said:

Securitization is merely a conduit through which Fannie/Freddie place their guarantee on such loans, and is not, minus the guarantee, required for the functioning of the market.

In the Canadian context, do we really want to place the federal government on the hook for interest rate risk that would be correlated to an increase in public sector financing costs?

*******************************
Really Mark, you are so fast to lecture.

I believe Securitisation puts the interest rate repayment risk on the buyers of securitised mortgages and not on Fannie freddie. Fannie Freddie I believe provide the mortgage default guarantee that makes the mortgages salable.

I try to post something about why Canadians don’t have locked in interest rates for 25 years and yet the ability to pay off early like Americans and you respond seemingly with the main goal of showing how smart you are.

#57 Wait There on 06.29.18 at 8:17 pm

A small amount of catalyst is not significant at all. Remember that!

#58 tccontrarian on 06.29.18 at 8:24 pm

Are Canadians ‘allowed’ to own RE in the USA/State of Washington? If so, what are the rules/regulations/risks etc?
Any Canadians here with experience on this – would appreciate some commentary, pros-cons, etc.

One other place I’m considering purchasing RE (over the next 3-5 years), is Costa Rica. Not too sure I trust their legal system and practitioners. I’ve heard stories of corrupt lawyers (Notaries) outnumbering the honest ones (someone told me that there you’d have to “hire a lawyer to watch your lawyer!”)

TCC

#59 Macduff on 06.29.18 at 8:28 pm

SCM, the big difference is that the US economy is actually booming and ours isn’t. They can afford a minimum wage hike and we can’t.

#60 TurnerNation on 06.29.18 at 8:28 pm

Let’s hear it for DoFo’s blondetourage.

And where’s my buck-a-beer……

P.C.: Just say the word (Su-Su-Sussudio)

#61 mike from mtl on 06.29.18 at 8:33 pm

As many have pointed out, the two are not comparable. Canada has a few true cites (3), whilst the states has loads.

Vancouver has zero local economy apart from flipping, imported Asian culture and transport whilst Seattle has a real industry.

TO has a few branch offices of local monopolies, condos and banks; Chicago, Cleveland, Detroit and Milwaukee have real companies. Montreal has Hydro, QC culture, low rent and corruption; NYC has everything else no contest.

Let’s not kid ourselves, we’re a no better than the OZ house flippers.

#62 When the Whip Comes Down on 06.29.18 at 8:44 pm

Seattle – great city. So much more going for it than Vancouver. So it really does beg the question. Why does the discrepency exist in the cost of housing between the two cities?

#63 BTTT on 06.29.18 at 8:45 pm

Considering the recent news about the report on money laundering in BC, is it plausible that played a significant role inflating property values here?

Of course not. – Garth
____________________

Wont even consider it huh?

#64 Shawn Allen on 06.29.18 at 9:00 pm

Mark’s lInterpersonal Skills

Mark probably wonders why I reacted defensively to his post. That would be the one whhere he starts out:

“#7 Shawn Allen on 06.29.18 at 5:11 pm “

In reading your post, I don’t think you fully understand…

*******************************
This is typical Mark over the years whether responding to me or Garth or anyone else. Responding by jumping right in with pointing out what is wrong or whatever rather than maybe (at least occasionally) first finding something to agree with.

I tried to point out over the years that this is no way to win friends and influence people, but to no avail.

So yes, Mark when your opening line to me is an insult, expect a defensive reaction.

#65 DON on 06.29.18 at 9:03 pm

Why the delete on the Douglas Todd Vancouver sun casino VIP – real estate professional news article. Offensive or Douglas todd?

Can,t imagine why people in BC would be upset.

Todd and this blog are not compatible. – Garth

#66 Lobster Man on 06.29.18 at 9:10 pm

In Seattle, as in the US in general, there is a cap on the capital gains tax exemption for principal residence. For a married couple e.g., the cap is set at $500,000…
In Canada, there are no limits. You can claim millions in tax-free gains for your principal residence. In a way that particular tax law for Vancouver RE is very similar to those in Australia, Hong Kong…. the sky is the limit, for specific RE “investment” gains.
Can you not see the difference between Seattle and Vancouver BC?

#67 Cheese on 06.29.18 at 9:10 pm

Farmers produce too much milk to sell, so its called quantitative cheesing time. For the first time in 100 years the surplus of cheese bought and stored by the US government has reached 1.39 billion lbs. that nobody wants, or cannot sell. They need to adopt our system of supply management of dairy products. What a joke on USA – give it away for free.

#68 The Real Mark (not the imposter) on 06.29.18 at 9:24 pm

“I believe Securitisation puts the interest rate repayment risk on the buyers of securitised mortgages and not on Fannie freddie. Fannie Freddie I believe provide the mortgage default guarantee that makes the mortgages salable.”

That’s not my understanding of things. Fannie Mae takes the interest rate risk, and hence, in an attempt to at least defease some of this risk, has to enter into swaps and derivatives.

http://www.investinganswers.com/financial-dictionary/real-estate/fannie-mae-fnma-2140

“Fannie Mae shares generally have an inverse relationship with interest rates; its stock typically increases when interest rates fall, and vice versa. Fannie Mae frequently attempts to hedge its exposure to interest rate changes by purchasing derivative securities, such as interest rate swaps.”

My ‘read’ of such is that the interest rate risk is heavily being dumped into (or willingly being taken on by) Fannie/Freddie, and that purchasers of the Fannie/Freddie-backed MBS are not exposed to the interest rate risk.

I think the problem is pretty obvious here — interest rate risk is being vested heavily in Fannie/Freddie. 2008/2009 was illustrative of this fact, as when interest rates blew out on MBS, Fannie/Freddie became insolvent. Only the systemic lowering of long-term interest rates restored health to Fannie/Freddie, and it allegedly has been a highly profitable entity in the era of low long-term interest rates.

The problem of course, is when long-term rates go back up, and the GSE’s find themselves on the hook. Could be very ugly.

If a true non-government-subsidized market for long-term mortgage backed debt existed in Canada, I’d be all for it. But at least its my understanding that such does not exist in the United States, and for similar reasons, probably could not exist in Canada.

Of course, as I have argued earlier, if an individual wants to lock their mortgage in for 30 years, while they can’t do it directly with their mortgage, they certainly can enter into an interest rate swap contract with a bank that would accomplish the same.

#69 Rexx Rock on 06.29.18 at 9:25 pm

The average income in Vancouver can’t be anywhere under $100,000.The high real estate values obviously is what people can afford.Do the math,its possible because people can service the high mortgages.

#70 yvr_lurker on 06.29.18 at 9:30 pm

As you can see from many of the comments tonight, many of us living in YVR have a very different view to what this blog suggests.
1. The comment that the NDP has made the entry level market more inaffordable is complete bogus. The stress test has been the key factor here, which has nothing to do with the NDP. Let’s revisit this issue in 3 years from now after all the curbs on speculation that the NDP has introduced has had effect. It would have been sinful to let what has happened for the past 15 years continue unabated.
2. The money laundering issue has now been brought to the forefront and was a key factor in goosing some key markets (westside properties, presale condos). Not clear what the actual number was, but I can’t imagine it was not a big impetus spurring locals to overbid for properties. The BC liberals did nothing with this for a decade, and Coleman seems to be on a convenient holiday. Eby represents my district, and is doing a terrific job in my view. Note to self: must change Shaw to alternative provider.

The additional measures to make the purchasing of houses by “corporations”, to hide the true foreign ownership of properties will also be another welcome step.

Let’s revisit where we are in YVR in 3 years from now after these measures all have a time to act. No harping on the same subject; just give it 3 years and then re-examine. I am hoping that vancouver will be returned to the locals; where there is a more level playing field to afford decent housing, so as to develop vibrant communities (and not towers and streets of ghost citizens). This will give a “world-class city”; and if this is called “building walls” by some, I frankly don’t give a shit. I further don’t care if my paid off for place on the westside goes down in valie; it will at least mean that my kids and my neighbors kids have a chance to also have a fulfilling life here long term.

#71 Fish on 06.29.18 at 9:33 pm

Please excuse me but , I will Never ever talk to that

WHaCO with a green truck with garbage in it with an

Alberta plate and red club attached to his steering

wheel and Most importantly to all of my friends

happy canada day weekend!!!

#72 Trojan House on 06.29.18 at 9:34 pm

#59 Macduff on 06.29.18 at 8:28 pm

Not exactly. First quarter of 2018 GDP increase was only 2%.

#73 Montreal on 06.29.18 at 9:35 pm

Corruption is an acceptable way of life and a tradition that will never end. Today, one plays it safe while driving the streets, and when a cop stops you just hand him the papers with a $100 bill, and all is well less the $100 for no ticket or an increase in your auto insurance. The clubs are the same with a line up, and the man at the door expects to see some green because this becomes your entrance taxation.

#74 Tim H on 06.29.18 at 9:35 pm

My family and I moved to Seattle from Vancouver in 2005. If you have the means, I recommend it. The city is better than Vancouver in basically every way. We make 7 figures, and our effective tax rate is 17% all up.

#75 jess on 06.29.18 at 9:41 pm

https://www.denverpost.com/2018/06/28/no-money-down-mortgages-colorado/
have the rental reits bought up all the sfh’s?

YIMBY? (yes in my back yard)
must have learned that from their leader!
“You generate policy by yelling about things.”

https://www.theguardian.com/cities/2017/oct/02/rise-of-the-yimbys-angry-millennials-radical-housing-solution

Federal mortgage rules hurting local housing market, says CEO of ARR
Regina, SK, Canada / 620 CKRM The Source | Country Music, News, Sports in Sask
David Boles
June 24, 2018 08:35

Was it the rules ? or simply the prices are too high?

“In Regina, we’ve got supply levels and the number of active listings on the market at all time highs and we’re seeing already weak demand being dampened through these rules.”

http://www.620ckrm.com/2018/06/24/federal-mortgage-rules-hurting-local-housing-market-says-ceo-of-arr/

#76 Canada=Poor cousin of U.S on 06.29.18 at 9:42 pm

Comparing Canada to U.S is not fair. United States is a super power with a behemoth economy. Canada on the other hand is…. well Canada.. Happy Canada day to the Canadians!!!

#77 For those about to flop... on 06.29.18 at 9:43 pm

Pink Lemonade Stand in Vancouver.

This one is borderline ,but since it’s a condo and people seem to want to know if the condo tower is ready to topple,I will track it and see what happens.

They paid 820k September 2017 and the latest reduction is down to 899k so they might grind out a couple of percent after expenses if it goes for the full number.

One detail not in their favour is the low assessment that tops out at 787k

I’m sure by now their realtor has told them that things in Condo World are not as hot as the previous couple of years.

I would tell them ,but I don’t want to rain on their Parade…

M44BC

2301 602 Citadel Parade Street, Vancouver

Jun 1:$930,000
Jun 28: $899,000
Change: – 31000.00 -3%

https://www.zolo.ca/vancouver-real-estate/602-citadel-parade-street/2301

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

Feel free to make a donation.

Flop For Fox Fund…

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

#78 Canada=Poor cousin of U.S on 06.29.18 at 9:46 pm

To add to my previous comment, United States is very developed. It has the best of everything in the world including the weather. Canada only has 2 major cities. Toronto and Vancouver and almost everyone wants to live here. The rest is all snow and even worse weathers. So its natural, the property prices would go higher in Toronto and Vancouver. Happy July the 4th!

#79 Leftover on 06.29.18 at 9:46 pm

“By the way, in Seattle they can lock up a mortgage rate for 30 years, and write the off the interest from family taxes that just went down.”

Well, sort of, though they pay capital gains on real estate on the flip side. As it should be.

Nice comparison nevertheless. Familiar with both Seattle and Vancouver, I’ve had to shake my head at the difference in housing costs between a city that has a great economy, terrific culture and a real work ethic (Seattle) and one that pretends to (Vancouver).

Self regard, delusion and money laundering create unique dynamics though. The implosion will not be pretty.

#80 Mike Tompa on 06.29.18 at 9:49 pm

Also note, Washington has no state income tax and is just north of Oregon which has no sales tax. Live in Washington and buy your big items in Oregon. Cars, couches, BBq’s, and fridges all tax free. Sounds good to me!

#81 Gulf Breeze on 06.29.18 at 9:54 pm

Garth,

I co-own a commercial building in the heart of Seattle. Where are you getting your numbers from? 26% vacancy rate in residential housing when the most pressing issue there are the thousands of homeless there? Huh?? Something doesn’t add up here. I have been on top of this issue for years. Is your story somehow incomplete? Please show me your sources.

Mike Rosenberg, Seattle Times, Trade Development Alliance, Seattle King County Realtors and other local sources. – Garth

#82 viorelli on 06.29.18 at 9:59 pm

Vancouver is much more expensive to live in on many levels, this comes with lower wages and higher taxes. Spoken with an owner of a new bubble tea shop on Commercial Dr recently. He pays $6200 / month for 650 sq.ft on main level. How many bubble teas do you have to sell in order to cover your rent? Let alone wages. Everything is gone through the roof and it drives many businesses and professionals out of the city and even the country all together. A colleague’s son is moving to Dubai which has no income tax, offered $ 180.000 annually for managing IT security for local businessman. He is leaving for 5 years and will figure out what to do later. The only rules are: leave your gender neutral, lgbtq, and feminist thoughts at home and do not question the Quran, otherwise welcome to come! Why we as the country cannot stay competitive?

#83 WiseGuy on 06.29.18 at 10:03 pm

Obviously, there are major issues with regards to real estate in Canada, notably in BC and Ontario that needs government intervention.

Organized crime, money laundering at BC casinos from around the world has propped up real estate in BC, the same goes for Ontario. Money can fly a few hours east too.

The government hasn’t had the balls to do anything and nobody is talking to one another until now in 2018. Now they have to figure out how to combat it.

Of course the ordinary Joe chased real estate upwards higher and higher over the years, because that is exactly what was happening with NO government intervention.

Blind to mostly what was going on with regards to organized crime, the government slaps on rules, like the stress test and so forth to try to slow things down….which has happened!

I don’t know why you are against this?

The USA is s completely different beast and they would never have allowed what has gone on in Canada. Truly, we are an open door and a laughing stock for people around the world, where crimes are punished with weak jail terms.

#84 Ana on 06.29.18 at 10:09 pm

TS: I think your argument is flawed:

3. “Property taxes are 3 or 4 times higher in the US and pay for more local services. In Canada, many multimillion dollar homes declare only poverty line levels of local income. They pay almost nothing for some of the best public services in the world. The USA frowns on free loaders.”

– I don’t think you are comparing apples to apples when you discuss ‘property taxes’ and ‘income taxes’ this way. If you have a more valuable home in Canada you are paying more in property taxes which pay for local municipal services.
Sure – some of my income tax may trickle down locally but it goes provincial/federal. So I agree with Garth that your argument is flawed – at least on this point.

#85 Ponzius Pilatus on 06.29.18 at 10:09 pm

#34 Run it Like Christy on 06.29.18 at 6:43 pm
Former B.C. premier Christy Clark named to Shaw Communications board.

Perks to be had. Now we need to figure out if/how Shaw is connected to the money laundering business.

https://www.cbc.ca/news/canada/calgary/calgary-shaw-christy-clark-board-1.4728396

You people are obsessed. Get over it. – Garth
————–
I wonder why CKNW did not hire her back.
Worst Premier ever.

#86 Leo Trollstoy on 06.29.18 at 10:12 pm

#16 PeterL on 06.29.18 at 5:52 pm

FYI Vox is considered a garbage media source

Stick to Reuters or AP

https://qph.fs.quoracdn.net/main-qimg-12c4a577a0e064c32c356186fc1e91bc

#87 Leo Trollstoy on 06.29.18 at 10:15 pm

#21 Bob Dog on 06.29.18 at 6:13 pm

Good luck!

Tech is hot!

#88 Leo Trollstoy on 06.29.18 at 10:19 pm

I try to post something about why Canadians don’t have locked in interest rates for 25 years and yet the ability to pay off early like Americans and you respond seemingly with the main goal of showing how smart you are.

And yet accomplished the opposite lolol

crissy wrong on C$/US$, rates, deflation, gold, tech, what’s left? lulz

#89 waiting on the westcoast on 06.29.18 at 10:23 pm

#56 Shawn Allen on 06.29.18 at 8:08 pm says…”
*******************************Really Mark, you are so fast to lecture.

I believe Securitisation puts the interest rate repayment risk on the buyers of securitised mortgages and not on Fannie freddie. Fannie Freddie I believe provide the mortgage default guarantee that makes the mortgages salable.

I try to post something about why Canadians don’t have locked in interest rates for 25 years and yet the ability to pay off early like Americans and you respond seemingly with the main goal of showing how smart you are.”

To no avail…

#90 You Must Be Asleep on 06.29.18 at 10:28 pm

#70 Wise Guy – You must have been sleeping not to remember the mortgage backed securities fraud, or were you just kidding with one of the biggest financial messes in modern day history originating in USA.

#91 TRON on 06.29.18 at 10:38 pm

#55 jwilson on 06.29.18 at 8:08 pm

However, there are SOME misconceptions here on this blog. First, there is no world class entertainment district in Seattle. It is pretty dismal these days.
_____________________________________________

Here’s a misconception – there’s a world class entertainment district in Vancouver. Vancouver is so culture starved that Boston Pizza calls it’s restaurant two blocks from the Scotia Theater ‘The Theater District’. It’s really very laughable. Poor Vancouver, the city that really wants to grow up and be like the other big cities someday.

#92 Pete on 06.29.18 at 10:40 pm

#4 Stan Brooks
………………………..………..
Sorry to break the news to you, but GreaterVan/Fraser Valley is a pit:
https://globalnews.ca/news/4064656/bc-crime-justice-system-report/
https://bc.ctvnews.ca/is-gang-violence-on-the-rise-in-metro-vancouver-1.3772966

#93 Fish on 06.29.18 at 10:41 pm

How am I supposed to remember the guy s name they all have the same name, not like he wearing a name tag, look I see hundreds a person a day, gosh I mean well you would think he would announced himself how simply thoughtful is that ????? Not so wild enough idea???????? look it’s easy please ask the [email protected] front desk could you please send her down

#94 Shawn Allen on 06.29.18 at 10:50 pm

Mark, Please Stop

Mark, please consider not responding when you have no clue.

You state:

“My ‘read’ of such is that the interest rate risk is heavily being dumped into (or willingly being taken on by) Fannie/Freddie, and that purchasers of the Fannie/Freddie-backed MBS are not exposed to the interest rate risk.”

******

Look, of course the buyer of a mortgage backed security takes the interest rate risk just like on ANY traded fixed income product. And they take prepayment risk. So you are wrong here.

And you state:

“Of course, as I have argued earlier, if an individual wants to lock their mortgage in for 30 years, while they can’t do it directly with their mortgage, they certainly can enter into an interest rate swap contract with a bank that would accomplish the same.”

****

Yes, Mark, a typical home owner can enter into a swap. What nonsense. Also as I posted Americans get the OPTION to pay off their mortgage early and refinance to a lower rate. The notion that a Canadian home owner can replicate that might be true in some theoretical fashion but certainly not in practical reality.

I tried to make a useful post and your nonsense is ruining it. Please stop.

******
Also Fannie / Freddie went down because they guaranteed repayment on loans taken out by what turned out to be people who who could not afford to pay the loans. Interest rate issues may have played a par later but the root cause was obviously the defaults. So please stop.

I will not respond any further to you.

#95 Lead Paint on 06.29.18 at 10:51 pm

#56 Shawn Allen on 06.29.18 at 8:08 pm

Every one of Mark’s posts has only one purpose – to make himself seem smart. He doesn’t fool anyone for very long… peak house 2013? Sales mix? Deflation? His nonsense mumbling, littered with technical jargon, might be amusing if they weren’t so poorly written.

#96 TS on 06.29.18 at 10:52 pm

#84 Ana
Sure – some of my income tax may trickle down locally but it goes provincial/federal. So I agree with Garth that your argument is flawed – at least on this point.

—————-

I suppose that is one way to look at it, but here’s the thing…In Vancouver, the wealthy don’t pay their share of income tax either. This study should be required reading.

http://siteeconomics.com/wp-content/uploads/2017/04/High-House-Prices-and-Low-Incomes-April-2017.pdf

In the GVR, home prices and declared taxable income are inversely correlated. You probably guessed that isn’t the case in Seattle. The real question is what are all those 3 million + west Van homeowners doing for all that cash that isn’t showing up on their tax return?

#97 Benz on 06.29.18 at 11:01 pm

DELETED

#98 Prices on 06.29.18 at 11:02 pm

Garth,

Are the prices in your post in USD, CAD or the respective currencies of each city?

Have a great long weekend!

#99 Dolce Vita on 06.29.18 at 11:08 pm

#37 ozman

I think you have it: a plague.

Having left YVR for NE Italy you realize so-called laid back YVR’ites are a pretty greedy bunch obsessed with RE as an investment and not just a place to live.

And ya, self-important too about their mountains and ocean [no clean beaches to swim in though with those murky waters]….wow.

Here in Italy, we have beaches you can swim in, Mediterranean blue, azure, topaz waters and mountains (minor examples, Google Images “Viareggio” which is in Tuscany or Google Images about the crystal clear waters of Sardegna making it unnecessary to go to the Maldives or “Giardino dell’Infinito” in Ravello on the Amalfi Coast). 7600 km worth of coastline that no one gives a second thought about other than where you go in summer to hang out.

Ya, self-important RE plague minded describes YVR [and corrupt if you believe the 2 bricks short of a full load MSM they have there that claim to be journalists].

#100 fishman on 06.29.18 at 11:14 pm

Commercial property tax is 5.25x residential per assessed value in Vantown. About 45% of total municipal taxes comes from commercial. A rule of thumb for triple net commercial is rent/sq.ft./annum is twice the triple net/annum.
Like my accountant told me 30 years ago. You don’t own a business here; you own the property the business is on.

#101 renter in Surrey on 06.29.18 at 11:34 pm

# 2 Pete on 06.29.18 at 10:40 pm
Sorry to break the news to you, but GreaterVan/Fraser Valley is a pit:
———————————————————
Well, those $100K bags with 20 dollars bills that has no effect or RE have to come from somewhere…

#102 From Mississauga With Love on 06.29.18 at 11:35 pm

Garth and All,
My in laws have not used their TFSA quotas at all.
Is it legit if I have extra cash for me to stuff their accounts, and then have them withdraw the money in the future and return it to me?

#103 Ian on 06.29.18 at 11:35 pm

Loving the cabinet! Fedeli will be rock solid.

Although, I’m stunned Aris Babikian didn’t get the AG post. He has way more experience than Mulroney. Why does she need to be in cabinet? Gah.

Also, looks like the Research & Innovation post has gone poof? Smaller government on the way! Love it.

#104 The Real Mark (not the imposter) on 06.29.18 at 11:48 pm

“#64 Shawn Allen on 06.29.18 at 9:00 pm “

Wow, talk about rude. You write something for which you obviously haven’t done basic research. And then you get upset and accuse me of rudeness when I attempt to point out that the facts are substantially different than your version of events.

If the GSE’s were purely just conduits for securitization, and guarantors of payment, then they would have no need to enter into interest rate swaps, and their earnings would be independent of interest rates.

Yet as that link I provided you, as well as the actual performance of GSE issued equity securities in 2008/2009, when MBS interest rates blew to the moon indicated, the GSE’s clearly take interest rate risk.

Now I could write a post detailing how your interpersonal skills are poor for lashing out at me when I bring facts to the table, or dare to question your own erroneous assumptions concerning the role of the GSE’s in US housing finance. But I think its better to let the audience come to their own conclusions.

Its been my experience that once debaters start attacking individuals, rather than the arguments or facts as presented by those who they may be opposed to in debate, then the quality of the discourse diminishes rapidly. Its truly unfortunate that you’ve gone down that path.

#88, there’s people who can help you. And no, they don’t put people in straitjackets any more in the sort of place you need to be.

#105 Oft deleted much maligned stock picker on 06.29.18 at 11:50 pm

Don’t kid yourself, the media is paid off. Announcing strength in the Canadian economy, enough to warrant a rate hike, is all smoke up your kiester. Isn’t it coincidental that the good news comes on the coat tails of the spin about Trudeaus renewed popularity over his standing up to Trump. There is a media blitz going on…because it dovetails with the return of Obama on the campaign trail and Trudeau thinks he’ll hold out and outlast Trump into the US midterms. Butts is already promising to subsidize losses to certain companies but layoffs are inevitable, however the numbers will be swept under the carpet until November. The Liberals are buying Canadian dollars on the market hand over fist…the current account deficit is ballooning. Likely your CPP is getting redirected towards this gambit. How many billions Trudeau is prepared to flame is anyone’s guess, but sure as taxes will have to increase when the IMF slams Canada once again and Trudeau is forced to show the emperor has no clothes. But won’t it be nice to see Trudeau and Obama standing hand in hand again? Once the US midterms are over the C$ will crash.

#106 Steve French on 06.29.18 at 11:58 pm

“It is simply true that the president is corrupt and that his supporters celebrate his corruption. That twisted power has enfeebled the institutions that depend on the very things the president would call weak—honesty and honor and service. As those institutions collapse, so does a polity capable of reasoning without them….”

This is the sadness I’m feeling. It is deep because it is clear. There is no longer doubt… The country we thought we shared is changing faster than anyone expected.”

America is collapsing into authoritarianism.

https://slate.com/news-and-politics/2018/06/supreme-court-is-now-trumps-and-so-we-grieve-for-america.html

#107 Dolce Vita on 06.30.18 at 12:02 am

#23 TheDood

You should NEVER have returned, just have VISITED.

CAUTION: yet another N. Italian RANT – read at your own peril.

I live in NE Italy now and many friends say I should return to Canada (apparently, they miss me…lost on me…I think misery loves company instead). My response:

For the food & produce ALONE I would not return.

Simple examples:

Italian grocery chickens are the size of a Canadian grocery chicken breast (Canadian chickens the size of Italian turkeys – we do not steroid juice pig the dung out of our animals). And yes Canada, we do know how to raise animals. Recall, we have horse races older than you (Il Palio).

And for the holier than thou Vegetarians, your veggies are GMO and Roundup tainted and neither are ours wax coated shiny and perfect like yours (and our tomatoes are not ethylene gas matured like yours are, why our sauces taste so much better). And yes, your grain Canada is restricted in use here in Italy due to being RoundUp tainted (blame Monsanto and not the Farmers).

And the rest (e.g., World Heritage Sites, etc.) are obvious about this pint sized country 1/3 the size of “Supernatural” self-important BC.

And, we are not a 3rd World country either (although, on GDP growth you could argue thus, yet, we are happy and plod on). Then again, Italy has the #2 ranked healthcare system in the World per WHO, smug Canada is #31 always comparing itself to hapless America at #34 or so.

My theory about YVR:

Parochial. Provincial.

Explains their RE market.

You should have stayed overseas.

In my 3 years in Italy (and traveling the EU extensively – not a 3rd World tourist…if you do not have a Milan to shop for clothes in or something like a Venice to hang out at within 1 hour of leisurely travel…I will not visit you…why I stopped visiting the rest of the EU) – also, not a fan of Asian or Middle Eastern cuisine, if you can call it that…why I will not visit them either (at some point, you do have to eat).

And no, I do not work for Tourism Italia, it is self-evident…well, except for the parochial and provincial raised on pork chops, Big Macs, Tacos and Kool Aid thinking that Granville Street & the West End represent the epitome of Culture.

Parochial. Provincial (Cars, Canucks and Canadian…the 3 C’s of YVR).

#108 Flat Earth Society on 06.30.18 at 12:03 am

So here is a theoretical question, for you folks who think you know everything.

What if the Jews never demanded Christ’s execution and he lived out his years in relative exclusion?

What we know about Christ, if he indeed existed, was that he was a Jewish Rabbi who preached inclusion of the gentiles with some seemingly eastern mysticism. However the Jewish leadership saw that as blasphemy and had him crucified, even after Pontius Pilate washed his hands of the whole affair.

This is a classic example from history. You don’t know what you don’t know, and you don’t know what you know either. That’s why governments are so dangerous. They can change the world, but they don’t know how or why they are doing it. They have know idea what will come about. They are no smarter than people, and people aren’t very smart. Half of them are below average IQ.

The government that governs best, governs the least.

#109 DT on 06.30.18 at 12:36 am

I lived in Seattle for three years but back in Vancouver now. My daughter was born in Seattle. When we visited the hospital at 2 am to see her in her incubator in the the maternity ward the first night, the hospital staff were shocked. Apparently it was deadly dangerous around that hospital.

We lived in a gated community but people ignored the laws. We were on 1/3 acre and our neighbor, a realty franchise owner, had a dirt bike track built for his sons (in violation of the rules) and all weekend it was noise. When I spoke to the Community Manager he said he gets death threats.

We used to commute up and down I-5 but for awhile (until they caught them) a couple of rogue soldiers from the Ft Lewis base we’re taking pot shots at commuters.

We should have made a U-turn the day we moved in our house. We stopped at a shopping mall just as a murder suicide was taking place between a cop and his estranged wife. It took place in the parking lot (in front of the two kids, BTW).

When we would sell things on Craigslist, because we lived in a gated community, people did come by and admit things like “I just had to get away from where I live for a bit so I came to see your item. Some gunman is shooting in the mall near me”.

And about that money. Our welcome basket included literature telling us the Asarco smelter in Seattle had an arsenic plume that contaminated soil in our community and others. Young kids shouldn’t play with dirt the circular said. But the money for the owners of Asarco did well. The Guggenheim’s have extracted their wealth and the citizens of the Seattle area will have to live with that toxicity for decades longer.

It tells a lot about a person, overvaluing the monetary component in a valuation exercise.

Even with its warts, I will still take Vancouver any day of the week, over Seattle.

But that wouldn’t be the reason for lower rents and higher salaries, would it??

#110 Timor on 06.30.18 at 12:37 am

You failed to mention one important fact: In Canada the capital gains on a principal residence are tax free unlike our neighbours to the south. A lot of investors/speculator exploit this benefit making Vancouver a far more attractive market compared to Seattle, hence prices that have decoupled from sanity.

#111 K on 06.30.18 at 12:44 am

I have several friends in Seattle and they say how hard it is to find a place at a reasonable rate. Where are all these cheap places because I know of a few people who would like to check them out.

#112 Stan brooks on 06.30.18 at 1:13 am

#92 Pete

Of cource I was being sarcastic.
Nice info on rising crime, poverty leads to that.

#113 For those about to flop... on 06.30.18 at 1:32 am

Pink Lemonade Stand in Vancouver.

Here’s another attached property I will monitor to see how much weakness is in that segment of the market.

Downtown townhouse,let’s see how it goes.

These guys with their current ask would be candidates for a Pink Draw.

Picked up for 1.38 in November 2017 their new ask would leave them with enough profit left over for a pack of peanuts.

Most people accept that detached has hit the wall ,what about attached?

Could be the new elephant in the room…

M44BC

102 1168 Richards Street, Vancouver paid 1.38 November 2017 ass 1.39

Mar 28:$1,538,000
Jun 28: $1,450,000
Change: – 88000.00 -6%

https://www.zolo.ca/vancouver-real-estate/1168-richards-street/102

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

Feel free to make a donation.

Flop For Fox Fund…

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

#114 Victor Y. on 06.30.18 at 1:34 am

Welcome to the Banana Republic of Canada, the land of Bring (the) Cash!

#115 Smoking Man on 06.30.18 at 2:11 am

James, I want an honest opinion. Got a shit load of fans out there in greater fool land. They are demanding a sequel to the deplorables. I’m lazy. My book starts up with a taking penis attached to an impotent smoker and drinking man demanding hookers.
The sequel. Me and my crew crash land on the planet lesbitron.

Crew is saved by the rebellious thin clan. The fat clan who are momentarily in power decree. Kill all dicks.

Thinking I got something here.

What do you think.

#116 Chinese Dude on 06.30.18 at 3:12 am

As I said before, the state income tax in Seattle is nothing while the property tax there is high. If we here in Vancouver apply the same tax system as they do in Seattle, the real estate market will crash immediately.

#117 Howard on 06.30.18 at 3:27 am

Canada’s immigration rate is 3x the rate of the US. Vancouver is a major immigrant destination whereas Seattle is not.

You want Seattle housing in Vancouver? Drop the annual immigrant intake to 100,000 and build a bunch of other major cities in Canada to compete for them.

#118 Buy? Curious? on 06.30.18 at 3:54 am

DELETED

#119 Sam J on 06.30.18 at 7:00 am

How many people would want to live in the USA anyways? They don’t have healthcare (God forbid you should ever have to go to the hospital). The Congress has turned into a circus run by 2 parties that are controlled by rich oligarchs. Homelessness is rampant everywhere. Constant wars.. Need I continue?

#120 dharma bum on 06.30.18 at 8:14 am

So here’s a bigger city with a better economy, a larger population base and more affluent families, and yet taxes are lower, houses 50% cheaper, and landlords are showering tenants with freebies. – Garth
——————————————————————–

However, strolling through downtown Seattle is like being in George Romero’s “Dawn of the Dead”. Except that it’s not zombies that are endlessly accosting you.
It’s homeless people.

#121 Big Kahuna on 06.30.18 at 9:15 am

#106Steve-That Slate article was GREAT-what a hoot! Trump is driving the little snowflakes and soy boys absolutely crazy.

#122 Manchester Arms on 06.30.18 at 9:53 am

#111 K – 1412 Summit Avenue, Seattle – A weekly special is for rent – one bedroom for only $695 per month and you had better hurry because this won’t last long.

#123 Smoking Man on 06.30.18 at 10:02 am

Steve French on 06.29.18 at 11:58 pm
“It is simply true that the president is corrupt and that his supporters celebrate his corruption. That twisted power has enfeebled the institutions that depend on the very things the president would call weak—honesty and honor and service. As those institutions collapse, so does a polity capable of reasoning without them….”

This is the sadness I’m feeling. It is deep because it is clear. There is no longer doubt… The country we thought we shared is changing faster than anyone expected.”

America is collapsing into authoritarianism.

https://slate.com/news-and-politics/2018/06/supreme-court-is-now-trumps-and-so-we-grieve-for-america.html
…..
Stop smoking weed. Makes you sound ridiculous. Burbon all the way.

#124 Wrk.dover on 06.30.18 at 10:07 am

So my 70 year old brother is convincing my 96 year old mother to buy life insurance to make her mid six figure estate tax free! He is a self professed financial know it all…

What are they going on about? Where are the actuaries that sell life insurance to 96 year old cancer survivors?

And where are these savings?

Help, please, anybody, even Mark!!!!!

#125 New Train For Trudy on 06.30.18 at 10:24 am

Trudy will be making a trip to Japan in the near future for trade discussions. There is a new ‘Pink’ bullet train called the ‘Hello Kitty’ and am sure he will enjoy the ride to gain knowledge of the latest technology. The crew wear hats with cute ‘Pink’ bows. Saddle up Trudy because this ride is for you. Might be a video of the debut.

#126 Eaglebay on 06.30.18 at 10:24 am

WiseGuy on 06.29.18 at 10:03 pm

How do you launder money at a casino?
I’m interested.

#127 Dissident on 06.30.18 at 10:26 am

The difference between Vancouver and Seattle is significant enough to warrant price differences – I mean, who wants a shoreline littered with orange industrial constructs and the blue collar wail of grunge in the air – https://2018.worldiaday.org/location/seattle-washington Might as well move to Hamilton and call it Vancouver. It’s not the same. Vancouver actually looks like a mini Hong Kong island – (Van city) http://www.grosvenor.com/featured-locations-and-properties/city/living-vancouver/ (Hong Kong) https://www.lesechos.fr/finance-marches/marches-financiers/0301561571609-hong-kong-soutient-sa-monnaie-2169083.php I totally understand the appeal. Like the RE agents say, “location location location!”

#128 Smudgekin on 06.30.18 at 10:35 am

Border differences: Canada run by 5 banks. US by Wall Street

#129 Ponzius Pilatus on 06.30.18 at 10:50 am

#123
how do you launder money at a casino?
————-
https://www.theglobeandmail.com/canada/british-columbia/article-how-organized-crime-uses-bc-casinos-to-launder-money/

#130 The Trudy Express on 06.30.18 at 11:05 am

https://www.youtube.com/watch?v=J7Z1LnHVo0Q

#131 Fish on 06.30.18 at 11:08 am

just as expected, more and more RE listings
Goodness they sure come out from under the wood work

Please explain the empty nest sydom Tax

#132 Leo Trollstoy on 06.30.18 at 11:14 am

Lol crissy gettin schoold by posters

Poor crissy, joblessness and poverty breed ignorance

#pitycrissy

#133 baloney Sandwitch on 06.30.18 at 11:31 am

I think we need a partial exchange of population between Canukistan and Trumplandia. Lots of lefties want to move up North for free healthcare and an equal number of rednecks want to move down to worship the orange clown. Charge them each a million bucks and let em go where they want.

#134 Raging Ranter on 06.30.18 at 11:38 am

@ #127 Dissident, Seattle is ten times the city Vancouver is on its very best day. Those “orange industrial constructs” are a sign of real work getting done by real industry, something your typical Vancouver booster would not even recognize, let alone value.

Keep believing that selling houses to offshore buyers (and each other) at ever higher prices represents a healthy and sustainable economy if you want. But don’t pretend Vancouver offers something Seattle can’t. Seattle left Vancouver in its shadow 3 decades ago and never looked back.

#135 Madcat on 06.30.18 at 11:48 am

#5 Mike:

https://seattle.craigslist.org/search/apa?query=free+rent&availabilityMode=0&sale_date=all+dates

#136 Scott Longworth on 06.30.18 at 11:51 am

Why are we not talking about interprovincial trade within Canada. It is ridiculous that we don’t have a much higher interprovincial trade in Canada and cities too.

We should try to focus more at home and try not to depend too much on U.S., China etc. I know we have to trade outside Canada but we can lessen the blow when things go wrong outside the country as with the U.S. and Europe now.

#137 45north on 06.30.18 at 12:01 pm

Phoenix Pay System

Marie-Danielle Smith: The new system created by IBM was supposed to run more smoothly, and save about $70 million a year in operating costs. But today the annual costs are more than twice the $230 million per year it cost to operate the old pay system.

https://nationalpost.com/news/politics/new-report-estimates-phoenix-pay-system-will-cost-billions-but-minister-disputes-five-year-timeframe

The real reason for the Phoenix Pay System was a centralizing bureaucracy. Saving money was the cover.

I worked 40 years in the Federal Civil Service. Centralizing is almost always good for the managers. They get increased authority and pay. Usually, the new system is good enough – I mean who’s keeping track? It’s when the new system costs twice as much as the old system and doesn’t do the job that the bureaucracy gets in trouble.

As it should.

#138 Shawn Allen on 06.30.18 at 12:05 pm

25 year fixed rate mortgages and how to eliminate the stress test AND the stress.

My first post about the benefits of the America 30 year fixed rate mortgages that are (believe it or not) essentially open for repayment or refinance to lower rates at any time having been ruined I will try again as some might be interested.

Canada introduced a stress test even on 5 year fixed mortgages because of the risk that rates rise and the borrower cannot afford the higher rate when it renews in 5 years.

The American system of 30 year fixed rates ELIMINATES that risk for the borrower AND still leaves the borrower open to repay (with a modest fee) the mortgage or refinance to a lower rate if rates fall. Wonderful for the borrower!

In America someone must still bear the risk that rates rise. Banks who fund with deposit money can’t take the risk of people paying off mortgages early when rates fall.

The system facilitated by government entities and regulations is that the mortgages are bundled up and securitised and sold to fixed income investors who CAN and do bear the risk of getting their investment back early if interest rates fall. This system usually works well but yes it led to major trouble in 2008 when lenders gave loans to non-credit worthy people and this garbage got passed on to investors in the mortgage backed securities. That problem was presumably fixed as America is still using the system.

It seems clear that Canadian home buyers could benefit if such a system operated in Canada. CMHC and regulators would not take the interest rate risk. They would as in the USA facilitate a system where fixed income investors would buy the 25 year locked in rate but OPEN mortgages as happens in the U.S. 30 year case.

Upon a lot of investigation I found no credible answer to why it could not be done or tried in Canada. It is NOT the bank act which requires mortgages to be open after 5 years since in the American system they are essentially open I believe from the start.

If such a system were in place in Canada the stress test would simply not be needed. Home owners could lock in a rate for 25 years. Fixed income mortgage backed securities investors would take the risk of mortgages getting paid off early if rates fell. Obviously the interest rate would be somewhat higher than today’s 5 year rates perhaps around the 4.6% that applies in America today.

I do hope CMHC and the finance Minister Morneau is thinking of this better way forward. It seems far superior to the stress test.

Every finance student learns that safety requires long-term assets to be financed with long-term fixed rate debt. Yet we force home owners to float after five years on their home loan!

#139 Smoking Man on 06.30.18 at 12:32 pm

119 Sam J on 06.30.18 at 7:00 am
How many people would want to live in the USA anyway? They don’t have healthcare (God forbid you should ever have to go to the hospital). The Congress has turned into a circus run by 2 parties that are controlled by rich oligarchs. Homelessness is rampant everywhere. Constant wars.. Need I continue?
……

I’m here, view of the pacific ocean from by back yard is so cool. 75 degrees and sunshine everyday. Smokes are 7 bucks a pack. And a 1.5 liter of JD is only 20 bucks. California beach babes and my new surf board.

Pretty sweet if you ask me.

#140 No Disclosure on 06.30.18 at 12:50 pm

There was gossip recently about a financial entity that was located in the GTA with funds. Its a known fact that the biggest offshore tax haven in the world is really located in Reno, Nevada which was well written about. In fact this company is global with key offices worldwide with unlimited funds. The Canadian office is located in Toronto which is a branch office, or a subsidiary with funds from Reno. This becomes an interesting theory to ponder.

#141 Balmuto on 06.30.18 at 12:55 pm

If the GSE’s were purely just conduits for securitization, and guarantors of payment, then they would have no need to enter into interest rate swaps, and their earnings would be independent of interest rates.

The MBS holder bears all the interest rate risk. However, prior to their collapse, the GSEs were doing more than just issuing MBS. They had a large “retained mortgage portfolio” business in which they purchased various mortgage-related securities and even repurchased some of their own MBS from capital markets. It was this retained mortgage business, not the mortgage securitization business, that created the interest rate risk that they needed to hedge.

#142 Gulf Breeze on 06.30.18 at 12:59 pm

I stand corrected. I read the Seattle Times article and am astonished that the vacancy rate is so high in residential real estate.

Rosenburg goes on to explain that rents for a two bedroom apartment still average over 2,000.00 per month after 7 years of rent hikes.

Those rent hikes increased rental costs by 60%. Now rental hikes have slowed down and in some cases there is a slight drop.

I assumed that thousands of homeless, including high death rates from ‘natural causes’ of same were at least partially due to lack of housing. The article points out that there is still a lack of affordable housing.

For those contemplating a move there, be forewarned. There medical system is beyond bad. I went to a large corporate clinic for a very simple problem, was purposely given a diagnosis of ‘abnormal ultrasound’ suggesting I have ultrasounds every six months to check for cancer. This was ludicrous. My ultrasound was not ‘abnormal’ at all. They wanted to get me in there every six months so they could ding Blue Cross for payment. Kakakaching!

As a consequence of this blatant greed, medical insurance company recategorized me as an ‘at risk for cancer’ patient and my medical insurance payments, already high, like everybody else’s, doubled.

The ‘at risk for cancer’ didn’t scare me a bit because I had become familiar enough with the American system to know I was being shaken down.

Soooo…2 years after Dubya became president and my husband semi-retired, I returned to Canada, my country, and brought my American husband.

#143 Wallflower on 06.30.18 at 1:09 pm

in Vancouver there’s a vacancy rate of about zero

nope – I walked all around the West End Denman streets area… astonished at the number of signs at the front of all the rental buildings: vacancy, multiple vacancies (also saw many, many abandoned houses and many unlived in houses in other parts of main Vancouver)

#144 conan on 06.30.18 at 1:28 pm

#136 45north on 06.30.18 at 12:01 pm

Getting Phoenixed is now a verb.

The Cons fired/laid-off/ treated like crap/ all of the people who knew the information that needed to be entered into Phoenix computer system. Complex pay structures with many rules and variables. It took years to learn it, and that was with people to call and ask questions.

The Cons booked those savings into their Federal Budgets, even though they themselves, created this broken system.

Someone’s head is going to roll.

Either way, this is the number one reason, not to vote for the Cons in the next Federal election.

Its a F up ,of all F ups.

#145 Blacksheep on 06.30.18 at 1:46 pm

Crowded # 3,

“I may buy in a few more years after prices drop.”
————————
Like I said, every body has a plan, motive or agenda. It’s called acting in, ones own best interest.

No need to make oneself seem more honorable buy hiding intent, as most people see the obvious.
————————
“I sold about 5 years ago. Tripled my money in about 15 years.”

Good job, to bad you missed the last doubling of RE values.

“I marry your daughter.”

So about 20 years ago you bought RE. That means your pretty old. Are you one of those pervy (and smelly) old dudes that leers at young girls on the Skytrain?

Or worse yet, traps em in elevators?

#146 Brian Ripley on 06.30.18 at 2:02 pm

#40 and #52 – Did I mean Inflation not Deflation?

I think a growing USD/CAD metric will prove to be deflationary if it becomes chronic since our biggest supplier of goods and services is the U.S. (+/- 70%)

As the cost of goods and services increase without a corresponding increase in employment income, there will be a shift to get those goods and services at lesser costs which is why the Costco model is replacing the Sears model and the Amazon model is replacing the brick and mortar model.

And that means fewer people are required to produce and distribute. Fewer people involved in production distribution means fewer people getting a paycheque to afford the products of production.

In the last decade we have seen a much bigger visible class of people living in tents, doorways and camper vans and not just in large urban areas but in small town Canada as well.

If fewer people can afford the products of capital and fewer people are needed to produce, then it becomes deflationary especially for the labour side of the capital and labour equation which becomes more and more devalued.

I don’t need to have an employed person to help me at the checkout counter if I can use a self checkout scanner and avoid the lineup at the till. I don’t need people making change if I use my credit card. I don’t need to purchase a car if I get Amazon to deliver my necessities. I don’t need higher levels of education if there is no compensating employment for my investment of time and energy.

The unemployed and semi employed consume less by definition. Less consumption means less production and in Canada we live on credit until we can’t. And as I have pointed out it shows up in the FDI metric on my household debt chart:

http://www.chpc.biz/household-debt.html

“Foreign Direct Investment OUT higher than IN over the last 20 years means Canadian companies are investing outside of Canada to get a better return on Capital and Labour. For every $1 of investment coming in to Canada, $1.36 leaves (full year 2017 data)”

Notice that in the last 3 years the FDI spread has widened dramatically.

If and when the housing construction boom corrects for an extended term, perhaps sparked by the pending boomer transfer of real estate ownership, a big source of employment is going to evaporate. The FIRE sector of GDP is around 15% of GDP (2016 data).

I think that will add to the deflationary pressure.

Although if we decide to allow more immigration to occur into Canada, then we can keep everyone employed building stuff. But most of us are involved in consumption not production. And we import most of the stuff we need for production.

Maybe in 100 years Canada and the U.S. will have an at par currency and an open border for employees to seek out lower cost higher wage locales.

My bottom line is if we see price inflation from a chronic high USD/CAD then I as a consumer will shift my spending priorities and search out better value for my capital investment which is why the FDI chart is so telling. We Canadians would rather invest offshore. I will consume the cheapest imports rather than the more expensive Canadian made. That’s deflationary for Canadian producers.

#147 Ottawa on 06.30.18 at 2:04 pm

Any thought on bidding war in Ottawa (barrhaven)? It’s crazy.

#148 Reality is stark on 06.30.18 at 3:08 pm

The GTA condo market is rolling over.
It is all over but the shouting now.
I have talked to some builders who have laid off half their workforce. It’s dead.
This is going to make the USA real estate crash look like child’s play.
Oil, commodities and poverty is the new Canada.
Get used to it.
In a few years the US border patrol will have to beef up security on the Canadian border as people try to sneak through.
We have nothing to offer except loud overweight social justice warriors and the USA doesn’t want any more of them.
Our health care system gets to look after them.

#149 Shawn Allen on 06.30.18 at 3:15 pm

Mortgage backed Securities

#141 Balmuto on 06.30.18 at 12:55 pm

The MBS holder bears all the interest rate risk. However, prior to their collapse, the GSEs were doing more than just issuing MBS. They had a large “retained mortgage portfolio” business

***********************************
Thank you.

#150 Tony on 06.30.18 at 4:13 pm

Trump has reasoned or figured out… break the Chinese at the source. Hit them hard with tariffs let them devalue the Yuan and presto they’ve got no more money to buy anything abroad.

#151 crowdedelevatorfartz on 06.30.18 at 5:21 pm

@#145 Blackened Sheep
“Are you one of those pervy (and smelly) old dudes …”
+++++
Yep thats me. Hoping beyond hope for a May- December romance.
But the Skytrain is so overrated.
Elevators. THATS where the action is…..not a lot of talking….kinda hard to talk and hold ones breath….

As for “property doubling in the last 5 years”
Nope. Not in the old neighborhood. Paid 238k and sold for 800k…the new owners gutted, reno’ed to the tune of 600k + the cost of one year of renting elsewhere.
Other brand new houses in the neighbourhood arent selling for 1.4 ….more like 1 mil.
So. Those greaterfools are pink pollen candidates for sure

#152 Ace Goodheart on 06.30.18 at 6:13 pm

Socialism kind of wrecked the whole landlord situation. The idea of the socialists was that landlords are bad and they need to attack them dominate them and beat them.

This of course led to no one wanting to be a landlord. What is the point? Your tenants are always right, you are not allowed to make money on your property and you are villanized no matter what you do.

Why earn 1.5 % on an investment property and be beat up for doing it? You can easily earn 6% in the markets. It makes no sense to be a landlord.

As the socialists continue to over run BC you will see a decrease in available rental properties.

Ontario should show an increase as Doug and his cons dismantle socialist rent controls and tenant friendly legislation.

In other news. Babies. Teaching them how to burp. A skill I would like to impart to him once he is five, to impress his classmates. But apparently they need to learn it fresh out of the womb.

Kids are so honest. They said to me teach your kids to respect adults. I was like no way. Teach them to distrust and question adults. The older people get the less honest they are. We could all learn a lot from child good honesty.

But with babies it is just eat sleep poop repeat. And they are so focussed on it. If you want to see pure unadulterated human happiness find a baby who has just successfully voided her bowels. That is the essence of the human spirit.

Everything we do afterwards just builds on that first child good sensation of successfully pushing that poop down the digestive track and out into the diaper.

You can learn a lot about economics from watching babies……

#153 Steven Rowlandson on 06.30.18 at 8:47 pm

Unfortunately socialist government was invented in nice places like America and England and quite a few European countries as well in the temples of money, higher learning the tribe and freemasonry. The proverbial apple does not fall far from the tree and it is also exported as well. Free trade comes in all forms.

#154 Steven Rowlandson on 06.30.18 at 8:51 pm

How did we lose our way?

By making real estate an investment instead of merely a place to live.

#155 45north on 06.30.18 at 10:15 pm

Ottawa: Any thought on a bidding war in Ottawa (Barrhaven)?

Barrhaven is on the outskirts. It’s a 20 minute drive to downtown under ideal conditions. Farrhaven. Bidding war? I don’t see a reason for a bidding war. Employment is stable but not expanding. Banks are tightening.

#156 B Wilds on 07.01.18 at 9:21 am

While I fully agree with the article it was the picture that drew me in, simply put when I see anything that says Amazon I see red! Amazon is a job-killing exploiter. The fact is that many of the options Bezos employs to expand Amazon are available to him only because of the many areas his various companies engage in and this is the crux of growing antitrust talk.

Jeff Bezos did not purchase the Washington Post in 2013 because he expected newspapers to make a lucrative resurgence. He purchased the long-trusted U.S. newspaper for the power it would ensure him in Washington and because it could be wielded as a propaganda mouthpiece to extend his ability to both shape and control public opinion.

http://brucewilds.blogspot.com/2018/04/trump-and-bezos-face-off-clash-of-titans.html

#157 jess on 07.01.18 at 3:26 pm

https://eig.org/recoverymap#mapReport

https://www.citylab.com/equity/2018/04/connecticut-cities-face-a-property-tax-death-spiral/558101/
https://trendct.org/2015/04/10/tax-exempt-property-is-a-500-million-dilemma-for-towns-in-ct/

tax exemptions for non profits …why they benefit from the same essential city services police fire street maintenance, snow removal etc that businesses and residents pay for with their property taxes.

attacking the exemptions afforded non profits
https://www.csrealconblog.com/2017/02/articles/construction/tax-court-puts-brakes-recent-trend-nullifying-religiousnon-profit-exemptions/
https://www.nhregister.com/columns/article/David-R-Cameron-Hartford-s-tax-exempt-11331291.php

===

…”more U.S. growth typically means a stronger dollar, which is a significant problem for emerging-market nonbank borrowers, which have accumulated more than $3 trillion in dollar-denominated debt, according to Bank for International Settlements data.Nov 18, 2016
The Emerging Markets’ Dollar Problem – Bloomberg
https://www.bloomberg.com/…/emerging-market-borrowers-have-a-big-dollar-problem

https://muddywatermacro.wustl.edu/dollar-denominated

#158 jess on 07.01.18 at 4:05 pm

https://eig.org/recoverymap#mapReport
https://muddywatermacro.wustl.edu/dollar-denominated

end of salt in usa