Trapped

Up she goes: Rates hiked and 'more warranted'. Link

“I’ll stick with the tradition of sucking up right off the bat,” says thirtysomething Brian, wisely. “I have learned more about real estate, finance and economics from this blog than any course I’ve taken, any book I’ve read, by far. I’ve been reading for awhile now and even know some of the deplorables that populate the comment section. I try to keep my distance but here I am pitching a situation you know well.”

Ah yes, the conundrum

“I’m in my early 30’s and own a condo in the nice-ish city of Guelph. I paid 250k for it 4 years ago (when the building was brand new) and I figure the market will allow for 330k today (according to recent sales in the building). I’m thinking of unloading the condo for a number of reasons. A year from now I don’t think I’ll get as much as I can today with the stress test touching 6%. As time goes on this building will deteriorate and I don’t want to be around for when the elevator breaks. In this city there are condos going up everywhere. I don’t know why someone would choose an older building with higher maintenance fees when they can purchase a shiny new one with low fees.

I make 70k annually and my girlfriend is fresh out of school and a minimum wager. We have no debt and the small amount in my TFSA is invested in an ETF. We want to travel and work somewhere within the next year or two. I estimate I’ll come out of the sale with 100k. I would like to get your opinion on whether or not it’s the right move to sell and rent for the next two years, and where I should park this 100k.  I could also rent my place out. I just like the romantic idea of having cash invested and not being a slave to the bank for 25 years.

Keep up the great work, and the dog photos.”

Smart boy. Apparently there is hope. Not all moisters are house-lusty helo kids begging to be mortgaged. Brian’s arguments are valid. Yes, rates will be rising and as the stress test rate touches 6% prices will have to decline. Yes, condos are being massively overbuilt, even in a sleepy burg like Guelph. Yes, unlike me, condo units lose appeal every year they age. Monthly costs rise. Things stop being shiny. The herd moves on. And, yes, B has almost 100% of his net worth in a single asset. Since the point of investing is to make money, why doesn’t Brian realize that tax-free gain and start acting his age (ie. more irresponsibly)?

Keep the condo, rent it out and lease somewhere else? What a ridiculous idea. All that would accomplish is to subsidize someone else’s living costs. Nope, sell. Invest. Be liquid and free.

What of the argument that if Brian made good coin on the condo (about $12,00 a year) he should stay on the property ladder, maybe leveraging his capital gain into a detached house worth four or five hundred grand?

Bad idea. That would entail swallowing a bigger mortgage to buy in a vulnerable market at an uncertain time. The low rates that gave big price gains are over. The slow ascent higher will choke off credit and impact prices. Guelph – like Burnaby, PoCo, Milton or Whitby – is vastly more susceptible to price corrections than urban areas like YVR or the Six. Especially now in southern Ontario with the trade war bubbling. Ground zero for car production.

Besides, what’s the point of having a detached with a fat mortgage when you have no money? That’s just asking for trouble. Job loss. Ill health. Mat leave and kids. Divorce. Anyone who is married, likely to start a family, who puts all their eggs in one basket is irresponsible. B has decided to marry for love, not money, which only underscores what the correct path should be.

Finally, face facts.

Even the realtors are morose. Big price slide coming, some of them are telling the media in Vancouver. No surprise there. In the GTA sales of houses costing over a million (don’t they all?) have fallen 46% year/year, says Sotheby’s. Blames the CEO: “The collision of rising mortgage rates, stricter lending guidelines and cascading governmental policies and taxes.”

Sure, the usual shameless pumpers (Royal LePage and Re/Max) are still at it, telling people the bottom is in and that there’s never been a better time to buy (like they suggested last spring when prices peaked). But, as stated, facts are facts. The inverse correlation between rates and prices has not been broken. B20 has reduced available credit between 15% and 20%. Sales volumes have dropped and listings increased. This was the worst rutting season in memory. Over 80% of the top GTA real estate brokerages are struggling (RedPin vaporized recently). And while Trump may thump Canada, he’s the inflation president who will keep interest rates, bond yields and mortgage costs rising.

As always, if you want a house, need a house or have a horny spouse, get one – provided you can afford it without putting all your precious eggs in one costly basket. Otherwise rent, invest and save, be liquid and flexible, flee the trap and await the inevitable.

137 comments ↓

#1 Steve on 07.10.18 at 4:52 pm

I wished I knew about this blog when I was 20.

#2 SimplyPut7 on 07.10.18 at 5:00 pm

“I have learned more about real estate, finance and economics from this blog than any course I’ve taken, any book I’ve read, by far…”

————

I agree. Thank you.

#3 X on 07.10.18 at 5:02 pm

If B20 reduced available credit 15-20%, how much does each quarter point increase reduce available credit?

#4 OPSEU on 07.10.18 at 5:10 pm

We need a Marxist revolution to stop Doug Ford and his austerity cuts which negatively affect the poor while his tax breaks affect the rich in a positive way.
Doug Ford is already making way, or should I say, paving way for piece-by-piece of the Ontario Greenbelt to be sold for pennies on the dollar to his developer buddies so that they can build glass condos for foreign investors.
WOMEN HOLD UP HALF THE SKY and if Doug Ford dares to de-fund abortion, WE as women will STOP him and impeach him from office!

#5 HT on 07.10.18 at 5:17 pm

Slave to the bank or mercy of a landlord.. pick your poison. What I’ve learned about renting – the rent will always go up, but your mortgage would not have. Things get harder, not easier, so consider “locking in” now if you can. Although, in Metro Vancouver, that’s just too late, as I’ve painfully learned.

#6 the ryguy on 07.10.18 at 5:20 pm

Garth Im wondering..if the rate hikes happen as you (and I) believe they will over the next 18 months..do you think the stress test will get reduced/eliminated?

I don’t think they should, BUT if they are trying for a soft landing I think at some point they will have to consider it to avoid a full on collapse.

And Brian…dude sell immediately. Once I got over the stigma of it, renting is awesome.

#7 theoryAnPractice on 07.10.18 at 5:21 pm

What of the argument that if Brian made good coin on the condo (about $12,00 a year)… -GT
——————————————————–

Yes, we really read your blog :), did I pass the test ?

#8 Crocodile Man on 07.10.18 at 5:21 pm

Howdi all.
I’m looking start day trading and would like to ask for advice from the dogs over here.

I like to flip penny stocks and am interested in low price of trades but also a company that is not going to disappear overnight with my savings.

Any suggestions from the host or dogs would be greatly appreciated.

Croc

#9 ll on 07.10.18 at 5:24 pm

How much 100 k can pay if invest?
What can be the return?

#10 Jimbo on 07.10.18 at 5:27 pm

Hopefully they don’t have to tell us the bottom of the market is here for a decade only to see it fall deeper and deeper.

#11 Smoking Man on 07.10.18 at 5:29 pm

Can’t believe the USDCAD is still above 1.3
Rate hike is a certainty , Oil surging.

Does not look like a vote of confidence for Canada. The I’m afraid of T2 Syndrom.

#12 NotLegalAdvice on 07.10.18 at 5:29 pm

” is vastly more susceptible to price corrections than urban areas like YVR or the Six……” – Garth

Would you consider areas like Brampton and Mississauga to be more susceptible to a price correction as well?

Or would you rank them up there with urban Toronto?

#13 Lost ...but not leased on 07.10.18 at 5:29 pm

Phyyrrzt !

#14 Joke maloke on 07.10.18 at 5:35 pm

Hey there boys and girls, get ready for the recession and crash! I know I am 8===D

#15 AGuyInVancouver on 07.10.18 at 5:40 pm

Real estate looks rosy, Royal Lepage is calling for a price rebound in Canada later this year. Uncork the champagne and sign those Audi leases!
https://www.bnnbloomberg.ca/home-prices-to-rise-in-q3-after-spring-market-that-never-blossomed-royal-lepage-1.1104915

#16 Keith on 07.10.18 at 5:50 pm

@#8 Crocodile Man

My suggestion is go to Youtube and enter Tyler Bollhorn or Stockscores into the search bar. Tyler Bollhorn is a Canadian who has been trading the markets for decades and has dozens of videos on you tube. You can learn quite a lot for free before you decide to invest money in training or market scanning or trading software. Best wishes for trading success, trade well.

#17 LL on 07.10.18 at 5:51 pm

# 8 – …”I like to flip penny stocks and am interested in low price of trades but also a company that is not going to disappear overnight with my savings”…

If you found a good one let me know!

#18 Lost ...but not leased on 07.10.18 at 6:12 pm

WAM did a story re: Berlin…..one is not permitted to renovate ones property…and the City is actively purchasing properties that become available.

In essence…all the hallmarks of Big Brother commies.

#19 James on 07.10.18 at 6:12 pm

“Even the realtors are morose”

Garth, better turn on your spell-checker.

It’s “m-o-r-o-n-s”

#20 Dean on 07.10.18 at 6:19 pm

Want a house and certainly not putting all my eggs in one basket, can easily afford it….But I’m still wondering: fixed or variable mortgage? Please advise, thank you.

#21 Wallflower on 07.10.18 at 6:19 pm

Visited African Lion Safari with aunt, dog, and three year old son 19 years ago. Had to place dog in animal cage area for drive through park. Put dog in. Neither aunt nor I could figure how to lock it – so there we were inside the large cage with dog trying to sort this issue, perplexed. Boom. Cage door locked on us IN IT. Three year old outside. Nobody visible in any direction as far as the eye could see….. oy oy oy.

#22 Cam on 07.10.18 at 6:24 pm

I’m 25 and I was in the exact same position, bought in Guelph 2 years ago for 250 and just sold a couple months ago for 330, maybe even the same building. I now rent in toronto and walked away with a 97k cheque that I put in a savings account well I decide my next move.

#23 Matsebula on 07.10.18 at 6:27 pm

I read a study by an economist from TD that said for every 25 BP rise in interest rates, house prices generally drop by 1.2%. So if you count the qualification rules as 200 BPs, and we get another 300 BPs in interest rate rises, that would imply a 24% drop in home prices basically across the board.

There is also the chart Garth put up about the home price vs. median income ratio being 3 standard deviations above the historical average. That one is scary. Things are melting off pretty quickly in Calgary.

When we moved back here from Winterpeg, we rented a place and haven’t looked back. We will probably wait at least a couple of years until we see where things will settle out. Barring a serious investment cycle in O&G here (not likely) things will continue to melt for a while yet and we will just save and wait.

#24 Debtslavecreator on 07.10.18 at 6:28 pm

#4 OPSEU
You have it backwards buddy. We’re reversing the last 18 years of corrupt neo Marxist rule and retiring govt to a proper size
You left wing radicals care only about stealing what belongs to others and never saw a dollar you didn’t want
You public sector union parasites have devoured our precious tax dollars by buying off the politicians using union dues taken from our tax dollars of which much was borrowed from the youth
Out of control govt borrowing and spending along with junk monetary policy have played major roles in destroying the standard of living
Now its time to begin reversing this left wing junk
Socialism and other forms of left wing junk is collapsing over the next 10-15 years
And it’s only FAIR
Stop trying to force others to live the way YOU think they should
Go live in Havana or Paris if you want hardcore Marxist style life

#25 april on 07.10.18 at 6:32 pm

#19 – not a spelling error!

#26 JohnAB on 07.10.18 at 6:32 pm

Otherwise rent, invest and save, be liquid and flexible
Easier said than done, since most of the people have no idea how to invest… I am not saying about creating a balanced portfolio. That’s an impossible mission even for me.

#27 JohnAB on 07.10.18 at 6:34 pm

#11 Smoking Man

So you say I should convert all my USD to CAD? What about it in the long run?

#28 kommykim on 07.10.18 at 6:40 pm

RE: #8 Crocodile Man on 07.10.18 at 5:21 pm
I like to flip penny stocks and am interested in low price of trades but also a company that is not going to disappear overnight with my savings.

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

Somehow I don’t think it’ll be the brokerage that’ll be losing your savings….

#29 Penny Henny on 07.10.18 at 6:47 pm

Mark disappeared. Still trying to figure out mortgages.
Will he admit he was wrong?
Or more likely he will have a four paragraph explanation for why we were both right.
Sorry Mark

#30 armpit on 07.10.18 at 6:47 pm

Brian… the only advice other than Garth’s is to not let your minimum wage g/f move in without a co-habitation agreement. Second advice is to have her write it up, so if there is any misunderstanding, she cannot claim duress and say, ” I didn’t know what I was signing”. Protect yourself, and not only with a condom.

#31 For those about to flop... on 07.10.18 at 7:04 pm

Recent sale report/Realtor assistance needed.

A few people asked me to try and spend a bit more time on condos and Townhomes,I obliged and this is one of the ones I had in the folder.

Although it sold 35 days ago, Zolo just put the sold sticker on it now.

Picked up for 1.05 in June 2017 they went for the quick flip and hopefully we will find out sooner ,rather than later how it panned out.

If you look at the asking price history,they were never planning on striking it rich ,and maybe something happened and they just couldn’t make the payments anymore.

I have slowly been putting more attached cases in my folder and so in time you will likely Seymour…

M44BC

Sold June 5th 2018

3001 438 Seymour St,Vancouver paid 1.05 June 2017 aorss 1.03 asking 1.15

3001 438 Seymour Street, Vancouver

Nov 2:$1,198,000
Apr 18: $1,150,000
Change: – 48000.00 -4%

https://www.zolo.ca/vancouver-real-estate/438-seymour-street/3001

https://www.bcassessment.ca/Property/Info/QTAwMDAwM05LNw==

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

Feel free to make a donation.

Flop For Fox Fund…

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

#32 akashic record on 07.10.18 at 7:06 pm

Charles Bukowski: The Slavery of the 9 to 5

https://www.youtube.com/watch?v=vV5ARyuxpow

#33 crowdedelevatorfartz on 07.10.18 at 7:25 pm

Brian should sell.
Invest his tax free gains and take a year off to travel…..or not.
Either way, a year from now……. he’ll be much happier on the sidelines of the looming real estate melt.

#34 For those about to flop... on 07.10.18 at 7:29 pm

Recent sale report/ Realtor assistance needed.

This house in Richmond sold 23 days ago.

This one was only a Possible Pinkie that was on the back burner when they weren’t having it all their own way and cut the asking to 1.28,getting down towards Pink Snow territory ,before crushing some hearts and jacking it back up.

They paid 1.15 in January 2016 and this one will likely get some love from the realtors on here as it is most likely Green Snow ,and at least I will open dialogue with them again as they have been avoiding me like the plague.

Some people say that all Tasmanians have six fingers on each hand and six toes on each foot,whatever I’ve got its non infectious ,so help me out.

You are safe…..your clients on the other hand.

Not so much…

M44BC

11520 Daniels Rd Richmond paid 1.15 Jan 2016 asking 1.28 now 1.55

2017-07-20 : $1,598,888
2018-04-11 : $1,288,000
2018-05-29 : $1,559,000

https://www.zolo.ca/richmond-real-estate/11520-daniels-road

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

Feel free to make a donation.

Flop For Fox Fund…

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

#35 akashic record on 07.10.18 at 7:29 pm

Lakota Sundance Song ~ Thank You For My Life

https://www.youtube.com/watch?v=NK_o9T75JLc

#36 Gregory Smith on 07.10.18 at 7:38 pm

I have $100,000 in U.S. silver dollars that are worth about $2,000,000 Canadian. I collected these back in the 1970’s.

I am reluctant to sell them as they were worth $6,000,000 back in 2011. I would rather wait another 10 years if needed to triple my money.

I have more than enough income, investments to live on so I will wait it out.

#37 The Real Mark on 07.10.18 at 7:38 pm

“#29 Penny Henny on 07.10.18 at 6:47 pm
Mark disappeared. Still trying to figure out mortgages.”

No buddy, I actually have a life. Anyways, a 25bp increase in annual rates means the cost of servicing a $500k debt increases by $1250/year. You can play with amortization periods all you want, in an attempt to weasel out of the obvious truth, but $1250 per year additional will come from the wealth of the borrower of $500k into the pocket of the lender.

As has been suggested the impact of this is profound. A lender of $500k will enjoy an extra $1250/year of income. The borrower will have to reduce their consumption by $1250/year.

For someone who has a balanced portfolio, this might not be a big deal. Higher financing expense on a mortgage would be offset by higher financial investment returns in the portfolio.

But for the family that stretched to the moon, or for Realtors that absolutely depend on inflated valuations, higher rates are definitely going to be life-changing. And probably not for the better.

#38 Smelly on 07.10.18 at 7:41 pm

Housing market is slowing big time. Very few new sales.
2019 our builders have little to build.

Not sure what’s coming.

#39 Catalyst on 07.10.18 at 7:41 pm

Don’t sell. You got in at a good price and likely will be forking over much more for rent to speculate that houses will go down? Just stay put for now until you have a REASON to move other than speculating house prices.

#40 NEVER GIVE UP on 07.10.18 at 7:51 pm

This is quite possibly the greatest video that will ever hit You Tube.
Dont Miss It!
I had my 16 year old son watch with me and he was genuinely smiling throughout the whole video.
Gather your family and watch!

https://www.youtube.com/watch?v=QjvzCTqkBDQ&index=1&list=RDQjvzCTqkBDQ

#41 akashic record on 07.10.18 at 8:01 pm

The latest real trap number: worldwide combined debt, 2018 July.

247,000,000,000,000 debt … ~ 7,500,000,000 people …

No way this can ever be paid off… Now what?

#42 Tony on 07.10.18 at 8:07 pm

Re: #8 Crocodile Man on 07.10.18 at 5:21 pm

I’ve got a jewel but their earnings come out in two weeks. I’m not sure if I’m going to unload and buy back in after their earnings or add to the position after their earnings. I think this stock could be a 10 to 50 bagger. This is a mathematical probability that will repeat over time so I see zero risk. I’ll tell you after their earnings come out because I want to be “all in” before I divulge their name.

#43 AK on 07.10.18 at 8:10 pm

“Sure, the usual shameless pumpers (Royal LePage and Re/Max) are still at it, telling people the bottom is in and that there’s never been a better time to buy”
=====================================
Yes. Soper was on BNN today, stating as such.

#44 renter in Surrey on 07.10.18 at 8:15 pm

#37 The Real Mark

As has been suggested the impact of this is profound. A lender of $500k will enjoy an extra $1250/year of income. The borrower will have to reduce their consumption by $1250/year.
—————————————————————-

Profound, sure.

Give me a break.
People spend $3K+ per year just for beer.

Nobody will even notice neither this hike nor next five-ten hikes.

#45 Felix on 07.10.18 at 8:16 pm

Today’s caged human pic shows so clearly the sadistic and psychopathic tendencies of canines, always trying to savagely brutalize humans.

Cats would never be so cruel. No need to. We control you with our minds. Our omnipotence allows us to be much kinder to you.

Choose your companions wisely.

#46 Tony on 07.10.18 at 8:17 pm

Re: #17 LL on 07.10.18 at 5:51 pm

Noted.

#47 Nuke on 07.10.18 at 8:20 pm

Mentioned the NYT rent or own calculator on LinkedIn and was told that was communist propaganda.

#48 Tony on 07.10.18 at 8:20 pm

Re: #12 NotLegalAdvice on 07.10.18 at 5:29 pm

Real yearly earnings not fictitious or stated earnings should relate to the price of housing in a given city.

#49 ulsterman on 07.10.18 at 8:23 pm

My only word of warning to Thirtysomething Brian and poster #22 Cam echoes the sentiment of:

#5 HT on 07.10.18 at 5:17 pm
Slave to the bank or mercy of a landlord.. pick your poison. What I’ve learned about renting – the rent will always go up, but your mortgage would not have. Things get harder, not easier, so consider “locking in” now if you can. Although, in Metro Vancouver, that’s just too late, as I’ve painfully learned.

If you are going to rent and “pocket the difference” make sure you really do. It’s far too easy to adapt to your rent and spend what’s left over – not saving the difference between the hypothetical mortgage payment and what you are paying in rent.

Before you know it 10 years will have passed while you sit on the sidelines, reading real estate blogs, waiting for that perfect moment to jump into ownership.

Frequently that time never comes and in the meantime, you’ll have been renovicted a few times while your mates establish a home for their families, build equity and see a final mortgage payment coinciding with retirement.

Yes, i do speak from bitter experience living in Vancouver and watching the people who bought 10-15 years ago sit comfortably on hundreds of thousands in equity. Hell, even condo-buyer friends who “foolishly” bought at the top of the market (ha ha) two years ago have almost doubled their money in parts of the LM such as Port Moody.

Make your own decisions, but be careful about the long-term so-called benefits of renting.

#50 Camille on 07.10.18 at 8:25 pm

Hello. Back on topic (Trump), would it be recommended to reduce emerging market exposure. Thank you.

#51 renter in Surrey on 07.10.18 at 8:26 pm

RE: #23 Matsebula on 07.10.18 at 6:27 pm

I read a study by an economist from TD that said for every 25 BP rise in interest rates, house prices generally drop by 1.2%. So if you count the qualification rules as 200 BPs, and we get another 300 BPs in interest rate rises, that would imply a 24% drop in home prices basically across the board.
—————————————————————–

at three 25BP hikes per year we get 250BP in 3 years
so 1mil house will be 900K in 3 years, 800K in 6 years
(if rates keep going up) … 500K in 15 years

so I can afford to buy in 20 years from now, great
oh wait, I might be dead by that time

#52 Long-Time Lurker on 07.10.18 at 8:29 pm

#97 Dean on 07.09.18 at 11:29 pm
#63 Long-Time Lurker

Thanks!
I tried to pay attention :(
It seems there would still be 3/4% difference between fixed and variable. Before 1% was an acceptable spread. This is only one increase, it seems we’ve still got a long ways to go before they’re even. Because of the certainty of this one increase are variable mortgages off the table?

Best regards,
Dean

>We’re in a rising interest rate environment. A recession could halt that but for now continuing increases look to be on the way. Garth has been writing about this. Locking in also protects you from possible spiking interest rates because of bond vigilantes.

#53 Tony on 07.10.18 at 8:37 pm

Re: #2 SimplyPut7 on 07.10.18 at 5:00 pm

I lived through it all, I didn’t have to read any books. With all the old economic rules and models not relating to anything today up to date information is vital. I got the most information from the money gps on youtube.

#54 ImGonnaBeSick on 07.10.18 at 8:43 pm

#24 debtslavecreator – Amen!

#55 Stone on 07.10.18 at 9:08 pm

#41 akashic record on 07.10.18 at 8:01 pm
The latest real trap number: worldwide combined debt, 2018 July.

247,000,000,000,000 debt … ~ 7,500,000,000 people …

No way this can ever be paid off… Now what?

———-

Easy. I’ve decided to purchase the whole debt contract. I now own all of you along with all your future offspring. Bow down to your new uberlord master. There is no escape.

#56 IHCTD9 on 07.10.18 at 9:08 pm

#180 Dan Franco on 07.10.18 at 2:57 pm
IHCTD9

I am in a similar situation but have a much higher education and annual income.

I am single, 28 but my take home pay is $1,500 a week and I save $1,000 a week. I rent and don’t have any debt and never will. I managed to work long hours for years now and have $300,000 in RRSP’s, TFSA’s, GIC’s, ETF’s, REIT’s etc.

My main goal is to have a cool $6,000,000 by 60 years old and make sure staying debt free. A 6% to 7% annual return should achieve this by then.
————

Wow, that is some accomplishment! You are set big time!

I envy the youth of today that can glean info and see the results others have achieved on the Internet as inspiration. There is a whole flock of young folks doing the same thing as you have done thanks to the www.

Hope you are planning on getting some pro advice on the tax front, you’re going to need it!

Keep pounding it in there, chances are by 45 you might change your mind and start thinking of packing it in, and you’ll be able to do it too. I know I would be if I could, the 9-5 rat race is for the birds!

#57 conan on 07.10.18 at 9:22 pm

France 1 Belgium 0

They beat the guys who beat Brazil.

https://youtu.be/MNzafK1HIro?t=43

#58 The real Kip on 07.10.18 at 9:27 pm

Brian, son, 250k tied up in real estate and you’re writing this pathetic blog for advice? Really? It’s peanuts.

How about option C, you relax in the condo with your gal, stop worrying about real estate that’s on the bottom end of the valuation scale. Fix it up and live well and have fun with the new gal.

#59 For those about to flop... on 07.10.18 at 9:29 pm

Race to a million.

“One of the best buys in the market!” strains the realtor of this listing.

Could be right,as it is a little bit newer and bigger than the detached listings I have seen selling just above a million in Vancouver proper.

He could of probably spent a bit more time on the internal photos, but I’m sure someone will see the potential.

Listed at 1.19 and assessed at 1.30 ,it is priced right off the bat to get some action.

Small bungalows on busy streets are going for a little over a million and so this one should clear the bar ,but let’s see if it goes closer to 1.1 or 1.3.

If Vancouver specials start going regularly below 1.2,then that will be another leg down.

I live in a Vancouver special,they are more solid than spectacular,built in 1986 in my case.

If you look real close,you might even see some real wood.

They might even put a wooden architrave in a museum one day.

Imagine…

M44BC

https://www.zolo.ca/vancouver-real-estate/3764-nanaimo-street

#60 akashic record on 07.10.18 at 9:32 pm

#55 Stone on 07.10.18 at 9:08 pm

#41 akashic record on 07.10.18 at 8:01 pm
The latest real trap number: worldwide combined debt, 2018 July.

247,000,000,000,000 debt … ~ 7,500,000,000 people …

No way this can ever be paid off… Now what?

———-

Easy. I’ve decided to purchase the whole debt contract. I now own all of you along with all your future offspring. Bow down to your new uberlord master. There is no escape.

You don’t have enough money to purchase a 247 trillion dollar debt contract. You can’t even get loan for it.

#61 Leo Trollstoy on 07.10.18 at 9:36 pm

Sure, the usual shameless pumpers (Royal LePage and Re/Max) are still at it, telling people the bottom is in and that there’s never been a better time to buy (like they suggested last spring when prices peaked).

The best time to sell was last year in 2017 during the peak in real estate prices

Sad

#62 Sam the Sham on 07.10.18 at 9:48 pm

#8 Crocodile Man on 07.10.18 at 5:21 pm
“I like to flip penny stocks and am interested in low price of trades but also a company that is not going to disappear overnight with my savings.”
———————————-
The best way to end up with a million dollars trading penny stocks is to start out with two million!!

#63 rental property math on 07.10.18 at 10:08 pm

Don’t fall for this renting is better crap. As soon as your a few bucks below market rent your landlord is thinking about how he’s going to give you the boot.

Me and the lady live minimalist lifestyles. We could pack up our whole place in a day and load it into a truck small enough that can be driven with a G license. Paying the tenant one month compensation is a smallish price to pay to get market rent and start the next tenant off right. Right meaning max increases every year right from the start.

B-20 killed the rapid price appreciation but it certainly increased rents. Landlords (the good ones) are greedy.

I’ll be playing a bit of musical chairs with my rentals but not to re-rent them at a higher price, but to fix them up and sell. Tenants can put more wear on a house in 1 year than the house I grew up in that’s over 30 years old. This is why landlords don’t like tenants. The good ones are a diamond in the rough.

Upon mortgage renewals I’m going to consider how much cash my rental brings in at the end of the year. Total rent – mortgage interest – property tax – insurance – maintenance divided into TOTAL EQUITY in the property not my down payment & closing costs. When calculating this way it’ll make sense for me to punt the rental and invest in a balanced portfolio.

Being a landlord sucks! 10% YoY price appreciation makes it worth it. Anything less than that and I don’t want to be making repairs due to tenant uselessness/neglect. I never wanted to be a construction worker. Just opened my package from amazon. An ergonomic caulking gun and a scraper tool that’s sitting on my desk. 10 years in this gig is long enough.

#64 Dolce Vita on 07.10.18 at 10:22 pm

#58 The real Kip

Good advice.

Garth’s advice more withering, precise, yet true to the mark.

Reads like Moister “Virtue Signalling” and “getting a prize for just showing up” has made its debut at The Greater Fool.

#65 For those about to flop... on 07.10.18 at 10:25 pm

CONFIRMED PINK SNOW

I think this case is over by that brand new Infill house that is struggling to get a million.

Let’s have a look at what happened to their neighbours.

The details…

4665 Baldwin st,Vancouver.

Paid 1.69 February 2016

Sold 1.65March 2018

Assessment 1.46

So even though the assessment was low they still got them up in a changed market ,but it wasn’t enough.

2.5% to start,closer to 7.5 after expenses and I’ll mark it down as a 125k detour.

Even Trump knows not to mess with a Baldwin…

M44BC

http://www.jasonto.ca/blog.html?id=132963

Infill house nearby.

https://www.zolo.ca/vancouver-real-estate/4650-baldwin-street

#66 FOUR FINGERS WATSON on 07.10.18 at 10:26 pm

The average price of a Kelowna home continued to rise in the second quarter of 2018, checking in at $623,706.

That figure was part of the Royal LePage House Price Survey and Market Survey Forecast released on Tuesday morning.

The average price of a two-storey home in Kelowna reached $701,576, which represented a 3.9 per cent increase from a year ago, while the condominium average jumped 3.7 per cent to $386,927. Bungalows experienced the biggest year-over-year jump, an 8.3 per cent increase to an average sticker price of $641,886.

Even though Kelowna and the Okanagan as a whole are experiencing fewer sales this year, thanks to new cooling measures, Royal LePage officials said millennials and Vancouver residents are still flocking to Kelowna due to the city’s “strong economy” and “affordable home prices.”

#67 Dolce Vita on 07.10.18 at 11:03 pm

#37 The Real Mark

“Anyways, a 25bp increase in annual rates means the cost of servicing a $500k debt increases by $1250/year.”

Not exactly.
_______________________

2.5%, 25 yr amortization, $500K mortgage, Total Interest Paid:
$ 171,949.34 ($ 671,949.34 total in payments).

2.75%, 25 yr amortization, $500K mortgage, Total Interest Paid:
$ 190,767.18 ($ 690,767.18 total in payments).

25 year Difference = $ 18,817.84 or an Average of $ 752.71/year – how much more will be paid with a 25 bp increase.

If we believe what MNP has said in the last few days about the state of Cdn. household debt, that extra $750/year on average ought to sting somewhat ($63/mo towards that $200/mo piggyback busting number).

29% of Cdn. mortgages are VRM.

That’s will be a lot of people tomorrow wishing it were not so.

#68 Oft deleted much maligned stock.picker on 07.10.18 at 11:05 pm

DELETED

#69 tomas on 07.10.18 at 11:07 pm

what is that article about?????

#70 yorkville renter on 07.10.18 at 11:14 pm

In the GTA sales of houses costing over a million (don’t they all?) have fallen 46% year/year

I read this today and wondered – is that even possible?

How do we lose almost half of the $1mm sales and STILL have an average price over $1mm. I’m too tired to do the math – who wants to field this one?

#71 Long-Time Lurker on 07.10.18 at 11:17 pm

I think Ronaldo posted this up earlier. It’s worth looking at again for some historical perspective on where we MAY be now.

https://www.investopedia.com/articles/economics/09/1970s-great-inflation.asp

How the Great Inflation of the 1970s Happened By Leslie Kramer | Updated February 7, 2018

It’s the 1970s [US, 2009], and the stock market is a mess. It loses 40% in an 18-month period, and for close to a decade few people want anything to do with stocks. Economic growth is weak, which results in rising unemployment that eventually reaches double-digits. The easy-money [historical low interest rates & quantitative easing] policies of the American central bank, which were designed to generate full employment, by the early 1970s (2020s), also caused high
inflation. The central bank, under different leadership, would later reverse its policies, raising interest rates to some 20%, a number once considered usurious.

For interest-sensitive industries, such as housing and cars, rising interest rates cause a calamity. With interest rates skyrocketing, many people are priced out of new cars and homes…

https://www.investopedia.com/articles/economics/08/1970-stagflation.asp

Stagflation, 1970s Style By Barry Nielsen | Updated December 12, 2017

1970s Economy
When people think of the U.S. economy in the 1970s [Canada, 2020s] the following things come to mind:

High oil prices
Inflation
Unemployment
Recession

In December 1979, the price per barrel of West Texas Intermediate crude oil topped $100 (in 2016 dollars) and peaked at $117.71 the following April. That price level would not be exceeded for 28 years.

Inflation was high by U.S. historical standards: core consumer price index (CPI) inflation – that is, excluding food and fuel – reached an annual average of 12.4% in 1980. Unemployment was also high, and growth uneven; the economy was in recession in 1970 and again from 1974 to 1975.

…To get the economically devastating effects of inflation under control in the 1970s, the Federal Reserve should have followed a constrictive monetary policy. This finally happened in 1979 when Federal Reserve Chairman Paul Volcker put the monetarist theory into practice. This drove interest rates to double-digit levels, reduced inflation and sent the economy into a recession….

#72 tomas on 07.10.18 at 11:23 pm

is anybody stressed in this article. anybosdy needs help. dinkl vodka and try pot maybe that solution. if you pay pay . all of you lib=ve in Auschwitz but simply you do not know humburgeres./

#73 Dolce Vita on 07.10.18 at 11:25 pm

#66 FOUR FINGERS WATSON

Honest to God, give it a rest with Kelowna doing well.

Go here:

https://www.myrealtycheck.ca/

Click on Kelowna at the top of the page and on the map observe all of the list price increase changes for July – there are NONE.

ALL little red down pointing arrows (red = bad = list price decreases).

Summary list price decreases = -6.27% on average and ranging from -$20,000 to -$300,000 depending on the property type.

And of all price sources to use, Royal LePage, RE pumpers par extraordinaire…they are so bad this way that they should all be wearing Pumps as footwear.

They flock to Kelowna for a camping trip, pick some fruit to take home and/or drink some marginal over priced wines whilst they are there, but not to live there.

#74 Drunken Stupor on 07.10.18 at 11:31 pm

To all the Marxists out there, please name one example of a country where it succeeded/worked! …. am waiting… oh, nothing you say?…. Or have you lived in any of the ‘experimenters’? I did and don’t want to go back to it! Please stop this cr&p!!!!!!!!!!!!!

#75 Long-Time Lurker on 07.10.18 at 11:39 pm

>I put up something like this about a year-and-a-half ago. So where are we now? We’re not in the same exact situation as the U.S. (hopefully fewer sub-prime mortgages) but we MIGHT see the same basic three stages:

https://www.usatoday.com/story/money/business/2013/09/08/chronology-2008-financial-crisis-lehman/2779515/

Timeline: Key events in financial crisis
USATODAY Published 9:08 a.m. ET Sept. 8, 2013

These were some of the key events in the financial crisis that became the Great Recession.

2007

[Stage 1, approaching]:
Housing crisis deepens.

Banks and hedge funds that invested big in subprime mortgages are left with worthless assets as foreclosures rise. The damage reaches the top echelons of Wall Street:

Feb. 27: Mortgage giant Freddie Mac says it will no longer buy the most risky subprime loans.

April 2: Subprime mortgage lender New Century Financial files for bankruptcy-court protection.

July 31: Investment bank Bear Stearns liquidates two hedge funds that invested in risky securities backed by subprime mortgage loans.

Aug. 6: American Home Mortgage Investment, which specializes in adjustable-rate mortgages, files for bankruptcy protection.

Aug. 16: Fitch Ratings cuts the credit rating of giant mortgage lender Countrywide Financial to its third-lowest investment-grade rating.

2008

[Stage 2]
The U.S. economy is in recession.

The crisis in subprime mortgages infects the credit markets.

Jan. 11: Bank of America, the biggest U.S. bank by market value, agrees to buy Countrywide Financial for about $4 billion.

[Stage 3, Government’s hysterical reaction: We never saw this coming.]

March 16: The Federal Reserve agrees to guarantee $30 billion of Bear Stearns’ assets in connection with the government-sponsored sale of the investment bank to JPMorgan Chase.

Bear Stearns
Wall Street investment bank Bear Stearns became one of the early casualties of the financial crisis when federal regulators engineered its sale to JPMorgan Chase in March 2008.

July 11: Federal regulators seize IndyMac Federal Bank after it becomes the largest regulated thrift to fail.

September:

7: Mortgage giants Fannie Mae and Freddie Mac are taken over by the government.

15: Bank of America agrees to purchase Merrill Lynch for $50 billion.

15: Lehman Brothers files for bankruptcy-court protection.

Britain Lehman Brothers Auction
Investment bank Lehman Brothers filed for bankruptcy on Sept. 15, 2008, setting off turmoil in financial markets worldwide.

16: American International Group, the world’s largest insurer, accepts an $85 billion federal bailout that gives the government a 79.9% stake in the company.

21: Goldman Sachs and Morgan Stanley, the last two independent investment banks, will become bank holding companies subject to greater regulation by the Federal Reserve.

25: Federal regulators close Washington Mutual Bank and its branches and assets are sold to JPMorgan Chase in the biggest U.S. bank failure in history.

29: Congress rejects a $700 billion Wall Street financial rescue package, known as the Troubled Asset Relief Program or TARP, sending the Dow Jones industrial average down 778 points, its single-worst point drop ever.

Oct. 3: Congress passes a revised version of TARP and President Bush signs it. Wells Fargo & Co., the biggest U.S. bank on the West Coast, agrees to buy Wachovia for about $14.8 billion.

Nov. 18: Ford, General Motors and Chrysler executives testify before Congress, requesting federal loans from TARP.

Nov. 23: The Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. agree to rescue Citigroup with a package of guarantees, funding access and capital. Citigroup will issue preferred shares to the Treasury and FDIC in exchange for protection against losses on a $306 billion pool of commercial and residential securities it holds.

Dec. 19: The U.S. Treasury authorizes loans of up to $13.4 billion for General Motors and $4.0 billion for Chrysler from TARP.

Sources timeline.stlouisfed.org, AP, Bloomberg.com

#76 oncebittwiceshy on 07.11.18 at 1:04 am

It seems like every Realtor board has that but ….

https://www.castanet.net/news/Kelowna/230723/Home-sales-trend-down

“This is the fourth consecutive month where sales volumes are substantially down from the same period last year,” Okanagan Mainline Real Estate Board president Marv Beer said in a press release.

It’s clear, according to OMREB, that new mortgage rules, interest rate hikes, and the spectre of a possible speculation tax in Kelowna and West Kelowna are having an effect.

#77 Jimers on 07.11.18 at 1:23 am

I was in a similar situation in Hamilton, Pier 4 – 2 bdrm, Dec 2016, ended up selling and taking my $150K profit from 2 years and bought a 4 brdm house in Welland, paid cash and low taxes here, yet all the utility of a city. I work online but seems there are decent jobs available, but you’d need a car. Oh and prices have been continually edging higher here. IMHO The Niagara area is best place for young people, lots to do and EVERYTHING is cheaper here, few line-ups and little traffic. Wages are lower as well but I think things are way easier here than the GTA. I know several minimum wage couples who have a house and two cars.

#78 The Real Mark on 07.11.18 at 2:39 am

#15 AGuyInVancouver on 07.10.18 at 5:40 pm
Real estate looks rosy, Royal Lepage is calling for a price rebound in Canada later this year. Uncork the champagne and sign those Audi leases!

Have a listen to Ross Kay sometime. He explains, in pretty plain language, why organizations such as those you name must, under all circumstances, paint a rosy picture of the market. They first and foremost represent the sellers of RE, not the buyers.

#79 Midnights on 07.11.18 at 3:40 am

Who Really is the Deep State?
By Martin Armstrong
https://www.armstrongeconomics.com/world-news/conspiracy/who-realyl-is-the-deep-state/

#80 g diddy on 07.11.18 at 4:32 am

Brian,

Ditch the crib and the girl. Take the loot, go and buy a big arse gold chain, a diamond grill for your chompers and start rapping in T dot. Fames and dames await you. Your first ditty could be about your dreary past life in G-spot(Guelph)

#81 Stone on 07.11.18 at 6:10 am

#60 akashic record on 07.10.18 at 9:32 pm
#55 Stone on 07.10.18 at 9:08 pm

#41 akashic record on 07.10.18 at 8:01 pm
The latest real trap number: worldwide combined debt, 2018 July.

247,000,000,000,000 debt … ~ 7,500,000,000 people …

No way this can ever be paid off… Now what?

———-

Easy. I’ve decided to purchase the whole debt contract. I now own all of you along with all your future offspring. Bow down to your new uberlord master. There is no escape.

You don’t have enough money to purchase a 247 trillion dollar debt contract. You can’t even get loan for it.

———

I have a piece of paper that says it is so, therefore it is so. That’s all you need to know. That, and belief (leg breakers). Empires have been built on less.

#82 NoName on 07.11.18 at 6:20 am

I’m listening to this podcast where they interview some dude who have flag factory, what he sad is that during presidential campaign trupm ordered a way more flags comparing to hilari. Ok there is a chance that Dems ordered flags elsvare, but it’s interesting that he sad, now he is making t 2020 campaign flags.

#83 Andrew Szalontai on 07.11.18 at 6:43 am

Thanks for the precious information,keep it up

#84 dharma bum on 07.11.18 at 7:01 am

#4 OPSEU

If Doug Ford dares to de-fund abortion, WE as women will STOP him and impeach him from office!
——————————————————————–

But then WHO will MAKE Ontario GREAT again???

#85 dharma bum on 07.11.18 at 7:20 am

#37 The Real Mark

“No buddy, I actually have a life.”
——————————————————————–

OH, HI Mark!

https://www.youtube.com/watch?v=C-IvV8thrO4

https://www.youtube.com/watch?v=2B8HEIJO9B4

#86 Renter's Revenge! on 07.11.18 at 7:23 am

#36 Gregory Smith on 07.10.18 at 7:38 pm
I have $100,000 in U.S. silver dollars that are worth about $2,000,000 Canadian. I collected these back in the 1970’s.

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

Were you a pirate? That’s 6000 lbs of silver coins. Where did you bury them? What brand of treasure chest do you prefer?

#87 Tater on 07.11.18 at 7:35 am

#3 X on 07.10.18 at 5:02 pm
If B20 reduced available credit 15-20%, how much does each quarter point increase reduce available credit?
——————————————————————
At current levels, about 2.5%.

#88 Tater on 07.11.18 at 7:44 am

#8 Crocodile Man on 07.10.18 at 5:21 pm
Howdi all.
I’m looking start day trading and would like to ask for advice from the dogs over here.

I like to flip penny stocks and am interested in low price of trades but also a company that is not going to disappear overnight with my savings.

Any suggestions from the host or dogs would be greatly appreciated.

Croc
—————————————————————-
Don’t. You have no edge and will lose a good chunk of cash before you figure that out. All the trading coaches on the net are a scam. You’re welcome.

#89 Art Vandelay on 07.11.18 at 7:51 am

Brian,

Ditch the crib and the girl. Take the loot, go and buy a big arse gold chain, a diamond grill for your chompers and start rapping in T dot. Fames and dames await you. Your first ditty could be about your dreary past life in G-spot(Guelph)
—————————————————————-
Ayyy fam dope idea yo

#90 Brandon Sheppard on 07.11.18 at 8:01 am

I’m 25 and I was in the exact same position, bought in Guelph 2 years ago for 250 and just sold a couple months ago for 330, maybe even the same building. I now rent in toronto and walked away with a 97k cheque that I put in a savings account well I decide my next move.
——————————————————————-
Hey Cam, there was a sale a couple months ago for 330. It may have been you if you’re in the Kortright/Gordon area. I think the decision is made and i’m following you out the door.

#91 Tater on 07.11.18 at 8:08 am

#70 yorkville renter on 07.10.18 at 11:14 pm
In the GTA sales of houses costing over a million (don’t they all?) have fallen 46% year/year

I read this today and wondered – is that even possible?

How do we lose almost half of the $1mm sales and STILL have an average price over $1mm. I’m too tired to do the math – who wants to field this one?
—————————————————————–
Sellers are stubborn, and aren’t being forced to sell yet. Not much more to it than that.

But, for a fun stat, the average place in the GTA is just about 4x the cutoff to be in the top 1% for individual income.

#92 WileE Toronto on 07.11.18 at 8:11 am

To Dolce Vita

I think you live in Italy, I am European too, and have thought about moving there in retirement.

I have read your comments on Vancouver real estate, and that the GTA will drop 25% in the 4th quarter 2018.

I own rentals in Toronto ,good tenants, profitable but not that good compared to other possible investments.

My question to you is , why do you care about real estate here(?) and read and comment about it. I cannot fathom following Italian real estate unless I was planning to move there. I could not make a prediction from here at all. I know you prefer living there , why bother following real estate here??

#93 Hyperbole on 07.11.18 at 8:25 am

Irresponsible ? Give it a rest Garth . You often go overboard in an effort to make a point

Bought our home 24 yrs ago . Had no savings, all eggs in one basket. Our two boys grew up in said house – home

We built the savings , tfsa , rrsp , non-registered .

It was a good time to buy and it worked out . Today’s market may not be the best time to buy , obviously

Which is exactly what I suggested. – Garth

#94 maxx on 07.11.18 at 8:26 am

What the Banks of Mommy are now hearing is the sound of savings being flushed. Loudly.

What a colossal waste of wealth.

What governments often don’t seem to realize is that if the people aren’t wealthy, the country’s not either. Put another way, if people aren’t doing well, how can the country’s economic immune system help us bounce back from adverse economic events?

#95 gfd on 07.11.18 at 8:28 am

“Sure, the usual shameless pumpers (Royal LePage and Re/Max) are still at it, telling people the bottom is in and that there’s never been a better time to buy. . . . .”

Let me let you on the greatest real estate buying secret. . . . . .

https://lfpress.com/news/local-news/london-home-prices-still-skyrocketing-new-study-shows

#96 Ian on 07.11.18 at 8:43 am

Happy BoC Day!

The Plozzer and the Wilko are back from the golf course and ready to raise this central rate puppy up!

#97 TurnerNation on 07.11.18 at 8:48 am

Trapped into cites per brutal UN Agenda. Rural areas set to be economically bombed into waste.
Loss of Greyhound bus routes will push more people and junkies into the already dangerous and festering cities.

Police *will not help you* when these violent zombies attack life and limb. It’s all about “Harm reduction” for these poor marginalized vunerable people you see?
You get nothing but taxes.

Ontariowe gang war well underway. What are our elite public unionistas up to? Solving crime or distracting and dividing us while reaping rewards? (Grimly.)
Headlines today spell it out:

Mayor John Tory won’t apologize for calling gunmen who wounded 2 young girls ‘sewer rats’ cbc.ca
Police chief responds to battle with union over spate of deadly shootings cbc.ca
Tory slams police union boss for only paying ‘lip service’ to shift schedule changes cp24.com

Public unions never let a good cri$is go to waste!

#98 For those about to flop... on 07.11.18 at 9:45 am

What a bunch of SHEEO…

M44BC

“States Investing the Most (and Least) in Higher Education.

Getting a degree is a surefire way to land a good paying job, and in general, earning more money means contributing more to the economy. But if going to college is such an obvious benefit, why do states contribute wildly different subsidies to public higher education? Our newest visualization illustrates the enormous disparities across the country.

The State Higher Education Executive Officers Association (SHEEO) keeps track of state and local allocations to public universities and colleges. To be clear, the group certainly has a vested interest in getting government to contribute more money to its members’ institutions. The SHEEO calculated how many full-time equivalent students each state supports, then they tabulated the entire state and local assistance given to higher education in 2017. This gave us an average per pupil allocation, which we simply used to create a color-coded map of the U.S.

These are the top ten states spending the most money on a per pupil basis for higher education.

1. Wyoming: $18,237

2. Illinois: $16,055

3. Alaska: $13,612

4. Hawaii: $10,810

5. North Carolina: $9,959

6. Nebraska: $9,801

7. Idaho: $9,793

8. North Dakota: $9,552

9. New Mexico: $9,348

10. New York: $8,640

There are a couple key takeaways from our map. The first is that funding for public higher education does not conform to any neat pattern. State and local governments contribute as much as $18,237 (in Wyoming) or as little as $2,695 (in Vermont). Both rural states like Idaho and those with large cities like Illinois top the charts. From a political perspective, states with overwhelming state-level majorities on both sides of the political aisle can be found in the top ten. The only clear trend is that Western states tend to spend more on a per pupil basis than Eastern states.

But there is something insightful hiding just beneath the surface of our numbers. The states with more funding tend to have smaller populations. Illinois is an exception for very specific reasons related to the dysfunction of the state government’s inability to pass a budget in recent years. According to the SHEEO, Illinois allocated only about $12,000 last year, although much of that went toward unpaid bills thanks to missing funds from the year before that. States with smaller populations like Alaska and Idaho tend to have higher numbers only because there are so few students to divide the allocation.

So where is the best place to get a degree? Don’t simply consider state-level allocations. After all, tuition costs can vary dramatically from school to school and state to state. You should instead view higher education as a long-term investment in future earning potential. Check out our other visualization on which schools have the highest ROI to help guide your decision.”

https://howmuch.net/articles/states-investing-the-most-in-higher-education

#99 gfd on 07.11.18 at 9:59 am

‘Sure, the usual shameless pumpers (Royal LePage and Re/Max) are still at it, telling people the bottom is in and that there’s never been a better time to buy . . . . . .’

Hidden gem of real estate investment.
https://lfpress.com/news/local-news/london-home-prices-still-skyrocketing-new-study-shows

#100 Spectacle on 07.11.18 at 10:04 am

Now, Wallflower,

Your story has to be the most telling of exactly what occurs to so many Canadian real estate purchasers.

Wam, locked in, your child in a risky lion zoo of a position, and no help. Purchasing real estate 2.0 !

~~~~~~~~~~~~~~~~~~~
#21 Wallflower on 07.10.18 at 6:19 pm
Visited African Lion Safari with aunt, dog, and three year old son 19 years ago. Had to place dog in animal cage area for drive through park. Put dog in. Neither aunt nor I could figure how to lock it – so there we were inside the large cage with dog trying to sort this issue, perplexed. Boom. Cage door locked on us IN IT. Three year old outside. Nobody visible in any direction as far as the eye could see….. oy oy oy.

#101 gfd on 07.11.18 at 10:11 am

Rates up, baby!

#102 Smoking Man on 07.11.18 at 10:25 am

JohnAB on 07.10.18 at 6:34 pm
#11 Smoking Man

So you say I should convert all my USD to CAD? What about it in the long run?
….
No as long as climate barbie and the groper get a free pass from msm short CAD all the way.

#103 James on 07.11.18 at 10:52 am

#11 Smoking Man on 07.10.18 at 5:29 pm

Can’t believe the USDCAD is still above 1.3
Rate hike is a certainty , Oil surging.

Does not look like a vote of confidence for Canada. The I’m afraid of T2 Syndrom.
__________________________________________
Rate hike is an uncertainty until it comes. Woops and there it is!

#104 Ali on 07.11.18 at 10:55 am

Bank of Canada raises benchmark interest rate to 1.5% :)
https://www.cbc.ca/news/business/bank-of-canada-rate-decision-1.4742063

#105 Shawn Allen on 07.11.18 at 11:01 am

How High Will Interest Rates Go?

Many people believe the central banks will not push interest rates too high because the economy and particularly the indebted can’t stand it.

That seems like bunkum to me, lendders have a big say in what rates they will accept. If borrowers are tapped out and desperate they have little bargaining power.

But right now the lenders are still saying we will give you low rates. Check the flat yield curve.

Lenders/investors will accept a paltry 2.8% on a U.S. ten year. With a flat yield curve, the central banks have pushed up the short end. The lenders/investors are still accepting tiny rates on the long end. … suggesting rates may not have much higher to go.

But who knows? Stay tuned. Stay liquid.

#106 FOUR FINGERS WATSON on 07.11.18 at 11:07 am

#73 Dolce Vita on 07.10.18 at 11:25 pm
#66 FOUR FINGERS WATSON

Honest to God, give it a rest with Kelowna doing well.

Go here:

https://www.myrealtycheck.ca/
…………………………

I am not promoting Kelowna at all, just posting Royal LePage’s latest published numbers. I would never advise anyone to move here for many reasons…..Been here 25 years, and i can attest that I have never seen so many new condo and townhouse starts. I am sure that there are a ton of price reductions out there, but construction continues unabated. Go figure.

#107 AGuyInVancouver on 07.11.18 at 11:48 am

#104 Ali on 07.11.18 at 10:55 am
Bank of Canada raises benchmark interest rate to 1.5% :)
https://www.cbc.ca/news/business/bank-of-canada-rate-decision-1.4742063
_ _ _
1.5%, Oh the Humanity! That Poloz is a daredevil.

The BoC rate has tripled in four stages. Mortgages have doubled. more to come. – Garth

#108 Stone on 07.11.18 at 12:12 pm

Listened to the press conference. Interesting on Poloz’s interpretation of the tightening yield curve between the 2 year and 10 year bond rate. High demand by institutional investors. In preparation of what? Hmmm…

#109 april on 07.11.18 at 12:27 pm

#106 – It’s east to understand why condo building is still going on all over the place. Apparently “new construction organization is a difficult, lengthy and multi-step process”. The permission to erect all these condos today was applied for 2/3 yrs ago when things were selling out fast. Now that things are slowing down the builders have to continue or loose alot of money [building permits +] if they cancel the project. This is my understanding. Someone with more expertise can explain the process much better than I can.

#110 bill on 07.11.18 at 12:31 pm

#8 Crocodile Man on 07.10.18 at 5:21 pm
dont.you will most likely lose the lot…
unless you have worked as a professional trader – which doesnt appear to be the case as you wouldnt be soliciting advice about penny stocks if you were a pro or knew how the system works in ‘penny stock world’.

#111 Dave on 07.11.18 at 12:44 pm

I still remember when everyone was expecting interest rates to rise a few years ago but instead they went down because of oil prices. Exact opposite of what the street expected.
This created an intentional housing frenzy that was uncontrollable and the mess we are in today.
This hike is too little to late…

#112 robert james on 07.11.18 at 12:47 pm

This is a good example of businesses that have had enough of the “Okanagan Lifestyle”.. https://www.castanet.net/edition/news-story-231019-1-.htm#231019

#113 Newcomer on 07.11.18 at 12:47 pm

If you are looking for a place to rent, read:

#63 rental property math on 07.10.18 at 10:08 pm

This is the type of landlord you want to avoid. The best thing is to find a place managed by a property management company, but if that is not available, look for a person with just one property for rent, so they are not over-extended. Find out what their finances are like. Ask about their employment, their family and their retirement/career plans. You don’t have to be rude. Just ask things like, “So how did you end up having a house for rent?” “Do you own a lot of properties?” “What do you do for a living?” “Have you always lived here?” and so on. You are looking for someone with income and wealth that makes it easy for them to carry the property as a long term (ten years+) investment. If you get the sense that they might be struggling or unhappy, or they are secretive, or snobbish, or just generally greedy or petty people, walk away. I’ve lived in rentals in major cities all over the world. I’ve never had my rent raised unreasonably, never waited too long for maintenance and never had the landlord terminate the lease. There are good landlords out there, but there are also people like Math. Choose carefully.

#114 Rob on 07.11.18 at 12:51 pm

Garth
Could you please explain to the simple readers(like myself) how these trade tariffs work. Because the way I understand it…its bacicly just another tax grab for government confers. “We export steel,aluminum or softwood into the US and they slap a tax on at the boarder at whatever rate is chosen….and the Us Govt pockets it.”?
Do they return any of the funds collected to the so called US companys that are apparently being taken advantage of?
I ask this because, I am not the only one who cant understand why, if we have been sticking it to the US buisness world for so long that these companys in the states have survived.
US wages and cost of living in general, is similar to that of Canadians.
So the way I see it…..its an out right money grab!
Your thoughts?

#115 Ezzy on 07.11.18 at 12:55 pm

#24 Debtslavecreator on 07.10.18 at 6:28 pm

#4 OPSEU

Debt, for sure OPSEU is just an instigator/comment troll. Regardless, I agree with you; socialism only works when it’s someone else’s money.

However, the Left always forget that eventually the “someone else” tire of paying for the ineffective social projects being operated by an always increasing bureaucracy, and the inevitable failure of socialism. All funded through heavy taxation.

#116 Shawn Allen on 07.11.18 at 1:16 pm

Canadian 10 year yield far below U.S. 10 year.

What can this mean?

Might it mean that large institutional investors expect the Canadian dollar to rise? Why take 2.16% in Canada when you can get 2.87% in the U.S? Sure, pension funds need to invest in Canadian dollars but they can also hedge. Is the implied assumption of traders that the Canadian dollar will rise? My memory of “Interest rate parity” is foggy but I think I have the direction right. Even so, it would not mean that the Canadian dollar will rise, just that the betting is in that direction, I believe.

#117 Shawn Allen on 07.11.18 at 1:27 pm

This Flat Yield Curve Means?

So Canadian institutional investors can get only 2.16% interest by lending 10 year money to the Canadian government. And 2.21% if they lend for 30 years. And, this is what they are doing. That’s the market rate as of yesterday.

Or they could get 1.94% by lending/investing for two years.

So what could they possibly be thinking when they take 2.16% (a paltry premium of 0.22%) for locking in for 8 more years? Or taking a 0.27% premium per year to lock in for 30 years!

If you thought rates would rise would you lock your savings in for an extra 8 years for this extra 0.22% per year?

It seems to me that they appear to be protecting against (if not necessarily expecting) a fall in interest rates.

Now I fully expect rates to rise. But I am asking and looking at what is this yield curve telling us?

And sure, institutional investors can sell that 10 year bond any time. But someone has to own it until it matures. And if rates rise they will be selling at a capital loss.

Nobody buys a 10-year bond to hold to maturity. These are negotiable, liquid investment assets that investors buy for the same reason they trade equities. – Garth

#118 Allie Hunter on 07.11.18 at 1:33 pm

Let’s put this in perspective, 1.5% new Bank of Canada rate. In 2007, the last peak it was 4.5%, in 2001, it was 6.5%, the other peak and in the 1990’s, as high as 14%.

So rates are still extremely low. The media is blowing this all out of proportion. Even with 5 year GIC rates in the 3.% to 3.5% range are still quite low.

They used to be in the 5% to 6.5% range earlier these 2 decades and in the 8% to 11% in the 1990’s.

Inflation is not 2% or 2.5%, look at gas prices, property taxes, housing and rental prices, costs, electricity prices, water and utility costs, food and other costs, insurance etc. are all going up more than 2.0% to 2.5%, more like 4% to 8% a year on average.

Interest rates are being kept low on purpose so there is no real competition for investors and so they have to go into riskier investments in other investment classes. We all know what they are. It is also to keep debt ridden consumers, companies, countries, provinces, cities etc. in cheap paying mode.

Bond rates are even more worse and under control then GIC rates. Interest rates should be in the 5% to 9% range short to medium, long. This is what financial repression looks like, 1.1% to 3.5% savings, GIC, bond rates for years now.

Reality bites, manipulation is the powers at be their best friend.

#119 Boots on the Ground in Ptown on 07.11.18 at 1:42 pm

As always Garth, thanks for all you do. Agree with 1st poster and others saying this is where they’ve learned more than any other sources.

In regards to realtors recycling listings and other shady things. Its not only Canada…it looks a “tad murky” here in US as well. (as far as data so obscured that its almost impossible to make a well informed decision) –And then there’s Zillow getting into the housing game of all off putting things–

CASE IN POINT REGARDING TRENDGRAFIX:

About a month ago I spoke with a real estate broker locally. Casually asked for stats going back 15 yrs for a specific area of this PNW state. He said he’d check but he’s pretty sure he could only get me two yrs back. !!! “TWO YRS!? I practically yelled. “Are you serious?! How is that going to help me establish any long term trend?” I basically told him that I’m not buying but watching the market and that I didn’t want any shiny spin on this whole thing and lets talk Frank to Frank. He softened up right away and we went on to have a great conversation for about 40 mins. He more or less agreed with me on how ridiculous and bubbly it has gotten and said he can’t see it being sustainable at all. Mentioned how he/his wife bought 3 yrs ago since he’s self employed (harder to get credit when tightening happens in earnest) and how all their family/friends are driving Jags, Audi’s buying way too much house etc. Anyway. I told him I’d gotten 4 yrs back stats not too long ago from a different broker. About a week later I got an email from him with the 15 yrs of data that I wanted, albeit quarterly but that’s fine.

Point being: in the conversation I asked who this Trendgrafix is that generates the charts. He explained that brokerages subscribe to this service and then Trendgrafix uses the MLS data for an area to generate the charts. Hmmm…. I said, can you say conflict of interest? If you really put a tin foil hat on anyway. He didn’t agree, (he’s a realtor after all, can only bash your own industry so much) but did agree with me that 2 yrs of data isn’t going to help anyone make an informed real estate decision. Also he noted that since he’s been in the industry, he’s seen where at first they could get 10 yrs of data from Trendgrafix, then 8, then 6, then 4 etc etc. Ea year he said there’s been “changes” in how far back they can get data. NO KIDDING!! Think about it. Its perfect. There’s no liability here. Agents sell the house and if the thing tanks in value in a year, who’s to blame? The charts only showed it “going to the moon”.

#120 jess on 07.11.18 at 1:59 pm

Jul 1, 2018 –

Mariner Finance is owned and managed by a $11.2 billion private equity fund controlled by Warburg Pincus, a storied New York firm. The president of Warburg Pincus is Timothy F. Geithner, who, as treasury secretary in the Obama administration, condemned predatory lenders.
‘A way of monetizing poor people’: How private equity firms make money offering loans to cash-strapped Americans

https://www.washingtonpost.com/business/economy/a-way-of-monetizing-poor-people-how-private-equity-firms-make-money-offering-loans-to-cash-strapped-americans/2018/07/01/5f7e2670-5dee-11e8-9ee3-49d6d4814c4c_story.html?noredirect=on&utm_term=.5449140717f2
=================

Or ISA student loans
Adapting a 1955 idea by economist Milton Friedman to sell “human capital investments,” the university paid the students’ tuition. In return, the university hoped to recoup its investment by having the group collectively repay it as a share of each individual’s income.
It didn’t work out. Low-earners paid back at different rates than high-earners, leaving frustrated students holding the bag for others. It was, in the words of one higher-education policy expert, “an utter disaster.”

https://qz.com/1190860/taking-a-cut-of-students-future-paychecks-has-silicon-valley-investors-funding-education/

#121 Shawn Allen on 07.11.18 at 2:06 pm

10 Year Bonds

Nobody buys a 10-year bond to hold to maturity. These are negotiable, liquid investment assets that investors buy for the same reason they trade equities. – Garth

********************************
Well, I think maybe most pension funds do hold to maturity mostly and perhaps insurance companies too.

One thing for sure, someone has to hold the ten year that yields now 2.16% to maturity. It is going to pay out only $21.60 each year in interest per $1000 of face value to whoever owns that bond for the next ten years. Trading the bond will not change that.

And if bought for capital gains, that requires interest rates to fall for that to happen. Is that what the investors expect?

Or maybe someone is manipulating the rate down by restricting supply. Maybe the government is not borrowing much at ten years? Or is our central bank buying up the 10 years and pushing the rate down? – not that I have heard of.

I mean I don’t claim to know exactly what this very flat yield curve with low rates on the ten year means. I am asking the question. The most obvious answer would seem to be they don’t expect rates to rise. Perhaps some institutional investors can come to the blog and tell us.

#122 Duke on 07.11.18 at 2:11 pm

#111 Dave on 07.11.18 at 12:44 pm
I still remember when everyone was expecting interest rates to rise a few years ago but instead they went down because of oil prices. Exact opposite of what the street expected.
This created an intentional housing frenzy that was uncontrollable and the mess we are in today.
This hike is too little to late…

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

You are absolutely correct. This rate hike will have a greater impact to all and many of them will lose their homes.

#123 Milkman on 07.11.18 at 2:34 pm

Hey Brian,

Make sure you Google, read, read, read, and understand the law around “common law spouses” in Ontario… consult a lawyer for an hour to find out… or consult a lawyer when she finds out… your choice. One costs a little cash, the other costs a lot of everything.

#124 NoName on 07.11.18 at 3:17 pm

I told you guys already of those two ever get to oval office, bil mo nica will be non event.

http://punchng.com/croatia-vs-england-trump-may-get-croatian-jerseys-ahead-of-world-cup-semi-final/

Trump was given the number nine jersey of striker Andrej Kramaric — that number was also worn by the top scorer at the 1998 World Cup, Davor Suker.

Me thinks she kept 6 for her self…

#125 James on 07.11.18 at 3:32 pm

And now for something completely different.
It appears that Pompeo’s North Korea meeting went ‘as badly as it could have gone? Now who would have thought that the North Koreans were stringing the old orange dotard out for a public scourging? Nope it will all be on Mike Pompeo according to the Trumpster. How does that song go…………….

Are you ready, hey, are you ready for this?
Are you hanging on the edge of your seat?
Out of the doorway the bullets rip
To the sound of the beat
Another one bites the dust
Another one bites the dust
And another one gone, and another one gone
Another one bites the dust
Hey, I’m gonna get you, too
Another one bites the dust
How do you think I’m going to get along
Without you when you’re gone?
You took me for everything that I had
And kicked me out on my own
Are you happy, are you satisfied?
How long can you stand the heat?
Out of the doorway the bullets rip
To the sound of the beat

#126 James on 07.11.18 at 3:44 pm

So how is that trade war going with China Mr Trump? Your heartland “who I might add voted heavily for you just got a kick in the stones.” Winning!!!!!!!!!!!!!!!!!!!!!! sort of maybe, actually WTF?

https://www.desmoinesregister.com/story/news/politics/2018/06/25/iowa-gop-donald-trump-tariffs-trade-war-consequences-ernst-grassley-blum-loebsack-king-young/733068002/

#127 James on 07.11.18 at 3:46 pm

Anybody here in Soy futures?

https://www.nasdaq.com/markets/soybean.aspx

#128 jess on 07.11.18 at 3:48 pm

debt slave creator?

are you sure that wasn’t a typo
“We’re reversing the last 18 years of corrupt neo Marxist

and you meant neo liberal?

=
as twitter purges the fakes etc how about all the
FALSE papers that need retraction

Springer purge of fake reviews takes down 10+ more neuroscience …
https://retractionwatch.com/…/springer-purge-fake-reviews-takes-10-neuroscience-pap…

Jun 14, 2017 – Back in April, Springer retracted a record number 107 papers from Tumor Biology … were related to the Tumor Biology retractions for fake peer review: …. Springer Nature is currently working on some improvement processes.

or this:

Mathgen: Randomly generated math papers
thatsmathematics.com/mathgen/

Mathgen. Randomly generated mathematics research papers! … Produce your own math paper, full of research-level, professionally formatted nonsense!

#129 The Real Mark on 07.11.18 at 4:00 pm

“25 year Difference = $ 18,817.84 or an Average of $ 752.71/year – how much more will be paid with a 25 bp increase.”

You’re still missing the point. If a banker lends $500k, and rates go up 25bp, the banker earns an extra $1250/year on $500k lent. Yes, with an amortizing loan, there is some difference in how quickly the loan is paid back assuming increased payments. But the lender still has an extra $1250 in his pocket yearly as the result of lending $500k. Now, of course, as you correctly point out, eventually some of that $500k will be repaid, but the lender, across a portfolio of loans, can probably go out into the marketplace and replace the paid-down mortgage with another investment.

Not sure why there’s so much tap-dancing around the obvious here, that higher finance costs are proverbial ‘kryptonite’ to highly leveraged and un-diversified families concentrated in RE. And today’s 25bp increase was just to the BoC policy target benchmark rate — lenders will likely apply additional spread in recognition of the fact that interest rate sensitive collateral is suffering a rapid loss of value and loans are riskier.

#130 jess on 07.11.18 at 4:00 pm

lagging

https://retractionwatch.com/2018/07/10/uk-house-of-commons-committee-wants-to-make-sure-university-investigations-into-research-misconduct-are-handled-appropriately/#comment-1621849

The UK Experience

As of March 10, 2017, the Web of Science, a widely used index of scientific publications formerly owned by Thomson Reuters (now Clarivate Analytics), includes retractions of 147 articles since 1990 by researchers in the United Kingdom. The true number is likely higher, because databases often lag behind journal activity and some journals do not consistently transmit changes, although it is difficult to say how much higher. While it is not easy to determine relative rates of retraction by country, for various reasons, it does not appear that the UK has a higher rate than other nations.”

http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/science-and-technology-committee/research-integrity/written/48704.html

#131 The Real Mark on 07.11.18 at 4:41 pm

“I mean I don’t claim to know exactly what this very flat yield curve with low rates on the ten year means. I am asking the question. The most obvious answer would seem to be they don’t expect rates to rise.”

The logical explanation is usually the correct one. The Canadian consumer is at record levels of indebtedness. Its pretty obvious that the debt bubble, if not already in the process of, will collapse.

A collapsing debt bubble, as we saw in the aftermath of the US debt/housing bubble, means almost insatiable demand for CAD$, and a much higher savings rate.

I don’t know if CAD$ debt will actually appreciate much as the result of the BoC being forced to run NIRP to keep the Canadian economy liquid and from imploding due to the deflationary pressure that is building. But the CAD$ itself is likely to rise dramatically at some point due to rising demand for CAD$ to pay back CAD$-denominated debt. So a good chunk of the return on that 10-year bond would simply be currency appreciation.

Of course, timing is difficult. But the CAD$ bond market is basically saying, “deflation dead ahead”, and is not implying much higher rates.

#132 NoName on 07.11.18 at 5:05 pm

#126 James on 07.11.18 at 3:44 pm
So how is that trade war going with China Mr Trump? Your heartland “who I might add voted heavily for you just got a kick in the stones.” Winning!!!!!!!!!!!!!!!!!!!!!! sort of maybe, actually WTF?

https://www.desmoinesregister.com/story/news/politics/2018/06/25/iowa-gop-donald-trump-tariffs-trade-war-consequences-ernst-grassley-blum-loebsack-king-young/733068002/

Im not here to defend him but… He is almost dome making WTO irelevant, buy holding back on a judge, europe is scared from put in, i think and as a time goes on he actually will make a deals. Keep in mind china index is down 17% just on a talk of trade wars in a last little while, while snp is going sideways or maybe slow uptick… as for soy beef and pork will be cheap, or maybe they can make it biodiesel and suppress price of oil down.

https://imgur.com/a/Ds4AQjQ

#133 oncebittwiceshy on 07.11.18 at 5:08 pm

Shawn Allen: *”And if bought for capital gains, that requires interest rates to fall for that to happen. Is that what the investors expect?”*

Actually, Shawn I expect that the institutional investor is telling you just the opposite.

Pension plans and Insurance companies need the safety of bonds but can’t afford the “downside” of rising rates. You were absolutely right about the capital gain loss in a rising interest rate environment. Can you imagine that loss on a 20 – 30 year bond?

The fact that the 10 year yield is so low is probably indicative of the flight of institutional investors to a lower risk bond that has a certain stability (less capital loss) but the needed guaranteed returns.

The largest market in the world is telling you that rates are going in only one direction … up.

#134 Bob on 07.11.18 at 6:42 pm

A dog day? Excellent idea…

…just got a German Shepherd puppy, 8 weeks….he is slowly whipping me into shape!!

#135 Pete on 07.11.18 at 10:20 pm

Spaced out RE reporters like Tess Kalinowski are reporting that GTA and Vancouver RE is going to tale off this fall (because desperate RE “experts” say so). That doesn’t help moisters that are on the fence wondering whether to jump into RE. It’s going to get ugly…fast.

#136 Jimers on 07.11.18 at 11:06 pm

#WalkAway

#137 NEVER GIVE UP on 07.12.18 at 12:21 am

https://whorulesamerica.ucsc.edu/power/wealth.html

Check out table #2 in the above link.
It will easily spell out the reason why Trump was elected.
He appeals greatly to the bottom 80%.