Just watch

Dick and Jane (not their real names) want to buy a SFH in 416. It costs $1,145,892 (the average). With land transfer tax, but not counting other closing costs, the actual price is $1,184,677.

D&J have no choice but to cough up a 20% downpayment, since no lender will provide them with CMHC insurance on the mortgage amount. If default coverage was available, they could get away with 95% financing. But for almost seven years now there’s been a million-dollar cap, imposed by Ottawa. That made sense in 2012, when the same house was changing hands for $728,800.

So these guys need to have $230,000 in cash, plus another $39,000 for closing taxes in order to buy, with a mortgage exceeding $900,000. Monthly payments will be about $4,700. Adding in property tax, heating costs and insurance brings that to $5,700. The allowable GDS (gross debt service) ratio is 35%, so Dick & Jane must earn $170,000 to pull this off.

That’s seven times the national median income, and just twenty grand below the threshold for being in the top 1% of all individual earners. And, sadly, $1.1 million currently doesn’t buy prestige in Toronto. Here’s a semi in that price range:

This is why personal finances are in terrible shape and household debt sits at record levels. As one of Ryan’s fancy charts yesterday demonstrated, there’s a near-perfect correlation between the growth in house prices and family indebtedness. Our house lust plus low interest rates have delivered outsized risk. So, things will be changing.

But, sadly, not for the better.

First, politicians are poised to try and reflate housing prices which are now in corrective mode in most markets. This Milkbone-loving blog has already told you about Alberta’s Jason Kenney cozying to realtors and vowing to trash the stress test. There will be more. We’ve also predicted the governing Libs may be using the budget or the election campaign this year to (a) bring back 30-year mortgages, (b) cap or modify the stress test and (c) remove the $1 million ceiling that make D&J produce a 20% downpayment. The combination of a higher price point and longer amortization would let this couple buy the same place with a smaller down and a similar monthly. But, yes, their debt would be over a million and interest charges greater.

Why are elected officials so keen goose housing less than two years after governments declared a real estate emergency, amid FOMO and 30% price hikes?

To get elected and stay elected. Duh. Voters crave homes and since prices haven’t tumbled substantially, politicians seem willing to give up and once again make credit easier to get. For these guys ‘long-term’ means after lunch. Pathetic.

Second, the economy will be slowing and Canadian public policy has allowed real estate to swell to about a quarter of the entire GDP. It’s no surprise the expansionary years will be winding down – something central banks have been signalling. The Fed’s message last week was clear. The interest rate tightening will be over before long. Corporate profits which roared past 20% last year will be just a quarter or a third of that in 2019. Debt servicing costs have mushroomed, but in Canada wages are actually less than inflation. China is leading global growth a bit lower, while the Trump trade war and that absurd government shutdown have taken a toll on expansion. This is the tenth year of advance after the GFC. It’s only reasonable there’s a pause coming.

(I will explain soon how financial portfolios should prepare.)

In any economic slump, no matter how shallow, Canadian real estate will be disproportionately impacted. Given static incomes and sticky house prices, buyers have been using oodles of credit, so even as the pace of sales slows, mortgage indebtedness continues to rise. Add to this an increase in unemployment, a drop in oil prices as global demand for commodities slows and a sluggish, protectionist US economy, and suddenly spending $1.14 million for half a house with a quarter-million-dollar downpayment and seven-figure debt doesn’t look like such a hot idea.

How did Canadian politicians fight the 2008-9 global financial crisis? Right. By making it easier to buy real estate. It worked – even as families became less diversified and more burdened than ever before. And how do you think Ottawa will try to counter the next slow patch? Uh-huh. Just watch.

119 comments ↓

#1 CFA on 02.03.19 at 2:25 pm

Total morgage in “tapped out” only makes sense when presented as a fraction of working population

#2 Russ on 02.03.19 at 2:31 pm

Do investment earnings qualify to get one into the 1% club?

Family package is only 175 but I.E. will take us over the two (most years).

Cheers, R

#3 Trumpocalypse2019 on 02.03.19 at 2:34 pm

Britain is preparing for Brexit catastrophe and the Royals are seeking bunkers for shelter.

https://www.politico.eu/article/queen-evacuation-bad-brexit/

This will spill over everywhere in the West as the US self-destructs and Canada’s bubble economy falls off the cliff.

A horrible year lies ahead. For those who live that long.

PREPARE

#4 T-Rev on 02.03.19 at 2:38 pm

As the owner of a golden retriever, there’s only three things that would possess that dog to climb on that roof:
– Food
– A chuckit ball
– a belly rub

Either way, it’s the human that screwed up there.

#5 Joe Schmoe on 02.03.19 at 2:40 pm

This does seem like a particularly intractable problem in a democracy. This system of government works fine when resources are plentiful. When they’re scarce, not so much. There are any number of things politicians could do to get house prices back into the reasonable 2-3 times median income range. But any such changes would mean destroying the “wealth” of 70% of the voter base. So fat chance of that.

#6 Dave on 02.03.19 at 2:44 pm

In BC we have the NDP, they will tax real estate to death. Market crash is on its way

#7 Red_falcon on 02.03.19 at 2:46 pm

Housing! First downs!! Fumbles!!!

First!!!

#8 Great Article Here on 02.03.19 at 2:47 pm

I read it in stunned belief because it hit a home run, just by reading the context of it all. The sad part of it all is there are other options to explore. They just don’t want to move away for greener pastures, and leave the insanity of debt behind. A home is just a place to live, and little do they know that for $250,000 they could own a far better residence elsewhere, and invest the rest without giving up anything to live a better life filled with opportunity. Nothing needs to be sacrificed in moving elsewhere, but they won’t explore the options, or the thought of relocating to have it all.

#9 Danforth on 02.03.19 at 2:52 pm

That house is at Mt Pleasant and Davisville, a prestige neighbourhood. Surprised it’s not going for more!

It’s not a first time buyer hood…it’s an area people grow and aspire to.

#10 Godth on 02.03.19 at 2:53 pm

except it’s not just a canadian thing and not just a real estate thing. remember how 2008 was remedied?
-huge money injections for wall st. and corporations with zero assurances or restrictions on the private beneficiaries from this public bail-out.
-drop interest rates to historically low levels (zirp & nirp) to encourage consumer spending and private investment (theoretically). in reality corporations could get to the trough first and bought back their own stock, lining the upper management pockets and creating yet another bubble.
-buy back toxic assets from the big boys, gratis of any repercussions.
What has been incentivized at every level? irresponsibility.

punching down is too easy though. it’s all going to end in a world of hurt.

#11 NotLegalAdvice on 02.03.19 at 2:54 pm

First on Superbowl Sunday??

I’m in a similar situation to D&J, but I want to buy a $850k house and give 20% down.

hmmmmmm

#12 For those about to flop... on 02.03.19 at 3:09 pm

Pink Snow falling in Vancouver.

Another one in Vancouver that has stumbled onto some smelling salts and is getting more in tune with the market.

More and more 2015 purchases are struggling with the change of wind direction.

The details…

2149 w 35th ave, Vancouver.

Paid 3.15 April 2015

Originally asking 5.18

Now asking 3.18

Assessment 3.92 down from 4.62

So two million down from original ask, or close to 40%, that type of behaviour flew for longer than it should have but now it is crashing into the trees like a kite.

The NDP firmly has a no speculation sign on the lawn out in the front of the Legislature in Victoria, so like I showed with the previous case this morning, knife catchers above 3 million better be playing the long game and have talon proof gloves.

A new market has taken flight…

M44BC

2018-02-21 : $5,188,000
2018-05-02 : $4,988,000
2018-06-25 : $4,188,000
2018-08-20 : $4,498,000

https://www.zolo.ca/vancouver-real-estate/2149-west-35th-avenue

https://www.rew.ca/insights/89821/2149-w-35th-avenue-vancouver-bc

#13 not 1st on 02.03.19 at 3:11 pm

This blog is becoming more like CNBC everyday. One days its bullish next is bearish. Ryan just gushing over the TSX yesterday.

I have better reason to goose the RE market, because the liberal and NDP manifesto hate capital gains. They think its the worst kind of wealth and are dying to tax it. So give the market a final boost, get elected and then go after capital gains exemptions on personal residences. There is billions there for the taking and its forced just like the land transfer tax. No avoiding it. The smart money will use this last gasp to exit.

Ryan said, ‘We see the TSX doing just fine in 2018.’ I agree. Way better than in 2018. But housing will be under pressure. When you exaggerate you lose credibility. You have little to spare, so be cautious. – Garth

#14 crowdedelevatorfartz on 02.03.19 at 3:19 pm

@#12 Flop.

Never mind the Pink Snow
Its REAL snow in Burnaby!
The horror.

#15 millmech on 02.03.19 at 3:22 pm

Just keep buying bank stocks, 30 years of interest payments, especially on $900,000+ will work out to another $900k in interest profit for the banks. Now you add on high fee bank accounts, HELOCs, minimum payment visa cards, 2%+ MERs on mutual funds, mortgage life insurance it is a license to print money.

#16 crowdedelevatorfartz on 02.03.19 at 3:28 pm

@#3 Trumpocalypse2017,18,19
“A horrible year lies ahead. For those who live that long….”
+++++

Your soothsayer shtik needs work.

#17 mike from mtl on 02.03.19 at 3:29 pm

#5 Joe Schmoe on 02.03.19 at 2:40 pm

There are any number of things politicians could do to get house prices back into the reasonable 2-3 times median income range. But any such changes would mean destroying the “wealth” of 70% of the voter base. So fat chance of that.
////////////////////////////////////////////////////////////////

Exactly, the gobberment basally encouraged this behaviour why stop the party now? Especially when the vast majority of your voting base is ‘invested’.

Housing bubbles on the way up are awesome profits for Banks, Gov (fake GDP), Transfer taxes, Muni prop taxes, construction, city permits, wealth effect without wage increases, etc. Regardless of political party no-one wants own up to the downside consequences on their time in power.

#18 1930's Semi on 02.03.19 at 3:31 pm

#9 Danforth – I know this area well because went to all the baseball games just north of there. My girlfriend was on a league, and cheered her on. This is not a detached home, but an old semi, and would not call that an investment paying over $1 million. Indeed it was a nice area like a village, but would not buy it in my opinion. Who knows what the neighbours might be like because its another risk or gamble.

#19 DON on 02.03.19 at 3:39 pm

2010 – House prices were much much lower and they had room to goose the market. Makes one wonder what the ‘brain trust’ in Ottawa is thinking. How much room do they think the market has on the up side before people start to walk away from house sales. Like what a chunk of debt to carry for what at least 20 years. That’s a long time to be sucking off all extra cash. Buying the house is one thing maintaining it is quite another. As nothing last forever. Well maybe stupidity does.

#20 Figure it Out on 02.03.19 at 3:40 pm

If Jason Kenney really wanted to make it easier for Albertans to buy real estate, there are more concrete things he could do than being the chinook that blows hot air in Ottawa’s direction. So I figure that if that’s all he’s promising, he doesn’t really want to do/spend anything, except maybe some political capital.

Will Ottawa do something? I don’t know. I’d have to see their internal polls, constituent contacts, and what the federal Conservatives would promise in a platform. The CMHC guy and the Bank of Canada guy are both Harper appointees, and both have harped on household debt levels.

#21 Victoria Real Estate Update on 02.03.19 at 3:42 pm

Politicians and policy makers in any country are quite predictable. They’ll use any short term (and temporary) fix to temporarily make a major problem go away – only to face the same problem (x 10) in the future after it inevitably resurfaces.

Garth nailed it – CMHC was Canada’s (temporary) economic action plan in 2009. As Ryan’s chart (from yesterday) illustrates – Canada’s debt/bubble problem from 2009 has multiplied into a much worse problem for Canadians and the Canadian economy in 2019 and beyond.

Canada’s extreme debt/bubble problem in 2009 was not permanently fixed by using CMHC as Canada’s economic action plan.

So can Canada keep tinkering with mortgage lending rules to keep the Canadian housing bubble from deflating? Those whose livelihoods depend on it certainly hope so. Garth thinks policy makers will attempt to kick Canada’s (beyond massive) debt/housing bubble problem down the road yet again by loosening mortgage lending regulations again this year.

Unfortunately for those who depend on the bubble, 200 years of world housing bubble history shows that every country that had a housing bubble tried to tinker with lending rules to maintain the bubble and prevent the inevitable unwinding. And they all failed.

In every case the bubble deflated. House prices fell back to the long-term mean and in no case did it happen in a slow, controlled manner.

But only the bubble cities will face major price corrections. The 2006 US bubble demonstrated this nicely.

US CITIES – PRICE DECLINE (%) (after 2006/08):

* San Francisco, California (-45%)… (in 3 short years)
* San Diego, California (-42%) * Los Angeles, California (-41%)

* Bismarck, North Dakota (-1%)
* Shreveport, Louisiana (-1%)
* Amarillo, Texas (-2%) * Cedar Rapids, Iowa (-2%)
* Davenport, Iowa (-2%) * Fargo, North Dakota (-2%)
* Texarkana, Arkansas (-2%)
* Oklahoma City, Oklahoma (-3%)
* Rapid City, South Dakota (-3%) * Wichita, Kansas (-4%)
* Great Falls, Montana (-4%) * Billings, Montana (-4%)
* San Antonio, Texas (-4%) * Little Rock, Arkansas: (-4%)
* Lexington, Kentucky (-4%) * Austin, Texas (-4%)
* Sioux Falls, South Dakota (-4%)
* Omaha, Nebraska (-5%) * Tulsa, Oklahoma (-5%)
(Sources: Case-Shiller Index, All-Transactions House Price Index)

#22 Yuus bin Haad on 02.03.19 at 3:43 pm

Wow!

@RealMaduroVE just tweeted that Andrew Scheer is the legitimate leader of Canada and citizens must push to remove the evil Trudeau.

How presumptuous is that?

#23 The Great Gazoo on 02.03.19 at 3:44 pm

“We’ve also predicted the governing Libs may be using the budget or the election campaign this year to (a) bring back 30-year mortgages, (b) cap or modify the stress test and (c) remove the $1 million ceiling that make D&J produce a 20% downpayment.”

I predict we get a bump in the amount individuals can contribute from their RRSP towards a home. Encourages younger folks to contribute to an RRSP and get access to some of their own funds to purchase a home.

#24 DON on 02.03.19 at 3:46 pm

#17 1930’s Semi on 02.03.19 at 3:31 pm

#9 Danforth – I know this area well because went to all the baseball games just north of there. My girlfriend was on a league, and cheered her on. This is not a detached home, but an old semi, and would not call that an investment paying over $1 million. Indeed it was a nice area like a village, but would not buy it in my opinion. Who knows what the neighbours might be like because its another risk or gamble.
**********

Isn’t it obvious why they moist over this property. Look at it – the Palm Trees on the spacious front lawn. New friends, next store. This is stupid.

Everything will be great for the 1st year until the novelty of the trendy neighbourhood wares off. Life is a lot longer than most young people plan for. At what point will they fret over the lost of mobility and cash.

#25 Flip Flop or Fly on 02.03.19 at 3:49 pm

Looks like Flying away from BC as fast as they can is what a lot of people will start doing again.

The falling market is having a lot of them for lunch.

Ruining the futures and retirement dreams for many over-indebted real estate stooges. Reality Bites!

#26 For those about to flop... on 02.03.19 at 3:50 pm

#13 crowdedelevatorfartz on 02.03.19 at 3:19 pm
@#12 Flop.

Never mind the Pink Snow
Its REAL snow in Burnaby!
The horror.

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

Hey Crowdie, I’m pretty sure if you get in your Toyota Toboggan and drive by the house on Sperling ,you know the one the other day that I showed you lost 750k, I’m sure you will find blood in the snow out front.

Look closely.

It is scattered, but there is Pink Snow falling all over Greater Vancouver…

M44BC

#27 Yukon Elvis on 02.03.19 at 3:50 pm

The strategy and the shtick will probably work. Elvis thinks that the Libs will get re-elected. Elvis has a lot of confidence in the ignorance of Canadian voters.

#28 akashic record on 02.03.19 at 3:54 pm

In return of land transfer tax, government should provide sale price data to the public for free. Gov must have the data to calculate the tax.

#29 akashic record on 02.03.19 at 4:02 pm

#3 Trumpocalypse2019 on 02.03.19 at 2:34 pm

Britain is preparing for Brexit catastrophe and the Royals are seeking bunkers for shelter.

https://www.politico.eu/article/queen-evacuation-bad-brexit/

—-

They could move here, the crown land and royal subjects are plenty.

#30 Raging Ranter on 02.03.19 at 4:05 pm

How did Canadian politicians fight the 2008-9 global financial crisis? Right. By making it easier to buy real estate.

Not quite. Zero and forties were eliminated in December 2008, right at the beginning of the crisis. 35 year amorts were eliminated a year later, and 30s the year after that.

But interest rates were lowered to the floor, and the CMHC purchased about $125B of mortgages from the banks so they could keep lending, and lend they did. Overall, borrowing did become much easier, but that was due to falling rates and a flood of available credit, not an easing of the rules.

If these changes happen, it will be the first loosening of mortgage regulations since 2006 when they first brought in the zero & forty.

0/40 was in place for too brief a period to skew the market. It was low rates that were the consequential policy response to the GFC. – Garth

#31 Stan Brooks on 02.03.19 at 4:06 pm

So we were just told that the economy is fine, will keep growing, in fact it is in a fantastic shape (especially for the banks) and we are getting scared of 1.75 % interest rate so we need to juice the housing market again?

It tells us that things are much worse than spoken of and the plan becomes pretty clear – introduce more lax lending standards backed by taxpayers that will result in whole bunch of more ultra-subprime mortgages and when the dear leader wins the elections, start running 100 billion + yearly deficits.

8-10 % increase of cost of living in the next decade or two, interest rates at zero, even negative, ‘official’ inflation at sub 2 %.

It is an acknowledgement that economy can not be fixed and uncontrolled inflation will follow.

But hey, don’t be all doom and gloom, just keep calm, enjoy the great weather, and head quietly for the slaughterhouse.

How are those nice nesting eggs growing?
I am sure the french villa guy will find good, fair use of it ‘for the good of all Canadians’

#32 LarryB on 02.03.19 at 4:09 pm

So much talk about personal debt and the ballooning costs as interest rates increase but next to nothing about soaring national and provincial debt. Who do you think will have to pay for all that debt renewing at ever increasing rates? How are taxes not going to go anywhere but higher and faster just to keep up the interest payments as our social programs and standard of living slowly erodes. Our children and grandchildren WILL suffer because of this growing mountain of government debt. Buying a house or building an investment portfolio will be the least of their concerns.

Garth, how about some analysis of government debt and its’ effect on the lives of Canadian’s in the future?

Ontario has the largest debt of any non-sovereign government in the world. The Canadian government has no plan to even consider balancing its budget let alone dealing with the debt accumulated.

But hey, Sunny Ways and a good selfie will get people reelected.

If people would start to understand that every time your government states it is spending money on some vanity project (to get reelected), remember….this is your money they are spending and in fact are BORROWING on your behalf.

#33 Damifino on 02.03.19 at 4:16 pm

…the governing Libs may be using the budget or the election campaign this year to (a) bring back 30-year mortgages, (b) cap or modify the stress test and (c) remove the $1 million ceiling that make D&J produce a 20% downpayment.
————————————–

I wonder what are the odds they’ll announce moving the TFSA contribution ceiling back to $10K? That would be a real vote-magnet.

#34 TurnerNation on 02.03.19 at 4:16 pm

Not so boolish on Kanada given the UN-T2 stoner plan. This short Apple commercial shows how exactly our elites wish us to be. Totally zoned out and nihillistic.

I wish this were a spoof, it’s not: https://www.youtube.com/watch?v=aY0BnLLh19g

It’s over folks admit we lost. When you have former PMs (Kim C) and MP Adam Vaughan engaged to tweet rage against Orangeman and Fordnation. Just to divide us.
Max Max is playing his part.
Who earns the most in this world? Entertainers.

#35 not 1st on 02.03.19 at 4:26 pm

#33 Damifino on 02.03.19 at 4:16 pm
—–

So having another $5000 invested will buy your vote for degenerate nation destroying socialism taking permanent hold here? Take a look around you man.

#36 Old gringo on 02.03.19 at 4:27 pm

For the love of me,I cannot figure out why anyone in their right mind would buy a shxxthouse for one million dollars
Give your sorry heads a shake amigo’s

#37 Shortymac on 02.03.19 at 4:47 pm

So do you see prices sinking further despite their efforts?

#38 GoKartMozart on 02.03.19 at 4:51 pm

re: #3 “Britain is preparing for Brexit catastrophe and the Royals are seeking bunkers for shelter.”

Her grandson learned how to drive a helicopter – may prove to be a wise decision.

#39 Ronaldo on 02.03.19 at 4:54 pm

#19 DON on 02.03.19 at 3:39 pm

2010 – House prices were much much lower and they had room to goose the market.
——————————————————————
In the beginning 2010 I was trying to convince my daughter in law to sell their 1920s tear down in Vancr. west for the 1.2 million that it was supposedly valued at.

They had paid 875.000 for it in summer of 2008. I was certain at that time that prices had peaked but lo and behold they kept climbing and they did sell it at the peak in December of 2017 for 1.875. A cool million more.

Problem is, they reinvested back into the same market and area at a much much higher price. Now they will discover what a downturn in housing prices is all about.
Welcome to the 80s.

#40 Geena Dunsforthe on 02.03.19 at 4:54 pm

Garth, Please tell me my preferreds aren’t about to crater now!!

#41 Dominion Minion on 02.03.19 at 4:55 pm

What exactly are big city folk contributing to the Canadian economy that justifies salaries 7x the national average?
#relativity

#42 Forgotten on 02.03.19 at 4:56 pm

We always blame interest rates, taxes, grants, insurances and similar for the housing boom. There’s no doubt that the Internet – and millions getting access worldwide – played a massive part in the boom. The Internet put re porn at our finger tips to watch and monitor. Think of a foreigner trying to buy real estate internationally 20 years ago. Where or who would they go see to go about it. It’s all on the Internet now. At our finger tips. I reckon at least half of the global re boom could be correlated to peeps getting access to the Internet.

#43 Interstellar Old Yeller on 02.03.19 at 4:59 pm

As a dirty, dirty 416-dweller it was helpful to see all the numbers laid out like that. Not saying I’d buy at that price but that house is a decent home for youngish upper-middle-class earners who “have” to own. Good area, has a back yard, walkable to the subway. I’m with #9 Danforth that it’s not a first-time buyer neighbourhood (at least, not for most or for those without help from the Bank of Mom & Dad!)

Read the numbers to my better half, we agreed we could rent one killer place if we were looking to spend $5k/month!

Half a house for $1.1 million. – Garth

#44 Credible Fogotten on 02.03.19 at 5:03 pm

Here’s a link to some stats. Scroll one page down to see the tabulated data. I’m sure it’s totally credible and supports the case of access to Internet correlating with home price run ups worldwide …

https://www.internetworldstats.com/emarketing.htm

#45 Too Big To Fail on 02.03.19 at 5:08 pm

So then once again, ‘real estate is too big to fail’ and ‘the government will never let it happen.’

For the past decade, countless posters have put this message forward and were mercilessly mocked and chastised for outlining what you have recently started to note – that the government will intervene to keep prices high and undo the negligible correction we have seen the last year.

Here we are into 2019, 11 years after the GFC and all the warnings about rising interest rates, crushing debt levels, and prices disconnected from fundamentals, are all about to become moot again, for the 11th year.

Its game on for the Spring market for the 11th year in a row – interest rates have halted and remain and emergency low levels; an election with measures to reinflate the market will emerge, changing buyer sentiment (just as it did in 2008); and employement remains high with people continuing their ability to service their ridiculous debt levels.

The winners for the past decade have been the armchair economists and those that listened to realtors as they have one in a lifetime capital gains; those on the sidelines renting that did the prudent thing will never catch up to those that took leveraged risks years ago while doomers crowed about risk.

#46 Ronaldo on 02.03.19 at 5:26 pm

I recall back in 1980 the BC Govt came up with a short term scheme to try and get housing starts up by introducing a one time interest rate subsidy whereby first time owners would only pay 10% or thereabouts for a 5 year mortgage on a new build. This was at a time when interest rates had risen to around 16% in the spring of 1980.

In our little town where I lived at the time, I knew of 4 people who took advantage of this and they all worked for the same company as I did. One was my boss. I was lucky and had built the year before and got in at 9.5%. In July the next year interest rates for a 1 year fixed hit 21.25%. We didn’t see 10% again until January 1984. By the time my mortgage came up for renewal 5 years later, rates were still near 14%.

Who knows, maybe our great leaders will come up with a similar scheme.

#47 Let's just ... on 02.03.19 at 5:34 pm

#3 “Britain is preparing for Brexit catastrophe and the Royals are seeking bunkers for shelter.”

see if the Brits start sending their young over here again for safe keeping.

#48 Ronaldo on 02.03.19 at 5:49 pm

#44 Credible Fogotten on 02.03.19 at 5:03 pm
Here’s a link to some stats. Scroll one page down to see the tabulated data. I’m sure it’s totally credible and supports the case of access to Internet correlating with home price run ups worldwide …

https://www.internetworldstats.com/emarketing.htm
————————————————————–
Whoa. And to think that I was one of those 1st 16 million to be surfing the net back in 95. Now 4.2 billion. That is incredible. I remember one search engine called ‘Dogpatch’.

#49 theoryAndPractice on 02.03.19 at 5:51 pm

(I will explain soon how financial portfolios should prepare.)- GT

While at it , Could you also please give your opinions on :

– How much exposure to Canada, US, Int’ by geography do you recommend ?

– Would you recommend decreasing exposure to Canadian assets ? (ie. elevated risks due to housing downturn, and all political actions going around it)

– In Canadian assets what would be the best positioning?

#50 For those about to flop... on 02.03.19 at 5:59 pm

Pink Snow falling in Burnaby.

I am currently trying to find out what happened to a place at 4642 Pender.

My iPad changes it to Pandora.

I change it back to Pender and the computer changed it back to Pandora again.

Being a technophobe,I then threaten the computer with the only voice command I know.

“You wait until my wife gets home.”

Until she does I decide to see if the computer is trying to tell me something and click on the first one I see in that area.

The details…

5226 Pandora st,Burnaby.

Paid 1.61 April 2018

Originally asking 1.79

Now asking 1.68

Assessment 1.52 down from 1.59

So I started with a 2017 sale on Zealty, and then upon cross-checking, realized that Rew already had another sale squeezed in between in 2018,so technically this one is another candidate for Double Pink Snow as it already has red ink splashed across its recent history.

“PRICE REDUCED!!! GORGEOUS LOT WITH SWEEPING SOUTHERLY VIEWS OF METROTOWN…”

Strange marketing, don’t recall the last time someone wished for a better view of a mall,but hey, it takes allsorts.

The market here is an equal opportunity destroyer…

M44BC

https://www.zolo.ca/burnaby-real-estate/5226-pandora-street

https://www.rew.ca/insights/256068/5226-pandora-street-burnaby-bc

#51 Long-Time Lurker on 02.03.19 at 6:35 pm

#60 Godth on 02.02.19 at 10:02 pm
#38 Long-Time Lurker
have you ever wondered why debt jubilees were a thing? of course you haven’t. maybe you should. you must be german where money is guilt, as opposed to latin where credit is faith.
—————————————————————
if only canada was an island…
https://www.ubs.com/global/en/wealth-management/chief-investment-office/our-research/life-goals/2018/global-real-estate-bubble-index-2018.html

>My post was an article about MMT. What are you talking about? Smoking Man is more coherent than you and he’s questionably sober most of the time. Money is a tool and so are you. Allow me to clarify:

#38 Long-Time Lurker on 02.02.19 at 6:33 pm
Modern Monetary Theory (MMT)…

“…sandwiches us between hyperinflation and hypertaxation.” (paraphrased)…

https://www.urbandictionary.com/define.php?term=Tool

TOP DEFINITION
Tool
Tool: (noun)

1.) A guy with a hugely over-inflated ego, who in an attempt to get un-due attention for himself, will act like a jackass, because, in his deluded state, he will think it’s going to make him look cool, or make others want to be like him. The person may even insincerely apologize later on, but only in an attempt to get more attention, or to excuse his blatantly intentional, and unrepentantly tool-ish behavior.

2.) Someone whose ego FAR exceeds his talent, intelligence, and likeability. But, of course, he is clueless regarding that fact. He erroneously thinks he is THE MAN!…

5.) Godth.

#52 Dolce Vita on 02.03.19 at 6:50 pm

You may well be correct that Gov. will try and goose RE and thus GDP to get elected. But it won’t matter.

GDP was -‘ve in the past 2 of 3 months. The psychology is decidedly negative. That’s the recipe for recession.

That whole industry is hanging on by the skin of its teeth hoping for some Lazarus style resurrection come this Spring.

It won’t happen.

Instead all we read about is larger and larger RE inventories, record decade(s) low unit sales, prices continuing to drop, people trying to dump RE assignments as fast as they can, etc.

They can goose RE all they want. It will be like:

Beating a dead horse.

Worse if a recession comes like I think it will by the end of this Qtr (acknowledged by the MSM in 2nd Qtr).

#53 James on 02.03.19 at 7:23 pm

Hey Smoking Man – got an offer for you, Old Man.

It’s still 0-0 at the Super Bowl as I write. You chose the Rams, I’ll take the Pats.

Patriots win, and you leave this blog forever. Rams win and I go.

Deal or no deal? You’ve got 10 minutes to decide if you have a backbone.

Tick tock…..

#54 AACI Home-Dog on 02.03.19 at 7:26 pm

Yuk…an old semi-detached. You had best get along with your neighbour. Or else..who knows. Just sayin’.

#55 not 1st on 02.03.19 at 7:32 pm

(I will explain soon how financial portfolios should prepare.)- GT

——-

All Canadian exposure capped to 25%, mostly safe stuff here. Preferred and banks probably maybe some bonds if you get a kick out of govt debt. No TSX indexes no resources, 60% to trump land where fortunes will be made and MAGA, rest dabble in the international corruption casino.

#56 TurnerNation on 02.03.19 at 8:17 pm

“Monthly payments will be about $4,700. Adding in property tax, heating costs and insurance brings that to $5,700.”

Save the DP and rent in same area.
$4500 – grand SFH.
https://www.realtor.ca/real-estate/20204364/5-1-bedroom-single-family-house-518-merton-st-toronto-mount-pleasant-east

$5900 for a semi-castle on the Beltway. This would sell for 2 mill I bet.

https://www.realtor.ca/real-estate/20191340/4-bedroom-single-family-house-24a-oxton-ave-toronto-yonge-st-clair

#57 akashic record on 02.03.19 at 8:27 pm

#53 James

Are you drunk James?

#58 Cowtown cowboy on 02.03.19 at 8:50 pm

That’s what over a mil gets you in Hogtown…

That’s some funny caca..truly are they doomed..I’ll stick to views of the Rockies and digging up that sweet sweet bitumen!

#59 You know on 02.03.19 at 8:57 pm

Sorry Garth…its hard to believe this market has any more Legs…just Crutches from here on in…the road is more slick than ever…did I hear someone say pass the salt Duh.

#60 NOSTRADAMUS on 02.03.19 at 8:59 pm

MADNESS, 100% MORTGAGES ARE COMING HOME!
As the prices in Canada’s housing market continue to slip slide downwards, compounding fears that the multi-year housing boom is coming to an end. The country’s mortgage lenders are all frantically looking for new mortgage schemes designed specifically to help buyers with little or no personal savings inject fresh blood into the souring market. Look once again, a trial balloon for 30 year amortizations is on lift off. Next up, cash backs, teaser rates, and then 100% financing, plus a new child is born, and this is a big baby, get mom and dad into the game. The goal is not to stroke a new property boom, but rather to keep the current one alive. With T-2 and his gang gearing up for an election, and with all polls indicating that housing affordability is priority number one in the minds of a large number of younger voters. How it will be addressed will influence who they vote for on Election Day. Many voters have divided loyalties and shifting allegiances and all are willing to sacrifice their devotion to the highest bidder. Repeat, get ready for 100% mortgages, they are coming back to a bank near you. Remember the banks and other mortgage lenders have a ton of mortgages that will soon be underwater if they don’t find a way to prop up the real estate market. You heard it here first. I am predicting that the Banks will shortly be wheeling out their better, best mortgage dream scheme ever. This is how it will work. We get mom and dad into the act. All mom and dad are required to do in order to facilitate their children’s good feel real estate purchase is to deposit 10% of the purchase price into the lenders coffers, and like magic the mortgage is approved. And as always, the banks exposure is backed by C.M.H.C. meaning you the tax payer. Added bonus protection, mom and dad’s 10% cushion. To grease the wheels, mom and dad will be paid a happy day interest rate of say 3% on their deposited funds. And let’s not forget the loving feeling that money can buy, mom and dad can sleep soundly at night knowing they have helped their children get onto the real estate ladder. It all adds up to a lot of big, big wins. Big win for the lenders, big win for the children, big win for mom and dad, and the biggest winner of all, will be T-2. I can already imagine the headlines as he bangs the election drums as to how he single handily, addressed the issue of providing affordable housing. What could possibly go wrong? As the days unfold, and the election draws near, you can rest well assured these T-2 supported lender schemes of old will begin to re-surface. However, for those of sound mind, they will appear eerily reminiscing of the high-risk instruments that helped fuel the madcap property booms and busts, including bank collapses in country’s like the U.S. Ireland, Spain, and the U.K. I will leave you with this observation; there is no education in being kicked twice, by the same mule. In the land of universal deceit, telling the truth can be a revolutionary act. You can trust me as the teller of truth in the land of gypsies, tramps and thieves.

#61 dakkie on 02.03.19 at 9:05 pm

Global Real Estate From Australia To UK To Canada See Widespread Sales FALLING!

https://www.investmentwatchblog.com/global-real-estate-from-australia-to-uk-to-canada-see-widespread-sales-falling/

#62 DON on 02.03.19 at 9:15 pm

#52 Dolce Vita on 02.03.19 at 6:50 pm

You may well be correct that Gov. will try and goose RE and thus GDP to get elected. But it won’t matter.

GDP was -‘ve in the past 2 of 3 months. The psychology is decidedly negative. That’s the recipe for recession.

That whole industry is hanging on by the skin of its teeth hoping for some Lazarus style resurrection come this Spring.

It won’t happen.

Instead all we read about is larger and larger RE inventories, record decade(s) low unit sales, prices continuing to drop, people trying to dump RE assignments as fast as they can, etc.

They can goose RE all they want. It will be like:

Beating a dead horse.

Worse if a recession comes like I think it will by the end of this Qtr (acknowledged by the MSM in 2nd Qtr).
***************
Driving around today saw a couple of “development land for sale) signs.

#63 crowdedelevatorfartz on 02.03.19 at 9:17 pm

@#21 Victoria RE Update

https://www.timescolonist.com/real-estate/greater-victoria-real-estate-continues-cooling-trend-1.23621088

#64 DON on 02.03.19 at 9:17 pm

#57 akashic record on 02.03.19 at 8:27 pm

#53 James

Are you drunk James?
**********
Drunk on himself maybe

#65 Nonplused on 02.03.19 at 9:24 pm

Why not change the CMHC thing so you can get CMHC on the first $1 mil and then need 20% down on anything over? Or is that how it already works? Although I’d be thinking $1 mil is too high. So maybe 5% down for the first $750,000 (and insured) of all mortgages and then 20% down on anything above, the banks are on their own above the $750,000. That seems more fair than a cutoff where it is 100% insured below and 0% insured above.

Anyway these house prices are still super crazy. How can you have a city like Vancouver or Toronto where literally nobody can afford a house unless prices keep rising? That’s the only thing that makes it work. You buy at $1.146 million but you sell at $2.146 million. If that trend does not continue, paying $4,700/m to carry it doesn’t make sense. (I didn’t include heat and insurance because you have to pay that either way, even if it’s indirect.)

It’s inflation all the way out boys and girls and others. The only way all the debt can be repaid is if the asset values hold. Classic bubble stuff.

#66 Buyer Beware of Crybaby in Ottawa on 02.03.19 at 9:27 pm

Wake up and smell the roses. Crybaby in Ottawa is getting his clock punched this time around. Only one go at it and he has failed Canadians MISERABLY

#67 Vision on 02.03.19 at 9:30 pm

That anyone would want to spend over a million for that semi is crazy. The worst is that taxpayers will shoulder the burden (CMHC)in the event that these buyers default.
If people can’t afford to weather interest rates at 2% higher, they cannot afford the house. Debt is debt and it will not fly away.
Get out of Toronto, and live in something much nicer for the same money.
That home is not worth that money. Ugh!

#68 Alba on 02.03.19 at 9:57 pm

Are there REALLY this many people willing to form a line jumping off a cliff in blizzard conditions because everyone else is doing it?
“…buyers have been using oodles of credit, so even as the pace of sales slows, mortgage indebtedness continues to rise. Add to this an increase in unemployment, a drop in oil prices as global demand for commodities slows and a sluggish, protectionist US economy, and suddenly spending $1.14 million for half a house with a quarter-million-dollar down payment and seven-figure debt doesn’t look like such a hot idea.”

#69 april on 02.03.19 at 10:16 pm

Listen to Steve Saretsky on Howestreet.com. Cmhc, banks, Canadian bank regulator, etc do not care about first time buyers or people’s emotions, etc… doesn’t sound like the stress test is going away.

#70 You know on 02.03.19 at 10:19 pm

#60 Nostradamus take a chill pill…,make it a double

#71 -=jwk=- on 02.03.19 at 10:25 pm

@#32 LarryB
Ontario has the largest debt of any non-sovereign government in the world.

Ontario provides more services to the largest population of any non-sovereign government too.

#72 bubu on 02.03.19 at 10:25 pm

“….Dick & Jane must earn $170,000 to pull this off.
That’s seven times the national median income, and just twenty grand below the threshold for being in the top 1% of all individual earners”

That is very common for 2 professionals at the beginning of the carrier, not 1% and for sure not 7 times the median income… I’m not saying it is ok to buy a house for $1.1M with that income but let’s show less drama here….. https://www150.statcan.gc.ca/n1/daily-quotidien/170913/t002a-eng.htm

#73 Felix on 02.03.19 at 10:28 pm

“This Milkbone-loving blog …”

Eeewww! Yuck! No wonder dogs are so sickening.

Here’s a high class alternative for a superior species:

https://www.businessinsider.com/best-cat-treats#the-best-cat-treats-overall-1

And for those bored by the NFL today, a far better alternative to that sorry match:

https://www.wnypapers.com/news/article/current/2019/02/02/135799/hallmark-channel-hosts-first-cat-bowl

#74 45north on 02.03.19 at 11:37 pm

Victoria Real Estate Update: So can Canada keep tinkering with mortgage lending rules to keep the Canadian housing bubble from deflating? Those whose livelihoods depend on it certainly hope so. Garth thinks policy makers will attempt to kick Canada’s (beyond massive) debt/housing bubble problem down the road yet again by loosening mortgage lending regulations again this year.

I’m thinking the banks want the stress test:

Just listen to Dave McKay, who happens to be in charge of the Royal Bank: “We need some of this policy change, particularly the B-20 change, as we are in a highly stimulative monetary policy environment. We needed to layer on some type of policy change; now that the Bank of Canada feels more comfortable raising rates, that’s supposed to be the brake on the economy that we all like to see.”

What’s going to happen when there are large scale delinquencies on mortgages? Nobody really knows. I compare the US experience in 2006 to 2008 to the Canadian situation today . The thing in the US, was the financial industry was unprepared for the collapse of the housing market. The thing in Canada, is that the banks are prepared – they have adopted the stress test. Which the government prescribed. In the middle of this, is Bill Morneau, the Minister of Finance who has spent his life in the financial industry.

I’m thinking looser lending regulations would be a gift to the opposition parties. The message would be simple – it’s stupid.

Garth has some pretty good stuff today:
For these guys ‘long-term’ means after lunch.
Tinkering with the mortgage rules would put them on the receiving end of this stuff for another nine months.

#75 KarlB on 02.04.19 at 12:07 am

“Voters crave homes and since prices haven’t tumbled substantially…”

I’m confused (or dumb). I thought most major markets in Canada (Vancouver, Toronto, Calgary, …) were in the dumps, with average single detached home prices way down and listings way up.

#76 Game Over on 02.04.19 at 12:09 am

I think from what I am reading online and what I am actually seeing in the market, at least in the east end GTA, are two different things. Inventory is selling quick and I am even starting to see sold over asking signs again. I know the open houses are full because I am going to them! God knows I love this blog, but we have been wrong about housing for a very long time. Given the low rates and the persistent lust for housing, there is a very good possibility that the feds will be able to relight the fire in the market because the central bank is totally powerless to actually curb the debt binge. We have crossed the threshold where debtors are in the drivers seat, not anyone else. People who said they could never raise rates were partly true because the BoC couldn’t even get rates to neutral before they were forced to pump the brakes. And now numb nuts Trudeau wants to goose it even further. Good luck..

#77 Ponzius Pilatus on 02.04.19 at 12:23 am

#29 akashic record on 02.03.19 at 4:02 pm
#3 Trumpocalypse2019 on 02.03.19 at 2:34 pm

Britain is preparing for Brexit catastrophe and the Royals are seeking bunkers for shelter.
————–
First things first.
They are also seeking a new butler.
Only in Britain, pitty.

#78 Stan Brooks on 02.04.19 at 1:54 am


0/40 was in place for too brief a period to skew the market. It was low rates that were the consequential policy response to the GFC. – Garth

The very existence of CMHC encouraged the banks to keep lending, so instead of credit contraction and deleverage as in US we got ultra-over-leverage and ultra loose credit, credit boom that led to absolutely insane house prices.

By definition everything that CHMC and private ‘insurers’ ‘insure’ /backed by tax payers is subprime stuff, if the risk was standard they would not need insurance in first place.

If not for CHMC the house prices in GTA/Vancouver would have been 1/3-1/4 from current. The economy would have been in much stronger shape as capital would have moved from real estate to tech as it did in the US/you can see the results.

70-80 % of the loans from the last 10 years would have never been underwritten.

Now as a result we now face humongous debt, mortgage risk offloaded to taxpayers, absolutely idiotic house prices, constantly increasing taxes, including property tax and roaring inflation.

All to be paid by the working taxpayers.

The bad news is that we can not really allow for it/the RE/ to deflate in any shape or form as there is nothing else left in terms of economy.

Literally nothing except some resources

#79 Hamsterwheelie on 02.04.19 at 7:06 am

We leveraged up from first time buyers to 4 homes using all the perks banks were willing to give from 2011-16 and then started selling in 2017.
We’re down to 2 solid Victorian homes with 6 units and one unit we live in. Very moderate incomes on this self employed couple – would bet our tenants would get approvals we can’t at banks. (Whereas we mostly worked with private brokers, B-lenders, private lenders)
The reason we jumped in so hard was based on high-ish returns on purchases of lovely homes, in the core with room to up the rent over the years.
First rental house was purchased in 2012 for $130,000 and rented out as 2 units for $850 each – now the mortgage is $100,000 and brings in $2600/mo. Its a nice place, we lived in it for a year (and no, we didn’t sell it for the cap gains, planning on another 10 years with it)
Houses for us have been a jump into a different investment class than we could have ever achieved with our poverty line incomes – we don’t have kids and were able to do a load of the work ourselves in designing & fixing these houses up over the years.
Given what’s changed out there financially I think we’ll continue to get our pick of quality renters willing to pay for our units but not be able to aquire any more homes to do this with. We’re ok with that, It was all immensely stressful and we’re grateful for what we have.
I have trouble wrapping my head around a mill plus mortgage that isn’t a 4+ unit rental – just a lil’ house in Davisville. I worked designing gardens for many of these homes and folks seemed house poor 10 years ago (can we get a better price on the asphalt driveway, can I use cedars to block out my neighbours as a fence is too expensive etc) I suppose that was just before everyone started using the houses as ATMs.
Good luck – truly- getting continuous returns on a small lot unless you happen to be in a developers path to building a condo.
Think alternatively, work less not harder, for your house should be working for you.

#80 MF on 02.04.19 at 7:07 am

#67 Vision on 02.03.19 at 9:30 pm

-That’s easy:

1) because they believe the price will be 2 million in the future

2) they believe they can rent it out for “income”

3) or they want to demolish it and build something else to sell for a profit.

4) It could be a couple with a larger income who believe interest rates are going nowhere fast and can carry the monthlies easily (a good bet). The GTA is where the jobs and lifestyle are so people are willing to spend to not have to sit on the 401 for 3 hours a day.

Same old motivations again and again..and unfortunately, these people have been correct for decades now.

You are right about one thing though: get rid of the CMHC. Totally worthless and needs to go. A big cause of our housing bubble.

MF

#81 50 YEARS OF MAPLE LEAF INCOMPETENCE! on 02.04.19 at 7:53 am

Garth, if you will permit, I’d like to reach out to the suffering today.

Tragically, millions of Toronturds and GTAholes are waking this morning in a profoundly confused emotional state.

The news everywhere is about a team that has just won a Championship that really matters. One that happened in your lifetime, not when your parents or grandparents were children and tv was black and white and the internet did not even exist.

Not just one Championship, but 6 in less than 20 years! About as far as you can get from 0 in 52 years.

That’s what well-managed teams in world class cities do. Rinse and repeat.

They don’t gouge and manipulate their sucker fans for decades, laughing all the way to the bank.

Toronto? MLSE?

So sad. So delusional. Just like their real estate bubble, totally detached from reality.

To any locals there in distress, please do not call 911 or go to the Emergency Department. They are already very busy dealing with the massive surge in violence and drunk-driving crashes there.

Instead, pick up the phone and call a local realtor. They are sad and lonely too, and will be happy to reassure you that it is still different there.

For a small fee.

#82 David Driven on 02.04.19 at 8:12 am

Australian home approvals collapse as credit tightens.

https://uk.reuters.com/article/australia-economy-housingstarts/australian-home-approvals-crater-as-credit-tightens-idUKL3N1ZZ0YW

Will Trudeau head fake the market and restart debt purgatory as a cheap vote buying tool ?

#83 crowdedelevatorfartz on 02.04.19 at 8:12 am

@#71jwk
“Ontario has the largest debt of any non-sovereign government in the world.”

++++

I had to check it for myself.
Ontario is screwed. Canada is screwed.
I’m investing in cat food stocks.

https://www.fraserinstitute.org/article/ontario-vs-california-whos-really-debt

#84 Remembrancer on 02.04.19 at 8:15 am

#76 Game Over on 02.04.19 at 12:09 am

By east end GTA do you mean Kennedy Road or Durham Region? :-)

Assuming the latter, the east has been historically (significantly) cheaper and at least some of these sales are likely otherwise west-end or Richmond Hill/Markham/Aurora bound money who have finally given up and looked past regional bias to the east along the 401 or 407 corridors…

#85 Godth on 02.04.19 at 8:45 am

#51 Long-Time Lurker
i know, i know, we’re on the gold standard, banks lend deposits, and the government operates just like your household.
we should use tally sticks.
https://www.bbc.com/news/business-40189959

#86 Figure it Out on 02.04.19 at 8:56 am

“Ontario has the largest debt of any non-sovereign government in the world.”

Italy, for one, has us beat handily. Are they sovereign if they can’t print their own money or set their own budgets? And the Fraser Institute ignores California’s huge underfunded public pensions mess. Not that I’m saying Ontario is in a good place. But calling it the dirtiest shirt in the hamper is a bit simplistic, IMHO.

#87 Godth on 02.04.19 at 9:19 am

#51 Long-Time Lurker
since we’re going to use tally sticks think about what a rare commodity willow will become.
http://www.usdebtclock.org/

so there’s you’re hot stock tip.

#88 dharma bum on 02.04.19 at 9:28 am

As long as the debts (i.e., mortgages) keep being serviced, the lending will continue unabated, and house prices will be relatively stable (i.e., no crash).

However, if (when?) the day comes that the economy falters to the point that job losses become rampant, those debts will go into default, and the housing market will be flooded with power of sale properties.

Then the price of houses will go down.

As long as people can cover their “monthlies”, there will be no change.

Investment portfolios? HAH! The average Canadian knows not or cares not of such things.

We are a rat race hamster-wheel spinning debt slave species.

#89 crowdedelevatorfartz on 02.04.19 at 9:44 am

@#82 David Driven
“Will Trudeau head fake the market and restart debt purgatory as a cheap vote buying tool ?”

+++++
He may toss fiscal prudence to the wind to get re-elected but it’s just delaying the inevitable.

Rising US rates, a slowing Canuck economy, a falling Canuck buck, … and the Libs want to make it easier to get financing for the house horny Mils…..
Eventually someone will have to pay the piper and it probably wont be boomers.
Good luck with that.

#90 crowdedelevatorfartz on 02.04.19 at 9:55 am

Hey Flop.
This could get interesting or it could be a scam to pump the price.

6349 Elm St in Vancouver.
Originally purchased in Jan 2016 for $11,388,000.00

To be offered in an unreserved auction Feb 8th

#91 Midnights on 02.04.19 at 10:01 am

Pass this memo to Trudeau lol…
https://www.armstrongeconomics.com/world-news/climate/un-admits-paris-accord-will-never-work/

#92 tkid on 02.04.19 at 10:03 am

Would I be a bad person if I liked the house (but not the price)?

#93 JB on 02.04.19 at 10:10 am

#72 Smoking Man on 02.03.19 at 12:30 am

Got 20gs. On La.
My logic. The liberals have been losing so much since 2016 they are due a meaningless win.

Dr Smoking Man
PhD Hetdonomics.
……………………………………………………………….
WTF Smoking Man, do you know anything at all about football? Thanks for being such an uneducated sports better. Makes life for the rest of us so easy when suckers like you make dumb bets.
Pats win, Rams loose!
Ha, ha,ha Thanks for contributing to my investment funds.

#94 LL on 02.04.19 at 10:13 am

…”So these guys need to have $230,000 in cash, plus another $39,000 for closing taxes in order to buy, with a mortgage exceeding $900,000. Monthly payments will be about $4,700. Adding in property tax, heating costs and insurance brings that to $5,700. The allowable GDS (gross debt service) ratio is 35%, so Dick & Jane must earn $170,000 to pull this off”…

It’s completely ridiculous how RE has become!

#95 TRUMP2020 on 02.04.19 at 10:24 am

SO I SHOULD KEEP MY HOUSE…….

Another year or 2 and profit off the rising prices??

#96 Godth on 02.04.19 at 10:36 am

#89 crowdedelevatorfartz
i’ve started hoarding pennies for the copper, nickels for the nickel, dimes, quarters, and loonies for the silver and twoonies for the silver and gold. at least when it all come a cropper these commodities will be worth something.

#97 LL on 02.04.19 at 10:47 am

…”Alberta’s Jason Kenney cozying to realtors and vowing to trash the stress test”…

No need to stress test anymore..they cannot rise interest rate high as they thought.

#98 For those about to flop... on 02.04.19 at 11:18 am

Crowdie04.19 at 9:55 am
Hey Flop.
This could get interesting or it could be a scam to pump the price.

6349 Elm St in Vancouver.
Originally purchased in Jan 2016 for $11,388,000.00

To be offered in an unreserved auction Feb 8th

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

Hey Crowdie,here’s a recent post I did on this one…

M44BC

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

Pink Snow falling in Vancouver.

I’ve been calling this case The Nightmare on Elm street.

This case is more in line with this blog’s theme of blood drops in the snow for Pink Snow, blood splattered pumpkins for Pink Pumpkins and the rest of the scenarios I set up to capture people’s imagination and attention.

It’s back on the market today, and since they removed it, the luxury market has only gone one way.

South.

The details…

6349 Elm st, Vancouver.

Paid 11.38 January 2016

Originally asking 12.38

Now asking 10.88

Assessment 2017 9.23

Assessment 2018 8.45

This bomb has the potential to blow 2 million dollars out of their hands very easily.

Assessment just dove a bunch.

Asking just dove a bunch.

No more prawn sandwiches for lunch…

M44BC

https://www.zolo.ca/vancouver-real-estate/6349-elm-street

https://www.rew.ca/insights/92549/6349-elm-street-vancouver-bc

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

#99 marco on 02.04.19 at 11:25 am

Unbelievable!

https://www.marketwatch.com/story/crypto-exchange-customers-cant-access-190-million-after-ceo-dies-with-sole-password-2019-02-04

#100 HowDeepThePain? on 02.04.19 at 11:31 am

…”Alberta’s Jason Kenney cozying to realtors and vowing to trash the stress test”…

No need to stress test anymore..they cannot rise interest rate high as they thought.

+++++

Why do people say we should have had the stress test years ago to avoid the crazy inflated house prices. But now want to remove the stress test if rates aren’t rising?
I don’t get it.

#101 Bigriders nonno on 02.04.19 at 11:32 am

DELETED

#102 Stan Brooks on 02.04.19 at 11:33 am

#88 dharma bum on 02.04.19 at 9:28 am
As long as the debts (i.e., mortgages) keep being serviced, the lending will continue unabated, and house prices will be relatively stable (i.e., no crash).

Not really, it is a re-enforcing feedback loop.

You need more debt and low rates just to keep somehow the ‘economy’ going, the more debt you add, the more unlikely is to be able to repay it, so the more severe the crash.

As long as people can cover their “monthlies”, there will be no change.

The longer people try to hang on to their houses, the lower their other consumption will be, so the economy will keep shrinking.

At some point banks will stop lending, no matter what as they will realize that the ability of/probability for the government to cover the risks for them will be very, very low.

We basically will default or uber-inflate.

————————————
#89 crowdedelevatorfartz on 02.04.19 at 9:44 am

Rising US rates, a slowing Canuck economy, a falling Canuck buck, … and the Libs want to make it easier to get financing for the house horny Mils…..
Eventually someone will have to pay the piper and it probably wont be boomers.
Good luck with that.

Yes, the ultimate goal is to avoid paying for somebody else’s follies and stupidity.

My conclusion is that it is best to cut any exposure to the economy and any liabilities whatsoever in order to avoid it/being the payer/holding the bag/be without a chair/ when the music stops, as it will stop.

#103 NoName on 02.04.19 at 11:38 am

I kind of knew number will be big but i didn’t except to be this big

https://www.cbsnews.com/news/copmanies-spent-record-1-trillion-buying-back-their-own-stock-this-year/

#104 Remembrancer on 02.04.19 at 11:48 am

#43 Interstellar Old Yeller on 02.03.19 at 4:59 pm

Garth’s sample is easy to find on realtor.ca, definitely not a starter neighbourhood nor starter house that one. A lot of that $1.2M that isn’t paying for the HGTV wayfair.com reno is paying for the postal code, certainly not the shared drive and front door parking pad and its only 1/2 a house like Garth says…

#105 Godth on 02.04.19 at 11:54 am

#51 Long-Time Lurker
what do any of us have to loose when we’re all such lose geniuses?
play the game to win. tell the loosers to stick it you know where…the hot stock tip.

#106 Remembrancer on 02.04.19 at 12:05 pm

#103 NoName on 02.04.19 at 11:38 am
I kind of knew number will be big but i didn’t except to be this big

https://www.cbsnews.com/news/copmanies-spent-record-1-trillion-buying-back-their-own-stock-this-year/
———————————————————-
Then there the ones borrowing to do buybacks…

#107 The Smoker on 02.04.19 at 12:25 pm

https://nypost.com/2019/02/03/trump-predicts-patriots-victory-praises-brady-and-belichicks-leadership/
He must be confused, because even Trump predicted a Patriots win. Never bet on what the Smoker says, because he is consistently wrong.

#108 Duke on 02.04.19 at 12:25 pm

#98 For those about to flop… on 02.04.19 at 11:18 am

6349 Elm st, Vancouver.

Paid 11.38 January 2016

Originally asking 12.38

Now asking 10.88

Assessment 2017 9.23

Assessment 2018 8.45

This bomb has the potential to blow 2 million dollars out of their hands very easily.

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

Losing 2 mil is very optimistic prediction. I would say it will be at least 3 mil, and even 4~5 mil is very possible. Whoever owns this property, it will be a bloody pink avalanche.

#109 jess on 02.04.19 at 12:39 pm

fugly :
how many more construction issues like opal tower downturn in aussie real estate prices + bad construction

“construction boom” had caused people to try and get buildings on the market as quickly as possible — and that there was a “high risk” many had been “cutting corners” as a result.

it’s a spectacular fall from grace for a residential block which was marketed as luxury living within Sydney’s Olympic Park.

But just four months after it was opened, the cracks literally started to appear in the concrete panels of the structures “sky garden” on the 10th floor.

The sound was so loud it was heard by terrified residents, and the cracking was also caught on the building’s CCTV cameras.

#110 not 1st on 02.04.19 at 12:52 pm

Garth, I hope you have thought long and hard about your financial recommendation because junior is giving away the kitty faster and faster. There wont be anything left here but a giant debt chasm.

https://globalnews.ca/news/4921639/canada-to-host-lima-group-meeting-as-crisis-in-allies-meet-in-ottawa-to-discuss-crisis-in-venezuela/

#111 LL on 02.04.19 at 12:54 pm

# 102

…”The longer people try to hang on to their houses, the lower their other consumption will be, so the economy will keep shrinking..”

I don’t see any shrinking economy..peoples travel all around the world, cuise ship are full, etc.., etc.. Shrinking economy? Not with the easy credit!
Maybe we will see more bankruptcy!

#112 jess on 02.04.19 at 1:00 pm

what is the difference between a pool then and a “dark’ pool today?

The Pecora Investigation was an inquiry begun on March 4, 1932, by the United States Senate … as the underwriting of unsound securities in order to pay off bad bank loans, as well as “pool operations” to support the price of bank stocks.

========
2018
Securities and Exchange Commission members unanimously approved rules Wednesday that force trading venues known as dark pools to disclose more data and reveal potential conflicts of interest. The SEC proposed the regulations — some of which resemble requirements for public stock exchanges — in 2015 after firms including UBS Group AG paid tens of millions of dollars to settle allegations that they allowed practices that benefited high-frequency traders without properly informing other clients.(bloomber)

But how old is the data?

The Silence on Wall Street’s Dark Pools Is Deafening

By Pam Martens: January 21, 2019 ~

http://wallstreetonparade.com/2019/01/the-silence-on-wall-streets-dark-pools-is-deafening/

https://www.investopedia.com/articles/markets/050614/introduction-dark-pools.

=====
Steven Maijoor, Chair, said:

“Today’s proposal aims to alleviate concerns about an unlevel playing field developing regarding tick sizes between third-country and EU trading venues. It also ensures that the applicable tick size in the EU is calibrated in a more convergent way.

“The proposed amendment is also relevant in the context of the United Kingdom’s withdrawal from the EU, which may result in a significant increase of the number of equity instruments for which the most liquid trading venue is located outside the Union. It will provide EU national competent authorities with adequate tools to address, at least with respect to the tick size regime, the possible issues that might arise in this context.”

Next steps

ESMA has submitted the final report to the European Commission which now has three months to decide whether to endorse the proposed amendments to RTS 11.

#113 Blacksheep on 02.04.19 at 1:18 pm

Stan # 102,

“My conclusion is that it is best to cut any exposure to the economy and any liabilities whatsoever in order to avoid it/being the payer/holding the bag/be without a chair/ when the music stops, as it will stop.”
—————————————–
With a stance like that, you must be a prepper Stan?

This blogs anonymous, so you can fess up.

I should add, there’s nothing wrong with a little prepping as long as it’s done reasonably and not life consuming. I have heard little hints here and there from a few of the dogs that I bet are preppers.

Maybe it’s time for Garth’s generator selling website to start up again : )

We live in uncertain times, having little self support system is just being prudent, especially if you have family and a little advance warning.

#114 r h on 02.04.19 at 1:48 pm

JESS @ # 112
That is a frightening parade of information and conclusions I am sure most of us were unaware of, but had/have deep suspicions of trading manipulation.

#115 Lorne on 02.04.19 at 2:00 pm

When will the savers ever be rewarded? You know, those people who realize paying $1 million for a shack in East Van makes no sense so they sit patiently and wait for the insanity to end….only to have government more concerned about the those who showed no common sense whatsoever and contributed immensely to the “bubble”?

#116 kommykim on 02.04.19 at 2:19 pm

RE:#33 Damifino on 02.03.19 at 4:16 pm
I wonder what are the odds they’ll announce moving the TFSA contribution ceiling back to $10K? That would be a real vote-magnet.

————————————————-

Maybe for Blog Dog voters but not for the average Canadian who doesn’t fully utilize their TFSA at all.

#117 Smartalox on 02.04.19 at 2:21 pm

REBGV numbers for Jan 2019 (Sprry for Long Post):
*** Detached LISTINGS EXPLODE***
*** Detached Median Sale Prices DIVE ***
Comparing Median Sale Prices ($000’s) for detached, Jan 2018 vs. Jan 2019:
City Jan 2018 Jan 2019 Difference
Burnaby 1650 1440 -13%
Coquitlam 1265 1090 -14%
Delta NA NA #VALUE!
Maple Ridge 879 795 -10%
New West NA NA #VALUE!
N. Van 1637 1618 -1%
Poco NA NA #VALUE!
PoMo NA NA #VALUE!
Richmond 1760 1448 -18%
Van East 1596 1400 -12%
Van West 3600 2712 -25%
West Van NA NA #VALUE!
Average 1770 1500 -15%
(Areas that are ‘NA’ have less than 20 sales, and therefore lack statistical significance)

Comparing the same, (median price $000’s) from Dec 2018 to Jan 2019 (1 month):
City Dec ’18 Jan ’19 Difference
Burnaby 1489 1440 -3%
Coquitlam 1252 1090 -13%
Delta NA NA #VALUE!
Maple Ridge 870 795 -9%
New West NA NA #VALUE!
N. Van 1731 1618 -7%
Poco NA NA #VALUE!
PoMo NA NA NA
Richmond 1428 1448 1%
Van East 1399 1400 0%
Van West 3137 2712 -14%
West Van NA NA #VALUE!
Average 1615 1500 -7%
Conclusion: Some of the best Real Estate in the region is down sharply, year over year. In many cases, a substantial portion of that decline in value has happened in the past month.

Sales are down, but predictably, listings are UP. WAY. WAY UP. Here’s a summary of the monthly percent change in listings for the past few months:
Aug-Sep Sep-Oct Oct-Nov Nov-Dec Dec-Jan
Bby 55% 8% -54% -42% 184%
Coq 31% -31% -18% -53% 216%
Del 68% -24% -31% -67% 394%
MR 12% -1% -23% -60% 200%
NW 53% -2% -31% -48% 163%
NVn 167% -27% -43% -67% 418%
PCo 0% -19% -17% -58% 147%
PMo 159% -36% -29% -70% 467%
Rmd 21% -18% -25% -53% 331%
VEst 30% -12% -25% -59% 220%
VWst 26% -2% -35% -47% 231%
WVan51% -11% -32% -52% 240%
TOTAL42% -14% -32% -55% 251%
Conclusion: listings are surging into the market on a 90-day cycle, with big increases one month followed by deep cuts in the third month, as stale listings expire. Then the cycle repeats, as stale properties are re-listed. What’s different in Jan 2019 is the size of the surge in listings. Doubling. Tripling. QUADRUPLING.

As prices fall, competition surges – with more sellers desperate to unload their investment properties.

The spring market is poised to be a bloodbath, in two parts:
January to March – sales stay low, prices fall further.
April to July – More listings, more pressure on prices.

Note: July 1 2019 = BC Assessments for Jan 1 2020.

#118 Ubul on 02.04.19 at 3:02 pm

#115 Lorne on 02.04.19 at 2:00 pm

When will the savers ever be rewarded?

Assuming that savers should be rewarded, who would do the rewarding and how? The government, market?

#119 PastThePeak on 02.05.19 at 2:49 pm

#115 Lorne on 02.04.19 at 2:00 pm
When will the savers ever be rewarded?

++++++++++++++++++++++++++

I would recommend you take a more active approach to your financial well being than “waiting to be rewarded”. I don’t mean that as an insult – I understand what you mean. But the neither the government nor the market provides any guarantee.

Gov’ts just want to get elected, so if more of the population want policies that enable more debt, that is what will happen.

You will be rewarded IF there every is a significant correction in either housing or the economy. Such an event “seems” inevitable (some day:), but I wouldn’t want to plan on it. Could start later this year – or the can could be kicked down the road for years with enough policy changes.