Boom in the gloom

Let’s connect some dots, as we await tomorrow night’s apocalyptic whatever.

First: interest rates are insane. There’s now a 1.29% variable-rate mortgage available in Ontario. In just a matter of months the inflation rate will be higher. So it’s free money, Bubba.

Second: cheap cash greases house prices. People can borrow more on the same income, inflating the cost of real estate, as no other single factor can. Household debt goes up, property values swell while the monthly mortgage burden can actually go down. Look at this RBC chart – home loan financing costs have fallen even as people pay 15-20% more for a house.

Third: the virus has been wicked awful, of course, but perhaps government overreacted. It’s why we now have the biggest federal deficit on the planet and the last finance minister slunk, moaning, back to Toronto.

Check out this conclusion reached by bank economists on Bay Street: Ottawa gave families affected by the virus more than twice the amount of money the bug cost them. “Overall, Canadian households received more money ($56 billion) from government aid programs such as CERB and other transfers in the second quarter than they lost in wages and salaries due to the pandemic ($23 billion).”

Wow. In the middle of a pandemic recession, household income actually rose – by a huge 11% – because of government largess. That made making mortgage payments a whole lot better. It helped create what’s being called a “boom in the gloom.”

Here’s some evidence you might find interesting. The site Numbeo tracks house prices around the world, measuring affordability against local incomes. Below are the Top 10 cities in North America, ranked by their price-to-income ratios. Not good.

By way of comparison, the price-to-income ratio for Miami is 5.7, while it’s just 3.8 for Chicago and 2.98 for Los Vegas. If you really want a deal, go to Dallas (2.1), Buffalo (1.97) or Detroit (1.26). The point is Canadians are paying some of the highest real estate prices in the world thanks in large part to two things that will not last – excessive government spending and crashed interest rates.

Bond yields started to rise in recent days. Canada’s five-year government bond yield is the stiffest in several months. Ditto with US Treasuries. Our federal government is spending so much money the central bank will have to issue endless bonds to cover it and at the same time buy up existing debt to dampen market forces and keep rates depressed. Since March the Bank of Canada has snapped up 80%, so things are getting extreme. The situation cannot and will not last.

Second, a Biden win on Tuesday (or whenever a winner emerges) will mean less US economic activity as Covid is attacked, and more government spending to compensate. The deficit goes up. More bonds are issued. Higher rates. Our bank follows suit (no choice).

Now, what about more subsidies to Canadian households?

We’ll get the first numbers from Chrystia at the end of this month. Included in the economic statement will be a package of measures made necessary by the second wave of the virus. After that there’s word $20 billion in permanent spending will be added to finance pharmacare and a national child care plan.

But wait. Don’t we have a $340 billion annual shortfall already? Isn’t this, like, seven times the huge hole Harper had to dig to get us out of the 2008 crisis? Aren’t there consequences?

You bet. And connecting to this dot should make it clear excessive, structural spending will inevitably be inflationary so when the virus starts to fade in 2021 interest rates will rise regardless of what the central bank does. Inflation, after all, makes bonds worth less – so the market adjusts prices to reflect that, forcing yields higher.

So, yes, real estate has been on a tear since the virus came. Yup, it’s nuts since we’ve been in a recession and a public health crisis with double-digit unemployment. Almost 13% in Toronto right now. Over 11% in Vancouver. And apparently nobody in Alberta works any more. In fact real estate, like bonds, stocks, fine art and other assets are in bubble territory because of central banks actions in the age of Covid.

None of this is normal. Or permanent. Asset price inflation is dangerous, and once recovery comes The Authorities will bring the hammer down.

This would be a swell time to get out of debt. Unlike everyone else on your street.

178 comments ↓

#1 Vanreal on 11.01.20 at 1:34 pm

So as interest rates begin to normalize, won’t that cause stock prices to decrease as well?

Not necessarily, if GDP rekindles. In any case, a balanced portfolio would mitigate this risk with a rise in fixed income prices (preferreds) and yields (bonds). – Garth

#2 I'm out ... on 11.01.20 at 1:43 pm

of debt.

#3 We'll all be surrey in the end on 11.01.20 at 1:43 pm

Honolulu and Surrey alongside each other. Sunny skies and big surf vs gray skies and drug needle turf. Who ever knew Surrey could be up there.

#4 NSNG on 11.01.20 at 1:54 pm

So Trudeau says freedom of speech should have it’s limits and almost ZERO Canadian news outlets are talking about it? The rest of the world are putting out more outrage about what our PM said than any Canadian news outlet

#5 pPrasseur on 11.01.20 at 1:56 pm

“There’s now a 1.29% variable-rate mortgage available in Ontario. In just a matter of months the inflation rate will be higher.”

Home prices around Montreal are exploding, so I’d say inflation is already here and has been for quite a while.

Hope you don’t entertain the fantasy that inflation will be distributed equaly across the board.

#6 Doug t on 11.01.20 at 1:58 pm

The End is nigh

#7 Sail Away on 11.01.20 at 2:15 pm

Wow, Surrey is more expensive than Honolulu.

And as a bonus, you’d get the Bacon gangsters and Ponzie for neighbours. Sign me up!

#8 sue on 11.01.20 at 2:16 pm

So much for the virus bursting the bubble. I’ve been waiting for years and I honestly believe that Canadians will just keep paying through the nose to be a homeowner. They will pack their house with 3 crackhead tenants before they would think of selling. It’s a cult in this country. There is no inventory, it’s just so aggrivating.

#9 Leftover on 11.01.20 at 2:18 pm

2021 looks precarious. The bond market certainly won’t cooperate and, other than housing, there’s nothing left to tax in Canada.

Could this be the moment that principal residences finally get treated like the financial assets that they’ve become?

#10 Felix on 11.01.20 at 2:18 pm

Thank you for this instructive photograph today, an example for many dog worshippers to follow.

Encouraging canines to cannibalize themselves is a very practical and efficient method, with a low environmental footprint, to get rid of that useless, dogawful species.

(And the low IQ humans who worship mutts can just turn their attention to Bitcoin and gold. Their gene pool will then also be exterminated eventually. Win-win)

A highly commendable recommendation shown today.

#11 truefacts on 11.01.20 at 2:21 pm

Garth,

Not trying to be a pain (although perhaps I accomplish it without trying), but with your B&D portfolio recommendations, don’t stocks fall as interest rates rise (as lower interest rates were the reason stocks shot back so quickly from March)? I mean aren’t stocks already priced pretty high, so even with robust GDP growth, is it not reasonable to expect them to be repriced down?

Then bond prices will fall as rates rise (I know, short duration, but still…isn’t straight cash better right now?).

Rate-reset preferreds should rise as interest rates do, but being such a small overall allocation, can if offset losses in other areas?

Buy and hold seems okay for the long-term, so I tend to do very little, but rising interest rates is a high hurdle for most investments to clear – your thoughts???

#12 Stan Brooks on 11.01.20 at 2:21 pm

Hahaha,

Stupid brain-frozen idiots.

Brampton on par with Honolulu and ahead of San Francisco, the tech capital of the world.

1.29 % variable rate mortgages?

Let me guess: as there is demand for ‘safe’ government bonds at 0.5 %?

Bhahahahahahhaa

Opening a new bottle of Jack to commemorate that.

Repeat with me: stuuuuuuuuuuuuuuuupid.

We need no hyperinflation, the destruction of the sh..ty currency is already here.

Cheers, stupid.

#13 Northshore guy on 11.01.20 at 2:24 pm

BoC is buying bonds minimum of 6 billion per week to depress rates.
Is there a ceiling on how much they can spend? If yes then how can Tiff guarantee low rates for years to come like he did the other day?
Btw was Tiff realtor before he became BoC boss lol

#14 Ace Goodheart on 11.01.20 at 2:28 pm

Looks like Trudeau and Freeland have successfully devalued our currency.

The value of a country’s currency is set by the amount of tax that can be collected to pay interest and principal on the national debt.

There is no way they can tax us out of the hole.

Look what happens when countries print large amounts of their own currencies and flood money markets.

You get rapid inflation.

That is about to happen here in Canada.

#15 Pete on 11.01.20 at 2:31 pm

Only worked 3 months since April 2019. A previous employer that I left voluntarily 4 years ago reached out with a short-term, full-time position. I accepted. They could’ve added the new responsibilities on anyone in the company, but they made a position just for me. Full of gratitude. There are good employers out there. Christmas won’t suck this year.

#16 NoName on 11.01.20 at 2:34 pm

i was watching early woting map, my my everithing is blue. even texas revert to pre 80 condition, of woting blue…

Press play

https://www.youtube.com/watch?v=GDKxS1Nz74k

#17 Andy on 11.01.20 at 2:35 pm

Curious about the data – does the price-income ratio refer to household income (ie possibly two people) or individual income? From what I read about prices in Van and Tor, I am guessing it is household?

#18 Jackinthebox on 11.01.20 at 2:35 pm

Wait. Didn’t the bank of Canada say they won’t raise rates until 2023? I don’t see rates rising that fast Garth. It will take years…

#19 Hans on 11.01.20 at 2:49 pm

Stupid question…

Inflation will force interest rates higher which will hurt housing as an asset class. But inflation should also inflate the prices of hard assets, housing included. Which force will have a greater effect? I get that housing is already inflated, but as we have seen recently, the starting point for the asset class makes no difference when govts intervene. So how does one play this?

#20 Handsome Ned on 11.01.20 at 2:56 pm

#3 we’ll all be surrey in the end

The joke in Vancouver goes: What do you say to a Surrey man wearing tie? How do you plead?

#21 mark on 11.01.20 at 2:57 pm

So, your projecting at some point the bond market blowing up and prices crashing sending yields through the roof? Strategy is??? Why would you sit in any bond fund when we are looking for the bottom to fall out. Ya Ya reduces volatility, provides a little income?

As a side note Winnipeg hospitals are now overrun and ICU full, there in code “red”.

https://winnipeg.ctvnews.ca/how-winnipeggers-are-feeling-about-code-red-restrictions-1.5169406

#22 ElGatoNerodeYVR on 11.01.20 at 3:01 pm

#3 We’ll all be surrey in the end on 11.01.20 at 1:43 pm
#XYZ And all other Surrey bashers.
========
I’m not usually the one to argue online with random strangers however I feel compelled to post something in response.
I feel that a lot of up you haven’t ventured South of Fraser River in decades and think that Surrey is defined by Whalley ,Scott Road @ 92 and parts of Newton. Surrey is a lot more then that and majority of it is actually a lot nicer than people think ( Fleetwood , Clayton , South Surrey …). What people like you do is the same if someone goes into the East Vancouver area along Hastings between PNE and Carral and makes their impression based on that. Surrey has evolved significantly past those old days and except some select areas with big city problems it is quite nice,safe and the only city with growth potential as it is really where people who work for a living here in the GVA live.
This attitude is what creates a lot of problems as local governments continue to sink transportation money into Vancouver instead of realizing that speeding infrastructure money to connect “The Valley” would deliver better results. Also a lot of people of questionable financial accumen buy into the same thinking and continue to pile up in super-overpriced already tiny boxes in the sky driving prices even further up instead of logically looking at what Surrey has to offer. Instead Surrey gets to develop the overpriced South Surrey area skewing numbers like the above.
On a separate note averages are never a good comparison in these sort of analytics , median should be used instead for a better picture.
And last I went to Honolulu a couple years back and if you think GVA has a homeless problem you haven’t seen nothing yet ,try it.

#23 Nottawa Housing Bust on 11.01.20 at 3:04 pm

How long until we have a currency crisis. How is it the in the new MMT world, a small country like Canada can borrow 340 billion and possibly more in one year, and our bond market not move.

Even if the GoC were to continue bond buying indefinitely, wont other countries just refuse our currency (similar to Venezula, or Zimbabwe). Why would you trust CAN fiat, if we issue 100-200 billion of “made up money” a year.

Something doesn’t not smell right. Harper/Obama went a tenth deep in debt in 2008, and markets were worried. Are they numb to the consequences now? Maybe we have broken free from the laws of Economics.

#24 Diamond Dog on 11.01.20 at 3:05 pm

#1 Vanreal on 11.01.20 at 1:34 pm

It’s all about earnings. High unemployment won’t be kind or gentle on GDP. We can expect, because of U.S. government responses or lack thereof and lags, Q4 and Q1 to be a disaster. We can hope Q2 will see pent up demand and economies will ignite as the northern hemisphere warms again with a vaccine that hopefully offers something better than 60% efficacy, but there will be a percentage of the population that is financially wiped out. Bankruptcies will be the obvious number to watch going forward and there will be inflation next year I would think, as there will be less competition from bankruptcies.

We can start to expect some currency disruption as well from fiscal spending disruption world wide next year. Biden should win and the Dem’s should win all three houses, but we could see a constitutional crisis before it comes to pass which would roil the markets in November and the question of the scale of mail in ballots will be… that’s a wild card that will effect some states. I don’t think anyone knows how that will play out but its impacts could be grossly underestimated right now.

I can say definitively that Trump’s handling of the pandemic is the worst thing you can do for the economy going forward. We think shut downs are bad… to do nothing to avoid shutdowns i.e. herd immunity is to ensure that hospitals across the U.S. will become overwhelmed with the infected forcing state governors to react. I think this will happen in the majority of states now whether Biden wins or not. Biden won’t take power until at least January 20th. There will likely be somewhere between 150,000 and 200,000 cases a day in the U.S. by then. Investors and lamen alike need to know what this means.

We are looking at somewhere between 9 to 12 million new reported cases between now and Jan 20th in the U.S. . Factor in lags and time it takes for a Biden government to gear up personnel and it will be Feb before we see a reasoned response that may not impact the numbers until March or April. We are looking at a rough winter no matter what happens now economically and socially. It’s difficult to see how the markets will retain their current valuations through this period, but it remains to be seen. A Biden win, smart messaging and stimulus could be all it takes potentially… but earnings have to come from somewhere, its still all about earnings.

#25 broader mind on 11.01.20 at 3:09 pm

I fear the Authorities don’t know how to use a hammer. I pray anyways and hope you are correct. Brampton , holy crap Batman this is a serious problem.

#26 Dave on 11.01.20 at 3:11 pm

Give it a rest….Canadian economy lives on real estate.

Everytime it is set to decline…governments counter to keep it going.

Covid should have destroyed real estate values but it has done the opposite.

Market correction has been around the corner for over a decade.

#27 Dolce Vita on 11.01.20 at 3:16 pm

Well, you really have to love snow or rain a lot to want to live in Canada is all I will say AFTER reading today’s Blog*.

Thanks for the Numbeo reminder Garth, used it extensively before ‘Outta Here to Italia.

Basically, take Toronto or Vancouver and HALVE or MORE everything and you have my Region of FVG be it Pordenone, Trieste or Udine its main cities.

You have 2 diseases in Canada:

-1 of them ought to disappear some time in 2021.

-The other endemic, a death do us part illness, inflicted by its citizens one upon the other.

Canada has changed, for the worse I’m afraid to say. Crippling Gov debt, crippling home price to income ratios, etc. with no end in sight.

Oh well, to each his own.

If you’re happy Canada, then I’m happy Canada. In the end that’s all that matters.

———————–

*To quote QEI from the movie Shakespeare in Love to our Blog Shakespeare:

Something more cheerful next time My Liege…for 12th Night?

#28 Linda on 11.01.20 at 3:16 pm

Good point about getting out of debt. There are students living at home who are not actively contributing to the family finances. If they have been receiving CERB, applying that ‘free’ money to the cost of their tuition/student loans could conceivably ensure they graduate with very little or even no outstanding debt. In this day & age, that is one heck of a leg up. There is also the possibility they can contribute to a TFSA. Opportunity is knocking…..

#29 WTF on 11.01.20 at 3:24 pm

“We’ll get the first numbers from Chrystia at the end of this month”.

in Russian?

#30 Sail Away on 11.01.20 at 3:25 pm

#20 Handsome Ned on 11.01.20 at 2:56 pm

The joke in Vancouver goes: What do you say to a Surrey man wearing tie? How do you plead?

———–

Yes, and…

Living in White Rock means never having to say you’re Surrey.

#31 kp on 11.01.20 at 3:30 pm

So of BoC is buying up $5-6B of mortgage backed bonds and other stuff. Over the course of 52 weeks that would be 250-300b. How does that play out. Is this just massive money printing/ QE? Seems to me that the deficit is being covered by money printing.

At that scale there has to be price and/or asset inflation. Canada’s gdp in 2019 was 1.6 trillion so 300b of money printing would be about 19%. Hmmm that about the same ballpark figure that RE has increased.

#32 The Woosh on 11.01.20 at 3:31 pm

Below are the Top 10 cities in North America, ranked by their price-to-income ratios.

—————————

Thank goodness Brockville, Cornwall, Kingston, or Gananoque don’t fall on that list. Still a few affordable spots left! Lol

In terms of getting out of debt, not all debt is bad debt. Context is key.

#33 Brian Ripley on 11.01.20 at 3:31 pm

As of Q3 2019 according to Demographia, the Price/Income Ratio for the 6 biggest population metros in Canada ranked from least to more affordable are: Vancouver 11.9, Toronto 8.6, Montreal 4.7, Ottawa 4.1, Calgary 3.9, and Edmonton 3.8

Charts here: http://www.chpc.biz/demographia.html

Toronto indeed has moved up the unaffordability scale, but I suspect that we will see Montreal and Ottawa also move up when Demographia updates their data set in JAN 2021.

While we wait for the October Real Estate data to roll in, I have updated my global pandemic data charts to Oct 31: http://www.chpc.biz/history-readings/pandemic-update6041669

Global deaths are up 18% M/M and deaths per cases remain at 3%.

#34 Man itsa ... on 11.01.20 at 3:33 pm

glorious day out here on the west coast today. What a view out towards the Island. See for miles …

#35 willworkforpickles on 11.01.20 at 3:35 pm

Highly leveraged homeowners/mortgagees in Canada should seriously look into not voting the current spendthrifts back in office in the next election.
Rising inflation is guaranteed at the current spending pace.
Printing to infinity as they seem hellbent on doing unabated, will lead to rising rates and the eventual destruction of the overleveraged despite all the lies and deception to the contrary.
Maybe the lib spendthrifts will catch themselves midway and come to realize they indeed could be voted out for it and change course.
But i doubt it…doubt it turning out for the greater good via voter sanity or from this mad joyride spend to the end government.
Once upon a time they could create money like no tomorrow (QE and the like) and spend it like no tomorrow too.
Yes – and they did…all made possible when at peak production and near full employment.
They could and did by this (artificially) in so keeping rates down then way down, it led in to this vastly unaffordable housing market.
So what’s different now?
Peak unemployment, low level production…all of those generous free dollars and much more to come, circulating…buying up what is being produced subject to current production limitations and forcing the firms and entities that produce the goods society demands to raise prices and eventually raise them considerably. All quite inflationary…getting to be more so until it escalates.
Rising rates in the next year to 18 months?
I’ll bet on it.
Been saying all of this over and over for months.

#36 dutch4505 on 11.01.20 at 3:36 pm

oh no….my city is in the top ten. Bellingham WA Makes sense why we are on the list. Wages are too low here, and real estate is too high. Moving to Buffalo NY when it stops snowing there in the winter.

#37 Dolce Vita on 11.01.20 at 3:41 pm

17 Andy

God you’re lazy.

He gave the link, go to a city page, click on the circle with an “i” in it to the right of “Index” and low and behold:

https://www.numbeo.com/property-investment/indicators_explained.jsp

Your,

-Italia Admin Assistant

[or whatever PC noun they have for the latter nowadays]

———————-

…you can lead them to the watering trough BUT you can’t make them drink.

#38 Hawk on 11.01.20 at 3:52 pm

#27 Dolce Vita on 11.01.20 at 3:16 pm

==========

Time to open up Italia & Europa in general. Lockdowns are not working, Napoli erupted in anger lately. The Swedes are wiser than the rest of us.

Mankind has lived with these type of problems since the beginning of time, without becoming prison planet.

Open up, I hear Cinque Terre calling :-)………..

#39 FreeWilly on 11.01.20 at 3:52 pm

Garth, I love you, and maybe it’s the candy hangover talking. But if you’ve previously implied there will be no significant correction in Canadian housing prices, what exactly do you think will happen again?

The future will not look like the present. Figure it out. – Garth

#40 greyhound on 11.01.20 at 4:00 pm

Isn’t there an old saying, something like “every bubble or mania is based on an assumption that everyone believes is true but actually isn’t true?”
In 2008 it was, “real estate prices cannot go down.”
In 2020 it might be, “interest rates cannot go up.”
‘Cause if they did, the carrying cost of all those mountains of debt could get just a wee bit out of hand.
Maybe it’s good time to be long bankruptcy businesses…

#41 Dolce Vita on 11.01.20 at 4:01 pm

Enjoying the internecine YVR vs. Environs urinating contest here so far.

Honestly people?

You live on a coast with some mountains and trees – and a large number of you not even that.

Get over yourselves.

If you were as DUNG HOT as you apparently think you are, well the World would be falling over itself to come visit you and you’d get about +30 million visitors every year like Venezia.

But alas, you DON’T.

Neither does ALL of Canada.

Reality self check there Canada.

————————–

A good thing to be “last stop the Arctic” and not everyone’s holiday destination in January (I take it that many of you go to Mexico or Florida then on CERB); thus, a Silver Lining when it comes to COVID-19 since it needs to hitch a ride with some host to get to its next “holiday” destination.

Be grateful for that Canada and give hubris a time out for just a little while…actually, give BRAZEN a respite.

#42 the Jaguar on 11.01.20 at 4:01 pm

P.S. @ #34 Man itsa … on 11.01.20 at 3:33 pm
glorious day out here on the west coast today. What a view out towards the Island. See for miles …

Enjoy. You have a ‘special weather statement’ headed your way. 100-150 mm of rain. Mercy.

#43 MikeR on 11.01.20 at 4:05 pm

“Overall, Canadian households received more money ($56 billion) from government aid programs such as CERB and other transfers in the second quarter than they lost in wages and salaries due to the pandemic ($23 billion).”

This one stands out for me. I know neighbours down the street in the city with two teenagers who both got CERB though they had not been working before. The father was unemployed, doing occasional housework to help his family at home but got CERB too. The mom worked in the film business and had no contracts for some months, so got CERB too. Way more money than would be normally justified imho. Lots of spending on fun stuff and new home repairs that I have seen. Will the country get much of this back?

#44 Keith in Rio on 11.01.20 at 4:07 pm

Garth,

Whenever you write an article, always remember the phrase “except in Calgary”…………as in……..”all this stuff I am writing about is sorta happening, except in Calgary”……..

#45 Terry on 11.01.20 at 4:11 pm

“Second, a Biden win on Tuesday”

Sorry Garth……….Trumps got this one. Same script being played out from 2016. Trumps support is HUGE and many are silent about it because of the radical left. You’ll all see again on Tuesday night.

“by the second wave of the virus”

It’s not a second wave yet. We are still seeing a continuation of the first wave that was deferred from the mistakes of the lock-downs and social distancing last spring and summer. Everyone on this planet will get this virus. Cases don’t matter and masks don’t work. We all just need to get on with our lives. Sweden got it right most other countries didn’t.

#46 Guelph Guru on 11.01.20 at 4:12 pm

As always an excellent post with a nice peek into the bond world.
All the same, we have left logic so far behind that it’s not even visible in the rear view mirror.
It would be interesting to see how people can afford 3-5% mortgages while paying $5 for a loaf of bread , without an increase in monthly wages. Bankrupcies may aggravate the situation.
Will believe it when it happens. Maybe it’s diff this time.

#47 Bob Loblaw on 11.01.20 at 4:13 pm

DELETED

#48 Bill on 11.01.20 at 4:13 pm

DELETED.
Do that again and you are gone. – Garth

#49 Anonymous on 11.01.20 at 4:31 pm

“once recovery comes The Authorities will bring the hammer down”

Come on, we all know the Authorities will do whatever they can to keep the party going.

#50 Randy on 11.01.20 at 4:31 pm

Pretty sure that Toronto and the GTA vote Liberal because Liberal-run Bank of Canada is likely to help subsidize and grow the value of their (CrackShack) real estate…

#51 baloney Sandwitch on 11.01.20 at 4:34 pm

DELETED

#52 Flop... on 11.01.20 at 4:37 pm

What can I say about happenings in the comments section yesterday?

Maybe it’s best left in the past.

Typed in Corpus Christi for todays entry and got this feedback…

M46BC

Indices Difference.

Consumer Prices in Corpus Christi, TX are 24.57% lower than in Vancouver

Consumer Prices Including Rent in Corpus Christi, TX are 30.79% lower than in Vancouver

Rent Prices in Corpus Christi, TX are 40.75% lower than in Vancouver

Restaurant Prices in Corpus Christi, TX are 16.65% lower than in Vancouver

Groceries Prices in Corpus Christi, TX are 27.98% lower than in Vancouver

Local Purchasing Power in Corpus Christi, TX is 34.80% higher than in Vancouver

#53 IHCTD9 on 11.01.20 at 4:40 pm

#8 sue on 11.01.20 at 2:16 pm
So much for the virus bursting the bubble. I’ve been waiting for years and I honestly believe that Canadians will just keep paying through the nose to be a homeowner. They will pack their house with 3 crackhead tenants before they would think of selling. It’s a cult in this country. There is no inventory, it’s just so aggrivating.
— –

Like Mr. T noted, financing costs are dropping even as home prices climb double digits. Thank those mid 1% interest rates.

A house down the road from me sold got 485k last week. At 1.8%, that’s a 2k mortgage payment. I bought 19 years ago for 1/4 the price, but my payment was nowhere near 1/4 of 2k – closer to 1/2 – at 6.4%.

Right now, the banks are not getting near the profit they used to, but sellers are making big bucks instead.

#54 Dolce Vita on 11.01.20 at 4:49 pm

#38 Hawk

“Targeted Restrictions do not work.” I have said that on Twitter many times. Unfortunately, lockdowns do.

Gov Italia does not have Gov Canada’s seemingly bottomless pit of cash to throw at its citizens and businesses nor did it – why people are in the streets protesting…they are going bankrupt or insolvent.

We, Italia, are not the only ones in the streets protesting, then again you get your news from the hopeless N. American MSM.

As for Sweden you’re SO misinformed, brainwashed?

Their Gov (not their people) are knucklehead social re-engineering apparatchiks that will not admit they screwed up…oh wait a minute, THEY DID:

https://www.bloomberg.com/news/articles/2020-06-03/man-behind-sweden-s-virus-strategy-says-he-got-some-things-wrong

My bad.

And in Italia we do not euthanize our elderly for a lack of oxygen as they did in Sweden.

If Canada were Sweden, it would have at least 10,000 new cases today.

Italia’s 2nd Qtr to 3rd Qtr growth rate:

16%

Sweden = 8.3%.

ALL HAIL MIGHTY Sweden.

Pack your bags, off you go to the land of Odin. Put your money where your mouth is.

I did.

#55 willworkforpickles on 11.01.20 at 4:51 pm

The big question is: How far can the denizens of greed and profit push the powers that be (banks & governments) lording it over the common man?

Big biz and big tech are reaching their limits lording it over the banks and government as they are themselves puppets in the bigger scheme of things.

Taking this into account it doesn’t matter what you believe in or don’t…indisputable laws of the universe in the grand scheme of things apply to the human condition regardless of individual beliefs just as sure as the perplexing inexplicable nature of the virus and its elusive cure remains to be discovered.

With regard to a response from SeeB – couple days back…in placing blame for various ongoing societal evils on governments and banks being akin to blaming the puppets and not the puppeteers of big biz and big tech…I responded that I agree that big biz and big tech are part of the big picture and mentioned there is a bigger picture to consider yet still.
A bigger picture that I touched on but didn’t go into detail in a post prior to that exchange.

– Beyond the banks and governments there is a bigger force to consider in big biz and big tech. The banks and governments are the puppets of the shot caller puppeteers of big biz and big tech.

– Beyond big biz and big tech there is a greater force at work still, rendering even them to mere puppet status.

All in the big picture most fail to see.

(Looking back a few posts you can find the one i posted that touches on this subject…previous to the one SeeB replied to)

#56 3s on 11.01.20 at 4:58 pm

LOL, you should know by now that human greed is a one way bet!

#57 espressobob on 11.01.20 at 5:02 pm

#55 willwprkforpickles

The best revevenge is to own them.

#58 The Woosh on 11.01.20 at 5:04 pm

#43 MikeR on 11.01.20 at 4:05 pm
“Overall, Canadian households received more money ($56 billion) from government aid programs such as CERB and other transfers in the second quarter than they lost in wages and salaries due to the pandemic ($23 billion).”

This one stands out for me. I know neighbours down the street in the city with two teenagers who both got CERB though they had not been working before. The father was unemployed, doing occasional housework to help his family at home but got CERB too. The mom worked in the film business and had no contracts for some months, so got CERB too. Way more money than would be normally justified imho. Lots of spending on fun stuff and new home repairs that I have seen. Will the country get much of this back?

———————————————

Sooooooooo…they spent the money which in turn stimulates the economy and keeps businesses from going bust. Same money now circulates throughout the economy and contributes itself back through to the government via HST, income taxes, etc. They did exactly what the government expected them to do. Stop being so one sided…or was that jealousy ‘cause you didn’t get some pogey money too???

#59 Billy Buoy on 11.01.20 at 5:05 pm

Interest rates CANNOT go up for YEARS as there is TOO MUCH DEBT WORLDWIDE. The World cannot handle even a 2% increase in rates to service the debt ALREADY INCURRED.

Repeat this mantra daily.

#60 Ace Goodheart on 11.01.20 at 5:07 pm

RE: #27 Dolce Vita on 11.01.20 at 3:16 pm

Well, you really have to love snow or rain a lot to want to live in Canada is all I will say AFTER reading today’s Blog*.

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

Well one thing is for sure, you cannot purchase a house in Toronto anymore.

when this passes for a million dollar house, we are all in a lot of trouble:

https://www.zoocasa.com/search?latitude=43.664669038650445&longitude=-79.46478271484374&zoom=15&listing-id=9797030

Located directly next to Toronto’s main CP rail line (also used by more than one GO passenger commuter train line), this little house can get quite noisy when the big CP rail trains shunt their cars around in the multi line rail yard directly next to it.

The smell of the diesel from the big red CP locomotives is quite overpowering at times.

But it does back onto a park.

And you can just fit those garbage bins into the grassy space that is the “backyard”.

There is no such thing as affordable brick and mortar real estate in Toronto anymore.

The people who buy this house probably will earn less than 150K per year as their family income.

#61 Apocalypse2020 on 11.01.20 at 5:13 pm

You thought Halloween was scary?

3 DAYS TO GLOBAL CATASTROPHE!

PREPARE

#62 MF on 11.01.20 at 5:15 pm

Terry on 11.01.20 at 4:11 pm

Lol this Sweden talk is like a bad rash that keeps coming back.

Sweden did worse than comparable Scandinavian countries, but better than Western European countries like England.

The reason? The Swedes listened to their government and did everything you stupidly discounted: social distanced, wore masks, and so on.

That being said, there is still lots of debate in Sweden itself about whether their strategy actually worked. Many are not amused:

“ Swedish virologist says her country’s COVID-19 strategy has failed, but nobody will admit it”

(Yes it’s CBC, don’t care what your thoughts on them are)

https://www.google.ca/amp/s/www.cbc.ca/amp/1.5767967

MF

#63 Dolce Vita on 11.01.20 at 5:20 pm

#38 Hawk

PS:

I agree Gov’s OVER REACTING and Italia, as of today, is the only 1 of the European G4 NOT to impose a lockdown.

The German “soft lockdown” is exactly what we have in Italia. As for the French and English, well they are not doing well case wise and in my opion having a kanipshit but they see ICUs getting full fast and worry about providing care other than for COVID.

Italia nowhere near that with 20.6% of ICU capacity in use and Germany slightly higher, why they are following Italia’s lead and not that of the UK and France.

Do I agree with all this – lockdowns, targeted restrictions?

NO. A HUNDRED TIMES, NO.

Gov’s should be doing all the can to isolate those most vulnerable or take the Swedish approach and oblige your +70 yr olds to stay home, as in self isolation. Not working for them either.

Most people are horrified when they see this from Europe, new cases, Oct. 26 gotten worse since then:

https://i.imgur.com/FFg6PkX.png

BUT ne’er a mention that deaths are low vs. new cases compared to Wave 1:

https://i.imgur.com/ewnobXP.png

Yes, EXPONENTIAL but look at the details behind the numbers and charts.

Most deaths are still from the most vulnerable. TRUE many more of the young are getting infected, Italia:

https://i.imgur.com/HWHztjA.png

BUT mortality is still for very advanced ages and NOT the young, Italia:

https://i.imgur.com/sHG3YMK.png

The numbers do not lie and if we believe the number collectors, then allow those, the YOUNG, that DRIVE THE ECONOMY TO DO JUST THAT. AND render harmless the vulnerable.

Therapies are well developed now and yes people get sick but are not dying save the very elderly.

FWIW

#64 willworkforpickles on 11.01.20 at 5:21 pm

DELETED

#65 crowdedelevatorfartz on 11.01.20 at 5:26 pm

@#10 Felix.
Good one. :)

#66 Dolce Vita on 11.01.20 at 5:34 pm

#60 Ace Goodheart

So true what you and others say about Toronto.

Lived there 4 years, LOVED IT.

Sad that the economic engine of Canada cannot give its citizens a decent shot at owning a home and not being on the hook for it cost for the rest of their lives.

Boggles my mind it has come to that in Canada. A land of wealth and opportunity that has managed somehow to encumber its citizenry with untold debt due to RE.

Not a clue what the solution ought to be, none.

But it is sad for our young especially. Very, very sad indeed.

#67 zoey on 11.01.20 at 5:36 pm

Agree 100%. BoC cannot continue to just buy bonds forever. This RE asset bubble is already long in the tooth. Its a great time to go ETF shopping, some of the yields are pretty sweet ~6% for the ones I follow…I wonder if we have another market thumping around the election.

Some interesting stats I read,

According to HouseSigma the absorbtion rate in Toronto for Oct, all property types is 30%, right on the line between a balanced market and a buyers market. Condo’s , 18.3% a solid buyers market. Going into the winter with Covid2 Condo’s may continue to slide.

#68 crowdedelevatorfartz on 11.01.20 at 5:38 pm

@#61 Apocalypse2020
“3 DAYS TO GLOBAL CATASTROPHE!”

+++
Why is Melania… filing for divorce… a global catastrophe?

#69 JJ on 11.01.20 at 5:38 pm

Garth is way too optimistic. Inflation may be decades away. The Bank of Canada is not printing enough money. The Bank of Canada should be cancelling the bonds it bought in the secondary market.

#70 IHCTD9 on 11.01.20 at 5:53 pm

#60 Ace Goodheart on 11.01.20 at 5:07 pm

Well one thing is for sure, you cannot purchase a house in Toronto anymore.

when this passes for a million dollar house, we are all in a lot of trouble:

https://www.zoocasa.com/search?latitude=43.664669038650445&longitude=-79.46478271484374&zoom=15&listing-id=9797030

Located directly next to Toronto’s main CP rail line (also used by more than one GO passenger commuter train line), this little house can get quite noisy when the big CP rail trains shunt their cars around in the multi line rail yard directly next to it.
——-

Another sweet 7 figure property in Toronto lol! That basement would have me living with multiple head wounds from the looks of it – barely tall enough to install a door down there. And that back yard looks like something out of the Shawshank Redemption – just missing all the inmates milling around.

Well, hopefully prices keep rocketing uppa in Toronto – maybe when a goofy “property” like this costs 2 million Torontonians will finally – at long last, snap back into reality?

I grew up a stones throw from a rail yard where cars would lock,up all day and night. Bang! Then bang, bang! Then bang, bang, bang – a new bang was added for every car locked up. The old plaster lath walls had a never ending parade of new cracks for Dad to patch up. The big diesels shook the ground moving around out there.

#71 CL on 11.01.20 at 5:56 pm

#26 Dave on 11.01.20 at 3:11 pm
Give it a rest….Canadian economy lives on real estate.

Everytime it is set to decline…governments counter to keep it going.

Covid should have destroyed real estate values but it has done the opposite.

Market correction has been around the corner for over a decade.
———————————-

I couldn’t agree more. The money printing will continue unabated. The bond market won’t flinch.

What Garth says is, of course, accurate. However, this is Canada, a country that skates through economic laws without a scratch.

We will all be here saying the same things in 10 years if there is a country left. When a country votes in such massive incompetence in T2 and appoints a journalist to manage the country’s finances, you know it is only a matter of time until something blows up but it will not be real estate. Canadian real estate only goes up. Never down. I am being genuine because this is what the facts/data tells us.

I once believed in economic law just as I do spiritual law but economic law is not a threat in this country so the money printing will continue to infinity.

#72 Reality is stark on 11.01.20 at 6:03 pm

I am convinced that this government will spend the dollar down to 20 cents.
They will NOT care how low our credit rating goes.
They only have one agenda and that is to spend your money until it is gone. They know that you are stupid enough to accept a 20 cent dollar.
They’ve set the tone and they will be unable to stop the train.
Rome is burning and our administration has no will to put out the fire.
We need to cull the public service and pour money into infrastructure projects. Unfortunately that takes planning and administration.
What we have is an administration that doesn’t plan and is incapable of making hard decisions.
START REDUCING PUBLIC SECTOR SALARIES to reflect declining revenue.

#73 Long-Time Lurker on 11.01.20 at 6:05 pm

The Canadian government’s initial response of closing the borders and doing a national lockdown were correct. We needed a baseline of how bad things were. Back in February and March I was watching cellphone videos on Twitter of people dropping dead on the street in China, Iran and New York City.

I thought Boris Johnson’s measured three-tier approach (adjustable response levels) was appropriate but he’s now gone into lockdown. It’s better to be safe than dead.

#74 Turd World on 11.01.20 at 6:19 pm

Rates will inevitably rise but not within the next few years.Without free money sloshing around for years to come we will surely enter a depression.Businesses are closing at a rapid clip(160,000 by year end in Canada alone)yet gov’t employees(1.6 million in Ontario alone)get full pay and yearly raises.No tax revenue coming in but debt spending continues to keep a scrambling economy with somewhat of a pulse(how fake it may be)

#75 45north on 11.01.20 at 6:20 pm

Below are the Top 10 cities in North America, ranked by their price-to-income ratios. Not good.

6 of them are in Canada!

By way of comparison, the price-to-income ratio for Miami is 5.7, while it’s just 3.8 for Chicago and 2.98 for Los Vegas. If you really want a deal, go to Dallas (2.1), Buffalo (1.97) or Detroit (1.26). The point is Canadians are paying some of the highest real estate prices in the world thanks in large part to two things that will not last – excessive government spending and crashed interest rates.

the fact this is from a former Minister of Revenue is cause for worry!

here’s my guess. In Canada, in the short term, price to income ratio is going to get more extreme. Prices will go up and income will go down! But long term, prices have to drop! I don’t see a bottom. Who says that a house worth $1.2 million can only drop to $1 million? Nobody. $800,000? Nobody.

#76 Stan Brooks on 11.01.20 at 6:26 pm

Who drives the housing market?

Canada’s House Prices Are Soaring Because Reality Doesn’t Matter Anymore To Things Like That

https://ca.yahoo.com/news/house-prices-quantitative-easing-government-spending-133510978.html

Canada’s average house price jumped more than 17 per cent during the worst economic crisis to hit the world in decades.

‘Innovative’ monetary policies apparently.

And don’t forget your lesson folks: Inflation is sub 1 % as of lately, yearly, not monthly ‘according to statistics’.

Keep repeating it and it could apparently become the truth.

Saludos, Camaradas. (some latin american makes sense economically as they also thought that some money printing will make sense, then some more and more to keep ‘economy going’ until the currencies collapsed).
Let’s dump some more ‘money’ and ensure ‘endless credit’ to the sheeple to ‘save the situation’ which of course will require more and more/and more aggressively of the same tomorrow until the camel’s back brakes with all the consequences.

Shacks in GTA at 3-5 millions, anyone? Just give the geniuses central bankers 5 years and we sure can get there. Maybe even 3 will do. And of course inflation will be 1 %, no in fact there will be severe deflation that will require strongly negative nominal interest rates. No indexing of that CPP and OAS, sorry, maybe even decrease it, that increase of cost of living you are experiencing is imaginary.
And get some subsidized pot, it will solve all your problems.

And yes, let’s blame it ‘on the virus’.

#77 Timmy on 11.01.20 at 6:28 pm

DELETED

#78 Nonplused on 11.01.20 at 6:30 pm

Somehow none of these subsidies flow to anyone in my household, even those not working. Which sucks because it has been an expensive summer-fall. All the things broke down or started leaking.

There are still people working in Alberta but mostly government workers and the service industry sans restaurants. I’ve been keeping the repair man and mechanic plenty busy.

I still don’t see Biden winning. It’s going to be 2016 all over again with all the same polls being wrong heading in. But if Biden does win I don’t see him lasting 2 years before Harris takes over. Then we can really start crapping bricks.

My reasoning is twofold; first, all the polls were wrong last time, and second, nobody who voted Trump last time is going to vote Biden this time same as nobody who voted Hillary last time is going to vote Trump this time. It will be a complete redo. The Trump voters are not going to be persuaded by the continual onslaught of fake news over the last 4 years because none of them watch the news anyway. They are too busy installing a lift kit on their truck.

But anything can happen. Another interesting dynamic will be that more Trump supporters will vote in person because they generally think the lockdowns are a conspiracy anyway. But there will be lots of mail in votes so it is unlikely a final tabulation will be made for several days. It is going to be an interesting week. Never before has there been so much potential for the final result to be so much different than the initial results. I think people are going to lose their minds. And there is real potential for a rout in the stock markets as buyers disappear until the results are finalized.

#79 Elon fanboy on 11.01.20 at 6:36 pm

#16 noname “ i was watching early voting map, my my everithing is blue. even texas revert to pre 80 condition, of voting blue…”

————— ——-

You’re gonna be in for a shock then….historically Dems tend to vote early or by mail. Republicans leave it until closer to election day and vote in person. Based on the election watchers I follow on Twitter who got it right in 2016….Trump is ahead of where he was in 2016 in all the key states.

And in some he’s blowing the Dems out of the water, i.e. Florida. Take Miami-Dade county. Clinton won it by 30 points in 2016. It’s already flipped Red just on early voting!

Trump is going to win Florida by 6 points.

If Biden loses Florida he needs to carry ALL of WI/MI/PA/MN to win.

Speaking of which the Trafalgar group polls which nailed 2016 has Trump 2.5 points up in MI, dead even in WI, and narrow lead for Trump in PA.

#80 Ponzius Pilatus on 11.01.20 at 6:38 pm

#7 Sail Away on 11.01.20 at 2:15 pm
Wow, Surrey is more expensive than Honolulu.

And as a bonus, you’d get the Bacon gangsters and Ponzie for neighbours. Sign me up!
———–
The minute I moved in, the house prices shot up.
Austrian charm just does that.

#81 Stan Brooks on 11.01.20 at 6:42 pm

#25 broader mind on 11.01.20 at 3:09 pm
I fear the Authorities don’t know how to use a hammer. I pray anyways and hope you are correct. Brampton , holy crap Batman this is a serious problem.

Apparently the whole world wants to live in Brampton.
And in Kingston and Bradford. Innisfil is the new Bay area. Just made up whatever idiotic story you can come up with and it instantly becomes a reality in the new wonderland, where smart bankers found a way to beat the business cycle and milk and honey flows.

Mississauga is already by far more expensive than most of the New York suburbs. So is Vaughan folks.

GTA is the pinnacle of civilization apparently.

And no, it is not a problem to our politicians and very qualified and professional central bankers who carefully monitor the situation.

The most important part is: everything is under control.
They will just increase the amount of money printing from 1 billion a day to 2 billions (as apparently those jobs are NOT coming back and the economy and the GDP actually shrinks despite the hundred of billions of fresh new ‘money’) and blame it all on the virus.

Once you have an excuse you have every incentive to keep lying, hoping that the wheels won’t come off during your watch. Except it already did.

Cheers,

#82 FreeBird on 11.01.20 at 6:53 pm

Almost every US election poll available, small and large. Sort by national or state.

https://projects.fivethirtyeight.com/polls/

#83 Stan Brooks on 11.01.20 at 7:01 pm

#70 IHCTD9 on 11.01.20 at 5:53 pm

That 1.1 million gem was worth 274 k in 2004. 16 years, 4 fold increase. Exactly ‘aligns’ with ‘inflation’ of 1-2 % yearly.

Plus it has a finished basement. It could be worth 2.5-3 mills in 5 years with the accelerated real estate growth.
Remember folks, this is organic growth. In wonderland the more money you print, the better you live. No jobs? No problemo.

I am hearing that most hedge funds billionaires are starting to relocate to GTA. That gem on the link is much better than an estate in Hamptons or castle or luxurious French villa (poor investment decision by the former wiz of finance).

Cheers,

#84 Nonplused on 11.01.20 at 7:03 pm

#52 Flop… on 11.01.20 at 4:37 pm

Texas, for the most part, does not have land zoning laws, so if some farmer wants to develop a subdivision he pretty much just does. But they are very dependant on their cars. You just “can’t get there from here” using transit. Sugarland is like no place I have seen in Canada. It is certainly not like Vancouver. Also the labor rates to build a house are much lower in Texas.
Building codes are also different.

#85 Nonplused on 11.01.20 at 7:18 pm

#60 Ace Goodheart on 11.01.20 at 5:07 pm

From the one photo of that property I would say it is about as wide as a door and a couch. In Texas they would call that a hallway. But to be fair they have been living like that in Europe for decades. It does have 3 stories. In Europe all 3 would be above ground and maybe there would be 4 if you were rich but hey.

I did like the 14″ CRT TV in the office though. Waste not want not. For $1 mil they should throw that in.

#86 yvr_lurker on 11.01.20 at 7:21 pm

With regards to over-supporting people and businesses during the initial shutdown, speed in setting up the financial support programs was key given how quickly things were shut down. Was the Gov’t to quickly hire swarms of extra minions to check/audit the financial affairs of all of the applicants to verify the claims, taking months to do so? I would not critique the Gov’t too harshly on this point. However, does anyone know the address in Beijing where we can send the COVID bill to?

I hope that T2 does not pursue the pharmacare program at this stage, which mostly benefits the elderly and early baby boomer set. The lockdown, which will cost all of us all in the end through much higher taxes, was primarly to prevent much more widespread death in that group anyway. I am a late boomer, and frankly if someone in my age group or older has not saved enough for their retirement, then in my view they should not expect the Gov’t to subsidize them more heavily. It’s unfortunate but you had your chance over the past 40 years and many in this group have benefitted from the exponentially rising real estate.

Invest instead in trying to help minimize child poverty in Canada so that the next generation can get a good start and a good education. Maybe then if the birthrate increases in Canada, and our kids get a good education, we won’t have to keep pushing the immigration numbers ever higher each year. Of course we need smart immigrants coming in, setting up businesses and contributing. However, we certainly don’t want to end up like France or the UK with the challenges they have in integrating vastly different cultures.

Watching the shitshow that is going on in the US is an eye-opener. The audacity of these rich right wing zealots like Steven Hotze financing lawsuits and appeals to the Texas supreme court to effectively discard the 127,000 votes already cast in Harris county (largely a democrat county) is completely outrageous. Imagine the court approving the appeal tomorrow? Should these 127K people stand in mile long queues in the very few official polling stations in all of Harris county on voting day on Tuesday? Looks to me like Democratic traditions in the US are under an unprecedented threat. I lived in the US for 10 years, and that was plenty for me.

Gary Kasparov has an interesting take on all of this:

https://www.cnn.com/2020/10/31/opinions/trump-after-the-election-prepare-for-unimaginable-kasparov/index.html

#87 willworkforpickles on 11.01.20 at 7:23 pm

Well that wasn’t the first time i brought up something firearms related and was deleted for it. Touchy subject.

Not the reason your post was deleted. – Garth

#88 McSteve on 11.01.20 at 7:23 pm

I though about buying a vacation home in Honolulu, but I saved a few bucks and bought in Brampton. The smell of jet exhaust from Pearson is beyond compare. And who needs a beach when you have a giant Canadian Tire distribution centre

#89 John in Mtl on 11.01.20 at 7:28 pm

#61 Apocalypse2020 on 11.01.20 at 5:13 pm

You thought Halloween was scary?
3 DAYS TO GLOBAL CATASTROPHE!
PREPARE

Oh, how convenient… just after the US Elections.

Why not on nov 2-nd, or nov 28-th or dec 18 or something?

#90 Barb on 11.01.20 at 7:35 pm

“You get rapid inflation.

That is about to happen here in Canada.”
———————————-
We have ZERO debt and have been frugal… literally forever.

I’m stunned by the cost increases of all types of food and other necessities. And if prices haven’t increased, their containers are 30% smaller (to hide the increased price).

Our dollars are buying far, far less than pre-pandemic.

…wait until the C$ REALLY drops…oh oh!

#91 NoName on 11.01.20 at 7:41 pm

#79 Elon fanboy

Regardless who wins i wont be to much surprised, bot candidates and parties and candidates are somewhat strait forward with direction they will lead a county.

#92 DON on 11.01.20 at 7:46 pm

I see James went off on a rant…

WTF!

Like a flea nipping at Smoking Man.

#93 DON on 11.01.20 at 7:49 pm

So record deficits…potential second wave…and December or April Federal election?

#94 DownToFinance on 11.01.20 at 7:56 pm

Sure, rates will rise eventually. But the government is already meddling with the idea nomalizing of 30 year mortages again. Up she goes.

#95 Two-thirds on 11.01.20 at 8:01 pm

What is the point of getting out of debt now?

Deficits will have to be paid for, so who will pay? Those with money and investments, or those with debt?

The former are outnumbered by the latter, 9 to 1 at least. They all vote, so which one would you rather be?

Moral hazard is now official government policy in Canada. No need to pay rent, no need to work, free healthcare and soon, drugs. Benefits go to those without assets, paid by those with.

So no, the lunatics are now running the asylum, so load up on debt, buy hard assets and wait for inflation to come destroy our currency. That new car will cost a lot more and be taxed more when things “normalize”

PREPARE is right!

#96 binky barnes on 11.01.20 at 8:10 pm

Oh don’t worry folks. I don’t. I sleep well in the knowledge that our top man (Mr. Justin Trudeau) has his two manly hands on the wheel, expertly guiding our nation through these turbulent times.

BB

#97 Montana Bob on 11.01.20 at 8:18 pm

Well, as far as I understand, all of the government support was based on assumption that everything will be back to normal (with Covid-19) by the end of the year. So, all of their calculations were based on that. However, it is evident now that assumption was wrong and government cannot give handouts at the same pace.
Thus, support will dry out and people will not have CERB indefinitely. Rates might also go up, like it or not. Slowly, but surely. People will continue to have reduced income and hours. So, they will have to survive with that. Whoever can. Slowly, many people will get to be immune on real estate propaganda and they will think twice what they will buy and for how much.
In today’s G&M:
https://www.theglobeandmail.com/business/article-assignment-sales-are-rising-in-toronto-as-investors-who-bought-pre/
They say: “A record 23,000 new condos units will be completed in the Toronto region this year, and another 22,434 are due next year, according to Urbanation. It estimates that 50 per cent were bought as rental units”. When all of them hit the market, not all of them can be rented, so, they will sit empty. And their owners will pay them. Let’s see what will happen in next September. Are students going to be back to school, or they will continue online. Also, people might not be back to office by that time too. In the meantime, if they don’t rent it, that will mean 2,5k per month out of pocket expense. Which is about 30k per year. That can be considered as a risk to investment. Other problem is if price on condo falls and they have to sell it. That will be easy about 75k loss.
As far as I saw, CERB gave people some buffer to survive and renovate house or apartment to get ready to sell. That worked, but, we will see for how long.
Even if they find a vaccine, it will take a considerable time to administer it and to see effects. Which can take about 2 to 3 years.
Thus, expect a roller coaster for next few years.

#98 rodney knopp on 11.01.20 at 8:32 pm

As I read it, insolvencies in Canada are down 40% in 2020, from 10,000 per month to 6,000/month. The lowest level in 23 years.

How can this be? I know- governments are propping up individuals and businesses that normally fail. This is sad, but part of the normal cycle. Then new, better ideas and smarter individuals emerge better and stronger.

Instead, we are supporting a massive amount of individuals and businesses that normally have to “reset” in a recession. Yikes

#99 Terry on 11.01.20 at 8:40 pm

#62……….my reply.

Sweden didn’t destroy their economy, we did……just wait for it………….the abyss is just around the corner for us once all the free money stops. Secondly, if you really do your due diligence you would become educated to the fact that masks really don’t work. It has been statistically and clinically proven. Lastly about CBC………..I just won’t go there……ever…ever again!

#100 Steven Nicolle on 11.01.20 at 8:42 pm

I never hear it mentioned but anyone who receives CERB will be taxed 15% on next tax return so make that you are getting $850 to spend on a $1000 CERB. Then when you buy something you pay in Ontario 13% HST. So when you get $1000 you are paying 28% tax. Not a bad return to keep the economy from drying up right? Am I wrong so the money is not free as some people like to imply.

#101 GRG on 11.01.20 at 8:51 pm

“…Asset price inflation is dangerous, and once recovery comes The Authorities will bring the hammer down…”

The Authorities aren’t even thinking about thinking about thinking about bringing the hammer down.

They will never try to pop another asset bubble ever again.

#102 crowdedelevatorfartz on 11.01.20 at 8:54 pm

@#72 Reality
“START REDUCING PUBLIC SECTOR SALARIES to reflect declining revenue.”

+++
First the “benefits” will get whacked.
Then the pensions.
Finally…. the bloated bureaucracy….

If Trudeau and Freeland keep spending like they are….it’s inevitable.

#103 crowdedelevatorfartz on 11.01.20 at 8:56 pm

@#88 McSteve
“The smell of jet exhaust from Pearson is beyond compare. And who needs a beach when you have a giant Canadian Tire distribution centre”

++++
Brampton…….Hilarious

#104 MF on 11.01.20 at 8:56 pm

#74 Turd World on 11.01.20 at 6:19 pm

You mean like nurses? You know, the people on the front line of this pandemic helping the sick?

To me they deserve full salary and even more raises then they get, actually.

By the way, were you outside protesting the 2008 bailouts? When the biggest corporations got government money as a reward for their failures? When CEO’s who were incompetent and failed made millions from the tax payer bailout, while the taxpaying employees got laid off?

Of course not. But nurses working 80 hours/week making 60k/year helping the sick are the problem? Get real.

There is a lot of propaganda floating around these days. Some left leaning, some right leaning. It’s all to be ignored. The idea that people like nurses our bankrupting our country feels like outdated propaganda from 1980.

MF

#105 James on 11.01.20 at 9:02 pm

Garth,
To improve our savings and kill the (no to bad) remaining debt, what kind of side gigs do you suggest we could do while still working a regular 9-5 job?

#106 FOMO on 11.01.20 at 9:15 pm

#21 Mark

As a side note Winnipeg hospitals are now overrun and ICU full, there in code “red”.

https://winnipeg.ctvnews.ca/how-winnipeggers-are-feeling-about-code-red-restrictions-1.5169406

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

Dude…..There are 18 people in the province of Manitoba that are in ICU from Covid.

If that’s all it takes to be overrun they’ve got bigger issues.

#107 FOMO on 11.01.20 at 9:36 pm

#60 Ace Goodheart

Just some background on that house.

It originally sold for $275,000 in 2004.

It’s been re-listed a few times already since Oct 7th.

Oct. 7th $979,000 terminated.
Oct.15th $1,230,000 terminated.
Oct. 26th $1,089.000 current.

This seller’s pricing is all over the place so I wouldn’t take too much from the current list price.

#108 yvr_lurker on 11.01.20 at 9:36 pm

I will be glad when the *&^^**( election is over. I just wish there was some sense of fair play similar to what they try to instill in teaching kids when they are first playing team sports. You shake hands at the beginning of the soccer match, you don’t try to intentionally injure the other teams top players (Tanya Harding here comes to mind), and you shake hands and show some class in a loss not blaming the referee or some crazy conspiracy that your net was larger than theirs. (I realize the shaking hands bit is off with Covid). You don’t get a group of nutbars to surround the other teams bus in going to an event to prevent the team from warming up properly before a match, and you don’t hire lawyers to lobby the soccer federation so as to pre-select someone partisan to referee the match. All of the same applies to the first debacle of a “debate”.

None of this shitshow that is going on now as the new normal provides any sort of role model of fair play and civil discussion that we should try to teach our kids. The lies, corruption, deception, and BS is inching the US closer towards a modern day version of 1984. Kasparov has a good read on the dangers of all of this.

#109 Millennial 1%er on 11.01.20 at 9:40 pm

TN status. TN status. America here I come! Affordable housing and a responsible government

#110 Captain I'm Higher on 11.01.20 at 10:11 pm

Consequences? Party on Garth! Also whispered somewhere in Ottawa, we need an election quick but we have to make it look like somebody else’s fault, preferably O’Toole. I mean before the rubes figure out we’re gonna hose them later.

#111 KG on 11.01.20 at 10:48 pm

The future will not look like the present. Figure it out. – Garth

Even equities ?

#112 Helen Dhaliwal on 11.01.20 at 10:49 pm

#14 Ace. Currency is priced based on the demand for that currency. As we see in the US debt is not a factor. Once upon a time there was high demand from international concerns for Canadian dollars. They bought our dollar in order to buy our energy products, resource products, mining products, manufacturing products and ancillary services for technical expertise in development projects internationally.

Companies like SNC etc etc etc for example supplied engineers and specialists in the hundreds of thousands. Trudeau has killed those industries. Mining, manufacturing , energy and services are dead under Trudeaus delicate boot, shuttered all the same.

There is no demand , there is no floor. There is no value. As Garth has pointed out only the BOC is buying billions a week to keep the dollar artificially floating. When BOC has to come clean and end the Trudeau Debt Support Program the $C has nowhere to go but down hard.

#113 the Jaguar on 11.01.20 at 10:56 pm

I got bounced twice today from the comments. Just running this test to see whassup….

#114 Doug t on 11.01.20 at 10:56 pm

#72 reality is stark

HOME RUN – true words

#115 the Jaguar on 11.01.20 at 10:56 pm

Mercy. First post blew up.

#116 TurnerNation on 11.01.20 at 11:46 pm

I passed the Park People/Tent People in the big park.
New since March. Hang in their guys, by Q1 next year you’ll have UBI and likely a place to live – a re-possesed or expropriated Condo or AirB&B..
Every First world country has its local economy shot at this time. Shutdown for our health Comrade.
UBI is the natural outcome. Lockstep global rollout.
But the global elites care about your health.
We are looking at the more years of constant change.
Communism will not come easily.

#117 IHCTD9 on 11.01.20 at 11:53 pm

Right now in Canuckland, the tach is rev’ing into the red zone. Our hyperactive Banks have the machetes out, the BOC has the printing press operators working 24/7, our deficit spending would not look out of place reported in the comics section (right next to the Far Side), RE in our metropolises is priced at three stooges levels – with an army of apologists making excuses for it. Our realtors write some of the best fiction the West has ever seen.

Meanwhile, our hapless PM has a permanent case of shoe-leather halitosis, has been converted by the disciples of the church of MMT, and has appointed a head nodding finance minister who knows what to do to keep her job.

We’re like an overloaded helicopter with the turbines screaming at 100 thousand RPM, yet the rubber remains firmly attached to the tarmac. How long till the rotors fly off?

Trudeau is just the Man to find out.

#118 Mark on 11.02.20 at 1:53 am

Boys are frisky tonight, lots of deletes…..

#119 Jane24 on 11.02.20 at 2:29 am

Well England is shut down as of Thursday morning. We are semi-retired in that my husband’s hair salon is run by staff and I have an AirBnB as a side venture. Britain has made the same mistake as Canada in that govt compensation for the first wave was calculated higher than the normal income from our small businesses. The govt support for our AirBnB was particularly lucrative. Yes they will get some funds back as income tax but Pandora’s Box has been opened, they can’t reduce support for the second wave now. A free income floor has been established.

I spoke last night to my Manitoba family and my heart bled for them facing Covid disruption in their lives right as the harsh Canadian winter starts. It is going to be very tough. They were all for universal basic income and saw it as a basic human right. That box is already opened in Canada. I wonder if the rest of the Western world will follow.

#120 Trudi Woods on 11.02.20 at 4:03 am

I’m with MF…a correction needs to be made not in just real estate but real effing pay for essential workers …the writings on the wall…to many have made a ton of dough…think nursing home shareholders…on the backs of essential workers living on minimum wages.

#121 Cto on 11.02.20 at 4:41 am

What the last +10 years has taught me is the BOC will keep rates pinned to 0, regardless of real inflation by using the bogus cpi. Bonds may have their way in the end at some point.
Truduea is ready to slam immigration into overdrive, and super densify only 2 cities in Canada, regardless of job opportunities of existig Canadians.
This will continue to drive housing to the stars.
The government and BOC have 1 interest and 1 only,… to prop up housing, because its too big to fail. This solidifies the voting block of the home owners,…(boomers and their kids). 70%
All other things mean a big fat ‘0’!

#122 Howard on 11.02.20 at 4:46 am

“This would be a swell time to get out of debt.”

——————————————————–

Isn’t this incongruent with the rest of your blog post?

If inflation is about to erupt, people should be taking on MORE debt right now.

#123 Cto on 11.02.20 at 4:57 am

Garth
No disrespect, you are a guy with deep knowledge of financial system, having a job of finance minister at one time…but you use too much logic to predict the actions of ever increasing illogical politicians, governments and I hate to say it…central bankers.
These guys have clearly been flying by the seat of their pants since 2008 doing things that past generations would have deemed unthinkable!
It is different now, housing is the last bastion, like the last engine running on a 747.
They will kill everything else to preserve it…

#124 Diamond Dog on 11.02.20 at 6:07 am

#99 Terry on 11.01.20 at 8:40 pm
#45 Terry on 11.01.20 at 4:11 pm

Masks do work. You are right on this virus still being in a first wave (dominant strain still having its way) but the rest of it, not worth the oxygen required to read it. China still has only 86K cases with a couple dozen coming in a day. You say this virus is going to spread through the 4 corners of the Earth? Not in China, New Zealand, Australia, South Korea, Singapore, Taiwan and to a lesser extent Japan, these nations have already largely already beaten it. Only the low informed will think otherwise and how did they do it?

Their citizens wore masks and not shitty cotton masks that offer only 10 to 30% protection, but N95 equivalents. News out of China in Q1, Q2 was that when mandatory mask polices came into effect, all Class 4 virus’s had a reduction of infection spread by 500 to 600%. Self educate and take some time to check out just how large the class 4 family of virus’s is and how prevalent they are within humanity:

https://en.wikipedia.org/wiki/Viral_disease#Table

When you say Covid19 will spread through the 4 corners of the Earth, quickly remind yourself that China, a crowded nation of 1.35 billion people, has already beaten this virus. All North America had to do was follow their lead which was use N-95 masks, heat guns, contact tracing, cel apps, border restrictions and move toward a non card, cashless economy. This, plus non-politicize the government message.

Now, I get that there was a world wide shortage of N-95 masks (and sadly still is) but the U.S. government could have at any time, created policy to manufacture N95’s for the masses. Instead, we saw Mike Pence fly to 3M for a discussion of what size of political donation 3M had to offer if the WH did nothing and as a consequence, there is still not enough N-95 masks to enact a universal mandate for wearing masks.

The WH has sabotaged any meaningful response to this pandemic in every way they could and as a consequence, we now have a full blown pandemic that has been badly politicized and North America will suffer tremendously for it, not just with deaths and scarred lungs but financially and economically. We are talking about a virus that isn’t merely killing 2.5 to 3% of the elderly here, some 16 to 20% of reported cases will end up in the hospital with some degree of inflammation to the lungs and heart and 4 to 5% will end up in ICU.

If Canada wants to be a nation that beats this virus, we will need to follow the proven examples out of China, Singapore, Taiwan, New Zealand, Australia, South Korea and Japan. Every nation will have to tweak for it’s circumstances including Canada, but we already have a successful model to follow.

To that end, I will repeat. N95 masks, temp guns, contact tracing, personal hygiene, this is only part of the equation. Covid19, as with all other class 4 virus’s, is preying on immune systems that are deficient in Vitamin D, Zinc, Zinc Ionospores and post infection, Vitamin C. Deficiencies coupled with high viral loads are the reason why this pandemic is spreading. The Chinese model went directly after viral loads and succeeded with this alone (but worth a mention, their CFR dropped substantially toward the end by addressing deficiencies).

The U.S. where the virus is so well seeded now, even there, the U.S. can still get it under control but not without a dramatic reduction of the transmission of viral loads (masks, temp guns, contact tracing toward the end) and directly addressing deficiencies (they will likely need to do both, too well seeded now). Otherwise, to solely rely on short lived vaccines with initial efficacy around 60+% and vaccine campaigns that may not immunize more than half of the gen pop, it’s doubtful that the U.S. ever will get it under control. Yep, the world’s largest economy has within it, a major flaw, their systems of education or lack there of. (41% of the population of uneducated white Americans with a major political party feeding this demographic deadly, demotivating propaganda)

https://www.cnn.com/videos/tv/2020/10/31/rural-america-covid-spike-ozarks-missouri-orig.cnn

#125 Justin S on 11.02.20 at 6:36 am

I understand that Toronto home prices are high, but is this not somewhat justified in that toronto is consistently recognized as one of the best cities in the world in which to live? There is always angst that RE is 25% of Canadian GDP, but when you’re one of the greatest countries in the world (my vote for THE greatest), does it not follow that land and homes in that great country would be more expensive than homes in lower ranked countries? It just seems logical.

Of course not. Look at the list of cities that are perfectly livable and where locals can afford houses. Toronto is a dangerous bubble, according to every global metric. – Garth

#126 John in Mtl on 11.02.20 at 6:54 am

#117 IHCTD9 on 11.01.20 at 11:53 pm

We’re like an overloaded helicopter with the turbines screaming at 100 thousand RPM, yet the rubber remains firmly attached to the tarmac. How long till the rotors fly off?

Let’s hope they don’t bump the mast in flight, I’m sure none of these clowns know how to autorotate. Down we go…

#127 crowdedelevatorfartz on 11.02.20 at 7:05 am

@#99 MF
“Of course not. But nurses working 80 hours/week making 60k/year helping the sick are the problem? Get real.”
++++

Try again.
And are you talking a Registered nurse? a Bachelor of Nursing, a pediatric nurse, on and on.
If your job is in a old folks home emptying bedpans then you might be making 60k

Nurses typically work 12 hr shifts, 4 on 3 off, etc.
Shiftwork.
They make on average, $80k a year with any and all the overtime they want.
100k per year isnt unrealistic or extraordinary.
Especially this year.
Time for you to………Get real?

#128 Jay on 11.02.20 at 7:20 am

Garth,
Dont you think house prices will inflate like everything else. Salaries too.
So, buying a house now makes more sense than not. I just dont get your point on how house prices can decline in an inflation scenerio

Prices are impacted by rates, which rise with inflation. – Garth

#129 Bezengy on 11.02.20 at 7:31 am

#120 Trudi lost in the woods.

think nursing home shareholders…on the backs of essential workers living on minimum wages.

—————-

Extendicare has lost 50 percent of it’s value in the last 5 years. Every shareholder lost money. When Jagmeet declares these random social injustices you really gotta do your own fact checking. The guy hasn’t a clue on how to run an country. Diddo for the rest of the dippers.

#130 cto on 11.02.20 at 7:58 am

#125 Justin S

“toronto is consistently recognized as one of the best cities in the world in which to live?”

Toronto?!
Really? You’re being sarcastic right?

half the people i speak with that live in this crazy City cant stand those self serving articles that ignore the facts!!!~

Buddy,…i’m not even going to waist the next hour making out a three page list to counter your delirious conclusion….get real!

#131 Phylis on 11.02.20 at 8:07 am

I remember Kasparov claiming the computer cheated him. Maybe that experience helped form his character.

#132 crowdedelevatorfartz on 11.02.20 at 8:12 am

@#125 Justin S
“toronto is consistently recognized as one of the best cities in the world in which to live? ”

++++
Only because Torontonians desperately wish it to be true……have you ever lived anywhere else?
Toronto bragging
It reminds me of the self congratulatory BC License plates of 20 years ago that used to say “British Columbia – The best place on earth”
A pompous , asinine, arrogant statement if there ever was one.
Personally I find Toronto to be another large , flat, boring, cookie cutter North American city.
Indistinguishable from dozens of other flat boring North American cities.
Unbearably hot and humid in the dead of Summer and a frozen wasteland in the dead of Winter…

Perhaps the next generation of BC license plates should be a little more honest.
“British Columbia, Its nice and its not Toronto.”

#133 Dan in Vancouver on 11.02.20 at 8:35 am

After reading today’s blog and comments I am convinced we are caught in the gears of Charlie Chaplin’s “Modern Times” – but, like all good movies, in the end we will find ourselves merrily walking down the road without a care in the world…

#134 Dharma Bum on 11.02.20 at 8:39 am

#36 Dutch4505

Bellingham WA Makes sense why we are on the list.
——————————————————————–

Back in the early 90’s when I was a travelling sales rep, I used to cross the border into Bellingham whenever I was in Vancouver.

Why?

To get hammered in one of the many sleazy dive bars there. The beer was way cheaper than in Canada.

I also bought a radar detector there for use when speeding on the Coquihalla highway.

On the way back home, the customs guy was always half asleep in his booth and just waved me back in.

Ahhhhhh…..the good ole days!

#135 justdeleteitifyoudontlikeit on 11.02.20 at 8:43 am

A little thing about inflation. Observations from my neighbourhood.

House prices are up. High end renovations continue apace. The guy who had one G-Wagen in the driveway now has two, and a Ferrari. My groceries aren’t up much and energy is still cheap.

Those extra eurocars aren’t going to bump inflation in Canada, unless the guy who sold them buys a Canadian made Ford — actually not even then.

If the rich hold the vast majority of assets (including government bonds) and the rich don’t sell down their assets in retirement, then who exactly is going to sell govvies and drive bond yields higher? You’re in the business. Are your clients selling down fixed income in favour of inflation hedges?

#136 Dominoes Lining Up on 11.02.20 at 8:44 am

Garth, did you catch these two headlines in the Globe & Mail today?

https://www.theglobeandmail.com/

REAL ESTATE

Investors rush to get out of pre-built Toronto condo deals. It is a sign of weakness in a market beset by a glut of new units, declining rents and a dwindling number of renters

+

Relistings disguise Toronto’s chaotic condo market

#137 Dharma Bum on 11.02.20 at 8:51 am

#78 Nonplused

They are too busy installing a lift kit on their truck.
——————————————————————–

Hah!

I don’t care who you are, that’s funny right there!

https://www.youtube.com/watch?v=RFlCD5CYAcU

#138 Dharma Bum on 11.02.20 at 8:57 am

CANADA

No Country for Young Men (or Women).

Ok if you’re a retired bum like me, though.

But that’s about it.

Not exactly the land of opportunity anymore.

#139 NoName on 11.02.20 at 8:59 am

#131 Phylis on 11.02.20 at 8:07 am
I remember Kasparov claiming the computer cheated him. Maybe that experience helped form his character.

—-

what happend is, 1st game I think, that computer chrashed and tech spend spent some time to fix it. now imagine if he played real person wo had heart atach, game would be called, win for kasparov or most likely draw.

he never complained about second game when he got defited, and also he sad that computer played much better…

#140 vic Hood on 11.02.20 at 9:14 am

When the carrot becomes an entitlement, beware the stick.

#141 TurnerNation on 11.02.20 at 9:24 am

Here it is. That was quick. The UN just took over our travel rights. Yep CV did this.
This is a global rollout of control over our breeding, feeding and movement. We are like farm animals to them.
….

“The Globe and Mail reports in its Monday edition that a global aviation manual now under review by a UN body suggests global guidelines calling for the use of highly reliable tests when screening passengers to detect COVID-19 ahead of flights. A Reuters dispatch to The Globe says that carriers and airports are pushing for uniform global testing guidelines to waive strict quarantine requirements that are decimating travel. Travel restrictions and the use of testing now vary globally. Some airlines require passengers to obtain a negative test, even as some countries allow visitors in without quarantine, while others bar all non-essential foreigners. The International Civil Aviation Organization Manual on Testing and Cross Border Risk Management Measures, expected this month, would offer voluntary technical guidance, but not oblige countries to remove quarantines”

#142 Sail Away on 11.02.20 at 9:38 am

#132 crowdedelevatorfartz on 11.02.20 at 8:12 am
@#125 Justin S

“toronto is consistently recognized as one of the best cities in the world in which to live? ”

———–

Only because Torontonians desperately wish it to be true……have you ever lived anywhere else?
Toronto bragging

It reminds me of the self congratulatory BC License plates of 20 years ago that used to say “British Columbia – The best place on earth”

———–

Haha, yep. A few years back I was driving through a completely forgettable town on the prairie. Can’t recall the name, but maybe ‘Toejam’.

On the outskirts was the water tower with the town motto:

‘Toejam: The BEST Place in the World!’

#143 TurnerNation on 11.02.20 at 9:42 am

CV takes away travel rights and it takes away wealth.
Wait this is all about our health right, not some type of global rollout or something?
….
“With the government’s colossal fiscal response to Covid-19, financial professionals must shield their clients’ wealth ahead of potential tax increases, says Kim Moody, director, Canadian tax advisory, at Moody Tax in Calgary, Alta.

Moody spoke on Friday at the virtual Distinguished Advisor Conference — ACUITY 2020, organized by the Knowledge Bureau.

With the hefty price tag on Covid-19 relief efforts, Moody expects increased taxes aimed at wealth”

#144 George S on 11.02.20 at 9:55 am

#124 Diamond Dog said:
“Masks do work. You are right on this virus still being in a first wave …….. ”

Right on, excellent comment.

——–

The real estate situation all over Hawaii is completely crazy. Anything close to the ocean is ultra expensive so anybody other than movie or rock stars or CEOs, etc can only afford property at higher elevations quite far away from where they work time wise. Because real estate is so expensive there are very few roads that are completely jammed with traffic during the normal commute times. A bumper to bumper line of red tail lights going up the hill. When I was there at the end of October (30 years ago) it was -20C at home and of course beautiful there. Everyone was wondering how anyone could stand to live in SK. So I asked them; when was the last time you went to the beach. They all said, well a few years ago but that is because we go to work in the dark and get home from work in the dark and on the weekends we have to do yard work and have family BBQs, etc. So I said we have long days in the summer, it doesn’t get dark until after 10 pm. so we have plenty of time to get all our yard work done and since we know that in a few months all that water is going to be frozen and all those leaves are going to be gone we enjoy our outdoors while we can and besides there are lots of fun things to do in the winter, we don’t just hide indoors under a big pile of blankets.
I was talking to the owner of a local store, he was a competitive surfer. He said that because of the low real estate prices in SK he got to go surfing more than his buddies that lived in coastal cities. They had to work really a lot to keep up with their mortgage payments, he could fly anywhere cheaply.
At that time the house price to household income ratio in most of SK was about 1.0 or less.

#145 Pandemic my derriere on 11.02.20 at 10:02 am

What gullible children are the Canadian lemmings….ROTFLMAO

People in China dropping dead in the streets in March, how retarded can u be to believe that..

#146 Mattl on 11.02.20 at 10:20 am

Prices are impacted by rates, which rise with inflation. – Garth

Historically sure, but this time it does appear to be different. We just went through 10 years of pretty significant inflation – I mean house prices / rents , which represent a large share of spending for most people skyrocketed. Who cares what a carrot sells for when your rent goes up 5x your grocery bill for a month. Economies were flush with cash. A boat that was 60K in 2009 is 120K today. Building supplies, collectables, labour, everything us way up. Good luck finding anyone to work on your property, and if you do, expect to pay nearly double for what a job would have cost 15 years ago.

And did rates normalize? No, in the midst of this, they declined!

While I respect your traditionalism on things like rates and RE, at what point do we say things are different this time? Do you actually believe central banks have the courage to increase rates in bad times, when they haven’t had any willingness to do it in good times?

#147 Giraffe on 11.02.20 at 10:49 am

Check out this conclusion reached by bank economists on Bay Street: Ottawa gave families affected by the virus more than twice the amount of money the bug cost them. “Overall, Canadian households received more money ($56 billion) from government aid programs such as CERB and other transfers in the second quarter than they lost in wages and salaries due to the pandemic ($23 billion).”

Anyone have a link to the full report??

Here it is. Shall I come over and wash your car while I’m at it? – Garth

#148 GBiddy on 11.02.20 at 11:13 am

Jaguar, I’ve been getting ghosted and vanished for weeks…

#149 N on 11.02.20 at 11:23 am

#129 – ….When Jagmeet declares these random social injustices you really gotta do your own fact checking. The guy hasn’t a clue on how to run an country. Diddo for the rest of the dippers.

From what we’ve seen over the past many decades, not sure on who has a clue on how to run a country.

#150 IHCTD9 on 11.02.20 at 11:26 am

#146 Mattl on 11.02.20 at 10:20 am

…at what point do we say things are different this time? Do you actually believe central banks have the courage to increase rates in bad times, when they haven’t had any willingness to do it in good times?
___

Not yet. Either history continues or we become Japan. We aren’t going to become Japan for obvious reasons. We also are heading into some uncharted waters for Canada.

Time will tell, but it will take quite a lot of it yet. Despite all the stuff going on out there – most would probably agree they are better off today than 20-30-40-etc.. years ago.

#151 ronh on 11.02.20 at 11:52 am

J. P. Morgan says buy buy buy.

https://www.zerohedge.com/markets/moment-brutal-honesty-jpmorgan-says-economic-disaster-and-more-lockdowns-will-be-great

#152 IHCTD9 on 11.02.20 at 11:55 am

#132 crowdedelevatorfartz on 11.02.20 at 8:12 am

Perhaps the next generation of BC license plates should be a little more honest.
“British Columbia, Its nice and its not Toronto.”
____

Or “You are now entering ICBC Country” with a little graphic of an open wallet with a vacuum cleaner stuffed into it.

#153 Terry on 11.02.20 at 11:57 am

#124………..my reply

Sorry “Diamond Dog”, I don’t buy what you’re selling. I will never believe any data that comes out of China. The CCP hard liners are still in battle with the reformers. China is not our friend. Secondly, even N95 masks will not stop the Covid-19 virus from penetrating the mask it’s too small. My main point is when we all get back to normal living like we were before Covid-19 then the virus will rage everywhere again and again and again infecting more and more people every single year until almost everyone on the planet has had it. The longer we lock-down again and again, destroying more peoples livelihoods in the process, the longer the “first wave” will take to spread “Everywhere”. This may take a year or two or five maybe even a decade. It all depends how many times and for how long we keep making the mistake of locking everybody down. The virus will do what it’s going to do. Mankind will not win this battle against nature. Herd immunity also will not last. People will continue to catch this virus again and again over their lifetimes. We all need to just get on with our normal lives, get busy living, and accept our mortality if we are one of the unlucky ones to draw the short straw with catching a secondary infection after recovering from catching Covid-19. People don’t die from catching Covid-19. The can die from getting sick with something else after recovery from Covid-19 because their immune systems have been temporarily compromised from fighting the Covid-19 virus.

#154 A J on 11.02.20 at 12:01 pm

“Overall, Canadian households received more money ($56 billion) from government aid programs such as CERB and other transfers in the second quarter than they lost in wages and salaries due to the pandemic ($23 billion).”

This makes me want to puke.

#155 Faron on 11.02.20 at 12:08 pm

#122 Howard on 11.02.20 at 4:46 am

“This would be a swell time to get out of debt.”

——————————————————–

Isn’t this incongruent with the rest of your blog post?

If inflation is about to erupt, people should be taking on MORE debt right now.

No. Interest rates that consumers pay will always exceed inflation, rise with it and negate effective debt reduction due to inflation. Houses might make sense when the asset price increase is effectively making the interest rate lower. At most inflation will rise to 3% while interest rates are much more open ended and will rise rapidly to keep inflation at or below 3%. You don’t want to be holding debt if the economy overheats and inflation is piping up which is what Garth is predicting in his post. That “lid” on inflation means that relying on it to effectively reduce your debt would be a mistake.

Currently: Inflation 1%. 10yr is 0.8%. Credit Line 6%. Mortgage 2%.

Future: Inflation 3% max. 10yr 2% rising as needed. Credit Line 7.2% rising with bonds. Mortgage 3.2% rising with bonds.

#156 Faron on 11.02.20 at 12:13 pm

I should have added a future+5 years:

Future+5: Inflation 3% max. 10yr 5% still rising as needed. Credit Line 10.2% rising with bonds. Mortgage 6.2% rising with bonds.

numbers pulled out of my arse and not based on any real relationships. I’m sure they aren’t accurate, but they do illustrate the trajectories.

#157 Captain Uppa on 11.02.20 at 12:15 pm

Of course not. Look at the list of cities that are perfectly livable and where locals can afford houses. Toronto is a dangerous bubble, according to every global metric. – Garth

——————————————————–

People want what they want.

People crave stability. There are very few countries in the world more anchored than Canada in almost every regard. The United States does not have nearly the appeal it once did for many evident reasons.

Markets move on supply and demand. Whether it’s real estate, cars, gadgets, etc. What Canada offers is in very high demand, especially in these times.

#158 Barb on 11.02.20 at 12:22 pm

Can’t shop in the USA because borders are closed.

When borders reopen, the C$ will sink.

Irony.

#159 RyYYZ on 11.02.20 at 12:37 pm

So, a friend pointed out one of the units in my condo townhouse complex is for sale. Asking price a paltry $448,500. I’ve looked at the listing and it basically as un-upgraded as mine (slight improvement in kitchen). This is over twice what I paid for my unit 7 years, which I thought was already a ridiculous amount. I must admit to being tempted to sell this sucker and bank (invest) the >$300k I’d gain, and just rent somewhere. I didn’t buy this house for profit, just a place to live, but at this kind of price…

#160 IHCTD9 on 11.02.20 at 12:42 pm

#121 Cto on 11.02.20 at 4:41 am

Truduea is ready to slam immigration into overdrive, and super densify only 2 cities in Canada, regardless of job opportunities of existig Canadians.
This will continue to drive housing to the stars.
_________________________

There is a limit – and YYZ at least is getting close to it. The influx of immigrants over the glacial till into BF nowhere Ontario is steadily increasing since 2017. Gas stations, restaurants, and Motels are being built/bought, and most low end jobs are no longer handled by the dwindling local youth.

At some point, the comfort of the GTA ethnoburbs ain’t gonna be worth the cost – I noticed Brampton is on that top ten price to income list above. There is only one reason how that makes sense, and it jives nicely with the demographic showing up most here in the hinterland.

Add these new Canadians who said *&%$-it to gta prices alongside the stampede of retirees and millennial families who were already kicking down the back door to gtf out of the GTA – and you might eventually get something good: A softening of demand in some parts of the gta, and an influx of new blood into the long stagnating smaller centers.

#161 jal on 11.02.20 at 1:07 pm

“When borders reopen, the C$ will sink.”
——
When borders reopen, the C$ will be on par.
(I didn’t say when it will reopen. :-) )

#162 TurnerNation on 11.02.20 at 1:24 pm

Follow the trends in this WW3. Bankers and travel rights.

– Major airline CEO-banker bails back to that:

“The Globe and Mail reports in its Monday edition that Bank of Nova Scotia says outgoing Air Canada chief executive officer Calin Rovinescu has joined its board. A Canadian Press dispatch to The Globe say the Toronto bank’s announcement comes just after Mr. Rovinescu announced he will retire from the airline in February as it struggles to rebuild the travel sector amid COVID-19.
© 2020 Canjex Publishing Ltd. All rights reserved. ”
…..

– KLM eternal?

“The Globe and Mail reports in its Monday edition that the Dutch government on Saturday put on hold its plan to bail out KLM NV, after pilots rejected a wage freeze until 2025..
KLM chief executive officer Pieter Elbers had said that “without this loan, KLM will not make it through these challenging times.” ‘
© 2020 Canjex Publishing Ltd. All rights reserved.

#163 Stone on 11.02.20 at 1:29 pm

#120 Trudi Woods on 11.02.20 at 4:03 am
I’m with MF…a correction needs to be made not in just real estate but real effing pay for essential workers …the writings on the wall…to many have made a ton of dough…think nursing home shareholders…on the backs of essential workers living on minimum wages.

———

Own…or be owned.

Slavery was never eliminated. The slaves maintenance cost was simply outsourced…to the slave.

Oh, and they were also rebranded. They’re now called employees or independent contractors. Much more palatable when slave has such a bad connotation attached to it.

#164 Stone on 11.02.20 at 1:48 pm

Here it is. Shall I come over and wash your car while I’m at it? – Garth

———

Hell yah! And bring the car wax and polisher too.

Please. Lol

#165 TurnerNation on 11.02.20 at 2:11 pm

And more on travel rights.
Planned for years rolled out this years. Big Tech and A.I. own the world. TONS of $$ to be made here.

“A new digital certificate called CommonPass, designed to serve as a clearance mechanism for passengers based on a health diagnosis underwent its first transatlantic test on October 21 under the watchful eye of the Centers for Disease Control (CDC) and U.S. Customs and Border Protection (CBP) at Heathrow Airport in London. There, a group of select participants embarked on United flight 15 to Newark, New Jersey after being screened and tested for COVID-19 at the point of departure in a largely ceremonial exercise that included initiative co-founders, Paul Meyer and Bradley Perkins.

The app’s first trial run took place with much less media fanfare last month on a Cathay Pacific Airways flight from Hong Kong to Singapore and marked the beginning of the CommonPass pilot project launched by The Commons Project non-profit organization in-tandem with the World Economic Forum.”

#166 Justin S on 11.02.20 at 2:19 pm

Wow. Can’t believe all the Toronto hate in here. You all seem to forget where the financial, economic, and cultural centre of Canada lies!

I’ve lived in five large-ish cities by Canadian standards – Saskatoon, Calgary, KW, Ottawa, Toronto. I’ve loved them all. I’ve also travelled to 50+ countries in 5 continents, and seen countless cities. Toronto is the best by far.

You can hate on Toronto all you want, but the independent studies don’t lie.

The desirability is also apparent in so much more than the studies that continually rank Toronto as one of the best places in the world to live! Open your eyes people! This is utopia – how could it get better?

#167 belly rubs on 11.02.20 at 2:33 pm

Real estate appreciating? Say it ain’t so. There are sure a lot of players depending on the whole calliope spinning. Maybe do an(other) exposee on all those stakeholders. My assessments keep going up.

Do you see a lot of appetite for debt? The banks are the only real buyers with a wink and a click, and who knows what their data says. The title purchaser is still on the hook for the difference when the tide goes out. So be it. Banks have lots of tools to reduce bankruptcies and guide us through the next 20 years of unpredictable economic redistribution.

Who knows? The kid who cuts the lawn in 2040 might be demanding $90/hr, but your house might be worth $5 mil. The planners just need to fill in the gap between have and have-nots before then. There will be a lot of expectations on the grads of 2021.

#168 belly rubs on 11.02.20 at 2:38 pm

#166 Justin S on 11.02.20 at 2:19 pm
Toronto as one of the best places in the world to live! Open your eyes people! This is utopia – how could it get better?

From space, it’s an eyesore.

#169 Diamond Dog on 11.02.20 at 2:46 pm

#153 Terry on 11.02.20 at 11:57 am

#124………..my reply

Sorry “Diamond Dog”, I don’t buy what you’re selling. I will never believe any data that comes out of China. – Terry

Why stop with China? What about Taiwan, South Korea, Singapore, New Zealand, Australia, Japan? What is it, an Asian conspiracy? C’mon. Don’t get lazy on me, look at the numbers and see for yourself:

https://www.worldometers.info/coronavirus/

Secondly, even N95 masks will not stop the Covid-19 virus from penetrating the mask it’s too small. – Terry

Masks don’t have to be 100% effective, all they have to do is substantially lower the viral load of infection. If you think there is no difference between getting infected by, say, 1,000 virus’s as opposed to 50, think again. The reduction of the viral load is all about giving the immune system time to mount a defense against foreign invaders, not be overwhelmed by them. This isn’t a moon beam hypothetical:

https://www.cnn.com/2020/11/01/health/viral-dose-coronavirus-severity/index.html

“My main point is when we all get back to normal living like we were before Covid-19 then the virus will rage everywhere again and again and again infecting more and more people every single year until almost everyone on the planet has had it.” – Terry

Like what we did with the measles and various pox’s? (Class 4 virus’s btw) Humanity has 3 lines of defense against class 4 virus’s. 1, reduce viral load of infection. 2, address deficiencies class 4 virus’s prey on. 3, Vaccines and pharmaceuticals. We don’t have 3 yet, but we already have working models for #1 that have created virus free zones in the nations I’ve named. To dispute this, square peg round hole. #2, nutritional deficiencies compromising immune systems, the world is sluggard to wake up to it but that doesn’t change reality:

https://www.ippmedia.com/en/features/first-clinical-trial-support-vitamin-d-therapy-covid-19

https://www.youtube.com/watch?v=X6rRtTzMsBo

Spain is doing a followup with a 1,000 patient trial. They should be looking for zinc deficiencies with the same trial. If they did, we could pop the cork off this bottle.

The longer we lock-down again and again, destroying more peoples livelihoods in the process, the longer the “first wave” will take to spread “Everywhere”. – Terry

That’s the point. Maybe its not obvious, but if we allow the virus to spread everywhere, we’ll overwhelm hospitals as is happening right now in the states. Once hospitals are overwhelmed, like I said before, it forces governors and premiers to act and shutdowns are the only thing they can do at that point.

“Let ‘er buck” is not a logical option. You either slow the spread of infection through stopping or reducing viral loads of transmission, or forced shutdowns from overwhelmed hospitals are certain and the only way we can do that is reduce the viral load of infection which includes masks, the use of heat guns in indoor gatherings such as box stores and airports, washing hands, social distancing, test and trace, we already have the working models, we don’t need to reinvent the wheel.

“Mankind will not win this battle against nature.” – Terry

Terry, some nations have already beat this virus, not just China. The only thing keeping the rest from doing the same now is ignorance and political will.

Herd immunity also will not last. – Terry

Agreed (likely for different reasons, Covid19 is likely to mutate into different strains to reinfect hosts when approaching herd immunity, as it’s closely related genus virus’s have done), the rest of what you say, already answered. It will be hard globally if not impossible to get herd immunity with vaccines in the coming years which is why #1 and #2 are such important concepts to grasp. I can say to readers what will happen if we don’t. We’ll see more of the same of what will happen this winter and the economic consequences will last for years. Perhaps not as acute as what we will face this winter, but a drag on the world economy just the same.

This does not have to happen but ignorance is a choice so, it can happen. Like I say, some nations have already beat this virus through the reduction of viral loads alone and the science will build a compelling argument for #2 (deficiencies compromising immune system function) but in reality, we should already know deficiencies are at work with Covid19 as they are with all other forms of pneumonia. Again, I’ll post the link below because people are likely to skip it. With deficiencies like Vitamin D, its as plain to some as the nose on your face (Zinc is less obvious but a Zinc deficiency compromises the immune system just the same, particularly with the proper functioning of the Thymus gland but we’ll get there)

https://www.youtube.com/watch?v=X6rRtTzMsBo

https://www.healthyandnaturalworld.com/common-diseases-caused-by-vitamin-d-defficiency/

https://pubmed.ncbi.nlm.nih.gov/3514057/

#170 50 YEARS OF MAPLE LEAF INCOMPETENCE! on 11.02.20 at 2:46 pm

#166 Justin S on 11.02.20 at 2:19 pm
Toronto as one of the best places in the world to live! Open your eyes people! This is utopia – how could it get better?

And the Arghhh Hoes are undefeated this entire season!

Toronto is all about Winning!

#171 SoggyShorts on 11.02.20 at 2:55 pm

#163 Stone on 11.02.20 at 1:29 pm
#120 Trudi Woods on 11.02.20 at 4:03 am
I’m with MF…a correction needs to be made not in just real estate but real effing pay for essential workers …the writings on the wall…to many have made a ton of dough…think nursing home shareholders…on the backs of essential workers living on minimum wages.

———

Own…or be owned.

Slavery was never eliminated. The slaves maintenance cost was simply outsourced…to the slave.

Oh, and they were also rebranded. They’re now called employees or independent contractors. Much more palatable when slave has such a bad connotation attached to it.
***********************
Really?
If you could choose, would you rather be
a) a black slave in 1820
b) a worker at Costco in 2020

Which would you pick? idiot.

#172 KLNR on 11.02.20 at 3:35 pm

@#132 crowdedelevatorfartz on 11.02.20 at 8:12 am
@#125 Justin S
“toronto is consistently recognized as one of the best cities in the world in which to live? ”

++++
Only because Torontonians desperately wish it to be true……have you ever lived anywhere else?
Toronto bragging
It reminds me of the self congratulatory BC License plates of 20 years ago that used to say “British Columbia – The best place on earth”
A pompous , asinine, arrogant statement if there ever was one.
Personally I find Toronto to be another large , flat, boring, cookie cutter North American city.
Indistinguishable from dozens of other flat boring North American cities.
Unbearably hot and humid in the dead of Summer and a frozen wasteland in the dead of Winter…

Perhaps the next generation of BC license plates should be a little more honest.
“British Columbia, Its nice and its not Toronto.”
—————————–

LOL
every so often a list comes out that rates Toronto high in the best cities category. like this one https://www.cntraveler.com/gallery/the-most-livable-cities-in-the-world. then the curmudgeons come out of there holes to tell us all otherwise. amusing how triggered some folks get by the littlest thing.

Toronto consistently makes these lists.
just one of many great places to live.

#173 Phylis on 11.02.20 at 3:45 pm

#166 Justin S on 11.02.20 at 2:19 pm
The mayor of milton needs your promotional expertise.
Btw, where did he go?

#174 Ronaldo on 11.02.20 at 4:01 pm

#128 Jay

What has happened to house prices in previous recessions.

https://www.loveproperty.com/gallerylist/96807/what-happened-to-us-house-prices-in-previous-recessions

#175 William R Drury on 11.02.20 at 11:26 pm

Had to get your shot in about Trump with Covid rampant. Do you know who is getting covid? They will not die. The schools are open and where is the crisis the teachers union railed about. Those unions care about money not the students. Yes I know there is some super conscientious the union drags out to say all teachers are like this. You might be right Trump gets crushed but did you figure out what Kamala was saying in her meme cartoon. Okay I will help you. Communism with reparations are the US future if Biden wins. Maybe the corupt wall street has already purchase the Biden administration. You should know how that works.
regards
Have a nice TDS day
Bob Drury

#176 Jean Roden on 11.02.20 at 11:54 pm

DELETED

#177 Jenn on 11.03.20 at 9:54 am

At the very least, with a childcare plan, that has been studied and produces ROI. When parents (mostly women) don’t have to drop out of the workforce because they have children and no (affordable) childcare, that produces economic activity. So, I wouldn’t consider that a straight-up cost. If it follows Quebec’s model, it’ll pay for itself. There are certain social programs that do that, by eliminating certain costs to society.
For example, providing the homeless with a residence is cheaper than not, because they then require way fewer social services and medical care.
You just have to swallow the upfront costs first to see the savings or ROI.

#178 You are wrong on 11.04.20 at 12:24 pm

Garth if you are correct about inflation, then there is no reason to get out of debt. Indeed, pile on more debt because inflation will devalue it.
The real problem is that there is no inflation to speak of. There is an explanation for this. There is very little velocity of circulation of money.

from
You are wrong