The young & the pooched

In case you’ve been arousing yourself with MLS temptations lately and missed the big news, here’s a recap.

Six out of six big Canadian banks have posted fat profits, beat the Street and slashed their loan-loss provisions. In the middle of a pandemic and recession, what does this mean? Simply that the virus is so done – at least as the main determining macroeconomic factor. We now know where we’re going. Only the speed is uncertain. Several implications flow from this. They all support the themes a certain pathetic blog has been proselytizing for a weeks now.

Our reptilian Bank of Canada boss, for example, is admitting that as the herd is dosed (and that will erupt come April) the economy will rebound. The central bank rate will stay low, but sentiment is growing the CB will start ratcheting back its bond buying – also in April.

Put it together: (a) corporate profits jumping, (b) vaccinations ramping up, (c) infections and hospitalizations falling, (d) economy reopening and rebounding, and (e) the slow retreat of monetary stimulus. And this is what you get…

Yes, I know we published a chart of the bond market erection two days ago, but the growth since has been dramatic. The return on 5-year G0C debt has now tripled in three months. The bond market ain’t blind. It sees growth, wage pressures, retail therapy, less stimulus and more inflation. By the way, StatsCan says payroll employment rose by 44,200 in December after decreasing by 64,500 in November.

So, you can expect mortgage rates to begin their ascent momentarily. Hope you locked in. As suggested.

Now, some people wonder – if Covid’s being crushed, workplaces will reopen, offices repopulated and herd immunity achieved – why this insane nesting real estate boom would continue. Pandemics are temporary, after all, but moving your family to Marmora or Comox is not. How come public officials, like the central bank governor, keep denying the speculative FOMO fever that’s embraced the land?

It’s wilful blindness. The CB wants growth, no matter from whence it comes. The big banks are entering a critical spring housing market and want to sell a slew of mortgages. And floggers like Royal LePage just want to, well, flog.

Did you see the latest survey that outfit published? What have we done to the children?

LePage says 48% between ages 25 and 35 own real estate with half of those having bought during the pandemic – yes, when prices were at an historic high. Among those who have not purchased, 84% say they will soon. And when asked if real estate (now the most expensive it has ever been because of a unique set of temporary circumstances, already passing) is “a good financial investment”, 92% stick up their hands in joyous agreement.

Yes, we know the nation’s biggest real estate marketing company creates media interest with these pieces of ‘news’ routinely fed to journalists now working in their basements and broadcasting over Skype. But this is a scary as it is suspect. We’re also being told that the young cohort believes WFH will last forever (because they want it to), which gives carte blanche to go rogue-suburban and borrow their brains out. “The pandemic provided an unexpected prize for young Canadians,” says the company’s CEO mouthpiece, “a path to home ownership.”

Some prize. It also allowed this generation to spend more than any previous one on accommodation, increase household debt by a record amount ($100 billion+) in a single year, restrict mobility, suck up scarce liquid assets, become less diversified or flexible and – in many cases – physically remove them from workplaces where advancement, recognition and career potential are achieved.

Hey, but that’s just the Boomer in me talking, right? Houses will go up forever. Mortgage rates won’t double in five years. The boss will keep giving you raises and job security even when you don’t come to work. And putting 100% of your net worth into a single asset a suicidal commuting distance from the office is a “good financial investment”. Coz, of course, everybody wants to live there. With the chickens.

Well, time will tell. But experienced eyes see a generation embracing risk, betting on a one-asset strategy and mistaking a weird little (but intense) chapter in modern history as an inflection point for the future. It’s not.

131 comments ↓

#1 S.Bby on 02.25.21 at 1:48 pm

Speaking of bonds, here is some comedic relief:

https://www.marketwatch.com/story/bitcoin-may-replace-bonds-cathie-wood-says-11614276934?mod=mw_latestnews

#2 Rook on 02.25.21 at 1:55 pm

Garth, you talk about the explosion of pent-up demand we’re in for as the vaccine gets distributed. Assuming no serious covid mutation which lowers the vaccine’s efficacy (or makes it useless), I’m inclined to agree.

That being said, one of the other things you’ve mentioned is how supply chains have been stressed. Your $7 for a 2 x 4 is a decent example of that. Demand exceeding supply, driving the price up.

Do you know something we do not about the ability of supply to keep up with the pent-up demand? Won’t limited supplies and the controls governments have implemented for covid limit supplies?

#3 headsmash buffalo jump on 02.25.21 at 1:57 pm

“The big Six out of six posting fat profits, in the middle of a pandemic and recession, what does this mean?”

“A Feast in Time of Plague (opera)” – play of the early 20th century

from wikipedia:
In the midst of a feast, a Young Man calls for everyone to remember and raise a toast to one of their friends who recently died from the plague. Walsingham, however, stops them and calls for a moment of silence instead. He then requests that Mary sing something sad before the merriment resumes. He is touched by her song, but Louisa thinks that Mary is just playing on his emotions.

Louisa’s cynical rant is interrupted by the creaking sounds of a dead-cart passing by. She faints; when she comes to, she asks to know whether she was only dreaming about the cart. The Young Man tries to cheer her up, and asks Walsingham to sing something in honor of the plague.

“When Walsingham finishes singing his hymn, the Priest enters, chastises the merrymakers for disrespecting the dead, and begs them to leave. When the Priest attempts to shame Walsingham by bringing up the memory of the latter’s recently deceased mother and wife, Walsingham sends the Priest away and then remains lost in thought. The feasters return to their meal, momentarily interrupted by distant sounds of a funeral procession.”

Or this one:
https://www.youtube.com/watch?v=9fnbbNPQigE

#4 SnowOwl on 02.25.21 at 1:59 pm

Garth, does it make sense to buy utilities in the current fixed income environment?
Thanks!

#5 Stone on 02.25.21 at 2:00 pm

#1 S.Bby on 02.25.21 at 1:48 pm
Speaking of bonds, here is some comedic relief:

https://www.marketwatch.com/story/bitcoin-may-replace-bonds-cathie-wood-says-11614276934?mod=mw_latestnews

———

Soooooo…..when should the outflows from the ARK ETFs begin? Yesterday?

I wonder if anyone will remember her name in 6 months? A year?

#6 binky barnes on 02.25.21 at 2:00 pm

Not so fast folks. Once the big man gets stuck in to this housing mess it will get sorted, lickety-split. That is what our PM does….he solves problems. For example, vaccine acquisition and roll-out, and his prudent and efficient decision-making around it, is a clear demonstration of his problem-solving in action. This housing mess is small potatoes.

BB

#7 TurnerNation on 02.25.21 at 2:05 pm

As this is a financial blog:
A look at the permanent, rolling Economic Shutdowns.
For decades the ‘conspiracy’ nuts warned of a global rollout/agenda planned for 2021. Well here we are what say you?

All that revenue lost without the live events, why we might just require a UBI? How ’bout that. Cash me outside.
(A reminder, Ontario increased PCR test cycles from 30 cycles to 35 cycles to “more accurately test for variants.)
Economic shutdowns and loss of rights is not going away. It’s being rolled over till JULY in Calgary, Toronto
Our elite rulers tell us it’s not so bad:

-https://www.cbc.ca/news/canada/toronto/toronto-covid-19-update-1.5926041
Toronto is preparing for another summer under the shadow of the pandemic, with major in-person events once again cancelled to July 1st. (Evan Mitsui/CBC)

-https://calgaryherald.com/news/local-news/city-extends-state-of-local-emergency-to-assist-with-vaccinations
The decision extends the city’s local state of emergency, which was declared Nov. 25, for another 90 days.
quarantine.

………………….

THIS IS NOT ABOUT SCIENCE. It is about No Fun Allowed and ending Our Way of Life. Proof is below. From Day one of this New System in March ’20 we were told #stayhome.

Huh??
>>”Snowbirds who have been vaccinated abroad still have to submit to testing and pay for three days in quarantine.”<<
……

"Globe says Air Canada told travellers pay price for fun
The Globe and Mail reports in its Thursday edition that as a way to disincentivize non-essential travel, the federal government's new rule requiring a three-day hotel stay for international travellers makes sense. The Globe's Robyn Urback writes that not only will many potential jet-setters balk at spending upward of $2,000 on three days in an airport hotel, but surely the prospect of wasting hours on a government-run hotline to book a quarantine reservation is enough to keep most Canadians at home. Indeed, only a masochist would put himself or herself in a position to hear, "We are experiencing higher than normal call volumes" for hours. So the new policy just might prove effective in dissuading some casual vacationers from leaving the country. But as a public-health measure, the hotel quarantine program does not appear to have been designed with actual evidence in mind….Snowbirds who have been vaccinated abroad still have to submit to testing and pay for three days in quarantine. © 2021 Canjex Publishing Ltd. All rights reserved."

#8 Matt on 02.25.21 at 2:06 pm

People said housing is a bubble in 2008 and every year since. The prices has kept going up even during a pandemic. The prices will be a lot higher in the future due to inflation (dollar losing value).

#9 Newbie on 02.25.21 at 2:07 pm

WFH is not the driver of the demand for SFH. It’s:

1. Millenials getting older and having families and
2. Low interest rates.

Most professionals aren’t tied to a major city. Many small towns have lawyers, teachers, doctors, and yes even financial advisors. They’re moving because of a lifestyle change. Pubs and concerts are going to be replaced with diaper changes and yard maintenance.

#10 chuck on 02.25.21 at 2:19 pm

Garth, the sentiment is understood and no asset class can go up forever, however I think there is a reason why real estate has the word “real” in it. Currencies turn into dust while it is in people’s DNA to continue to births, and seek shelter. Can we say those in charge of monetary policies found wholy graal?

#11 Howard on 02.25.21 at 2:21 pm

This is kind of noteworthy. Small country but sets a precedent. I like the word “forces” in this Bloomberg headline.

Well done Jacinda.

New Zealand Government Forces Central Bank to Include Housing In Rate Setting

https://www.bloomberg.com/news/articles/2021-02-24/n-z-government-forces-rbnz-to-include-housing-in-rate-setting

New Zealand’s government will require the central bank to take account of rampant house prices when it sets interest rates, a change that may restrict its ability to run loose monetary policy.

#12 Doug in London on 02.25.21 at 2:29 pm

Yes, bond yields are up and it shows with the falling prices of bond ETFs. I figure it’s a good time to take some profits on equities that you scooped up last March when they were dirt cheap, and move back into the bond ETFs you sold back then. Not all at once, because those bond funds will probably get even cheaper, but every now and then going forward. Wow, buy low and sell high. What a strange concept.

#13 Millennial 1%er on 02.25.21 at 2:30 pm

I bought a house (out of necessity & well within my affordability) last year and my real estate agent is trying to convince me to take out a HELOC to use as a downpayment for a second property lmfao

can’t wait for this party to be over. canadian looney is funny money that the banks will just give out for free i guess

#14 Billy Buoy on 02.25.21 at 2:41 pm

Yield curve control by the Fed starting in 3…2…1.

Buying 80 billion in bonds currently. Why not print a few more Trillion and buy bonds to keep the party going?

THEY HAVE NO CHOICE.

Enjoy your 10 million dollar homes clowns with your 25 dollar bread.

Disgusting but I bet most of you here just don’t give a Damm….

#15 Billy Buoy on 02.25.21 at 2:47 pm

Mr. Turner:

Your calls for housing have been prudent for years but as we all know timing is everything.

I say by the end of 2023 you will be right.

#16 Alex on 02.25.21 at 2:50 pm

We didnt move to the boonies, but we dont want to go back to the office… :(

No boss to impress, and close enough to reaching our target NW to not give a crap….

The next few months will be interesting.

#17 45north on 02.25.21 at 2:52 pm

talking about home ownership Some prize. It also allowed this generation to spend more than any previous one on accommodation, increase household debt by a record amount ($100 billion+) in a single year, restrict mobility, suck up scarce liquid assets, become less diversified or flexible and – in many cases – physically remove them from workplaces where advancement, recognition and career potential are achieved.

good writing, I’ll repeat it because it’s important

the kids have just taken on record debt
their mobility is restricted
they have fewer liquid assets
they’re less diversified
they’re physically removed from the office where advancement, recognition and career potential are achieved

I’ll comment on the last point. If you’re working from home you’re not going to see the new technology. You complete your assignments using the old technology – after all you’re good at it. If you’re in the office you see things you’re not going to see at home. At Agriculture Canada, I learned Digital’s VAX technology . Then we moved into satellite image analysis. Because I was in the office, they asked me to buy the equipment. Performance of the unix systems was twice that of the VAX systems. At least twice. I learned unix. A year later all our work was on unix. A year after that I cancelled all our VAX accounts.

#18 Dolce Vita on 02.25.21 at 3:05 pm

Agree the young biting off more than they will be able to chew even without mortgage rates going up.

I mean, this was Dec. 2019, Statcan:

– House prices increased 69.1% between 2007 and 2017.
– Median income rose by 27.6% over the same time period.

Since then median income up by 12%. House price index up by about 25% and climbing.

%’s or not, those are big numbers. For example:

https://www150.statcan.gc.ca/n1/pub/46-28-0001/2019001/article/00002-eng.htm

————————

Canadians losing a LOT of ground in the past 14 years with income vs. property values. Will it end?

I doubt it.

It’s a National Disease you can’t VAX for, Obsession, ATM Retirement Plan.

One thing it does mean is that spending in the economy other than finance and RE will suffer. Has to. Finite income, home costs outstripping it by a long country mile…

something else has to give.

We’ll just have to wait and see what that is.

#19 Linda on 02.25.21 at 3:11 pm

Today’s pup photo is ‘AWWW!’.

OK, now on to the blog of today. As a member of the Boomer generation, albeit the latter end of it, I think WFH may well be the wave of the future. First, not a few businesses will have recognized the financial benefits of not having to supply office space. So those businesses that can employ digital workers are possibly not going to return to major office space. A minor, possibly shared with other companies in the office rendition of a time share arrangement, maybe. Second, what if the tradeoff to get & keep employees is allowing them to WFH? As not a few commenters on the blog have noted, they or someone they know have been doing WFH for literal years prior to any pandemic. Third, we already know the virus has mutated. While I sincerely hope that vaccination, even if it ends up having to be annual just like the flu shot, will allow us to return to former habits I am also cognizant that may not happen. Let’s just say I’m not planning to get rid of my mask supply any time soon. In fact, I’ve come to believe that mask wearing will be a semi-permanent accessory from now on in.

Will housing prices level off or even drop? Well, for the sake of those trying to buy I do hope so. Meanwhile, I think those that can should lock in for as long a term at as low a rate as they can get. Call it a hedge against inflation, because I also believe that rates are going to go up.

#20 Prince Polo on 02.25.21 at 3:17 pm

Speaking of embracing risk like a good boy, each $1M+ mortgage added to the books of the big five banks means that my juicy divvies are that much more secure. Thanks, Millennials (my cohort does not disappoint)!!

#21 Dolce Vita on 02.25.21 at 3:24 pm

Nice USA VAX Delivery chart.

Looks good, for the USA.

Little if none of that trickling your way Canada:

– Moderna doses to Canada from the USA = 350K doses in Feb, out of 100M.
– Pfizer doses to Canada from the USA = BIG FAT ZERO doses in Feb, out of 100M.

I recall last March Americans thinking Italia was Fascist again due to its lockdown (no one else save China) and Tweeting to them my warning to prepare that it is coming their way AND their response in chorus:

“Give me Liberty or give me Death.”

– it would appear that Death trumped Liberty and “me first, you after” their meme with neighbors.

Oh and Canada at that time, SMUG they would be the World’s Valhalla Norse God Deities rendered harmless by Maple Syrup, Orcas, Tim Hortons, Poutine and Lobsters. A Non Sequitur nation…a lot like its RE.

————————

Lucky for you Canada the European Union was there [and here] when you needed it and it didn’t MOCK you like the UK did for “stealing” vax doses from the World’s Poor (Covax) nor did it send you a TRICKLE of vax like the USA.

JE ME SOUVIENS Canada…let’s hope so.

…meanwhile in Italia I have to ask just how many 80 yr olds are there in this country that need vaxing? Where are they all coming from, the woodwork?

Yup, Covid didn’t kill them.

#22 Are you DEBT? on 02.25.21 at 3:30 pm

What about the debt?

Looks like the Liberal are about to go on a spending spree that will put the $400B of 2020 look like foreplay.

Who’s going to pay for all this?

Perhaps that’s the play?

Use Covid as excuse to spend, spend, spend.
Spend, spend, spend to stoke inflation.
Use this run-a-way inflation as cover to jack rates.
Use jacked rates as excuse for austerity and why everyone must pay more taxes.

Nice roadmap for politicians to have cover and ensure self-preservation next 2 decades.

#23 SunShowers on 02.25.21 at 3:31 pm

“Houses will go up forever.”

I mean…they probably will.

But only with a significantly long time horizon (2ish decades), and when you consider maintenance/opportunity costs, they will have gone up less than a B&D investment portfolio would have in the same amount of time.

#24 Job#1 on 02.25.21 at 3:36 pm

#6 TurnerNation

“(A reminder, Ontario increased PCR test cycles from 30 cycles to 35 cycles to “more accurately test for variants.)”

I meant to comment when you first linked to this issue.

As far as I have been able to find, Ontario never ran fewer than 35 amplification cycles, nor did anywhere else in North America, with the exception of Newfoundland/Labrador at 32 cycles.
The article states that only positive samples achieved with 35 OR FEWER cycles can be used to determine if it is a VOC (Variant Of Concern). Any sample requiring more than 35 cycles to turn positive does not contain enough viral material. In fact, this is a directive to LOWER the cycle threshold and is a tacit admission that high threshold counts result in unreliable outcomes.
Just a small correction…otherwise, thanks for your efforts.

#25 Dolce Vita on 02.25.21 at 3:37 pm

Only thing that can mess up when the pandemic ends is of course:

The Variants.

On paper, VAX Canadense ought to easily outpace the variants if we believe Minister Anand delivery data and trust the Provinces to get the vax fast into the arms of Canadians.

Though, and 2 data points only, Variants gaining a bit of steam as of late, Feb 21/25:

UK 760 → 908
South Africa 39 → 42
Brazil 1 → 2
Totals 800 → 952 (up 19% in 4 days)

Still very few variant cases overall vs. the original Covid cases over that period…gives me a bit of pause though.

UK variant last Sept was all of 300 cases mostly in the Kent area. You all know what happened in Dec to them (cases went exponential in ONE MONTH, 14.5K → 60K). Canada hopefully has learned from them.

Fingers crossed.

#26 Tron Light on 02.25.21 at 3:44 pm

#7 TurnerNation on 02.25.21 at 2:05 pm

In keeping with your post: Two thirds of New York City arts and culture jobs are gone according to Bloomberg.

https://www.bloomberg.com/news/articles/2021-02-24/two-thirds-of-new-york-city-s-arts-and-culture-jobs-are-gone

#27 Leftover on 02.25.21 at 3:47 pm

#13 Millenial 1%er

“I bought a house (out of necessity & well within my affordability) last year and my real estate agent is trying to convince me to take out a HELOC to use as a downpayment for a second property lmfao”

____________________________________________

Exactly…that’s what’s fueling the speculation bubble. People with houses taking advantage of extraordinary interest rates and artificially low inventory to flip houses. I see plenty of listings that were purchased mid to late 2020 now on the market for $XX + 20%.

Does anybody still think that it’s foreign buyers that drive up house prices? Or that we don’t need to tax capital gains on primary residences?

#28 Comments! on 02.25.21 at 3:48 pm

In 1929 Herbert Hoover and Andrew Mellon (Treasury Secretary) did very little to stop the stock market crash that later led to the great depression, both with deep beliefs in pure and unfettered capitalism. Today’s central banks will to do anything and everything possible to prevent a recession, a normal bear market and even much needed real estate correction.

Time will tell which medicine will have the most damaging side effects.

#29 Doug t on 02.25.21 at 3:55 pm

Um yeah so Canadian banks post big profits – huh – shock and awe – the way they treat their “customers” is akin to a puppy mill – since the damndemic struck I was not at all shocked when walking into a Cibc branch to find zero hand sanatizing stations (let alone a box of masks) for “customers” – they wouldn’t spend a penny for anything even at gun point – the little cubicle offices are shambles, torn rugs, chipped and scraped desks and chairs, and every 6 months you get a brand new “account manager” that seems about as seasoned as a raw oyster. The top nuts at the head of these “banks” should be ashamed of the way they treat their employees and customers all in the name of PROFITS – ha they probably walk around with tape on the bottom of their shoes hoping to snag a nickel on the sidewalks

#30 triplenet on 02.25.21 at 4:00 pm

Dolce Vita-
When you go out for dinner in Italy and then voice your concern that you don’t think you can afford the cost of the meal- do they still tell you not to worry, the German government will take care of it. ?

#31 cramar on 02.25.21 at 4:17 pm

#75 SoggyShorts on 02.24.21 at 5:40 pm

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

Sounds like more roommates who have sex rather than a couple to me.

Not responsible for what you think. We have been married for 53 years and have 3 grandkids in university.

Do you do separate loads of laundry too?

No. She does laundry.

Split the check at a restaurant?

No. Sometimes she pays, and I get the tip. Other times vice-versa. Unless one is treating the other for a special occasion.

What about wills? Are you each sole beneficiaries of each other’s loot?

No.

Also curious: divorced parents?

Absolutely no divorced parents or grandparents. Or uncles & aunts.

Trivia over. We’re done!

#32 Dolce Vita on 02.25.21 at 4:22 pm

One last salvo today:

Not advocating for WFH but it will probably end up LOWERING home prices in the long term.

The young are going outside of urban centers seeking cheap land. Face it, that Sugar Shack in Vancouver at $1M [link by a commenter from Mtl] is all land cost.

So the farther out of town the young go, the cheaper the home price will be in the long term thanks to cheaper land.

That means urban home prices will have to drop to attract buyers. Initial forays were into the ‘burbs but I think if WFH is a “thing” forays out of urban centers and the ‘burbs for homes will also be a “thing”.

I mean I would tell relatives here in Italia that 3 of her can fit into BC and home prices before I left upwards of €700K on average and their mouths would drop and they would ask with all that land, prices are that high? Are you crazy?

So if it sticks [WFH] it will lower prices in urban centres due to cheaper land outside of urban centers.

I know Garth, empty malls, REITs no longer a good suggestion to invest in BUT lowering the debt of the young trumps all that.

Where they go, services will follow as they always have.

Society will adapt as it always has. Recall:

– Luddites vs. Gutenberg’s invention a few centuries before.
– Horse, buggy vs. auto, gasoline autos vs. electric autos, vs. railroad, air flight, etc.
– Bill Gates late 80’s, paraphrased “The Internet will never amount to much.”
– Industrial Revolution, former serfs could work at a factory, be free [ending generations of indentured servitude] and buy/rent a home. They left the farms, landlord estates for urban centers.

Certain there are clever Commenters that can extend the above list considerably.

One thing for certain, there is no certainty when it comes to Schumpeter’s Creative Destruction.

We’ll have to see if WFH is more efficient than urban centers. When it comes to RE prices, clear that it will be cost and price wise.

A “thing” who knows? but a good start I’d say.

-FWIW

#33 wallflower on 02.25.21 at 4:29 pm

One wonders how an authentic financial advisor feels to be in competition with ANY real estate agent.
How do I despise the RE industry… Lock them up.

#13 Millennial 1%er on 02.25.21 at 2:30 pm
I bought a house (out of necessity & well within my affordability) last year and my real estate agent is trying to convince me to take out a HELOC to use as a downpayment for a second property

#34 As I often say ... on 02.25.21 at 4:32 pm

I would hate to be young now. Lottery or inheritance …

#35 The Last Gasp on 02.25.21 at 4:34 pm

you were referring to the equity market Garth?

yikes!!!!

#36 don on 02.25.21 at 4:38 pm

matt #8 Prices, especially in suburbia, did drop in 2018 until the fed reduced interest rates responding to a stock market correction. The prices began to shoot up shortly after.

#37 Faron on 02.25.21 at 4:41 pm

Yeah, wow. Bond market tanking while bond market fear skyrockets. We are at a level of VXTLT that was crossed upward on March 5th, 2020. Apparently, the UD Fed doesn’t like bond fear.

#5 Stone on 02.25.21 at 2:00 pm
#1 S.Bby on 02.25.21 at 1:48 pm

I wonder if anyone will remember her name in 6 months? A year?

She may be remembered as a pariah. Lets see what the outflows looked like today. Apparently, when an entity holds more than 10% of a stock, they cannot sell until 6months after they cross that threshold. This effect is that if outflows ramp up, she has to sell the more liquid (and often more solid) names because she can’t sell the more speculative names that are crashing this week. Ugly.

Stone, how’s your B+D holding up? If you report that you are still up 6.4%, I’m going to… I don’t know what I’ll do. yelp.

#147 Don Guillermo on 02.25.21 at 12:11 pm

Good to know you’ve appointed yourself the focal point for engaging on Garth’s comment section.

Strange, isn’t it the dry season in Mazatlan right now? Why so glum? Sail Away visit your pool?

#148 Sail Away on 02.25.21 at 12:17 pm
Let’s just say in a true long term emergency, hygiene is waaay down the list.

That’s why the best emerg ration for serious problems is a can of catfood. Plenty of calories and you certainly will never be tempted to raid it until you need it.

I don’t think the inuit nor the dorset had catfood.

#38 Danger Dan on 02.25.21 at 4:47 pm

As I learned from Wile E. Coyote, we can defy gravity as long as we don’t look down

#39 Penny Henny on 02.25.21 at 4:47 pm

#14 Billy Buoy on 02.25.21 at 2:41 pm
Yield curve control by the Fed starting in 3…2…1.

Buying 80 billion in bonds currently. Why not print a few more Trillion and buy bonds to keep the party going?

THEY HAVE NO CHOICE.

Enjoy your 10 million dollar homes clowns with your 25 dollar bread.
//////////////

I make my own bread now and it’s delicious!

#40 Rogerhomeinspector on 02.25.21 at 5:00 pm

Been watching the comments here for years and I can never figure out this sense of Canadian exceptionalism that seems to be bounced about all the time.

For example, I hear many here (and in the wider public) state that the BoC won’t ever raise interest rates- it’ll be suicide! My question is at what point do we not have a choice? If the Americans and other developed nations raise their rates 2 or three percent, wouldn’t that force our hand? Or what happens if there’s another 2008 style crisis or a global recession? What if we start experiencing significant and uncontrolled inflation? Who’s going to want to do business with Canada?

It just seems to me that there are a lot of external factors that could upset the apple cart and send the Canadian economy (and its housing with it) into a nose dive that we simply couldn’t dodge.

#41 Dougie on 02.25.21 at 5:00 pm

…reptilian Bank of Canada boss…

A bit harsh, don’t you think?

#42 Penny Henny on 02.25.21 at 5:01 pm

#37 Faron on 02.25.21 at 4:41 pm

Stone, how’s your B+D holding up? If you report that you are still up 6.4%, I’m going to… I don’t know what I’ll do. yelp.
//////////////

My B&D (boring and dull) Canadian dividend focused portfolio is at 8.4 after todays hit.
Now that I’ve said that let the sell off begin.

#43 Sun Tzu on 02.25.21 at 5:17 pm

I appreciate your enthusiasm for the future of the economy, but I think you are missing some big parts of it
that are either not coming back or coming back over time.
Airlines, tourism, hotels, not to forget thousands of small business that won’t be seen again and landlords who have taken big hits. I don’t see them in your calculations. The economy is going to look a lot like Tiger Woods during recovery.

#44 KLNR on 02.25.21 at 5:38 pm

@#43 Sun Tzu on 02.25.21 at 5:17 pm
I appreciate your enthusiasm for the future of the economy, but I think you are missing some big parts of it
that are either not coming back or coming back over time.
Airlines, tourism, hotels, not to forget thousands of small business that won’t be seen again and landlords who have taken big hits. I don’t see them in your calculations. The economy is going to look a lot like Tiger Woods during recovery.

the second covid subsides and folks get the green light, the travel industry will be back in full force. the entertainment and travel industry will be real frothy. great time to be an entrepreneur.

#45 KLNR on 02.25.21 at 5:42 pm

@#34 As I often say … on 02.25.21 at 4:32 pm
I would hate to be young now. Lottery or inheritance …

I’d love to be young right now.
so much opportunity out there if you want it.

oh and, it’d be real nice to have more years
in front off me than behind.

#46 cuke and tomato picker on 02.25.21 at 5:54 pm

Time to take some profits?

#47 George on 02.25.21 at 5:56 pm

StatsCan says payroll employment rose by 44,200 in December after decreasing by 64,500 in November.

……….

lol. all i see is shutdown stores in the Etobicoke area, actually…far worse in Toronto. Am sure that will be bakc and running in few months..nah

i guess folks bragging about the portfolios will end for awhile . OUCH

#48 Papabear on 02.25.21 at 5:56 pm

@Sun Tzu

What makes you think airlines won’t be seen again? Almost everyone I know with two loonies to rub together is ITCHING to book a flight somewhere. Anywhere, just as long as there’s something new to see. Hotels might take a while, but with some clever deals to be had, the run-up to full capacity will come.
Small businesses, sure, but someone else will fill their shoes with hopes of cheap commercial rent.

“Almost everyone” being whoever didn’t need to take out a mortgage worth 50%+ of their take home pay.

#49 ha!!!!! on 02.25.21 at 5:57 pm

Stone, how’s your B+D holding up? If you report that you are still up 6.4%, I’m going to… I don’t know what I’ll do. yelp.

……..

priceless- no updates for awhile !!

#50 Dr V on 02.25.21 at 6:01 pm

29 Doug T – remedy for you

1) Pull out investments statement
2) Search “holdings” on internet
3) Look for RBC/TD/BMO/CIBC/BNS

Guaranteed to lessen the pain.

#51 Stone on 02.25.21 at 6:02 pm

#37 Faron on 02.25.21 at 4:41 pm
Yeah, wow. Bond market tanking while bond market fear skyrockets. We are at a level of VXTLT that was crossed upward on March 5th, 2020. Apparently, the UD Fed doesn’t like bond fear.

#5 Stone on 02.25.21 at 2:00 pm
#1 S.Bby on 02.25.21 at 1:48 pm

I wonder if anyone will remember her name in 6 months? A year?

She may be remembered as a pariah. Lets see what the outflows looked like today. Apparently, when an entity holds more than 10% of a stock, they cannot sell until 6months after they cross that threshold. This effect is that if outflows ramp up, she has to sell the more liquid (and often more solid) names because she can’t sell the more speculative names that are crashing this week. Ugly.

Stone, how’s your B+D holding up? If you report that you are still up 6.4%, I’m going to… I don’t know what I’ll do. yelp.

———

Since you’re asking…my B&D is at 5.37% YTD. Down 1.10% today from yesterday. Yeah, I guess I could be like Penny Henny claiming 8.40% but then, I like to maintain my creds.

All I have to say to those holding something like XBAL, VBAL, ZBAL, yikes!!! 40% in aggregate bond allocation is just…painful to watch. Even XGRO, VGRO, ZGRO with their 20% aggregate bond allocation Sigh…

#52 brad on 02.25.21 at 6:04 pm

Bond yields are inversely correlated with bond prices. As the price falls, interest rates rise. And there is really nothing to stop yields from climbing higher and higher. But if that happens, the entire economic house of cards will collapse. The economy is predicated on low interest rates. Bond yields are going up because there is a massive supply of bonds because we have massive deficits. And even though the Fed is buying a lot of bonds, they’re not buying enough. So, those extra bonds, there’s no buyer, and so the price keeps falling. massive supply, and there’s no demand outside the Fed. So, the Federal Reserve is going to have to pick up the pace. At some point soon, the Fed is going to be forced to announce a major increase in its asset purchase program. And when the Fed comes clean, the market is going to figure out that they’ve got this wrong.

#53 NOSTRADAMUS on 02.25.21 at 6:21 pm

NO ONE BELIEVED IT!
In June of of 2007 when the lights went out at Bears Sterns, or September 15th 2008 when Lehman Brothers collapsed, bringing on the start of The Great Recession or more recently, March of 2020 when the stock market experienced a Cardiac incident. The patient was brought back from the brink with a jolt from the Central Bank paddles of liquidity and low interest.
The point being, the Stock and Real Estate markets are living on borrowed time. There are numerous knock on problems that could reverberate in todays economic and market systems. “let’s call this the unknowable”. Be patient, there is never a rush to make an investment and there is nothing, and I repeat nothing wrong sitting on cash until a good deal, a real bargain comes along. Being patient is a virtue- it is also a good way to stay out of trouble. After the damage occurs, and the paddles no longer revive the patient, the media’s excuse is always, “well no one could have seen that coming, Covid-19 ring a bell?

#54 Faron on 02.25.21 at 6:24 pm

#42 Penny Henny on 02.25.21 at 5:01 pm

#37 Faron on 02.25.21 at 4:41 pm

Stone, how’s your B+D holding up? If you report that you are still up 6.4%, I’m going to… I don’t know what I’ll do. yelp.
//////////////

My B&D (boring and dull) Canadian dividend focused portfolio is at 8.4 after todays hit.
Now that I’ve said that let the sell off begin.

YELP.

That’s awesome. Is it maple heavy? My thesis is that Canada having financials and commodities as chief industries, it should do pretty well. O+G and banks held up well until today and did okay today on a relative basis.

I’m curious about Stone’s because he holds something like a 60/40 and he’s been announcing the status of late.

Aside:

There is currently $2.64B in option premium on Gamestop, a corp that is probably fairly valued at less than $1B. That’s insane. For reference, TSLA (which always has heavy options volume) has $2.5B, or something like 0.4% of its market cap. Game stop is the second larges behind the SPX at $5B

#55 Adam on 02.25.21 at 6:26 pm

With boomers, it was cars. If you didn’t own your own car, you were a loser. And no, Garth, a beater with a heater doesn’t count. But with this new generation it is a house. If you don’t own a house, then you might as well forget going to the water cooler at work. That’s all anyone talks about is real estate. It doesn’t matter if your TFSA and RRSP are empty and you have no investments, cuz bro, that stuff ain’t cool. It’s all about the house. Girls don’t care if you pick them up for your tinder date on your bicycle and they are more likely to ask you “So, do you own or rent?” than they are to ask you “What kind of car do you drive?”. This is the age of housing and what an age it is.

#56 Shortymac on 02.25.21 at 6:39 pm

My sister in law and her fiancee just bought a house in Lisle, Ontario for 500k, I think she is going to get pooched.

But I can’t blame her, I’ve been sitting on the sidelines waiting for houses to get back to normality so my husband and I can afford a house and despite a slow down there hasn’t truly been a break.

I wonder if it would be prudent to get pre-approved for a mortgage now and wait for the pop in April.

#57 The West on 02.25.21 at 6:41 pm

You are certainly optimistic Garth, I will give you that.

“reptilian: haha – wasn’t David Icke the leader of “Q”?

#58 Odif on 02.25.21 at 6:50 pm

Garth, you had me at the chickens. If there is a reason why I still want to buy a house one day is to have a pet chicken! lol

#59 more up on 02.25.21 at 6:52 pm

Agree.

Again the markets dumped on the bond yield news today … The market moans if it doesn’t get stimulus and then whines when that stimulus creates inflation. ok sure. So pickle, will the market whine or rejoice when the next Biden 1.9Trillion( or whatever it ends up being ) stimi is passed ?

Central banks I continue to learn are completely useless and irresponsible , is it any wonder people continue to exit their broken system for a decentralized digital asset like Bitcoin ?

#60 Blake on 02.25.21 at 6:58 pm

Sold yesterday! 40 people came, several offers within a few hours, $180,000 over list price, firm offer.
New house is currently being built in a less expensive area, with zero mortgage thanks to this sale!

#61 Ponzius Pilatus on 02.25.21 at 7:05 pm

Re: using your pool as a toilet.
In Canada, having pool is a major headache and very time consuming.
And it can actually drag you house value down.
My first house had a pool. The kids were excited when we bought it.
But then we could only use it for about 4 months, and I was the only one who did all the work.
When we sold it, we had to take a 15% haircut, and then we heard that the new owners just filled it up.
Talking about money down the drain for us.

#62 Stone on 02.25.21 at 7:19 pm

#49 ha!!!!! on 02.25.21 at 5:57 pm
Stone, how’s your B+D holding up? If you report that you are still up 6.4%, I’m going to… I don’t know what I’ll do. yelp.

……..

priceless- no updates for awhile !!

———

Uhmmm…did you read the comments section yesterday? Feeling dumb now? Good. My job is done.

#63 Sarbear on 02.25.21 at 7:28 pm

Comment lurker here. I’m an elder millennial who was able to go remote before the pandemic. I still worry about the impact on my and my partner’s career for the points mentioned in the article. We still chose to go remote as we couldn’t see a future in either of the big cities where our jobs are located (vancouver and Victoria). Unfortunately the real estate in the small town we moved to has skyrocketed, without the economic engine that the aforementioned cities can somewhat point to as a reason for the crazy prices (although, can anybody call Victoria an economic hotspot?) it’s hard not to feel squeezed. Canada doesn’t have the rental pool or protections to justify or protect an entire generation of renters through life stages like having a family. We just found out the radon levels are high in our expensive rental – not sure if the landlord will fix it. All good points in the article, though the rush to real estate partially reflects the insecurity in a lot of rental markets. Canadian taxpayers have paid a lot to educate us, and we’d love to stay, but we are starting to look elsewhere for better quality of life.

#64 JustSayin on 02.25.21 at 7:28 pm

Matt, how are you going to pay your $15,000 to $20,000 a year in just property taxes in just 10 years from now. Ever heard of current value assessment, MPAC here in Ontario. Be careful what you wish for Matt.

#65 AM in MN on 02.25.21 at 7:28 pm

The fun really starts when the star chamber cuts of the mid-90’s come to whoever is in government at the time.

Remember it was Paul Martin as Fin Min who had to deal with the debt hangover from Mulroney & Sr.

I expect a lot more riots, all over the world. many people won’t know what hit them when the free money stops. The wealthy, who could see it all coming, will hide behind ever higher walls.

It won’t be a pretty sight when the interest rates start climbing… a lot higher than this!

Plenty of younger types in Bitcoin, although mostly male for some reason (if conferences are anything to go by). They’ll have an easier time hiding, and be blessed with liquidity and mobility!

#66 Job#1 on 02.25.21 at 7:36 pm

#43 Sun Tzu

I tend to agree.

#45 Papa bear

“Small businesses, sure, but someone else will fill their shoes with hopes of cheap commercial rent.”

The Canadian Federation of Independent Businesses (CFIB) sez 75% of small business owners have taken on an average of $170K debt each, to try to survive. Combine this with the statistic that over 50% of new startups wither on the vine within the first two years of operation, usually because of inadequate capitalisation, add in rising rates and a tightening policy by lenders, and you’ve got some pretty strong headwinds facing recovery. The economy will have to muster some serious growth and GDP expansion to overcome these obstacles and create a rising tide to rescue the small guys who create the majority of jobs. I don’t think the outlook is all that rosy. Hope I’m wrong.

#67 Armpit on 02.25.21 at 7:43 pm

OMERS reports a loss of 2.7% in year 2020. Looks like they didn’t have a balanced portfolio.

#68 Dominoes Lining Up on 02.25.21 at 7:43 pm

An interesting take on the same news about younger buyers tonight right now on “Hot Property” the unofficial advertising medium for some Toronto realtors and mortgage brokers and developers on CP24.

All three dudes there are saying that there is no “exuberance” to worry about and “it’s just reality and responsibility, get into the market…”

“Once you’re into the market, you’re in the market. You can sleep, and breath.”

“But if you’re just sitting there watching on the sidelines in a rental property, this is pretty devastating, and prices get out of reach and you can’t get into the market….”

They all diss the messages from Tiff and CMHC about possible risks, saying they are “baffled” by those messages. They exert and support each others’ claims of expertise, people who “have seen prices go up for 35 years” and “have their finger on the pulse of the market” like no others.

They claim that the immigrant deficit from 2020 will explode this year, and there just is nowhere near enough supply to meet the demand ahead.

This is like a tsunami of rhetoric and propaganda suggesting prices will soar ahead again this year and that is no problem at all, in fact a good thing for the market. All part of regular cable tv channel surfing.

Grab a drink and watch it now or later online. A pretty stunning culture of complete denial of any risk involved in a real estate bubble.

#69 Nonplused on 02.25.21 at 7:45 pm

It is better to live in the Suburbs because there is more room for things like your wood stove, wood stockpile, stuffed pantry, generator, fuel, bottled water, solar panels, batteries, etc. You need these things for when the rolling power blackouts come to your town.

As more and more becomes known about what happened in Texas, it is becoming increasingly clear it wasn’t just some frozen windmills. It was a systemic collapse where the failures rippled through a highly complex system, one failure leading to another. Oil and gas production dropped because of the power outages, particularly refining. Storage facilities lost telemetry and could not withdraw. Some of those storage facilities use electric compression so they definitely could not withdraw. A lack of winterization froze off various facilities. It was one thing after another.

Everyone pretty much takes reliable electricity for granted, at least in the first world. But haven’t we had enough blackouts by now to alert us to how fragile the grid really is? I’m old enough to remember the power blackout of August 14, 2003.

https://www.history.com/this-day-in-history/blackout-hits-northeast-united-states

Being interconnected didn’t help anyone back then. It was damn lucky that it happened in August and not January. But did we learn anything? Not much, it would seem.

The way power grids are regulated is driving them towards more complexity and less reliability. There is no money for ancillary services (standby generation) so when the wind quits the brownouts start. In order to keep costs low maintenance gets deferred. Nothing gets fixed until it breaks. It goes unnoticed most of the time because the grid is not at peak load so there is usually another power source available when one fails and nothing seems affected. But when you need 100% of the grid capacity and something, or a bunch of things, fail, you do notice.

I wonder what the damage from all the frozen water pipes in Texas is going to be. Who would have thought? Frozen water pipes in Texas? But it is another sign of how complex and integrated everything is. You really can lose all services, electricity, gas, water, sewer (the pumping stations aren’t working so eventually someone’s basement fills up) and communications, all at once, for days, in the winter.

#70 Yukon Elvis on 02.25.21 at 7:47 pm

#50 Dr V on 02.25.21 at 6:01 pm
29 Doug T – remedy for you

1) Pull out investments statement
2) Search “holdings” on internet
3) Look for RBC/TD/BMO/CIBC/BNS

Guaranteed to lessen the pain.
……………….

Right you are. During the dip I bought CIBC at 80 and then again at 70, now at 118. BNS @ 60ish now 75, and TD @ 60ish now 78. They were paying 6-6.5% div at the time. I don’t see anything right now that I like that pays 6-6.5% so I will just hang on to those for now.

#71 KLNR on 02.25.21 at 7:51 pm

@#61 Ponzius Pilatus on 02.25.21 at 7:05 pm
Re: using your pool as a toilet.
In Canada, having pool is a major headache and very time consuming.
And it can actually drag you house value down.
My first house had a pool. The kids were excited when we bought it.
But then we could only use it for about 4 months, and I was the only one who did all the work.
When we sold it, we had to take a 15% haircut, and then we heard that the new owners just filled it up.
Talking about money down the drain for us.

Every other neighbour of mine put in a pool over the past couple years. 2 more prepping for spring instal this year.
well over a 100k with hardscaping and most of the pool companies are fully booked through 2022. I’d love to have a pool but not at those $$$s

#72 KLNR on 02.25.21 at 7:54 pm

@#60 Blake on 02.25.21 at 6:58 pm
Sold yesterday! 40 people came, several offers within a few hours, $180,000 over list price, firm offer.
New house is currently being built in a less expensive area, with zero mortgage thanks to this sale!

did the same in 2017.
parlayed the profit into a cottage.
lifes’ good eh

#73 tbone on 02.25.21 at 8:01 pm

My totally un diversified and un balanced account that holds my bank , weed , and ENB stocks along with 3 Mawer funds is up 8.94 % . And it spits out around 5 % in dividends . I live off this account .

I am balanced and diversified with [email protected] with other accounts .

#74 Nonplused on 02.25.21 at 8:02 pm

#61 Ponzius Pilatus on 02.25.21 at 7:05 pm

Re: using your pool as a toilet.

In Canada, having pool is a major headache and very time consuming.

——————————-

My neighbor got one of those big above ground pools one year. It cost her $350 just to fill it up with water (using a water truck, it was going to take days with a hose and our co-op ain’t exactly cheap either). Her kids used it a couple of times and that was it because they thought it was too cold. She hasn’t set it up again since.

But I don’t get where this thread of using it as a toilet came from. Gross. Take water from the pool and put it in your toilet.

Another idea I read is that if you suspect the water is going to go out fill up your bathtub. But that can freeze too so it’ll only work if you can keep your house warm.

#75 cl on 02.25.21 at 8:08 pm

I keep having to do a double take on the 5yr. What a rocket! I keep wondering…as I have for too many years now….when this illusion will end in the housing market but when you have every level of gov’t across the entire country including the CB all for the insanity…one wonders if it will end. I am starting to think we will be here 10 years from now and still talking about the same things.

#76 millmech on 02.25.21 at 8:11 pm

2,100,000 GME shares borrowed to short today and tomorrow.
Always interesting to see where this goes.

#77 Captain Uppa on 02.25.21 at 8:17 pm

#56 Shortymac on 02.25.21 at 6:39 pm
My sister in law and her fiancee just bought a house in Lisle, Ontario for 500k, I think she is going to get pooched.

But I can’t blame her, I’ve been sitting on the sidelines waiting for houses to get back to normality so my husband and I can afford a house and despite a slow down there hasn’t truly been a break.

I wonder if it would be prudent to get pre-approved for a mortgage now and wait for the pop in April.
——————————————-

Oh boy.

Don’t know where to begin with this … so, I won’t.

#78 Francois Gagnon on 02.25.21 at 8:21 pm

I used to buy Quebec savings bonds but they do not pay that well now and my RRSP’s, TFSA’s are coming do this year, late 2021 and first quarter 2022. Good thing I have $1,735 a month in CPP, OAS and $1,756 a month LIRA guaranteed life annuity transferred from a workplace pension when interest rates were much higher in 2019.

I don’t need a big return from my investments but GIC’s, term deposits, Quebec savings bonds don’t pay that well maybe 1.5% to 1.75% at most for a multiple years, 2-7+ years terms investment. If I can get close to 3% that will get me close to 50% boost to my CPP, OAS, guaranteed life annuity which would be $20,000 to $21,000 a year in annual interest but is tax deferred, tax free from RRSP’s, TFSA’s which would be a tax sheltered of some sort.

I am living quite comfortable on 66% or 2/3 of my net after income taxes income of $35,000 from CPP, OAS, LIRA guaranteed life annuity income a year or $23,000

Garth, are you saying don’t buy bonds now. I am looking at mid to longer term 2% to 3% longer term provincials, provincial strips. Maybe ladder or stagger these things. Unless 2-10 years 2.25% to 3% GIC rates are coming this year or early next year.

Garth, is it possible I buy these things and will be really sorry, stuck with lower bond rates buying too early capital losses after there is much higher 3% to 4% bond rates are coming this year or first quarter 2022. It is so, such a confusing time now.

#79 Francois Gagnon on 02.25.21 at 8:29 pm

Garth, I forgot to mention the reason I got the $1,735 a month LIRA guaranteed life annuity is it is a 7.75% annual payout with the value of the pension in 2019 and has a 15 year guaranteed payout if I die tomorrow. I thought it was a no brainer as almost doubled my CPP, OAS income guaranteed for all my life or up to maximum 15 years.

Also, annuities in Canada are guaranteed up to $2,000 a month or maximum 85% of the value whichever is less. I believe it is from Assuris.

#80 crowdedelevatorfartz on 02.25.21 at 8:30 pm

@#61 Ponzies Pool
“In Canada, having pool is a major headache and very time consuming.
And it can actually drag you house value down.”
++++

Ladies and Gentlemen.
Once every 1000 years the planets align.
AND that is when I agree with Ponzie…..

A co-worker many years ago had a HUGE house with a beautiful pool.
Pool parties, kids enjoying it, etc etc etc.
The liner went, mucho dinero.
The boiler went, mucho dinero.
The dog disappeared, to be found the next Spring, adios muchaco.
The filtration system rotted out. Mucho dinero.
Got everything tip top….
Sold the house.
The new owners.
Filled it with gravel.

#81 VicPaul on 02.25.21 at 8:36 pm

#51 Stone

All I have to say to those holding something like XBAL, VBAL, ZBAL, yikes!!! 40% in aggregate bond allocation is just…painful to watch. Even XGRO, VGRO, ZGRO with their 20% aggregate bond allocation Sigh…

*********

I hear ya….pref’s (8.5%), Reit’s (7.2%) and a DB pension are my fixed income (double entendre noted) component. ETF’s comprise about 55% and stock (growth or divvie) about 20% with ~5-10% cash.
I’m sure Garth and his Porsche-driving, card-trading associates would do a better job – but for a couple more years…let this old cowboy ride. )

M57BC

#82 Ustabe on 02.25.21 at 8:42 pm

#45 KLNR on 02.25.21 at 5:42 pm

@#34 As I often say … on 02.25.21 at 4:32 pm
I would hate to be young now. Lottery or inheritance …

I’d love to be young right now.
so much opportunity out there if you want it.

oh and, it’d be real nice to have more years
in front off me than behind

Story Time.
When my sons were graduated they announced they would be staying here as the rock climbing, mountain biking, mountain climbing, kayaking, camping and hiking, snowshoeing, skiing, etc superseded anything else they would care to do.

I cautioned them that they would earn less as a trade off to a lifestyle, their answer is “wasn’t that what you did?” Fair enough.

So what is disparagingly referred to as the Bank of Mom & Dad on here is a simple matter of “we have the money, why make you wait til you are in your 60’s to get to it?” and we fronted them an advance on the inheritance. A gift.

And they bought a front to back duplex house in an area zoned to allow a basement suite below the owner occupied side. Looks like a single family home, produces income like a champ. Covers mortgage, taxes, insurance with a good bit left over. Bought for $140 a side, now $340 a side.

Fast forward a few years and they picked up another duplex, same zoning. Not quite the deal the first was but projections show it being positive cash flow in increasing rate environment in less than five years. Mom and Dad didn’t even hear about that until is was over. So now they each have a home that provides significant income, they each hold what could best be described as middle management jobs, one with a clear path to GM, the other doing something he absolutely loves. (few get to do that…) TFSA’s full, investment accounts building. Just hit their thirties.

So, ya, I guess inheritance but also initiative and drive.
My kids are going to be OK.

And yes I’d love to be young right now, only proviso being I’d have to have the knowledge I now hold so I wouldn’t make so many mistakes along the way. Like turning down Netflix at $17.00. Back when they mailed out CDs.

#83 Bert on 02.25.21 at 8:59 pm

The market is dramatically over estimating the “return to normal” as is all of Wall Street.

https://youtu.be/LBc0bqrNuUs

Governments are going to remain hyper cautious for a lengthy period of time.

Any additional “waves” likely re activates the WFH trade. I would be buying growth and tech here.

#84 FriedEggs on 02.25.21 at 9:08 pm

https://www.huffingtonpost.ca/entry/basic-income-members-bill-strategy-canada_ca_6037f768c5b6371109dac382

Bill C-273 tabled yesterday – great news! Good thing October 15th article was just a fiction.

#85 Ponzius Pilatus on 02.25.21 at 9:11 pm

#71 KLNR on 02.25.21 at 7:51 pm
@#61 Ponzius Pilatus on 02.25.21 at 7:05 pm
Re: using your pool as a toilet.
In Canada, having pool is a major headache and very time consuming.
And it can actually drag you house value down.
My first house had a pool. The kids were excited when we bought it.
But then we could only use it for about 4 months, and I was the only one who did all the work.
When we sold it, we had to take a 15% haircut, and then we heard that the new owners just filled it up.
Talking about money down the drain for us.

Every other neighbour of mine put in a pool over the past couple years. 2 more prepping for spring instal this year.
well over a 100k with hardscaping and most of the pool companies are fully booked through 2022. I’d love to have a pool but not at those $$$s
—————
Same thing happened in my neighborhood.
Then some kids drowned. People realized the pools were too cold. So installed solar. Even so only about 4 months of use. 6 feet fence became mandatory to keep neighborhood kids out. Insurance shot up.
But worst, so many chemicals needed, and soo much maintenance.
Never again.

#86 Francois Gagnon on 02.25.21 at 9:13 pm

Garth, I forgot to mention the $12,000 a year I have left, saved after all my income taxes are paid, living expenses etc. I max out my TFSA yearly $6,000 now and the other $6,000 in cash, savings accounts.

I don’t know, should I buy Canadian bank dividend ETF’s with this, I do have no debts of any type, modest house paid off and have access to a $40,000 low interest line of credit at 2.99% variable or 3.5% fixed 7 years interest only. I think it would make sense to invest this $1,000 a month and get 4.5%+ dividends for a few years maybe at least 5 to 6 years to build it up to $80,000 which is double the $40,000 low interest line of credit so I will not be in hot water riding out 5% to 20% dips in share prices.

I can handle 10% to 15% of all my investments in Canadian bank ETF’s which is about $100,000 as I have guaranteed income from CPP, OAS, LIRA guaranteed life annuity of $42,000 a year. This seems conservative, cautious in this low interest rate environment.

#87 Leprechaun on 02.25.21 at 9:17 pm

Garth,

Serious post here. I purchased my first home at 24 years old 15 years ago. I was technically unemployed, I was a full time pizza driver.

Cost me $8000 at the time and was offered any amount pre approved. I was sensible and went with my $244,000 bungalow.

Same applies now, I sold my house in the boom and have been renting for the last few years. Eastern lady who ownes the $1.2 million dollar home I am renting owns 3 more in the subdivision plus her main house in Markham. Her job to get that got her “approved “ for all these mortgages, accountant for Toyota dealership.

I also for fun called some real estate agents to look at some house but need help with financing, within hours I have brokers calling me to tell me that as long as I have good credit I don’t even need a job to get a mortgage. All they ask is 1% of the selling price of the house for a fee.

I believe CMHC is in big trouble as they are on the hook if the loans go bad.

None of this is on pen and paper but I think it’s a big problem no one talks about.

What’s your thoughts ?

#88 Rick Andros on 02.25.21 at 9:20 pm

Garth, are going to see 3% 30 year US treasury bond yields and 3% 5 year mortgage rates by summer.

#89 Ponzius Pilatus on 02.25.21 at 9:25 pm

#74 Nonplussed

But I don’t get where this thread of using it as a toilet came from. Gross. Take water from the pool and put it in your toilet.
———————
The usual suspect, Sailo.

#90 TurnerNation on 02.25.21 at 9:27 pm

‘Sir Tiff’ has a nice ring to it. He likely crested though, on the back of a rowing scholarship (a scullership?) – or something equally upper crust in nature – toward some Ivy green place.

“The virus is done” says this weblog. Is it about a virus? Europe etc are still shutting down anew:

– Finland announces March shutdownNews (yle.fi) — so too Latvia, Morroco, rolling shutdowns.

– Paris ‘will propose’ a three-week city lockdown to curb COVID-19 spike (euronews.com)

– Least Coast – their colour coded meter has “Green – New Normal’. Think: rolling Economic Shutdowns. This is like the t3rror alert levels. Yep we are at war, globally, and we are its targets. Witness the dark and blackened out – economically b0mb’d streets in your prefecture.
https://www.princeedwardisland.ca/en

……….

Meanwhile elsewhere in the world, you see we are only being shut down in the the Former First World Countries.
Not here: https://www.youtube.com/watch?v=rnYueDh46xs&feature=youtu.be
NARENDRA MODI STADIUM – India Vs England | motera stadium |
54 views•Feb 24, 2021

….

Remember SARS and the follow up SARS-Stock?
Does anyone really thing we would be ‘allowed’ (our elite rulers) to do this these days ? A haha of course not.
This ain’t ending soon. Coming up under a year of complete control over the Former First World Countries.

SARS Stock : https://en.wikipedia.org/wiki/Molson_Canadian_Rocks_for_Toronto
Molson Canadian Rocks for Toronto was a benefit rock concert that was held in Toronto, Ontario, Canada on July 30, 2003. It was also known as “Toronto Rocks”, “Stars 4 SARS”, “SARSStock”, “SARSfest”, “SARS-a-palooza”, the “SARS concert”, or, more descriptively, “The Rolling Stones SARS Benefit Concert”. Estimated to have between 450,000 and 500,000 people attending the concert, it is the largest outdoor ticketed event in Canadian history, and one of the largest in North American history.[1]

#91 Michelle R Hosick on 02.25.21 at 9:47 pm

#56 Shortymac

Wow. Had a friend years ago bought a 50 acre farm one minute north of Lisle and just across the road from Base Borden. Had a few foggy visits.
Some D**k siphoned the gas tank on my 72 Challenger once as I was trying to recover from a day of overexuberance.

#92 Bert on 02.25.21 at 9:51 pm

Ontario! $15M people. What are they doing?! A bureaucratic nightmare.

https://youtu.be/Ay2ZfnIsjog

#93 AbLyft on 02.25.21 at 10:11 pm

Garth, any chance either your or one of your Porsche driving hooligans can write a blog about bonds. Focus on what drives demand, why QE is important, etc

#94 Lead Paint on 02.25.21 at 10:19 pm

My father, approaching 80, learned that his younger siblings in Barbados (a developing nation) received the vaccination today! Back in snowy Ontario he anticipates getting his in mid-April, maybe, we’ll see.

Oh Canada….

#95 45north on 02.25.21 at 10:21 pm

Dominoes: talking about the Toronto real estate industry Grab a drink and watch it now or later online. A pretty stunning culture of complete denial of any risk involved in a real estate bubble.

yep

#96 Rob on 02.25.21 at 10:27 pm

What a cutie. Is that a picture of your new puppy?

#97 45north on 02.25.21 at 10:44 pm

Shortymac My sister in law and her fiancee just bought a house in Lisle, Ontario for 500k, I think she is going to get pooched.

I think so too.

Lisle, Ontario to 215 Huron Street where I used to work, is 1 hour 21 minutes. Google maps says it’s 1 hour 21 minutes at 22:36. That’s a long long way.

That’s like quitting your job. Let’s say on a good day, it’s 2 hours one-way. That’s 4 hours a day. Now, if your sister-in-law and her fiancé are in their twenties, they can do it for maybe a year. There are also days when they close Highway 400 which means that they don’t get to work.

My sister lives in Kettleby. She says her internet sucks. What’s it like in Lisle?

#98 KNOW IT ALL on 02.25.21 at 10:52 pm

You either “LIVE with CHICKENS” or “WORK with SHEEP”

At least the chickens cluck to their own beat.

#99 mike from mtl on 02.25.21 at 10:53 pm

#61 Ponzius Pilatus on 02.25.21 at 7:05 pm
Re: using your pool as a toilet.
In Canada, having pool is a major headache and very time consuming.
////////////////////////////////////////////////////////////

Totally agreed, even here where you might get 8 maybe 12 weeks of use of the entire year is totally crazy. But people do it especially the worst crappy above ground sort are very common. We simply don’t have the weather to even make use of a personal pool half a year anywhere in this country. Does not stop this psyche.

#83 Bert on 02.25.21 at 8:59 pm
The market is dramatically over estimating the “return to normal” as is all of Wall Street.
/////////////////////////////////////////////////////////

Agreed we are seeing glimpses that ‘normal’ like pre-9/11 is gone. I seriously doubt I’ll ever step into a “white collar” office this year or even the next reading between the lines. The communists running the show here and many places don’t give a single F about restaurants or businesses. The WFH crowd are okay for now but that will be a prelude to mass “reductions”.. mark my words.

I expressed last year anyone with a public physical location in big cities – just close the doors, you’re done. How can you run a business with the imminent threat you can be closed without notice beyond your control?

Getting a US visa to work in example Miami is looking very likely.

#100 Sail Away on 02.25.21 at 11:04 pm

And here they were just trying to get a down payment through their own hard work…

https://www.google.com/amp/s/beta.ctvnews.ca/local/toronto/2021/2/25/1_5324673.html

#101 NoName on 02.25.21 at 11:08 pm

Hey Flop youll like this.

https://www.youtube.com/watch?v=my9fsBix630

#102 Lead Paint on 02.25.21 at 11:16 pm


#33 wallflower on 02.25.21 at 4:29 pm
One wonders how an authentic financial advisor feels to be in competition with ANY real estate agent.
How do I despise the RE industry…

——————————————————–
You should have met Happy Housing Crash Everyone! You guys would have gotten along well.

Here’s a snippet from 2017 “Shyster realtors know for a fact that realtors are liars and will do anything for a sale no matter how illegal .”

#103 IHCTD9 on 02.26.21 at 12:22 am

#39 Penny Henny on 02.25.21 at 4:47 pm

I make my own bread now and it’s delicious!

——————-

Try this recipe out PH, I just use frozen already made dough from the grocery store, but this stuff is great!

https://www.lcbo.com/lcbo/recipe/parmesan-garlic-monkey-bread/F202006048#.YDiE5C3EihA

#104 Spectacle ( no new normal...) on 02.26.21 at 2:00 am

SARSfest”, “SARS-a-palooza”, the “SARS concert”, or, more descriptively, “The Rolling Stones SARS Benefit Concert”. Estimated to have between 450,000 and 500,000 people attending the concert, it is the largest outdoor ticketed event in Canadian history, and one of the largest in North American history.[1]

Share your comment:
#90 turner nation::
My friend, you usually provide more succinct and hard hitting pieces! I didn’t understand the whole piece tonight! Could bevthe cuban rum & orange. I take it that wsu, way back , the agenda all along was to infiktrate covid sars into the communities worldwide.

I live near the airport & have key contacts there , it is so over for air flight business.

.

#105 Nonplused on 02.26.21 at 2:06 am

#137 IHCTD9 on 02.25.21 at 10:50 am

“I think NG infrastructure relies on pumps, so not sure what the implications are here.”

They are called compressors in the natural gas world, but same difference.

The main problem with natural gas as a fuel source for grid down situations is that the pipes are not designed for this load under peak conditions. And yes I am an expert, one of my first jobs out of university was designing natural gas urban distribution systems primarily for new subdivisions, but also sizing and relocating mains. The pipes are only designed big enough to handle the design load at peak demand, in other words the coldest day experienced in the 100 years. But this was only the furnace and hot water tank (and maybe stove), for most all the natural gas infrastructure as this was long before it was envisioned that everyone and their dog might get a Generac and try and run that on the coldest day of the year also. This is why in many jurisdictions hooking your new Generac to the natgas is not allowed. In theory, if the power is out there should be lots of gas available because the co-gens are shut down, but the pipe that goes to your house isn’t big enough to get the gas from where it is to where you are if the furnace is also running. The gas pressure will go to low and regulators will start shutting in, creating even more havoc because most people are not qualified to reset them and for safety reasons they will not reset themselves.

But as Texas has made clear, a widespread power outage can make the natgas unavailable as well, or hugely expensive if you can get it. So running a backup generator on natgas is not the best idea. Propane is better.

#106 Maths are hard on 02.26.21 at 2:09 am

#133 Penny Henny on 02.25.21 at 9:58 am
#99 Maths are hard on 02.24.21 at 8:13 pm

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

English 2

————————

You might have missed the joke.

#107 Philanthropist on 02.26.21 at 7:18 am

I’ve said this before: What is the point of society or “the economy” if it can’t keep people adequately housed and fed etc? Including people who work full-time? Why are we going to so much trouble for such results

I’m feeling a bit “storm the capitol” Ottawa and Queen’s Park myself these days – not to hurt anybody but to demand a big minimum wage and OW/ODSP increase and pharmacare and dental care and child care and housing and safe workplaces and liveability and decency for all.

I’m so fed up and angry after a year of watching our already unequal society and paltry safety net get even worse.

#108 Civil Unrest on 02.26.21 at 7:23 am

At this point, politicians like John Tory aren’t even trying to hide the fact they can’t do shit. It’s liberal conservatism in a nutshell.

They won’t do a thing because Toronto is not a Canadian city.

Want to raise taxes to provide badly needed funding for the social safety net? Sorry. Moody’s credit agency is here to downgrade your province’s credit worthiness. So no.

Want to do something about the waterfront? Sorry, it’s complicated and has been for 30 years now. We commissioned a multi-level government task force 20 years ago and we spent millions of dollars to tell you, tough: how about some condos?

Want to do something about gun violence? How about we displace the marginalized communities where this happens so we can build luxury condos?

Don’t worry, 35 apartments will be designated for “affordable” housing when they return and we’ll be sure to hire Drake’s marketing agency. They’ll have him sing about one of the shootings to truly honour the victims while inside his Bridle Path mansion with OnlyFans and Instagram influencers.

#109 Jimbo on 02.26.21 at 7:43 am

I only come here for the dog photos

#110 Howard on 02.26.21 at 7:58 am

Covid case counts have begun to increase yet again in the past week. Concerns of a new wave (or “wavelet”) abound, even though it won’t be nearly as severe as the wave that just concluded. I think the spike in interest rates might be premature.

#111 Sail Away on 02.26.21 at 8:09 am

#96 Rob on 02.25.21 at 10:27 pm

What a cutie. Is that a picture of your new puppy?

———–

Hmmm… Garth has been posting puppy costs lately and this is perhaps the one time in history that SPCA is mostly dogless. And this one looks like a Chow.

My magic eight ball says ‘It is decidedly so’, although that eight ball is notoriously unreliable.

#112 Dharma Bum on 02.26.21 at 9:37 am

#30 triplenet

Dolce Vita-
When you go out for dinner in Italy and then voice your concern that you don’t think you can afford the cost of the meal- do they still tell you not to worry, the German government will take care of it. ?
———————————————————————–
Also…

When Italians go out for dinner, do they say: “We’re going out for Italian food tonight”?

#113 Penny Henny on 02.26.21 at 9:42 am

#103 IHCTD9 on 02.26.21 at 12:22 am
#39 Penny Henny on 02.25.21 at 4:47 pm

I make my own bread now and it’s delicious!

——————-

Try this recipe out PH, I just use frozen already made dough from the grocery store, but this stuff is great!

https://www.lcbo.com/lcbo/recipe/parmesan-garlic-monkey-bread/F202006048#.YDiE5C3EihA

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

Thanks for that but it seems like so much work.
My recipe requires no kneading and about 5 minutes of work. Only flour, salt, yeast and water. If I made that monkey bread I’m not sure if I would ever be able to stop eating it. Anyways here is my recipe.

https://www.budgetbytes.com/no-knead-bread/

#114 Penny Henny on 02.26.21 at 9:44 am

#106 Maths are hard on 02.26.21 at 2:09 am
#133 Penny Henny on 02.25.21 at 9:58 am
#99 Maths are hard on 02.24.21 at 8:13 pm

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

English 2

————————

You might have missed the joke.

//////////

I think you missed my joke too :)

#115 Dharma Bum on 02.26.21 at 9:48 am

#30 triplenet

Dolce Vita-
When you go out for dinner in Italy and then voice your concern that you don’t think you can afford the cost of the meal- do they still tell you not to worry, the German government will take care of it. ?
———————————————————————–
Also…

When Italians go out for dinner, do they say: “We’re going out for Italian food tonight.”?

#116 Sail Away on 02.26.21 at 9:59 am

Paradise. Available to all of us. Enjoy:

https://youtu.be/6TsKWeVI618

#117 Dharma Bum on 02.26.21 at 10:05 am

#111 Sail Away

My magic eight ball says ‘It is decidedly so’, although that eight ball is notoriously unreliable.
———————————————————————–

Magically nostalgic!

https://www.youtube.com/watch?v=Q3ujbKT283A

Magic 8 Ball – Magic 8 Ball – Magic 8 Ball!

#118 Sail Away on 02.26.21 at 10:22 am

Re: bread recipe

My favourite is a 6am stroll to the bakery when loaves come out of the oven, with a sticky pecan roll sidekick.

Hot bread, lots of butter. Life is good.

#119 Guelph Guru on 02.26.21 at 10:23 am

Hoping that the pooched dont walk away from their mtgs. If CMHC has to pay and goes under water, then we the people of Canada will have to pay for the stupidity. Either by printing more money or through more taxes. Both scenarios will be bad for us.
The young minds should be innovating and starting new enterprises. Not lusting over houses. Where did we go wrong?

#120 Ponzius Pilatus on 02.26.21 at 10:45 am

#94 Lead Paint on 02.25.21 at 10:19 pm
My father, approaching 80, learned that his younger siblings in Barbados (a developing nation) received the vaccination today! Back in snowy Ontario he anticipates getting his in mid-April, maybe, we’ll see.

Oh Canada
————————
Barbados gets their vaccines from India as a goodwill gesture.
Can’t afford buying their own vaccines.
Next time one of you guys gets sick, will ship you to Barbados.

#121 Ponzius Pilatus on 02.26.21 at 10:50 am

#118 Sail Away on 02.26.21 at 10:22 am
Re: bread recipe

My favourite is a 6am stroll to the bakery when loaves come out of the oven, with a sticky pecan roll sidekick.

Hot bread, lots of butter. Life is good.
———————
Where in the fantasy world is Sailo now?
If this is Friday, he must be in France.

#122 NoName on 02.26.21 at 11:12 am

@ salio

There was balkan food store in burnaby somewhere, go there and buy Kajmak for that 6am bread run. Kajmak Beats butter buy mile.

And while you are there aks where can you get sheep cheese from that was dryed smoked (sometimes) and aged in a sheep skin. Check in Romanian store if any, they also make it very similar to ours.

(Use translate)
https://www.agroklub.com/stocarstvo/mrvljeni-sir-iz-mjesine-prema-ilirskom-receptu/14124/

#123 Bill on 02.26.21 at 11:54 am

#7 TurnerNation on 02.25.21 at 2:05 pm

TN. Very true, theres information from 15 years ago telling us this was in the works.
The plan is to curtail global travel. Its bad for the environment they say.
This kinda stuff is why they programed the mantra. “The new normal”
There is lots going on and this is just part of it…no time the pen it. Gotta go.. Enjoy your new permanent restrictions Kanada.

#124 westcdn on 02.26.21 at 12:05 pm

My mother was tough. She and my wife were political – something I lacked. I was just get out my way.

My mother signed up with the Canada Revenue Agency. There was a guy, David Ingram, a tax advisor based in Vancouver. He would terrorize the staff with his questions. They started routing his calls to my mother. She brooked no bullshit and laid down the law.

The stories she told me her dealings were entertaining. Amazing his clients trusted him or were just dodging tax. I think he ended up in prison for tax fraud. He did write a few books…

#125 maxx on 02.26.21 at 12:17 pm

If the divorce rate is approx. 40% now, wait a few years. Poor asset management strategy will force that stat into very different territory.

#126 Sail Away on 02.26.21 at 12:21 pm

#122 NoName on 02.26.21 at 11:12 am
@ salio

There was balkan food store in burnaby somewhere, go there and buy Kajmak for that 6am bread run. Kajmak Beats butter buy mile.

And while you are there aks where can you get sheep cheese from that was dryed smoked (sometimes) and aged in a sheep skin. Check in Romanian store if any, they also make it very similar to ours.

————

Looks delicious! Now I have a mission for the next Vancouver trip. Well, 2 missions: first Ponzie’s place, then the Romanian shop.

#127 theoryAndPractice on 02.26.21 at 12:22 pm

https://montreal.ctvnews.ca/vaccine-passports-in-the-works-in-quebec-says-minister-despite-concerns-globally-and-from-trudeau-1.5325000

https://www.ctvnews.ca/health/coronavirus/ticket-to-ride-vaccine-passports-divide-world-1.5324301

When enough vaccine is available worldwide, what seems optional ‘vaccine passports’ would then be mandatory for basic activities. Unfortunately, none of this is going away regardless the root cause given if it is still around or not.

#128 Phil on 02.26.21 at 12:28 pm

#63 Sarbear on 02.25.21 at 7:28 pm

Comment lurker here. I’m an elder millennial

————————————————
“elder” millennial?
God, I am sooo old!

#129 Kiril Peev Ottawa Realtor on 02.26.21 at 12:39 pm

Garth I completely agreee that real estate prices are not in line with long term ratios and incomes. That being said like most industries/markets in Canada real estate is a tightly regulated industry.

Central bank MBS buying at billions per week has been the major reason why we are seeing 1.4% high ratio mortgages. Along with CHMC backing through insurance products and loss backstopping.

Regulators have had many chances to stop this speculation but have not acted. Easy solutions exist but then the gravy money will stop and no one is willing to make that difficult decision.

Real estate agents work for a commission. They do not make the regulations. Yes lobbying exists like in every other industry. Things will rebalance eventually. In Ottawa we are seeing rising vacancies and landlords are starting to sell instead of yeilding low rents.

#130 Lefty on 02.26.21 at 12:40 pm

Oh GameStop.. dropping like a stone again after your dead-cat bounce.

#131 Steven Rowlandson on 02.26.21 at 12:41 pm

“Houses will go up forever. Mortgage rates won’t double in five years. The boss will keep giving you raises and job security even when you don’t come to work.”
I seriously doubt the last sentence but for now the first two appear to be accurate. Two out of three ain’t bad but in the game of prophesy less than 100% accuracy in ancient times was bad for ones wellbeing.
Canadians might reflect on the warning a slave whispered into the ears of conquerors in Roman Triumphs.
“All glory is fleeting and you are mortal.”