Off the charts

Are we out of control yet?

Oh, you bet. ‘Insane’ was January. Now it’s Elon-Musk-batshit-crazy. (That’s a technical term.)

Look at little Kelowna, for example. An okay house up the hill on Bowron Street had an appraised value of $626,000 last summer. It just hit the market for $920,000, with a realtor’s note saying, “Priced to sell!!! Sellers have young children. Long closing or rent-back requested.” Offers will be reviewed Sunday at five. Multiples are expected.

“Kelowna is having a Vancouver moment here,” says our undercover Blog Dog agent. “Listing prices are shooting 200-300k over assessed values and up about 150k in price from just a few months ago and it is going to show big in upcoming data.

“Who are the buyers? From what I have seen as a small snapshot is mid 20s, Caucasian couples with kids. There are crowds of them showing up to these listings that are selling day-of. Anyway, I have never seen anything like this in my life, which includes 15 years in Vancouver during the mania of 2007 and 2014/2015.”

Sales-to-listing ratio goes nuts in the Okanagan

Click to enlarge

And you heard about the GTA?

A few weeks ago we reported the average property price would exceed $1 million this year. Well, it did that in a few days. Up 15% year/year to $1,045,488. Detached sales in 416 jumped 23% to $1.6 million. In the soulless 905 there were 28% more deals for SFHs, taking the average to $1.3 million. And let’s remember that for most of the past 100 days the region has been in a stay-at-home-or-die lockdown. The realtors (gleefully) forecast more: “In the absence of a marked uptick in inventory, the current relationship between demand and supply supports continued double-digit average home price growth this year.”

It’s everywhere. Ottawa. Halifax. Montreal. Victoria. Even in Calgary sales exploded higher by 55%. In Vancouver transactions are 73% above this time a year ago – before the virus hit and when we were still naive

The gain is across property types, too. Look at Toronto condos, for example. Last month sales surged 65% as investors swooped in to Hoover up listings that had oh-so-temporarily dipped about 15% as renters were crushed.

Meanwhile mortgage debt has rocketed, rates have begun to creep higher (bond yields erupted again today) and all the dosing promises to reopen society. Contributions to TFSAs and RRSPs, as well as corporate pension plans are flatlining or declining. Every day that goes by, FOMO and YOLO guarantee more families will be buying real estate at all-time inflated values because, well, it’s going to the moon with Elon!

This, says Scotia’s big economist. Derek Holt, “is off the charts. Ottawa has been caught completely off-guard in the magnitude of the housing response to very low financing costs.” His prediction: Chrystia the Impaler’s virgin budget – likely to come next month – may well include “macroprudential regulatory measures” to stem what’s clearly become a dangerous mania. Without curbs, this guarantees the average family will never afford the average house and the evil wealth divide in society yawns even further.

Vaccines change everything. They make it possible for the feds to drop the housing hammer – something that was not on anyone’s radar when this nonsense started last summer.

What could that be?

Hmm. As you know, Ottawa’s tried to stop the real estate juggernaut before. Amortization periods were cut, down payments modified, debt ratios changed, insurance costs increased, a mortgage cap introduced and a stress test hatched. Plus provinces have increased transfer taxes, allowed a levy on under-used homes, taxed speculators and offshore owners and coddled renters at the expense of landlords.

Nah, nothing worked. So what will?

There could be a cue in a speech given a few years ago by the outgoing CMHC boss, wild Evan Siddall. Prime targets of macroprudential diddling, he suggests, are down payments and loan ratios.

Did you know it’s only been since 1998 that buyers needed just 5% down to secure an insured mortgage – moving risk from the lender to the taxpayer? Yup. Before that only first-timers could use that amount of leverage, and prior to 1992 everybody had to have at least 10% to put down.

“Politicians are tempted to help first-time homebuyers enter the market, but low down payments may be part of the problem adding to affordability pressures and macro-economic vulnerabilities,” said Siddall.

“Coupled with the personal exemption from capital gains taxes on the sale of principal residences and other programs, Canadians have very powerful incentives to own homes… I have yet to be convinced that people in our country “need” access to 19:1 leverage to buy homes. In fact, it may be a fool’s bargain with the extra demand simply feeding higher house prices: the benefits of the policy accruing to wealthier home sellers rather than to the young first-time homebuyers it purports to help.”

You bet. It’s obvious. Either down payments go up or the capital gains exemption is trimmed.

As for the amount people can borrow relative to what they earn, maybe it’s time for a cap, says Siddall. “In a low-for-long environment, it is also worth exploring the future merits of a loan-to-income limit, which the U.K., Ireland and others have introduced.”

What’s that?

It means hard-capping the amount a person can borrow based on earnings, rather than deciding if he/she can carry the debt. In the UK, the cap since 2014 has been 4.5. Imagine what that would mean in, say, Vancouver where average houses cost 11 times average incomes.

Will Mr. Socks & Crew address this runaway asset, or let her rip? The needle may just have flipped.

A seller’s market across Canada… like no other

Source: CREA; RateSpy

 

182 comments ↓

#1 crowdedelevatorfartz on 03.04.21 at 2:46 pm

Socks and Christy Freecash dont have the spine to do anything brash before a looming election.

#2 IHCTD9 on 03.04.21 at 2:48 pm

Nice nails, gross tongue.

#3 "NUTS!" on 03.04.21 at 2:59 pm

“Without curbs, this guarantees the average family will never afford the average house and the evil wealth divide in society yawns even further.”

What!? Curbs you say? Little late for curbs. In all the glorious wisdom that the professorial Economists, Politicians, and so-called experts bestow on the sheep, nothing will work except for the one option which has alluded us throughout the entire mesmerizing rise in home values. Until interests rise-and yes, until there are the devastating casualties that goes with it-nothing, but nothing will change. Anything else is a temporary reprieve and lipstick, but pig continues to fatten.

#4 ogdoad on 03.04.21 at 3:00 pm

Chrystia the Impaler
wild Evan Siddall

What’s your screen name, Garth?

Sounds like the wild west during the gold rush. People seeing other people getting rich want to hitch on to that wagon regardless of loss or risks of the unknown. Kelowna will lose its charm (if its not gone already) and tumbleweeds will roll.

Whiskey sounds good.

All powerful Og

#5 Leftover on 03.04.21 at 3:02 pm

While introducing capital gains tax on primary residences would have an immediate and long-lasting effect, the best alternative, if policy makers are trying to help young buyers avoid death-by-mortgage scenarios, is to raise down payments to 20%.

It won’t stop parents from foolishly taking on HELOCS to provide their offspring with down payments, but at least it transfers the risk from public (CMHC) to private (stupid parents) lenders.

#6 Rinse and Repeat on 03.04.21 at 3:02 pm

Yawn….

The ever present threat of federal intervention has yielded nothing but price increases after 10 years of policy initiatives.

There is only one thing you need to know – which is that there is only one sector generating revenue during the pandemic, and that sector constitutes 25% of the economy.

Every other sector has been pinched with pandemic restrictions, creating a loss of revenue for the feds on top of their conscious attempts to bailout every Canadian with hundreds of billions in payouts.

It takes a certain type of naivety to think that this government will touch the market that is paying its weight in gold into the economy.

It will, instead, announce a grandiose policy change that will be nothing but window dressing – as all have been in the past – and this ‘change’ will then be put on a pedestal as heralding the end of the market.

Rinse, and repeat…..

#7 Diharv on 03.04.21 at 3:03 pm

It’s not pleasant knowing that my 17 and 20 year old will never be able to own their own place someday. And if they take the plunge, it will own them, holding them in financial hostage for life. You keep saying this won’t end well, but it seems that for those that can never get in, it is not ending well also. This is just all so stupid and toxic.

#8 Prince Polo on 03.04.21 at 3:04 pm

Loser renters be damned. Mr. Socks & crew will totally let’r rrrrrrrrrrrrrrrrip!

#9 Brian Ripley on 03.04.21 at 3:05 pm

FOMO 2.0 UNLEASHED

I have my Vancouver and Toronto housing charts up with the FEB 2020 data:
http://www.chpc.biz/

VANCOUVER:
Res-Listings down 55% from JUN 2012 high
Res-Sales down 28% from MAR 2016 high
Current Monthly Absorption Rate = 45%
Current Months of Inventory = 2

Vancouver SF Detached Price
NEW PEAK PRICE FEB 2021
Up 120% in last 10 years

Vancouver Town House Price
NEW PEAK PRICE FEB 2021
T-Houses are priced at 55% of SFDs
or 1 SFD = 1.8 Townhouses

Vancouver Condo Price
Down 7.7% from JAN 2018 Peak
Condos are priced at 37% of SFDs
or 1 SFD = 2.7 Condos

TORONTO:
Res-Listings down 62% from MAY 2013 high
Res-Sales down 14% from JUN 2016 high

Current Monthly Absorption Rate = 126%
Current Months of Inventory = 1

Toronto SF Detached Price
NEW PEAK PRICE FEB 2021
Up 137% in last 10 years

Toronto Townhouse Price
NEW PEAK PRICE JAN 2021
T-Houses are priced at 63% of SFDs
or 1 SFD = 1.6 Townhouses

Toronto Condo Price
Down 3.6% from FEB 2020 Peak
Condos are priced at 47% of SFDs
or 1 SFD = 2.1 Condos

#10 Frank on 03.04.21 at 3:05 pm

Trimming tax free capital gains on primary residences needs to be coupled with deductible interest payments, doesn’t it ?

#11 CJB on 03.04.21 at 3:06 pm

Where does a mid 20’s couple with kids get that kind of money to buy a house? We bought 15 years ago in our late 20’s for $175,000 and that was a stretch. They must all be you-tubers!

#12 Paddy on 03.04.21 at 3:06 pm

I’m all for removing the capital gains exception upon the sale of one’s primary residence. Everything else you sell gets taxed, so why is a home any different??? And no I’m not a renter. Would one be able to deduct mortgage interest then? Deduct maintenance costs? Thoughts anyone??

#13 Diharv on 03.04.21 at 3:13 pm

Ottawa caught off guard? They orchestrated this over the years with their policies. They have no interest in curbing this since “real estate” is pretty much the driver of Canada’s economy now.

#14 Linda on 03.04.21 at 3:16 pm

Seems to me the horse has not only left the barn, but has multiplied since ‘affordable’ housing when it comes to SFH is apparently as rare as a unicorn. Seriously, when the ‘average’ income for Canadians is under $60K how on earth can anyone claim housing at $1 million & up is ‘affordable’? Even the much envied top tier earners – those who pull down $250K & up – have commented how difficult it has been to buy. How the heck does anyone expect Joe/Jane average earner to be able to afford prices like these? Especially since it appears that bonds are erupting or giving warning signs they are about to erupt, just like Iceland.

#15 Inequity on 03.04.21 at 3:20 pm

I know its easier to giveth than taketh…
The government created the CMHC to help the average guy afford a house… but it increased demand and prices with it. Maybe its time to scale the CMHC way back maybe even to zero.

#16 Rook on 03.04.21 at 3:20 pm

What are we sitting at, $800 billion or so new money printed in 2020?

Doesn’t sky’s-the-limit housing prices equal sky’s-the-limit property tax revenue? Wouldn’t it be in any government’s best short(ish)-term interest to keep housing prices going to the moon so they can keep property taxes going to the moon too?

Shame about the people who bought, but just as the 10k a year TFSA contribution was ‘only for the wealthy’, why can’t we treat housing as the same? It’s ‘only for the wealthy’ and they need to pay their ‘fair share’?

#17 X on 03.04.21 at 3:22 pm

A 10% downpayment is not unreasonable.

The higher this goes, the more it comes back to reality. When, who knows, maybe when we all have shots in our arms, and sellers feel more comfortable listing to increase supply, maybe when we can book holidays and thus demand will be reduced. Maybe when rates rise. Maybe all. Who knows.

I shake my head at some of the sale prices I have been watching in the neighbourhood.

#18 604_Housing on 03.04.21 at 3:23 pm

We have no economy outside of real estate. A Tangerine Republic.

#19 Franco on 03.04.21 at 3:25 pm

Inflation is back, will it be with a whimper or a roar?

#20 Inequity on 03.04.21 at 3:28 pm

#2 IHCTD9
gross nails…

#21 Sail Away on 03.04.21 at 3:30 pm

It’s fun watching the Meghan Markle/Royal family tiff.

Many Americans have always (well, since 1775 anyway) viewed England in general and the Royal family in particular as snootily pompous poor losers with highly misguided delusions of their own importance.

Now this pettiness? Suspicions verified.

#22 Ace on 03.04.21 at 3:31 pm

The banks want to fill up on as much insured mortgage debt they can possibly get before rates increase and there is a drought.

#23 Millenial 1%er on 03.04.21 at 3:34 pm

I made more in the past 6 months off of my real estate compared to my fairly high income job. Maybe I should trade the stress of my job for the tedium of signing mortgage documents. Do what the rest of the kids are doing, HELOC and roll more properties.

#24 mj on 03.04.21 at 3:36 pm

they need to cut the amortization again and put it 20 years max

#25 bdwy on 03.04.21 at 3:37 pm

#2 IHCTD9 on 03.04.21 at 2:48 pm
Nice nails, gross tongue.
————–
found the cat lover.

no dog tongue is gross, that’s where kisses come from. (unless , of course, they were just licking their @ss. then you want to wait a bit!)

—————-
no way on cap gains, too complicated. 7% dp maybe , but… election , so nothing.

don’t blame homeowners for mr powell’s printing.

#26 Richard L on 03.04.21 at 3:38 pm

The primary form of economic activity in this country is selling houses to each other.

#27 Billy Buoy on 03.04.21 at 3:43 pm

Just let the rates rise to where they should be and stop the real estate bubble in it’s tracks.

Nope, too old fashioned and what is the alternative for making big money in Canada these days?

Crickets…

Powell actually showed he had some cajones today letting the 10 yr rise above 1.5%.

A true march miracle for the ages….let’s see what he does if it gets to 1.75%

More crickets

#28 Grandv!ew on 03.04.21 at 3:44 pm

The needle can not flip. We all know it. If you are owner or renter in Canada it doesn’t matter anymore.
We do not have any other way for our country to sustain itself other than real estate. We do not innovate or invest into the new technologies or manufacturing of new products. Our last couple of generations became docile, meek and uninspired to do anything other than buy properties and stay where they are while being devoid of any risk taking or aspirations. At this point of time we all know but we are afraid to admit to ourselves, if you are under 40 years of age it is not too late to start over almost anywhere else: USA, Asia, Western Europe…
I can not believe situation we are in, and just because politicians are not prepared to risk political votes and their positions. Rotten Toronto garages for $730K East Van houses for $2.3 Million…..all in the country where norm is two weeks of vacation time while earning below average income….while kids in Denmark are making
$22/hour to start while working at McDonald’s and enjoying six weeks of paid vacation also to start.

#29 Cto on 03.04.21 at 3:46 pm

Diddling and seemingly pretending to actually care about housing costs.
How quaint!
Look! There is only one organization that has the power to change this and we all know who they are…
They,…recieved their mandate from the fed government and it has nothing to do with controlling inflation.
After this and other western countries offshore all their decent jobs decimating economic sectors that legions of middle class families relied on, guess what’s left..
.
Mass immigration
Debt expansion
Housing and condo development

There it is, the new replacement for what sustained us before

#30 IHCTD9 on 03.04.21 at 3:50 pm

#1 crowdedelevatorfartz on 03.04.21 at 2:46 pm
Socks and Christy Freecash dont have the spine to do anything brash before a looming election.
____

End of discussion right there. Trudeau will let ‘er rip. No brass located in Ottawa. Must. Win. Election.

Funny thing though, those who are hurt the most by Trudeau’s actions, are the exact same folks who will vote him right back in there.

Hey MR – who’re ya voting for next federal election? I’m guessing Trudeau, so you’d best start desensitizing right now. You’ll be paying 50-100X more for a house than the Boomers did.

Just blame the Boomers for it though, they don’t really care. In fact, the longer the blame is aimed at them instead of where it should be, the richer they’re going to get!

#31 Kiril Peev on 03.04.21 at 3:57 pm

Lots of buyer out there. They is some frustration though as many do not want to engage in bidding wars. Sellers are also wary of listing as they do not what to join the line up of buyers. Seems to me that an increase in supply is an easy solution. I lived in South Korea for a few years and there is an abundance of quality housing at an affordable price. 50M people and a small territory. I’m sure we can solve this here in Canada.

We have so much space compared to any other country.

#32 IHCTD9 on 03.04.21 at 3:57 pm

#25 bdwy on 03.04.21 at 3:37 pm
#2 IHCTD9 on 03.04.21 at 2:48 pm
Nice nails, gross tongue.
————–
found the cat lover.

no dog tongue is gross, that’s where kisses come from. (unless , of course, they were just licking their @ss. then you want to wait a bit!)
___

Correct, I like felines.

I’ll pass on getting kissed by that eel-like appendage.

#33 The West on 03.04.21 at 4:00 pm

Idiots! Kelowna is not even a top notch destination in the interior of the new Han province.

Anywhere else in the east Kootenays is far more enviable- especially if its WFH mania you seek. Nelson, Creston, Cranbrook – or, if you like it more remote than that – hop north off the Balfour ferry and hit Ainsworth (there’s an unreal Hotsprings there featuring about three hundred feet of caves into the mountain – you can sit in the springs and look over a breathtaking view of the Kootenay Lake), Nakusp or even Kaslo (if you’re really brave about being “remote”.)

And everything there is for sale – the Calgary oil money ran out years ago and suddenly nobody from Alberta could afford to B-ring C-ash.

The Schuswaps is the tourist trap. The Kootenays is where the blue bloods (I’m serious, the English Establishment) hang out over the summer.

#34 Millennial Realist on 03.04.21 at 4:02 pm

On a related note about WFH + “The Return”

Lobbyists for professional workers and union advisers are already moving on preparing demands to change labour laws across Canada.

Fundamental will be the right to WFH if the job criteria should allow it by a standard of reasonableness.

This will undercut pressures to return to offices, and strengthen the appeal of non-urban locations.

Watch for more news on this ahead….

#35 winterpeg on 03.04.21 at 4:04 pm

I thought the minimum down payment back in 1994 when I bought my house to avoid the CMHC premium was 25%. (So my down payment must have been $9625 on my little house which I bought for $38,500).
Crazy, eh? Might be able to sell it for $215,000 now.
I think the minimum CMHC should be raised back up again. And if the gov does start taxing the gain on principle residences, I wonder what the valuation date would be? (ie, how far back they would go for a starting date to tax the gain)

#36 Winterpeg on 03.04.21 at 4:08 pm

Oops.
Bad English. I didn’t buy my house to avoid the premium. Bought it in ’94, when the minimum down payment to avoid the CMHC premium was , (I think) 25%.

#37 S.Bby on 03.04.21 at 4:08 pm

I’ve never understood the appeal of Kelowna. It strikes me as one long strip mall on the side of a highway.

#38 Fred on 03.04.21 at 4:10 pm

the equity markets….no more uppa uppa …:)

#39 Dolce Vita on 03.04.21 at 4:11 pm

…meanwhile

The Markets are crashing, ETFs, Vax stocks, etc. all down except for my Death stock, like taxes something you can rely on.

I hate RE.

Probably the only Cdn that does.

Debt servitude. And they’re all lined up for that, happy to outbid each other into higher amounts of debt. Good for them and they’re the only economic show in Canada.

Then again, they’re looking at Mr. Market as of late and saying “NO THANKS” I’ll take my chances on exorbitant house prices instead.

———————-

…meanwhile, meanwhile

Variant World marches on.

106% increase in 12 days (800 to 1,645 total variant cases today)

5% of total Covid cases today.

Amazed at how fast variant cases growing and to think numbers are from weeks ago thanks to genomic sequencing taking time and hit and miss finding them (no one knows if a positive test sample is a variant or not).

More numerically intriguing than worrisome.

I will begin to worry when I see hospital and ICU beds start to fill up again. So far, none of that. A GOOD thing.

#40 wallflower on 03.04.21 at 4:11 pm

Almost uninhabitable garbage that has been lipsticked is selling for $700,000+ in Barrie.
I see tears and delinquent property tax accounts in 2022 and 2023.

#41 WTF on 03.04.21 at 4:12 pm

Sooo the people Socks has been buying off with our $ are now rushing into debt servitude. Nice, did I help with the down payment?

Uh Oh what now indeed? Some Big decisions await the man the Liberal Caucus elected to be our PM.

1:Let it ride and simply throw the unwashed who cannot or will not pay extortion rates to buy buy buy?. 2: grow a spine and whack this idiotic runaway FOMO induced insanity with actual tough love? No Paul Volker in this mix to assume the pain for his Wokeness.
I’m betting PM UBI goes for 1.

If this crashes and CMHC has to pick up the tab Canada is financially screwed, no more money in the national cookie jar.

A finance Minister who knows more Russian than economics. A paternalistic PM who loves to spend, and desperately wants an election. What could possibly go wrong?

#42 Job#1 on 03.04.21 at 4:15 pm

Garth (or anyone),

The graph above shows an interesting spike in inventory around May last year.
What happened? Was this a pandemic-induced, short term freak out? Was this what created that small window of opportunity to scoop up DT condos that you identified?

#43 Damifino on 03.04.21 at 4:19 pm

#8 Prince Polo

Loser renters be damned. Mr. Socks & crew will totally let’r rrrrrrrrrrrrrrrrip!
——————————

I agree.

It’s not the PM’s way to simply drop the ball. He’s more inclined to grab it, run the wrong way, and spike it into his own end zone. Look at the China vaccine fiasco and the entirely foreseeable reaction by Xi Jinping.

BTW, if Enbridge’s Line 5 is stopped by Michigan (with Joe’s help) T2 will be truly finished. Not that it would be his fault, exactly. But since he’s a great proponent ditching fossil fuels while also lacking the spine to stand up for Canadian energy, I would fully expect him to shoulder most of the blame.

#44 Guelph Guru on 03.04.21 at 4:21 pm

With all the money printing going on, I don’t understand how far the CAD has devaluated. The rationale that I hear from my friends, is those prices are just keeping up with the CAD devaluation.
Is this irrational exuberance or value adjustment? My paycheck has not changed an iota. So I hope it’s the irr exu. Only time will tell.

#45 Mattl on 03.04.21 at 4:22 pm

Kelowna has been pretty affordable for quite a while. Was mostly flat for almost 8 years, 2009-2017. You can get an acreage, walk to the beach, older home for the price of a basement walk out in Mission.

That chart is interesting because we had homes in my area for sale for up to a year and then boom, two week period, all inventory was absorbed. Literally nothing left in the area.

Tempting to sell and cash out, but you have to live somewhere and Kelowna is as close to perfect as a Canadian city can get.

#46 IHCTD9 on 03.04.21 at 4:26 pm

#12 Paddy on 03.04.21 at 3:06 pm
I’m all for removing the capital gains exception upon the sale of one’s primary residence. Everything else you sell gets taxed, so why is a home any different??? And no I’m not a renter. Would one be able to deduct mortgage interest then? Deduct maintenance costs? Thoughts anyone??
____

100 to 0% in ten years. IMHO, it has to be kept simple. No exceptions which might create loopholes, we’ll just have to deal with the (likely minimal) collateral damage for those who are forced to sell in under 10 years. Folks will eventually take better stock of their vulnerabilities when considering a home purchase.

PR CGT inclusion starting at 100% at 1 year ownership dwindling to zero at 10 years ownership. No breaks for reno’s or interest paid. Clock doesn’t tick if any part of the property is rented out. Clock doesn’t tick if home is not occupied. It’s supposed to be a PR, if it’s not being used as such, no ticky.

Whatever it ends up being, it has to poison the well in the eyes of any short term profiteer no matter what form he/she takes.

#47 Tron Light on 03.04.21 at 4:42 pm

How about getting rid of the CMHC? In other words, get rid of taxpayer funded “insurance” of mortgages.

What do banks care if people are paying more than they can afford when they have the repayment of a defaulted mortgage guaranteed by the taxpayer? Without this guarantee, we’ll see how fast banks are to lend to people who can’t afford it.

#48 cuke and tomato picker on 03.04.21 at 4:43 pm

Number 7 Diharv what you say is very true and established families on south Vancouver Island
like parents and grandparents are concerned so the nerdy
not cool little guy in the classroom does have a chance.

#49 PricedOutMillenial on 03.04.21 at 4:44 pm

Garth – You pointed out in your earlier blog that NewZealand is reigning in Speculators.. More down payment if they don’t intend to live there or flip the property.

Why wouldn’t Canada do this too.

Someone buys a house, the property value goes up. Then they take HELOC off the house and get a second and a third house. But it blows my mind as to how they become eligible for the second and third mortgage. Wild West!!

#50 Dave on 03.04.21 at 4:53 pm

Government is 100 percent responsible for this mess and people should be outraged, especially when they could fix it so quickly and easy by adjusting amortizations and down payments. Now they have already allowed real estate to become unafordable, so actions will be too little too late.

#51 Yikes on 03.04.21 at 4:54 pm

market headed off a cliff as Powell refuses to give in. Powell, RUNS the show, in case anyone isnt aware

at least we got real estate :)

The Dow lost 1% today. You call that a cliff? – Garth

#52 Legions on 03.04.21 at 5:02 pm

If permanent prosperity could be attained by printing money to infinity, every poor country in the world would have simply printed itself to permanent prosperity and the world would have been free of poverty and starvation over the past 100 years or more.

Simply not possible or it would have been done.

And those countries that have tried to print their way to prosperity have failed miserably and the opposite effect has happened.

Even more laughable is the idea that it is possible to print money to infinity to permanently maintain a state of rising house prices as a way to keep the economy rolling.

Again, no country in history has printed money to infinity to maintain permanent prosperity. And it would be virtually impossible to come up with a coherent and fact based argument to prove that Canada’s current real estate “boom” would have happened without all the free money that has been sprinkled over the country over the past year. A year in which a big chunk of our economy has been shut down.

Continued extreme money printing will have extreme consequences on the economy with high inflation and spiking mortgage rates (bond market).

And without all of that continued extreme money printing that Canada’s housing market heavily depends on, there will be catastrophic results in terms of housing prices across Canada.

But that is exactly where this country appears to be headed.

Those who set monetary policy have had themselves painted into a corner for well over a decade. They will print at extreme levels for as long as they can and keep rates at historic low levels.

However, again, it is impossible to create or maintain permanent prosperity by printing money to infinity. So this will naturally fail. And there will be extreme consequences. The fall of housing prices will be catastrophic. It is simply inevitable.

#53 yorkville renter on 03.04.21 at 5:03 pm

with houses topping $1mm, no one can put down 5% anyway.

#54 binky barnes on 03.04.21 at 5:08 pm

You know that Mr. Justin Trudeau is currently racking his brain on this issue. But sleep easy secure in the knowledge that he will come up with the solution.

BB

#55 MF on 03.04.21 at 5:08 pm

#23 Millenial 1%er on 03.04.21 at 3:34 pm

Actually you didn’t make anything.

No one did.

Real estate is up everywhere, as are stocks and everything else.

What are you going to do? Sell? Buy somewhere else? This is a worldwide everything bubble.

MF

#56 Club Foot on 03.04.21 at 5:24 pm

Upping the down payment to 10% in an election year budget? No chance does JT hand the opposition parties that kind of gift. ZERO.

#57 Don Guillermo on 03.04.21 at 5:25 pm

#33 The West on 03.04.21 at 4:00 pm
Idiots! Kelowna is not even a top notch destination in the interior of the new Han province.

Anywhere else in the east Kootenays is far more enviable- especially if its WFH mania you seek. Nelson, Creston, Cranbrook – or, if you like it more remote than that – hop north off the Balfour ferry and hit Ainsworth (there’s an unreal Hotsprings there featuring about three hundred feet of caves into the mountain – you can sit in the springs and look over a breathtaking view of the Kootenay Lake), Nakusp or even Kaslo (if you’re really brave about being “remote”.)

And everything there is for sale – the Calgary oil money ran out years ago and suddenly nobody from Alberta could afford to B-ring C-ash.

The Schuswaps is the tourist trap. The Kootenays is where the blue bloods (I’m serious, the English Establishment) hang out over the summer
****************************************

Nelson, Creston, Balfour ferry, Ainsworth Hotsprings, Nakusp, Kaslo are all in the West Kootenays. Cranbrook is East Kootenays. We say Cranbrook has BC taxes with AB weather.

Still plenty of money in Calgary. Most people with the money have found better places to go.

#58 Bk on 03.04.21 at 5:25 pm

Anyone else notice the stock market is really down????

The S&P 500 is 4% below its all-time high. A correction of 10% would be useful. – Garth

#59 Penny Henny on 03.04.21 at 5:28 pm

“Politicians are tempted to help first-time homebuyers enter the market, but low down payments may be part of the problem adding to affordability pressures and macro-economic vulnerabilities,” said Siddall.

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

Increasing the percentage of down payment required can have the effect of having first time home buyers priced out of the market for many more years as their down payment saved fails to keep up with rising home prices.

Conversely, low down payments have fueled housing values, locking out new buyers. Siddall is correct. You are not. – Garth

#60 Sean on 03.04.21 at 5:39 pm

They need to capital gains tax over a certain amount – van and TO should be 1M.

How is everything you buy and sell taxable but all this wealth has accumulated into houses and they haven’t taxed it yet???

Let all these oldies cash out their nest eggs before the tax comes into place – increase supply for the young-ins and make it affordable. Everyone wins.

#61 cuke and tomato picker on 03.04.21 at 5:45 pm

Number 57 Don I got my first degree from a university in Nelson BC I also have been all around the the Kootenays
but grew up in the south Okanagan and did my working life their. I loved the Okanagan but we decided to give
south Vancouver Island a try now we are retired and we
feel we are in the best place in BC.

#62 Paul on 03.04.21 at 5:46 pm

12 Paddy on 03.04.21 at 3:06 pm
I’m all for removing the capital gains exception upon the sale of one’s primary residence. Everything else you sell gets taxed, so why is a home any different??? And no I’m not a renter. Would one be able to deduct mortgage interest then? Deduct maintenance costs? Thoughts anyone??
————————————————————————————————
We must be some dumb F’s the way to fix everything is to tax it. Well everything else is taxed yes and it doesn’t work the powers that be take your money and tax it when you make it when you spend it and when you die wake the hell up.

#63 theoryAndPractice on 03.04.21 at 5:51 pm

https://toronto.ctvnews.ca/dilapidated-garage-hits-the-toronto-housing-market-for-729-000-1.5332018

I will not even bother writing a comment here, it is self explanatory…

#64 TurnerNation on 03.04.21 at 5:55 pm

Finally. THIS is the reason. Get used to it.
THIS is why the attack on flying, travellers and our movements.
From day one we were sold on #stayhome, in our controlled UN Smart Cities right?
Welcome to the New System. An open global air-prison. Avec Lockdowns.

https://www.theguardian.com/environment/2021/mar/03/global-lockdown-every-two-years-needed-to-meet-paris-co2-goals-study

Carbon dioxide emissions must fall by the equivalent of a global lockdown roughly every two years for the next decade for the world to keep within safe limits of global heating, research has shown.

Lockdowns around the world led to an unprecedented fall in emissions of about 7% in 2020, or about 2.6bn tonnes of CO2, but reductions of between 1bn and 2bn tonnes are needed every year of the next decade to have a good chance of holding temperature rises to within 1.5C or 2C of pre-industrial levels, as required by the Paris agreement.

#65 Penny Henny on 03.04.21 at 5:57 pm

#59 Penny Henny on 03.04.21 at 5:28 pm
“Politicians are tempted to help first-time homebuyers enter the market, but low down payments may be part of the problem adding to affordability pressures and macro-economic vulnerabilities,” said Siddall.

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

Increasing the percentage of down payment required can have the effect of having first time home buyers priced out of the market for many more years as their down payment saved fails to keep up with rising home prices.

Conversely, low down payments have fueled housing values, locking out new buyers. Siddall is correct. You are not. – Garth
//////////////

I think both statements can be correct at the same time as they are not necessarily contradicting each other. Low down payments have been with us for a long time. Very long time, so there is more to it than just that.
One viewpoint that I don’t see much of, actually two viewpoints.
1. Millennials are coming of age to buying a home, they are quite a large demographic.
2. People realized that if they don’t spend so much on some wants (because everything is shut down, no more Adele concert tickets at $300 a pop) they have a lot more available for other wants (owning not renting).

And if this Siddal guy is so smart then why was he so wrong on the call for house prices to plummet?

#66 NOSTRADAMUS on 03.04.21 at 6:01 pm

MONEY, BOTTOM LINE!
Money flows move markets, more than any other single independent determinant, including rising interest rates. The driver to market movement is not valuations, rather it is the degree of the systems liquidity. Debt loads in both the private and public sectors are becoming untenable and posing substantive cycle risks. With the withdrawal of liquidity (ability to access funds), the situation can quickly become a nightmare for the over indebted. Fewer bad things can happen to households and other entities with no debt or low fixed costs. Well, that is all I have to say about that, for now.

#67 SoggyShorts on 03.04.21 at 6:02 pm

#34 Millennial Realist on 03.04.21 at 4:02 pm
On a related note about WFH + “The Return”

Lobbyists for professional workers and union advisers are already moving on preparing demands to change labour laws across Canada.

Fundamental will be the right to WFH if the job criteria should allow it by a standard of reasonableness.
***********************
Hahahaahahaah, no.

I hire you to do what I tell you to and where to do it.
If you don’t like either of those I’ll find someone else.

#68 Rogerhomeinspector on 03.04.21 at 6:03 pm

House prices aside, as a wood elf, I’ve noted over my career that home owners are becoming less and less handy. I feel that if lined some of these kids and asked them to pick up a hammer, they’d grab it by the wrong end.

Couple that with the fact that no one really wants to do any kind of useful work any more and so we’re running into trades shortages throughout the country. In my trade as a finish carpenter and cabinet maker, there’s like zero people coming into the field and those of us who have experience are hunted to extinction. What’s that done? Pushed labour rates up, up, up.

So while peoples equity grow, I know for a fact many people then take this equity out to pay for ever higher maintenance and renovation costs. Our “average” modest custom kitchen is running about $30k just for cabinets. And that’s lacquered mdf and poplar. Nothing fancy material wise. We can get into $75-80k with little effort.

So I often have to wonder- if people are constantly sucking equity to pay for ever more expensive maintenance and upkeep, how much is their home actually “worth” in the end?

#69 Penny Henny on 03.04.21 at 6:04 pm

Conversely, low down payments have fueled housing values, locking out new buyers. Siddall is correct. You are not. – Garth
////////////////

Locking out new buyers in itself would tamper demand in which case prices would not rise as much.
I think it’s more of a supply side issue.

#70 Wrk.dover on 03.04.21 at 6:06 pm

The distortion is now so great, the small potato debt free savers will somehow be dragged down as collateral damage. Soon, too.

Invested or not!

In Garth we trust….

#71 Howard on 03.04.21 at 6:07 pm

As you know, Ottawa’s tried to stop the real estate juggernaut before.

——————————

No it hasn’t. That was all for show. Window-dressing. The biggies were all left untouched. For starters, why not bar the CMHC from insuring investors?

This government WANTS a housing bubble. If that isn’t obvious to you by now, I’m not sure what will convince you.

#72 Caledondave on 03.04.21 at 6:08 pm

Meanwhile out at sea aboard the good ship HMS Canada, Chrystia the Impaler is up in the crowsnest looking out for icebergs whilst in the wheelhouse Captain Justin Twinkles grips the wheel with his strong, caloused and manly hands knowing full well that Chrystia is dyslexic and always calls out the location of the bergs 180 degrees off. In the back of his mind he hopes that she doesn’t get it right once.

#73 fishman on 03.04.21 at 6:10 pm

So CMHC is the stinky bad boy? I remember my parents & aunts & uncles sitting around the kitchen table talking about CMHC in terms of godlike awe. An interest free loan for a veteran to buy a starter home. Medicare too. It didn’t get any better. A generation of a time, believing that the sacrifices made through a depression & a war were worth it. That Canada was run by the wise & fair & generous. I wish I could believe like they did. However, If wishes were horses, Beggars would ride.

#74 Flemington Park Millionaire on 03.04.21 at 6:14 pm

Things have been very quiet here in Covid central . The local testing centre has had very few people show up last 3 weeks . Barely anyone is employed but interest in these old poorly maintained moldy condos is off the charts . The condo building I now rent at is bankrupt , bare minimum in reserve fund and now must borrow to cover emergency capital costs . A special assessment charge is being debated . The condo buildings in Flemington Park are on average 55 years old and in very poor repair . The neighborhood is considered the lowest per capita by income in the city . Very high rate of violent crimes . Condo units are immediately selling over list price . No in person viewings are allowed so people buying over computer I assume . I bought a unit in one of these dumps in 2013 for $189 k and sold 6 months ago 500k. Happy to rent here for $1900 a month all inclusive.

#75 cto on 03.04.21 at 6:15 pm

Dogs, don’t you get it?
Housing is canada’s goose that always lays the golden egg! Our whole economy from coast to coast is housing now! they (BoC and government) absolutely cannot let it correct!

#76 Bloff Witzer You're in the sitatation cloakroom on 03.04.21 at 6:21 pm

Whatever they do it should be called the to little to late law because every time they have intervened that is what it has been. Slam that barn door closed once the horse is two counties away. Government intervention has caused much of the problems.

#77 Howard on 03.04.21 at 6:22 pm

#12 Paddy on 03.04.21 at 3:06 pm
I’m all for removing the capital gains exception upon the sale of one’s primary residence. Everything else you sell gets taxed, so why is a home any different??? And no I’m not a renter. Would one be able to deduct mortgage interest then? Deduct maintenance costs? Thoughts anyone??

——————————–

The fact that the federal government exists primarily to prop up the housing market with taxpayer money is more than sufficient offset to a capital gains tax, absent any deductions.

You want the government to pump the value of your PR while simultaneously allowing you to deduct all your expenses? Maybe homeowners should also be given taxpayer-funded lambos and personal masseuses?

#78 Drinking on 03.04.21 at 6:23 pm

Socks, Merkel, Biden, Macron etc. are as knowledgeable as any poster or this blog host, it is all a crap shoot!

If you are interested on bright minds that discuss different topics on Ted talks watch this, mind you this was over five yrs back; this gentleman is a real gem! Do not be afraid to ask those questions.

https://www.youtube.com/watch?v=nwRJLa0igmQ

#79 printing press goes brrrrrrr on 03.04.21 at 6:34 pm

I suggest raising the bank of Canada rate to 3% immediately. That would solve the housing problem. Oh ya…. AND STOP PRINTING MORE MONEY!!

#80 Faron on 03.04.21 at 6:35 pm

#58 Bk on 03.04.21 at 5:25 pm

Anyone else notice the stock market is really down????

The S&P 500 is 4% below its all-time high. A correction of 10% would be useful. – Garth

When equities corrected in September, spurred by a fat gamma squeeze, The Market Ear pointed out that the markets lost narrative. Equities effectively went sideways until November although small caps net climbed as a hint of what was to come. A new narrative was established with the election and the vaxxx “The vaccine rainbow”.

I think the markets are at the end of that phase and are about to meet the “rubber meets the road” narrative (my term) wherein the real reopening happens and the economy is weaned off of life support. Things will have to reshuffle to adjust to rising rates and a hand-off from tech/momo to industry in physical goods and stimulus measures that go to production of real goods rather than to stimulate market functioning.

Currently, MOVE and VXTLT among other bond fear gauges have been climbing for almost two months and are now settled at a level that was only briefly hit during 2018’s volmageddon. I don’t see the markets settling until there are meaningful drops back down in those gauges. That either means rates settle back a bit, central banks step in, or simply passage of time with sideways bonds and equities (because implied volatility is based on options, it bleeds downward in static markets). I wouldn’t be surprised to see a few sharp, temporary drops in bond yields. Bonds are currently heavily shorted as is the dollar and Gamestop gave clues to what can happen to shorted instruments.

Adding to this is the retail speculative options mania and the unravelling of ARK. A lot of upward momentum in equities has been on the backs of retail buying call options and the piling on in same by institutionals looking to capitalize on the trend and/or spurring the trends through curative social media. A lot of money has been spent on worthless crapcos and that narrative may also be ending. Watch Tesla/ARKK and also watch Russell 2000 which is loaded with profitless garbage like Plug Power among others as indicators of the death of crapco pumping sentiment.

There are massive tailwinds in the economy still, but equities need new leaders. This is why a correction may be coming and why one is needed. Ultimately, the fresh narrative will arise with fresh sectors/names that will be chased.

Here’s an article on the problems with ARKK and the author, @keubiko, is a great follow on fintwit. He’s made some great calls in the past months on Magna, Lockheed Martin and Goldman Sachs before their recent ramps. He is TSLAQ, so trigger warning there.

https://seekingalpha.com/article/4411559-raiders-of-lost-arkk

#81 Ponzius Pilatus on 03.04.21 at 6:37 pm

#165 S.Bby on 03.04.21 at 12:23 pm
# 161 protea

I kind of wonder if the consumption of weed has increased dramatically during Covid-19

I have heard that some extra CERB cash has gone to increasing drug use.
—————-
Not sure about the drug use, but booze consumption has gone up quite a bit.
I heard some numbers in the 20% range.
Here in BC, booze tax is 15%.
So, some of the CERB is coming back.

#82 Stone on 03.04.21 at 6:40 pm

Another sad day on the markets today. Whatever happened to uppa uppa uppa? I’m happy to be balanced and diversified though. As a result, my B&D is only down 0.60% today with a 5.68% return YTD.

That’s better than Cathie Wood. She’s at zero for 2021.

https://www.bnnbloomberg.ca/cathie-wood-s-flagship-ark-innovation-etf-erases-all-2021-gains-1.1572244

#83 Ponzius Pilatus on 03.04.21 at 6:47 pm

#21 Sail Away on 03.04.21 at 3:30 pm
It’s fun watching the Meghan Markle/Royal family tiff.

Many Americans have always (well, since 1775 anyway) viewed England in general and the Royal family in particular as snootily pompous poor losers with highly misguided delusions of their own importance.

Now this pettiness? Suspicions verified.
—————-
No fan of the Royals, but they contribute lots of dough to the British coffers.
But keep them out of Canada, or at least let them pay for related expenses.
And “The Crown” on Netflix is a good watch

#84 Faron on 03.04.21 at 6:48 pm

Addendum: I wouldn’t be at all surprised to see maple come out the equity winner in the “new narrative”. Mining, energy, banks, insurance. Unless RE bites the big one and takes banks lower.

Addendum II: Transition to real production almost has to happen. There are shortages everywhere and price spikes everywhere right now. If production can’t respond to that, we are truly in trouble with inflation and a non functioning industrial/commodities sector.

#85 Faron on 03.04.21 at 6:50 pm

#68 printing press goes brrrrrrr on 03.04.21 at 6:34 pm

I suggest raising the bank of Canada rate to 3% immediately. That would solve the housing problem. Oh ya…. AND STOP PRINTING MORE MONEY!!

That would also bankrupt almost every listing on the NASDAQ, so trillions of dollars and the backbone of our modern economy. Probably not worth it even if it were to put a touch of sanity in the housing market. Sorry.

#86 Stone on 03.04.21 at 7:00 pm

#82 Stone on 03.04.21 at 6:40 pm
Another sad day on the markets today. Whatever happened to uppa uppa uppa? I’m happy to be balanced and diversified though. As a result, my B&D is only down 0.60% today with a 5.68% return YTD.

That’s better than Cathie Wood. She’s at zero for 2021.

https://www.bnnbloomberg.ca/cathie-wood-s-flagship-ark-innovation-etf-erases-all-2021-gains-1.1572244

———

My mistake. She’s actually -5.02% YTD.

Sooooo…when do people start handing me $50 billion to invest for them and I can charge an MER? Garth, I’ll cut you in for 0.10%. On $50 billion, that’s mucho dinero.

Helllllllo!?! Helllllllo!?! Anybody there? Bueller? Bueller?

#87 Damifino on 03.04.21 at 7:03 pm

#37 S.Bby

I’ve never understood the appeal of Kelowna. It strikes me as one long strip mall on the side of a highway.
—————————-

Precisely. That’s the appeal.

#88 Ponzius Pilatus on 03.04.21 at 7:05 pm

#7 Diharv on 03.04.21 at 3:03 pm
It’s not pleasant knowing that my 17 and 20 year old will never be able to own their own place someday. And if they take the plunge, it will own them, holding them in financial hostage for life. You keep saying this won’t end well, but it seems that for those that can never get in, it is not ending well also. This is just all so stupid and toxic.
——————
Seems like you have a severe form of FOMO.
I think you and your kids could benefit from attending FA (FOMO Anamynous).
Don’t wait any longer. 
Spring is RE rutting season, when the urge to buy an over prized house is the strongest.

#89 Buford Wilson on 03.04.21 at 7:07 pm

Don’t diddle with the mortgage rules.

Our old friend Mr Market will manage housing, Garth.

#90 Ponzius Pilatus on 03.04.21 at 7:12 pm

#57 DON Quixote
Nelson, Creston, Balfour ferry, Ainsworth Hotsprings, Nakusp, Kaslo are all in the West Kootenays. Cranbrook is East Kootenays. We say Cranbrook has BC taxes with AB weather.

Still plenty of money in Calgary. Most people with the money have found better places to go.
———-
Like you?
How is Sancho doing?

#91 It won't last on 03.04.21 at 7:30 pm

Just as the FED look like fools for trying to control the bond market and own everything. Printing money and showering the world with it is not a free market. They created bubbles everywhere and soon they will all crash. The stock market is getting tired of Powell’s bs and his telling him what he can do with his money printing. Canada I would like to think is a little smarter and will raise rates…maybe wishful thinking though as all central bankers seem to think alike.

I’m moving to low correlation assets like bitcoin to get away from these idiots.

#92 Nonplused on 03.04.21 at 7:35 pm

#12 Paddy on 03.04.21 at 3:06 pm

I’m all for removing the capital gains exception upon the sale of one’s primary residence. Everything else you sell gets taxed, so why is a home any different??? And no I’m not a renter. Would one be able to deduct mortgage interest then? Deduct maintenance costs? Thoughts anyone?

———————————

What else that you own for personal use gets taxed when you sell it? Cars? Used kid’s sports equipment? Garage sale items? Boats? RV’s? I guess the difference in people’s minds is that those things usually go down in value whereas real estate seems to endlessly go up.

Real estate is already taxed in the form of property taxes so unless your house is increasing more per year than the property taxes you aren’t making any money. Then there is mortgage interest for most people as well. And maintenance. And inflation. Prior to this madness I don’t think anybody actually made any money owning a house.

And then there is the problem of what a capital gains tax on primary residences would do to people who are planning on repurchasing. They’d likely have to finance all of it. Remember, houses aren’t money so when you have to move for work or whatever reason you still only end up with one house. You aren’t really ahead until you sell for the last time.

It has often been discussed that real estate prices are a function of incomes, demand, and interest rates. But who knew that as interest rates approach zero prices could go to infinity? That appears to be what we are seeing here, a divide by zero error.

It does not make sense to me that the kids will be “priced out forever”, unless the population is maybe growing faster than housing supply. Sooner or later everyone who buys a house has to sell that house. There is no way around that. It’s all a matter of price, which for most people comes down to the monthly. So if we could say perhaps interest rates will stay below 2% for the next 25 years, maybe the prices make some sense? But I hate to think what would happen if for some reason rates moved back up to say even 5%. Would house prices fall by half? Or is what we are seeing a sign that the dollar is going to be devalued?

#93 joblo on 03.04.21 at 7:50 pm

#54 binky barnes on 03.04.21 at 5:08 pm

You know that Mr. Justin Trudeau is currently racking his brain on this issue. But sleep easy secure in the knowledge that he will come up with the solution.

BB
Racking his brain alright, as we should, sleep easy like PM Pot?

#94 45north on 03.04.21 at 7:56 pm

Are we out of control yet?

maybe not quite

here’s what Ron thinks

6) Wild card? When. The sweet spot for a Federal election is between the early economic dead cat bounce that will begin by early May, and the havoc caused by higher interest rates, that kick in after July.  I think the second half of the year is going to be a lot rougher than the first half.

it’s vital to the Liberal election chances that the housing market keep going up.

I pray it doesn’t.

#95 Nonplused on 03.04.21 at 7:56 pm

A little back of the envelop cancelation:

Assuming a $4,000 monthly and 1.5% interest and approximately a 25 year amortization, a person could carry $1,000,000 in original principle on a mortgage.

Bump the interest rate up to 5% and the original principle drops to $680,000.

#96 Kelowna rock(et)s! on 03.04.21 at 8:04 pm

#4 ogdoad on 03.04.21 at 3:00 pm
Kelowna will lose its charm (if its not gone already) and tumbleweeds will roll.
____________________________

Yes, Kelowna will lose its charm. Keep on believing that if it makes you sleep well at night.
But first, let us all know what hallowed woods your holiness eminates so the rest of us can have a good laugh at your expense!

#97 Out Of Work CEO, Will Travel on 03.04.21 at 8:08 pm

Looks like the barn door got left open …

#98 Cici on 03.04.21 at 8:10 pm

I bet they’ll do absolutely nothing.

But I also bet this is going to come back and bite us in the butt big time.

The smart money has probably sold and is now temporarily hiding out in those rental condos, waiting for COVID to subside so they can take their newfound tax-free windfall to a cheaper destination and live like Kings and Queens. This will be especially easy for people who hold two or more passeports, temporary residents and border crossers.

Even the retirees who are cashing out of their homes at these new all-time highs are going to make less money stuffing the proceeds into $CDN GICs and mutual funds than they would by keeping the mortgage-free digs and continuing to rent them out for monthly cash flow. I predict our boomers are going to be boomeranging out of here but will be keeping Florida booming.

I also reckon a lot of cash has already left the country and when the Vax finally does come and save us, there will be a monumental stampede for the exits.

And it’s going to be hard to convince the young, productive foreign talent that isn’t already mega-rich to immigrate here with such extreme house valuations in comparison to salaries and wages. Unless their goal in life is to be saddled with 45 years of sky-high debt just to live on a tundra.

#99 Cheese on 03.04.21 at 8:11 pm

My portfolio dropped 20% today, still work near minimum wage in the hospital.

“I’ve seen things you people wouldn’t believe. Attack ships on fire off the shoulder of Orion. I watched C-beams glitter in the dark near the Tannhäuser Gate. All those moments will be lost in time, like tears in rain. Time to die.”

#100 Nonplused on 03.04.21 at 8:11 pm

#16 Rook on 03.04.21 at 3:20 pm
What are we sitting at, $800 billion or so new money printed in 2020?

Doesn’t sky’s-the-limit housing prices equal sky’s-the-limit property tax revenue? Wouldn’t it be in any government’s best short(ish)-term interest to keep housing prices going to the moon so they can keep property taxes going to the moon too?

———————————–

In most areas property taxes are not based directly on house prices but instead there is a mill rate applied. The assessment’s main effect is to determine relative tax rates so a house assessed at $1,000,000 will pay twice as much as a house assessed at $500,000. Whether house prices go up or down the city just keeps bumping the tax up 2-3% a year regardless.

#101 Oak on noggin on 03.04.21 at 8:12 pm

#87 Damifino on 03.04.21 at 7:03 pm
#37 S.Bby

I’ve never understood the appeal of Kelowna. It strikes me as one long strip mall on the side of a highway.
—————————-

Precisely. That’s the appeal.
________________________________________

I can assure Jealots like you that shopping is the least of the reasons people move here. And this is different from where you live?

I guess you never bothered to explore the downtown, surrounding area of Kelowna and the Okanagan. And for that, we remain eternally grateful.

#102 Leftover on 03.04.21 at 8:13 pm

#33 The West

Yup, the Kootenays rock. Sell your Kelowna dump for $1 million and get a beautiful place in Rosland plus a condo in Cabo. Rent the Rosland place to skiers while you play on the beach and never work again.

Sounds good to me.

#103 Faron on 03.04.21 at 8:13 pm

S&P is in negative gamma at levels last seen… well, never. It’s a record. Closest second was Feb 27th last year.

https://squeezemetrics.com/monitor/dix

Click GEX for the bulk gamma timeseries.

Should you sell? No. Why? Because a) you shouldn’t listen to me. b) The third most negative gamma position was Feb 26th this year and the next day the market ripped upward. c) selling when the market is closed is dumb. d) Bottoming gamma often means a bottom in prices or close to it.

Negative gamma means that the options market will reinforce whatever moves the underlying equities make in either direction. Negative gamma is rocket fuel in whatever the preferred direction the market takes tomorrow. So, no matter what the open/close differential is EOD tomorrow, there is bound to be a lot of movement.

In contrast, positive gamma has the opposite effect. Tends to dampen market moves either at set levels or overall. Gamma was record positive through December and into mid January which is why equities dully moved upward with little intraday range (low realized volatility). Yes, record positive gamma to record negative in a bit over a month. The options market is getting closer to the drivers seat. Thanks Robinhood.

#104 Sail Away on 03.04.21 at 8:15 pm

#86 Stone on 03.04.21 at 7:00 pm

[ARK is] actually -5.02% YTD.

Sooooo…when do people start handing me $50 billion to invest for them and I can charge an MER? Garth, I’ll cut you in for 0.10%. On $50 billion, that’s mucho dinero.

————-

Well, S, as soon as you return 300% in a year in an established fund, you can expect the willing buyers to appear. Get to it.

And, as an aside, fund managers already supplement their income by selling covered puts and calls on their holdings, so add around 10% of Cathy’s holdings as pure, sweet profit in her pocket- your 0.10% is chump change.

#105 GAV on 03.04.21 at 8:21 pm

#85 Faron on 03.04.21 at 6:50 pm
#68 printing press goes brrrrrrr on 03.04.21 at 6:34 pm

I suggest raising the bank of Canada rate to 3% immediately. That would solve the housing problem. Oh ya…. AND STOP PRINTING MORE MONEY!!

“That would also bankrupt almost every listing on the NASDAQ, so trillions of dollars and the backbone of our modern economy. Probably not worth it even if it were to put a touch of sanity in the housing market. Sorry.”

I’m confused. What does the Bank of Canada have to do with the NASDAQ?

#106 Sail Away on 03.04.21 at 8:22 pm

#99 Cheese on 03.04.21 at 8:11 pm

My portfolio dropped 20% today, still work near minimum wage in the hospital.

———

C, you have clearly either deliberately ignored all advice ever given on this blog in the history of ever, or you’re just making things up for a response.

#107 cowtown cowboy on 03.04.21 at 8:22 pm

WTF???

We were/are considering moving and looked into new financing..we make about $300k and were told that 4x earnings, ie. $1.2 would be the max we could qualify for…how are people getting this kind of financing? While we could afford it in theory, I could never imagine taking on that kind of debt..wtf is wrong with people???

My worry is the libtards will just inflate it away and the near mil we’ve finally managed to accumulate will just shrink and shrink and shrink….

#108 Paul Summerville on 03.04.21 at 8:24 pm

The Uk approach can definitely help reduce demand however coming so late it bakes in inequality. Kids rely on parents for support who are long housing. Third best is taxing capital gain but this probably doesn’t figure in on a person’s decision to buy. Second best is for a 25% down payment. But the real problem is interest rates. Every central bank made the mistake of keeping emergency rates in place from 2009. Raising rates is what will eventually cap demand. Until then … ps. What’s is a ‘big’ economist?

#109 Faron on 03.04.21 at 8:28 pm

#102 Leftover on 03.04.21 at 8:13 pm

#33 The West

Why would you leave Rossland in winter??? Koots have the worlds best powder skiing! + everyone and their brother and almost yours truly is moving there or tried during the pandemic summer. Late trade.

#110 GAV on 03.04.21 at 8:30 pm

#16 Rook on 03.04.21 at 3:20 pm
“What are we sitting at, $800 billion or so new money printed in 2020?

Doesn’t sky’s-the-limit housing prices equal sky’s-the-limit property tax revenue? Wouldn’t it be in any government’s best short(ish)-term interest to keep housing prices going to the moon so they can keep property taxes going to the moon too?”

There is one thing all Canadians seem to have in common.

That is a complete misunderstanding of how property assessments and Municipal taxes work.

#111 TurnerNation on 03.04.21 at 8:32 pm

When you grandkids ask How did the global Communism come to be? Tell them one cold March week in ’20.
It’s been said that the New System is predicated on two things, the words: Mandatory. And Asymptomatic.
To wit in the news: “Mandatory COVID-19 testing begins at 11 more land borders”

But you are free to leave at any time! How long you think this lasts. We are but one year in the and the control is ramping up weekly Another 2, 5, 10 years to go? 2030?

– T2 tweeted that the Lockdown support is extended until JUNE. So big hint-hint to ON & QC Red, Grey war-zones, this is not going away. It was planned ahead of time, in 2020, with several Provinces ordering then the fictional States of Emergency well into 2021. Umm ya you’re gonna need a UBI for that.

(You see to our global rulers WE are the virus. To be controlled. Humans. We are The Internet of Things. Our DNA in the Blockchain.)

….
Kinda known 8 months ago here:

From AUGUST 2020:
#114 TurnerNation on 08.04.20 at 8:41 am
We are in the Compliance stage.
By 2021 we might have some sort of global UN-based UBI system, whereby free money for all and First World countries are bled dry to pay .

#125 TurnerNation on 07.29.20 at 10:57 pm
See in the New System all fun is banned by edict. Specifically public dancing, singing. Traditional weddings and funerals.
People must walk a distance behind another. Regular rituals of purification – using Purell – must be performed, daily. Else the omnipresent but unseen CV gods might smite you. You unclean animal.
Faces must be covered in reverance to these gods. A hushed awe. Soft black masks seem the norm.
This is the new global religion.

…..

Ooops hehe. We lost our freedoms for this. Science yo:

https://www.nugget.ca/news/cassellholme-outbreak-cases-misleading-ceo

““The 13 cases the health unit reported to the community on Friday was erroneous. At least seven of those cases reported Friday are negative. Those individuals went to the hospital (North Bay Regional Health Centre) to get retested and ended up with a negative result,” he said.

However, Lowery said the North Bay Parry Sound District Health Unit will not take those seven people who tested negative off the total case count.”
…….

#112 Faron on 03.04.21 at 8:32 pm

#104 Sail Away on 03.04.21 at 8:15 pm

#86 Stone on 03.04.21 at 7:00 pm

[ARK is] actually -5.02% YTD.

Sooooo…when do people start handing me $50 billion to invest for them and I can charge an MER? Garth, I’ll cut you in for 0.10%. On $50 billion, that’s mucho dinero.

————-

Well, S, as soon as you return 300% in a year in an established fund, you can expect the willing buyers to appear. Get to it.

You forgot to add that Cathie has the lord almighty on her side. Stone, do you? ;-) Really is one of the best ways to flow the lemmings. Greed + dogmatic fervor for max fleecing.

#113 Expat on 03.04.21 at 8:34 pm

I left Toronto at 35 and basically started over financially after being accused of false accusations.

I am in my lower 40s and plan to retire in Thailand at 50.

I live like a college student in a humble apartment and I drive an nice, but inexpensive vehicle (Accord).

I don’t really go without because I still have so much leftover each month because of my low cost of living that it doesn’t matter. I am going to buy an RV and travel the states until I either get sick of it or I hit the age where I can start withdrawing from my retirement accounts without penalty.

At the end of that? Who the hell knows? Settle down in a low COL area and focus on hobbies and interests or travel the world if I still have my health.

World is your oyster without attachments. This isn’t just Toronto real estate. Don’t let Chrystia Freeland own you as you accumulate wealth. Keep it simple. Don’t let her have your money.

#114 Sail Away on 03.04.21 at 8:36 pm

#83 Ponzius Pilatus on 03.04.21 at 6:47 pm

No fan of the Royals, but they contribute lots of dough to the British coffers.

———

Wrong. The royals are totally on the public dole. Maybe just call them partial redistributors of charity:

“Taxpayers in the United Kingdom are paying more money than ever for the Royal Family. The latest Sovereign Grant accounts show that the monarchy cost £67 million ($86 million) in 2018-19 – a 41 percent increase on the previous financial year.” -Statistica

#115 NoName on 03.04.21 at 8:40 pm

#90 Ponzius Pilatus on 03.04.21 at 7:12 pm
#57 DON Quixote
Nelson, Creston, Balfour ferry, Ainsworth Hotsprings, Nakusp, Kaslo are all in the West Kootenays. Cranbrook is East Kootenays. We say Cranbrook has BC taxes with AB weather.

Still plenty of money in Calgary. Most people with the money have found better places to go.
———-
Like you?
How is Sancho doing?

I can’t remember when i red it, highschool probably, even to this day i remember how much i laughing when dude fighting windmills. What brings ne to point, what is literature mandatory reading in highschool here. Does anyone knows?

#116 Flop... on 03.04.21 at 8:44 pm

Flop’s Sale of the week.

Well, hold my beer.

The Vancouver Special that went for 2.6 overlooking Trout Lake has just been told to sit down and shut up.

A house at 815 e 23rd Ave just sold for 2.93

Ask was 2.59

Assessment 1.95

https://m.youtube.com/watch?v=1Kaaa31AHno

48 years old but extensive renovations completed and like the Trout Lake one on a oversized lot,0.14 acres.

Do I want to see what 3 million can get on the more prestigious Westside, which will hold its value if and when whatever correction happens when we go back to the good old days of injecting heroin instead of COVID vaccines?

No, I do not…

M46BC

#117 Neo on 03.04.21 at 8:51 pm

What’s happening right now behind the scenes is the interbank lending known as the Repo Market is failing again. The last time it did was September 2019. It reached a boiling point in February 2020 and the Pandemic was used as cover to bail out the financial system yet again. Of course, nothing was “fixed” and here we are again.

Expect more chicanery from The Fed to put lipstick on this bond and equity pig but the underlying conditions to continue to deteriorate and Garth to completely ignore the subject along with Ryan on his numerous weekend blogs.

#118 Mattl on 03.04.21 at 8:52 pm

#101 Oak on noggin on 03.04.21 at 8:12 pm
#87 Damifino on 03.04.21 at 7:03 pm
#37 S.Bby

I’ve never understood the appeal of Kelowna. It strikes me as one long strip mall on the side of a highway.
—————————-

Precisely. That’s the appeal.
________________________________________

I can assure Jealots like you that shopping is the least of the reasons people move here. And this is different from where you live?

I guess you never bothered to explore the downtown, surrounding area of Kelowna and the Okanagan. And for that, we remain eternally grateful.

————————————————————-

Exactly. You go 100 meters off the highway and you have nice beaches, great restaurants. Go a KM south of the highway world class golf courses. Wineries, skiing.

Where do people live that Kelowna would look like one long strip mall? And what communities that are livable and have jobs have beautiful hwy’s running through them?

And the shopping sucks, there isn’t even a single good men’s store here. Kelowna is all about the outdoors.

#119 Ponzius Pilatus on 03.04.21 at 8:55 pm

#114 Sail Away on 03.04.21 at 8:36 pm
#83 Ponzius Pilatus on 03.04.21 at 6:47 pm

No fan of the Royals, but they contribute lots of dough to the British coffers.

———

Wrong. The royals are totally on the public dole. Maybe just call them partial redistributors of charity:

“Taxpayers in the United Kingdom are paying more money than ever for the Royal Family. The latest Sovereign Grant accounts show that the monarchy cost £67 million ($86 million) in 2018-19 – a 41 percent increase on the previous financial year.” -Statistica
——————-
Wrong.
According to my calculation on my abacus, the Royals bring in about 1.7 billion pounds in tourism revenue.
Google it.

#120 crowdedelevatorfartz on 03.04.21 at 8:59 pm

@#114Sail Away
““Taxpayers in the United Kingdom are paying more money than ever for the Royal Family. The latest Sovereign Grant accounts show that the monarchy cost £67 million ($86 million) in 2018-19 – a 41 percent increase on the previous financial year.” -Statistica”

$$$$

While “The Firm” may suck on the taxpayer teat.

They generate billions in tourism/fashion dollars for the rubes that want to possibly catch a glimpse of them or wear the same hat.

#121 Willem Schiere on 03.04.21 at 9:14 pm

I’m having deja vu; in the fall of 1980 and into the first half of 1981 people were rushing into all the realtors offices screaming, “where are the listings; I’ll buy any listing you have, sight unseen!!! Give me a pen and offer paper!!!”
That was when people were happy to pay 13% on a 5 year term! Then there was a rapid pivot when bond yields surged to 20% with no intervention from the government! 5 year mortgages peaked at a murderous rate of 21% that was the most efficient/effective painful normalizing of the market that has ever happened.
The result was about a 40% drop in prices and many houses that could be picked up for a few thousand bucks by assuming mortgages without qualifying 4 to 5 years later, just before they had to be renewed. And nobody wanted anything to do with real estate anymore. Like Warren Buffet talks about, “when there is blood in the streets ”
Who in government or the central banks has the back bone to find a solution that is priced to perfection so that the economy is not destroyed!?

#122 Bob Loblaw on 03.04.21 at 9:15 pm

Mr Socks should make rent a tex deductible expense. That would benefit lower income earners and, at the same time, incentivise renting vs buying for people that really cant afford to buy a house in the hotter RE markets

#123 DON on 03.04.21 at 9:27 pm

#94 45north on 03.04.21 at 7:56 pm
Are we out of control yet?

maybe not quite

here’s what Ron thinks

6) Wild card? When. The sweet spot for a Federal election is between the early economic dead cat bounce that will begin by early May, and the havoc caused by higher interest rates, that kick in after July. I think the second half of the year is going to be a lot rougher than the first half.

it’s vital to the Liberal election chances that the housing market keep going up.

I pray it doesn’t.

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

Trudeau has already stated that the CRA will stand down with CERB income tax…just in time for a late May election. If he gets his majority…

#124 Niagara Region on 03.04.21 at 9:31 pm

“This Hour Has 22 Minutes” on the Toronto housing market:
https://www.facebook.com/22Minutes/videos/2994618004158466/

#125 God on 03.04.21 at 9:33 pm

#112 Faron on 03.04.21 at 8:32 pm
#104 Sail Away on 03.04.21 at 8:15 pm

#86 Stone on 03.04.21 at 7:00 pm

[ARK is] actually -5.02% YTD.

Sooooo…when do people start handing me $50 billion to invest for them and I can charge an MER? Garth, I’ll cut you in for 0.10%. On $50 billion, that’s mucho dinero.

————-

Well, S, as soon as you return 300% in a year in an established fund, you can expect the willing buyers to appear. Get to it.

You forgot to add that Cathie has the lord almighty on her side. Stone, do you? ;-) Really is one of the best ways to flow the lemmings. Greed + dogmatic fervor for max fleecing.

———

Of course Stone does. Cathie is yesterday’s news.

#126 Sail Away on 03.04.21 at 9:33 pm

#112 Faron on 03.04.21 at 8:32 pm

You forgot to add that Cathie has the lord almighty on her side. Stone, do you? ;-)

————

Ah yes, Cathie does have the ear and support of the Lord High Mighty Musker.

#127 Sail Away on 03.04.21 at 9:36 pm

#119 Ponzius Pilatus on 03.04.21 at 8:55 pm
#114 Sail Away on 03.04.21 at 8:36 pm
#83 Ponzius Pilatus on 03.04.21 at 6:47 pm

No fan of the Royals, but they contribute lots of dough to the British coffers.

———–

Wrong. The royals are totally on the public dole. Maybe just call them partial redistributors of charity:

“Taxpayers in the United Kingdom are paying more money than ever for the Royal Family. The latest Sovereign Grant accounts show that the monarchy cost £67 million ($86 million) in 2018-19 – a 41 percent increase on the previous financial year.” -Statistica

————

Wrong.
According to my calculation on my abacus, the Royals bring in about 1.7 billion pounds in tourism revenue.
Google it.

———–

Nah. I’m not interested in accuracy. I’ll just stick to my story.

#128 Faron on 03.04.21 at 9:42 pm

#117 Neo on 03.04.21 at 8:51 pm

What’s happening right now behind the scenes is the interbank lending known as the Repo Market is failing again.

Do you have a recent chart for this? Last I saw, it was chill although based on FRA/OIS spreads. I read there was some turmoil last night/yesterday. But, yeah, that stress got the fed QE program running fall, 2019 long before the pandemic sparked the drop. Here we are with the printer running apace and lots of background stress and the fed taking a pass on additional measures today. Hmmm. Hopefully transient.

#129 Doug in London on 03.04.21 at 9:53 pm

What’s needed is higher interest rates, most likely coming, and a bigger down payment. Wasn’t the down payment 20% of price at one ancient time?

#130 printing press goes brrrrrrr on 03.04.21 at 9:54 pm

#85 Faron on 03.04.21 at 6:50 pm

That would also bankrupt almost every listing on the NASDAQ, so trillions of dollars and the backbone of our modern economy. Probably not worth it even if it were to put a touch of sanity in the housing market. Sorry.
_________________________________________

no. it would not. but it would probably bankrupt the ones that deserved to go under if they couldn’t survive 3% rates in the first place.

#131 rknusa on 03.04.21 at 9:57 pm

Zoocasa’s findings also showed that buyer sentiment generally reflects these location-specific trends in market data: nearly a third (32%) of respondents who purchased a property since COVID-19 bought in an area they would not have considered prior to the pandemic.

More specifically, 70% of those home buyers noted that their property is further than they would have previously considered, and over half (53%) highlighted that it was located in a town/city with a smaller population than they would have previously considered. Regardless, 73% of respondents who purchased a home during COVID-19 stated they plan to keep the property once the impact of the pandemic subsides.

27% plan to ditch their homes after COVID!

https://tinyurl.com/29twdtfp

#132 crossbordershopper on 03.04.21 at 9:59 pm

prices are crazy, and people are stupid.the actual homes are not worth that. anyone can build a house for a lot less than they are being sold for. there is a lot profit in there.
i have inquired and done a lot of research, i will be building and making good money, hooking up with developers and builders and sourcing and being the general myself, and sourcing my own material from us and china as well as subs from detroit. I offered twice the going rate and still 50% cheaper than Ontario. wow people are bing ripped off everywhere.
from the foundation costs to the roof shingles. why are people so happy paying for laminate what they used to pay for real hardwood flooring and kitchens and washrooms the best washrooms and kitchens could be purchased for 20 percent ofwhat people are quoted. crazy amount of over charging out there. its all with debt not real money and super low rates creates a complete distance from reality.
build your own house or many, make good money free princial residence exemption with all your family memebers flipping prince res every year. for all your family members. its crazy just crazy.
im going to be a builder. go figure.
the bottom line is this, why are people falling over each other to pay the profit to some high school drop out who can put up a sheet of drywall. you are paying that profit with borrowed funds to boot. and your job is to drive up and down the 401 going to work everyday of your life to pay the bank and insurance company with borrowed funds to pay for the up front profit of some construction worker ALL YOUR LIFE, 25 YEARS
and we are supost to be the educated smart ones?

#133 S.Bby on 03.04.21 at 10:06 pm

will this get some traction ?

https://www.taxpayer.com/petitions/no-home-equity-tax?gclid=CjwKCAiAp4KCBhB6EiwAxRxbpKSVW3LR_t6zYPNbvYA6ufAxHV3Twbip-Z0RVNOADRNBlVv1Tx_pexoCLDQQAvD_BwE

#134 DON on 03.04.21 at 10:08 pm

#126 Faron on 03.04.21 at 9:42 pm
#117 Neo on 03.04.21 at 8:51 pm

What’s happening right now behind the scenes is the interbank lending known as the Repo Market is failing again.

Do you have a recent chart for this? Last I saw, it was chill although based on FRA/OIS spreads. I read there was some turmoil last night/yesterday. But, yeah, that stress got the fed QE program running fall, 2019 long before the pandemic sparked the drop. Here we are with the printer running apace and lots of background stress and the fed taking a pass on additional measures today. Hmmm. Hopefully transient.

*********
zero hedge article…yesterday

#135 S.Bby on 03.04.21 at 10:12 pm

Kelowna.

It’s amazing how triggered the locals get when someone slags their ‘hood.

#136 Quintilian on 03.04.21 at 10:48 pm

#6 Rinse and Repeat:

“It takes a certain type of naivety to think that this government will touch the market that is paying its weight in gold into the economy.”

Agreed, however, I think doing nothing to stop this runaway train is best.

It has to go over the cliff on its on, tinkering with a gentle pump on the brakes for a visual, while stealthy adding fuel, will inevitably result in a crash.

At some point the price will inflate to the level that even negative rates can’t support.

There is more at play here than low rates. The artificially low rates are world wide, yet the housing bubbles are not.

#137 Faron on 03.04.21 at 11:02 pm

#130 printing press goes brrrrrrr on 03.04.21 at 9:54 pm

#85 Faron on 03.04.21 at 6:50 pm

That would also bankrupt almost every listing on the NASDAQ, so trillions of dollars and the backbone of our modern economy. Probably not worth it even if it were to put a touch of sanity in the housing market. Sorry.
_________________________________________

no. it would not. but it would probably bankrupt the ones that deserved to go under if they couldn’t survive 3% rates in the first place.

Yes, it would if the rate change was overnight. Sure, tech survives a slow ramp, it will have to. But a near overnight jump to 3% would do two things. First, it would destroy equity prices, cutting off their ability to raise funds through issues because everyone knows that profitability is gone at those rates and suddenly the risk premium for holding tech is gone. Second, suddenly corporate borrow rates would be at 5-6% for investment grade, approaching double digit for junk (i.e. what netflix borrows at). It would wipe out a majority of those listed on the NASDAQ. Carnage would be massive and probably include wiping the housing market as collateral damage.

#138 TorontoRE on 03.04.21 at 11:05 pm

#49 PricedOutMillenial on 03.04.21 at 4:44 pm

Someone buys a house, the property value goes up. Then they take HELOC off the house and get a second and a third house. But it blows my mind as to how they become eligible for the second and third mortgage. Wild West!!

I’ve done exactly that – and I’m eligible for the additional mortgage based on my wife and I have stable, high paying jobs.

#139 and the budget will balance itself on 03.05.21 at 12:26 am

the only way prices go down is if supply goes up. Canadas is too big to have a couple of major cities. Someone needs to pick a sh*thole city and turn it into the next big city.. I think windsor and niagara falls are good candidates..

#140 No Debt on 03.05.21 at 12:49 am

You know the world has gone nuts when –

https://dailyhive.com/toronto/no-bedroom-no-bathroom-run-down-toronto-garage-hits-the-market-for-729000-photos

#141 Don Guillermo on 03.05.21 at 12:52 am

#102 Leftover on 03.04.21 at 8:13 pm
#33 The West

Yup, the Kootenays rock. Sell your Kelowna dump for $1 million and get a beautiful place in Rosland plus a condo in Cabo. Rent the Rosland place to skiers while you play on the beach and never work again.

Sounds good to me
**********************************

There are two ss’s in Rossland. Grew up there. Had a locker and skied 3 or 4 times a week as a kid. Skied in many places around the world after and nothing was better than Red/Granite mountain. Cabo and Cancun are two of the most ridiculous places in Mexico. PV is a close third. Mexico is a wonderful country.

#142 Al on 03.05.21 at 1:27 am

Id argue that it is ” affordable” now as ppl are easily coming up with the money when they are motivated to do so. As soon as it becomes ” unaffordable” demand will drop. The only way to stop the ascent is to impose financial hurdles that will keep people out of the market, and thus rendering the house “unaffordable” for more people, even if their sticker price is lower. We want all sfh to be 300k when everyone wants to live together in the same spots and can use 19-1 leverage with 1.5% interest. There just isn’t enough space/ supply. The government could lower sticker price tomorrow by imposing all the rules discussed in this post, but the only reason that would happen is because they would have rendered the houses “unaffordable” for more people.

#143 Kate on 03.05.21 at 1:42 am

I’m appreciating renting and taking advantage of the 30% discounts on $TSLA right now. Will report back in 10-15 years and let you know where I’m at Garth – with some fun time stamps from your blogs!

#144 Faron on 03.05.21 at 1:54 am

#105 GAV on 03.04.21 at 8:21 pm

#85 Faron on 03.04.21 at 6:50 pm
#68 printing press goes brrrrrrr on 03.04.21 at 6:34 pm

I suggest raising the bank of Canada rate to 3% immediately. That would solve the housing problem. Oh ya…. AND STOP PRINTING MORE MONEY!!

“That would also bankrupt almost every listing on the NASDAQ, so trillions of dollars and the backbone of our modern economy. Probably not worth it even if it were to put a touch of sanity in the housing market. Sorry.”

I’m confused. What does the Bank of Canada have to do with the NASDAQ?

CAD + US overnight rates are highly correlated.

#145 Nonplused on 03.05.21 at 2:41 am

#122 Bob Loblaw on 03.04.21 at 9:15 pm
Mr Socks should make rent a tex deductible expense. That would benefit lower income earners and, at the same time, incentivise renting vs buying for people that really cant afford to buy a house in the hotter RE markets

—————————–

Rents would just go up in response to the increased demand, and most renters don’t pay much tax anyway.

All these proposals are just fiddling around the edges. All the big things that can be done have already been done, except raising interest rates, which they won’t do if they cannot find the inflation they are looking for.

They do not include house prices in the CPI. Instead they include “owner’s equivalent rent” (so, sort of cost of ownership basically). This creates a negative feedback loop. The more they lower rates, the lower CPI. This tells them to lower rates again.

The way you measure something can have a dramatic affect on what you think you are seeing. As long as CPI is measured using carrying costs, and hedonic adjustments that do not really exist, there is no way they can get the inflation numbers they are looking for even in a speculative bubble. Real world housing prices are exploding but CPI only measures carrying costs, which at 1.5% probably aren’t as bad as everyone says.

To get a proper CPI number they would have to switch back to measuring prices only. They will not do that.

#146 Jane24 on 03.05.21 at 2:51 am

The Queen’s annual payments from the UK govt is actually her own money coming back to her. She is the Duke of Lancaster in her own right and when she was young she or her father (can’t remember] signed over the revenues from both this Duchy and the Royal Estates to the govt of the day in return for an annual income.

Today this income is just a tiny % of what her previous property earns for the govt. She shouldn’t have signed those papers as it makes her dependent and open to criticism every year for her support funds from her own money.

Most of the precious items she owns cannot be sold as they belong to trusts for either the nation or future monarchs. If you view Buckingham Palace you will be shocked at how much work it needs!

Lay off our Queen, she has enough troubles right now.

On a different topic, house prices in Britain have gone up 7% on avg due to the pandemic. And we think this is bad!!

#147 maxx on 03.05.21 at 7:16 am

@ #7

You are so on the money. This real estate pandemic was entirely created by low rates and will never go away until rates rise.

Not only does it prevent motivated young people from accessing a historically solid building block of future wealth, it causes an unhealthy and increasing wealth divide and thereby social instability.

When rates are higher, not only is there a more stable and diversified economy, young owners are more motivated to pay off the mortgage quickly so as to begin building savings for family and/or a decent future retirement. Our first mortgage was at 11.25% and we paid the house off in 4 years.

Today, because of the economic cancer of low rates, amounts borrowed take on an intangible characteristic. They are so ridiculously high that people simply don’t feel the import of the debt.

Central banks have systematically cheapened the quality of life for its citizens and are now backed into a corner with no tools at all to fix the situation. As Garth often says, they are diddling. They can optimize, enhance, massage and blather away all they want. None of this will ever work and no amount of government “largesse” will ever mitigate it, let alone correct it.

I smelled a central bank rat back in the 90’s, so we doubled and tripled down on savings. I gradually completely lost faith in responsible management of both rates and our taxes by TPTB.

Today, we are beyond happy with our efforts. Even so, we are so disgusted with the current situation that we actively and constantly look for ways to save, save and save more. We buy almost everything second-hand, from second-hand stores and directly from individuals, run an 18 year-old car (aiming for 25) and bargain, barter and repurpose anything we can. We save a ton.

Savings, mainly go to travel, which for the most part, fills foreign coffers.

Too bad. If I felt well-served by TPTB, I’d be spraying our savings around in Canada.

“Lower, for longer”. Lovely. Well done. Generational frustration, supersized debt, wealth gaps that are obscene, social services that bear no resemblance to what existed pre-90’s and hordes that will be 100% dependent upon social services at retirement.

#148 Steven Rowlandson on 03.05.21 at 7:35 am

““Kelowna is having a Vancouver moment here,” says our undercover Blog Dog agent. “Listing prices are shooting 200-300k over assessed values and up about 150k in price from just a few months ago and it is going to show big in upcoming data.”

The holocaust of young working class Canadians! Lockup those real estate profiteers and realtors before things get worse.

#149 IHCTD9 on 03.05.21 at 8:00 am

#43 Damifino on 03.04.21 at 4:19 pm

BTW, if Enbridge’s Line 5 is stopped by Michigan (with Joe’s help) T2 will be truly finished. Not that it would be his fault, exactly. But since he’s a great proponent ditching fossil fuels while also lacking the spine to stand up for Canadian energy, I would fully expect him to shoulder most of the blame.
_____

I suspect the CBC would be working overtime to cover Trudeau’s southern hemisphere if line 5 gets shut down. From the looks of it so far, Michigan’s governor is without a good reason to shut line 5 down, so you’d think it won’t happen…

Overall, I think it’d be good for Canada in the long run if line 5 gets shut down. Folks here in Ontario and Quebec would feel serious pain from the gas pumps to airline tickets, big job losses too. We do need a good kick in the rear end out here. Maybe we’ll get a derailment or two with a freight train hauling oil. Maybe enough pain and anguish will forcibly install some common sense regarding fossil fuels and pipelines right across the board.

#150 printing press goes brrrrr on 03.05.21 at 8:14 am

#137 Faron on 03.04.21 at 11:02 pm

First, it would destroy equity prices, cutting off their ability to raise funds through issues because everyone knows that profitability is gone at those rates and suddenly the risk premium for holding tech is gone. Second, suddenly corporate borrow rates would be at 5-6% for investment grade, approaching double digit for junk (i.e. what netflix borrows at). It would wipe out a majority of those listed on the NASDAQ. Carnage would be massive and probably include wiping the housing market as collateral damage.
______________________________________

ya. i have no problem with that. they got a free ride for the last decade or so. shut them down if they can’t operate at 3% . let equity prices and the economy adjust. let there be unemployment and bankruptcies. none of these things should have been allowed to operate in the first place. so shut them down.

#151 crowdedelevatorfartz on 03.05.21 at 8:17 am

@#120 Willem Schiere
“5 year mortgages peaked at a murderous rate of 21% that was the most efficient/effective painful normalizing of the market that has ever happened.
The result was about a 40% drop in prices and many houses that could be picked up for a few thousand bucks by assuming mortgages without qualifying 4 to 5 years later.”

++++

Yep.
I lived in a house that the owner paid 240k in 1981 and 2 years later was worth 90k.
A car loan was peaking at 24%

#152 Andrey Vas on 03.05.21 at 8:20 am

I’m givving up: https://www.realtor.ca/real-estate/22868073/951b-greenwood-ave-toronto-danforth-village-east-york

#153 crowdedelevatorfartz on 03.05.21 at 8:24 am

@#146 Jane24
“Lay off our Queen, she has enough troubles right now.”

+++++

Oh to experience her “troubles”.

Mind you the British media seem to be raking Harry and Megs over the coals while conveniently ignoring the explosive allegations fired at her youngest son “Randy Andy” and his numerous visits to convicted pedophile Jeffry Epstein’s New York home and private island ……

After the Queen is gone…..we will have King Chuck?
I’d say the Monarchy is on borrowed time.

#154 Reximus on 03.05.21 at 8:46 am

that story on the danforth ‘garage’ @ 729k has been doing the rounds on media lately, but it’s been for sale on and off for ages and hasnt caught a sucker yet…and clearly the structure on it is irrelevant

#155 Howard on 03.05.21 at 8:47 am

#137 Faron on 03.04.21 at 11:02 pm

Yes, it would if the rate change was overnight. Sure, tech survives a slow ramp, it will have to. But a near overnight jump to 3% would do two things. First, it would destroy equity prices, cutting off their ability to raise funds through issues because everyone knows that profitability is gone at those rates and suddenly the risk premium for holding tech is gone. Second, suddenly corporate borrow rates would be at 5-6% for investment grade, approaching double digit for junk (i.e. what netflix borrows at). It would wipe out a majority of those listed on the NASDAQ. Carnage would be massive and probably include wiping the housing market as collateral damage.

————————————–

Funny how your leftism evaporates for anything that might negatively impact YOU personally.

#156 millmech on 03.05.21 at 8:50 am

I wonder if gas at pumps is going to hit $2.00 liter fairly soon?

#157 leebow on 03.05.21 at 9:01 am

“It’s possible given the recent increases in prices, that some people are speculating about further increases in prices,” Benjamin Tal, deputy chief economist at Canadian Imperial Bank of Commerce, said by phone. “That was missing in the market until now.”

Seems we can’t to reject that hypothesis.

#158 millmech on 03.05.21 at 9:04 am

More talk about bond rates taking off substantially, the only market that could weather “rocketing” rates would be the USA. Ten year treasuries up over 4% yesterday alone, curve is steepening.

#159 Dharma Bum on 03.05.21 at 9:44 am

Anecdotally speaking, Ottawa’s outta control.

Went to see an old wreck of a house. Converted into a “duplex”.

There were multiple rooms with floors that literally slanted. I felt like I was walking around in a funhouse.

It was like a haunted frathouse. A real project.

Purchased in 2015 last time for $565K. Sold for $925K.

Obscene.

Needs $150K of work – minimum.

#160 Phylis on 03.05.21 at 9:57 am

I think the line 5 ploy is to ensure it gets shutdown after the tunnels are constructed. A pre-emptive effort as the court process is guaranteed to be initiated if not already. Otherwise the lawsuits, including those from Ohio will be costly.

#161 Sail Away on 03.05.21 at 10:41 am

#159 Dharma Bum on 03.05.21 at 9:44 am

Anecdotally speaking, Ottawa’s outta control.

Went to see an old wreck of a house. Converted into a “duplex”.

There were multiple rooms with floors that literally slanted. I felt like I was walking around in a funhouse.

It was like a haunted frathouse. A real project.

Purchased in 2015 last time for $565K. Sold for $925K.

Obscene.

Needs $150K of work – minimum.

————

My bro in SD and his wife’s brother bought 1.5 acres for $12,000 and built a beautiful cabin for the mother/MIL from logs sourced mostly onsite. Total build cost: $32,000, or $44k all in.

Just because things are crazy in certain areas does not mean you (or your son, I assume?) need to play.

Choices

#162 Ponzius Pilatus on 03.05.21 at 10:42 am

#159 Dharma Bum on 03.05.21 at 9:44 am
Anecdotally speaking, Ottawa’s outta control.

Went to see an old wreck of a house. Converted into a “duplex”.

There were multiple rooms with floors that literally slanted. I felt like I was walking around in a funhouse.

It was like a haunted frathouse. A real project.

Purchased in 2015 last time for $565K. Sold for $925K.

Obscene.

Needs $150K of work – minimum.
—————————-
Remember, it’s the dirt underneath you pay for.
Apparently, they don’t make more of it anymore.
Crafty realtors.

#163 Mattl on 03.05.21 at 10:53 am

#135 S.Bby on 03.04.21 at 10:12 pm
Kelowna.

It’s amazing how triggered the locals get when someone slags their ‘hood.

—————————————————————

Not sure I’m triggered but the comments on the city seem to be from people that have never lived here or even visited. One big strip mall? Come on, lots of reasons to knock Kelowna, that’s a pretty weak take. Considering Burnaby is basically known for their malls.

#164 Sail Away on 03.05.21 at 11:04 am

A bit of dippy market volatility this week. Added to my US total market this morning. Nothing is too compelling. Mostly sitting on my hands.

#165 KLNR on 03.05.21 at 11:05 am

@#151 crowdedelevatorfartz on 03.05.21 at 8:17 am
@#120 Willem Schiere
“5 year mortgages peaked at a murderous rate of 21% that was the most efficient/effective painful normalizing of the market that has ever happened.
The result was about a 40% drop in prices and many houses that could be picked up for a few thousand bucks by assuming mortgages without qualifying 4 to 5 years later.”

++++

Yep.
I lived in a house that the owner paid 240k in 1981 and 2 years later was worth 90k.
A car loan was peaking at 24%

friends bought a house in 81 for 600k.
value dipped and didn’t regain until 2005 lol.
Not that any of this mattered to them, they still live there.
valued around 3+mil now.

#166 Russ on 03.05.21 at 11:12 am

crossbordershopper on 03.04.21 at 9:59 pm

i have inquired and done a lot of research, i will be building and making good money, hooking up with developers and builders and sourcing and being the general myself, and sourcing my own material from us and china as well as subs from detroit. I offered twice the going rate and still 50% cheaper than Ontario. wow people are bing ripped off everywhere.

build your own house or many, make good money free princial residence exemption with all your family memebers flipping prince res every year. for all your family members. its crazy just crazy.

!!!
I’m going to be a builder. go figure.

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

https://www.youtube.com/watch?v=jQHVo1naPP8

Pack up your billy cart and you’re on your way mate.

Cheers, R

#167 bdwy on 03.05.21 at 11:18 am

My bro in SD and his wife’s brother bought 1.5 acres for $12,000
—————-
you can do this without leaving the lower mainland.

10 gorgeous cleared acres in birch bay just a few minutes from the beach, 80k a few years back. prob doubled from there but still pretty cheap. now to get the damn border opened.

#168 bdwy on 03.05.21 at 11:20 am

tsla still in freefall – 900 to 550, that was fast

350 target.

is scamcoin next?

#169 Don Guillermo on 03.05.21 at 11:37 am

Big story breaking in Mexico this morning. Sutter returning to the Flames!

https://imgur.com/BO9gkdd

#170 printing press goes brrrr on 03.05.21 at 11:39 am

#155 Howard on 03.05.21 at 8:47 am

#137 Faron on 03.04.21 at 11:02 pm

Funny how your leftism evaporates for anything that might negatively impact YOU personally.
________________________________________

he’s a leftist? that’s rich.

#171 Faron on 03.05.21 at 11:56 am

#155 Howard on 03.05.21 at 8:47 am

#137 Faron on 03.04.21 at 11:02 pm

————————————–

Funny how your leftism evaporates for anything that might negatively impact YOU personally

Easy tiger! Rawrrr.

I don’t hold QQQ (save for exposure in VTI). I do seek to understand market functioning, however crudely. There’s no political bent in educating one’s self although most forms of higher ed now are cast as leftist :-/. And, if an overnight rate jump took the NASDAQ down, the turmoil would effect everyone. Chill.

#172 Faron on 03.05.21 at 12:21 pm

#168 bdwy on 03.05.21 at 11:20 am

tsla still in freefall – 900 to 550, that was fast

350 target.

is scamcoin next?

Yeah, wow. But now that I’ve commented on TSLA price action, you know it’s the bottom. Wish I tracked the $400 strike put the past month. March expiring would have seen some gains of late.

Fed’s allowing bond market stress to shake these bubbles out a bit I gather.

#173 Faron on 03.05.21 at 12:27 pm

#170 printing press goes brrrr on 03.05.21 at 11:39 am

#155 Howard on 03.05.21 at 8:47 am

#137 Faron on 03.04.21 at 11:02 pm

Funny how your leftism evaporates for anything that might negatively impact YOU personally.
________________________________________

he’s a leftist? that’s rich.

You sound like a free market righty/libertarian yet are asking a central bank (i.e. the purest expression of gov’t market intervention) to re-manipulate rates to a specified level. Hilarious.

#174 Steven Rowlandson on 03.05.21 at 12:36 pm

“Socks and Christy Free cash don’t have the spine to do anything brash before a looming election.”

That’s the real problem isn’t it? Those that make law and policy should do something but won’t out of fear of the consequences at election time if they uphold the common good and sound economics on one hand and squash genocidal greed on the other. Jesus the son of God said fear not! The political and financial authorities have a crime scene and financial disaster to clean up.
Get at it boys and girls.

#175 IHCTD9 on 03.05.21 at 12:43 pm

#169 Don Guillermo on 03.05.21 at 11:37 am
Big story breaking in Mexico this morning. Sutter returning to the Flames!

https://imgur.com/BO9gkdd
—- –

Yeeow! Thanks for that informative news link!

What was the headline again?

#176 Sail Away on 03.05.21 at 12:44 pm

#172 Faron on 03.05.21 at 12:21 pm

…now that I’ve commented on TSLA price action, you know it’s the bottom. Wish I tracked the $400 strike put the past month. March expiring would have seen some gains of late.

———–

We longs just enjoy the ride. Eat some caviar and boast when high, turtle up and maybe add when low.

#177 Howard on 03.05.21 at 12:44 pm

#170 printing press goes brrrr on 03.05.21 at 11:39 am
#155 Howard on 03.05.21 at 8:47 am

#137 Faron on 03.04.21 at 11:02 pm

Funny how your leftism evaporates for anything that might negatively impact YOU personally.
________________________________________

he’s a leftist? that’s rich.

———————————

Half his comments are consist of “woke” drivel about the gender pay gap (disproven), gender and race job quotas, and other causes célèbres of the left.

But any suggestion that the central banks and governments stop rigging the markets to benefit the top 1%? No, can’t have that.

The working and middle class voters would be wise to figure out who is on their side.

#178 Howard on 03.05.21 at 12:49 pm

#173 Faron on 03.05.21 at 12:27 pm

You sound like a free market righty/libertarian yet are asking a central bank (i.e. the purest expression of gov’t market intervention) to re-manipulate rates to a specified level. Hilarious.

———————-

Re-manipulate! That’s a new one.

Words apparently no longer have meaning when a desire to have central banks stop intervening in the bond market (which would be all that’s required for rates to go up naturally) is termed manipulation.

#179 printing press goes brrrrrrr on 03.05.21 at 12:59 pm

The central banks Are the problem and should be ABOLISHED.
I have to work with what’s there though and 3% would be a good start.

#180 NoName on 03.05.21 at 1:22 pm

jande24 and her husband windslow, then there is rest of “us, her “extended” family” in canada…

https://youtu.be/kGt-jvU5Iag?t=45

#181 Doug in London on 03.05.21 at 1:34 pm

There’s been some mention in the comments of stock prices dropping. It’s a minor pullback, nothing to worry about, but a good time to put any cash you might have to work. If you had the presence of mind to sell your house recently and now have the money it’s a good time to go on a buying blitz mainly of stocks and equity ETFs that have dropped and also some bond funds. They too have dropped in anticipation of higher interest rates.

#182 Robert Ash on 03.05.21 at 7:47 pm

Did a few calculations, the way I would have Financed this 20 Foot lot, as an investment property. 20 Year Term, 2.5% interest rate. Nothing Down, you have good credit or an established line, and can arrange, your own loan, with the Bank, and strike a preferred interest rate for a Rental.. Then here are the commitments… Borrow: 729K Payments principle and interest no Property Taxes, that has to be added… Interest rate a preferred 2.5 %. Monthly payment commitment $ 3863.00, Total interest paid, in 20 years $ 198,118.00. Total repaid commitment, $ 927,118.00 so there is a very long period of responsibility. I would not recommend doing this, when the subject property is the Garage Lot, unless, you have a firm understanding of the Development Potential, and or the Established Zoning, bylaws, supportive of a three or four level project. However if you are a Tradesperson, and zoning is positive, and forward thinking. Many possibilities. In many Asian Cities, this is a prime location for a shop house, ubiquitous, in High Density areas.. Concrete .. Three Floors, top two for living and the Ground floor, for Commerce.. Creative thinking, and work at home are not new concepts… Once the world opens, have a look…