The debt trap

Here we go, kids. Hang on

The beaver economy churned out an incredible 259,200 jobs last month, about three times what the experts had predicted. Unemployment tumbled from 9.2% down into the 8% range – and all this reflected (a) the end of 100 days of lockdowns, vax and the reopening of the economy plus (b) a tidal wave of hoary house lust. In the US, also gains – 379,000 more. But we aced that.

And, whoa, look at how Mr. Debt Market reacted, pushing the yield on Canada fives back up to the 1% mark. Yup, more mortgage bloat coming.

What do the vaccines, business reopenings, tons more jobs, mass inoculations and swelling bond yields tell us? Well, the same as $1 million average ticky-tacky suburban houses, G1S plywood sheets nobody can afford and outrageous puppy price tags. Yup. Inflation. Evidence is mounting this is turning into a big deal.

At the pointy end of the problem is real estate, as you know. BMO economist Robert Kavcic now says we are “playing with fire.” He points out the last house crisis in 2017 was not nearly as evil as this one, since it was contained to a few major markets. This sucker’s everywhere. Low mortgage rates have exacerbated the threat, becoming a bottomless debt trap. Cheap money means people borrow more, spend more, push up prices further and crush affordability. But if rates rise, indebted household finances wobble under the load.

Kavcic likens this to thirty years ago. Yikes. “If mortgage rates stay where they are, but prices keep doing what they’re doing, we’re back into the late-1980s territory by this time next year.”

And what happened then? I was there. In the thick of it. Real estate hit a wall. The market corrected brutally – falling just over 30%, and taking 17 years to recover. So if rates stay the same, pooched. If they follow inflation and bonds, more pooched.

By the way, real estate – thanks to our unsated residential desires – comprises more of the economy than at any time in history. It is double the share of housing in the US economy, and about 50% higher than when the American property market blew up in 2005/6 – dropping prices nationally by 32%. It took ten years to get over that.

So, is this what we’re doing to our nation?

Monthly GTA sales – this is not normal…

Click to enlarge. Source: Stephen Glaysher, MLS Sold Data

You might find insightful this note I received from a veteran Toronto realtor yesterday:

As of this morning there were 59,700 agents (Brokers & Salespeople) in Toornto. This represents 42% of the Realtors in Canada. (There are 142,160 according to CREA).  In a market that is best described as robust, the local industry has seldom been sicker. In the GTA more than 20,000 agents do not record a single sale in a given year, and another 20,000 only record one or two sales. Imagine going for heart bypass surgery with a surgeon who has done one procedure in the last few years, Gulp.

On the surface, it would appear that all of this competition would drive down commission rates, but because most agents are going for that single home-run a year, there is no incentive to lower fees. At 5%+ HST the owner of the average $1 million dollar Toronto home will pay $56,500 to have the SOLD sign erected on the lawn. To put that in perspective the owner could get ALL of the following non-insured medical procedures for the same cost:

1) Face Lift
2) Neck Lift
3) Eye tuck
4) Nose Job
5) And a Brazillian Butt Lift, (whatever that is)

All procedures performed by highly skilled and extensively trained Medical Doctors.  Garth if you choose to use any of this, best let me remain anonymous, don’t want my car “keyed” in the parking lot.

Meanwhile, all governments have been silent on this matter, preoccupied as they are with the virus. A couple of brave bank CEOs and fund managers have worried aloud. Now a growing number of economists are hoisting red and yellow flags – like my long-time doomer buddy David Rosenberg. Normally I feel Rosie enjoys eating broken glass and shooting himself with a nail gun, but this time he’s stating the obvious: “This might be one of the biggest bubbles of all time.”

It is. And since Canadians keep the bulk of their net worth in one asset class, have borrowed $1.6 trillion in order to afford it and live in an economy dependent on it, real estate has the potential to kick ass. All that behavioural finance stuff we talked about yesterday – recency bias and confirmation bias especially – ensure most are blissfully unaware of the potential for reversal. Many weren’t yet out of Huggies in 1989.

However, Friday’s data speaks for itself. Be careful what you buy. Be unafraid to take gains. Be balanced. And good luck with the butt lift.

153 comments ↓

#1 I lived through it too ... on 03.12.21 at 1:11 pm

was a Godsend for some. A LOT of hurt for others. Different but the same … then rates were around 20% for mortgages … hard to believe that just a measly few percentage points now could wreak the same hurt. It just feels like it again …

#2 TurnerNation on 03.12.21 at 1:17 pm

The Great Depression is back- everything old is new again. The CERB HOBOS are riding the rails.

Brother can you spare a dime? Coming soon to a UN “Smart City” near you.

https://www.cheknews.ca/west-coast-communities-bracing-for-more-illegal-summer-camping-752259/
Vancouver Island communities on west coast bracing for more illegal summer camping
March 12, 2021
The summer of 2020 saw hundreds of people arriving from across the country in places like Ucluelet, Tofino and Port Alberni with no place to stay and no plan for even the basic amenities. This created a series of health and environmental concerns for many local officials.

A handful of logging roads in the Alberni-Clayoquot Regional District, such as West Main road near Kennedy Lake, looked more like homeless camps — many with CERB payments in their pocket but no other plan.

………….
Kia is telling owners of nearly 380,000 vehicles in the U.S. to park them outdoors due to the risk of an engine compartment fire.
The Korean automaker is recalling certain 2017 through 2021 Sportage SUVs and 2017 through 2019 Cadenza sedans to fix the problem. The company says a short circuit in the hydraulic electronic brake control unit can cause excessive current, increasing the risk of a fire. Owners should also park them away from structures until repairs are made.

…..

Look that saying “You will own nothing and be happy” is already here.

– Living in the big cities you probably need no car ownership, instead use the Globalists’ corps. Uber, Lyft and Car sharing services to get around.
– If you get a car probably it’s leased from a globalist-owned car company. You return it, a few years hence.
– With Big City small business ownership shut down by our globalist-run governments you probably order stuff via Amazon global.
– Owning your home? Most do not and with prices skyrocketing the globalist-run banks have a steady supply of debt slaves.

–Check the MLS Commercial website listings. A tons of downtown (former) small business at fire sale prices here offered.

#3 crowdedelevatorfartz on 03.12.21 at 1:27 pm

“Meanwhile, all governments have been silent on this matter, preoccupied as they are with the virus.”

++++++

Our political “leaders” love the virus……
It gets the voting sheeples minds off the debt, deficit, and what a crappy job they’re doing.

Over to you Ponzie.

#4 Know any good public parks to camp in? on 03.12.21 at 1:35 pm

I listed my place last night. Will probably end up living in a tent, but at least I’ll have made some cash.

#5 Dolce Vita on 03.12.21 at 1:44 pm

The Labour Force Survey numbers where outstanding month to month, not doubt about it.

But, still on the road to recovery:

Total employed, all industries, Feb 2020 to Feb 2021
-599,100
-3.1%

Actually, the Seasonally Adjusted number of +271.6K job gains UNDERSTATES the Actual or Unadjusted gains:

+309.3K

So, StatCan conservative on the Actual job gains Jan to Feb 2021.

IMPRESSIVE. Huge step towards what once was.

—————————

Garth, I do not want to rain on your bond rate chart since you have been wonderful, like forever, but you know My Liege that BIG BLUE ARROW of yours disappears to NOTHINGNESS in the same chart, different timescale:

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

Same with Uncle Sam’s 10Y:

https://i.imgur.com/8jZyhi8.png

It is not the bond rates that will do in RE. They, over the past +30 years, are headed down overall.

It will be the debt burden from mortgages that reduces consumer spending, a huge Gov’s Canada debt/printing of money that will fuel inflation and impoverish the Cdn Consumer. Not to mention higher taxes.

It will take time for all that to happen and when, who knows. But it will. When it does BOOM as you said yesterday Garth.

For now lets all enjoy a World flush with Gov printed money fueling Mr. Market to new highs*.

—————————

*And ridiculous things like $69M jpeg file sold at auction (NFT). About the best I have seen on the whole phenom with a bit of its history from a fave of mine Cold Fusion:

https://www.youtube.com/watch?v=x3nmAX3gAlw

For those with more modest wallets and just a few pixels, on sale items:

@cryptopunkart
@cryptopunksbot

———-

Yup, just another Covid-19 day on Planet Earth.

#6 ECHO ECHO on 03.12.21 at 1:46 pm

Greaterfools.ca is a bit of an echo chamber.

We have certain beliefs and we often come here to recharge those beliefs, or re-enforce them. They make sense to us, but who said the world makes sense?

In the end, what did we expect the politicians to do?

Knowing the economy is taking a dump. Perhaps that the whole capitalism game is collapsing under own weight. Knowing that real economic contributors are shrinking. Knowing that tax increases are needed – and it would be easy to take their slice in property taxes, with happy owners willing to pay as they justify it in their head with gains. INFLATE IT ALL! PARTY FOR EVERYONE!

Politicians didn’t waste a crisis. But in the end, what were they to do? They had the perfect cover – first GFC, now Corona. And in many respects Corona is a significantly more potent crisis because public opinion is so firmly with the politicians – vs. bailing out banks. Politicians were never going to waste it, and Canada REALLY didn’t waste it.

So here they are, pumping real-estate, which makes the economic numbers look good, which then allows them to jack valuations of homes and tax them more as function of value. People willing to pay it because “house is worth so much!” There is just too many goals they wanted to achieve on this path, which all aligned. HOW DID WE NOT SEE IT FROM DAY ONE?

Most importantly – IT WAS EASY!

No one wants to do the hard work. Everyone wants it done for them. That includes Canadians. “Do it, but I don’t want to pay for it!” And so…here it is. They are doing it, but you don’t have to pay for it – simply stay out of the Real Estate game.

#7 Dave on 03.12.21 at 1:47 pm

BOC Loud Speaker has spoken…no interest rate hikes till end of 2023.

BOC isn’t worried about real estate and neither is Trudeau.

Nothing can stop this train

#8 Sean on 03.12.21 at 1:48 pm

I said it last year and I’ll say it again: most governments are so indebted they cannot possibly survive real interest rates. Many citizens aren’t better.

What that means is interest rates won’t be positive any time soon. Governments and central banks will wait until inflation gets out of control and extinguishes debts (and destroys savings of the few remaining savers).

#9 Shortymac on 03.12.21 at 1:51 pm

Well, something has to give, the prices are absolutely insane and it’s ridiculous that the government has allowed housing to inflate to where it is now.

What do you think is more likely for the GTA, a 30% dip or just the mild deflation we saw in 2018?

#10 Faron on 03.12.21 at 1:52 pm

Yikes. Thanks Garth… for the video… that has now autoplayed to “Addicted to Love”

I like to think we are ready to be “underwater” on this mortgage given that we are long-runners here, but I’ve never “felt” that. All I have to go on is the experience of family members who rode out the GFC crash and eventually were made whole. But shoveling $$$ into a down asset is going to be trying.

#11 tkid on 03.12.21 at 1:57 pm

I would love to get back into a house, but I no can do and abide by the rule of 90.

#12 Joe Rosser on 03.12.21 at 1:58 pm

If you think “government won’t allow higher interest rates” you are sadly mistaken. The market will drive higher interest rates, Bank of Canada won’t be able to stop the train.

Housing bubbles are much deadlier than stock market bubbles. And here we are with both bubbles. In both the USA and Canada. The crash will totally crush so many people. We will be a case study in economics in future, along with the other great crashes in history.

#13 Ddorf on 03.12.21 at 1:58 pm

It’s a debt trap!
It’s a suicide rap …
… we better get out while we’re young.

#14 Faron on 03.12.21 at 2:00 pm

VIX on the ten year up 40% at one point today back above the post-crisis highs. Another 10 basis points on the rate. Bonds being sold as parts of the market are also being sold. Still an epic battle between structural weakness and very strong economic tailwinds as stimulus money gets directed at spenders rather than markets (in the US). Keep an eye out for bargoons in the coming week or two if there’s a pull back.

I had forgotten how many hit songs Robert Palmer had.

#15 Another Nut Job on 03.12.21 at 2:06 pm

I have Velcro where my butt use to be, just to keep me from sliding out of my chair. Can’t lift what isn’t there. Just like if you treat history like it isn’t there, you’re doomed to repeat it.

#16 Cliff on 03.12.21 at 2:07 pm

76 years old on my second transplant kidney. Rent and have just under a million in cash and preferreds. What do do? Thinking of spending $250000 on outlying apartment, enjoying it until I start drooling in my porridge, and letting the kids sell it off when I croak somewhere down the road. Could buy it but why spend up front with money earning 5% plus when I can mortgage less than that and still have investment accounts brimming.

#17 S.Bby on 03.12.21 at 2:11 pm

#7 Dave

“Nothing can stop this train”

except that down the tracks, the bridge is out…

#18 tkid on 03.12.21 at 2:11 pm

P.S. I can’t wait to hear Rosie’s retort to “Normally I feel Rosie enjoys eating broken glass and shooting himself with a nail gun.” Lol

#19 Dogman01 on 03.12.21 at 2:11 pm

Inflation Watch: Calgary Gasoline price @ $0.896 per liter average for the 2020 year.

However $1.18 Today.

For Turner Nation:

“consent of the ruled,” something acquirable by addictive substances — both pharmacological and technological — as well as “new techniques of propaganda.” All of this has the effect of “bypassing the sort of rational side of man and appealing to his subconscious and his deeper emotions, and his physiology even, and so, making him actually love his slavery.” – Aldous Huxley

Be “safe!” – what a slogan for the boldness of our modern emasculated society.

Noticing the Government advertisement; “Immigration is great” theme and “Here is all the program money we have shoveled out to you”.

Predictive Programming… election coming and the Immigration taps will go on turbo when things open up.

Housing costs will go uppa and money printing go brrr…

#20 johnny on 03.12.21 at 2:12 pm

I was there also in the 1980s but mortgage rates got up to 18 or 19 percent. Even if they go up to 3 percent in a year or two are we really going to see house prices plummet? And thats a big if..central bankers have been bending over backwards to keep rates low everytime there is any kind of threat going back to Greenspan. At some point rates will skyrocket but not sure we are there yet. Governments and the central bankers will come up with another sort of way to suppress yields. A stock market crash would do it just like a year ago.
Garth the chart you show on the 5 year yield is a bit misleading as its zoomed in over a year or so..show me a chart over the past 5 years and it looks a lot less scary. Interest rates are jumping for record low levels but they have a long long ways to go before they are even what we once called normal..in fact not sure they will evern be allowed to be normal again. Look at Japan..they have been playing this game since the 1980s and no big jump in interest rates there..likely see the same ZIRP here as well.

#21 Dolce Vita on 03.12.21 at 2:12 pm

And yes…

Canada Variant World

+273% cumulative cases, Feb 21 to Mar 10, 800 to 2986 cases.

Chart, Trend line 3rd order Polynomial, about a 99% fit to the actual data, NOWHERE near exponential (it’d have to be 14th order, or something like that, for that too happen):

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

No beds filling up, people dying so far.

Still, those darned bugs keep marching on and I don’t like it one bit especially how the actual line is snaking its way up that best fit trend line in the above chart.

About the only thing I can see that will delay Canada’s soon to be stellar post pandemic economic recovery and hinder with lockdowns etc. and slow down Vax Canadense.

-FWIW

#22 Going Broke on 03.12.21 at 2:13 pm

Biden spends, bonds fall.

#23 Sunny Daze on 03.12.21 at 2:17 pm

The make up of Canada’s economy isn’t turning around. It keeps going in the same direction.

The bank economists are funny. This has been going on for a decade.

Can they even imagine the scenario of a correction and a few rates hikes…and what that would do to a highly indebted country that relies on financialization/successively more debt/printing…to create growth.

Would leave a big smoking hole in every part of the country. Not gonna happen.

#24 Doug t on 03.12.21 at 2:18 pm

Houston we have a problem = KABOOM

#25 Billy Buoy on 03.12.21 at 2:18 pm

Once again you are dead right Mr. Turner but today is a lot different than the 80’s.

Way more debt, no growth prospects, old demographic = depression or kick the can down the road further co-ordinated by Central Banks world wide..

Take your pick?

I’m betting one more final stimmy then watch out below.

#26 rknusa on 03.12.21 at 2:30 pm

insanity!

here is an email from my realtor in Windsor re list price and selling price on homes I was interested in

I am done with this market

Hi! I find most houses are selling over, and this week for example a house at 1660 Everts (south Windsor) listed for 399,900 sold for 520,000. 347 Watson listed at 399,347 sold for 581,000. 2715 Askin listed for 349,900 sold for $515,000. Even in the west end bordering some less desirable areas at 2150 Secord (it’s close to the university of Windsor so excellent income potential) listed at 299,000 sold for 420,111-this was a war time 1 1/2 story home with 4 plus 1 bedrooms and 2 bathrooms, part finished bsmt and no garage. Now this was substantially renovated with high end finishings so that helped garner a higher sale price. House prices are rising in Windsor no doubt, and across the province as well. Average sale price in Toronto just hit 1 million and Windsor is just over 500k.

#27 rknusa on 03.12.21 at 2:33 pm

insanity!

here is an email from my realtor in Windsor re list price and selling price on homes I was interested in

I am so done with this market

Hi! I find most houses are selling over, and this week for example a house at 1660 Everts (south Windsor) listed for 399,900 sold for 520,000. 347 Watson listed at 399,347 sold for 581,000. 2715 Askin listed for 349,900 sold for $515,000. Even in the west end bordering some less desirable areas at 2150 Secord (it’s close to the university of Windsor so excellent income potential) listed at 299,000 sold for 420,111-this was a war time 1 1/2 story home with 4 plus 1 bedrooms and 2 bathrooms, part finished bsmt and no garage. Now this was substantially renovated with high end finishings so that helped garner a higher sale price. House prices are rising in Windsor no doubt, and across the province as well. Average sale price in Toronto just hit 1 million and Windsor is just over 500k.

#28 30,000 plus on 03.12.21 at 2:34 pm

Get a grip everyone… Not a chance in hell CBs are going to lift interest rates… Instead another package being prepared in the States to spend on infrastructure… With governments in huge piles of debt all over the world it’s unlikely interest rates are going any wheres… Paul Volker be damned…

#29 mark on 03.12.21 at 2:37 pm

Larry Berman says if you got a 60/40 portfolio and 40% in fixed income your pooched he seems to think low low bond yields for decades and no way to generate decent real fixed income for retirees.

He combats Negative bond yields with this newer product called “innovator ” series of etfs PJAN, PFEB, PDEC by writing puts etc, etc generating yields and limiting upside/downside drawdowns to produce livable dividend yields? Any thoughts Garth?.

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

Irrelevant to this blog’s advice, and common sense. We have said repeatedly not to have 40% bonds in the FI portion. Tell Berman to try to keep up. – Garth

#30 Prince Polo on 03.12.21 at 2:40 pm

If the federal government is going to get out of this mess unscathed, and I mean, shouldering absolutely zero accountability for the impending mortgage implosion, it’s going to have to come up with some new marketing for the 2020s. Just as we learned that ignorance of the law is no excuse for breaking said laws, we must start pushing the mantra that ignorance of financial literacy is no excuse for taking on a 1 ton anchor of debt.

If you want to YOLO and party like a rockstar, you get to deal with the epic hangover that comes afterwards. Just don’t come crying to me for a bailout or else I’ll hand you the bill for my inopportune stock picks of a previous decade! Yes yes, I’m the only one on here who can’t pick 10-baggers. I’m so pathetic and thus, equally deserving of this steerage section.

#31 Mountain Camper on 03.12.21 at 2:47 pm

I wouldn’t mind a bit of housing inflation in Central Alberta.There are some signs that prices are on the rebound ,specially for houses below 500k.

#32 Comments! on 03.12.21 at 2:49 pm

Wow comparing today to the late 80’s when under $200K bought you a detached bungalow in the GTA and $60K a detached home in London or Windsor, with a mortgage temporarily at 13.5% and rates fell to less than half that 10 years later. $1800 per month in 1990 vs $4500 per month in 2021 for the same home that is 31 years older now and about ready to fall over.

Do these guys seriously work for a bank?

The comparison is not between prices then and now, but rather debt-to-income and income-to-price ratios. Obviously you do not work for a bank. – Garth

#33 Concerned Citizen on 03.12.21 at 2:52 pm

The message from central bankers is clear: Don’t be responsible with your finances, don’t live within your means, spend don’t save. We’ll do “whatever it takes” to bail out the reckless, the irresponsible, the speculators. Those of you foolish enough to work hard and save, we’re dead set on inflating away those savings. So you’d better sink what money you can into the real estate bubble, stock bubble, crypto-bubble, NFT-bubble, etc. to try and protect your savings.

I honestly don’t recognize my country anymore. It’s like a dystopian nightmare that never ends.

#34 Ponzius Pilatus on 03.12.21 at 3:07 pm

#3 crowdedelevatorfartz on 03.12.21 at 1:27 pm
“Meanwhile, all governments have been silent on this matter, preoccupied as they are with the virus.”

++++++

Our political “leaders” love the virus……
It gets the voting sheeples minds off the debt, deficit, and what a crappy job they’re doing.

Over to you Ponzie.
————-
I let Garth answer (if I may)

“The beaver economy churned out an incredible 259,200 jobs last month, about three times what the experts had predicted. Unemployment tumbled from 9.2% down into the 8% range – and all this reflected (a) the end of 100 days of lockdowns, vax and the reopening of the economy plus (b) a tidal wave of hoary house lust. In the US, also gains – 379,000 more. But we aced that.”

#35 Don Guillermo on 03.12.21 at 3:07 pm

#33 Concerned Citizen on 03.12.21 at 2:52 pm

I honestly don’t recognize my country anymore. It’s like a dystopian nightmare that never ends.
********************************************

The nightmare will last for many, many years as our state media continues to censor dissenting opinions.

Below is a comment censured (CONTENT DEACTIVATED) this morning by CBC. I posted it in response to a comment on this article:

https://www.cbc.ca/news/politics/cbsa-ircc-national-security-redactions-1.5942306

buffy coate
1 hour ago
Reply to @brian duog: yes that explains why Harper asked google to redact everything about him.
0
REPLY TO @BUFFY COATE:
DG
Don Guillermo
54 minutes ago
CONTENT DEACTIVATED Reply to @buffy coate: You mean like this? https://www.thestar.com/news/canada/2016/06/16/google-deletes-harper-web-results-upon-liberals-request.html

#36 Millennial 1%er on 03.12.21 at 3:17 pm

@ #33 Concerned Citizen

>The message from central bankers is clear: Don’t be responsible with your finances, don’t live within your means, spend don’t save.

This is precisely how I felt last summer before purchasing my home. I had always planned to purchase a home at around that time, but it felt like all of the policies were akin to the central bank putting a gun to my head and purchase something. Interest rates were below 2%..

#37 Dan in Nanaimo on 03.12.21 at 3:33 pm

Meanwhile, back on the ranch, we are impatiently waiting for perpetual UBI.

Which, of course, will be great for RE and stocks.

Printing machines are the best !

Take the red pill because there is no other option

#38 Ponzius Pilatus on 03.12.21 at 3:33 pm

#3 crowdedelevatorfartz on 03.12.21 at 1:27 pm
“Meanwhile, all governments have been silent on this matter, preoccupied as they are with the virus.”

++++++

Our political “leaders” love the virus……
It gets the voting sheeples minds off the debt, deficit, and what a crappy job they’re doing.

Over to you Ponzie.
——————
All polls in Canada and the States say that the vast majority of voters think that getting the virus under control is priority.
What do you want the politicians to do?
Focus on the tent cities?
So that you are happy.

#39 SHANE GALLANT on 03.12.21 at 3:36 pm

Not 30% unless rates skyrocket to 5%.. I can see a 10%

#40 Guelph Guru on 03.12.21 at 3:38 pm

How long can Govt force the CB to keep up the QE program? I think, that might be the infliction point where RE starts tipping. When QE stops or slows down and Govt is forced to sell the bonds on the market, that’s when we will know what real investors demand for our bonds. If they demand 10% or more, then as Garth says pooched.
Can govt force CB for QE infinity? Anyone has opinions?

#41 The Woosh on 03.12.21 at 3:39 pm

Hey Binky Barnes…how about an uplifting sound bite to counter Garth’s doom and gloom?

#42 Pete on 03.12.21 at 3:49 pm

I thought we were supposed to expect a 15% correction. The mother of all bubbles should result in a bit more than that I’m guessing. Keeping in mind that we’re in uncharted territory, and our situation changes daily. So where is the bubble correctometer pointing to now?

#43 Newbie on 03.12.21 at 3:53 pm

I work for a company directly correlated with employment levels. Q1 volumes were 25% above 2020 (pre lockdown) levels, and just entering the busy season now. Companies are hiring, hiring, hiring… just wait until hospitality, restaurants and tourism starts up!

Also random question – why are REITS not considered fixed income? Don’t they generally pay a monthly yield?

#44 Sail Away on 03.12.21 at 4:02 pm

Let’s get this party started. Texas lifts all Covid restrictions. Go Elon!

https://globalnews.ca/news/7672601/coronavirus-texas-mask-mandate/

#45 Phylis on 03.12.21 at 4:04 pm

#27 rknusa on 03.12.21 at 2:33 pm Nice! I remember those street names. Are there still lotsa people staging in Windsor to get to the States across the river? Based on your handle, I’m guessing yes.

#46 CJB on 03.12.21 at 4:11 pm

I just sold a ton of maple exposure this week in my TFSA. I made a ton in a year…but I am definitely getting the jitters with the TSX and how are country is run. There is plenty of other markets around the world to invest.

#47 S.Bby on 03.12.21 at 4:11 pm

Go out there and spend money people. Do your part to help the Canadian economy!

https://www.citynews1130.com/2021/03/12/haircuts-home-renos-restaurants-economy/

Get a haircut…

#48 Leftover on 03.12.21 at 4:12 pm

In the USA, the Fed’s assets could reach nearly $10 trillion compared to a $21 trillion GDP. So Canada’s CB still has lending capacity with “only” $600 billion in assets compared to a roughly $2 Trillion GDP.

We have to stay well under the Americans’, but as long as Biden keeps spending, Tiff can keep buying bonds. More of the same for 2021 I’m afraid, don’t expect the brakes to come on until 2022 mid-terms. The USA is all that matters.

#49 Sara on 03.12.21 at 4:13 pm

#188 crowdedelevatorfartz on 03.12.21 at 12:59 pm
@#178 Priceless Prenuptual
“You are a single guy.
What do you know about marital bliss?”

++++

Ask your wife.

======================
I hate to admit it, but that was funny.

#50 Concerned Citizen on 03.12.21 at 4:14 pm

#40 Guelph Guru,

The Bank of Canada is technically independent, so in theory the government can’t force it to do anything.

The BoC is on record saying they will stop QE when they have met their inflation targets. To me it’s pretty clear that is at best wishful thinking, and more likely a blatant lie.

The central banks that have gone down the QE path – the BoJ, ECB, Fed – have not been able to extricate themselves from these policies. Why? Because governments, businesses, and individuals are up to their eyeballs in debt and can’t survive with positive real rates, and because the negative real rates have lead to massive asset bubbles that would collapse if rates were increased.

You might argue that they’ll be forced to raise rates if inflation comes about. I very much doubt it. They will either call it transitory and/or fudge the numbers.

If they were going to stop printing, they would have done it already. Instead they’re blowing the everything bubble bigger by the day. Maybe when homes are going for $1M over asking the Tiffster might have a thought that something is amiss.

#51 latent threat on 03.12.21 at 4:15 pm

Garth for most things concerning real estate in Canada, you are often all over it.

It would have also been interesting if you had compared the house price to income ratio of Toronto back in the early 90s, before the bust, to now.

I know someone who worked in Toronto in the industry in the early 90s. He had bought a quality home in a decent neighborhood and had to sell 2 years later – taking a full 50% haircut on the property. He simply couldn’t get any more than half of what he paid.

Things look far worse than that now, not only for Toronto, but for most of the rest of Canada.

This will end the way it should, based on the destructive policy decisions that have been made since before you called it a housing bubble in 2008.

#52 Devilled egg on 03.12.21 at 4:17 pm

Low mortgage rates have exacerbated the threat, becoming a bottomless debt trap. Cheap money means people borrow more, spend more, push up prices further and crush affordability. But if rates rise, indebted household finances wobble under the load.

__________________________________________

And how is this a problem? I sweep in and pick up properties, toys, and rides for a fraction of what someone else paid for them.

Bring on the next pandemic. My net worth could use another boost!

#53 Faron on 03.12.21 at 4:18 pm

#20 johnny on 03.12.21 at 2:12 pm

show me a chart over the past 5 years and it looks a lot less scary

What’s “scary” now is the rate of rise. There are equity market dynamics that can amplify a decline that’s big and sharp enough to trigger them. Rapid rises in rates is one way to spook equities. With a big enough spook, feedbacks kick in that force the roll down. COVID was a big spook for a good reason, but look at end of March to early April last year for how much the market overreacted to the plummet. By the end of April, more than half of the losses were regained — that regained portion was the “spookable” cascade and is similar to what we could expect with a spook today.

My point is that rate “fear” is something to pay attention to. VXTLT and other bond fear metrics like the MOVE almost always lead a market correction. These have been steadily climbing for more than a month now and will only ease if rates take a pause or a correction comes and bonds get bid up a gain. Lets hope it’s the former.

As for comparing the US and Japan, I think it’s pretty apples to oranges. US bonds are THE instrument of safety and the market is massive. I don’t think extending the Japan case to the US is an accurate extrapolation.

#54 Faron on 03.12.21 at 4:20 pm

#44 Sail Away on 03.12.21 at 4:02 pm

In my best motherly voice:

“If you are bored Sail Away, go outside and play with your dogs. Leave the nice internet people alone. And don’t wear your good pants ooutside!!!”

Mt. Benson is out your door. Use it!

#55 cuke and tomato picker on 03.12.21 at 4:21 pm

Here in Central Saanich BC the temperature was warm enough to work outside today and the neighbours were
in friendly conversation. My lawn mower is ready to go check- my weed eater is ready to go check – my leaf blower is ready to go check next will be the automatics. The TSX is up slightly and the Dow is up as well as the Dow futures and we all know house are up and going higher. People here are very upbeat and tomorrow will be warmer a lot will get done.

#56 Blacksheep on 03.12.21 at 4:25 pm

Echo # 6,

“Greaterfools.ca is a bit of an echo chamber.”

“We have certain beliefs and we often come here to recharge those beliefs, or re-enforce them. They make sense to us, but who said the world makes sense?”

“In the end, what did we expect the politicians to do?”

“Knowing the economy is taking a dump. Perhaps that the whole capitalism game is collapsing under own weight. Knowing that real economic contributors are shrinking. Knowing that tax increases are needed – and it would be easy to take their slice in property taxes, with happy owners willing to pay as they justify it in their head with gains. INFLATE IT ALL! PARTY FOR EVERYONE!”

“Politicians didn’t waste a crisis. But in the end, what were they to do? They had the perfect cover – first GFC, now Corona. And in many respects Corona is a significantly more potent crisis because public opinion is so firmly with the politicians – vs. bailing out banks. Politicians were never going to waste it, and Canada REALLY didn’t waste it.”

“So here they are, pumping real-estate, which makes the economic numbers look good, which then allows them to jack valuations of homes and tax them more as function of value. People willing to pay it because “house is worth so much!” There is just too many goals they wanted to achieve on this path, which all aligned. HOW DID WE NOT SEE IT FROM DAY ONE?”
————————————————–
I have been saying this here since I re entered the RE market, 7 years ago this month.

Align your personal investments, with what’s in the best interest of our major politicos, because they can safely be relied on to do what ever is necessary, to stay in power.

#57 Brian Ripley on 03.12.21 at 4:25 pm

My Plunge-O-Meter tables and chart are published with FEB data:
http://www.chpc.biz/plunge-o-meter.html

A couple of months ago I had to draw new support lines as FOMO 2.0 pushed the idea of a price “correction” off the table.

No doubt the idea of a top must be entering the minds of some especially after we saw the news coming out of Christie’s Auction house yesterday that in exchange for $69,346,250, some lucky buyer got a “long string of numbers and letters… a code that exists on the Ethereum blockchain.” Oh yah, they also got a high-resolution JPEG of the digital art they bid on. The artist reacts: https://www.youtube.com/watch?v=S8p1B8NHLFQ

Is this a signal of a top or just more FOMO noise?

#58 steadyplank on 03.12.21 at 4:25 pm

Over a year back, no one could predict the curve balls to be thrown at us, and particularly the real estate market situation we are now in . I am guessing the same will be said when another year goes by.

These days, surprises rule it seems , and a well balanced portfolio may still prove( surprise!) prudent when the sh#t hits the fan. (As opposed to going into debt up to your eyeballs , all in, for a house in the boonies)

I ,for one, am not jumping on RE this train anytime soon…

#59 crowdedelevatorfartz on 03.12.21 at 4:26 pm

@#11 tkid
“I would love to get back into a house, but I no can do and abide by the rule of 90.”

Try the rule of 80.

Take 80.
Subtract your age.
Add 40.
Put “19” in front of that number.

It’s your date of birth.

#60 Ponzius Pilatus on 03.12.21 at 4:27 pm

#36 Millennial 1%er on 03.12.21 at 3:17 pm
@ #33 Concerned Citizen

>The message from central bankers is clear: Don’t be responsible with your finances, don’t live within your means, spend don’t save.

This is precisely how I felt last summer before purchasing my home. I had always planned to purchase a home at around that time, but it felt like all of the policies were akin to the central bank putting a gun to my head and purchase something. Interest rates were below 2%..
—————
Get a grip, people.
Stop blaming the Government for your house lust.
You and no one else is responsible for your decisions.
Renting is not the end of the world.

#61 Subtle rebuttal on 03.12.21 at 4:28 pm

#38 Ponzius Pilatus on 03.12.21 at 3:33 pm
#3 crowdedelevatorfartz on 03.12.21 at 1:27 pm
“Meanwhile, all governments have been silent on this matter, preoccupied as they are with the virus.”

++++++

Our political “leaders” love the virus……
It gets the voting sheeples minds off the debt, deficit, and what a crappy job they’re doing.

Over to you Ponzie.
——————
All polls in Canada and the States say that the vast majority of voters think that getting the virus under control is priority.
What do you want the politicians to do?
Focus on the tent cities?
So that you are happy.

________________________________________

Once again, the Ponzius shows his depth of naivete.
Voters said the virus is a “priority” as it should be. Not that the government largesse couldn’t work on two things at once!

Absolutely true, the governments love this … so does the media. Same schtick every day, just change the numbers. Nothing else getting done until this party is over… and by then it will be too late!

#62 rknusa on 03.12.21 at 4:28 pm

#45 Phylis on 03.12.21 at 4:04 pm

No I am currently in US on TN Visa hoping to retire soon to Canada (not possible to stay in US) and am looking for a place to live with not much luck

#63 ogdoad on 03.12.21 at 4:28 pm

What else are we gonna do? Upstanding, tax paying citizens deserve the best. Just like scantily clad, tat doods deserve the views.

8 bil. stands at the door.

what do we do?

Og

#64 Ponzius Pilatus on 03.12.21 at 4:31 pm

#41 The Woosh on 03.12.21 at 3:39 pm
Hey Binky Barnes…how about an uplifting sound bite to counter Garth’s doom and gloom?
————–
What doom and gloom?
Unemployment is down, economy is opening up.
The future is bright, you gotta wear shades.

#65 crowdedelevatorfartz on 03.12.21 at 4:41 pm

@#38 Purgatory with Ponzie
“What do you want the politicians to do?”

+++

Oh I dont know.

Stop being everything to everyone with everybody’s money?

#66 pPrasseur on 03.12.21 at 4:42 pm

Money printing is all that keeps this economy together. This country is screwed and will stay screwed for a long long time, I have absolutely no doubt about that. The hardship and loss of purchasing power will be staggering. Not to mention the implosion of the welfare state, in particular health care.

I counter this by owning mostly US stocks.

#67 espressobob on 03.12.21 at 4:45 pm

Not even sure why I’m posting this comment?

Retail investors need to get a grip on the purpose of this exercise in the first place.

Contrarians love all market conditions. We know how to play.

Fear is in the eye of those that panic. Thank you…

#68 Father’s Daughter on 03.12.21 at 4:51 pm

Okay did the realtor seriously compare selling a house to performing open heart surgery?
Cardiac surgeons train for 10+ years
Realtors train for ten weeks?
There is very little expertise or knowledge of real estate that isn’t now publicly availability (listings on a million sites, comparable, comprehensive neighbourhood guides, local school catchment and ratings)

The younger generation will start buying and selling their own homes and hopefully put an end to the pricing games and the blind bidding wars that should be illegal to begin with

They will not start doing each other’s heart surgeries. They might take the saves commission and have free Starbucks for life or something fulfilling like that though

#69 Stone on 03.12.21 at 4:51 pm

You know, a week ago, I was wondering whether my B&D portfolio would get over 7% in the following week. Was I ever off. So off. The markets are in a madness. That, or I really, really nailed the allocations in my B&D. Looking at equities and fixed income, there is really nothing to rebalance YTD. All I did this year was flush the remaining bit of VAB at the start of 2021 representing 4.69% of my portfolio at the time and allocate it to ZPR as well as use my piddly $6000 TFSA contribution to also buy ZPR.

For the VBAL, XBAL, ZBAL, VGRO, XGRO, ZGRO crowd, I understand the frustration.

So, where did I land today?

8.12% YTD?

Who do I have to thank for that? Ryan Lewenza. Thank you for your Saturday posts. You are a scholar and a gentleman. And Garth too of course! The blog is gold.

#70 Tron Light on 03.12.21 at 4:52 pm

DELETED

#71 NOSTRADAMUS on 03.12.21 at 4:53 pm

POINT MAN! KA-BOOM!
On today’s journey through the financial minefield, I think that for my personal well being, it would be prudent to let the young and foolish take the point. I’ll just follow behind at a safe distance, pay my debts down and add some body armor,(cash) to the war chest. I suspect that when they do a roll call in the morning after the battle, a great number of speculators will be listed as (M.I.A.) Missing In Action. Those who actually answer roll call will be shell shocked, missing limbs, with eyes casting a thousand yard stare. It is doubtful if any survivors will ever return to the field of battle. “That’s all I have to say on that” for now.

#72 Sail Away on 03.12.21 at 4:58 pm

#54 Faron on 03.12.21 at 4:20 pm
#44 Sail Away on 03.12.21 at 4:02 pm

In my best motherly voice:

“If you are bored Sail Away, go outside and play with your dogs. Leave the nice internet people alone. And don’t wear your good pants ooutside!!!”

Mt. Benson is out your door. Use it!

———

Oh, I do all the time. Twice last week, actually. Usually every Tuesday at 4:30 in the summer. Come join sometime- Gary Robbins often trains there, so right up your 100 miler alley.

It’s all snow from the second roadway to the top at the moment.

#73 Bloff Witzer You're in the sitatation cloakroom on 03.12.21 at 5:04 pm

For some reason I keep thinking of that skinny little guy that looked like the young new minister/priest in every movie or tv show that kept asking are you excited and telling you he was excited on tv, usually after midnight. He was just dying to share how you could buy dozens of houses with other peoples money or no money down or some such nonsense. I wonder if he’s one of the ones who went to prison? Some of them did back then. Wouldn’t be a bad place for some that are on tv now with a different but also dangerous shtick.

#74 AmbiVasu on 03.12.21 at 5:04 pm

The beaver economy churned out an incredible 259,200 jobs last month, about three times what the experts had predicted.

To this jobs report in Globe and Mail, my wife commented as follows:

“part-time positions (171,000)”

I was a part time employee once; when I started, if I managed to get 4 to 8 hours work in a week, it was a miracle. I was there on the rolls with no hours, sometimes for weeks on.
4 to 8 hours did not put bread and butter on the table.
“But”, I HAD A JOB.
ANOTHER PLUS NUMBER ON THE STATSCANADA’s JOBS REPORT which did not put bread and butter on the table.
I wonder how many of these jobs are like mine?????

“retail and hospitality industries combined for an increase of roughly 187,000 jobs”

Wondering if these are also “on the rolls minimum wage jobs” like mine. If yes, how can they put bread and butter on the table, buy a million $ house and educate their kids and thus ensure CANADA still remains in G7 for our future generations????

All in all, these are just feel good numbers and do not tell anything else, to me of course

#75 yorkville renter on 03.12.21 at 5:04 pm

I was a very young teen in 1989/1990 and I remember it well… because it went very badly for my family (who are in Real Estate) and we basically lost everything — sheriff foreclosure notice on door of my house.

This is why I’m on eggshells with my wife… yes, we need more space (kids are getting big for our two bedroom place) but to pay $400k in cash to assume $1mm in mortgage – at the height of the market – seems like financial suicide.

*gulp*

#76 N on 03.12.21 at 5:13 pm

So what starts as inflation and rising interest rates results in a deflation (20%+ of the Canadian economy is housing).
History is telling me that the government will not let it happen. Or will they risk destabilizing the house of cards? Or will they try everything and still end up with stagflation?
Time will tell.

#77 Ponzius Pilatus on 03.12.21 at 5:15 pm

#49 Sara on 03.12.21 at 4:13 pm
#188 crowdedelevatorfartz on 03.12.21 at 12:59 pm
@#178 Priceless Prenuptual
“You are a single guy.
What do you know about marital bliss?”

++++

Ask your wife.

======================
I hate to admit it, but that was funny.
————-
Which wife?

#78 Freedom First on 03.12.21 at 5:21 pm

#33 Concerned Citizen

Love your comment!
——————————————————-
Just stay calm and follow Garth’s advice given out over the years. Pigs do get slaughtered.

Freedom First

#79 leebow on 03.12.21 at 5:23 pm

#59 crowdedelevatorfartz

Doesn’t work for folks over 120.

Reminds me of that joke.
– What’s your DOB?
– March 12
– Year?
– Every year

#80 Ponzius Pilatus on 03.12.21 at 5:28 pm

#65 crowdedelevatorfartz on 03.12.21 at 4:41 pm
@#38 Purgatory with Ponzie
“What do you want the politicians to do?”

+++

Oh I dont know.

Stop being everything to everyone with everybody’s money?
——————–
But you said the PM is not doing anything.
So, which one is it.
Also, posting stuff out of context, is pretty low.
Even by your standards.

#81 Sun TZU on 03.12.21 at 5:37 pm

Governments are not preoccupied with the virus, they are preoccupied with avoiding reality. Stats Can and the BOC will not tell the truth about inflation because it would be “off with their heads”. Trusting Canadian governments is a mugs game. Rosie is not appreciated, they will “cancel” him.

#82 Sheesh on 03.12.21 at 5:42 pm

#38 Ponzius Pilatus on 03.12.21 at 3:33 pm
All polls in Canada and the States say that the vast majority of voters think that getting the virus under control is priority.
What do you want the politicians to do?
Focus on the tent cities?
…..
So the current government can’t walk and chew gum at the same time? Sounds about right.

#83 CHERRY BLOSSOM on 03.12.21 at 5:44 pm

DELETED

#84 604_Housing on 03.12.21 at 5:48 pm

Need some government intervention on housing. A one time primary home capital gains tax exemption per common law couple? Sale within ten years considered a capital gain? A 500,000 tax free allowance on sale with rest subject to gains?

Refinements can be made to any idea. But outside of political polling, what is the government gaining by not taxing house sales?

Homeowners people won’t be happy with taxation, but non homeowners are unhappy now. Cynically, one groups votes matter, the others don’t.

#85 FOMO ETF on 03.12.21 at 5:50 pm

A new ETF wants to tap into the fear of missing out among investors desperately chasing the everything rally.

A filing this week with the U.S. Securities and Exchange Commission seeks to create the FOMO exchange-traded fund, named for the famous acronym associated with countless bubbles and market manias.

#86 Reximus on 03.12.21 at 6:02 pm

woot! just got my covid jab #1 an hour ago…the hardest part was deciding if I wanted it in my left or right shoulder, ya know, for my golf swing, and the girl was no help

#87 George S on 03.12.21 at 6:04 pm

I was talking with the owner of a lumber yard yesterday when I went to buy a sheet of 3/4″ GIS fir plywood. I bought the last sheet he had left and he told bye that he wasn’t getting any more in until the wholesale price dropped because if he had to set the price to try and make a profit, nobody would buy any.
There is so much construction going on (in SK anyway) that 3/8″ OSB (the stuff you see covering houses that are under construction) has gone up from $8.50 per 4X8 foot sheet last summer to $56.95 as of today. The next truckload will be $50 per sheet wholesale price.
They have never seen so many garages being built and are booking several per day for the coming construction season.
Definitely something really unique going on.

#88 Sail Away on 03.12.21 at 6:09 pm

I had a work email near-disaster today. As follows:

Big Client [full extended team cc’d]:
‘SA- We have piles of material on this recently-cleared site and our team is wondering if this can be reused as fill for the new site development? Signed, Best Client [full extended team cc’d]’

SA [reply all]:
‘I’m afraid not. Those piles from stripping the site are full of organics which will break down and settle over time. These are not suitable as structural fill. Retards’

I noticed the ‘t’ instead of ‘g’ a millisecond before Send. Yow!

#89 YVR Renter on 03.12.21 at 6:19 pm

In 1993, we were selling a house in Waterloo to move to BC for a good job. 1993 is the year the SHTF. We had to reduce price $10,000 to get buyers to close as they couldn’t sell their townhouse, get them to bridge. A townhouse! A friend had a buyer tell him he was paying $20,000 less than they signed for on closing, take it or leave it. He was stuck, already bought another property. We watched our house value tick down by the week. This is what may be coming, inconceivable to millenials, but many of us have lived it. Instead of over offer, under offer might become the norm when things crash. Oh, and our 1st house, bought in 1984,$72,600 mortgage interest was 12%. Price doubled in 3 years. We thought we did well, friends’ mortgages were at 18%. True story.

#90 Reximus on 03.12.21 at 6:20 pm

The r/e mkt around here in east toronto is completely bonkers, if the sale just up the street is an example. Nice enough semi listed at 1.099mil last week which is a fair ask considering recent sales, sold for 1.46mm.
Never got to it’s offer night, because it got 4 bully offers…

#91 Freddie on 03.12.21 at 6:24 pm

https://www.theglobeandmail.com/real-estate/toronto/article-30-offers-for-oakville-townhouse-as-sale-goes-250100-over-asking/

how can this be good for our country?

how, as a people, can we be this stupid?

#92 mark on 03.12.21 at 6:26 pm

You’ll like/hate this Garth.

A million, plus 350k house owned outright. Single woman wants to sell and rent because she’s identified all the hassle of owning. Ramsey advises her to buy a condo with the 350k.

https://www.youtube.com/watch?v=-CMlPY7eNJ4

Why listen to a cheesy US pop finance guy? You have your own right here. – Garth

#93 Phylis on 03.12.21 at 6:31 pm

#62 rknusa on 03.12.21 at 4:28 pm
#45 Phylis on 03.12.21 at 4:04 pm

No I am currently in US on TN Visa hoping to retire soon to Canada (not possible to stay in US) and am looking for a place to live with not much luck
Xxxxxxxx
Oh, ok. Maybe once the border opens up there will be a push for the Windsorite temps to complete their trek to their families in the States and open up a window of opportunity for you. Best of luck!

#94 I like tulips on 03.12.21 at 6:33 pm

Hi Garth, just wondering if this line of thinking also applies to stocks (as an asset class), and if not, why not:

“real estate has the potential to kick ass. All that behavioural finance stuff we talked about yesterday – recency bias and confirmation bias especially – ensure most are blissfully unaware of the potential for reversal. ”

Done. – Garth

#95 Keen Reader on 03.12.21 at 6:34 pm

500 new houses being built in my neighbourhood, prices up approx 40% in the last several years (according to Brian Ripley’s charts – thanks). This compares favourably with my B&D portfolio, considering RE leverage and opportunity costs. Happily renting but ready to vulch, just may bump the rule of 15 up a bit, given NZIRP.

Engine failures: they affect multiple fleets, not just 777s. P&W has developed a temporary fix, to reduce the risk of an internal weld fracture. My crew did our first test-flight today, doing aggressive power changes, inflight shutdown, core-lock check and windmill restart; all good. Fairly confident these corrected engines will mitigate the risk, pending the permanent configuration update. Nice day to fly, but two close calls with birds during circuit work; they’re baaack! Cheers

#96 I was there in 1980 too. on 03.12.21 at 6:45 pm

I was very young but what a dooosey of a recession. Remember when we were actually allowed to have recessions ? The RE market will get slapped hard if it goes like 1980.

Whats the best performing asset in the last 10 years ? Better than Gold, RE, Bonds ? Thats right …Bitcoin, and back close to all time highs as people wake up to inflation and the central bankers that have F’d everything up.

#97 bellend on 03.12.21 at 6:46 pm

“Kavcic likens this to thirty years ago……”
“If mortgage rates stay where they are, but prices keep doing what they’re doing, we’re back into the late-1980s territory by this time next year.”
And whats gunna happen now in…
“Q E W U R L D” ???

kick that can brah kick it hard

#98 crowdedelevatorfartz on 03.12.21 at 6:49 pm

@#80 Ponzie’s Pedantic Petard
“But you said the PM is not doing anything.”++++

Exactly.

Thats what happens when you try to please everyone , every time , every where.
Unfortunately for Canada, its with everybody else’s money.

#99 E Richard on 03.12.21 at 6:51 pm

Not sure how to read into this bank action. Had a prearranged montage for five months for a build to order mini home on a land lease community. This week a green chair chartered bank employee from out of province and REIT got into a spat over assignment of lease consent for manufactured homes and at last second bank chose not to fund at closing. 18% down plus Cmhc guarantees for bank. All costs to carry one third of take home income.

#100 Nonplused on 03.12.21 at 6:56 pm

#81 Sun TZU on 03.12.21 at 5:37 pm

“Governments are not preoccupied with the virus, they are preoccupied with avoiding reality. Stats Can and the BOC will not tell the truth about inflation because it would be “off with their heads”. Trusting Canadian governments is a mugs game. Rosie is not appreciated, they will “cancel” him.”

I don’t think anybody much cares about or follows the CPI, except perhaps those people who listen to AM news & talk radio shows. I bet 90% of the population couldn’t tell you what it was. However I think most people get an intuitive sense of what is going on when they visit the grocery store. Nobody believes we have “stable prices”.

#101 Drinking on 03.12.21 at 7:02 pm

This is in your neck of the woods Garth; seems this idiocy is stretching from coast to coast.

https://www.cbc.ca/news/canada/nova-scotia/nova-scotia-homes-buying-sight-unseen-housing-boom-1.5946827

#102 Alphonse Kehaulic on 03.12.21 at 7:17 pm

From yesterday’s blog:
“After an entire year of Covid (the sad anniversary is today) never have we seen such FOMO swelling assets or speculation making people crazy.”

Yes the sad anniversary was yesterday — 3-11 for your number 33, by the way. There was another sad anniversary yesterday: Fukushima — 11-3-11 for your Double 33, incidentally.

I remember that day. The TV programmers told us millions of gallons of radioactive slop was gushing into the Pacific, and the west coast of North America would soon glow like kryptonite and become uninhabitable for generations. Last time I checked everything was kosher. Houses on the coast from BC to Baja have never been pricier. You can still buy Pacific shrimp at Loblaws.

Seems some numbers just have a thing for tragedy!

#103 Nonplused on 03.12.21 at 7:19 pm

#84 604_Housing on 03.12.21 at 5:48 pm

“Need some government intervention on housing. A one time primary home capital gains tax exemption per common law couple? Sale within ten years considered a capital gain? A 500,000 tax free allowance on sale with rest subject to gains?”

The problem with capital gains on primary residences is that houses are not money. If you have to sell here and buy there, maybe for a job change, maybe because your family is growing, whatever the reason, you haven’t actually made any money. You just traded one house for another. You haven’t actually made any money until you sell for the last time, which is something that typically your executor does.

Thus, capital gains taxes on primary residences are typically going to have to be financed with additional mortgaging. People will have to take on more debt to pay the tax. This will trap people in their houses and make them unable to sell or relocate unless they can handle the additional financing. It could vapor-lock the real estate market, making it harder to buy houses, not easier.

One way I could see it work is some kind of “estate” tax. But then what about the sneaky people who sell before they croak and spend all the money on cruises? Or nursing homes?

The real target needs to be landlords (because it is a business) and flippers. But those folks are already subject to capital gains taxes. They also already tax the cottage when it is sold, or any other non-primary residence, but if you can afford a cottage you won’t get much sympathy from the 99%.

So what about the super-rich and their $5,000,000 homes? Certainly they can afford to pay? But again it is hard to see how one rule can be made to apply to everybody unless we get some sort of “graduated capital gains tax” that works like the income tax. $250,000 excluded, 250,000-500,000 25% included, $500,000+ 50% included or something like that.

#104 Comments! on 03.12.21 at 7:39 pm

The comparison is not between prices then and now, but rather debt-to-income and income-to-price ratios. Obviously you do not work for a bank. – Garth

—————————————-

No but I can use a calculator. A couple purchasing a home in Windsor now at $500K or more has a lower income-to-price ratios than someone who paid 85% less in 1990? Or a $1.3 million now in the GTA? With salaries stagnant and real cost of living up 300% since then?

Please educate me so I too can work for one of honourable banks.

#105 Rowdie on 03.12.21 at 7:42 pm

Really, I do not feel sorry for the NITS who buy these high end homes. When interest rates rise, they have to pay up. Greed and fear are hand in hand with RE nowadays. We will wait to buy when homes are at a decent price. Homes are just sticks in the ground. The land they sit on is more valuable. Still checking the RE in BC each day…. nice homes out there, but come on… 2M and up… now that is funny!

Happy house hunting in the near future!

#106 Cici on 03.12.21 at 7:44 pm

#13 Ddorf

That’s a great song. I also love the Frankie Goes to Hollywood version.

https://www.youtube.com/watch?v=AMfE2Se4r9w

#107 Jake on 03.12.21 at 7:46 pm

They say never try to time the stock market. Why would the housing market be different?

I bought my first home in ’88 in the Big Smoke… near the top of the market, although I didn’t know any better. I was a newbie and lusty to get some bricks. I lived there for 7 years and sold in ’95, the bottom of the market. Gulp. that sucked.

But…. I immediately moved to another residence where I paid $167k which remember was 1995 and the bottom of the market! I reno’d it (for peanuts since trades were desperate for work) with the cash from the house sale so essentially used the same pile of cash. Today, it’s worth 10x that…. ok, sweet.

Bottom line, if you can afford the monthly payments, and plan to own your home for 40 years it will smooth itself out. The housing market will correct but over time eventually will go back up just like stock markets.

#108 Cici on 03.12.21 at 7:54 pm

#14 Faron,

Was actually just thinking about the late great Robert the other day.

Here’s an 80s throwback for you: https://www.youtube.com/watch?v=lyNa-ReeZc8

#109 Drinking on 03.12.21 at 7:57 pm

Off topic, just an hour west of Calgary, Canmore and Banff, amazing photographer and pictures, we all need a little beauty in life!

https://www.cbc.ca/news/canada/calgary/banff-photographer-ice-skating-moments-rockies-1.5944645

#110 crossbordershopper on 03.12.21 at 7:58 pm

lots of small towns in the west are very cheap to live in. If you want to live in no where ville sask population 5K. sure you can get a house for 100K.
honesty, not that bad for most people, if you dont have family and are poor, collecting govt minimum poggy you can get a half decent life.
living and renting and working in toronto area , is a true rate rase and you will never own anything, so i dont understand why regular poor working people stay in ontario anyway.
my friend in milton is a perfect canidate, he couldnt come down with the down at 400K, now house is 900K and still cant save anything, so regardless of income, he isnt going anywhere, working for nothing. after all expenses, he ends up with nothing, but a nice working life. no savings in retirement no company pension plan, he will end up with a big screen tv, some furniture, a used truck and a bad back to show for his many years of working in Canada.
Go hope on flair airlines for 59 bucks and travel canada, the rural parts. its a nice country, not like americal dont get me wrong, but the east is nice, and victoria is great.
in the end you will end with nothing. The Cdn system is set up that way.

#111 Scott Dickson on 03.12.21 at 8:20 pm

30 year China bonds 3.79%, Canada 30 year bonds 2.03%, US 30 year bonds 2.39%. Am I missing something. Why are we much, much lower from 2 to 30 year bond yields than China. China’s inflation and GDP is not much more than ours.

#112 Ponzius Pilatus on 03.12.21 at 8:41 pm

#107 Jake
Bottom line, if you can afford the monthly payments, and plan to own your home for 40 years it will smooth itself out. The housing market will correct but over time eventually will go back up just like stock markets.
————–
Can’t really compare the two.
Stocks are a passive investment and pay dividends.
Houses are an active investment, meaning you gotta keep it up, pay property taxes and is not liquid like stocks.

#113 BCWally on 03.12.21 at 9:13 pm

I thought the blog today would have a bit of Tiff bashing in it, as he really blew up today on the jobs report. I guess that happened Wednesday already after the CB report so why repeat. He’s probably getting calls all day from Bay street on what a putz call that was to continue billion dollar bond days.
Anybody been around long enough to remember the blue light specials at Kmart? Pretty soon you can pick up Canadian sovereign bonds in the front bins, great deals!
Todays chart here nails it – nobody is buying the central bank poker bluff. That of course means that bond buying policy is a waste of time and will eventually lower our purchasing power even further.
I’m curious, is there an upper limit to those purchases under Canadian law? Or can the Canadian CB keep doing that until its the only buyer left?

#114 Cici on 03.12.21 at 9:23 pm

First world problem:

Accidentally overcontributed to my RRSP this year (forgot I had put in $5,000 last year, mid-March), so now I’m $5,000 over for a contribution I made this February.

Anyone know what I should do?

#115 crowdedelevatorfartz on 03.12.21 at 9:31 pm

@#96 I was there…
“The RE market will get slapped hard if it goes like 1980.”

+++
Yep,
I remember it well.
It will be interesting.
The Liberals cant keep tossing Billions $$$ every day in the “Bonfire of their pre election Vanities”.

The dumptruck loads of cash scooped daily from the taxpayer supported cash mountain isnt sustainable.
Sooner or later they will be forced to raise rates or do something else to slow down the insanity that is Canuck Real estate.

Will our devaluating buck be the straw that breaks the Liberal camel’s back?

#116 crowdedelevatorfartz on 03.12.21 at 9:40 pm

@#114 Cici
“Anyone know what I should do?”

++++
I’m not an accountant but I have overcontributed a few times by a few hundred.

Do you have unused RRSP room from previous years?
Or are you all caught up with RRSP contributions?

If you have 5k or more of unused RRSP contribution room you should be fine.
If you have zero room and have over contributed contact your accountant or CRA and tell them you screwed up.
It happens.
If you catch it before filing your 2020 taxes it shouldnt be that big of a deal.
Pull it out of the RRSP and put it in TFSA or something else.
An extra 5k you forgot about.
A nice problem to have.

#117 Nate on 03.12.21 at 9:46 pm

Comparing a cardiac surgeon to a real estate agent!!! Lol

#118 Keen Reader on 03.12.21 at 9:49 pm

#114 Cici

Did too, few years ago. Called CRA and got told to leave it in and not contribute next. Nothing bad happened, but I wouldn’t count on it again. Monthly penalty if they catch you, best to correct it asap or confess, methinks. Good luck!

#119 D.D. Corkum on 03.12.21 at 9:52 pm

I’d be really curious what people think:

a) bonds are now oversold; yields climbed too fast

b) bonds are now fairly valued; yields are just right

c) bonds are still overbought; yields remain too low

I have firmly believed (c) throughout this pandemic, but a small part of me is starting to think the needle has shifted to at least (b) for longer duration bonds.

#120 crowdedelevatorfartz on 03.12.21 at 9:53 pm

@#109 Drinking

Some of the shots looked like Lake Louise.
I used to camp up at the Spray Lakes above Canmore in 1980 when Canmore was a train whistle stop and a Truck stop…nothing else there but a few small houses.
We would set up camp and party nonstop all weekend at the Lakes.
No one around .
We had a bunch of bikers show up one time and they joined our campsite and we had a great time all night.
I woke up in the morning.
Everyone passed out everywhere. sleeping under tables, by their bikes etc.
Three deer were walk among the sleeping people eating cigarette butts and clumps of grass.
Surreal.

#121 Cici on 03.12.21 at 10:01 pm

#116 crowdedelevatedfarts

Wow, thanks for your response.

Unfortunately, I do not have any unused contribution room, but I just made the overpayment this February, so I’ll withdraw the amount tomorrow then call the CRA on Monday to see if they see if they can summon any pity for me regarding what I consider to be one of my finest blond moments.

Here, I’ll test this story on you first. Let me know if you think it’s hilarious.

So, in 2019 I make my RRSP contribution like a good soldier. In mid-March of 2020, I decide to make a $5000 to my TFSA. Earlier this year, I took a quick peek at my 2020 RRSP contribution limit and put the full amount in, not realizing that I had accidentally sent the $5000 earmarked for my TFSA last year to my RRSP account on mistake (both accounts are at the same institution). So, I’m over on the RRSP and under on the TFSA.

God I hate being blond. And it wasn’t even that fun for Marilyn Monroe!

#122 Wrk.dover on 03.12.21 at 10:02 pm

Money will only have one direction of velocity with the high debt and stagnating incomes.

Straight to payments,

For decades!

No growthyness in that movie.

What should I aspire hold on the impending spiral to the bottom when they stop the music that has been playing since GFC?

Cash or B&D Garthy stuff?

Cash lost 3% purchase power this week.

a year ago it grew more than that for weeks on end.

How long will the other asset take to recover next time?

#123 Sail Away on 03.12.21 at 10:39 pm

#114 Cici on 03.12.21 at 9:23 pm
First world problem:

Accidentally overcontributed to my RRSP this year (forgot I had put in $5,000 last year, mid-March), so now I’m $5,000 over for a contribution I made this February.

Anyone know what I should do?

————–

Yes. Don’t take a deduction for that $5k this year. Leave it in the RRSP and claim the deduction next year.

It’s fine. CRA doesn’t care if you occasionally have more money in there if you’re not taking a deduction for it.

#124 Phylis on 03.12.21 at 10:40 pm

#114 Cici on 03.12.21 at 9:23 pm
First world problem:

Accidentally overcontributed to my RRSP this year (forgot I had put in $5,000 last year, mid-March), so now I’m $5,000 over for a contribution I made this February.

Anyone know what I should do?
Xxxxxx
…Plus you can carry forward the overcontribution for 2021 since you said you contributed it this calendar year, just don’t claim it for 2020. And you can over contribute by $2000, but can not claim it as a deduction, the over contribution amount can be carried fwd. (you can not over contribute $2000 every year. If you exceed the $2000, you must withdraw the amount over this or pay a penalty if you don’t. As mentioned above, contact the cra to initiate paperwork to authorize the withdrawl in a timely manner to avoid penalties). Again, not an accountant…

#125 Zen Investor on 03.12.21 at 11:10 pm

How to conflate ‘ balanced’ with an obviously terminal real estate market? Equities have zero relationship to the idiots who buy houses, because idiots who buy houses don’t invest in equities.

Various companies are spitting out free cash flow onto sexy wet balance sheets or are on track to be direct beneficiaries of non real estate cash once Trudeau gets his boot off the neck of business.

That’s likely to be now, as evidenced by the miraculous openings, in the face of still soaring case numbers, because he’s angling for a summer election. So, maybe the worst time to be ‘ balanced and miss all the juicy gains . Discretionary, cyclical, interlisted finance all ripping. And, watch for the turn to near empty pasture. Plenty issues due for a trim after doubling and tripling in the past few months.

Balanced, bwahahahahaha. Where are all the customers yachts and converted bank bunkers? Of course real estate will crash. But not before Trudeaus election. Make hay.

#126 TurnerNation on 03.12.21 at 11:14 pm

– Amazon’s Brampton warehouse ordered to shutter over CoVid-19 outbreak (thestar.com)

Umm would these be the planned/alleged Supply chain shortages coming?

–Life in a locked-down Grey/Red warzone UN “Smart City”. Tracked at all times via Smart Phone.
This is conditioning. For compliance. Is this a set up for Inter and Intra-provincial checkpoints and roadblocks?
50/50 chance. “But you are free to leave at any time”

https://barrie360.com/tracking-torontonians-cellphone-data-reveals-simcoe-muskoka-was-popular-as-lockdown-lifted/

— When you see a headline like this, and you have the feeling that all new spending at the level of cities will be toward the Poverty Industry Complex, what do you think we are being primed for. My guess is more ‘safe injection’ sites in your neighbourhood. Crime and Sirens 24/7

– Opioid-related overdose deaths jump by 59 per cent in Ontario (theglobeandmail.com)

#127 Ponnaps on 03.13.21 at 12:12 am

People are buying high by selling high.. the eventual mortgage delta is within reasonable ranges and easily serviceable.. what seems to be the problem here.? Yes fthbs could end up being screwed but at the lower end of the price spectrum..

#128 Dr V on 03.13.21 at 12:16 am

114 Cici – did I misunderstand? Claim the Feb 2021
contribution for the 2021 tax year. Or have you already
filed for 2020?

#129 Ponnaps on 03.13.21 at 12:21 am

Sold high and bought high.. now carrying a 800k mortgage on a house currently worth 1.6mil.. so what if the market drops 30%..

#130 DON on 03.13.21 at 12:31 am

75 yorkville renter on 03.12.21 at 5:04 pm
I was a very young teen in 1989/1990 and I remember it well… because it went very badly for my family (who are in Real Estate) and we basically lost everything — sheriff foreclosure notice on door of my house.

This is why I’m on eggshells with my wife… yes, we need more space (kids are getting big for our two bedroom place) but to pay $400k in cash to assume $1mm in mortgage – at the height of the market – seems like financial suicide.

*gulp*

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

Can you rent a bigger place? It will never be big enough…they keep getting bigger. If your finances are good enjoy the lack of stress. Houses take maintenance, taxes and your time.

and prices are stupid on low listings.

Sooner or later the vultures start circling…that’s what I learned from the 80’s. My friend’s parents were both Century 21 realtors…market went down..
they got divorced and looked for new jobs.

I also remember a ponzie scheme they shut down in BC. Each person is recruited and puts in $20…they in turn recruit as many people as they can to anti up $20 and so on. Or something to that affect…just remember it being explained to my parents by their eager friends.

#131 Jane24 on 03.13.21 at 1:37 am

I was a TO RE agent in the 1980s run-up and then decline of RE prices. Let me tell you what happened. You will see the comparison to today in Canada.

1. House prices went crazy. People were driving by $250,000 bungalows in Scarborough, looking through windows and then putting in crazy offers, house unseen.

2. Due to RE commissions being so lucrative every family had a dog in the race so the wider family and friendship group didn’t have to pay RE commissions. It became harder to get listings and I was in the top 2% of agents. Anyone can put a sign in the lawn. Paying $50 grand today for someone to do this is laughable.

3. Govt and banks did nothing to stem the tide. The party went on. The media were all on side with the boom. The lone voice of distress was a young RE reporter in the Sun paper called Garth Turner. He was despised and dissed. I though this can’t continue and sold my own house to move to the sticks.

4. About one week after I sold my house for top dollar, to a guy who made a living telling the future, the market just stopped overnight. The phones stopped ringing. The Homelife office was totally dead for about a week.

5. Then everything went mad. Houses purchased with no conditions failed inspections and did not appraise. Buyers wanted out and legally we were informed that our sellers could not resell their houses if they held onto the first buyer’s deposit so deposits had to be returned.

6. Many sellers scared that they would not be able to buy a new home had brought one, usually from a builder, before selling their old one against my advice. Now they were in a falling market with prices declining weekly. All they could do was get ahead of the price decline and hope to bag one of the few buyers left. No-one wanted to reduce their prices fast enough. People were bridging 2 houses with both falling in value each day. People started juggling their debts and borrowing from family to keep both houses going.

7. Things overall got desperate for many clients, most of whom I had warned NOT to get involved in this market. The first things to go were the toys, cars, cottages and offers on downtown condos. Clients were informed that to close a deal there was no profit for them in fact they had to take a check to the lawyer to close. RE commissions finally started to fall as there was no money to pay them. I closed many deals for 2 or 3% and a few I did for nothing to help the client. Clients cried.

8. I found the whole experience so stressful and upsetting, I cried for these people, many had no financial smarts at all. I got out of RE after 15 years and earned a PhD and spent the rest of my career as a marketing professor at a British University.

The famous quote is right – if you don’t learn from history, you are doomed to repeat it.

Note that RE commissions in the UK are 1.5% on much cheaper houses!

#132 Overheardyou on 03.13.21 at 2:21 am

At least this time no one is blaming foreigners for the prices. Maybe the herd will finally accept that it was them all along…

#133 Nonplused on 03.13.21 at 3:47 am

#114 Cici on 03.12.21 at 9:23 pm
First world problem:

Accidentally overcontributed to my RRSP this year (forgot I had put in $5,000 last year, mid-March), so now I’m $5,000 over for a contribution I made this February.

Anyone know what I should do?

———————————-

Tis no big problem. You cannot deduct your over-contribution this year, but you can next year. It will cut into next year’s contribution though.

#134 Guelph Guru on 03.13.21 at 7:18 am

#50 Concerned Citizen on 03.12.21 at 4:14 pm

GM and thanks for taking the time to respond to the conversation. I’m trying to figure out if there is a way out of this debt trap. So to continue the conversation and the thought experiment from where you left …
If I look at my weekly grocery bill, the inflation gene is out of the bottle and it’s starting to hurt. It’s an inconvenience now but is quickly morphing into a headache. So the QE should stop if BoC is sober. If that happens, and Govt and Companies have to finance using debt on the open market, then the real int rate will kick in. I’m just guessing here for the free market but looking at inflation I’m guessing it would be +10%. What will happen:
RE: Pooched for sure.
Business: Leveraged operations like Bombardier pooched. Tech pooched. Utilities ?? Energy: ?? Banks: ??
Govt: The only revenue is tax. So tax will shoot up. We the people are pooched. Govt will have to trim down. Layoffs. Again we are pooched.
The problem is, I don’t see a way out except QE infinity.
It’s an interesting thought experiment to keep our brain cells active :)

#135 KNOW IT ALL on 03.13.21 at 7:48 am

“The 40-year bull market in bonds is over.”

https://www.bloomberg.com/news/articles/2021-03-12/a-15-billion-treasury-etf-drops-20-from-peak-as-yields-spike

#136 Dharma Bum on 03.13.21 at 8:58 am

1989!
The year I bought the house that I still live in today.
I remember it was the top of the market – because I just sold my house for a ridiculously high amount of money before buying this house.
I was busy in those days, so I didn’t notice the 17 year price collapse.
In the meantime, it’s only worth 4 times the money I paid.
However, the money I spent on the house, had it been invested conservatively, would have been worth 8 times the initial investment – give or take.
But, I lived in it.
The rent alone for an equivalent place would’ve cost almost the difference anyway.
Then again, the carrying costs over the years average out to about 1/2 the cost of what rent would have been, so there’s that.
Once the numbers are crunched, and I’ve convinced myself of the truth of my own rationalizations, I believe things worked out for the best.
That’s mostly because I didn’t carry hardly any debt, and always built a B&D portfolio over the decades.
I never thought of the house as a financial investment until recently, since I can now totally downgrade my residential requirements in terms of size, location, amenities, etc.
It’s only time that made it so.

I’m thinking of going this route:

https://www.youtube.com/watch?v=bglum6cny70

#137 Eric on 03.13.21 at 9:04 am

Hi Garth
Great job educating the masses. Keep up the good work.

Your blog post today speaks of inflation. I think it might be interesting to do a post on inflation, how its measured and its accuracy. The price of a 2×4 is up over 200%, industrial steel prices are up 50%, gas is up, realestate is sky rocketing the CPI in Canada is only reporting 1% inflation. This leads me to the conclusion that the indice is a lagging indicator, I am also concerned about its accuracy. Are their other indices that give a better reflection of inflation within the economy? If the CPI reflected reality, the real estate bubble would have influenced it greatly yet that isn’t my observation.

Keep up your good work, I find more relevant economy info here that in the mainstreet media!

#138 crowdedelevatorfartz on 03.13.21 at 9:05 am

@#131 Jane24

Yup.
I remember the 80’s real estate melt down.
The alarming price crash, house one week were 250k , a few weeks later 80k and no calls…
People who bought newer before locking up a sale.
The economy screeching to a halt.
Divorces skyrocketed.
And then the fires.
New construction sites half built, burned.
Empty houses…. burned.
The idiots not realizing insurance wot pay if arson is suspected.
it took at least 5 years for the economy to rebound and 10 + years for real estate to rebound

#139 D.D. Corkum on 03.13.21 at 9:11 am

#114 Cici on 03.12.21 at 9:23 pm

“Accidentally over-contributed $5000 to my RRSP; what I should do?”

—-

You are allowed to over-contribute $2K without consequence. (You cannot deduct this extra 2K from taxes until at least next year.)

Furthermore, up to 18% of last year’s income will add to your deduction limit for 2021 So if you had at least $17K of income in 2020, then you have enough room to contribute this amount in 2021.

If, after all of the above, you still have contributed too much… then read the link below.

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/contributing-a-rrsp-prpp/what-happens-you-over-your-rrsp-prpp-deduction-limit.html

#140 Bdwy on 03.13.21 at 9:12 am

Near useless and zero intrinisic value, bitcoin hits 60k.

Speculation extraordinaire.

But it seems to be catching on

IF there is a line up to pay 60k for ‘nothing’, then 2x or 3x todays prices for a house seems doable me.

#141 baloney Sandwitch on 03.13.21 at 9:13 am

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.” ― Charles Dickens, “A Tale of Two Cities”.

#142 Insane on 03.13.21 at 9:29 am

Housing prices are absolutely insane all over – unbelievable.

It’s one thing for homes in Toronto to be expensive, but are these high prices in boring, sleepy cities like Barrie, Peterborough, London, etc. sustainable?

I just read that most offices want employees to return by end of the year (when herd immunity exists), with a 3 day in-office, 2 day WFH arrangement. Even for those who plan to only head to the office 2-3 days a week, I expect the commute to get real old real fast. I feel the astronomical runup in prices in these areas are most at risk. Toronto will always have the population and demand to sustain their prices, but my god having bought now at the top in those other areas would be terrifying.

#143 Insane on 03.13.21 at 9:29 am

Housing prices are absolutely insane all over – unbelievable.

It’s one thing for homes in Toronto to be expensive, but are these high prices in boring, sleepy cities like Barrie, Peterborough, London, etc. sustainable?

I just read that most offices want employees to return by end of the year (when herd immunity exists), with a 3 day in-office, 2 day WFH arrangement. Even for those who plan to only head to the office 2-3 days a week, I expect the commute to get real old real fast. I feel the astronomical runup in prices in these areas are most at risk. Toronto will always have the population and demand to sustain their prices, but my god having bought now at the top in those other areas would be terrifying.

#144 Paul Wood on 03.13.21 at 9:40 am

Like with stocks, shouldn’t the approach to real estate be ‘don’t sell the dip…?’ When the market is in decline, just sit tight.

#145 Regjeg on 03.13.21 at 9:57 am

Is it not far more accurate to use the term “debt slaves” instead of “home owners” when referring to many of those who have signed huge mortgage covenants in the past several years?

#146 Cici on 03.13.21 at 10:30 am

Thanks for the assistance everyone.

I haven’t deducted any of it yet/haven’t filed my 2020 taxes yet.

But I’ll call the CRA Monday, just in case.

Have a great weekend ;-)

#147 Sail Away on 03.13.21 at 11:40 am

Re: Cici RRSP

Can you report back on the CRA discussion?

#148 ever after on 03.13.21 at 1:30 pm

one year since the crash … and my portfolio has increased exactly 100% … its true . i did lots of buying last March and the rest of my portfolio has come back from the dead since

. i just knew it was the thing to do . it wasn’t easy to do emotionally as we all know

but one year later big rewards.

much better increases and less stress than real estate BTW

#149 Drinking on 03.13.21 at 3:26 pm

#120 crowdedelevatorfartz

Yes, you are right, there are a few shots of the young lady skating on Lake Louise. It looks like the photographer is making use of many of the lakes in that region; maybe Spray, Minnewaska for sure and perhaps Lac des Arcs, looks nice through.

Ha, good story, I can remember when Canmore was just a sleepy coal mining town, maybe a population of eight hundred or so. We use to go fishing by the old bridge in town; great little hole there.

#150 Drinking on 03.13.21 at 3:27 pm

Lake Minnewanka, damn auto correct..

#151 Parsonage on 03.13.21 at 6:25 pm

@ Drinking 150
Camped out in Canmore while parents shopped for a house in Banff, summer of ’58. Hard to believe the changes to both towns over time. Skater in video enjoying Vermilion Lake in front of Rundle. Been there, done that.

#152 westcdn on 03.14.21 at 4:59 am

I heard God favors the bold – we shall see. Being a coward does sit well with me but they tend to hang around – GFY.

I don’t know where to go with my investments. Things are pretty stretchy. I am now the coffin dodger in a different form – I don’t want to die living under a bridge or in a tent. So guess what?

Let’s just say I will not stand to be shot. You are going to have to work it, meanwhile I will deliver in kind. Things are going good for me right now. Mistakes are few and I am scoring big (for me).

I have been sent to hell more than a few times and I come back (think cat). For now, I believe equities are the way to goin the shorter term. The recent QE and gambling disturbs me. I see no good in the longer run but that is is the game and I will play it to the best of my ability. I will always leave something on the table.

#153 willworkforpickles on 03.15.21 at 5:57 pm

The socialist US dollar will decline in value at a precipitous rate through continued rampant debt creation.
The ultimate price to pay for creating more debt with zero intent to pay back its debtors will be the removal of nearly all who live and reside in the US.
Removal by force by death or a forced physical re-location.
The unlucky ones who survive will face the worst suffering.
All relatively soon late 20’s early 30’s.
The future is not ours to see.

Just looking ahead some…but don’t worry none…its all good for now………until it isn’t.