We’re ten days from a mortgage crunch. This week the Trudeau gang capitulated and will be making it harder for first-time buyers to get home loans. It’s not a bombshell. But it’s a bullet. Aimed at the heart of real estate speculation.
Effective June first everybody applying for financing – those with 20% or more to put down as well as the 5% newbie, CMHC-insured crowd – will have to prove they can carry debt at 5.25%. That’s up from a minimum of 4.79% as the stress test becomes the greater of the rate being offered by a lender plus two hundred basis points, or 5.35%.
Consequences? Now people can borrow, on average, about 5% less money. This impacts a fifth of all buyers and means some kids will be buying cheaper places or getting knocked out of bidding wars faster.
It’s a meh move. But not without meaning. As property prices have inflated beyond reason more and more buyers have been unable to cough up a 20% down payment, thus avoiding CHMC insurance. So extending the tougher rule to insured borrowers (those with small deposits) means everybody now gets tested.
This is not the real news, however. Two things matter more.
First, the latest inflation numbers are a harbinger of what’s coming. Did you catch the news? The number surged to 3.4%, the fastest pace of growth since 2011. This is nothing less than astonishing at a time the country’s largely in lockdown with the biggest city under a stay-at-home order, people growing hair at an alarming rate, government stimulus payments curtailed and the Third Wave devastating Main Street.
“If Canada can pose inflation numbers like these when much of the country was supposed to be staying at home in lockdown, absent US-style stimulus cheques and with at least temporary disinflationary currency effects, then just imagine what reopening may bring over coming months,” says Scotiabank’s prescient chief economist dude Derek Holt. He adds true headline inflation is actually at 3.8% which (a) blows right past the Bank of Canada’s upper allowable limit (before interest rates start to pop) and (b) is the biggest number since way back in 2003, when Stephen Harper still liked me.
Of course, we all know the cost of living is not increasing by 3.4%, or even 3.8%. Houses cost 30% more than last year, plywood is precious and golden retrievers fetch three grand. But this ‘official’ measure – which Holt correctly presumes will rocket higher when the economy actually reopens in August and beyond – means the CB will have little option but to withdraw stimulus. No, that’s never fun. In this instance it means bond-snofling will end and rates rise.
This bring us to the other news. For the first time, the top central banker is setting up the oversexed housing market for a cold shower. What the Bank of Canada governor says is always calculated and consequential, so check this out…
“It is important to understand that the recent rapid increases in home prices are not normal,” Tiff Macklem said this week. “Counting on ever higher house prices to build home equity that can be used to refinance mortgages in the future is a bad idea.” Borrowers are “taking on significantly more mortgage debt,” he warned. “Interest rates are unusually low…borrowers and lenders both have roles in ensuring that households can still afford to service their debt at higher rates.”
To reinforce this, the CB’s just-released report adds, “These highly indebted households have less flexibility to deal with sudden financial changes, such as a job loss or a drop in the price of their home.” The entire market is vulnerable now, the central bankers stress, with speculation polluting things in Toronto, Vancouver, Hamilton and (soon) Ottawa. Mortgage quality during Covid has “deteriorated” and almost a quarter of all borrowers have a debt-to-income ratio of over 450%. That’s historic. Worse than in 2017, when governments freaked out and slapped down housing markets in BC and Ontario.
So, what to make of this?
New stress test regs, worries about high-ratio debt, explosive inflation and sudden alarm by the central bank… this should make you wonder what’s coming. The June 1st mortgage changes on their own will do diddly to douse the flames of house lust. What the market really needs to cool fast is for the CB to man up and pop its key rate while winding down its excessive purchase of bonds and mortgages.
And what does the government say?
“Maintaining the health and stability of Canada’s housing market is essential to protecting middle class families and to Canada’s broader economic recovery,” mutters Chrystia, who must by now understand the horse long ago slipped the barn and stole a Porsche.
Thus, things will not stay as they are. But you knew that.
About the picture: “Here is Remus enjoying a sunny spring day in his garden'” writes blog dog Nonplused. “He is a rescue dog who was found in a ditch on a reserve when a pup. He was fostered by a great woman until he was old enough for us to take him home. Hats off to the Cochrane Humane Society and all rescue societies and foster parents all around the world. I’ve been following you since I first bought “Greater Fool” (at an actual bookstore!). Many thanks for all the advice and thought provoking subjects. I’m not sure this photo is tear-jerking enough to make the photo selection, because I took this just minutes ago so obviously he is still with us, but given his backstory and as one of my friends put it, “He was born in a ditch and ended up here. Dog heaven. He probably can’t believe his luck.” I thought it might go along with something along the lines “better days are ahead”. He is a great dog. Folks, don’t be afraid to visit the Humane Society. You don’t need to pay $4,000 for a great dog.”
112 comments ↓
More stress?
WE DON’T NEED MORE STRESS ON OUR HEALTHCARE SYSTEM IN COTTAGE COUNTRY!
Stay away all you selfish, inbred southern hillbillies!
Keep your slimy little pathogens in Oakville!
Do NOT come up this weekend!!!!!!!!!!!!!!!!!!
Just.
Stay.
Home.
Great dog story.
He’s like Robert De Nero saying: You talking’ to me?
BillyBob on 05.21.21 at 11:41 am
#103 Ponzius Pilatus on 05.21.21 at 10:43 am
No worry here.
I buy my underwear at Costco.
Only one brand, no try out booths.
=======================================
From the guy mewling about “useless information”. Wowsa.
Second shot today, fully vaccinated. Even in Canada!
Although to be accurate, 1st was courtesy of Her Majesty months ago, so Canada can’t really claim my stat…
———————-
You’re back?
Who left the door open?
Man I’m screwed.
My partner is hell bent on the two beliefs: 1) Houses always go up; amd 2) buying is ALWAYS better than renting. Full stop.
It’s crazy. I have a solid upper level government job with a mid-6 figure globally diversified portfolio and I get called selfish and cowardly for suggesting maybe we need to throw cash at rent for a few years more. Buying 2 year ago objectively seemed like a bad idea but now it feels like financial suicide.
Paying high rent sucks but it’s better than losing 100K in equity over the next couple years (I’m in Victoria). Worse part is that we’ve all been ultimately so wrong about housing. We should have all been buying as many houses as we could over the years. It’s hard to defend a current position with that kind of track record. Of course, we would have all made more if we bought bitcoin at $.01 and sold at 64K.
Financial forecasting is hard.
To my handful of fans – glad you like it . On this weblog here, dedicated to Bikes, Babes and Balanced Portfolios.
A lot of my sayings are tongue-in-cheek (Tax farm? This was Smoking Man’s saying) but you get the idea.
All this might seem doomish but it’s happening. Did you think this control system is ending any time soon?
Why would anyone (over) pay for housing in this regime.
— Ontario Motions to Extend Emergency Powers until December 2021 (ola.org)
https://www.ola.org/en/legislative-business/status-business/government-motions
— Ontariowe will not ever fully be re-opening. There is no step for this. Only an “easing:” “Roadmap to Reopen outlines three steps to easing public health measures, ”
(The cynic in me says we will remain under house arrest until more of the New System is rolled out. But…)
https://news.ontario.ca/en/release/1000161/ontario-releases-three-step-roadmap-to-safely-reopen-the-province
—
— Par for the course worldwide really.
.Gov. Mills extends curfew for Maine restaurants, other businesses indefinitely (msn.com)
.Too early to set a date on loosening travel restrictions: Canada’s transport minister (cp24.com)
.Argentina announces ‘circuit-breaker’ lockdown as pandemic rages (reuters.com)
https://twitter.com/POTUS/status/1395358158533578752
“Hate has no place in America – and I look forward to making that clear this afternoon by signing the COVID-19 Hate Crimes Act into law.”
….
— SK police are asking for help ID’ing lockdown protestors. Comrades will you turn in your neighbours? Everything old is new again. Must be a slow crime day in Sask.
https://saskatoonpolice.ca/form/identify/
Giddy up inflation
“He is a great dog. Folks, don’t be afraid to visit the Humane Society. You don’t need to pay $4,000 for a great dog.”
+++
Truer words never spoken.
Remus sure looks like a fine fur friend:)
No surprise that inflation numbers are showing higher than expected. Despite the ‘nothing to see here’ meme of official government numbers in previous months the true story was obvious to anyone purchasing basic supplies when the total rang up at the till. The expectation that prices will decrease once supply chains are restored ignores that the market will charge what the customer will pay. So while some price reductions may occur, chances are that what we pay now will be the price going forward.
“Maintaining the health and stability of Canada’s housing market is essential to protecting middle class families and to Canada’s broader economic recovery,” mutters Chrystia
–
By ‘healthy and stable housing market’ the financially illiberal and highly incompetent financial minister means ever increasing house prices, less affordability and more debt.
For normal people that means 60-70 % drop in house prices from here.
For side spectators it shows the true insanity of this housing market. This is what happens when there is no economy left – bubble after bubble in order to provide false sense of wealth and ‘keep the economy going’/whatever that means.
It’s way past time for the BoC and GoC to begin addressing this godforesaken real estate market. I’m afraid it will be years before my 20 somethings can afford to get the hell out of my basement!!
More stress for first time homebuyers, for sure.
But less stress for ordinary Canadians who can now look forward to fewer Covid restrictions in the coming weeks.
Surpassing the States in first vaccinations.
It took awhile, but the summer looks bright.
Wear your shades.
Remus is a fine looking dog Nonplused.
@Dharma, dude that is just nasty. Alberta can keep you. And XL?, too bad that refers to waist size and not package contents or you might have something worth mentioning there.
Personally, like that other great Ontario born lad Bieber, I prefer CK Air FX and my briefs never see the dryer – line dry only. Buying quality undergarments is always a good investment.
Happy May 24 weekend to all.
The Biebs wants me to mention this too…
GO LEAFS GO!
Stay home! (this weekend)
So you can Stay at the cottage longer on the long weekend! BYOW, or we can pick some fresh stuff from behind the shed. ;)
“This impacts a fifth of all buyers and means some kids will be buying cheaper places”
Today, a “cheaper place” means $350K for a one bedroom 600 sqft condo in the bad part of town – a place that was going for $225-250K a year ago. This is an hour outside Toronto, mind you. Want a two bedroom 800 sqft condo in a nice part of town? How does $500K sound? Or how about $650-700K for a 1,000 sqft townhome? Not counting property taxes and condo fees, of course. With two good incomes you might swing that. Single income? Haha, good luck.
The BoC is talking a good game now – after saying rates will stay low for years – yet continues to pour gasoline on the raging inferno. Why on Earth are they still buying MBS in any quantity? Until they stop, they simply can’t be taken seriously. It’s like listening to an arsonist complain that there’s a fire (yes, an overused metaphor, but an apt one).
Macklem is also on record recently saying they’ll study the effects of QE on wealth inequality. As if we don’t know that already from 10+ years of QE in the EU and U.S. It’s just occurred to Macklem now that they’re blowing massive asset bubbles that benefit the rich? You’ve got to be kidding me. He does this for a living, FFS. He surely knew well before he bought the very first bond.
I hear lots of talk about “studying” and “watching closely”. I see next to no tangible action. They’re absolutely terrified that the bubbles they’ve blown will pop, and will likely end up doing nothing. If anything they’ll probably do something to make things even worse.
#10 Dave’s on 1st on 05.21.21 at 1:34 pm
It’s way past time for the BoC and GoC to begin addressing this godforesaken real estate market. I’m afraid it will be years before my 20 somethings can afford to get the hell out of my basement!!
———–
I can feel your predicament
But blaming the Goverment for it?
I’m a Socialist, but I believe it’s the parents responsible to raise their kids, and prepare them for adulthood.
Garth, have you heard about the surge in returned dogs since restrictions have started to lift?
If people get dogs simply because they are bored, think of how houses get them going!
The CB is trying to balance all these things … employment, inflation, debt levels, exchange rates, climate mandate. Can they do it ? Maybe, maybe not. One might need Paul Volcker type interest rates to smash inflation, but that may lead to 15% unemployment.
Plus higher rates leads to higher housing costs used for the CPI calculation … oops !
#7 crowdedelevatorfartz on 05.21.21 at 1:30 pm
“He is a great dog. Folks, don’t be afraid to visit the Humane Society. You don’t need to pay $4,000 for a great dog.”
———-
Truer words never spoken.
———-
Heck, get a couple and they just make themselves. It’s like magic:
https://youtu.be/_pDTiFkXgEE
“Stephen Harper still liked me.”
No Garth, you just thought he liked you. Sources close to the Prime Minister beg to differ!
#4 None on 05.21.21 at 1:20 pm
Man I’m screwed.
My partner is hell bent on the two beliefs: 1) Houses always go up; amd 2) buying is ALWAYS better than renting. Full stop.
It’s crazy. I have a solid upper level government job with a mid-6 figure globally diversified portfolio and I get called selfish and cowardly for suggesting maybe we need to throw cash at rent for a few years more. Buying 2 year ago objectively seemed like a bad idea but now it feels like financial suicide.
Paying high rent sucks but it’s better than losing 100K in equity over the next couple years (I’m in Victoria). Worse part is that we’ve all been ultimately so wrong about housing. We should have all been buying as many houses as we could over the years. It’s hard to defend a current position with that kind of track record. Of course, we would have all made more if we bought bitcoin at $.01 and sold at 64K.
Financial forecasting is hard.
______________________________________
Yes, you are screwed.
Might I suggest you go on a diet. Do the right thing and lose about 130 pounds.
I find it funny when Trudeau and his army of reddit peons will call the people who claim official inflation measures inaccurate conspiracy theorists.
It’s not a conspiracy. I have friends selling their shitty used jetskis for 3x of what they purchased them for after putting 0 work into them.
Good thing a large part of my compensation is through equity.
“Do not go back and forth’: Strang says cottage owners must pick one residence and stay there”
https://www.halifaxtoday.ca/local-news/do-not-go-back-and-forth-strang-says-cottage-owners-must-pick-one-residence-and-stay-there-3793883
DO YOU SELFISH ENTITLED NARCISSISTS GET IT!?
YOU ARE PARASITES!
DO NOT COME TO COTTAGE COUNTRY! ANYWHERE!
Just.
Stay.
Home.
#15 Ponzius Pilatus on 05.21.21 at 2:01 pm
I can feel your predicament
But blaming the Goverment for it?
I’m a Socialist, but I believe it’s the parents responsible to raise their kids, and prepare them for adulthood.
———————-
I think it is quite reasonable to blame the governments at all levels for by-in-large leaving the RE market left unchecked. The Feds for allowing flippers and speckers to not pay cap gains (either at all, or not enough) and for the provincial gov’t for not regulating the RE process adequately.
Don’t assume I haven’t prepared my kids simply because they still live at home. How was I supposed to prepare my kids for this insane RE market? By prepping them to be mortgage poor for 25 years?
I like trying to guess who belongs to the daily photo. I knew it was an Alberta dog because the grass isn’t very “lush”.
I find myself wanting to see a snap of Felix’s cat. Garth?
#5 TurnerNation
Yes, I remain a fan TN!
I am also watching events as they unfold worldwide. As a student of history, it is easy to see signs of communism/fascism/dictatorship taking place throughout the world today. It is sure to affect the finances of many.
Freedom First
“Pick one residence and stay there”
So says the Nova Scotia doctor with more brains than any 10 slimy little cottage pathogens put together!
There is no 2021 cottage season. Get over it. Be a grown-up, not a whiny toddler.
Just.
Stay.
Home.
Beautiful dog Nonplused. You too Sail Away.
#112 Sail Away on 05.21.21 at 12:41 pm
Well, rating jokes is a questionable activity to begin with. And all jokes are derivative or riffs. IMO, if you indicated that the wealthiest family on the block lives in a pond you could have earned some creativity points. Still, a 4 is a good number.
#3 Ponzius Pilatus on 05.21.21 at 1:06 pm
BillyBob on 05.21.21 at 11:41 am
———————-
You’re back?
Who left the door open?
—
He’s here to deliver useful information like…. Um…. uhhh, you know… Sorry, drawing a blank here.
Please raise interest rates in the USA and Canada even 1 percent in the next year.
Pretty please.
I double dog dare ya…popcorn, lawn chair and cash ready.
COVID has shown how vulnerable and unprepared we are to manage the existential challenges that face us.
Having failed to sufficiently learn from past pandemics have we, or at least our leaders, learned anything over the past year?
We ignore the lessons of history at our peril.
We must respect and better understand the nature and importance of viruses.
Many sobering truths in this incredible article:
https://thetyee.ca/Analysis/2021/05/21/The-Pandemic-Speaks
Well done Nonplused. You and Remus were/are lucky to have each other. There is no higher calling than making another life better.
Prayers go out this morning to Jonathan Tavares and his family. Great game – great result but, jesus, that was hard to watch. Wishing him a speedy recovery. The series is less without him.
Cottagers STAY THE HELL AWAY!
……..
Garth: Why do you allow this person to make theses comments on this blog. They are not relevant to the topics discussed and are invasive and angry. I find them insulting. I do not live in Oakville, but I resent the reference to Oakville or any other community. Tell this person to get vaccinated and they may sleep better at night. Or get a pacifier.
“borrowers and lenders both have roles in ensuring that households can still afford to service their debt at higher rates.”
Notice how they said ‘households’ rather than borrowers as this would draw obvious criticism of their reckless enabling of government borrowing.
#17 alexinvestor
“One might need Paul Volcker type interest rates to smash inflation,”
Maybe not.
Inflation is stealthily eroding purchasing power, eventually the reduced purchasing will lead to reduced consumption, and recession, made even worse as the cost of money rises.
It will be a bit of a party as the economy fully opens, but it will be a short-lived party.
Followed by a painful hangover for those who over indulged in debt.
Canada’s phony response to housing inaffordability has been going on for years now. I recall 10 years ago Mark Carney warning Canadians to reduce their debt loads immediately because interest rates would go up soon. Also, Jim Flaherty would implement some trivial tightening measure to look like he was doing something about it.
Nice dog Nonplused.
So, very soon I have to pick between a variable and a 5 year fixed and there’s quite a spread between them. I know, lock in now you say. Can I take the variable and then switch that to a fixed whenever I want without penalty?
https://twitter.com/REWoman/status/1395485277049737225
A lot of us are starting to leave. Pretty soon it’s just be Shoppers, Dollaramas, Tacobell and empty condos to be flipped like a burger patty.
Chrystia says big things but does small things.
“Maintaining the health and stability of Canada’s housing market is essential to protecting middle class families and to Canada’s broader economic recovery,” mutters Chrystia
But it’s NOT healthy or stable. So what is she maintaining? If wages magically increased 35% in one year, businesses, small and large, would be incensed and demanding the provincial and federal governments to do something immediately. But if house prices rise 35%, if household debt rises in double digits and real inflation pushing double digits …… it’s something healthy and stable and needs to be maintained? Sorry Trudeau and cabinet. Hopefully you’ll all be eating this s*** sandwich come next election.
Garth,
Inflation is a function of money printing, not economic growth, so long as that growth is real and based on productivity improvements.
If your B&D portfolio makes 6%-7%, but the money supply increased 10%, your in a negative return range.
Remember when Nixon went off the gold standard the Dow rallied, everyone cheered, his poll numbers went up! That was 1971. 10 years later there was not so much joy in the streets.
Once the rate rises start, it won’t be pretty going forward. Might take 10 years ro reset.
When rates, growth and economic activity advance, so do corporate profits and portfolio returns. Investing 101.- Garth
Folks,
Recall that these sorts of highly non-linear systems are being analyzed by economics and others with tools based on linear systems. These forecasts must be interpreted with a large degree of skepticism.
The economic impact from the various stimulus methods we have seen implemented are extraordinarily hard to predict. Small variations in inputs can lead to huge (unpredictable) deviations that can quickly get out of control, even for CBs.
I never liked you, Turner.
No dog lover would ever last under my leadership.
https://www.huffingtonpost.ca/news/stephen-harper-cat/
#10 Dave’s on 1st
It’s way past time for the BoC and GoC to begin addressing this godforesaken real estate market. I’m afraid it will be years before my 20 somethings can afford to get the hell out of my basement!!
‐‐——————————–
Lots for rent these days. Three or four young people can share a fairly decent place. It was a fact of life in my twenties. No one was in a position to even dream about buying.
The real estate market has already begun to unravel. More listings and re-listings, and less sales. What’s more interesting are the $2M properties that sold in September 2020 and are back on the market with a listing of 2.1 to 2.2, with no movement. Once rates begin to go up, there will be No looking back.
Doesn’t the government typically say theyre concerned every few years about housing and nothing actually happens prices just keep going up. This sounds like a broken record now 20 years in the making.
A little cheer as we head into the long weekend;
M2 money supply is growing at around 15%
Last few times that happened was 1981, 1989 and 2008
How did 1982, 1990 and 2009 go?
Oh, and the dog in the picture looks a bit like Garth. We should all be so lucky.
#5 TurnerNation on 05.21.21 at 1:23 pm
I have to agree with TurnerNation. Ontario (or Canada) will not reopen as there will always be “cases” or “variants” to shut us down again. The Ontario announcements are just carrots to keep us plebs happy to look forward to something only to have the goalposts moved when we get closer to that date. In the meantime, be a good little comrade, wear your mask, get your shot and report on your neighbour.
Welcome to Covidland.
#4 None on 05.21.21 at 1:20 pm
Man I’m screwed.
My partner is hell bent on the two beliefs: 1) Houses always go up; amd 2) buying is ALWAYS better than renting. Full stop.
It’s crazy. I have a solid upper level government job with a mid-6 figure globally diversified portfolio and I get called selfish and cowardly for suggesting maybe we need to throw cash at rent for a few years more. Buying 2 year ago objectively seemed like a bad idea but now it feels like financial suicide.
Paying high rent sucks but it’s better than losing 100K in equity over the next couple years (I’m in Victoria). Worse part is that we’ve all been ultimately so wrong about housing. We should have all been buying as many houses as we could over the years. It’s hard to defend a current position with that kind of track record. Of course, we would have all made more if we bought bitcoin at $.01 and sold at 64K.
Financial forecasting is hard.
——
Yikes, quite a position your partner holds. Isn’t it reasonable to suggest that “yes, it would be great to own. Please go ahead and buy with YOUR downpayment and name on the loan papers”.
Maybe it’s time to discuss the term “partner” with said person.
Well done with the portfolio, I’m with you.
One thing I learned early was some battles are not worth winning. It is the war that matters and wars take longer.
I did wonder Hitler got his brown shirts – I look at Covid policies and SJW activities… Fear and being a social reject are powerful tools. Those that promise solutions to these issues usually end up as an elite. Yet, elites are generally more vulnerable. Think about how they hide behind curtains, act as toadies and their arrogance.
Nobody wants to lose but as was said in a movie – great power comes with responsibility. I wish elites would take that to heart and put themselves in the front line too. Don’t worry, we plebs will take care of you if we think you are worthy.
It has been a brutal week in the markets. Big money is up to their regulars games and scooping money off the barrel. I raised my cash, stand back and wait for mispricing. Shorting RE is entering my mind but I think it is too early. I seldom have respect for big money for my reasons.
I am looking forward to seeing one of my favorite villains on the screen again – Loki.
The trailer looks good – https://www.bing.com/videos/search?q=loki+trailer&docid=607988045752316984&mid=8F01288A48E508EE53BC8F01288A48E508EE53BC&view=detail&FORM=VIRE
Garth….people growing hair at an alarming rate
***********
Applause turning into a standing ovation!!!!
That is TRUE!!!!
Garth! Thank you! Just now I’m going to ride a bike and you SHARPLY improved my mood.
It is funny how everyone is now realizing what I said when the stress test was first brought in – that it will be another in a long line of failed federal initiatives to ‘cool’ the market. Another useless measure in a long line of useless measures for the last 10 years, designed only for optics and not effectiveness.
It only impacts 10% of the buyers and reduces buying power by 4% according to Rob McLister, the mortgage guru.
Its a nothing burger. Even realtors don’t know about it. But of course when it was brought up months ago, it was going to be another nail in the coffin of a gasbag market.
Yawn. The government will protect this market at all costs – its too big to fail. Just as T2 bailed out every sector during the pandemic do you really think he wouldn’t bail out homeowners, or 70% of the voting population.
#5 TurnerNation
To my handful of fans…
——————
I like your stuff. I seldom agree with what you write but you’re quirky and I like that.
Quirky is good.
In a World now where everyone is supposed to fall lock step into the prevailing social idioms, contrarians like yourself are worth reading.
They give pause. They make one think about their own preconceived notions or cast in stone judgement of matters.
You may end up being incorrect 99/100 times BUT it is that ONE time you are correct and not mainstream, where you may well yet save everyone’s bacon with a singular observation that was lost on the other 99.
And, I believe in Free Speech, Break the Mould and Open Mindedness.
DELETED
Garth ….“Counting on ever higher house prices to build home equity that can be used to refinance mortgages in the future is a bad idea.”
*************
STOP,STOP , STOP Mr. Tiff Macklem. Your government promised that they don’t allow RE prices to fall down.
Time bring your government to court for lie?
DELETED
You posted the same trash under three names in the last 20 minutes. Get a life. Go away. – Garth
#4 None on 05.21.21 at 1:20 pm
Man I’m screwed.
My partner is hell bent on the two beliefs: 1) Houses always go up; amd 2) buying is ALWAYS better than renting. Full stop
I am in the same boat. Beside this blog, are there any other support groups for people like us? :)
The key point is ” it means some (…) will be buying cheaper places” . Just as with other measures to cool down the market, this one also will result in a push up in the cheaper segment which is actually the highest risk. It’s already overpriced, when the most basic 500 sqft apartment starts at half a mil. The real crash, whenever will come , will happen in the condo market. It’ll hurt hurt the poor and overextended investors/landlords. The more expensive homes are owned by the well-to-do, and 2017 was proof that a pull-back in that segment is of little consequence.
#10 Dave’s on 1st
It’s way past time for the BoC and GoC to begin addressing this godforesaken real estate market. I’m afraid it will be years before my 20 somethings can afford to get the hell out of my basement!!
============
In my humble opinion the moving out is becoming less and less likely.
My take is that we are already into the multi generational home situation, we just don’t want to admit it.
Basement dwellers will move upstairs as parents age to help with cooking and cleaning and houses will be passed between generations.
Financial planning must change to reflect that and rather than helping them move out maybe we will sell them a portion of the house so parents can get income while the children pay into it and build equity.
Later boomers and Gen X will be the ones that will get to live this and figure out the legal and tax implications.
On inflation, today ECB Pres Christine Lagarde said that inflation will be temporary, to decline in 2022 at the Eurogroup meeting in Portugal.
https://twitter.com/Lagarde/status/1395771617641439234
What struck me was the other 3 on stage kept looking at her incredulously. Small wonder, they were:
1. Paschal Donohoe, President of the European Group
2. Paolo Gentiloni, Commissioner of the Economic
Commission for Europe, and
3. Clause Regling,Managing Director of the European Stability Mechanism
To me it looked like Paschal wanted to say shut it Christine. Clause, in charge of doling out cash to hard hit Covid countries stood in silence, head dropped and Gentiloni at times I thought was going to jump up and say “No, no Christina”.
We’ll see if she is correct.
She also said they will continue monetary policy, “recovery”, to support people and businesses during Covid:
https://twitter.com/Lagarde/status/1395774888154128387
As mentioned it is a token response. They have already said they do not want anyone’s equity ruined as it is being relied on as people’s retirement money. Pretty sad.
Only Adam Vaughan said that. He doesn’t matter. – Garth
Cottagers STAY THE HELL AWAY! on 05.21.21 at 2:32 pm
Just.
Stay.
Home.
—————————————–
No, I don’t think I will. Last I checked, section 33 hadn’t been invoked.
So you know what? I’m heading up there, and I’ll be right next door to you, coughing from up-wind.
Yay, splash pads open in Ontario.
re:
#41 Damifino on 05.21.21 at 3:21 pm
#10 Dave’s on 1st
It’s way past time for the BoC and GoC to begin addressing this godforesaken real estate market. I’m afraid it will be years before my 20 somethings can afford to get the hell out of my basement!!
‐‐——————————–
Lots for rent these days. Three or four young people can share a fairly decent place. It was a fact of life in my twenties. No one was in a position to even dream about buying.
====
I remember my 20’s being a renter. Was great when changing jobs / cities. I even had roommates / housemates during some of that time… reminds me of university days…
#54 Comrade on 05.21.21 at 4:00 pm
#4 None on 05.21.21 at 1:20 pm
Man I’m screwed.
My partner is hell bent on the two beliefs: 1) Houses always go up; amd 2) buying is ALWAYS better than renting. Full stop
I am in the same boat. Beside this blog, are there any other support groups for people like us? :)
One answer to your shared conundrum is to find a zoned area where they allow basement suites below owner occupied premises. Next find and buy a duplex in that area. Next move in, lease out the opposite side and begin putting a legal suite below your side. Rent it out.
The two rent incomes very well might equal or better your mortgage payment, even in today’s market.
This certainly has worked for both my adult sons. They bought one, did the suite conversion and lived together in one side while they built savings and equity and now, fairly recently, bought a second. So they each now have a cash flow positive, equity rich home before they were 30.
One last tid bit: Drive past either property and you’d never know they were duplexed. One is a back to front layout, the other is a side entrance, walk out basement configuration. Hard to describe that one, think a 3 bed house sitting partially in front of and 1/3 over top of a 2 bed home that is offset a bit. Definitely not a suite, full windows, lots of sq ft. In both cases the basement suites are one bed to preserve a bit of basement storage. The last one done 2? years ago came in at $50,000 fully inspected and real smart looking.
Story Time: A lot of their friends who had got into condos or townhouses are now seeing that my boys are surrounded by way less folks living beside, on top of or under them, have full sized yards, actual space to BBQ, store kayaks, etc and are now trying to sell the condo and pick up a duplex. Trouble is real estate prices around here have gone way up in lock step with the rest of you.
Just the other day I saw both sides of a duplex, 3 bed 1.5 bath each asking a bit over $600,000! Now it needed probably $90,000 of work, probably two appliance packages, interior and exterior paint plus a load of sweat equity into landscaping but that is $300,000 a side.
Who can afford that?
If you are fully vax’d* Canada WELCOME BACK to the EU for your Summer vacation.
No quarantine. No tests.
EU wide starts July 1.
Started already in Italia. June 1 we are near restriction free.
QR Code either digitally or on a piece of paper verifying you were vax’d. No details yet how this will function for non-EU citizens.
WHO disagrees, says it is too early to open up like this. I agree with them but torn as I cannot wait for Summer travel. Like everyone, sick and tired of Covid restrictions.
From Roma today, World Healthcare Summit:
https://www.ilgiornale.it/news/politica/lue-trova-lintesa-green-pass-tornano-i-viaggi-i-test-si-1948255.html
[Google will translate “tamponi”, Italian for test swabs, to “tampons” in English…Americani]
And Italia, well aware of the plight of the rest of the World with little vax:
“Italy has offered 300 million euros to Covax and 15 million doses of vaccines in the donation pool” -PM Draghi (Super Mario)
Draghi called for a temporary suspension of patents to make more vax and until all vax’d, pandemic over.
A good start.
*EMA approved vax which all of Canada’s are.
CBs can flap their gums all they want, but now let’s see some positive action from them.
#23 Dave’s on 1st on 05.21.21 at 2:29 pm
#15 Ponzius Pilatus on 05.21.21 at 2:01 pm
I can feel your predicament
But blaming the Goverment for it?
I’m a Socialist, but I believe it’s the parents responsible to raise their kids, and prepare them for adulthood.
———————-
I think it is quite reasonable to blame the governments at all levels for by-in-large leaving the RE market left unchecked. The Feds for allowing flippers and speckers to not pay cap gains (either at all, or not enough) and for the provincial gov’t for not regulating the RE process adequately.
Don’t assume I haven’t prepared my kids simply because they still live at home. How was I supposed to prepare my kids for this insane RE market? By prepping them to be mortgage poor for 25 years?
——————
1. Teach them owning a house is not a right.
Having shelter is. There is no shame in renting.
2. Let them explore the country, the world.
For instance, in Vienna, Austria, 70% are renters.
Many places where housing is much more affordable.
This is all after the fact advise.
So probably the best thing to do now is:
Stop pampering them. And start charging them rent.
Good luck.
The featured photo is what I imagine that Garth would look like as a dog; specifically, the no-nonsense facial expression is telling me to knock it off with my idiotic commentary……
Happy Victoria Day weekend!
Read the dog descrip.
I was confused.
I thought Remus was showing us his Garth face.
Antigua, Guatemala. A country struggling with the divide between wealth and poverty. Most of their country’s income comes due to their people people working as servants in 1st world counties.
There so many stories to tell about the Spanish conquest. Zero was good for the Mayans. They maintained their tribal behavior through centuries to their detriment.
You have too see the country of deep valleys why the wheel was not adopted. Antigua failed as the capital because it was vulnerable to volcanic eruptions and earthquakes. The Spaniards stuck a long of capital into the place. The ruins about are worth visiting. I made a couple of hiking trips up to to the nearby active volcano to roast my butt in the flowing lava.
I think it is the Jade capital of the world. Antiqua was full of Asians buying it. The artist shops were amazing because Jade rates up with diamond in hardness but does not sparkle. It is “cowboy” land still where people some want to steal with force. I will never forget small kids with assault rifles guarding the zone. I even got to stare down the rifle of a shotgun held by one. He laughed at me when I pushed it away.
Plan ahead, get a guide because the Guatemala airport is a zoo. Drivers were berserk and chicken buses were an adventure. Get off the street when it gets dark, stay in groups because there were many who were hungry.
Treat the beggars with respect because most did not like it anymore than I did. The Mayans are also proud people. Some very fine restaurants if that is your want.
https://www.bing.com/images/search?q=guatemala+restaurant&qpvt=guatemala+restaurant&FORM=IGRE
When rates, growth and economic activity advance, so do corporate profits and portfolio returns. Investing 101.- Garth
———————————–
When Ol’ Yeller or Garden Gnome Powell even suggest the mere thought of considering a rate hike, the markets tanks. Reality 101
Do not confuse short-term profit-taking or with investing. Rookie mistake. – Garth
Part of the problem, at this point, is signaling and expectations. This is a government that pissed away close to $400 billion on a half baked covid recovery “plan”. The government can talk a tough game on housing, and take these half measures.. But this is a government that also signals they will try to bail out every problem as it arises. People expect this.. And they are probably correct. At every turn, Canada punishes success and rewards failure.. Punishes the responsible to reward the reckless. Why even try to do the right thing anymore?
There is no hope anymore, those of us making 30k a year or in that area, are now doomed.
Kill yourself, or get a cup of coffee – Albert Camus
You know, the longer you’re away from Canada, the more baffling it is. Demented little beavers bidding up their particle board palaces. I was last there in October and the snow was falling… And I see in many places it still is! Hard to believe! But in regards to housing, I am positive that the moment you credibly took away the promise of bank bailouts, the banks would tighten up credit like no one’s business. They aren’t stupid… If they were on the hook for that million dollar mortgage on some crappy build, they would quickly demand 20 or 30 % down, not to mention higher rates. Can we please just get Adam Smith back in the house?!?
Yes, Chrystia mutters.
And nods continually at her boss.
We’ve stopped watching the news because of those two.
#114 kommykim on 05.21.21 at 1:37 pm
RE: #93 JR on 05.21.21 at 12:29 am
This is largely a sham investment. – Garth
https://coinmarketcap.com/charts/
Crypto now has a 2.5 Trillion Dollar market cap.. Sham.. errr, right.
Maybe you just don’t get it Garth.
Seems like a lot of other people do.
=======================================
“It’s a hustle.” –Elon Musk
—————————————————————
Rule #1 in investing is don’t lose money.
As an investor, I’m okay with missing out on some good opportunities if I can avoid investment flops. Another opportunity will come along soon enough. It’s more important to be right about where you put your money (what you invest in) than to be wrong about where you don’t put your money (what you don’t invest in).
In the case off crypto, this means I’m okay with not being part of the hype (and missing out on potential gains) in order to a) avoid losses due to the speculative nature of crypto and b) have money to invest in a B&D portfolio that’s giving a consistent return.
#18 Sail Away on 05.21.21 at 2:05 pm
#7 crowdedelevatorfartz on 05.21.21 at 1:30 pm
“He is a great dog. Folks, don’t be afraid to visit the Humane Society. You don’t need to pay $4,000 for a great dog.”
———-
Truer words never spoken.
———-
Heck, get a couple and they just make themselves. It’s like magic:
https://youtu.be/_pDTiFkXgEE
————————————
Funny video. But humane society dogs come spayed/neutered. All we get out of Remus is fur. Lots of fur. Fur everywhere. So we also got a Roomba.
*About the name: That is what they called him at the humane society and it just kind of stuck.
House is to live in, what the hell it has to do with economy or protecting middle class family and this & that, come on government, you don’t care for anybody except some economy numbers & votes.
#30 The West on 05.21.21 at 2:48 pm
“Well done Nonplused. You and Remus were/are lucky to have each other. There is no higher calling than making another life better.”
It was my son’s idea. He had been asking for a dog for some time but I kept saying “we can’t, we’re renting this place”. When we finally bought, it wasn’t too long before the wheels in his little 7 year old brain whirred away and he asked me “So, dad, we own this place now….?” I think my wife put him up to it. Anyway they are great friends. What boy doesn’t want a dog? What dog doesn’t want a boy?
Crickets from the media on this topic. Obviously, big RE doesn’t want the public to know what’s going on.
So how does one figure out the stress test when it comes from moving from a construction mortgage to a residential mortgage??
#35 Ballingsford on 05.21.21 at 3:00 pm
Nice dog Nonplused.
So, very soon I have to pick between a variable and a 5 year fixed and there’s quite a spread between them. I know, lock in now you say. Can I take the variable and then switch that to a fixed whenever I want without penalty?
———————————–
Assuming that question was directed to me, I am unable to answer it. I think you have to ask that question to your mortgage provider.
But I think Garth’s advice is to lock it up. With these recent inflation numbers and no reason to think things will get better in the inflation/rates department, most of the risk is to the upside on rates. About the best rates could do to the downside is stay about where they are.
Longer term rates like a 5 year mortgage are a sort of a prediction as to where rates are going and some risk factor. So when lenders have the 5 year rate above the short term rates, it indicates they too think the risk is that rates will rise. The spread is indicative of how much they think rates could rise.
#4 “My partner is hell bent on…: 1) Houses always go up…”
Dorothy’s house in the Wizard Of OZ kept going up, up too – she got quite the education – and woke.
#67 wallflower on 05.21.21 at 5:30 pm
Read the dog descrip.
I was confused.
I thought Remus was showing us his Garth face.
—————————————
No, that’s his “What’s with the camera? I want a cookie.” face.
Garth, being once heavily evolved in politics, was it as wussy and as insecure as it is today in Canada? Or is that just the Liberal mandate?
Og
We were men. Kings. Warriors, son. – Garth
LAND MINES IN THE SAND!
A large number of people have been wandering down Primrose Lane, with their ear phones on listening to all the good news pundits. Oblivious to the Land mines buried in the sand below their feet. The Goldilocks era when bad news was invariably good news for equities and risk assets is reversing. Good news is now freighted with trouble. I suspect those blowing their horns about the built up inflationary pressure will soon be running out of hot air. Ask yourself the question, what’s inflated the most in the past decade, Answer, asset prices. And, as shown through out history (and today)highly levered asset inflation, and the over zealous expectations thereon are always transitory. You can call me a dreamer, but I’m not the only one.
@Nonplused
A feel good story all around.
:)
Been I bit of a weekend warrior on here this year, sucks for the weekend guys Rhino and Robax, but I’m sure they’ll get over it.
I said at the start of the year I was gonna come out the other side of the COVID mess better off, or at least go down swinging.
Apart from reflection, Covid online protocol allowed me in the new world to overhaul my superannuation, whereas before for certain things the wanted me to jump on a plane for a 27,000 kilometre round trip just to put pen to paper.
Emboldened by that, and the daily nagging feeling that Garth Turner is embarrassed by me, I decided to ditch as many high fee mutual funds as I could get my hands on.
Yeah some of the are still mutual funds by nature, but they contain ETFs and my average MER went from close to 2% to around 0.85%
Then things got really kooky, was scheduled to start a renovation on a Shaughnessy mansion and the owner kept pushing the start date back, and then wouldn’t respond to any calls from the contractor, then a couple of condo jobs cancelled as well.
I looked around to see if there was a way to protect myself from the disruption and I spied a government job online.
I applied, said I would go to the interview if they called, even though I had since found work privately, and gave it my best shot, thinking at the very least I could garner some experience for my non-existent interview skills.
Well, earlier this week they offered me the position and I start next week.
How do ya like them apples?
It could be short lived, despite being a large strong looking dude, I have had to try and overcome physical difficulties in recent times which I did not declare at my interview as the did not ask and I went for the “Don’t ask, don’t tell” interviewing method as I wanted to present myself in the best light and not talk myself out of a job.
Got a security pass this afternoon, lookout.
Scared and excited all at once, I can always go back to doing what I was doing before, as I try to avoid burning bridges during transitions.
Been a busy 5 months, potentially the most financially altering since I started working in 1989.
I have to watch what I do with my money, I have enough to not be under a bridge, but if I don’t pay attention I could end up being that guy that rents the front bedroom on a noisy road, beside that bridge.
I will miss parts of my old life as I transition into a government worker, no more corn flakes for breakfast, 2 bowls of granola from now on…
M46BC
@#86 Floppie.
Well congrats on the new job.
A secure income may be a rare thing to have over the next few years.
Check your brain and work ethic at the door everyday and you’ll do fine.
New York?
Los Angeles?
Palm Springs?
Pffft.
They cant hold a candle to this “World Class City”
https://www.citynews1130.com/2021/05/21/vancouver-housing-unaffordable-north-america/
#71 Cheese on 05.21.21 at 6:37 pm
There is no hope anymore, those of us making 30k a year or in that area, are now doomed.
***********************
Are you a student or fresh out of highschool?
Loads of people start out at minimum wage, the key is to not stay there too long.
There’s plenty of trades that start out higher with zero experience and provide on-the-job training.
Unless you are disabled there should be opportunities post-covid to earn far more than $15/h
We were men. Kings. Warriors, son. – Garth
Now all we have are lame a** pathetic politicians who tiptoe around every issue and play to the whining populace to maintain their position and power – and of course “men. Kings. Warriors” are beaten to death for being what they are these days by the ultra liberal socialist softies that want mambie pambie all inclusive group think, cult like worshipping masses to join together in a daisy chain of rainbows, unicorns and magical make believe thinking – OH WELL good luck with that Canada
Remus really does look like Garth, LOL… they both have the same handsome, chiseled and hairy face ;-)
And what a nice companion for a 7-year old boy.
#86 Flop
Congratulations on the job. Knew you’d get it!
Hope you like it, and if so, give it your all. Keep us all posted, anyways.
Anyone else come here mainly to see Garth’s replies to the comments? Especially when he lays the hammer down?
“Maintaining the health and stability of Canada’s housing market is essential to protecting middle class families and to Canada’s broader economic recovery,”
so what are you going to do Chrystia?
the housing market is unaffordable right now, if you keep interest rates low a bad situation will become worse. Remember the government’s position is that “housing is a human right”.
if you raise interest rates, then the price of housing will come down and it would be more affordable. Problem is that lots of people will be screwed. They would be screwed in a number of ways
– the price of their homes would fall
– their mortgage costs would rise
– selling would be hard, maybe impossible
The market has taken off. It’s not a bunch of civil servants who will fall in line.
#86 Flop…
Congrats to you and your wife on your new career Flop!
Sincerely, Freedom First.
Chrystia is a journalism major playing the part of Finance Minister. Justin is a Drama major playing the part of PM. Everyone; get ready for the boring epilogue. Maybe we find out Fidel really is the father. Stay tuned! Have faith in this skilled and experienced leadership group!! Why should we question their knowledge????
Kibbles are much cheaper than expensive PCR tests. This blog has embedded in it the secret for that too.
(and yes, I know they say the PCR test is still needed but what would you expect the pushers of PCR tests to say?)
Dogs can detect COVID-19 quicker and more accurately than nasal swabs, study finds
Dogs can detect COVID-19 in humans quicker and more accurately than the gold-standard nasal swab, according to a new study.
A Finnish scientist, who’s been testing the disease-detecting pups at Helsinki Airport, said her pooches identified a number of people who had the virus but had tested negative after taking polymerase chain reaction (PCR) nasal tests, The Times reported.
Days after the dogs — Miina, Kössi and Valo — diagnosed the travelers, the supposedly negative passengers started experiencing symptoms.
https://nypost.com/2020/11/05/dogs-can-detect-covid-19-quicker-better-than-nasal-swabs-study/
Go Flop, go!
Would now be a good time to resurrect some of crowded’s historical postings on how he feels about government employees?
#78 Nonplused on 05.19.21 at 8:02 pm
#109 Cici on 05.18.21 at 10:28 pm
———————————————-
Well, your post is a bit exaggerated, if you don’t exercise your self assertive Canadian identity they might force upon you (subconsciously) their American exceptionalism, and mind you many left US for Canada in a just last decade.
Those who can’t find Canada on the map are bunch of “ignorants” and dreaded American “suburb”. And another “funny bunch” are Aussie, they know Canada very well by the virtue of Dominion, but still have their own misconceptions…
Happy Victoria Day to All.
“almost a quarter of all borrowers have a debt-to-income ratio of over 450%.”
I had to go to the table in the report below to verify
https://www.bankofcanada.ca/2021/05/financial-system-review-2021/#v1
So it seems it’s 22% of “new” borrowers, which also includes re-financing.
What I really want to know is what percentage of total homeowners meet or exceed this ratio.
@#98 Ustabe.
“Would now be a good time to resurrect some of crowded’s historical postings on how he feels about government employees?”
+++
Go for it.
I’m sure Floppie can handle it.
Perhaps he could print some of them and post them on the Lunch Room Bulletin board.
Anonymously of course.
We were men. Kings. Warriors, son. – Garth
Would be nice to have role models that had a set, that’s for sure. Now its a competition for the least toes you can step on and how many times you can say sorry in one day. In my opinion, peoples feelings are getting hurt way too easily these days. What will come after the entitlement era? Lol.
Enjoy the long weekend, Garth and team!
Og
@#90 Doug T
“We were men. Kings. Warriors, son. – Garth”
+++
Yeah.
When you switch it to Trudeauspeak…
“We were people. Rulers. Combatants, son…”
It just doesnt have the same “zing”.
“In a reflection of changing social norms, a labour arbitrator has ruled that cabin crew on Air Canada flights should be allowed to sport discreet but visible tattoos, as well as piercings in their ears and nose without fear of disciplinary action.”
Tattoos. Another contentious subject for another day since cats can’t get any air time on this blog. Mercy.
Can anyone tell me, perhaps, which day next week the housing prices will fall by 40%-50%?
That would still be outrageously expensive, but doable.
I wanna buy that day.
Anyone?
Nearly everyone I know is respecting Ford’s stay at home orders by going to cottage country or congregating with friends..
Way to go ONTARIO, long live freedom, ignore the demented freaks that destroyed yr life last year..
The “Front line” heroes…was it a war somewhere and I wasn’t informed???? Yes there was a psychological war against the people…loool
Even the royals rescue dogs: https://www.google.ca/amp/s/www.vanityfair.com/style/2020/12/duchess-camilla-dog-beth/amp
Garth, have you seen this?
https://www.reddit.com/r/TorontoRealEstate/
45north, the only way they can raise interest rates is make the increase, rate increase impact equal to a mortgage payment tax credit of maximum 50%. This is only for primary residences and maximum $5,000 monthly mortgage payments .
So a 50% increase in interest rates on current 2% to 2.1% mortgage rate goes to 3.0% to 3.05% this would not impact current mortgage payments households.
The problem is other taxes, cuts would need to be done to make this not a big deficit, debt problem in coming years for Canada.
The libs are expert at one thing, being wordsmiths. The statement, “Maintaining the health and stability of Canada’s housing market is essential to protecting middle class families and to Canada’s broader economic recovery,” can be read two ways.
For those looking to buy/slash see prices come down, they would see this welcome.
For those with houses it would be interpreted as doing what it takes to make sure housing values don’t decline.
I’m betting on version #2
Nonplused, that is a fine looking dog. Nice coat and colouring. Intriguing facial structure and markings. Thinking there are some wild ancestors in the recent lineage there. Not unusual with reserve dogs.
Thanks to you and everyone who is sharing their photos. So nice to see everyone’s family.
Its gaining interest now that CSTHA is back! I responsibly did not travel this May 2-4 weekend, but next weekend, I am so excited to open my cabin, put the dock in the lake and maybe even watch 50YoMLI drop out of the playoffs!