Expectations

It was the best of time. It was the worst of times.

You’ve heard that quote before. Dickens wrote it. Smart dude. But take a minute to read the rest of the passage, and think about 2021:

“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.”

People have always lived in times of contradiction. No difference today. Some would argue in a world where one guy has greater wealth than a few billion others that humanity’s more messed up than usual. But, maybe not. Kings and serfs. Overlords and underlings. Twas ever thus. Perhaps it’s just our expectations that got out of control.

In any case, here we are. It’s the age of rights. Society tells us we have the right to a basic, livable income plus the right to shelter, for example. Reasonable people know that’s utopian, and we can see what happens when government attempts the impossible. Deficits and debt spiral. Taxes follow. And we still have deep inequities in society.

Well, they’re at it again. Days ago we parsed BC’s lame-brain idea of breaking real estate contracts, which will reduce listings, raise prices and make lawyers happy. The feds are about to unveil the FHSA, a new age-based tax shelter destined to reduce affordability. Nova Scotia just announced a withering tax of 2% of assessed value annually on properties owned by anyone from “away.” Ottawa has a national anti-foreign-owner tax coming and is mulling its own empty house tax. Toronto launches one of those in January. And now Ontario has unveiled a task force to deal with the real estate ‘crisis’ in a province where the citizenry is addicted to house porn.

Regulations and taxes. Incentives and gifts. Brake-accelerator-brake-accelerator. The best. The worst. Clearly the people running this place have no clear idea on what to do next. Meanwhile the two reasons real estate are out of control remain. First, buyers can use extreme leverage with loans backstopped by taxpayers. In other words, lenders have little reason not to lend. Debt explodes. Second, while almost all investment gains are taxed, house profits are free.

So until 5% down payments and the PR exemption are gone, nothing much will change. Houses will escalate further, until market forces take over. When might that happen?

Beats me. But rising inflation, interest rates, debt, taxes and government interference are negatives. Any society that tries to condone rights on people that used to be privileges, and uses borrowed capital to do so – Hoovering wealth from the future – is destined to falter. People are now paying $1.7 million for a detached house in big cities. Will they be able to pay $3 million in five years without incomes doubling? How will that possibly happen?

The expectations are unrealistic, especially when the cost of money will rise and governments sink deeper into their morass of red ink. This matters if you are, say, 35 or 45 years old with the bulk of your net worth in one thing. Ask yourself how society can make housing accessible to people as a right without destroying its value to the privileged who now own it.

In practical terms, does this not mean an eventual wealth tax to find the money the majority demands be spent on affordable homes? Like Jagmeet campaigned on, but broader? Like the American Democrats are now proposing for the rich? Taxing unrealized capital gains, instead of income? Like your house?

Owning real estate has been a bonanza for many. The ride isn’t over yet. But this is an unsustainable aberration. Million-dollar garbage heaps. Concrete boxes selling for $1,200 a foot. Trillions in personal borrowing. FOMO and debt-desire everywhere with elected people desperate to fix a crisis former elected people gave birth to.

People like me have lived through a lot of business and economic cycles. We’ve seen assets rise and fall. Markets that give and take away. Nothing goes up forever. Consider where your finances will be if this asset class corrects. Because it will.

About the picture: “Long time readers over here in Edmonton!” writes Kathryn. “Thought we would send along a fall picture of our Mocha. She is a 5 month old German shepherd that saved our spirits. As we had to say goodbye to our old shepherd of 17 years last spring, friends couldn’t take our sadness and linked us up with a new litter of pups in Vegas. My husband drove 21 hours one way to pick her up (he’s a dual citizen so could cross both ways during Covid). Here she is, a new Canadian, happily playing hide and seek in the leaves (and ignoring me!) Thanks for all that you do for us blog dogs! We just crossed the one million net worth mark and that’s all because of you dear sir!”

145 comments ↓

#1 First Nations on 11.09.21 at 2:40 pm

And so the law begins to expose the problems with the Treaties that underpin Canada. It starts.

If the Crown broke the 1850 Treaty, do First Nations have the right to now claim it is void as one of the options?

>
Crown broke 1850 land treaties with First Nations, Ontario Court of Appeal rules

Ontario’s highest court has ruled that the Crown violated the terms of treaties from 1850 by capping annual payments at a few dollars per person to Indigenous peoples who ceded a vast area of the northern part of the province.

The Ontario Court of Appeal ordered a yet-to-be determined amount of compensation that could be in the billions of dollars, and that could come from Ontario, the federal government, or both.

https://www.theglobeandmail.com/canada/article-crown-broke-1850-land-treaties-with-first-nations-ontario-court-of/

#2 TurnerNation on 11.09.21 at 2:40 pm

Dolce what do you make of this Chart? Science in Kanada.
<14 days here, and they are considered "Un-V".
Which is where the spikes are, in the <14 days range.
Someone pulled the data pulled from Alberta website:.

https://i.redd.it/7krvy9ijygy71.jpg

https://www.alberta.ca/stats/covid-19-alberta-statistics.htm#vaccine-outcomes


—————-
Guys we are really close to Normalcy here! Someone should tell Florida. Kanada is slated for destruction.
Freedom…ended March 2020. You need government permission to do anything (QR code).

.Yukon declares state of emergency, adopts new temporary COVID-19 measures (cbc.ca)

.French health authority advises against Moderna COVID-19 vaccine for under 30s (reuters.com)

–Ahem. But from August, has anything changed?

#24 TurnerNation on 08.28.21 at 1:06 pm
Things which have the permanency in Kanada:
1. Fictional ‘State of Emergency’.
2. Flags at half mast
3. CV Rules. Always the rules Comrade.

#3 Dolce Vita on 11.09.21 at 2:43 pm

Passionate State of the Confederation write-up today Garth. I liked it very much.

——————-

“… it was the winter of despair.”

Vax rates from this morning (CET):

Most populous city 18+ yrs, 1st/2nd dose = 91%/87%
12+ yrs = 92%/89%

“State of emergency declared in response to increased spread of COVID-19 in the Yukon”

https://globalnews.ca/news/8360088/yukon-covid-state-emergency-november/
https://yukon.ca/en/news/state-emergency-declared-response-increased-spread-covid-19-yukon

I think they are overreacting, cases/100K wise. Still, with those Vax Rates HOW IS THIS EVEN POSSIBLE?

Rough Winter ahead Canada.

Swedes think so to (size of Covid blotch indicates who they will blame, wry/dry Svenska humor):

https://i.imgur.com/3mYOGUZ.png

Cases not the only thing surging in Europe, in Austria hospital & ICU are as well, “drastic”:

https://kurier.at/chronik/oesterreich/7712-neuinfektionen-in-oesterreich/401799091

Deutschland in Denial (2 days ago their highest since the beginning of the pandemic at +200 cases/100K & still on the rise):

“COVID-19 Special: Germany’s growing caseload”
https://www.dw.com/en/covid-19-special-germanys-growing-caseload/av-59733765

Besides the Swedes, the Americans see what’s coming to:

“The US is reopening its borders to Europe, the global epicenter of Covid-19”
https://edition.cnn.com/2021/11/08/world/covid-europe-us-reopens-borders-intl/index.html

————————–

Italia response to the above:

https://www.wantedinrome.com/news/italy-offers-200-spa-bonus.html
https://www.wantedinmilan.com/news/italy-offers-100-bonus-towards-buying-a-new-tv.html

Canada will help fix your old appliances and send you to the Shrink. Italia helps you buy a new TV and sends you to the Spa.

Welcome to Planet Earth. Have a nice day.

#4 BlogDog123 on 11.09.21 at 2:43 pm

my mailbox was filled with Realtor(tm) flyers saying how fantastic the market is, albeit with few listings…

A letter from a realtor was begging for help finding people who want to sell their home… Must be starving…

#5 Wrk.dover on 11.09.21 at 2:49 pm

Nova Scotia just announced a withering tax of 2% of assessed value annually on properties owned by anyone from “away.
____________________________

Aww shucks, Halifax won’t end up with Vancouver pricing levels. Workers will be able to live near jobs.

Pity the summer people, but maybe people like me will still be able to achieve living with a salty view on chump incomes.

The tax income won’t hurt my healthcare system either.

#6 National Treasure on 11.09.21 at 2:55 pm

What is happening to our national treasure, Celine Dion?

#7 No Correction Coming on 11.09.21 at 2:56 pm

Garth, governments are just going to inflate the hell out of everything. It’ll be the 1970s all over again. People who bought assets like houses will end up having their debt vanish as they’ll be able to pay off their mortgages with cheap dollars. Meanwhile, those of us who behaved rationally won’t see our incomes increase proportionally to the new prices, so homeowners win again. So the lesson is buy real estate, the evidence shows that government won’t let you lose.

#8 A Borrower Bee on 11.09.21 at 2:59 pm

Interesting conundrum. I came to North America in the mid-90s as a teenager and to Canada in the late 90s in my early 20s. Now in my 40s, I have never lived through a period when Canadian real estate reset or went down.

At an intellectual level, it is obvious what what is happening is not sustainable. But when a cycle basically lasts an entire generation, it is pretty much impossible to “buy low” – you either buy high or you don’t buy at all. I finally relented this year and bought high. A good deal a house in one’s 50s just as the kids are grown and the space becomes unnecessary is really kind of pointless.

I sometimes ask myself what I would do if the mother of all crashes were to happen in the next few years. At least part of me is entertaining the idea to buy two properties for my kids at that time that would be available to them as grown-ups, just in case that the next growth cycle also lasts 25-30 years like the last one.

Time-shifting five years is easy. Ten years is doable. 25 years just doesn’t work, as that covers one entire generation of child-rearing.

#9 Dan in Nanaimo on 11.09.21 at 3:00 pm

Most folks are just trying to retain their sanity in an insane environment as life becomes more challenging as inequality spreads.

Relax and enjoy the madness of the times – and give thanks to Jerome Powell and the various CB’s – if you are among the fortunate who have prospered disproportionately during the last 20 months.

#10 Dolce Vita on 11.09.21 at 3:03 pm

“Any society that tries to condone rights on people that used to be privileges…is destined to falter.”

‘Been saying that for a couple of decades Garth.

Good to read I’m not the only one that thinks that.

#11 crowdedelevatorfartz on 11.09.21 at 3:04 pm

Politicians with no new ideas OR spines……
A recipe for disaster.

#12 Docile Vat on 11.09.21 at 3:12 pm

V for Vendetta – 2006 movie.

I’m sure you guys have seen it right?

You remember how in the climax of the movie V explains how it all came to be? Developing a virus scare and fear as an excuse to boost pharmaceutical companies to make the party and government more powerful and stricken the citizens rights, for full power. Using the phrase “Its for your safety”.

It’s been a while, but I think the movie happens in 2020 too.

Freaky coincidence when a movie has such parallels. The only other time I remember this is when China Syndrome came out a few days before Three Mile Island happened.

#13 Yukon Elvis on 11.09.21 at 3:16 pm

In practical terms, does this not mean an eventual wealth tax to find the money the majority demands be spent on affordable homes? Like Jagmeet campaigned on, but broader? Like the American Democrats are now proposing for the rich? Taxing unrealized capital gains, instead of income? Like your house?
++++++++++++++++++
Sounds like a solid platform for the Lib Dips in the next election. The 65% who vote for them are sure to say hell yes! and give them another 5 seat gain in the next parliament. Democracy at work.

#14 ogdoad on 11.09.21 at 3:17 pm

When one’s great expectation is housing will increase in value forever – not a lot of media contradicting this – then why ever any change in sentiment? Recency bias will prevail – always…just like cows know when its feeding time.

You have a way with words, Mr. Turner!

Og

#15 Solo Artist on 11.09.21 at 3:21 pm

Garth, blog dogs, all in one ETFs, does that include the all-world equity offerings like VXC and XAW? I switched over to these a few years ago and drip the maxed out tfsa with both only. Bonds etc. in RRSP. Seems to be be working ok.. volumes are a bit low but not the underlying funds. MER decent all things considering. Thanks for the insight.

#16 Nobody knows on 11.09.21 at 3:23 pm

So until 5% down payments and the PR exemption are gone, nothing much will change.

So true!!! I never agreed with you more. And everyone must know it. But i think everyone must also know that scrapping those will result in house prices declining and noone wants that.
The game is rigged.
The only question is: will they lose control?

#17 SunShowers on 11.09.21 at 3:26 pm

Funny how it always seems to be the kings telling the peasants to know their place as servants and to accept their squalid lot in life, and never the peasants begging kings to impoverish them.

But I suppose it’s apt that you compare the 1% and their ‘right’ to own obscene amounts of wealth to the divine right of kings. Two concepts that are affronts to ones sensibilities, and are without logical or evidentiary justification.

If the 1% aren’t careful, their ‘right’ may come to an end the same way the divine right of kings did.

#18 Diamond Dog on 11.09.21 at 3:29 pm

#20 Bullshift on 11.08.21 at 3:29 pm

Gaze upon a 50-year chart of the S&P 500. People who invest and stay invested do well. Those who time things flail. Sounds like you’re a timer. – Garth

100% Garth.

Returns represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment.

Past returns tend to be more of an indicator of the future than authors. (Or bloggers.) – Garth

Lets examine the past more closely then, shall we?

https://www.macrotrends.net/2324/sp-500-historical-chart-data

April 1949 to March of 1966 saw a near 17 year bull run after WWII. The market then went sideways from March of 1966 to Dec 1972. In fact, one could argue that from March of 1966 to June 1982, the S/P spent 16 year losing investors money if they sold and didn’t re-invest, or simply lost value. Ouch! Lets remind, this chart does not keep up with inflation.

From June 1982 to November 1999, the S/P romped on a 17.5 year bull run, then went sideways for 7 months to July of 2000 and took until May of 2014 to recover from July 2000 highs. If investors sold during this 14 year period and didn’t re-invest, they lost money. Many did.

Since the ugly bottom of March 2009, the S/P has continued a stellar bull run into November 2021 for an ongoing 12.6 year bull run. Let’s recap. The S/P saw a 17 year bull run post WWII and a 17.6 year bull run up to the 2000 dot com bubble. The S/P also saw a 16 year bear market from the 60’s to the 80’s and a gut wrenching bear market from July 2000 to March of 2009 spanning 8.7 years and we’ve been on a bull market ever since.

The question everyone wants to know is how long this current near 13 year bull run is going to last since there are obvious long term trends to bulls and bears. If history is any indication at all, it could last a few more years but wait! There are historical comparisons to be had with this current market and the all time high dot.com bubble of 2000, adjusted for inflation. With P/E ratio’s, we are 10% way from 2000:

https://www.multpl.com/shiller-pe

Price to sales ratio defines share price to revenue. Note, it’s the highest I believe the market has ever been:

https://www.multpl.com/s-p-500-price-to-sales

Look at the price to book, also a worthwhile indicator compared to the zenith peak 2000 bubble, we are already there now:

https://www.multpl.com/s-p-500-price-to-book

The difference between now and 2000 is, real estate is also in a bubble thanks to decade long term low interest rates lasting as long as this current bull run. Commodities are there too. (plus $80 U.S. oil, nat gas is high, $ 4.50 copper etc.) Bond coupons are plenty more expensive thanks to cheap rates in comparison to 2000. This market is bloated thanks more than anything else, to real estate and risk is higher thanks to risk factors coming directly from real estate.

We are watching these markets ratchet higher and higher knowing what happened to Japan who took these same fundamentals gas bagging the markets to the next level. A lost 20 years followed and they are still wrong footed since the 90’s.

There are long term historical trends in the market place and we’ve been witness to a long historical bull run that will, when it finally reaches the cliff, see a long bear run that follows. There is more risk with this market than markets of the past as a consequence to risk from real estate and bonds. There is no precedent for the risk in the markets we see right now. Anyone wish to argue with this? Argue with this guy:

https://www.youtube.com/watch?v=c13O6Amn1lQ

Can the S/P, the flagship of the markets, go higher? Sure it can. Never underestimate the power of monopolies, as indicated by the PRICE TO SALES chart. All indications by the Fed is that they are pushing for it n concert with America’s largest corps. Can incomes keep up with inflation? In the short term, in theory it could but if it leads to higher bankruptcies, the entire market place falls apart. There’s a timeline to this though and it must be said, at these valuations, the bear market that follows, typified by asset deflation and persistent core inflation i.e. stagflation, will be painful for everyone. This too, is a matter of historical record.

I don’t know what will happen, I only know that this current market, already laden with risks from nosebleed valuations, carries risk we haven’t seen before from other bubbles. It’s difficult to put your money in the markets and forget about it knowing how long true bear markets can last or how long it can take for peaks to recover their value.

Managers speak with 20, 30, 50 year gains and go long strategies, but most of the money invested in the markets is owned by people 55 years or older. The big interrupter of long term strategy? Death and taxes (and divorce). The plan it takes to see long term strategies reach their conclusions? Good health! But we’re not supposed to talk about that today, no offense, just pointing out the irony. :)

The biggest long term threat to the markets (some like me would argue it’s here now and accelerating)? The overall health of the workforce (physical, emotional, mental, spiritual) getting to the heart of productivity and of course, Climate change (pollution and population growth). We all need to get far more serious about both issues than we are now if we really want to wade into a future that even has a long term:

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

#19 James on 11.09.21 at 3:34 pm

#11 crowdedelevatorfartz on 11.09.21 at 3:04 pm

Politicians with no new ideas OR spines……
A recipe for disaster.
______________________________________________
Your not talking about our snake of a PM are you?

#20 crowdedelevatorfartz on 11.09.21 at 3:34 pm

@#1 FN
“Ontario’s highest court has ruled that the Crown violated the terms of treaties from 1850 by capping annual payments at a few dollars per person to Indigenous peoples who ceded a vast area of the northern part of the province.”
+++

They can have all of Northern Ontario back but they have to now have to pay property tax on it and income tax to the Confederation.
Pay for highways, hospitals, snow removal, clean water , police, airports, fire stations, on and on and on.
Cant have your cake and eat it too.

#21 Dolce Vita on 11.09.21 at 3:37 pm

“Consider where your finances will be if this asset class corrects. Because it will.”

RE is THE asset class in Canada. The BULK of Cdn wealth is in that single asset class. 2020 StatCan Cdn Total/Avg/Median Assets, Debt and Net Worth…

Under 35’s
https://i.imgur.com/S3wA1KI.png

Late Millennials 35-39 years + GenX less 55-56 years
https://i.imgur.com/asaQDWm.png

Late GenX 55-56, Boomers 57-75, War, 76+
https://i.imgur.com/o1zv0LC.png

I’d like to see an update post Pandemic. See if CERB etc. helped clean up debt and impact of current RE prices on Net Worth.

Of course, if RE crashes Cdn’s will whine to Gov Canada stating that it’s their right that RE prices should be high. Which means they’ll want money to offset their losses.

Most vulnerable are the Boomers, Paleos…will not have too much time left on the Planet to see prices recover (and keep borrowing against RE for Junior and themselves).

#22 crowdedelevatorfartz on 11.09.21 at 3:46 pm

@#6 National Treasure.

“What is happening to our national treasure, Celine Dion?”
+++

She lives and works in the US and pays US taxes.
I assume you’re from the US?

Aside from being very rich and a tad weird…..

I’m sure she can afford the best of medical/ psychiatric opinions.

#23 Kiril Peev on 11.09.21 at 3:46 pm

Ottawa Real Estate Market Summary:

October 2021 was another solid month for real estate in Ottawa. Prices climbed by about $10,000 for both detached homes and townhomes and increased by about $20,000 for condos when compared to September 2021.

Buyers are in a good position to secure in demand properties over the next few months. There is usually added value in purchasing real estate in November through January and July and August as the data shows that prices experience relative weakness in those months due to seasonal trends.

Sellers are still reaping the rewards of historic price appreciation in Ottawa. Property owners can expect their home or condo to sell in 1-4 weeks depending the location and pricing strategy.

Prices are slowly approaching Feb/March 2021 highs. Market risks are mainly central bank bond tapering and mortgage rates. Personally I see no slowdown and in fact activity is staying very strong for this time of the year.

https://www.kirilpeev.ca/ottawa-real-estate-market-update-october-2021/

#24 Dolce Vita on 11.09.21 at 3:47 pm

#2 TurnerNation

Dolce what do you make of this Chart?

————–

FFS TN. It shows most cases are the unvaxd and too many vaxd.

Read my Yukon expansion to your alert.

What do I think?

Get a booster, YESTERDAY Canada.

Or it’s going to be a LONG Winter…of despair. Vaxes waning faster than even I thought possible & that ought to be clear to any thinking person.

What’s really alarming me right now?

Europe and countries like Austria with hospital/ICU drastic increases. In FVG where I live Austria is just a hop and skip across the border + all the high Covid countries love to come to Italia in the Winter.

Rains. Pours.

#25 Sail Away on 11.09.21 at 3:47 pm

#15 Solo Artist on 11.09.21 at 3:21 pm

Garth, blog dogs, all in one ETFs, does that include the all-world equity offerings like VXC and XAW?

——–

No, these two are not all-in-one ETFs. These are equity-holding funds, excluding Canada, with half or more of the holdings in the US.

In my opinion, both are decent funds to hold as a portion of your foreign equity portfolio allocation. I hold around 3% XAW.

#26 crowdedelevatorfartz on 11.09.21 at 3:48 pm

@#19 Jimbo

“Your not talking about our snake of a PM are you?”

+++

ALL politicians and especially our “acting” PM.
True-Doh.

#27 toold on 11.09.21 at 3:49 pm

I’m 68 yrs old and seen things that still amaze me.

Stupid wars, fear mongering, crazy destructive spending, 20% interest rates and 0% interest rates. Promotion of divisiveness, insane labeling, etc.

But when I look into the causes… the root causes are always government lackeys. Why do the common people continue to bend a knee and kiss their hands?

They will always lead you in the wrong direction. Right now they are leading people in debt imprisonment amongst other things.

#28 Winterpeg on 11.09.21 at 3:58 pm

“It was the best of time. It was the worst of times.”
Yes it was from “Tales of Two Cities”. It was set around the time of the French Revolution, leading up to the “Reign of Terror”.
Apropos, n’est pas?

#29 Immigrant man on 11.09.21 at 3:59 pm

#20 crowdedelevatorfartz on 11.09.21 at 3:34 pm
They can have all of Northern Ontario back
—–
Nuh-uh!
That’s were all the minerals for EVs are gonna come from. Ford said so )

#30 Dolce Vita on 11.09.21 at 3:59 pm

#17 SunShowers

“…never the peasants begging kings to impoverish them.”

——————

The peasants are doing a stellar job on their own impoverishing themselves. In need of no help nor fomenting by you.

Peruse the Assets, Debts & Net Worth image tables in my prior Comment.

If anything OVERLORD today is trying to warn the peasants they have lost their minds.

And for the record, it’s the EVIL 1.3%, dutifully highlighted so you won’t miss them:

https://i.imgur.com/MVHXBw8.png

Whatever your age is, they walk among you. Careful.

#31 Honest Realtor on 11.09.21 at 3:59 pm

This is all pretty much built in now. The vibrancy of our property market will build a very sold future for millions now as well as the coming epic influx of New Canadians. Don’t miss out on the next fifteen years, folks. Probably nothing in the past will compare to what you gain from real estate by 2040 and 2050. For those of us who live long enough to see it happen, Canada will probably have a population closer to 75-80 million by then. Just imagine the effects on real estate. And your balance sheet.

#32 Warm cockles on 11.09.21 at 4:03 pm

#10 Dolce Vita on 11.09.21 at 3:03 pm

“Any society that tries to condone rights on people that used to be privileges…is destined to falter.”

‘Been saying that for a couple of decades Garth.
Good to read I’m not the only one that thinks that.

___________________________________________

The irony is that the word “condone” is not used appropriately in this sentence. Of all things you chose to agree with. Have you really been saying that for a couple of decades? People must have had a good laugh when you shared that jewel with them.

It warmed my cockles when I realized it was one Dolce Vita that wrote this comment. I would expect no less.

Perhaps Garth meant “confer” or “bestow” but he was too busy focusing on “noodleheads” like yourself littering the comment section.

#33 Ballingsford on 11.09.21 at 4:09 pm

Clever use of words today, sir Garth. You have a bit of the Dickens in you too!

#34 The West on 11.09.21 at 4:09 pm

“People have always lived in times of contradiction. No difference today. Some would argue in a world where one guy has greater wealth than a few billion others that humanity’s more messed up than usual. But, maybe not. Kings and serfs. Overlords and underlings. Twas ever thus. Perhaps it’s just our expectations that got out of control.”

Expectations got out of control? The forefathers of European Descendants paid in blood to end the madness of Divine Right to Rule and subsequently built the most prosperous nation states the world had ever seen.

Lest we forget:
https://en.wikipedia.org/wiki/Age_of_Revolution

#35 Triplenet on 11.09.21 at 4:14 pm

Too bad that Rittenhouse trial is taking so long. Apparently the NRA hoped to get him to Glasgow for a final few words.
On a lighter note – Greta Thurnberg has 75 million instagram followers……. however Kylie Jenner has 275 million. Now it begs the question – what are the uneducated really interested in?
Anti-climatic for sure.
Ha

#36 Bullshift on 11.09.21 at 4:22 pm

#18 Diamond Dog

Sometimes you need to step back, take a look at the overall picture. You know, like you would looking at a big work of art at a gallery.

I think the points you make are very valid. I think John De Goey in that Financial Post piece is very clear in terms of thought and his article makes very strong points why some series shift is about to go down.

I think it is entirely possible that the moment has arrived and is just upon our doorstep. Hence the $20T to underpin a western world that has been stuck in emergency rates for over a decade since GFC. World which has been dealing with a vary friendly loanshark. Liquidity galore. Money for nothing, bailouts for free.

Here is that piece again. Really, a lovely read and the “Bullshift” is a clever way to put it.

https://nationalpost.com/investing/the-timing-of-the-next-global-depression-is-getting-closer-than-you-think/wcm/c32cb0e3-1193-4b75-9793-88a3ed05d59f

Now, consider what the growth is measured in – FIAT. Man made stuff that is quickly and effectively being undermined in terms of any value it carries.

Have we forgotten the money supply going 5X?

Have we forgotten the inflation claims of 4.4%?

Have we forgotten that NO ONE and I mean NO ONE believes that 4.4% number?

Does anyone even believe the 5.4% inflation number in the US?

And so…no what?

#37 Tiffany Pontes Dover on 11.09.21 at 4:26 pm

https://financialpost.com/pmn/business-pmn/unsealed-emails-show-how-jj-shaped-report-on-talcs-links-to-cancer

“Unsealed emails reveal the role baby-powder maker Johnson & Johnson played in a report that an industry group submitted to U.S. regulators deciding whether to keep warnings off talc-based products linked to cancer.”

“I swear, man, I’m not against ALL talc, only the stuff laced with asbestos.” — anti-talc’r who needs to be banned from social media

#38 Chameleon on 11.09.21 at 4:26 pm

#47 Penny Henny on 11.08.21 at 5:20 pm

Two things wrong with today’s photo.
1. As much as I love dogs a public fountain is not for their use. Bring a container fill it with water from the fountain and let your dog drink from that.
2. Grown men should not wear footwear that exposes their toes unless they are on a beach.

—–

Ha ha ha. I also give grown men a pass on flip-flops in the shower/locker room and also diabetics get a pass. Otherwise, it’s a hard YUK. Why don’t you whip out some other appendage for all to see, since you clearly have no self respect as a man, right?

This flip flop phenomenon is really funny and…well, lazy.

Hey Dolce, do women in Italy ever wear flip flops out and about?

What about the men? Only the ones who’s Mama still takes care of them in their 40s and 50s?

#39 Dolce Vita on 11.09.21 at 4:29 pm

#18 Diamond Dog

No disrespect but next time, download the numbers like I did, use a Compound Annual Growth Rate (CAGR) Calculator and come up with this:

Cdn RE Price Index VS. (S&P 500 CAGR) start year of compounding to 2021-1Q

1975 = 2.32% (8.4%)
1980 = 2.58% (8.6%)
1990 = 2.83% (7.9%)
2000 = 3.46% (4.8%)
2015 = 4.22% (10.8%)
2020 = 7.11% (18.4%)

Saves on the mile long prose. Inflation adjusted to 2010. Price index by Freddie Mac.

Dirt vs. Mr. Market, latter wins hands down with no lawns to mow, sidewalks to shovel, city tax or mortgage interest.

#40 Shawn Allen on 11.09.21 at 4:31 pm

Nova Scotia can go to …

Nova Scotia just announced a withering tax of 2% of assessed value annually on properties owned by anyone from “away.”

*****************************
So glad I voted against Equalization. It’s symbolic but felt good.

Nova Scotia has forced me to become an Albertan. Previously I was just a Canadian period. Always thought this was one country. I was wrong.

#41 I'mshort_corpdebt on 11.09.21 at 4:33 pm

how society can make housing accessible to people as a right without destroying its value to the privileged who now own it?

1) Legislate rules that don’t allow any more tax evaders/avoiders to park their money at any cost in other countries like the our Canadian real estate market.

2) Change the CMHC structure or rules and get the people out of being landlords that shouldn’t. Most barely can cover the costs of doing so and it doesn’t help at all with subsidizing renters.

3) Sorry Garth as this will not be popular with your colleagues but get rid of the financialization of everything gimmick. See the problem below?

professor of economics at Bard College:
“Finance has an oversized presence in contemporary mature nations. It has grown enormously in terms of size, relative to the rest of the economy. And, financialization has crept into all aspects of our lives. Housing, education, and healthcare are all targets for investors. More recently, new investment vehicles are being marketed that would even financialize natural ecosystems.”

#42 Ponzius Pilatus on 11.09.21 at 4:34 pm

#110 crowdedelevatorfartz on 11.09.21 at 8:08 am
@#95 Wrk.dvr
“Really though, listen to yourself, a few months ago you stated to all of us here, one more year….”

+++

Nope. Never planned for a retirement at 61.
65 is the goal. And I’m a co-owner.
Quitting isnt an option unless I’m bought out or the company sells.
Another 4 years of juicy salary, bonuses, profit sharing and dividends…. :)
Slow and steady wins the race.
 —————-
To make this happen, you sold your soul to the devil.
Just like Dr. Faustus.
Read up on it. Educate yourself a little bit.
At age 65, Luxifer will show up to collect his due.
But you’re lucky, he’ll have to leave empty handed.
Turns out, you have no soul.
Same goes for Sailo.

#43 Guy in Calgary on 11.09.21 at 4:42 pm

Putting an end to the blind auction would definitely help affordability.

#44 Dolce Vita on 11.09.21 at 4:42 pm

US Fed warns about Evergrande risk spreading.

https://www.bloomberg.com/news/articles/2021-11-09/fed-flags-china-concerns-as-selloff-spreads-evergrande-update

https://www.nytimes.com/2021/11/09/business/the-fed-warns-that-chinas-property-market-stress-poses-a-risk-to-the-us.html

Clickbait?

Hope so.

#45 Sean on 11.09.21 at 4:43 pm

I hope it is the 1970’s again. I want get my 16% to 18% GIC back.

#46 Sydneysider on 11.09.21 at 4:43 pm

In the Malabar suburb of Sydney in 2008, house prices were in the 800K AUD range. Lately they are getting close to $4M – run down houses with terrible plumbing and electrics, 1 bathroom and 3 small bedrooms.

The resilience of that market shows that Vancouver’s probably has a long way to go before it approaches collapse.

#47 Linda on 11.09.21 at 4:45 pm

This idea of taxing the assessed value of a property sounds like one rigged game. The government who needs tax revenue decides what the assessed value is. Whether that figure actually has any bearing in reality should the property in question be sold is another matter. Also who the heck would be willing to buy if all it gains is one ever increasing tax bill?

#48 Shawn Allen on 11.09.21 at 4:47 pm

Canada in 2021

A tale of 10 countries

Thanks to Quebec, B.C. and now Nova Scotia.

Tribalism. Bitterness towards domestic foreigners.

Nova Scotia in particular determined to be a backwater with a rapidly aging population.

Will get no sympathy from me.

#49 Sonny Kang on 11.09.21 at 4:50 pm

It’s been awhile since I saw it, but I think I might watch it again this weekend.

“Remember, remember the fifth of November…”

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

#12 Docile Vat on 11.09.21 at 3:12 pm
V for Vendetta – 2006 movie.

I’m sure you guys have seen it right?

You remember how in the climax of the movie V explains how it all came to be? Developing a virus scare and fear as an excuse to boost pharmaceutical companies to make the party and government more powerful and stricken the citizens rights, for full power. Using the phrase “Its for your safety”.

It’s been a while, but I think the movie happens in 2020 too.

#50 Ok, Doomer on 11.09.21 at 4:50 pm

“People like me have lived through a lot of business and economic cycles. We’ve seen assets rise and fall. Markets that give and take away. Nothing goes up forever. Consider where your finances will be if this asset class corrects. Because it will.” – Garth

+++++++++++++++++++++++++++++++++++

And there it is.

The hubris of the elites has attempted to cancel business cycles, weather cycles, science, physics and math. It seems like each leader is lying bigger and better, just to try to stand out in this Liar’s Ball.

At this time, I think it’s a toss up between Kamala Harris, who thinks that certain trees are racist, Pete Buttigeig who thinks that highways are racist, Joe Biden, who thinks that not giving illegal aliens $500K each is racist and Trudeau who thinks that appointing a cabinet based on ability and competence is racist.

I’m hoping that a slow talking, unphotogenic, bad haircut SOB like Harper rises again to drag us out of this mirror world that the elites are trying to gaslight us into.

#51 willworkforpickles on 11.09.21 at 4:52 pm

The Fed have the masses (including the BoC) in a state of deceptive illusion.
There is no way on earth the Fed can keep interest rates artificially low for too much longer. (1.5 to 2 years max).

It may very well be the Fed itself has drifted so far from reality they’re believing this illusion – prolonged negative rates – as per indefinitely – are sustainable.

It matters little to the masses how irresponsible and negligent the direction Fed policy is taking so long as it suits them all today. It won’t tomorrow.
Few have any idea just how negligent and irresponsible current Fed policy is anyway.
When the masses find themselves drowning in debt, blame will fall on the Fed for misleading them to financial peril.
It’s coming. And sooner than most believe could ever be possible. Most believe currently … no such outcome of its kind could ever become reality.
We are coddled in debt and by debt for life.
Debt will always take care of us now and forever without fail… far too many erroneously assume.

Massive inflation is just around the corner with no two ways about it either.
Government spending ballooning the national debt further will not be reigned in as projected.
Deception really does Reign and rule the day.

so…Who cares?…Its all good for now.

#52 Trojan House on 11.09.21 at 4:52 pm

If Canada was a Monopoly board, “tax” squares would take over more and more of the real estate squares.

#53 DLT INC on 11.09.21 at 4:56 pm

Some many people on this blog blame the government for getting us into so much trouble. Few people ever seem to ask who is pulling the stings that moves governments to do what they do. I

#54 NOSTRADAMUS on 11.09.21 at 4:57 pm

CAN’T MAKE THE BED DANCE.
I don’t get it, everywhere I look, there are new pickup trucks,( Ford 150’s ,and Dodge Rams) roaming about with nothing in the rear box, and only the driver navigating up front. In my area, 2 bedroom apartments are renting for $1400.00 to $1600.00 per month. Is a gas guzzling new pick up truck with heavy duty monthly payments worth as much as a place to live? Easy question. And something else to think about on a cold winter night, a shiny truck still can’t make the bed dance. How about these odds? The Loto Max lottery gives you a 1 in 14 million chance you won’t be going to work tomorrow, alcohol gives you 1 in 5. Amen Brother.

#55 Sarah YVR on 11.09.21 at 4:58 pm

I’m confused. Yesterday you said “ Those with windfall gains would be wise to sell.”

Today you say “ Houses will escalate further, until market forces take over. When might that happen? Beats me.”

??

#56 they started this before on 11.09.21 at 5:07 pm

Linda, you can thank the Liberal Party of Canada and Jean Chretien, Paul Martin for putting this idea forward. They did it already since the 1990’s. You have to pay income taxes on compound interest you have not received.

The annual income taxes on compound interest accumulated each year has been going on for for 27 years now. It used to be taxed at maturity of a GIC, term deposit, savings bond, strip bond, zero coupon bond, any interest bearing investment that accumulated interest each year but was not received by the investor.

They want to put an income tax yearly increase in the value of real estate, stocks, gold, any other property, investments that gain in value etc. with you not actually receiving any of the gains, increased value unlike today where you sell that investment, property and then pay the income taxes on the gains, increased value.

This is what people don’t understand or realize, they start one way and then do it elsewhere. I don’t see anyone complaining, outraged until it hits their crap in their pocket, account.

#57 Philip on 11.09.21 at 5:07 pm

Why not using property tax to control the price of RE? Property tax will be better than profits to banks, one way or another we will be paying. At least the government will provide community services , build roads for us. Good luck to ask the banks to do it.

Take a look at Houston Texas USA, a city of 2.3 million people, the average house price at $290,000, very reasonable compared to their average household income. The main reason for this is their property tax of 3% compared to Toronto’s 0.6% with a average house price of $1.2 million.

Since property tax is an ongoing expense, it is much effective tool than other, even mortgage rate drop to 0%.

#58 crowdedelevatorfartz on 11.09.21 at 5:08 pm

@#42 St Peter’s Pal Ponzie…… Purgatory
“At age 65, Luxifer will show up to collect his due.
But you’re lucky, he’ll have to leave empty handed.
Turns out, you have no soul.
Same goes for Sailo.”
+++

I’m not worried about where I’m going…just who I’ll meet when I get there.
Sounds like you’re headed in the opposite direction.
Fine by me.
Say hi to Faron….and be sure to spell Lucifer’s name right… I hear he can be a bit ornery when trifled with.

#59 California Love on 11.09.21 at 5:27 pm

#2 TurnerNation

https://www.tampabay.com/news/florida/2021/11/07/californias-covid-19-case-rate-now-twice-floridas/

#60 Shawn Allen on 11.09.21 at 5:39 pm

Dolce are you telling lies or are you just that stupid?

#39 Dolce Vita on 11.09.21 at 4:29 pm
#18 Diamond Dog

No disrespect but next time, download the numbers like I did, use a Compound Annual Growth Rate (CAGR) Calculator and come up with this:

Cdn RE Price Index VS. (S&P 500 CAGR) start year of compounding to 2021-1Q

1975 = 2.32% (8.4%)

*************************
I asked you before to address whether the 2.32% compounded gain for in Canadian Real Estate index is after deducting inflation. There is no possible way it is correct in nominal dollars.

Had you addressed it then I would call it a mistake. Now I am thinking pure stupidity?

Or will you prove me to be the stupid one? Your move.

#61 Reximus on 11.09.21 at 5:39 pm

Why not using property tax to control the price of RE? Property tax will be better than profits to banks, one way or another we will be paying.
—-

Wouldnt that hit the lowest income households the hardest? Not good for re-election methinks…

#62 Ponzius Pilatus on 11.09.21 at 5:40 pm

#58 crowdedelevatorfartz on 11.09.21 at 5:08 pm
@#42 St Peter’s Pal Ponzie…… Purgatory
“At age 65, Luxifer will show up to collect his due.
But you’re lucky, he’ll have to leave empty handed.
Turns out, you have no soul.
Same goes for Sailo.”
+++

I’m not worried about where I’m going…just who I’ll meet when I get there.
Sounds like you’re headed in the opposite direction.
Fine by me.
Say hi to Faron….and be sure to spell Lucifer’s name right… I hear he can be a bit ornery when trifled with.
————–
Lucifer, Luzifer. His friends call him Luzi.
The name is used in different languages.
As I said, you can’t buy education, only earn it.

#63 cramar on 11.09.21 at 5:40 pm

“Clearly the people running this place have no clear idea on what to do next.”

——–

Love the titles of some books I read over the years. Some titles could be recycled to describe the current situation. These come to mind:

“the Inmates are Running the Asylum”

“Surrounded by Idiots.”

#64 Gerry on 11.09.21 at 5:41 pm

Linda, they started this before, this is why I put all my interest compounding investments in my RRSP, RESP, TFSA. We need higher annual contribution limits for our RRSP, TFSA, RESP etc. and inflation indexing for all non-registered profits, income so income taxes paid on the real value of your income and not because the Bank of Canada, Trudeau Liberals and any other parties inflate, devalue by inflation our savings, income.

#65 Shawn Allen on 11.09.21 at 5:42 pm

#57 Philip on 11.09.21 at 5:07 pm said

Take a look at Houston Texas USA, a city of 2.3 million people, the average house price at $290,000, very reasonable compared to their average household income. The main reason for this is their property tax of 3% compared to Toronto’s 0.6% with a average house price of $1.2 million.

*******************
More likely the property percent is higher in Houston becasue the property prices are low. You have it probably the wrong way around. A city needs so much revenue. It sets the mill rate to get it. Higher property prices mean a lower mill rate.

I believe Cape Breton has a higher Mill rate than Toronto for example.

#66 Russ on 11.09.21 at 5:42 pm

The quote:
It was the best of time. It was the worst of times.

The modern result:
——————————
https://ih0.redbubble.net/image.190114116.6740/sticker,375×360.u1.png

Cheers, R

#67 Trudi Woods on 11.09.21 at 5:42 pm

…or watch a couple of seasons of Downtown Abbey…some people shouldn’t be given the responsibility
of having excessive wealth…actually many…most as it seems these days hoard dough and it and it serves no purpose in helping anyone…just my personal thought…of no use really except to ? why so many are not giving it away to charities only to see it taxed away to an iniffentant
system

#68 Reality Check on 11.09.21 at 5:47 pm

Wealth Tax – how to define wealth

There will be so many politically expedient exclusion in any made in Canada wealth tax I think only landlord and stock/bond investors will pay it.

Can’t tax:
– farms, way too motherhood – can’t have millionaire Quebec dairy farmers paying more tax
– small business – never – the “backbone” of the economy, imagine the guy with a chain of pet food stores having to lay off staff to pay his wealth tax!
– principle residences – politically a nonstarter. Think of CBC stories about the retired couple having to come up with $15,000 in wealth tax on their West Van home bought for peanuts in 1980.

Pretty much just leaves us people with investment portfolios and rental properties. After all we are the ugly b*****ds that deserve to be punished with inequitable taxes.

#69 Scott on 11.09.21 at 5:48 pm

High property taxes are a terrible idea. We should focus on higher normal long lasting interest rates and stricter lending and increase real housing supply where needed. This is much better and effective tools to cool and keep housing, rental prices, costs.

Come on , we all know that if mortgage rates never reached below 5% and where as high as 10% when there was too much speculation and real estate mania, craziness of cheap mortgage rates 1% to 1.5% ridiculousness. The Bank of Canada’s qualifying rate of 4.5% or 5% is too low and was implemented too late. Mortgage rates of 5% to 6% mean 6% to 7% annual mortgage payment rates over 25 years amortization.

#70 ImGonnaBeSick on 11.09.21 at 5:52 pm

Apparently you can be diagnosed with “climate change” now;

https://www.google.com/amp/s/www.independent.co.uk/climate-change/news/canada-climate-change-diagnoses-patient-b1953355.html%3famp

#71 Nonplused on 11.09.21 at 5:54 pm

Wealth taxes will not work because wealth is not money. What are you supposed to do, tear down 2% of your house and send it to Ottawa every year? Maybe 2% of your business?

Repeat after me folks, “Wealth is not fungible until it has been monetized.”

In other words you have to sell it. That means somebody has to have the money to buy it. Other than that, wealth is nothing more than a “net present value” calculation on the revenue stream it produces, which can be zero. It is a phantom on a spreadsheet.

Rich but stupid Elon Mush has kind of proven the point with two subjects recently.

First, when made aware that world hunger could be solved for $6 billion dollars, he offered to sell Tesla shares and fund the operation if it could be shown how it would work, where the money would go, etc.

Now let’s leave alone for the moment how far $6 billion dollars would go, permanent solution or maybe just a drop in the bucket, which I think was his point. Another point was made by accident: He does not have $6 billion dollars. He would have to sell shares to raise the money. Sell to whom? Well, hopefully the Robinhood crowd has some of that CERB left and didn’t spend it all on gaming computers.

Second, he recently polled followers to see if he should sell some shares to bring his eventual tax obligation forward. There is a lot to unwrap in this proposal but a few points come to mind:

– He does not have money to pay substantial tax without selling shares (to someone, see above).
– He is already subject to tax whenever he realizes a gain (monetizes it, sells). The “wealth tax” is not a new tax, it is merely a time shift.
– Billionaire wealth is already taxed the same as anyone else upon realization.
– He can’t even sell 10% of his shares without potentially cratering Tesla stock and making many investors furious. He is hostage to his position.
– Selling 10% of his shares and paying the capital gains tax involves a lot of money. But not as much as if he had to pay a capital gains tax of 25% on all of his holdings. The market is in a tizzy over 10%. Imagine if it were 25%? And that 25% had to be completed by year end so he could deliver the proceeds to the IRS?
– No long term increase in taxes will result from wealth taxes. Whatever the government collects now they would not be able to collect later.
– Telsa’s ability to raise capital would be hindered, as now any new share offerings would have to compete with the large float Elon is dumping.

Either way, though, his strategy of polling his followers is pretty smart for such a dumb guy. Now he can reduce his exposure, diversify a bit, raise some cash, pay taxes he would have had to pay anyway, and tell all the now cranky Tesla investors that they asked for it.

————————————–

Taxing primary residences is a morally bankrupt idea. Houses are not assets they are a consumer item. All the money made to pay for the house already incurs income taxes, and all the profit made by the bank on the interest also pays income taxes. But they will do it anyway.

Will it contain house prices? Not in the least. If that is the goal it will be a total failure. It will be about as effective as capital gains taxes on stocks, bonds, businesses, etc. They still all go up in price.

We should call a spade a spade. A capital gains tax on primary residences will not be implemented as a means of reducing house prices, because it can do no such thing. Instead, it is a tax grab. It is a theft of retirement savings. It is an attempt to enrich the government at the expense of retirees. It is an attempt to get at the little money the unwashed masses carry into retirement. It is evil.

Second homes and investment properties are already taxed, so don’t get on about those.

#72 yorkville renter on 11.09.21 at 5:57 pm

While I agree that housing is out of control, I doubt there are many in the GTHA that are buying with 5% down — the average is over $1mm now and that precludes 5 down.

Just sayin’

The limit is rising to $1.25 million. – Garth

#73 kommykim on 11.09.21 at 6:06 pm

RE: #15 Solo Artist on 11.09.21 at 3:21 pm
Garth, blog dogs, all in one ETFs, does that include the all-world equity offerings like VXC and XAW?

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

Those funds are equities from all around the world but exclude Canadian equities.

In my 60/40 balanced portfolio I hold 40% VXC, 20% ZLB (Canadian equities), and then the remaining 40% in preferreds and cash like equivalents.
An alternative would be 60% VEQT with the remaining 40% in preferreds (ZPR) and short duration bonds (VSB).

Garth just doesn’t like the long duration bonds in the all-in-one funds like VBAL etc. That portion of the fixed income will suck in a rising rate environment.

#74 Sail Away on 11.09.21 at 6:09 pm

#42 Ponzius Pilatus on 11.09.21 at 4:34 pm

At age 65, Luxifer will show up to collect his due.
But you’re lucky, he’ll have to leave empty handed.
Turns out, you have no soul.
Same goes for Sailo.

——–

Why would I have to leave empty-handed?

Crowdie, Lux and I could sip Scotch, smoke Cubanos, and chortle about the poor people.

#75 IHCTD9 on 11.09.21 at 6:20 pm

#133 Wrk.dover on 11.09.21 at 2:31 pm
#122 IHCTD9 on 11.09.21 at 11:38 am

Seven day weekends help draw down an RRSP even better. Those things are an albatross beyond midlife with a DBP in the marriage if not put to use, even if only to stuff TSFA’s because uni funding is flat lining the float.
—- ——

That’s pretty much what they’re going to do – stuff the TFSA’s to pass on eventually. They might provide for some early semi-retirement also. We’re very lopsided towards RRSP’s unfortunately, so I have accepted an eventual big tax bill unless we live to 100.

I don’t see them as an albatross though, there will be 4-5X in there compared to what we put in, and we got all the taxes back on those deposits too. We did the first time home buyer thing, and we’ll be able to drain a fair amount efficiently due to also having TFSA’s and probably some decent TFSA room at our disposal. They’d be less of a concern if it wasn’t for the DBP and dual CPP/OAS’s, but that’s a first world problem. We should have got to pumping those TFSA’S immediately upon debut, but we didn’t.

Underpinning us also is a sub ~1500.00/mo. retirement COL, and zero debt. We’ll find a way to minimize the damage, but still fully expect a final tax bill that exceeds everything we ever deposited into them in the end. C’est la vie.

#76 Bartman on 11.09.21 at 6:22 pm

#33 Ballingsford on 11.09.21 at 4:09 pm
Clever use of words today, sir Garth. You have a bit of the Dickens in you too!

I think he went up the down staircase recently.

#77 Ponzius Pilatus on 11.09.21 at 6:25 pm

#45 Sean on 11.09.21 at 4:43 pm
I hope it is the 1970’s again. I want get my 16% to 18% GIC back.
———————
That was the 80s.
But you’re right.
My FIL had all his money in Five Year Canada Savings Bonds. (remember those)
Made a killing.
Me, not so much.
Had a 20% mortgage.
Nobody said, life is fair.

#78 Inequity on 11.09.21 at 6:26 pm

#57 Philip
You think raising property taxes which is a fee for the services is a good mechanism for controlling prices of houses?
Thats like raising the cost per liter of gas to reduce the price of the vehicle.

….doesn’t make any sense.

Why not just get rid of the mechanisms that have contributed to those high prices… Increase the nonpayment requirements/reduce the coverage of CMHC. Get rid of the ability to borrow from RRSP for down payments, or all the other many programs that the government has implemented over the years to “Help” people afford a home.

#79 Chalkie on 11.09.21 at 6:27 pm

Nova Scotia to add a 2% annual Property Tax on people from away?? Are they loosing their marbles or what.
What does people from away mean? International/abroad or do Nova Scotia mean the balance of Canadian’s who already subsidize Nova Scotia Federally in a big way.
Keep in mind, to many properties with not enough buyers, will quickly deflate prices and values of current home owners.

#80 45north on 11.09.21 at 6:30 pm

Well, they’re at it again. Days ago we parsed BC’s lame-brain idea of breaking real estate contracts, which will reduce listings, raise prices and make lawyers happy. The feds are about to unveil the FHSA, a new age-based tax shelter destined to reduce affordability. Nova Scotia just announced a withering tax of 2% of assessed value annually on properties owned by anyone from “away.” Ottawa has a national anti-foreign-owner tax coming and is mulling its own empty house tax. Toronto launches one of those in January. And now Ontario has unveiled a task force to deal with the real estate ‘crisis’ in a province where the citizenry is addicted to house porn.

what fools

they’re tying themselves in knots trying to avoid a very simple truth – affordable housing is cheaper housing. I’ve posted this half-a-dozen times. The Federal Government has huge influence over the price of housing: interest rates, CMHC mortgage regulations and the fact that the Bank of Canada is buying mortgage-backed bonds from the banks. The Federal Government could reduce the price of housing.

affordable housing is cheaper housing

#81 the Jaguar on 11.09.21 at 6:33 pm

‘It was the best of time. It was the worst of times.’

Or maybe it’s a little more along the lines of ‘Treaty of Versailles/ Weimar Republic’ unravelling. All these ‘well intentioned types’ flying from one condescending conference to another, scolding other nations for their short comings on global warming, fossil fuels, how many migrants should be allowed within which borders etc., while shaking their puny fists and uttering patronizing platitudes at countries with real significance and connectivity to our everyday existence.
Like China, Russia, and dog knows who else.

Such League of Nations wannabees. Instead let’s have a meaningful discussion about why 92% of the world’s semiconductors are manufactured in Taiwan. Maybe get a little ‘move on ‘ to sort that issue out. It things go sideways on that country’s independence it may not end well. No wonder CEF is on the edge of his seat about it.

There are no meaningful conversations about what’s really going on in the world or here domestically. We need smart people with real solutions but they don’t play so well on social media.

Meanwhile, as Jean Pisani-Ferry puts it:
“Decarbonization can thus be regarded as an adverse supply shock—very much like the oil shocks of the 1970s. In the short run at least, it is bound to affect potential output negatively’.

Sounds a lot like that old Bette Davis movie Dark Victory where she gets a brain tumour and is advised ‘Prognosis Negative’. No kidding.

I see two possible outcomes. Both reminiscent of two Hollywood Blockbusters. In one scenario it’s like the scene out of ‘Network’ where the population grows a set of gonads and rises up with ” I’m mad as hell and I’m not going to take it anymore’! We rescue ourselves. (doubtful).

The second scenario is similar to the scene from The Sound of Music where the Von Trapp Family climbs over the mountains to Switzerland. (spoiler: they take their wealth and values with them.) It plays out as an ‘abandon ship’ kind of thing. Leave the keys to the insane asylum to the Brutes who will just annilate each other due to Tribalism).

Now where did I put my Lederhosen?

#82 willworkforpickles on 11.09.21 at 6:39 pm

We work things out in our minds so we can sleep at night using whatever means to do so available to us.
It is all too easy to deceive ourselves when we don’t have enough information, truth and fact to come to a prevailing conclusion that can stand the test of time about our future financial standing.
So instead, what we want, the way we want it becomes the way it must be in our minds more often than not with disappointing outcomes.

Overly optimistic high hopes for future RE riches sure comes to mind.

#83 Outrage on 11.09.21 at 6:44 pm

Hyperinflation is alive and well in Canada’s housing market .My Ozzie Jurock emailed floored me ,the average house gained $ 640,000 in 2 years .Its amazing how families can afford these kind of increases. Yes ,the Canadian dream of owning a SFD are over. The government and the central bank want you enslaved,not me I’m in Mexico and loving it. Affordable rent ,food and cost of living is pretty good. Why would people move to Canada,its to expensive with terrible weather.

#84 IHCTD9 on 11.09.21 at 6:47 pm

#57 Philip on 11.09.21 at 5:07 pm
Why not using property tax to control the price of RE? Property tax will be better than profits to banks, one way or another we will be paying. At least the government will provide community services , build roads for us. Good luck to ask the banks to do it.

Take a look at Houston Texas USA, a city of 2.3 million people, the average house price at $290,000, very reasonable compared to their average household income. The main reason for this is their property tax of 3% compared to Toronto’s 0.6% with a average house price of $1.2 million.

Since property tax is an ongoing expense, it is much effective tool than other, even mortgage rate drop to 0%.
— —-

Looking at houses in NYS, the price is pretty high still even with a 10-12K tax bill. Also, for whatever reason, Toronto tax bills are half of what they should be when you look at other cities in Ontario. I guess city hall is as scared of the voters as they are broke.

My area is a shining star for property taxes, they haven’t doubled yet in 20 years and counting. It’s even more amazing due to all the bridges on account of all the creeks, rivers, bays, locks, and waterfront the City has to deal with. Brand spanking new City Hall, Library, Fire Station, Police Station, and Public Works buildings too. The average sfd cost 350k here 2 years ago, but now it’s over 600K…

Suffice it to say, that the problem in Canada with house prices isn’t low taxes, it’s (urban) Canadians.

#85 IHCTD9 on 11.09.21 at 6:54 pm

#80 45north on 11.09.21 at 6:30 pm

The Federal Government could reduce the price of housing.

affordable housing is cheaper housing
——————

My woodpile has more problem solving abilities than our current Federal Government. So don’t hold your breath.

#86 Humbled & Broke on 11.09.21 at 6:54 pm

I smell collapse. It’s close now.

#87 WTF on 11.09.21 at 7:03 pm

#31 Troll Alert
“The vibrancy of our property market will build a very sold future for millions now as well as the coming epic influx of New Canadians”.

———————————————————–

Kinda like an Amber Alert except it’s triggered by lies conjecture and baseless navel gazing self interested opinion.

—————————————————————

Regarding NS and Foreign tax:

From NS, have owned prop there. Watched the assessment increase by 10% every year for raw land. Eventually got tired of the inflated ANNUAL increased assessments and put it up for sale. Took months. Got what I paid for it. Assessments were a complete cash grab. Based on my experience NS ALREADY has a (stealthy) foreign tax.

PEI has had a real one for decades.

#88 BillyBob on 11.09.21 at 7:19 pm

Vax for prevention, promising therapies for the few who get it.

https://www.smithsonianmag.com/smart-news/pfizer-says-covid-19-pill-cuts-hospital-and-death-risk-by-nearly-90-percent-180979025/

Proposed marketing tagline: “I can’t believe it’s not Ivermectin!”

#89 Buck on 11.09.21 at 7:23 pm

Yes, property taxes in Toronto are lower than other cities in Ontario but between higher water rates, new garbage taxes, fees, and now 8%+ annual property tax increases and Toronto land transfer taxes getting higher, a new empty homes tax coming in January-2022, it is catching up pretty soon. I can see them with mayor John Tory, fake conservative really a liberal, progressive will keep adding annual tax, fee increases of 12% to 14% a year that has happened since 2016.

#90 AM in MN on 11.09.21 at 7:23 pm

#17 SunShowers on 11.09.21 at 3:26 pm
Funny how it always seems to be the kings telling the peasants to know their place as servants and to accept their squalid lot in life, and never the peasants begging kings to impoverish them.
————————————————–

I somewhat disagree. It is the peasants voting for policies that will ultimately impoverish them, but they are too stupid to understand, and thus get taken advantage of by the Kings.

In our democracy, it is the voters who have voted to become serfs.

Most Kings historically provided for their serfs some basic level of protection in exchange for a lifetime of labour and servitude. Most people don’t see their relationship to the government and tax authorities the same way, but in reality if you are working 50+ hrs/week and not getting ahead, something is wrong with the system is it not? Especially when so much wealth is being generated for the few.

When the turning comes, and it will, those who cashed out of their over-inflated RE will do well, but everyone else will just have to think back to what might have been.

The wealth taxes will come for those who have not sheltered their wealth, hopefully without too much civil-strife that usually accompanies a major debt restructuring and wealth transfer.

#91 gfd on 11.09.21 at 7:26 pm

Chinese Real Estate Bubble
https://www.bnnbloomberg.ca/why-china-s-real-estate-slowdown-isn-t-like-japan-s-1.1679642

#92 Shawn Allen on 11.09.21 at 7:31 pm

#75 IHCTD9 on 11.09.21 at 6:20 pm on RRSPs
I don’t see [RRSPs] them as an albatross though, there will be 4-5X in there compared to what we put in, and we got all the taxes back on those deposits too. We did the first time home buyer thing, and we’ll be able to drain a fair amount efficiently due to also having TFSA’s and probably some decent TFSA room at our disposal. They’d be less of a concern if it wasn’t for the DBP and dual CPP/OAS’s, but that’s a first world problem. We should have got to pumping those TFSA’S immediately upon debut, but we didn’t.

Underpinning us also is a sub ~1500.00/mo. retirement COL, and zero debt. We’ll find a way to minimize the damage, but still fully expect a final tax bill that exceeds everything we ever deposited into them in the end. C’est la vie.

******************************
Great points. But even if the tax you pay on RRSP withdrawals is 5 times what you got in tax breaks, you still win.

Here’s the math:

Imagine you got got back 35% as a tax refund when you deposited the money.

Think of it as it cost you net $650 for every $1000 deposited. In effect the $1000 in the RRSP was paid for as $650 your money and $350 by tax refund.

Years later the pot grows to 5 times $5000 per $1000.

You take out $5000 and say you pay 35% tax or $1750 tax. That’s way more in tax than the $350 you initially saved per $1000 invested. But that $1000 has grown to $5000 and your after tax share is 65% or $3250. Your net investment of $650 grew exactly 5 times here to $3250. In effect your $650 cost of the RRSP grew TAX FREE in this example.

You are smart and know the tax angles. You have great common sense and already know from common sense that the RRSP is a good deal. I think the math shows it is an even better deal than you might think.

Now a problem can arise if you deposit at a 35% tax rate and take out at 50%. That is rare to happen (and as you say a first world problem) but in that case a TFSA would have been better.

Of course TFSA did not exist 20 years ago and so RRSP was still the way to go even for those with DB pension.

All those people speaking of trying to get the RRSP money out faster are mostly off track. In most cases they are better to let it grow if the cash is not needed.

#93 DON on 11.09.21 at 7:52 pm

The govs at all levels making sure they get there piece of the booming housing market even on the way down in the form of increased taxes.

Getting interesting to say the least.

#94 Stoph on 11.09.21 at 8:00 pm

#92 Shawn Allen on 11.09.21 at 7:31 pm
——————————————————–
Your calc seems to be off. To get your initial pretax investment would have to be $741, which gives you a $259 rebate ($741*0.35 = $259), for a total $1000 investment in your RRSP.

Because of the commutative nature of multiplication, you’ll get the same after tax return on both the TFSA or RRSP if your tax bracket hasn’t changed. In your example it would be:

TFSA: ($1000*0.65)*5 = $3250
RRSP: ($1000*5)*0.65 =$3250

I think the key here is to consider what tax bracket you’re in when you add/remove funds from the RRSP and also other benefits that will be impacted when you remove funds such as OAS or Child Care Subsidy.

Generally, if you’re poor and young and think you’ll be rich when you’re retire, add to your TFSA. If you’re old and poor and know you’ll be poor when you retire, add to your RRSP.

#95 RRSP, TFSA is our best chance on 11.09.21 at 8:13 pm

Our plan with RRSPs is to accumulate as much as possible until we reach 55 to 57. We will withdraw our RRSPs each year where needed to supplement what lacking in our annual income, expense needs. The problem is these darn low interest rates. We can’t take market risk, fluctuations ups and downs so it is what it is. We are averaging 3.15% since 2008 for our RRSPs and 3.35% for our TFSAs or roughly 3.9% to 4% after compounding is in effect. We are doing really great on the on the RRSP accumulation plan as we are both 37 and have already $205,000. What we are doing to counteract the low interest rates on our GICs, term deposits is we have maxed out not just all our RRSPs the last 13 years but we maxed out our TFSAs since 2009, it was introduced by the Harper, Flaherty Conservatives. We now have $90,000 in TFSAs. We will continue to save more aggressive and try to keep up our 25% to 30% savings rate of our gross income going. This will be the key to reach 20 years of $40,000 yearly RRSP income, RRIF payments at age 55 to 57.

We have a low debt load and have a $25,000 emergency fund, higher interest savings account. Our house has 70% equity and a $125,000 left on the mortgage. I guess this is the other side of low interest rates paying us back with a higher home equity value. We are not high income earners, we do this all on a gross income of $92,000 a year, $41,000 my wife and $51,000 me.

#96 yvr_lurker on 11.09.21 at 8:13 pm

Some would argue in a world where one guy has greater wealth than a few billion others that humanity’s more messed up than usual. But, maybe not. Kings and serfs. Overlords and underlings. Twas ever thus. Perhaps it’s just our expectations that got out of control.
—————–

The extremes on the wealth scale now are problematic (second gilded age as termed by Robert Reich), reminiscent of before the great depression (train and industrial barons).

I don’t think it is unreasonable expectations in our society that a high earning couple in their mid 30s (earning say >300K total per year) would be very hard-pressed to buy a decent home in a good neighbourhood in YVR or Toronto without significant inter-generational $$ transfer. Currently, an apartment or townhouse is the only possibility unless one has a super-long commute. Moving to a small town you would eliminate the high paying jobs, and due to fast rising prices in smaller communities, they would be in a similar pickle.

Is this progress as compared to the 60s and 70s when families with a sole income provider could still buy a good SFH in decent neighbourhoods without inter-generational transfers? In the 50s–70s was also the time when the wealth disparity was at a local minimum (as compared to the early 1900s and now). Is there some correlation here? (yup…)…

So here we have reverted to kings and serfs, those who will do really well are those who have land either in the family or gifted (feudal system) and who can rent it out to others…. seems like a big step backwards..

#97 TurnerNation on 11.09.21 at 8:15 pm

What are the Globalists up to? This country is already divided up, the permanent virtual Berlin Walls and armed borders on the Least Coast.
The global shutdowns in March 2020 all was to implement the New System.
Are you ready for the next step?

https://twitter.com/PremierScottMoe/status/1458114356386824196
“Scott Moe @PremierScottMoe
Saskatchewan needs to be a nation within a nation.
When the federal government implements policies that are detrimental to our province, our government will continue to stand up for Saskatchewan people.”


–Science in Kanada. Is Compliance.

.Quebec allows High Schoolers to remove masks in Class (globalnews.ca)

–Back to normal! Every Former First World Country has trashed all freedoms. Kaput.
We are under emergency wartime control, this is WW3. Guess who is the target.

.France’s Macron says over-65s will need booster jab to get anti-Covid pass from Dec 15 (france24.com)

.Covid: Scottish vaccine passport scheme could be expanded (bbc.co.uk)

#98 Ponzius Pilatus on 11.09.21 at 8:23 pm

#71 Nonplused on 11.09.21 at 5:54 pm
Wealth taxes will not work because wealth is not money. What are you supposed to do, tear down 2% of your house and send it to Ottawa every year? Maybe 2% of your business?

Repeat after me folks, “Wealth is not fungible until it has been monetized.”
————–
Haha,
Nonsense, here you go again.
Has Musk already liquidated the 10% he said he would if his Twitter follower wanted?
Oh, sorry Sailo is the Tesla expert here.
I like the word “fungible”.
Sounds like something that could cure me of my ugly toe fungus.
So I’m all for it.

#99 Soviet Capitalist on 11.09.21 at 8:27 pm

You know what happens when someone says out loud that real estate in Canada will correct?! It means it will go up 30-50% in the next few months.

Garth is right though – we have lost our way and if this continues, then Canada might disintegrate. Albertans will likely have enough at one point of being sucked up dry by Ottawa’s irresponsible behaviour of buying up votes using public funds.

#100 Stoph on 11.09.21 at 8:41 pm

#92 Shawn Allen on 11.09.21 at 7:31 pm
—————————————————–
Ignore my previous comment that your math is off – it’s fine.

#101 Shawn Allen on 11.09.21 at 9:02 pm

#100 Stoph on 11.09.21 at 8:41 pm
#92 Shawn Allen on 11.09.21 at 7:31 pm
—————————————————–
Ignore my previous comment that your math is off – it’s fine.

*************************************
Thank you. I always respect someone who corrects things like this.

#102 Grunt on 11.09.21 at 9:04 pm

Say Garth imagine the wrong folks getting hold of a quantum computer and doing ransomeware on Wall Street or the Fortune 500.

#103 Dishonest Realtor on 11.09.21 at 9:15 pm

Prices will not start dropping after interest rates start rising.

Fingers crossed.

#104 9 TO 11 Flag on 11.09.21 at 9:24 pm

WEEZ gotta problem, Evergrande will require deployment of capital back to home.

#105 Philco on 11.09.21 at 9:34 pm

People have always lived in times of contradiction. No difference today. Some would argue in a world where one guy has greater wealth than a few billion others that humanity’s more messed up than usual.
Garth
———————————–
And the Inet has given a form for the massive piles of fools voicing their opinion that in the end….no one gives a rats ass.
Toss your tea in the harbor.
A waist of time in my view.

#106 IHCTD9 on 11.09.21 at 9:45 pm

#92 Shawn Allen on 11.09.21 at 7:31 pm
———

Thanks for all that, you are a lot better at the detailed math than I am. Of course, you are correct, when we started out, the RRSP was the only game in town, so we had many years of pumping those, and then we were slow to jump on the TFSA, which will be a permanent regret.

But not a regret due to having to eat cat food during retirement. Truth be told, few were the years that we reinvested the tax returns back in tit for tat. Instead, they paid property taxes and insurances. But, the monthly deposits carried on, and undoubtedly some of those deposits contained some residual tax returns (single joint account). I’ve never been one to compartmentalize cash flow. I think bulk cash in – cash out – look for results. Probably why I suck at detailed math, it’s tough to figure out the minutiae with everything changing all the time.

All I know is I’ll be paying a big tax bill at the end of the day for sure, but running the RRIF calculator says I’ll have to live to near 100 to go broke drawing at 50K/yr fixed withdrawals and a 6% return. 5-6 of those years due to the RRIF factor will have us drawing 6 figures. Doing some napkin math on this says we’ve done just fine with our RRSP efforts – even if Ottawa gets hundreds of thousands all-in because we didn’t make it to 100. No complaints on that at all, and that from a guy who probably puts more effort into avoiding taxes than anyone on this blog. Chances are excellent that our RRIF withdrawals will be set up higher than the min despite the tax implications, I’m just not going to hit 100.

Reality says the OAS/CPP/DBP combo will almost assuredly be enough to get us by, and the D+B will essentially be gravy, at least initially. I think of it as a stack of ordnance to be deployed as it becomes desirable or necessary to do so. It’s mostly security and peace of mind. If everything stays calm and collected, the kids will get a nice hand up. Maybe grandkids too.

Ottawa will get plenty as well – but I wouldn’t have done any different if I knew then, what I know now (except getting on those TFSA’s immediately).

#107 Sail Away on 11.09.21 at 9:53 pm

#100 Stoph on 11.09.21 at 8:41 pm
#92 Shawn Allen on 11.09.21 at 7:31 pm

———

Ignore my previous comment that your math is off – it’s fine.

———

But your point is accurate that if the tax rate is the same at contribution and removal, the end take-home value of TFSA and RRSP will also be equal.

The main benefit of RRSP is the much larger contribution limit.

#108 Quintilian on 11.09.21 at 9:56 pm

I think we have a problem with a built-in solution.
Much of it is predicated on interest rates.

If rates do not rise, inflation will gain traction thereby reducing purchasing power, eventually leading to less demand for goods, leading to stagflation, and rising unemployment.

If rates do rise- it’s not too difficult to predict how the dominoes will cascade.

But that’s just basic stuff that even accountants can understand.

The social- political upheaval, well that’s another story.

My guess is the Central Bankers will be constrained by politicians, until it’s too late.

#109 IHCTD9 on 11.09.21 at 9:58 pm

#102 Grunt on 11.09.21 at 9:04 pm
Say Garth imagine the wrong folks getting hold of a quantum computer and doing ransomeware on Wall Street or the Fortune 500.
———

The “wrong folks” will be the last to receive quantum computers. Wall Street will be among the first.

#110 Sail Away on 11.09.21 at 10:02 pm

#98 Ponzius Pilatus on 11.09.21 at 8:23 pm

Has Musk already liquidated the 10% he said he would if his Twitter follower wanted?
Oh, sorry Sailo is the Tesla expert here.

——–

That’s me, the Tesla expert.

I am not sure if Elon has offloaded his $21B in stock yet, but since an average day of Tesla trading volume is 21,000,000 shares, it’s possible the unwinding may take some time.

#111 IHCTD9 on 11.09.21 at 10:12 pm

#103 Dishonest Realtor on 11.09.21 at 9:15 pm
Prices will not start dropping after interest rates start rising.

Fingers crossed.
—— –

Hahaha! (Yes, I’m here reading every day).

Seriously though, I’m good and ready for a legendary RE value pile-driving. It’s high time. The only way this gets fixed is via shaking the foundations. Epic pain needs to be rained upon the brows of the faithful. An inquisition dragging the witches to the stake. There’s no common sense – not without consequences. You bring the fire, I’ll bring the wood.

#112 Lee Adams on 11.09.21 at 10:30 pm

Major # 1 Contributing Factor to real estate prices. Lack of Supply. What happens when 35 offers sent to one Sale ? Quite different if there are 35 properties and 1 buyer.

#113 Fantastic Mr Fox on 11.09.21 at 11:00 pm

Wealth is not wealth if everybody has it. That is simple inflation.

#114 Larry on 11.09.21 at 11:07 pm

Hey there RRSP, TFSA is our best chance, if you can keep up a 3%minimum hopefully 3%+ annual GIC rate compounding in RRSP’s, GIC’s for the next 20 years with your current RRSP balance $205,000 will become $370,000 and your 18% annual RRSP contributions of 18% per year of gross income, $16,560 will become $445,000, you will reach $785,000. This is pretty \close to the $800,000/20 years=$40,000 per year RRSP/RRIf withdrawal you are aiming for.

This is without interest of say 3% a year on your RRSP which is $24,000 per year on that $800,000 at 57 years old. Also, the rest of your 30% savings rate of gross looks to be $11,040 or your TFSA compound that at 3% a year over 20 years+ your current TFSA balance of $90,000 compound at 3% a year over 20 years and it is $458,000 TFSA balance which would bring in $13,740 a year tax free interest. It looks like you will both be in decent position by 57 years old.

You could both take at 60 your early CPP payments which could easily be another $2,300 a moth combined. Your mortgage will be paid off by then for sure and your home equity will be 100% and your house will be probably going by historic Canadian housing inflation average gains per year be worth 80% to 100% higher in 20 years which will easily add hundreds of thousands to your net worth. I am a financial coach, do this stuff all the time but I must say you are very conservative with your money but if that is how you sleep at night then that is what you accept.

#115 leafsbigfan on 11.09.21 at 11:37 pm

While I agree that housing is out of control, I doubt there are many in the GTHA that are buying with 5% down — the average is over $1mm now and that precludes 5 down.

Just sayin’

The limit is rising to $1.25 million. – Garth
Hi Garth. Long time follower. Where is this written and when is it coming into effect?
Thanks

#116 Ponzius Pilatus on 11.10.21 at 12:14 am

Those Singaporean don’t mess around.
————————————————-
People ‘unvaccinated by choice’ in Singapore stop receiving free COVID-19 treatment
People “unvaccinated by choice,” make up the bulk of remaining new COVID-19 cases and hospitalizations in Singapore.

#117 Stoph on 11.10.21 at 1:24 am

#101 Shawn Allen on 11.09.21 at 9:02 pm
#100 Stoph on 11.09.21 at 8:41 pm
#92 Shawn Allen on 11.09.21 at 7:31 pm
—————————————————–
Ignore my previous comment that your math is off – it’s fine.

*************************************
Thank you. I always respect someone who corrects things like this.

——————————————————–

I was just happy enough to catch my error before you commented on it.

#118 I'mshort_corpdebt on 11.10.21 at 1:26 am

@#57 Philip

It is being looked at. Local governments, municipalities, are seeing the effect of decades of profit taking by the banks, RE owners pocketing huge sums and fleeing to third world hell holes to enjoy their grand lifestyles. While we see the decrepit houses, sidewalks, municipal buildings, bridges etc… crumbling in our own country.
All this money escaping to defer/avoid taxes or being spent elsewhere. Local governments will be taking matters in their own hands slowly. Eventually giving the finger to the bought and paid for plutocrats in Ottawa. That’s when Canada will begin to tear apart.

#119 april on 11.10.21 at 1:29 am

Have a listen to Ross Kay, Howestreet.com Nov. 9. … see what you think.

#120 Jane Finch on 11.10.21 at 4:50 am

I keep hearing “ lowering property prices” and “ making housing more affordable”. We hear about taxing, banning, confiscating, limiting….all wrong, and it’s shocking that 99.9999% of people don’t get it. The sole reason prices are so high is that rates are set at zero. Why are they set at zero? Because the BOC has acted like Trudeaus personal piggy bank and allowed him to borrow unreserved at zero. Rates at zero are killing the housing market because that destroys the intrinsic value of real estate. Nothing is worth anything if the set value is “free”. Fine….sell houses for two million…. that’s what a loaf of bread cost during the Weimar Republic. If you can’t say “hyperinflation” because it doesn’t suits your political strategy, then what do you call hyperinflation? BOC has lost all credibility.

#121 Steven Rowlandson on 11.10.21 at 7:06 am

“People are now paying $1.7 million for a detached house in big cities. Will they be able to pay $3 million in five years without incomes doubling? How will that possibly happen?”
They won’t. The ability to pay $1.7 million will be as null and void as paying $170,000. People will be lucky if they can afford $17,000 for a bungalow and $3,000 for a car.
Employers don’t have to pay more than minimum wage and they don’t have to employ anyone for 40 hours a week.
The a mount of debt carried by employees doesn’t matter to employers either. They don’t care and it isn’t their problem. The number of rug rats you have doesn’t matter to them either. What matters is are you willing to work and can you do the job even if it is for short work weeks like 10 to 30 hours a week and no benefits?
If not, there are plenty of others lining up here and abroad to take your place. There is no real income support for real estate and the economy as you all know it. You can’t get blood from a stone and when that becomes obvious kiss it all good bye.
People are going to learn that debt= failure and lack of savings and fiscal discipline = failure.
Learning those lessons will scare and scar people for generations.

#122 ImGonnaBeSick on 11.10.21 at 7:53 am

#116 Ponzius Pilatus on 11.10.21 at 12:14 am

Not something to be cheered… Replace Covid with HIV (which is also 100% preventable) and see if you’re such a cheerleader… You’ve been manipulated (wilfully) by the zeitgeist to wish misery on people for no reason.

#123 Dharma Bum on 11.10.21 at 8:27 am

#70 I’m Gonna be Sick

Apparently you can be diagnosed with “climate change” now;
—————————————————————————————————-

Hahahahaha…..precious.

It’s going to rain tomorrow.

Must be climate change.

It’s an emergency.

#124 Do we have all the facts on 11.10.21 at 8:37 am

In September 2019 the Federal Reserve held assets valued at $3.377 trillion.

By September 2021 the Federal Reserve held assets valued at $8.35 trillion.

The funds required to purchase close to $5 trillion in assets were generated out of thin air by the Federal Reserve through an increase in M2 money supply.

The M2 money supply in the US in September 2019 was $15 trillion. By September 2021 M2 money supply in the US was approaching $21 trillion.

There was general agreement that a $6 trillion increase in M2 money supply would increase the rate of inflation. There was also agreement that an increase in interest rates by 0.5% to slow the rate of inflation would add $140 billion per year to current debt servicing costs of the US Federal government. Eenny meemy!

The problem facing the Federal Reserve is that external demand for the assets they acquired through quantitative easing has all but disappeared. Demand from Foreign countries has remained stable and previous surpluses generated by domestic Trusts have all but disappeared.

In order to attract the investors necessary to cover future deficits incurred by the US government the interest rates offered by US treasuries had to be raised.

If increased rates do not generated sufficient demand for US treasuries the Federal Reserve will become the major source of future demand and the M2 money supply will have to be increased. Any future increase in M2 money supply will contribute to the current rate of inflation.

To this observer the lack of international demand for US treasuries coupled with large deficits incurred by the US government has placed the Federal Reserve in a very difficult position. Inflation has exceeded their target range but the obvious solution to control rising inflation would increase future deficits incurred by the US government and could force an increase the balance sheet of the Federal Reserve without an obvious exit strategy.

The Federal Reserve can only reduce their purchase of additional US Treasuries if alternative buyers are attracted by higher interest rates. As the global economies recover the demand for capital is bound to increase and global competition will result in an increase in interest rates charged to access development capital.

In 2021 less than 60% of all foreign reserves are being held in the form of $US. Times are changing and at some point in the very near future the Federal Reserve will have to take action to protect the value of the US dollar from inflation.

Between ‘a rock and a harder rock’ just about defines the current state of affairs facing the Federal Reserve.

#125 crowdedelevatorfartz on 11.10.21 at 8:39 am

@#122 sick

“You’ve been manipulated (wilfully) by the zeitgeist to wish misery on people for no reason.”

+++

No.
The unvaccinated people suffering and dying in overloaded ICU’s all over Canada and he World had a choice….
Get a vaccine or possibly get very very sick and die.

So now they fill the Intensive Care Units up and block them for other people who decided to get vaccinated and are now very very sick with Cancer, heart attacks, car accidents, etc etc etc.
And the UN-vaccinated cost the taxpayers millions of dollars to keep them alive because….they were stubborn, obstinate and believed the blithering drivel on the internet.

Fine.
Exercise your freedom and your “rights”.
But dont expect the world to endlessly pay over and over and over again to save you when your stupid, selfish decisions put others waiting for a bed in ICU in peril.

A billion people have been Vaccinated and none of the anti vaccine driveling rumor’s have surfaced.

Ivermectin ….my God.
What’s next ?
Yak pee mixed with decaffinated Civet dung and smoked in a Bong……

#126 RE_Investor on 11.10.21 at 8:46 am

People like me have lived through a lot of business and economic cycles. We’ve seen assets rise and fall. Markets that give and take away. Nothing goes up forever. Consider where your finances will be if this asset class corrects. Because it will.

Not bragging, just passing on information!
My last 2 RE Purchases were 2016 and 2018 in the GTA. Both semis. Wild that both are now up 100% and 60%.
I missed a Mississauga semi at $790k in August2020. This one is up 25% since a similar semi 5 houses away sold for $1 mil this month. I would gladly take a huge correction in RE Prices in order to buy my next rental property. When you buy with no leverage and get great rental income, ups and downs in prices don’t affect you, and you never sell anyways. Maybe that’s the same as a 60/40 portfolio, but I’m guessing no one would sell off their entire portfolio during a crash. You get cash flow from both types of investments, and you never sell, because both go up in value indefinitely. Just pick a point in your life and get into either market. Otherwise you become cynical and start venting on blog sites…lol

#127 Let's Go BUFFALO! on 11.10.21 at 9:19 am

Terrence Pegula, the billionaire owner of Buffalo Bills and Buffalo Sabres obviously wipes out his income completely with tax magic, got $2400 Pandemic Relief assistance cheque from the US Government!

He erodes his income to such level that the government sees him as “poor” sends him money!

Ahh…don’t you love it!

GO BUFFALO GO!

#128 ImGonnaBeSick on 11.10.21 at 9:55 am

#125 crowdedelevatorfartz on 11.10.21 at 8:39 am

I like you crowdie, agree with 99% of your world view, and respect you. I don’t disagree that people “shoul”d vaccinate. I’m a huge fan of vaccines. I think we just differ in opinion on this point. ICU capacity should have been increased during a pandemic and remained until the all clear. No one should be denied care.

#129 Sail Away on 11.10.21 at 10:09 am

#127 Let’s Go BUFFALO! on 11.10.21 at 9:19 am

Terrence Pegula, the billionaire owner of Buffalo Bills and Buffalo Sabres obviously wipes out his income completely with tax magic, got $2400 Pandemic Relief assistance cheque from the US Government!

He erodes his income to such level that the government sees him as “poor” sends him money!

Ahh…don’t you love it!

GO BUFFALO GO!

——–

Probably not his fault. I suspect checks were sent to all US taxpayers. Our family received US $4,200 complete with letter from the Pres. Of course we deposited it even though completely unnecessary.

If the Sail Aways get unrequested US stimulus $, I’d expect a mere sports team owner would get the same.

#130 ImGonnaBeSick on 11.10.21 at 10:23 am

Oh boy, do I ever _not_ want to get into a conversation about ivermectin in regards to viruses.. I have no idea if it has an anti-viral use.

But just to be clear, ivermectin is a very important drug for humans as well, has been described as one of the “wonder drugs” (like penicillin and aspirin) and has helped 100s of millions of people worldwide. It’s used to treat elephantiasis and river blindness… But it is not “horse paste” and no one that needs it for legitimate issues should feel bad or reluctant about taking it.

#131 millmech on 11.10.21 at 10:23 am

Canadian 5 year Bond Yields up over 5% this morning, wonder if banks raise mortgage rates this week.

#132 Quintilian on 11.10.21 at 10:32 am

#124 Do we have all the facts:

Correct.
“Between ‘a rock and a harder rock’ just about defines the current state of affairs facing the Federal Reserve.”

The politicians and the stock market are the rocks.

Central Bankers have no power, they are barking dogs.
This is the legacy of “The Greenspan Put”

10 year treasury still below or around 1.5

#133 Wrk.dover on 11.10.21 at 10:36 am

Real estate tourism. Around 1970, I had more than a couple of school friends whose parents had bought empty lots in NS for retirement homes, although they had no connection to the place. It just looked sweet on their vacation or earlier during training in WWII or whatever.

These retirement homes never materialized and the land was surely flipped, probably at purchase cost, or less.

The bulk of the shore line in Annapolis, Cumberland, and a most other counties is undeveloped small acreages with scrub brush and white spruce. Probably almost all of it is and has been owned by residing away people. The taxes on resource lands are negligible at best and seem like a joke to those that pay them, I know from personal experience.

None of these lands are anywhere near where one would shop or work without a stupid long round trip, every time.

The new 2% tax should do well to prevent the commoditization of this province as just another wealth sink for the top 10 or 20% that coincidently live thousands of miles away, and own most everything, thus being the top 10 or 20%.

Until the pandemic madness started, NS was not a place where you had to buy now for later use. The prices were low and did not rise very much over time, plus there is very much of with only several hundred thousand people not living in the urban areas.

Six years ago, for comparison to Van and TO madness, I posted a house link on this site for a stately center hall mansion that would suit Forest Hill in Toronto, except for its triple lot location high on the hill in Digby Town with a commanding view of the harbour and the length of the Annapolis Basin beyond. It had languished on Viewpoint for months at $299,000, and been previously offered several times in earlier years. Well, it did sell shortly after for 30K less and has sat vacant ever since with ADT security signs on the perimeter ever since. I just checked, the assessment is $299,000, although it appears that 1/3 of the land has been or will be flipped for infill.

We don’t need this crap here. Tax ’em Danno.

#134 Philco on 11.10.21 at 11:47 am

#123 Dharma Bum on 11.10.21 at 8:27 am
#70 I’m Gonna be Sick

Apparently you can be diagnosed with “climate change” now;
—————————————————————————————————-

Hahahahaha…..precious.

It’s going to rain tomorrow.

Must be climate change.

It’s an emergency.
———————
If you own a private jet there’s no such thing. Im working on that.
Unfortunately inflations moving fast so i doubt ill get there.
Will have to sneek in with Bezos.
Climate sham is for the poor and thats maybe $15mil or lower net worth.

#135 crowdedelevatorfartz on 11.10.21 at 11:55 am

@#133 Wrk.dvr
“We don’t need this crap here. Tax ’em Danno.”

+++

I had a cottage in PEI for about 7 yaers.
Building and property assessed at 85K
My “non resident – Come from Away” tax was $1700/year
My Uncle owned a 5 bedroom, 2500 sq ft house on 10 acres assed at 400k and his property taxes were $750.
He bitched and moaned about all the “off Islanders” screwing up the traffic and filling the Golf courses ( for 3 months per year.

I reminded him that his roads were snow plowed in the Winter, Garbage collected, pot holes filled, etc etc etc. by the taxes that all the non residents were gouged for….
OR they could kick us all out and pay double taxes.

Crickets.

#136 Stoph on 11.10.21 at 12:20 pm

#107 Sail Away on 11.09.21 at 9:53 pm

The main benefit of RRSP is the much larger contribution limit.
———————————————————

That’s a reason why the RRSP is a greater benefit to high income earners than to low income earners. In contrast, the TFSA contribution is the same for everyone, and yet Trudeau targeted the TFSA… Perhaps I should just stay quite, lest the masses figure this out and demand that RRSP contributions also be gutted.

#137 Steven Rowlandson on 11.10.21 at 12:36 pm

“We don’t need this crap here. Tax ’em Danno.”

On the contrary regulate real estate prices and rents and restore order and sanity.

No more than 3 years pay at the lowest payrate and no more than a weeks pay per month to rent a place to live and that assumes that such usury is allowed.
If people want profits there are other ways that might be more productive and less socially harmful.

#138 MagicWand&Endless$ on 11.10.21 at 12:43 pm

#128 I’mGonnaBeSick
“ICU capacity should have been increased during a pandemic and remained until the all clear. ”

Do you realize that it takes lots of years and $ to train the highly specialized teams of medical experts required to care for a single COVID-19 patient in the ICU?

And even if we could have accomplished such a feat in warp speed or were clever enough to set this up years ago, what would we do with all those expensive medical specialists in between pandemics? Pay them with your tax dollars to sit on their butts?

Hmmmm…..

#139 Sail Away on 11.10.21 at 12:51 pm

#136 Stoph on 11.10.21 at 12:20 pm
#107 Sail Away on 11.09.21 at 9:53 pm

The main benefit of RRSP is the much larger contribution limit.

——–

That’s a reason why the RRSP is a greater benefit to high income earners than to low income earners. In contrast, the TFSA contribution is the same for everyone, and yet Trudeau targeted the TFSA… Perhaps I should just stay quite, lest the masses figure this out and demand that RRSP contributions also be gutted.

——–

To a point that is true since many high income earners are able to max out both accounts.

However, in all cases for both lower or higher earners, there is the option to fund either or both of the registered accounts to the limit. From that perspective, a lower income earner is able to shield a higher percentage of their excess funds.

#140 IHCTD9 on 11.10.21 at 1:04 pm

#133 Wrk.dover on 11.10.21 at 10:36 am
___

Here in my hood, it’s the locals causing all of the issues. Average values went from 350K to over 600K since 2019. Everyone is building a spec house, buying and severing, building and listing. New homes, old homes building lots and vacant land. Half the local MLS is now GTA realtors. All kinds of houses being bought up by “away” peeps and immediately put up for rent. Everyone and their dog is trying to get paid selling the Canadian dream for 100% markup.

If Trudeau and the BoC don’t get a handle on this insanity, I will eventually need to move. But not before I join the fray and try to milk 7 figures out of my 4 acres of glacial till. I’ll leave, but I’ll do it with a bang.

Kingston area is looking good, somewhere out there might be a place for me where the GTA lunatics can’t reach. At least for now.

#141 ImGonnaBeSick on 11.10.21 at 1:12 pm

#138 MagicWand&Endless$ on 11.10.21 at 12:43 pm

Oh.. really.. no.. no, I didn’t realize that it would take money and time to train people… Especially during an emergency… So yeah, years to train someone on safe procedures and operation specialized devices for a specific disease, with specific symptoms…

Good thing we kept the ol’ pocket book closed for the last 2 years, that we didn’t open field hospitals, that we didn’t buy a bunch of respirators and deployable field hospitals… Good thing we didn’t bring nursing and respiratory students in under emergency conditions… Good thing we didn’t request all retired staff back… Bring in the military to help…

Yep, let ’em die, same should go for drunk drivers then, and lung cancer patients, and a mile long list of people that should know better…

Who are you again?

#142 MagicWand&Endless$ on 11.10.21 at 1:39 pm

#141 ImGonnaBeSick on 11.10.21 at 1:12 pm
#138 MagicWand&Endless$ on 11.10.21 at 12:43 pm

“Who are you again?”

Again?

Don’t think I wrote who I was, but if you want to know my name, you go first. ImGonaBeSick couldn’t be yours, could it?

#143 ImGonnaBeSick on 11.10.21 at 3:20 pm

#142 MagicWand&Endless$ on 11.10.21 at 1:39 pm

I could care less who you are outside the comments section… I meant why are you chiming in on a conversation while assuming naivete. You have every right to your opinion, but actually have an opinion then.

Fear that you or a loved one may not have a bed in ICU, is the same fear that anyone that has a friend or family member that will not got vaccinated has if these policies take hold.

Canada is now 88%+ over age of 12 vaccinated. We did it. Mission complete. You will never convince all the people. They do not deserve to be shunned like the lepers because of a fearful populace.

You want to see vaccine hesitancy, wait until the end of the month when vaccines are open to the 5-11 age groups.. will your tune change if people say children who aren’t vaccinated shouldn’t get a bed in ICU? We’ll see…

Anyways, I hate talking about this stupid virus and pandemic… I just wanted to get a jab in on the fake hyper peace and love looney lefty from Austria…

#144 MagicWand&Endless$ on 11.10.21 at 4:40 pm

I’mGonnaBeSick

Huh? You are a strange one to discourse with. I started with one concise point, in response to one of your comments, and you respond with several unrelated off-shoots I didn’t bring up at all.

#145 ImGonnaBeSick on 11.10.21 at 7:26 pm

#144 MagicWand&Endless$ on 11.10.21 at 4:40 pm

Heh.. ok. Granted. I made an assumption you had read all the comments, and were taking the stance that unvaccinated covid patients should not receive treatment.

If not, then yes, our back and forth could seem like the non sequitur ramblings of a madman. Excuse me, but I don’t have the desire to debate anything covid… And I’m kicking myself for piping up in the first place. Have a good night.