The big thing

Exactly a year ago (when we were all waiting for the vax) a big Bay Street consulting outfit sounded the alarm. Veritas Investment Research has creds. RBC is one of its heavy clients, and these days good data matters.

But, yikes, they blew it.

Real estate is ready to go over a mortgage deferral cliff, the company said. And the number of homes listed for sale will mushroom.

“We see a potential headwind for real estate prices as payment deferral programs wind down in 2020… An increase in MoI (inventory) represents a buildup of excess supply resulting in lower real estate prices and vice versa. Our analysis estimates the potential impact to real estate prices based solely on increased supply from properties tied to mortgage deferrals being listed for sale.”

The conclusion: A “material decline” in house prices. Across Canada, up to 11%. In Vancouver as much as 17%. And in the GTA, a cascade of up to 26%, as owners ran into financial distress and listings jumped.

Never happened. Veritas laid an egg. Not alone, though. Most bank economists were on the same page a year ago. So was CMHC. Remember Evan Siddall, its outspoken boss? He said prices were going down 15% as most of a million families took a holiday from mortgage payments.

Fail. Prices went up nationally by almost 20%, and in major markets and high-demand suburbs by a third. Moreover, inventory collapsed. Instead of having a 6-8 month supply of houses building up (as Veritas projected), in places like Toronto it’s measured in weeks. The number of active listings in Victoria, Vancouver, Mississauga, Hamilton, Ottawa, Toronto, Montreal and Halifax has crashed by up to 60%. The mortgage deferral cliff was not even a pimple. In terms of academic research, data-collecting and expert analysis through a macroeconomic lens, this was a disaster.

But why?

Mortgage rates are higher now. We’re in the fourth wave of this miserable pathogen. Inflation has surged, putting pressure on family incomes. Wage growth has been pathetic. Debt of all kinds – but especially for home loans and HEOCs – has taken a giant leap. Now Omnicron has arrived. Sheesh. Enough, already.

What the research failed to measure was human emotion. The real estate mess we now witness was caused by desire, house-lust, FOMO and the hormonal Bank of Mom – not record-low mortgage rates, Chinese dudes, money-laundering or any of the other bogus reasons thrown around below decks. Missed was a massive inter-generational transfer of wealth, unique in Canadian history. Sure, parents have always helped kids get established. But not like this.

A survey from IG/Pollara has found that 75% of high net-worth families (investible assets $1 million+) have funded downpayments, or plan to do so. The average gift is $145,000, and in most cases Mom Money is paying 25% of the purchase price. The total amount being transferred to adult kids by affluent parents: $100 billion.

By the way, real estate has never gone up as much, as fast, under any prime minister as it has during the Reign of T2. The Macdonald-Laurier Institute says in a report called “Hitting too Close to Home” that values under Trudeau are 70% higher – adding $300,000 to an average property. Just since the pandemic arrived, we’ve seen a 31% inflation. Meanwhile the money people make has barely budged. And this explains all the debt. Canadians are borrowing from the future to buy what they cannot afford today.

Besides FOMO and Mom Money, here’s the third thing screwing up real estate: house hoarding. As we told you last week, a quarter of all housing transactions now involve buyers who already own homes. It’s the financialization of accommodation. Given cheap money, easy leverage and lax downpayment regs, this is the one asset class Canadians have swarmed to. Half of all Toronto condos go to investors, not end users, and become part of the rental pool. Everybody with a house wants another one.

Well, it’s the end of November. Veritas has just issued its 2021 report. President & CEO Anthony Scilipoti has these messages for his corporate clients:

  • High household debt could lead to a reckoning.
  • That would involve “a series of sharp interest rate hikes to rein in inflation.”
  • Politicians have “no idea” on how to deal with low inventories and the trend towards house hoarding.
  • “My biggest concern,” he says, “is what happens when there is a rush to the exits for real estate investors.”
  • The work-from-home equation has been a mass social experiment that has likely changed how we live, work and play forever.

Should we ignore such words and keep pushing our kids into the most expensive, highly-leveraged housing market of all time? Will Canadian residential real estate be the first asset class that goes up forever? Does Mom know better than the data scientists?

Looks like 2022 will be a shocker.

About the picture: “This is Ozzie, our first granddog,” writes Ilona. “She’s almost 2 years old mini Australian Shepherd, unusually chill for the breed (and never barks!) Very pretty and knows it. If a passerby says, “Aw look at those beautiful blue eyes!”, they’d have to pet her and compliment the silky soft fur as well. We sure she misses Toronto snow, but otherwise is happy with her hoomans in BC. Segue to MSU: your blog helped me get over the idea of buying a condo for our daughter, who was a student at the time. She got the placement in Vancouver, and our B&D portfolio is definitely working better for us than a rental unit would! Thank you for your wisdom and sarcasm.”

122 comments ↓

#1 Joe on 11.28.21 at 2:40 pm

For over a decade prediction after prediction hasn’t come to fruition and now making yet another prediction??? I’m confused.

#2 Leftover on 11.28.21 at 2:47 pm

There’s a fourth thing – oldies are too scared to move into old folks homes due to Covid, so they’re staying put. This takes a big chunk of listings off the market.

Just look at what’s happened to reverse mortgages in 2020/21, double digit quarterly growth.

#3 The Woosh on 11.28.21 at 2:47 pm

“Does Mom know better than the data scientists?”

——————————————

Of course she does! No go out there and buy another house.

#4 Shawn Allen on 11.28.21 at 2:55 pm

Wealth transfer from old to young? and other directions

“Missed was a massive inter-generational transfer of wealth, unique in Canadian history. Sure, parents have always helped kids get established. But not like this.”

******************
Of course that’s true.

But there has also been money flowing intra-generation from old to old.

Here’s how: The kids from well-off families got help from their older parents. But they also needed a massive mortgage. And who’s bank account did both the down payment and mortgage funds eventually settle in? That would often be other older people selling houses to the kids. Sometimes home builder bank accounts – owned by relatively older people too.

And also money flowing from kids to older people. Here’s how: Not every young couple buying had the help of parents. Those who did not took their own down payments and massive mortgages and off that money went to middle and older generations.

Another point: I mention money flows here. As far as the wealth created due to the increase in existing home values. Well that got created largely of thin air.

Financial Wealth and money are of course two different things. Wealth as measured in units of money VASTLY exceeds the sum total of all actual money.

#5 Omicron on 11.28.21 at 2:56 pm

Garth, no, I am your father.

I am altering the deal. Pray I don’t alter it any further.

#6 Mean Gene on 11.28.21 at 2:58 pm

Defying logic seems to be the new norm these days.

#7 Omicron Kenobi on 11.28.21 at 3:06 pm

You can kill me, but you will never destroy me. It takes strength to resist the dark side. Only the weak embrace it.
It is more powerful than you know.

If you strike me down, I shall become more powerful than you can possibly imagine.

#8 Not Fooled on 11.28.21 at 3:07 pm

And all of those dire predictions never came to pass, even during a period of unusually low immigration numbers.

Once immigration ramps back up, the housing merry-go-round will crank up that familiar tune and home owners will go right back to making bank.

You can’t compare the risk of collapse in the Canadian housing market to any other historical RE collapse, because none of the comparisons involve countries with the high rate of immigration that Canada encourages.

Between students, TFWs, and economic immigrants Canada imports 1 million people annually. They gotta live somewhere.

Don’t forget that the Libs are big supporters of the Century Initiative.

https://montreal.ctvnews.ca/economics-vs-politics-the-liberal-party-s-policies-on-housing-immigration-are-not-sound-economics-1.5580025

#9 Most likely on 11.28.21 at 3:08 pm

“ Should we ignore such words and keep pushing our kids into the most expensive, highly-leveraged housing market of all time? Will Canadian residential real estate be the first asset class that goes up forever? Does Mom know better than the data scientists?”

-Most likely. 95% of those under 30 are completely priced out and wanting in all major markets. For the under 25 demographic it’s even worse, like 99%.

There simply is no going back with all the demand. The only hope these kids have is with help. Otherwise they will most likely join the ranks of the over 35 group who sat out and have little hope of ever owning (unless they were savvy investors -an extreme minority).

#10 Don Guillermo on 11.28.21 at 3:13 pm

Thankfully Black Friday weekend is coming to an end. There seemed to be an extra run on smash & grab specials this year. Sad.

#11 millmech on 11.28.21 at 3:17 pm

So what your saying is that Trudeau has increased family net worth by $300,000 for every asset they own, if you own two or three you made a million dollars tax free(you just have to put each addition asset in each siblings name therefore avoiding capital gains tax).
What other asset has created this much wealth from thin air and with no effort, just sign on the dotted line.
Does anyone believe that the powers that be will put a stop to this and have people lose their investment, not a chance, low rates are here to stay.
People are worried that their children will be priced out and I know that they are buying for their grandchildren now so that they will have a piece of property when they become adults.
Also do not forget that the 400k-500k new residents coming to a a country with basically no housing availability will make it even worse, where are these newcomers going to live if the rents and prices keep going up.
There is the problem of massive government debt with no way of paying it down so rate suppression will be there. If rates start to go up they will just discover another covid variant or declare another climate emergency.

#12 Dolce Vita on 11.28.21 at 3:24 pm

“a series of sharp interest rate hikes to rein in inflation.”

If they do that there will be a recession. I doubt the BofC has any appetite for that. Also, will increase debt servicing interest on Canada’s massive Gov debts to probably unprecedented levels.

————————

GOOD and quasi-bad Virus Porn

1. Moderna develops boosters against the Omicron variant (3 test approaches, months away though). Pfizer hard at it too.

https://www.20min.ch/story/moderna-entwickelt-neue-impfstoff-kandidaten-gegen-omikron-variante-662494134955

https://news.sky.com/story/covid-19-new-vaccines-ready-in-100-days-if-omicron-variant-is-resistant-to-current-jabs-pfizer-says-12479927

2. S.African doctor says patients with Omicron variant have “very mild” symptoms – read the whole article though, not sugar and spice, everything nice.

https://www.reuters.com/world/africa/safrican-doctor-says-patients-with-omicron-variant-have-very-mild-symptoms-2021-11-28/

3. Omicron spreads like wildfire.

RHS curve, 0.1% to 50% in just a couple of weeks vs. Delta’s several months.

https://i.imgur.com/T2MvQxl.png

And more recently, thanks to Ryan Imgrund on Twitter.

https://i.imgur.com/ae7IfOJ.png

4. Found so far excl. Africa in UK, Holland, Belgium, Germany, Hong Kong, Israel and Italia. They, exception Germany, are testing like mad. Canada and US have yet to find it. Observe test curves and you figure out why that is so.

https://i.imgur.com/fjxW27f.png

5. Hong Kong case medical people there reported this AM (CET) that they were shocked, incredulous at the huge viral load of Omicron. Could not find the article anymore. Only 1 the sample size, so grain of salt.

——————

My take:

Kind of looking good but still have to wait for the vax outfits to say if Omicron can escape an immune response.

One thing for sure, Omicron spreads like the dickens.

Canada:

Get fully vaxd or more. Wear an N95 mask (I’m wearing FFP3’s from now on in – to sound like Darth Vader breathing to oneself) and tell your Gov’s to start testing like CRAZY.

— FWIW for the Blog and it’s people.

#13 Triplenet on 11.28.21 at 3:33 pm

Governmental influence (interference) is one of the primary forces that affect real estate.
This government’s policies (as you have also stated) is impacting almost all forms of real estate, especially the financial aspects.
We call it irrational interference. We are also concerned the BoC is morphing into a – who knows what.

#14 TurnerNation on 11.28.21 at 3:33 pm

@Dolce lol – man bites dog story.
I have successfully survived ‘a global pandemic’ by simply turning off my TeeVee.

— War on Small business:
— Life in My Prefecture. Bitter -10c windchill. What do I see? People forced to line up in the cold outside of small businsess. That’s right in 2022 the government still will not let you wait inside. Instead you huddle in the chill, awaiting your turn. In Soviet Kanada.

— Restaurants were forced into to spending many thousands on plexiglass – for show. Science in Kanada.
Our global elites do not want us sitting down and socializing normally over a drink and food.
Fact: Nope you need (AT LEAST) 2* jabs for that. Divided, we fall:

https://nationalpost.com/news/canada/plexiglass-dividers-may-do-more-harm-than-good-ontario-science-table-director-says
“Plexiglass dividers may do more harm than good, Ontario science table director says”

(*Please call your Fizer salesman for future releases)

—-
—-
.Restaurants Canada @RestaurantsCA
80% of Canada’s restaurants no longer qualify for wage and rent subsidies and many may not make it through the winter. Here’s what they’ll need to survive:
https://www.restaurantscanada.org/industry-news/restaurants-canada-is-urging-parliament-to-expand-federal-support-programs

#15 Dolce Vita on 11.28.21 at 3:40 pm

As a European (and Canadian) this really, really riles me.

EU travel ban. Hours later the Dutch, KLM, defy it and allow 2 plane loads, +600 people, to land in Amsterdam.

Omicron, Delta Score so far…

Dutch find 13 Omicron cases among S.Africa travellers (61 total cases)

https://www.reuters.com/world/europe/dutch-set-announce-findings-omicron-cases-among-safrica-travellers-2021-11-28/

Why does that rile me?

Italian and UK rugby teams stranded there due to the EU flight ban.

https://www.ansa.it/english/news/2021/11/26/parma-rugby-team-stuck-in-sa-hotel-due-to-covid-11_79bf0081-9b79-4aa5-b840-88549bb91ef4.html

https://www.walesonline.co.uk/sport/rugby/rugby-news/live-updates-cardiff-scarlets-try-22282717

Italia and the UK actually follow their own laws.

The Dutch instead = do as we please, we are the Kings of Europa…is all I’ll say.

#16 Dolce Vita on 11.28.21 at 3:41 pm

#14 TurnerNation

Consider turning your computer off too.

#17 Dolce Vita on 11.28.21 at 3:44 pm

Dutch find 13 Omicron cases among S.Africa travellers (61 total cases) – defied the EU Travel Ban.

https://www.reuters.com/world/europe/dutch-set-announce-findings-omicron-cases-among-safrica-travellers-2021-11-28/

Meanwhile, Italian and UK rugby teams stranded there due to the EU flight ban.

https://www.ansa.it/english/news/2021/11/26/parma-rugby-team-stuck-in-sa-hotel-due-to-covid-11_79bf0081-9b79-4aa5-b840-88549bb91ef4.html

https://www.walesonline.co.uk/sport/rugby/rugby-news/live-updates-cardiff-scarlets-try-22282717

Italia and the UK actually follow their own laws. Do not think they are better than everyone else.

#18 Inflation on 11.28.21 at 3:50 pm

Everyone saying prices will keep going up and all these predictions of a housing collapse have failed the last 10 years forget one thing we have never had inflation like this in the last 10 years, this is a game changer. Wait do not buy now, you have waited this long what is a little longer to save major dough, in the end its a probability game, what are the odds of real estate over the next 5-10 years having a similar run to the last 10 years, slim to none. If real estate was going to keep going up like some say how come none of the great investors like Buffett, Drukenmiller/Zell/Tepper/Ackman are not doubling down on this, they are not, they are holding cash to wait to buy when things unfold, everyone thinks they will keep their real estate gains as in and lock in their gains, but when the tide turns, it turns fast.

#19 twofatcats on 11.28.21 at 3:55 pm

Nov 28 Today’s flipped ‘principal residences’

https://www.zolo.ca/welland-real-estate/2-bishop-road
https://www.google.ca/maps/place/2+Bishop+Rd,+Welland,+ON+L3B+2V5/@42.9789484,-79.2436274,3a,75y,259.13h,90.48t/data=!3m6!1e1!3m4!1sa2nPs_NZUyuT8eVsGOWxCQ!2e0!7i16384!8i8192!4m5!3m4!1s0x89d3482adda28cef:0xc3b84f3b56cef5c4!8m2!3d42.9789502!4d-79.2438154

https://housesigma.com/web/en/house/NkKJ3JdPaRZyd4V6/45-CHESTNUT-Street-W-St-Catharines-40189829-40189829-X5441588

https://housesigma.com/web/en/house/LzQ1y5E1d5MyqdeK/154-CARLTON-Street-St-Catharines-40116173
https://www.zolo.ca/st-catharines-real-estate/154-carlton-street

#20 Nonplused on 11.28.21 at 3:59 pm

I don’t believe all this “house hording” stuff is having much if any impact. Near all of it gets rented out and the home ownership rate is what, something like 70%?

You don’t have to own a condo to live in it. Most speculators want them rented out due to the cashflow. And if you are a young person, a good supply of rentals is a good thing. Who wants to be strapped to one accommodation when you are in your 20’s? WFH or no, mobility is one of the advantages the young have.

If we had an epidemic of empty units that flippers were carrying at their own expense with no rental income, I’d say we have a problem. I somehow doubt that is the case.

#21 Nonplused on 11.28.21 at 4:02 pm

#2 Leftover on 11.28.21 at 2:47 pm
There’s a fourth thing – oldies are too scared to move into old folks homes due to Covid, so they’re staying put. This takes a big chunk of listings off the market.

———————————-

Again, a relatively short term affect. Sooner or later they have no choice but to go to the home. Or the graveyard. The house will hit the market eventually.

Actually 92.1% of Canadian seniors live in the in their own house. Only 7.9% are in a collective setting. Most will never experience a retirement home. – Garth

#22 Linda on 11.28.21 at 4:02 pm

RE is now the solution for anyone wanting to get rich quick. Much higher chance of ‘winning’ a bundle than buying any lottery ticket. One of my siblings purchased a very modest townhouse in a small town a few years back. The value has increased so dramatically that said sibling is now figuring out how to word the will to ensure the (adult) kids receive an equal share of the inheritance should death come knocking. Or as I was earnestly told ‘I never thought I’d ever have anything worth enough to make a will necessary’. Who knows how this RE craziness will end?

#23 crossbordershopper on 11.28.21 at 4:03 pm

I am giving money to my nieces, 40K lined up for both of them when this program opens up. You think its bank of Mom, it extends even further.
Add in immigration wage, add in unbelievable strengh of immigrants wanting to own real estate regardless of old stock canadian bankers and there ratio’s. New Immigrants live in a different world.
prices could go sideways for a year or so, as rates edge up a bit, or something, but all I know , is real estate either stays same or goes up. It really is a blessing or a curse depending on when you were born.
I recommend everyone who is young, or a senior who is poor and rents, to move to Sask. I can get you a nice home for 100K. I will drive you around and show you the cdn tire, shoppers, grocery stores, doctors offices and banks. and walmart and costco of course.
If i was starting out looking at a million and quarter home, and stickng my hand in pants and pulling out what 20K, 50K, like it matters. really.
no way I would sacrafice my life for some builder and banker profits all my life.
let the immigrants do that. obviously we lied to them to come here, why would anyone come here if they knew they were going to work there entire life. and not really get ahead. I might be exagerating but not by much.
people work for nothing, just get a cheque from govt and live and own a little house in the prairies. you will have all your ammenities just like southern ontario except maybe professional sports. they have specialists etc.

#24 Bdwy on 11.28.21 at 4:03 pm

Attn turnernation. You get more correct every day.

Locked down for zero cases!
……..
A town with low vaccination rates has been plunged into lockdown after Covid-19 was detected in its wastewate

Another Northern Territory town has been forced into lockdown as a Rapid Assessment Team rushed to “manage” the response.

It currently has no confirmed cases but NT Chief Minister Michael Gunner said its low vaccination rates were a concern

…….
.

#25 Dolce Vita on 11.28.21 at 4:06 pm

“Politicians have “no idea” on how to deal with low inventories and the trend towards house hoarding.”

As if.

Slap an onerous yearly WEALTH TAX on RE Investors, 2 or more homes, and watch them sell. Prices will begin to fall if enough of them sell. Depends upon the size of the yearly Wealth Tax.

I doubt anyone in Canada will argue these are wealthy people esp. in the Lower Mainland and Toronto with a $1.2M average home price. Same applies to companies doing this.

Just don’t make it worth their while.

Gov isn’t that stupid. They’re just afraid they’ll spark a recession in Canada if they do that.

#26 Nonplused on 11.28.21 at 4:07 pm

#4 Shawn Allen on 11.28.21 at 2:55 pm
Wealth transfer from old to young? and other directions

“Missed was a massive inter-generational transfer of wealth, unique in Canadian history. Sure, parents have always helped kids get established. But not like this.”

******************
Of course that’s true.

But there has also been money flowing intra-generation from old to old.

———————————-

Sooner or later all the “wealth” gets transferred to the living. Again we are only arguing about the timing. And if you have the money, why would you wait until you are dead to help your kids out? Revenge? Hatred? So they build character? So you can spend it on a trophy wife?

Nobody takes anything with them when they go. The Pharos tried, but eventually we got that too.

#27 Sail Away on 11.28.21 at 4:16 pm

Hail Omicron!

https://youtu.be/aObsLwsqans

#28 TurnerNation on 11.28.21 at 4:17 pm

Christmas is again cancelled! Are you surprised? All the old culture must be torn down Comrade. The world will remain in lockdown until 2025 during this reset. Family, socializing, fun. All is not allowed in the New System.

.Power & Politics @PnPCBC https://twitter.com/PnPCBC/status/1464365370567974919
“I’ve cancelled my Christmas party…I do think Canadians need to continue to be vigilant.” Associate Health Minister @Carolyn_Bennett on whether Canadians should cancel their holiday plans,

.As omicron variant is detected around the world, travel bans may be too late, experts say (washingtonpost.com)


–We pay high taxes for our social safety net! As we go into 2022 in the Former First World Countries the health care is STILL being rationed and denied. Almost back to normal! Do they want us sick and weak? Uhhh…

https://www.saltwire.com/halifax/news/local/no-shot-no-doctor-unvaccinated-patients-being-turned-away-by-some-ns-physicians-100662965/
“No shot, no doctor: Unvaccinated patients being turned away by some N.S. physicians”

https://nypost.com/2021/11/26/gov-hochul-orders-elective-surgery-canceled-amid-covid-spike-omicron/
Gov. Kathy Hochul signed an executive order Friday to postpone elective hospital surgeries — something that hasn’t been done since the worst of the initial coronavirus outbreak last year.”


— ALL future spending will be on “Climate change”. Spoiler: No new “Hospital capacity” will be added.
Even with 1/2 million new people coming here each year + an rapidly aging populating.

.B.C. needs billions in dike upgrades to prepare for climate change (vancouversun.com)

#29 Tom on 11.28.21 at 4:23 pm

I’ve got a better idea: increase immigration. That’s exactly what we need during this housing shortage. I’m running for the Liberal party.

#30 Dolce Vita on 11.28.21 at 4:25 pm

You know, the WHO really makes a person wonder about them (basically, like Schultz in Hogan’s Heroes would say: “I see nothing! I hear nothing! I know nothing!”:

https://www.who.int/news/item/28-11-2021-update-on-omicron

…meanwhile at #Omicron on Twitter you get the latest and some of it unsettling, within the last 3 hours:

https://twitter.com/DrEricDing/status/1465015829041451014

https://twitter.com/DrEricDing/status/1465037954783621131

—————–

BRYAN ADAMS on the MEND. Italia taking care of him. A lot of good selfies in there too – medical people taking care of him and look really pandemickie.

https://deadline.com/2021/11/bryan-adams-tests-positive-covid-hospital-italy-1234880759/

#31 Dolce Vita on 11.28.21 at 4:30 pm

Forgot on Bryan Adams, if you have an Instagram account follow him here (has some vids of staff taking care of him):

https://www.instagram.com/bryanadams/?hl=en

View series of nested posts with image of pandemic dressed person walking away. Bryan gets jabbed with Lord knows what.

Did it Cut Like a Knife Bryan?

#32 Shawn Allen on 11.28.21 at 4:36 pm

Nonplused missed my point

Sooner or later all the “wealth” gets transferred to the living. Again we are only arguing about the timing. And if you have the money, why would you wait until you are dead to help your kids out? Revenge? Hatred? So they build character? So you can spend it on a trophy wife?

Nobody takes anything with them when they go. The Pharos tried, but eventually we got that too.

*******************************
I did not say a word against parents given younger people down payments.

Quite the opposite, my post was about mostly borrowed money flowing from kids to old people. Going the wrong may according to you, and I agree with that. You missed my point entirely.

Weird to argue with me against something I never remotely said or suggested. All I said about the down payment transfer, was yes, true it happens.

#33 Dolce Vita on 11.28.21 at 5:03 pm

Welcome to the Omicron Club Canada (no it’s it’s a new credit card)…

The new COVID-19 variant of concern that first emerged in South Africa has been detected in Ontario: health officials.

https://twitter.com/CTVToronto/status/1465077129884876806

Now you get to bitch like the rest of us infectee’s here in Europa as in:

Misery Loves Company (not really)

#34 Omicron Kenobi on 11.28.21 at 5:09 pm

I am in Ontario.

I am coming after you.

Deplorables first.

Then Realtors®.

#35 Quintilian on 11.28.21 at 5:17 pm

“Does Mom know better than the data scientists?”
High probability that mom knows better.

Admittingly, I am using the word “knows” with literary license.

Mom is guessing, but so are the data scientists.
Most of these scientists are assuming that policy is enacted based on sound economic theory and principles, which in itself is flawed, but in reality, it is a function of politics.

For starters, Central Bankers have been neutered and spayed.

Both the left and right politicians have taken the power away from the central bankers, and the subservient glorified bean counter poindexters gave little resistance.

#36 jimmy zhao on 11.28.21 at 5:23 pm

Sage Advice: Listen to Mom.

#37 Dolce Vita on 11.28.21 at 5:24 pm

#34 Omicron Kenobi

Oh Omicron, can we call each other hOmi’s even though I live in Italia?

Love the priority list.

THAT was good.

#38 Ponzius Pilatus on 11.28.21 at 5:28 pm

#10 Don Guillermo on 11.28.21 at 3:13 pm
Thankfully Black Friday weekend is coming to an end. There seemed to be an extra run on smash & grab specials this year. Sad.
————–
John Prine would understand.
Not really a folk singer.
Same for Bobby Zimmerman.

#39 When the Whip Comes Down on 11.28.21 at 5:35 pm

Moms are emotional. Veritas and the data scientists are not. Real estate for the masses in Canada is emotional as this blog has cited many times. Hence Veritas failed as did the economists in their call on how the pandemic would affect the RE market. It’s going to take some time for this reckoning to materially impact things. Emotion will continue as well as the insanity inherent within it.

#40 Stealth on 11.28.21 at 5:38 pm

Thank you Garth,
“ A survey from IG/Pollara has found that 75% of high net-worth families (investible assets $1 million+)”

Questions:
1. Investable assets 1MM+ is that for combined assets of husband + wife?
2. Investable assets: does it include all registered and non registered combined? Does tfsa fall under registered?

Thanks

Yes to all. – Garth

#41 Gen Z on 11.28.21 at 5:38 pm

It’s $1,700/month for a one-bed at Jane & Finch. Adam Vaughan supports real estate bubbles and Tiff Macklem supports money printer.

#42 fishman on 11.28.21 at 5:44 pm

Omicron Kenobi: Can’t get at B.C. Deplorables, I’m afraid. No roads or railways over the mountains. Any of you Kenobi’s back east getting that constipated feeling yet? Don’t worry. Lil potato & Horgan are forming a committee to fix that.

#43 Dolce Vita on 11.28.21 at 5:48 pm

#34 Omicron Kenobi

Artist* rendition of yourself as seen at Ottawa vax injection site:

https://i.imgur.com/48auQbI.png

* African Noir by:

Mussa Chaleque
@MChaleque
Health Communication Specialist | Mozambique & Chad
Journalist República de Moçambique

#44 NOSTRADAMUS on 11.28.21 at 5:49 pm

” THE DECREE NISI” BECOMES FINAL TODAY!
Every Real Estate posting since I don’t know when, has predicted this is the last chance, or two weeks to get into the Real Estate game, or ” minute to midnight.” Each one has been preceded by a chorus of harpies predicting failure, being left behind forever. The nattering nabobs of negativism, the Real Estate cartel and their bought and paid for boot licking media find some way to cast renting in a poor light, with mocking headlines to match. The cartel has served divorce papers on renting. They have escalated to ” Decree Nisi,” in the court of public opinion, spelling out when the broken marriage will end. Well, all you wanna be house buyers sobbing in your pillows tonight, there is another chapter soon to unfold. There is nothing more devastating than owning a home, and losing your castle as a result of being overindebted to the Shylocks in this world. The home owners you envy today, up to their eyeballs in debt are also sobbing in their pillows. There is an old saying, “When the dollars stop coming in, love flies out the window.” With financial problems. comes health issues, marital issues, etc, etc. Before too long, as the Real Estate market corrects your tears will dry up and you will thank your lucky stars that you didn’t listen to the cartel’s siren song. Amen Brother.

#45 George S on 11.28.21 at 5:49 pm

It is difficult to make predictions about what will happen in biological systems when the things you are predicting outcomes about can make decisions based on emotion and illogical things.
When people don’t get vaccinated during a worldwide pandemic because they think that it marks you so that Jesus won’t let you into heaven you know we are all screwed.
Now go and try and convince me that anyone can predict what those people will do WRT housing.

#46 NEVER GIVE UP on 11.28.21 at 6:06 pm

#26 Nonplused on 11.28.21 at 4:07 pm
Politicians have “no idea” on how to deal with low inventories and the trend towards house hoarding.”

As if.

Slap an onerous yearly WEALTH TAX on RE Investors, 2 or more homes, and watch them sell. Prices will begin to fall if enough of them sell. Depends upon the size of the yearly Wealth Tax.

I doubt anyone in Canada will argue these are wealthy people esp. in the Lower Mainland and Toronto with a $1.2M average home price. Same applies to companies doing this.

Just don’t make it worth their while.

Gov isn’t that stupid. They’re just afraid they’ll spark a recession in Canada if they do that.
__________________________

The root cause of their inaction is far more basic than that. It’s because all of our governors are also invested in multiple homes of real estate. Real estate is the go-to investment for wealthy people! We certainly wouldn’t want to touch that when we could enrich ourselves and crush the little people with laws that favor ourselves!

#47 macduff on 11.28.21 at 6:11 pm

Why would an aging parent gift money to a child for a house downpayment if it very likely could lead to the parent destitute when they hit 80? What happens then?
Also, doesn’t the privilege that comes with the parents giving their kids downpayments that no one else can afford, effectively shutting the young from home ownership go against everything the Liberals and NDP stand for?

#48 Drinking on 11.28.21 at 6:16 pm

This current so called Lib government has been the biggest disaster ever! They along with the C*C have created more anxiety, division, and just the most idiotic choices for a country that can help so many.
Inflation is absolutely insane, interest rates are at or close to record lows for savers, credit cards and loaners keep raising them and yet we have a population that are so ok with that?? What a shame/insane!!

Now, as so many of us predicted there is a new Covid variant, surprise, surprise, soon we will be expected to get our 3rd,4th,5th eventually ending at what exactly??

What many of us have said all along is that Covid will never, ever be tamed like the flu or common cold has never, what a sh8t show!!!

#49 THE DANDADA on 11.28.21 at 6:23 pm

Because IT IS different this time!

#50 IHCTD9 on 11.28.21 at 6:26 pm

Trudeau gonna ride till he can’t no mo’

https://www.youtube.com/watch?v=r7qovpFAGrQ

#51 Mark on 11.28.21 at 6:26 pm

“High household debt could lead to a reckoning.”
———–
yawn, we’ve heard this song before. Getting old. Put someone else in charge of the jukebox.

#52 Grunt on 11.28.21 at 6:32 pm

Canada see what Grsnde Noirceur 5 tatty banks with too much monopoly gets ya.

#53 45north on 11.28.21 at 6:53 pm

“My biggest concern,” he says, “is what happens when there is a rush to the exits for real estate investors.”

Scilipoti knows what’s going to happen – the rush to the exits will drop prices which will further the rush to the exits. A cascading effect.

There’s a window to sell. In this market, it’ll close. In a day. Scilipoti knows this.

#54 R on 11.28.21 at 6:55 pm

Garth,I was wondering if you could bring the Canadian TFSA cntributiion limits into a context for comparisions? For example, what kind of limits are allowed in the US for their version , or the UK, or other countries in general. Is Canada’s limits generous, or are they comparatively small? Are other citizens allowed to with draw comparitively larger sums of tax free money without the CRA equivilant scrutiny? T2 makes a big deal about how unjust the TFSA is to Canadians because according to him,”only the rich use it”, but he doesn’t mention Canada being overly generous compared to peer counties. Is it ?

#55 Sail Away on 11.28.21 at 6:56 pm

Listening to CBC for the last few days, I am convinced of the following:

1. Covid is the greatest existential threat the human race has ever faced
2. A close second is complete worldwide human-caused environmental Armageddon
3. The second can be fixed by Canadians
4. Rich people are evil (duh)
5. 98% of discussion pieces must include a gay person
6. Illicit drug abuse is absolutely and entirely the fault of the drugs

#56 Still employed in AB on 11.28.21 at 6:59 pm

From Reddit

Moved to NB, paid over asking for a house and now we need to move again for work but my agent is telling me I won’t get what I paid for my house.

Admittedly my partner and I got caught up in the hype and bought a hobby farm in Albert County NB.

The sellers wanted 200k and we offered 265k because there were a few other offers. The house ended up needing some work and all in we’ve spent 290k.

My job is no longer allowing me to work remotely and we can’t afford the mortgage and LOC on my partners wages alone. I can’t find any meaningful employment and the work I can find is $12 – $15 / hr and would require me to drive 30 minutes each way, the money I’d spend on gas would hardly make it worth it. We’ve done the math and I’d need to find something in the $22 – $25 / hr range to make it worth it.

Our second option is take a job in a different small NB town however when we decided to move again my agent told me that at most he’d want to list the property for 225k and hope that someone offers way above that.

Can we file for bankruptcy before we’re actually out of money? Or would we be better off selling at a loss and renting until we pay off the difference?

Do we have any other real options?

https://tinyurl.com/k8pwwr8v

#57 F Cook on 11.28.21 at 7:00 pm

“Forever” is a relative term.
To a spring bug, humans are immortal beings.

Few investors intend to hold an asset forever in the literal sense of the word. They are only concerned with what happens within their investment horizon – be it six months or 20 years. As long as investors are convinced a property’s value will increase within THEIR investment time horizon (and that it is an acceptable ROI for them), they will continue to participate in the market and form part of the demand curve, thus putting upward pressure on price.

The rental income is just icing on the cake. Someone to subsidize their carrying costs until they cash out on principal appreciation. This is especially true in expensive Canadian cities like the GTA and YVR, where the return from rental income is laughably small.

#58 Winterpeg on 11.28.21 at 7:11 pm

Non plus’d: “I don’t believe all this “house hoarding” stuff is having much if any impact. Near all of it gets rented out and the home ownership rate is what, something like 70%?”

There’s small one bedroom house directly across the street from me that has had a “For Rent” sign on it for at least 5 months. It sold back then for about 225,000, which is about right for the Peg. They want $1250/month rent. No bites yet. Have seen more house rental signs in the neighbourhood; not moving.
One was put on the market after several months of no renters.

#59 IHCTD9 on 11.28.21 at 7:15 pm

It’s money. Buyers just have access to too much of it. It’s coming in from other countries, from rich folks and extended families, proceeds of crime, from HELOC’s and the BoM, you can borrow it for basically free from multiple sources. Governments are giving it away, financial and RE markets are generating piles more of it as well. All of this focussed on a few big cities in a country carved out of granite by glaciers – and a population the size of Tokyo.

It’ll end when this hurricane of cash and credit fizzles for what ever reason.

#60 Omicron Kenobi on 11.28.21 at 7:18 pm

#43 Dolce Vita

That is an excellent rendition.

It is an energy field and something more. An aura that at once controls and obeys. It is a nothingness that can accomplish miracles.

Thank you, old friend. May the Pfizer be with you.

#61 Do we have all the facts on 11.28.21 at 7:43 pm

In his book “Capitalism in the Twenty-First Century” Thomas Piketty pointed out that investment based capital expands faster than growth of an economy and as a result inherited wealth is expanding much faster than earned wealth.

The observation that $100 billion has been transferred to the adult children of wealthy families is a good example of what Piketty was observing. In Canada a substantial portion of the net worth of Canadian households in the top 10% is the value of their primary residence. Giving your children a leg up by assisting in the purchase of a primary residence represents a transfer of wealth from one generation to the next.

A number of studies in Canada and in the United States identified that wealthy families with capital to invest received a disproportionate share if funds generated through quantitative easing. Piketty viewed the growing gap between the families with capital to invest and the general population as a critical flaw in Capitalism.

I have observed that the market cap of North American companies has expanded much faster than GDP. When inflation is factored into the equation growth of the net worth of the bottom 80% of Canadian households is lagging far behind the growth of net worth in the top 20% of all households.

On examination it would appear that residential real estate and the stock markets are the current generators of wealth in Canada not the Canadian economy.

Can this trend continue for much longer.

#62 meslippery on 11.28.21 at 8:17 pm

Actually 92.1% of Canadian seniors live in the in their own house. Only 7.9% are in a collective setting. Most will never experience a retirement home. – Garth
—————
Wow only 7.9% and the cost of staying in a collective
setting $3600.00 to $6000.00 plus… a month wonder why. That”s for a tiny 400 sq ft but includes food which old folks eat little of.

#63 Drinking on 11.28.21 at 8:38 pm

#62 meslippery

Do not waste your time; Garth (love what he tries to do) but infatuated in numbers and has no idea what an average individual is going through. Talks tough but!!!

#64 Nonplused on 11.28.21 at 8:42 pm

#32 Shawn Allen on 11.28.21 at 4:36 pm
Nonplused missed my point

————————————

My point, not clearly stated I suppose, was that all the money going from the young to the old will also turn around one day. The old get to keep nothing. Not necessarily the same young people that pay the money will inherit it, but we are talking about generations as a group.

#65 Ronaldo on 11.28.21 at 8:42 pm

#2 Leftover on 11.28.21 at 2:47 pm
There’s a fourth thing – oldies are too scared to move into old folks homes due to Covid, so they’re staying put. This takes a big chunk of listings off the market.

Just look at what’s happened to reverse mortgages in 2020/21, double digit quarterly growth.
————————————————————–
I am 75 and the oldest of the boomers and we and many in our age group are in no hurry to move out of our homes especially if we are in good health at least for another 10 years so don’t anyone hold their breath thinking that there is going to be a flood of homes coming onto the market from this group. Ain’t going to happen. Has nothing to do with Covid and fear. At one time 75 may have been considered old but not so today. My own parents did not go into a home until well into their 80s and what a blessing that was for them.

#66 yvr_lurker on 11.28.21 at 8:46 pm

“The speed and transparency of the South African and Botswana governments in informing the world of the new variant is to be commended,” Moeti said. “WHO stands with African countries which had the courage to boldly share life-saving public health information, helping protect the world against the spread of COVID-19.”

——-

As much as I disliked Trump, the World Health Organization is a complete joke and absolutely useless in fighting COVID. One would think that they would have learned something from 2 years ago where they were super-late in calling the alarm to the world in the outbreak in China, and instead believed the BS being spun from Beijing. Too late and too slow. Now the priority seems to be to make sure that the countries in Southern Africa are not stigmatized by the flight restrictions that the world has immediately imposed (in order to buy time to determine how serious a threat Omicron is). the WHO seems to care less about science and more about politics. Imagine that the variant instead arose from the US or Canada. Would the WHO be equally vocal about other countries banning flights in response to this? Not a chance.

Trump was correct at some level with the WHO. With them politics are more important than science. Shame!

#67 Kirk on 11.28.21 at 8:46 pm

Anecdotal story:

My sister hit it rich with a Toronto home bought for 450K and now worth over $1.7M.

She wants to buy a condo, or secondary residence of some kind, for her 17, 15 and 12 year old kids. So they could “have a place to crash” and be able to afford living under a roof.

#68 Nonplused on 11.28.21 at 8:47 pm

#21 Nonplused on 11.28.21 at 4:02 pm
#2 Leftover on 11.28.21 at 2:47 pm
There’s a fourth thing – oldies are too scared to move into old folks homes due to Covid, so they’re staying put. This takes a big chunk of listings off the market.

———————————-

Again, a relatively short term affect. Sooner or later they have no choice but to go to the home. Or the graveyard. The house will hit the market eventually.

Actually 92.1% of Canadian seniors live in the in their own house. Only 7.9% are in a collective setting. Most will never experience a retirement home. – Garth

————————————–

Well, I am not going to argue with the stats, but my point was that sooner or later they all move into a below grade suite and the house gets sold. The effect on the housing market is temporary.

#69 Phylis on 11.28.21 at 8:48 pm

I’m starting to think that the best way to pop this bubble is to keep pumping. Sad face.

#70 Stone on 11.28.21 at 8:50 pm

A survey from IG/Pollara has found that 75% of high net-worth families (investible assets $1 million+) have funded downpayments, or plan to do so. The average gift is $145,000, and in most cases Mom Money is paying 25% of the purchase price. The total amount being transferred to adult kids by affluent parents: $100 billion.

———

Wow! And when interest rates go up, house prices go down, all that “wealth” transfer will go “POOF”!

I wonder what the likelihood of that happening will be.

#71 Nonplused on 11.28.21 at 8:51 pm

Oh and further to that last point, I’d like to see seniors split up by age cohort. My mother-in-law being the last to go, lived until 83. She was on her own until the last couple of months, when she moved into a home. So if she were the only one surveyed, she lived more than 92.1% of her senior years on her own. The condo is now sold, and sadly the room at the home is also available.

#72 Ponzius Pilatus on 11.28.21 at 8:53 pm

#60 Omicron Kenobi on 11.28.21 at 7:18 pm
#43 Dolce Vita

That is an excellent rendition.

It is an energy field and something more. An aura that at once controls and obeys. It is a nothingness that can accomplish miracles.

Thank you, old friend. May the Pfizer be with you.
——————
Wrong quote:
May the BionTech be with you.
Jeez, people, can’t you even keep simple things like this straight.

#73 David Pylyp on 11.28.21 at 8:55 pm

Never happened. Veritas laid an egg. Not alone, though. Most bank economists were on the same page a year ago. So was CMHC. Remember Evan Siddall, its outspoken boss? He said prices were going down 15% as most of a million families took a holiday from mortgage payments.

It’s been a long run….. I too expected repercussions from the 8 month payment holidays…. Missed payments on the credit report…. But it all just slipped by…

2022 will be exciting…

Maybe my phone will start ringing again

#74 just say no on 11.28.21 at 8:58 pm

One more time now, Mom wins lotto 649 several million so it is no problem for mom to give each child the down payment to purchase. Many moms may be in this position. Remember Canada has a make millionaires weekly corporation selling pieces of paper. We never had so many made in canada mega millionaires 50 years ago. So there is that.

#75 Ponzius Pilatus on 11.28.21 at 9:10 pm

#61 Do we have all the facts on 11.28.21 at 7:43 pm
In his book “Capitalism in the Twenty-First Century” Thomas Piketty pointed out that investment based capital expands faster than growth of an economy and as a result inherited wealth is expanding much faster than earned wealth.
——————–
The way I see this, this is how a bubble forms.
That’s why tech stocks are way overvalued.
Market capitalization way above book value.
Not good, Not good.
Remember gains are only paper gains, until realized.

#76 Shawn Allen on 11.28.21 at 9:13 pm

Generational Wealth Transfer

#64 Nonplused on 11.28.21 at 8:42 pm
#32 Shawn Allen on 11.28.21 at 4:36 pm
Nonplused missed my point

————————————

My point, not clearly stated I suppose, was that all the money going from the young to the old will also turn around one day. The old get to keep nothing. Not necessarily the same young people that pay the money will inherit it, but we are talking about generations as a group.

*********************
I agree with that. The mega wealthy will never ever and can never ever spend anything close to all their wealth for their own consumptive enjoyment. Even their heirs typically can’t.

Most moderately to very wealthy people will die with their wealth not spent.

A lot of wealth will go to some kind of death taxes or charity.

I think we need new text books on the economics of extreme wealth inequality. Buffett has mega wealth but what harm is that? His wealth is 99% in Berkshire stock which will all be donated.

Bezos and ex wife have mega wealth. But they are not and cannot spend it on themselves to any great extent.

When Tesla shares get bid up to moon, Musk has not taken anything out of the economy. He has mega claim checks to take from the economy but never will take much.

As far as Generations as a group. I don’t like the concept. It implies a sharing among generations that simply does not exist. There is no “we” in economics. “We” are all on our own.

The top 1% might control whatever 20% of the wealth but they likely consume (and that’s what really matters in the end) maybe 2 or 3% of the output of the economy.

The bottom 20% may have zero wealth (many are negative wealth) but they sure as heck still consume a lot.

Things to ponder.

#77 Ponnaps on 11.28.21 at 9:16 pm

Not inter-generational but inter-national transfer of wealth, specifically from the 3rd world to advanced countries..

Real estate is the 21st century version of colonization.. both mechanisms for transfer of 3rd world wealth to develop and sustain western nations…

what else explains the deliberate govt inaction, wanton encouragement to pour in immigrant funds from back home and sucking up of immigrant incomes into real estate thereby indebting them for a couple of generations.. Canada Australia NZ it’s the same storyline… modern version of economic slavery and colonization..

#78 Ballingsford on 11.28.21 at 9:28 pm

Real facts. Ottawa/Barrhaven new build area. Took possession of new exec townhome just over 1 and 1/2 months ago. Love it. 4 unit complex next to us, 5 units in our complex.

Owners on left and right haven’t occupied yet, but check on their properties once in a while. We are end unit. Both Chinese on each side. Units have appreciated $200,000 since we signed P&S agreement in June 2020.

They must have paid for the properties with no mortgage and are holding them as investments and hope they rise further. Otherwise they are paying interest.

2 doors down, East Asian kid is neighbor, 22 yrs old, owns his place. Money from family I assume. Seems like a nice guy though. He didn’t know an elementary school was being built across from us, so parents must have been doing all the pre-lim stuff.

We Canadians have to figure out how to do this stuff.

I should have done something similar in early life.

Chinese nationality or race? – Garth

#79 PastThePeak on 11.28.21 at 9:50 pm

There is zero (0) evidence that Omicron causes any increase in severity of disease. This may of course be an outcome, but there is absolutely nothing to suggest it yet. The very earliest data from South Africa is pointing to no increase in hospitalizations.

Viruses often mutate to be less virulent over time (as influenza has done).

I find the entire panic of Friday extremely coordinated, and suspicious. Ask yourself what the governments and general fear mongers would want to accomplish with such a clearly managed spread of fear…

#80 Don Guillermo on 11.28.21 at 9:56 pm

#38 Ponzius Pilatus on 11.28.21 at 5:28 pm
#10 Don Guillermo on 11.28.21 at 3:13 pm
Thankfully Black Friday weekend is coming to an end. There seemed to be an extra run on smash & grab specials this year. Sad.
————–
John Prine would understand.
Not really a folk singer.
Same for Bobby Zimmerman
*********************************
“The answer my friend is blowin’ …………..”

#81 Nonplused on 11.28.21 at 10:12 pm

#76 Shawn Allen on 11.28.21 at 9:13 pm
Generational Wealth Transfer

#64 Nonplused on 11.28.21 at 8:42 pm
#32 Shawn Allen on 11.28.21 at 4:36 pm
Nonplused missed my point

————————————

My point, not clearly stated I suppose, was that all the money going from the young to the old will also turn around one day. The old get to keep nothing. Not necessarily the same young people that pay the money will inherit it, but we are talking about generations as a group.

*********************
I agree with that. The mega wealthy will never ever and can never ever spend anything close to all their wealth for their own consumptive enjoyment. Even their heirs typically can’t.

———————————-

Seems like we agree on more than we disagree. Even if we take an egregious example like a $300 million dollar super yacht, the boat will still be here long after the billionaire has set sail for the last time. And I don’t know if everyone knows how those things work, but there is a crew of up to 50 earning a living taking care of the boat. The billionaire seldom spends much time on the boat at sea; instead he meets it in the desired location. They take their private jet (also employing people) to the destination and then a private helicopter (also employing people) to the boat. That’s why they all have helipads.

If all the Elon Musks of the world did try to somehow consume their wealth all at once, I imagine the effect would be interesting. Not only would he have to liquidate many of his shares possibly destroying the M2M (share price) in the process, but then there could be an inflationary effect as all that money is put to use buying what-have-you. More mega-yachts I suppose. Hard to think of something that could absorb that much money besides government. Rockets maybe, except that there is a weak business case for those. NASA has to get to the space station somehow.

So ya, all that wealth goes to taxes upon death, and heirs and charity where it can stay safely on the spreadsheet that created it.

Some people feel righteous indignation at the idea that Bezos has a yacht employing 50 people at his personal disposal. But the way he financed that is sort of like a HELOC only against vaporous stock market M2M rather than vaporous home equity. The fact that he borrowed money to do it makes us all guilty if guilty he be. He’s just mastered “scale” in a way that few of us have. But if I could, I would too.

#82 jakethesnake on 11.28.21 at 10:14 pm

“Does Mom know better than the data scientists?”

Well, when you put it that way, then, resoundingly, yes, she does. See moms have a way of being a mom, which means being captive to their emotions, intuition and both intuitively and subconsciously understand the phenomenon of wants and needs better than any other creature on the planet, and certainly better than a bespectacled “data scientist” whose nose is so deep in numbers he can’t see past it.

You see, the data scientist is busy analyzing the numbers he’s seeing on the dashboard and overly caught up in the fact that we are driving 13 km/h over the speed limit and the gas tank is at quarter tank, not looking up to realize that, in fact, the car is actually being towed on a flatbed which is doing all the speeding and expending all the gas. There are also millions of other cars on the same flatbed, all going in the same direction at the same speed. Cut the chains off, slide off and crash now, get run over by all the other flatbeds driving in the direction, or stay on and wait for the same outcome when everybody hits a brick wall some time in the future (which may never come). Which is the better option? Need I ask?

#83 Doug t on 11.28.21 at 10:16 pm

They will keep this market afloat for as long as they possibly can because this country has nothing much else – Pump it up

#84 Ballingsford on 11.28.21 at 10:17 pm

#78 Ballingsford:
We Canadians have to figure out how to do this stuff.

I should have done something similar in early life.

Chinese nationality or race? – Garth
****

I’m not smart enough to know how to answer that. Chinese race for sure, but probably born in Canada. Kind of a dividing line between parents and offspring. Parents Chinese, kids Canadian. Try not to ask me a tough question.

I should mention, that the ability to do use the HELOC, as downpayments to fund kiddos may have helped, and then discontinue it may have helped. Maybe the advantage was made.

Seems to be a lot of money around and I don’t know how normal people can afford it.

Your post made a distinction between ‘Chinese’ and ‘Canadians’. Be careful. – Garth

#85 Rob Senetten on 11.28.21 at 10:27 pm

Investing the macro isn’t a perfect science, ask the “Blue Gold” water guys of decades past. Or take the Boom Bust Echo meme advice that all seniors eventually trade down into condos and free up homes for junior. Or, how Justin gets lost on the way home and we don’t hear from him again in either official language. It’s likely that these and other examples will prove prescient, but investing in timing the macro can kick you in the nuts while waiting for that sure thing.

Adam Smith called the one sure thing we can count on, greed, the invisible hand, animal spirits. Human emotion beat Mao and Stalin, it’ll beat climate crazy and whatever fad comes along.

Bottom line, house prices are up up up only because the BOC is in Trudeaus back pocket as a political supporter, keeping rates at zero so progressives can spend spend spend. Once rates are forced up, and there’s the nasty macro conundrum again, they will spike immediately and within the loan/rate renewal period of mortgage renewals a substantial number will fail. Will it cascade, good question. Personally I think yes. In Canada though mortgage holders are a tenacious bunch, historically they’d rather starve their children than pull the cork. Unlike in the US where people take losses less emotionally.

Inflation is at 30% . How much longer the BOC can pretend it isn’t is the question. Tiff taking drama lessons from Trudeau won’t turn back the inevitable tide. But, betting on real estate at this advance stage is akin to gambling. There are options , even in a casino.

#86 Doug in London on 11.28.21 at 10:38 pm

Human emotion leading to a buying frenzy at prices bloated way beyond even an an infinitesimally small amount of sanity? I’m an INTENSELY emotional person and when I see these prices lately I say TO HELL WITH IT! There are far better places to put your money. If I were a younger person starting out I wouldn’t give any thoughts whatsoever to buying a house and instead invest in other assets, like how I went on a frantic buying spree of stocks and equity ETFs in March of last year when they were on sale. That said, I’ll be watching the markets just in case we get some good sales like in March 2020 or December 2018. I’m ready.

#87 That guy on 11.28.21 at 10:51 pm

Dear Garth,

Please stop using the term house hoarding. It sounds like something an NDP party leader would use in trying to introduce legislation to prevent the purchase of investment properties by well meaning Canadians. And we all know the more the government gets in there the more they’ll screw it up!

BTW am a single home owner.

#88 Tony on 11.28.21 at 10:52 pm

Garth, what do you think about immigration impact? Canada brings record numbers, while the construction has significantly slowed down due to absence of foreign workers. They are not allowed to come for work due to covid, example Romanians. Local constructors are slow and over charge.

#89 Cici on 11.28.21 at 11:25 pm

#22 Linda

Thanks for the good advice the other night… although I’m 8 years over the FHSA threshold. That program was born too late!

But yes, the TFSA, RRSP and RESPs are topped up. But will look into the other suggestions soon ;-)

#90 Cici on 11.28.21 at 11:42 pm

Hmmm, Garth. I think policy and especially central bank action had a lot to do with this uptick. And the mortgage interest rate increases came very late to the party (i.e. only very recently, right after that sweet 1.99% jackpot rate). Now, the fact that there’s little stock left on the market is igniting more panic buying.

But what did we expect would happen when every kid dwelling in Mom’s basement was getting $2000 for nothing? I know of many cases where the kids have stockpiled that money for a downpayment on whatever they can get their hands on (even if they don’t want to live in it), then are getting additional downpayments and co-signing from the Banks of both Mom and Dad (never underestimate the kiddo power that comes out of divorce).

The strategy here is to buy ANYTHING and then rent it out just to get on the property ladder, before all the newbies JT is promising to bring in price them out completely.

I have a hunch these analysts are going to be made wrong again, so the CERB children and other speculators can be made whole. The peeps have learned that all this talk about raising rates is just that, talk. Besides, JT wants to keep the fire going and is willing to dump on more and more gasoline.

Only problem with that is that when she blows, she just might explode. I have a feeling someone else will be in power by then though, and they’ll have to deal with the fallout.

#91 crowdedelevatorfartz on 11.28.21 at 11:48 pm

A 3 hour flight at 39,000ft ……in the wheel well.

https://twitter.com/i/status/1464726434925133836

Never mind the Covid test.
Give that man a job.

#92 Cici on 11.28.21 at 11:49 pm

I probably should have referred to “central bank inaction” given that they haven’t touched rates, but seriously, Tiff’s promise to keep rates low for a very, very, very longtime probably has a lot to do with the current housing situation.

#93 Leo Trollstoy on 11.29.21 at 12:41 am

Economists have predicted 20 of the last 3 recessions

#94 Leo Trollstoy on 11.29.21 at 12:42 am

Live in a $1 million home and have a $5 million investment portfolio: happiness

Live in a $5 million home, and have a $1 million investment portfolio: misery

#95 Ballingsford on 11.29.21 at 1:47 am

#84 Ballingsford

Your post made a distinction between ‘Chinese’ and ‘Canadians’. Be careful. – Garth

*******
In fairness, it was an observation. It wasn’t just Chinese or South Asian.

I was just saying they know how to make money off real estate.

Separate banking structure among families or something.

#96 Ballingsford on 11.29.21 at 2:10 am

Wonder what the governor would say.

#97 Blobby on 11.29.21 at 2:48 am

Surely if politicians wanted to fix this, and they don’t – as they don’t want to be in power when housing crashes.

.. two easy fixes?

1. Tax “gifts” from relatives as an inheritance tax
2. Heavily tax 3rd + properties.. or at very least, remove the tax incentives (such as writing off interest)

#98 crowdedelevatorfartz on 11.29.21 at 8:07 am

@#96 Baillngsford
“Wonder what the governor would say.”

+++

Depends.
If it was the former Liberal Governor General she would likely scream demands at her sensitive hirelings.

If it was “The Guvnor”…. he’d likely say, “Bollocks”

https://www.youtube.com/watch?v=U0Ay8Oe6WLc

#99 ImGonnaBeSick on 11.29.21 at 8:36 am

Obligatory Dad Joke: I’m looking forward to the Pi variant. It sounds delicious.

#100 crowdedelevatorfartz on 11.29.21 at 8:37 am

The high heel wearing robot can fly, skateboard and slackline…….. but can it wash dishes….?

https://www.cbc.ca/radio/quirks/snapping-science-male-pregnant-seahorse-placentas-astronauts-in-labrador-and-more-1.6263003/an-agile-robot-that-can-skateboard-slackline-and-even-fly-1.6263018

#101 IHCTD9 on 11.29.21 at 8:55 am

#86 Doug in London on 11.28.21 at 10:38 pm

…and when I see these prices lately I say TO HELL WITH IT!
_____

I see the local realtors in my hood started doing the underprice and hold offers thing trying to get a bidding war started. The whole industry just makes me want to puke. Canadians are idiots too if they willingly participate in sheep shearing parties like this.

I think it’s gonna be a long time before I sell, and when I do; there will be no mercy.

#102 Chameleon on 11.29.21 at 9:05 am

Pink Heavy Metal Elephant?

It’s a start Garth. Thank you.

Next up, a live, wild, free, self-sustaining creature not dependent on humans and not alive for human pleasure.

#103 Dharma Bum on 11.29.21 at 9:10 am

#98 Sail Away (yesterday)

That said, from the show’s perspective, who would watch a show about a bunch of messed up poor people making bad decisions? That’s just sad.
——————————————————————————————–

Not really.

It’s just as entertaining and jaw droppingly fascinating in a train wreck watching kind of way.

Your description of “poor people making bad decisions” fits a lot of cringeworthy shows that instil a sense of self-righteousness, conceit, superiority, schadenfreude, and presumptuousness in the viewer.

Guilty.

Tiger King and Judge Judy come to mind. (Although some of those Tiger King peeps weren’t exactly poor.)

#104 Dharma Bum on 11.29.21 at 9:31 am

It seems like many economic theories are merely conjecture.

I suppose that’s partly why economics is defined as “the dismal science”.

https://www.theatlantic.com/business/archive/2013/12/why-economics-is-really-called-the-dismal-science/282454/

It’s not really science at all.

I had a high school teacher that said “you can teach a parrot to be an economist by teaching it two words: supply and demand”. He wasn’t too far wrong.

There are so many unpredictable wild cards floating around that make economic forecasting a crapshoot at best.

Even the Greater Fool Theory – as much as it seems to make sense – is only a theory. The past 20 years or so have beckoned claims of a housing market decline with warnings of impending doom.

Seemed highly plausible. I believed it too. And as you all are aware, I knows everyfing.

However, what has not been considered is this: Might there actually be an infinite supply of greater fools?

Hey! Yah nevah know!

Ergo, un-pre-dict-able.

2022 will be a shocker?

As was predicted by everyone about every upcoming year prior to that since years were invented.

It’s gonna be the coldest winter ever.
It’s gonna be the snowiest winter ever.
It’s gonna be the hottest summer.
It’s gonna be the rainiest spring.
We’re in the pinnacle of a climate disaster.
There’s a recession around the corner.
The glaciers are gonna melt this year and put NYC under water.

Yet, when disastrous stuff actually does happen, we never seem to see it coming.

Wild Cards.

That’s how they getchya.

#105 Kim Voll on 11.29.21 at 9:46 am

#23 crossbordershopper

I agree, ‘bank of Mom’ seems kinda “icky” like it’s a “dumb female” thing (from many above comments)

I am sure, most Mom’s confer with “Dad” or partner before they hand out 20-30Gs… and seriously, I know zero single Mother’s who can afford to pass a down payment to their kids.

#106 Sail Away on 11.29.21 at 9:55 am

#103 Dharma Bum on 11.29.21 at 9:10 am

Re: TV shows

———

Yes, you’re right. Lots of shows of all kinds of people. My favs are the crime shows, mostly drug trafficking. Business at its rawest where all options are open and massive profits can be made. The biggest downside is that nobody ever reaches natural retirement.

Re-watched Margin Call this weekend. Just as much cash to be made in the money business and the rival hedge fund won’t blow your head off.

#107 crowdedelevatorfartz on 11.29.21 at 10:07 am

Oh where are all the skeletons buried ?
The trial starts today….

https://www.cbc.ca/news/world/ghislaine-maxwell-trial-opening-1.6266303

#108 Alex on 11.29.21 at 10:12 am

DELETED (Anti-vax)

#109 westcdn on 11.29.21 at 10:16 am

I had to look up the acronym “WRT”. There are dozens of potential meanings. In the context I see it used, it is short form for “with respect to”. My favorite was “whitewater rescue technician”. I figure somewhere in the world such jobs exist, right up there with overpaid California beach lifeguards (guessing it has something to due with legal liability – the newish lottery win)

I am no genius. I never tried to be an expert at anything. I prefer to be good at as many things as I can. As one executive said to me, “you know enough to be dangerous”.

In my world, I am happiest working with people who have heart rather than brain. Despite my bent against union activity, I will trust male union leaders with hard hands over a male public servant or SJW with soft hands.

Rant warning:
I find pricks are over represented in elite and academic circles. Occasionally I sent trial balloons at them for my own purpose.

#110 Shawn Allen on 11.29.21 at 10:39 am

Mega wealthy and Money

Nonplused and I were agreeing that that the wealth of the old and certainly of the mega wealthy will be passed on to taxes, charity and heirs.

Non plused said:

Seems like we agree on more than we disagree. Even if we take an egregious example like a $300 million dollar super yacht, the boat will still be here long after the billionaire has set sail for the last time. And I don’t know if everyone knows how those things work, but there is a crew of up to 50 earning a living taking care of the boat. The billionaire seldom spends much time on the boat at sea; instead he meets it in the desired location. They take their private jet (also employing people) to the destination and then a private helicopter (also employing people) to the boat. That’s why they all have helipads.

If all the Elon Musks of the world did try to somehow consume their wealth all at once, I imagine the effect would be interesting. Not only would he have to liquidate many of his shares possibly destroying the M2M (share price) in the process, but then there could be an inflationary effect as all that money is put to use buying what-have-you. More mega-yachts I suppose. Hard to think of something that could absorb that much money besides government.

***************************************
Just on the point of the likes of Musk selling mega shares and having tons of money to spend.

It’s interesting that the money will have to flow to Musk from other investors buying those shares. No new money created.

It seems it is borrowing that creates money.

And, I have no problem with the mega wealthy spending huge sums. It allows a certain amount of their wealth to flow to others as in your example of the yacht crew. It’s best when it flows to people of moderate wealth.

#111 Don Guillermo on 11.29.21 at 10:51 am

#106 Sail Away on 11.29.21 at 9:55 am
#103 Dharma Bum on 11.29.21 at 9:10 am

Re: TV shows

———

Yes, you’re right. Lots of shows of all kinds of people. My favs are the crime shows, mostly drug trafficking. Business at its rawest where all options are open and massive profits can be made. The biggest downside is that nobody ever reaches natural retirement.
***********************************
El Chapo might

#112 Shawn Allen on 11.29.21 at 11:05 am

The rich get richer…

#61 Do we have all the facts on 11.28.21 at 7:43 pm said:

In his book “Capitalism in the Twenty-First Century” Thomas Piketty pointed out that investment based capital expands faster than growth of an economy and as a result inherited wealth is expanding much faster than earned wealth.

***********************
I read some or all of that book.

He meant it as a warning. I and probably most investors took as more of an instruction manual.

But it is true we have a system where the 5% or 1% or whatever have more wealth than they can ever spend and yet the system is set up to keep on increasing their share of wealth.

If they manage to pass it on to heirs we have the new inherited aristocracy which does not seem fair.

The bottom 20% is in debt to the top 20% or whatever. And/or the government is in debt to the top 20% in order to subsidize the bottom 20%. The poor and governments service the debt but it seems a bit of a charade as the debt will always be there and grow and the wealthy will never really collect and spend it.

Anyhow, the world is unfair but we must deal with it and make our own way in spite of things not being fair.

#113 Ponzius Pilatus on 11.29.21 at 11:21 am

#80 Don Guillermo on 11.28.21 at 9:56 pm
#38 Ponzius Pilatus on 11.28.21 at 5:28 pm
#10 Don Guillermo on 11.28.21 at 3:13 pm
Thankfully Black Friday weekend is coming to an end. There seemed to be an extra run on smash & grab specials this year. Sad.
————–
John Prine would understand.
Not really a folk singer.
Same for Bobby Zimmerman
*********************************
“The answer my friend is blowin’ …………..”
——————————
“The Times they are a’changin’”

#114 Wrk.dover on 11.29.21 at 11:21 am

Harvey comes to mind from that photo

#115 Ponzius Pilatus on 11.29.21 at 11:33 am

#109 Westcdn
I am no genius. I never tried to be an expert at anything. I prefer to be good at as many things as I can. As one executive said to me, “you know enough to be dangerous”.
——————-
There’s a difference between “knowing” and “knowing how to do things”.
The first one is the “dangerous “ one.
Like in the Westerns “he knew too much”.

#116 Quintilian on 11.29.21 at 12:12 pm

As we approach the of the year a parade of forecasts will be on display across all media.

The forecasters are not wrong in their intent.
It is the recipients who hear want they want to hear that are mistaken.

Just remember that when Benji comes on BNN to warn you that interest rates are going up, what he is actually saying:

“hurry, hurry, hurry, get your mortgage from us today”

Mission accomplished for Benjy.

#117 SunShowers on 11.29.21 at 12:21 pm

“Politicians have “no idea” on how to deal with low inventories and the trend towards house hoarding.”

Oh I can think of a few ways…

#118 Penny Henny on 11.29.21 at 1:08 pm

#98 Sail Away on 11.28.21 at 11:36 am
#94 Dharma Bum on 11.28.21 at 10:06 am

The Rogers situation reminds me of the HBO show Succession.

If you haven’t been watching it, you should check it out.

It’s a tasty cringe fest.

Representative of the uber wealthy psychopathic slime and their intrafamily strife.

———-

Don’t fall into the trap of thinking the rich automatically have all these issues. In general, I find comfortably wealthy people to be pretty well adjusted. All economic stratas have dysfunction, though.

That said, from the show’s perspective, who would watch a show about a bunch of messed up poor people making bad decisions? That’s just sad.
/////////////////

‘You mean like ‘Married…. with Children”

#119 Sail Away on 11.29.21 at 2:05 pm

#111 Don Guillermo on 11.29.21 at 10:51 am
#106 Sail Away on 11.29.21 at 9:55 am
#103 Dharma Bum on 11.29.21 at 9:10 am

Re: TV shows

——–

Yes, you’re right. Lots of shows of all kinds of people. My favs are the crime shows, mostly drug trafficking. Business at its rawest where all options are open and massive profits can be made. The biggest downside is that nobody ever reaches natural retirement.

——–

El Chapo might

——–

Haha

#120 Don Guillermo on 11.29.21 at 2:07 pm

#113 Ponzius Pilatus on 11.29.21 at 11:21 am
#80 Don Guillermo on 11.28.21 at 9:56 pm
#38 Ponzius Pilatus on 11.28.21 at 5:28 pm
#10 Don Guillermo on 11.28.21 at 3:13 pm
Thankfully Black Friday weekend is coming to an end. There seemed to be an extra run on smash & grab specials this year. Sad.
————–
John Prine would understand.
Not really a folk singer.
Same for Bobby Zimmerman
*********************************
“The answer my friend is blowin’ …………..”
——————————
“The Times they are a’changin’”
————————————————-
So true. The smash and grab times are upon us.

#121 Sooby on 11.29.21 at 2:15 pm

Your post made a distinction between ‘Chinese’ and ‘Canadians’. Be careful. – Garth

Why does he need to “be careful”? It’s a perfectly valid observation and if you could get you head out of your ass you’d know (as you probably already do) that offshore chinese are to a large extent responsible for high housing prices in Canada. We need to restrict real estate ownership in Canada to Canadian citizens only.

It may be a shock to you, but someone who looks ‘Chinese’ and may have Chinese ethnicity can be a Canadian citizen. In fact, most are. How’s your ass looking in there? – Garth

#122 Doug in London on 11.30.21 at 11:41 am

@Penny Henny, post #118:
who would watch a show about a bunch of messed up poor people making bad decisions? That’s just sad.
————————————————————-
The same goes for soap operas. The benevolent government gives tax breaks to TV stations to put this rubbish on. Why? So more people will leave the TV off and go outside, get more exercise, be healthier, and put less stress on the already overstressed public funded health care system. For every dollar of lost tax revenue, I figure the save anywhere from $10 to $20 in avoided health care costs.