The wave

For the next few months, this is all you need to know about the real estate market.

We’ll use the GTA as an example. But similar conditions exist in Vancouver, Victoria, southern Ontario, Montreal and Halifax. Even Calgary, where sales exceed new listings.

Remember, in the Toronto region dwell six million souls. By far the largest urban concentration in Canada. In fact the local real estate board is the largest in North America. And of the 401,000 newcomers to Canada in 2021, the majority settled here, offsetting a serious migration from the city to the rustic hinterland of desirable (Niagara-on-the-Lake) and questionable (Bancroft) burgs. It’s all residue of Covid. And it ain’t over yet.

But here’s the point. There are now (December) about 6,000 properties for sale in the entire region. Twenty-five years ago this month, when the population was 50% lower, almost 17,000 houses were on the market. So that means twice the number of people currently have a choice of real estate that is 65% less. Yikes. Classic demand overwhelming supply.

But wait. Twenty-five years ago the biggest population cohort – the Boomers – had a median age of 41. Today the biggest population bulge is made up of Millennials, and the median age is exactly a decade younger, at 31. That’s a seriously important ten years, since the bulk of people get married, have a kid and, yes, go house-shopping in that hunk of their lives.

Meanwhile, check this out: in 1996 the average five-year residential mortgage rate was 8.5%. Today a fiver is still available at 2.5%. Less if you deal with a mortgage broker selling loans out of the back seat of his Kia. That six per cent gap is massive, and goes far in accounting for the property inflation we see today.

Let’s summarize.

Way more people. Vastly fewer listings. Big demographic changes. More family formation. Massively cheaper credit.

Now, the federal Libs say: let’s add in a 25% higher CMHC borrowing limit (to $1.25 million). Let’s double the tax credit for first-time buyers. Let’s enhance the amount available through a shared-equity mortgage. Let’s raise the RRSP Home Buyer’s Plan withdrawal. Let’s bring in taxes on part-time residents, foreign owners and rental investments to increase real estate overhead. Finally, let’s create a new tax shelter for Millennials to allow tax-deductible contributions, tax-free growth and untaxed down payments, for houses giving taxless gains. In short, let’s goose demand.

Mix it all up. Whaddya get?

Unlike Omicron, this will not end with a whimper.

About the picture: “Jasper was a hybrid as one Vet put it, long before the term was used,” writes Wayne. “Jasper was a combination of Golden Retriever, Australian Shepherd with some Border Collie.Jasper was always a very happy dog, loved going on his rides and was crazy about pepperoni bits. I lost Jasper on Nov. 26 this year after 16 years of being companions. He will be sadly missed and fondly remembered.”

95 comments ↓

#1 renter in Surrey on 12.26.21 at 4:15 pm

So what’s going to happen?
RE keeps going up another 10%-30% every year?
If you had not got into RE before 2020 you will be renter till you die?

Nothing goes up forever. And this is completely unsustainable, based on incomes and current debt saturation. – Garth

#2 Earlybird on 12.26.21 at 4:17 pm

Hmmm…whaddya get?

A hostile generational rift….

#3 Doug t on 12.26.21 at 4:18 pm

Drop a BOMB on the housing market – time for a reality check

#4 Dolce Vita on 12.26.21 at 4:21 pm

Well Garth a compelling (and true) argument of Goose RE by Gov Canada.

One small short term issue is that Mill cohort will be at home nursing Omicron for themselves and/or their kids (the latter, Omicron’s snack de jour here in Europa).

Omi’s going to buzz saw thru Canada, so at least for a few months more verification of your argument will just have to wait.

#5 Supply and Demand. on 12.26.21 at 4:22 pm

Mix it all up. Whaddya get?
———————————–

Just remember Supply and Demand.

#6 TurnerNation on 12.26.21 at 4:23 pm

War on Small Business – finally makes the mainstream .

https://www.zerohedge.com/covid-19/covid-19-restrictions-questioned-omicron-related-hospitalizations-remain-low
“The president of the Canadian Federation of Independent Business is questioning Canada’s new round of COVID-19 restrictions put in place to stop the rapid spread of the Omicron variant, despite reports that the variant causes less severe illness than its predecessors.
“If #omicron continues to result in very few admissions to hospitals/ICUs, how long will it be before provinces remove their new restrictions and lessen the panic they’ve created. U.S. public health officials say there is no need to close schools or businesses,” Dan Kelly, who is also the chief executive officer and chair of the business advocacy group, wrote on Twitter.”


— Life in Ontario – the New System is brutal no? This local ER Doc is in agreement.

https://twitter.com/erdocAA/status/1475115610996621317 .ERdoc @erdocAA
After two years, we’re back to no visitors in the hospital. This isn’t about Omicron, it’s about cruelty.

.Joel Aro @PerpetualFinn Replying to @erdocAA
I was removed by OPP yesterday bc they said I was trespassing. I thought I was just tending to my wife who was in labour

.ERdoc @erdocAA
I pretended I didn’t know the policy and let a patient’s family member come in. We can’t keep going on like this…



Control over our feeding. They want us eating bugs. Our rulers do see us as farm animals in this global tax farm.

https://www.bloomberg.com/news/articles/2021-12-03/fake-meat-industry-eyes-crickets-beetles-mealworms-maggots-for-burgers
“Coming Soon: Faux-Meat Burgers Made From Maggots and Mealworms”

#7 SW on 12.26.21 at 4:24 pm

*BANG* is what happens, sigh.
Not today, not tomorrow, but soon enough.
How do we save the furniture?

#8 Ian on 12.26.21 at 4:33 pm

Walking around Aurora visiting for Christmas. 30 year old homes in this souless, no one walks around suburb fetch $1.5M. Crazy. My question is while it’s more affordable to rent than own, a lot of policy and government planning is based on people buying a home in life and using proceeds to fund retirement, long term care one day. Further, House rentals in this good have spiked from $2,500 to $2,800 to $4,500 to $5,000/mth. I dunno I find that expensive and unaffordable. So how is a renter going to be able to afford rent and to save for retirement if they’ll never get into the housing market? Renters will clearly need to save and invest, but with rents climbing it’ll get harder to save anything meaningful considering rent will probably climb at 2 to 3% per year and that’ll be a higher expense or similar to the property taxes and maintenance of a paid off home minus the equity. Asking as we have no debt, good savings and financial planners have told us no way we can ever buy AND afford to retire. Pick 1 is basically what we were told and we make good incomes…. Crazy.

#9 uncle dave on 12.26.21 at 4:38 pm

Houses are unaffordable to the average Canadian and even if they dropped 30% in GTA would still be out of reach.

#10 Sam on 12.26.21 at 4:40 pm

The best time to purchase real estate was yesterday. Finally Garth sees that real estate is the best asset to own. Sure diversify if you can a home, balanced ETF, Gold, Crypto etc but buy the home first.

Of course not. A one-asset strategy – when that asset is bought at historic, inflated levels, and with 20x leverage – is courting risk. Tery not to be so one-dimensional. – Garth

#11 Sail Away on 12.26.21 at 4:47 pm

#2 Earlybird on 12.26.21 at 4:17 pm

Hmmm…whaddya get?

———-

Another day older and deeper in debt?

#12 Dolce Vita on 12.26.21 at 4:50 pm

1 in 10 people.

That’s how many in London have Covid-19 according to the UK’s ONS. 1 in 35 overall. And that’s from Dec. 13-19. 1.5 million symptomatic . Consistent with ZOE estimates that week. ZOE estimate today:

1,808,011.

Omi, the buzzsaw.

Today walking to the Guggenheim it seemed like France had airlifted itself to Venezia. Only Italian heard was from Gondolieri busking for business. France had +100K new cases yesterday, Italia half of that. I hardly blame the poor things for wanting to get out of Dodge to a safer environs *.

OMI DIVERSION at PEGGY G.

Peggy, you fox.

https://imgur.com/gallery/d5N3Z6l

Her dogs & herself, RIP.

https://imgur.com/gallery/lNrhbzv
https://imgur.com/gallery/7DYdPFy

And speaking of Liquid Desires…

https://imgur.com/gallery/ccTexmk

…going downstairs for a Spritz Veneziano or 2, plus some cicchetti. Harry’s Bar will just have to wait until next time.

It’ll get better Canada.

———-

* FFP2 Italia soon enough outside, inside…Elada too.

Omi’s probably going to win that battle to, of mice and men.

#13 Justin Flation on 12.26.21 at 4:53 pm

Don’t worry I will come save the day. Everyone’s wages will be going up to compensate for my appearances everywhere.

Happy Holidays!

#14 Paddy on 12.26.21 at 4:58 pm

So what your saying is I should have bought more real estate…like…10 years ago.
I don’t see the government pushing to build more houses anytime soon…or in the future for that matter with Mr. Socks in power. Even with a rise in interest rates, the supply is still low so uppa she goes.

#15 Supply and Demand. on 12.26.21 at 4:59 pm

Nothing goes up forever. And this is completely unsustainable, based on incomes and current debt saturation. – Garth
———————————–
“In France, for example, people can choose to repay their mortgage at a rate of 1% per year for up to 120 years.”

https://www.europeanbusinessreview.com/8-things-you-didnt-know-about-european-mortgage-markets/

#16 Prince Polo on 12.26.21 at 5:13 pm

When my pathetic generation of Millennials, goes adulting, it means real estate instagramming and no careful consideration of living within one’s means. Who really cares what’s the monthly on a 50yr amortized mortgage? Nothing will stop our dear Photo-op Minister from pandering to the doofuses! I weep for my generation (with sweet bank divvies sopping up all of the crocodile tears that will be a-flowin’!). Happy Boxing Day to all…just don’t get suckered into a TKO.

#17 RE_Investor on 12.26.21 at 5:21 pm

#1 renter in Surrey on 12.26.21 at 4:15 pm
So what’s going to happen?
RE keeps going up another 10%-30% every year?
If you had not got into RE before 2020 you will be renter till you die?

Nothing goes up forever. And this is completely unsustainable, based on incomes and current debt saturation. – Garth

Even if Toronto RE prices correct to 2016/2017 levels (65% or $400k), the people who have been waiting to buy will swoop in, thus propping up prices again. I’m seriously waiting for this event to occur! The longest correction period I can remember is from 1990 until 2002. It took close to 12 years to recover price levels. As long as you need a place to live you should be able to weather the storm. No point selling at a loss when you can lower your mortgage payments by adding a secondary suite. Remember, multiplexes are coming soon to a Toronto neighborhood once the zoning bylaws get updated! https://www.greaterfool.ca/2021/11/25/detached-from-reality/#comment-814479

Nobody ‘swooped in’ on the last two occasions when GTA real estate values fell 20% or greater. You do not know human nature. – Garth

#18 Faron on 12.26.21 at 5:23 pm

Okay, here goes. My hunch is that, if one doesn’t have omicron right now (I bet a lot of you do) you have a 50-50 chance of getting it in the next week or so unless you are a remote lighthouse keeper. And, almost everyone is going to know someone or multiple someones who get omicron. Given that, and to encourage honesty on this here comments section, I would like to reveal something to perhaps free up commenters to talk about their looming personal experiences with COVID.

I had the delta variant back in August (I think it was delta, timing was right, but we didn’t get a sequenced test). I was double vaccinated with AstraZenica. It was at the end of the summertime low of infections and, although a family member was sick, they had tested negative through a RAT (rapid antigen test). In fact, several family members had.

So, with a false sense of security from the crappy tests (RATs are rife with false negatives) we proceeded with a vacation into the morass. About ten days into it, cycling through extremely hot, smokey conditions in Oregon, we succumbed to the infection and called it off. Luckily we were riding though sparsely populated areas, so caused minimal spread if any in a region that firmly doesn’t believe in vaccines or even COVID itself, but still we have lingering guilt. We tested positive, blasted home, went into quarantine etc.

My sense of smell and taste are still off and I have the attention span of a squirrel (which is worse than before to be clear). I was lucky that my symptoms came on late, so I actually enjoyed a good week of the trip while my partner suffered while insisting we forge on.

We were lucky to have had the protection of the vaccine. My partner was quite sick and, lacking the vaxx, would probably have wound up hospitalized. My understanding of omicron is that, with the vaccines, you will have a very mild experience and will come out of it with greater immunity. Without vaccination you may have a bad outcome and we will see based on numbers that come out in the coming week or so.

Neither here nor there, but last week I ditched fabric masks for N95s and shaved my beard to give a better seal. Still taking this thing very seriously even though the news is promising overall.

Take care friends and frenemies. This might be the crescendo of the pandemic.

And those in BC, enjoy the snow and cold. For a brief moment, we were colder in SW BC than Fairbanks Alaska. I love it.

#19 Dolce Vita on 12.26.21 at 5:24 pm

What with this being a FORMER Dog Lover’s Blog the Twitter Hive shows a bit of themed humor regarding OMI:

https://twitter.com/shaakumeni_/status/1474823742928871426?t=rvV_EWeKN7COqtN-lfBb_Q&s=19

but not everyone in the Hive buying that yet:

https://twitter.com/smokingkillsca1/status/1474986620336041987?t=hkzE6pFy5bYGyrlfwXQKEw&s=19

PS:

Recall Trudeau, Boris and Biden (2020 VAX HOG Gold Medal winners, a tie) are going to unleash The MOTHER OF ALL VAX SHIPMENTS upon the World?

https://twitter.com/other_europe/status/1474428428539641859?t=JRzUvsXkmrVGZh6etm-lCw&s=19

BS. Eyes are brown.

Europa shouldering the burden, as usual.

#20 45north on 12.26.21 at 5:30 pm

renter in Surrey
So what’s going to happen?
RE keeps going up another 10%-30% every year?
If you had not got into RE before 2020 you will be renter till you die?

Nothing goes up forever. And this is completely unsustainable, based on incomes and current debt saturation. – Garth

let’s throw another thing into the mix

“Housing as a human right”

so after having subverted the housing market by government props, Justin Trudeau and the Liberal Government will declare that the private market hasn’t worked and only they have the social awareness and the innate human compassion to manage the housing market.

They aren’t at all worried that they have put the housing market in a precarious and unsustainable position. Why not give it another shove?

#21 NOSTRADAMUS on 12.26.21 at 5:32 pm

CIPHERED NEWS BULLETIN.
I am in my bunker with face paint and GEN-1 activated night vision on my Kaiser Helmet. I am ready for the apocalypse swarm of government tax hounds sniffing out my war chest of cash. I have CNN on 24/7 to intercept coded messages from my sort of undisclosed location in the Kawartha Lakes region. Ciphered News bulletin, today’s real estate speculators are real people operating in the real world, buying, but never selling their real estate. The problem that never surfaces from the deep crevices of their reptile minds, the borrowed money is at an unreal rate of interest. All made artificially low by the flood of US dollar credit washing over the globe. Low and behold, numerous dollars have even washed ashore in Canada. It is so unreal. From my bunker, I can see the tide is starting to reverse. It would appear, that tides of money, do not flow in the same direction forever. Sleep tight my little beauties.

#22 Protea on 12.26.21 at 5:33 pm

DEPRESSING SUBJECT. I have even heard young people express that one day their will be a revolution in our country !!

They would take up arms over buying a house? Figures. – Garth

#23 Yukon Elvis on 12.26.21 at 5:38 pm

One of my family members has tested positive for covid. Double vaxed with pfizer.Thirty five years old, good health.About five days of symptoms now. Lost sense of taste and smell, feeling tired, stuffy nose, dry cough. Feels like a bad cold. Two unvaxed kids,four and six seem ok. Spouse has a bit of a cold but otherwise ok so far. Christmas was cancelled.

#24 THE DANDADA on 12.26.21 at 5:40 pm

So I been following this blog for years. I keep hearing the same story…. housing prices are out of control. This can’t be sustained for much longer I keep hearing – yet TIK TOK they just keep going up.

Those who keep taking your advice get priced out of the market by 20% a year?

I think you have underestimated the power of those “newcomers”. They’ll pile up 10-15 in a home, all work at Tim Hortons and McD’s and save up and split on the mortgage. They have come here to live the dream and believe it or not 10-15 in a home compared to where they came from IS a dream.

#25 Faron on 12.26.21 at 5:42 pm

#11 Sail Away on 12.26.21 at 4:47 pm

St. Peter don’t ya take me ’cause I can’t go

#26 Leichendiener on 12.26.21 at 5:43 pm

On CTV this afternoon, NFL Bills versus Patriots. The stands are packed. Meanwhile in Ontario, nada. What is going on?

#27 Quintilian on 12.26.21 at 5:46 pm

Garth’s post summarises what happens when the collective wisdom of the masses fails again.

First it must be recognized that the concept of private property rights is a blight on society.

And it’s not that we don’t have references to this in recorded human history.

In fact, it wasn’t all that long ago, that something as absurd as the right to own other people was a right; sanctioned and enforced by law.

The “owners/ proprietors” of slaves were often revered and respected as saint like members of the Sunday congregation.

Most humans are quite stupid.

#28 All lies and manipulated u decide on 12.26.21 at 6:00 pm

#14 Paddy on 12.26.21 at 4:58 pm
So what your saying is I should have bought more real estate…like…10 years ago.
——————
Yup I just kept buying. 1st place 1989.
T2 made me a lot of loot on paper and making a lot of peeps poorer than they realize.
I just a bone head to boot. Nothing to talk about or trade.
10 years of pow to the moon.
There’s a lot of over priced garbage now. No deals to to found. Too many clueless watching the tube pumping RE. Humans are monkey see monkey do do.
Don’t do what they do.
FYI
Plumbing all plastic now.
everything’s OSB chip or sawdust board and glulams.
Drywall cost more than ply wood.
Wires up a 100% in a year.
And houses are zillions.
Hindsight’s 20/20

#29 Dolce Vita on 12.26.21 at 6:07 pm

Remember me dissing BC and it’s lying about Covid cases and useless H. O. and Ministry…they just got an award from the Twitter Hive’s gold plated source:

https://twitter.com/DrEricDing/status/1474261928172208133?t=T29-1MXiBbvJ5k9taNrU6A&s=19

Told you so.

Loving the Cdn MSM articles now about how reported cases by Health Authorities are “probably” much LOWER than actual (Don’t test, Don’t count).

And here Canada you thought you’re rarified air really made you into the Norse God’s of Valhalla + forest primeval…well, according to your “what they don’t know may or may not hurt them” Govs.

Told you so.

And shame deluding the GOOD people of Canada.

Numbers don’t lie. People do.

#30 the Jaguar on 12.26.21 at 6:16 pm

Jasper appears to have one caramel coloured eye and one blue eye. I guess he can claim ‘sympatico’ with David Bowie, Jane Seymour and others. It’s the look of love and well being that defines him. One protective paw on his toy but his expression clearly conveying “open to opportunities’. Shouldn’t we all follow suit?

If my recent brush with freedom and other recent events has taught me anything it’s that the train is always leaving the station. Life isn’t a dress rehearsal, and above all never rehearse for tragedy. Be bold and daring.

Maybe life is like newspapers, or as Max Aitken, Lord Beaverbrook once said, ” I suppose I will go on selling newspapers until at last will come the late night final.”

Good advice, Max. And since you were instrumental in saving the world this past century, any advice from you considered ‘ A solid’.

#31 Summertime on 12.26.21 at 6:17 pm

It is very interesting how much more difficult, if not impossible life has become in some so wrongly called 1st world countries.

Incentivized insane competition for basic needs like housing accommodation – rent or cost of a house have both skyrocketing.

So is basic food, energy, we have not even started feeling the real pain from the green/carbon neutral policies.

The price of housing in some not so fine and close to completely non-commutable locations in the GTA suburbs is unfathomable and outrageous.

The basic needs for something resembling close to somehow sane living when compared to antient slaves (i.e. work to live and pay the mortgage with no pleasures in life whatsoever ) went from requiring 60 to 80,100,150, 200 % of average incomes. And will keep climbing fast.

Having kids, affording a house, being able to retire?

Forget about it. It not even a pipe dream.
The very purpose of moving to the big canadian cities – work is defeated for a very long time by the very high and constantly increasing cost of living that makes life mission impossible.

Dolce Vita, correct me if I am wrong, but can’t you purchase a relatively nice apartment for 100 k USD just 40-50 min outside of Rome these days?
Comparing that to the 1.5 mil Aurora homes mentioned above.

It is interesting to see how long will the die hard stubborn supports of living in GTA last.

In my humble opinion life in even inflation shaken Turkey is much more pleasant these days, not to mention the big difference in weather.

What will happen in long term? Hard to say but things are not looking good at all in the big white frozen north.
Smart people started moving out 8-10 years ago.

#32 Dolce Vita on 12.26.21 at 6:43 pm

#18 Faron

You’ve got Long Covid and pretty sure you know that.

Support info. if you haven’t already looked.

#LongCovid on the Twitter Hive.

https://covid.joinzoe.com/post/living-with-long-covid-summary#:~:text=The%20WHO%20definition%20of%20Long,of%20breath%2C%20and%20cognitive%20dysfunction.

The Lighthouse keeper isn’t safe either. Covid-19 can travel for miles and miles since it’s as small or smaller than particulates:

https://www.google.com/amp/s/www.ksat.com/news/local/2020/09/30/utsa-study-shows-airborne-coronavirus-particles-could-travel-more-than-a-mile/%3foutputType=amp

#33 Penny Henny on 12.26.21 at 6:54 pm

#18 Faron on 12.26.21 at 5:23 pm
My understanding of omicron is that, with the vaccines, you will have a very mild experience and will come out of it with greater immunity.

Neither here nor there, but last week I ditched fabric masks for N95s and shaved my beard to give a better seal. Still taking this thing very seriously even though the news is promising overall.

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

First off good for you for shaving the beard, it was gross.
Secondly you sound confused and scared. You being a pseudo scientist I would think that you could see through the haze.

#34 ulsterman on 12.26.21 at 7:00 pm

#8 Ian on 12.26.21 at 4:33 pm
Walking around Aurora visiting for Christmas. 30 year old homes in this souless, no one walks around suburb fetch $1.5M. Crazy. My question is while it’s more affordable to rent than own, a lot of policy and government planning is based on people buying a home in life and using proceeds to fund retirement, long term care one day. Further, House rentals in this good have spiked from $2,500 to $2,800 to $4,500 to $5,000/mth. I dunno I find that expensive and unaffordable. So how is a renter going to be able to afford rent and to save for retirement if they’ll never get into the housing market? Renters will clearly need to save and invest, but with rents climbing it’ll get harder to save anything meaningful considering rent will probably climb at 2 to 3% per year and that’ll be a higher expense or similar to the property taxes and maintenance of a paid off home minus the equity. Asking as we have no debt, good savings and financial planners have told us no way we can ever buy AND afford to retire. Pick 1 is basically what we were told and we make good incomes…. Crazy.

It doesn’t look good for renters. Rents skyrocketing and all 100% of that payment going poof! every month. The mortgage payer is sending about 90% to principal and doing nicely. As they have for at least 15 years since bear blogs gained in popularity. Honestly, renting has been a losers game. Very very few renters have the discipline to save the (supposed) savings from renting into a balanced portfolio, and then come out far ahead of the buyer. Sure, maybe you plopped it all into Tesla in 2008, but then most people did not. You just cannot complete with the relentless rise of real estate and the delights on enforced saving/investment it brings. The prices are so far out of whack with incomes argument has been used since i started reading this stuff way, way back in 2004. And on and on it goes.

#35 Concerned Citizen on 12.26.21 at 7:00 pm

#31 Summertime

“It is very interesting how much more difficult, if not impossible life has become in some so wrongly called 1st world countries.”

*****

It is amusing how so many people don’t recognize this. I can only assume such people have got theirs already and haven’t bothered to pull out a calculator or spreadsheet to do the math on the situation young and other asset-poor folks face today.

It’s true these problems are not unique to Canada. Many countries have engaged in money printing/debt monetization, without an increase in productive capacity to back it up. Too much money chasing too few assets means negative yielding government debt, real negative returns for junk bonds, and asset bubbles everywhere you look.

All sense of moderation and of a responsibility to all citizens – not just asset holders – has gone out the window. And Canada is by far the worst of the bunch. American housing is roughly half the price of Canadian, and in most cases you’ll get much better pay too. I continue to think we’re going to see a mass exodus of educated young people from Canada like we’ve never seen before, whether it’s to the U.S. or elsewhere. The deck is so incredibly stacked against them here, I really can’t blame anyone who leaves. The government and Bank of Canada have thrown them under the bus.

#36 Ponzius Pilatus on 12.26.21 at 7:01 pm

#5 Supply and Demand. on 12.26.21 at 4:22 pm
Mix it all up. Whaddya get?
———————————–

Just remember Supply and Demand.
————-
Yeah,
It’s always about Supply and Demand.
The more  brands of tooth brushes you have on the shelves the more people buy.
Anybody knows  what the difference is  between an expense tooth brush and a cheap one.
Yes, you’re right, the price.
I had a pig bristle tooth brush once.
Actually, was surprisingly soft and lasted forever.
And cleaned.
Well can’t have that!
Must buy a new brush every two weeks. to keep the economy going.
Happy Boxing Day, everyone.

#37 Penny Henny on 12.26.21 at 7:05 pm

#30 the Jaguar on 12.26.21 at 6:16 pm
Jasper appears to have one caramel coloured eye and one blue eye. I guess he can claim ‘sympatico’ with David Bowie, Jane Seymour and others
////////////////

David Bowie was an Australian Sheppard, I didn’t know that. Hmmph

#38 Barb on 12.26.21 at 7:15 pm

Jasper looks like he was a regal soul, Wayne.
You gave him 16 impressive years, and he gave you indelible memories.

#39 wallflower on 12.26.21 at 7:17 pm

of the 401,000 newcomers to Canada in 2021, the majority settled here
———
of people granted permanent residency en route to citizenship, or citizenship in 2021, the majority were already in Canada – which is why Canada was able to attain these numbers – they were already housed

it appears to me that 2022 will be similar

now if/when 2023 presents as normal, with the majority coming in from offshore, I predict there will be massive shock at the cost of shelter (of any kind, and particularly rental) and food which will result in an increasing rate of ‘returnees” – that will become the theme of Canadian immigration moving into the future – plummeting retention rates – that is when the housing wave changes course, dramatically

#40 barnz0rz on 12.26.21 at 7:21 pm

“On CTV this afternoon, NFL Bills versus Patriots. The stands are packed. Meanwhile in Ontario, nada. What is going on?”

The US will be taking the last 2/3rds January off with Omicron, that’s what is happening. There won’t be a shutdown from the government, but a lot will be at home sick. Hospitals, who knows….

I am at the tail end of Omicron right now. Tested positive on Wednesday. DB Vaxxed. The last 4 days have been bearable, but not great, and not how I wanted to spend Christmas. I finally got some extended time off work and was looking forward to doing some other things.
The industry I work in has been crazy for the last 2 years, but finally slowed down in the last month, I jumped at the opportunity to take some extra time off.

#41 mike from mtl on 12.26.21 at 7:24 pm

#18 Faron on 12.26.21 at 5:23 pm
..Given that, and to encourage honesty on this here comments section, I would like to reveal something to perhaps free up commenters to talk about their looming personal experiences with COVID.
/////////////////////////////////////////////////////////////

I’ll shoot.. probably got the ‘rona sometime in Jan maybe Feb 2020. It was like the worst Flu in decades but what was weird is I had this dry smoker’s cough and could not speak aloud for like a month.

Vax dose 1 had these weird inflammation cramps and a mild headache for weeks. Dose 2 zero.

Absolutely nothing since early 2020, not even a sneeze.

Only last week I could have called it a cold, Om?? Maybe.. who cares I did not feel in danger.

#42 Ponzius Pilatus on 12.26.21 at 7:30 pm

#26 Leichendiener on 12.26.21 at 5:43 pm
On CTV this afternoon, NFL Bills versus Patriots. The stands are packed. Meanwhile in Ontario, nada. What is going on?
——————-
Easy,
The Amis would rather die, than miss the slowest team sport (close second to baseball) on earth.
And the world famous F-150 tail gate parties, where they barbecue their world famous ribs and drink their world famous Bud pee beer.

#43 NOSTRADAMUS on 12.26.21 at 7:30 pm

BIG, BIG THANK YOU, TO DOLCE VITA.
Virtually no activity has the potential of bringing people closer together than carrying out a project for a good cause, or, more specifically, organizing and executing a charitable project on your own. By shining a light on the seriousness of Delta and its evil sibling Omicron, you have, in my opinion, saved lives. Thank you, my friend.

#44 All lies and manipulated u decide on 12.26.21 at 7:52 pm

#31 Summertime on 12.26.21 at 6:17 pm
——–
Yup
Corp investments collapsed here to. Most unfriendly place to do biz.
T2s puttin the final nails in the coffin.
Me and the wiffy are planing to get another shed in a warm friendlier place.
Natgas is getting outlawed. Their clueless as to energy infrastructure needed to run your house and car.

#45 Robert Ash on 12.26.21 at 7:53 pm

Hard to invest today in anything, today, when those coveted enduring rules of management are circumvented, and the Bosses, have their thumbs on the scale. That is my red line, so to speak…. I wouldn’t enter the housing market in the hot areas, that is for sure…. Ok, in the secondary markets, as the big RE pull, is the repayment, principle to interest, at 2.5% fixed 5Yr. rates… New Years, and more panic? Let’s hope not. Good luck and top of the season to all…

#46 Lee on 12.26.21 at 8:01 pm

The average fully detached in Toronto will be $3,000,000 in 2024. It won’t come down from there.

#47 Russ on 12.26.21 at 8:13 pm

Faron on 12.26.21 at 5:42 pm

St. Peter don’t ya take me ’cause I can’t go

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

“I owe my soul to the company store…”

Du du du da dodo du du

#48 VladTor on 12.26.21 at 8:20 pm

Garth…And of the 401,000 newcomers to Canada in 2021, the majority settled here…

***********
Majority newcomers normally doesn’t have money for mortgage. They need rent. Price for rent skyrocketing! Many of them will be shocked.
They need only to hold out for 4 years before getting a Canadian citizen and passport . Whole world will be open to them! I think 75% of them will return home after that. For one monthly rent here , they can live at home for six months, and the whole world will be open to them. The question is – do we Canadians need it? Before invite newcomers need to solve rent problems – rent should be affordable. But nobody even discussing price of rent. Housing…housing… housing – from each corner.

#49 Victor V on 12.26.21 at 8:25 pm

Feds “discuss” housing affordability:

https://twitter.com/pierrepoilievre/status/1475247551842504709?s=21

#50 crowdedelevatorfartz on 12.26.21 at 8:30 pm

Not one politician has the guts to do what’s right.
Raise interest rates.
Eliminate CMHC mortgage insurance
Eliminate tax free gains for sellers.

On and on the market has been pumped by govt intervention at ever step of the way.
10, 15, 20, 30 years this insanity has pumped up up up.

To expect Trudeau to drop the axe on the tens of thousands of Real estate agents, brokers, bankers, inspectors, speculators, builders, advertisers on and on and on to “rock the boat” and dump the golden goose overboard.

I wont hold my breath.

#51 Shawn Allen on 12.26.21 at 8:43 pm

High House Prices?

Home prices are extremely high mainly for the same reason that a ten year bond trades at an extremely high 71 times its annual dividend.

Many people claim a mortgage is cheaper than rent. Probably not when all costs the homeowner faces are considered. But then at 2.5% just over half the mortgage is going to pay down principal from day one. After 5 years 61% of the mortgage payment is going to pay down principal. That’s building equity even if home prices stay flat. The amount going to principal HAS to be included in any fair comparison – as does costs for property tax, deed transfer tax, real estate fees, and other things the that are in addition to the mortgage but are not directly faced by the renter.

#52 Dogman01 on 12.26.21 at 8:56 pm

It is minus 28 degrees feels like -37 in the major city I reside in.

Makes you agree that shelter is a human right, like food and air etc the basics.

I think of all the short term thinking, the lack of fundamental strategic planning, the destruction of our World Class Energy Industry. (Nat Gas is running $50 in Europe but Canada can’t export our abundance)

Takedown of our middle class.
• Competing against more labour supply, via Globalization & Immigration
• Less global demand for “workers” – via Technology
• Wages up against Inflation
• The sickness of shelter prices in Cold-Cold Canada.
It has been one of the best years for my personal wealth but I view the country going down the Toilet for the young.

#53 Bezengy on 12.26.21 at 9:07 pm

A couple days back I was sent out to buy some diapers for the gkid down here in Niagara. Pulled into a big pharmacy and went inside. They had a whole aisle of them. None for kids though, just adults, I [email protected] you not. Clerk said there just isn’t a demand for them. Lots of housing supply coming onto the market here soon, just a matter of time. Not trying to be morbid, but man, half the houses down here still have TV attennas on the roof. Big changes on the horizon imo.

#54 I don’t know on 12.26.21 at 9:12 pm

#10 Sam on 12.26.21 at 4:40

I agree. The mantra is always buy as soon as you can, preferably with dirt.

The paradigm around housing has shifted immensely in the last decade.

(Besides everything Garth mentioned in today’s post -generational demand, population growth, policy incentives etc.)

-The cost of materials for houses has skyrocketed in the last decade or so. The pandemic has exacerbated this.
-Developers and builders are not as incentivized to build SFD houses, and face many regulatory hurdles before they build if they are. This constrains the supply of SFD homes. Expect more condos.
-Families these days are smaller than in generations past. In the past, two families in two homes housed 8 or more people, now it’s 4, 5 or less. This puts huge constraints on supply of homes, versus demand. There has been a cultural shift.
-Although they will rise from where they are, interest rates will stay low relatively speaking for a long time. Amortization periods can also be extended beyond 25 years.

The 80’s aren’t coming back.

#55 cuke and tomato picker on 12.26.21 at 9:16 pm

A fixer upper in Victoria that needed considerable work
listed for $830,000.00 even after some caution from the real estate agent to his client they offered a million
and bought without any home inspection or conditions etc.

#56 cuke and tomato picker on 12.26.21 at 9:47 pm

After being down 3 to 1 our boys scored 5 goals and beat the Czechs 6 to 3. My main wish is they shut out the
ruskis.

#57 leebow on 12.26.21 at 9:49 pm

Economists recognize three types of inflation: cost-push, demand-pull and built-in. I would argue that we are descending from demand-pull to the built-in type. Built-in inflation is a type of inflation based on expectations of price growth and ultimately leads to the wage-price spiral that is very difficult and expensive to overcome.

I don’t know if we are past the point of no return or not, but nothing is being done to fix the causes.

#58 IHCTD9 on 12.26.21 at 9:54 pm

Mix it all up. Whaddya get?
—-

I think I have an answer. Our local hillbilly MLS serving a population of 50K, currently lists a total of 32 properties for sale. 14 of them are 1 Million plus. 13 are vacant land (not ready to rock building lots either). The cheapest individual actual house for sale has been on the MLS for 40 days, and it’s a shithole listed at near 400K. Highest priced is a nice place for 2.4 M – they’ve been flogging this house for years. Yes years, we’re talking over 1000 days on the MLS. Only 8 actual residences are listed at under a Million. I think sales here will move to near zero, 2+ hours from the GTA. There’s not a single solitary house even worth looking at.

Like I’ve said a thousand times before, Trudeau has dry-****** this country with a cactus. Living under these Liberal twits is like getting a barb-wire catheter inserted. But hey, let’s goose it even more. I’m living in a country run by a bunch of nose-honking ass-clowns.

What-ev. Canadians voted for it, and man have they ever got it. Average house price was under 450k with Harper, now with Justin – it’s 800K. Nothing changed, other than us electing a ******* twit cement-head goof to run the country. Based on current listings in my backwater boon-dock MLS, the average SFD here is 1.6 Million.

Next up appears to be a massive devaluation of the loonie from the looks of it. What a shit show. Canada is stand up comedy. I laugh more listening to Trudeau’s plans than listening to Chris Rock.

#59 leebow on 12.26.21 at 9:58 pm

Apologies to the host for spamming. But I’d like to share one observation that may be useful for the esteemed audience.

I noticed that the discourse now includes the term of borrowing by the government, as in “yeah, but we still can borrow long-term”. This didn’t come up before for AAA sovereign debt. My question is – how long before the market only takes 10 year debt, then 5, then 3, and so on. This is just such a classic scenario.

#60 IHCTD9 on 12.26.21 at 10:13 pm

#55 cuke and tomato picker on 12.26.21 at 9:16 pm
A fixer upper in Victoria that needed considerable work
listed for $830,000.00 even after some caution from the real estate agent to his client they offered a million
and bought without any home inspection or conditions etc.
—— – —

You’re surprised or something? Look who we have running the country. Time for you to shut up about RE. YOU voted for this cucumber, and now you’ve got it.

#61 IHCTD9 on 12.26.21 at 10:46 pm

#52 Dogman01 on 12.26.21 at 8:56 pm

I think of all the short term thinking, the lack of fundamental strategic planning, the destruction of our World Class Energy Industry. (Nat Gas is running $50 in Europe but Canada can’t export our abundance)

Takedown of our middle class.
• Competing against more labour supply, via Globalization & Immigration
• Less global demand for “workers” – via Technology
• Wages up against Inflation
• The sickness of shelter prices in Cold-Cold Canada.
It has been one of the best years for my personal wealth but I view the country going down the Toilet for the young.
——

Didn’t have to be this way. Alas, we have a Clown PM, and therefore a Circus country. The idea that youth or new immigrants can prosper in this recently destroyed country can be outright dispensed with. OSC’s have it made, the rest have been run-through by Trudeau. That’s the long and short of it.

#62 DirtyPants on 12.26.21 at 11:00 pm

Omni will be old news before you know it. Everyone at our Christmas party of 12 caught it, 6 vaccinated, 2 un, 4 kids, possibly the cat. It has mostly run it’s course in 4 days, although it has since moved on to annoy other relatives. Stay healthy everyone!

#63 Diamond Dog on 12.26.21 at 11:05 pm

https://www.greaterfool.ca/2021/12/25/the-chorus/

When someone, particularly an anonymous know-it-all in the comment section, advises to sell everything because markets are “overpriced” consider the following – Doug

One thing we can agree on is the market is expensive (oh wait, after proofing we can’t) not just judging by P/E’s like this chart suggests (only one other time more expensive in history):

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

But by aggregate share price to sales (has it ever been this high?):

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

Or price to book (oh look, nearing the dot.com bubble peak now):

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

These charts don’t indicate a mere expensive market, they indicate a bubble by one’s own definition of “relative valuation”.

On to PEG ratios. Lets take a deeper dive as to what they are and what the formula is:

https://www.investopedia.com/investing/use-pe-ratio-and-peg-to-tell-stocks-future/

You stated that the current PEG ratio of the S/P is sitting only at about 1x and that ratio is reasonable. Some examples: 16x earnings with 12% growth = a PEG ratio of 16/12 or 1.33. Another example: P/E of 25 and projected growth at 20% = a PEG ratio of 25/20 or 1.25.

Current S/P 500 P/E ratio is 40 with projected growth at 20% = 40/20 or a PEG ratio of 2.

What did you say the S/P PEG ratio was again Doug? Around 1x? Based on? If 1 is reasonable, what is 2?

And 1 is a good number? Sure, if P/E’s get chopped to 20 in this market and projected growth really hits 20%, buyer’s market but boy would it suck to ride it down from here. Btw, what happened to all the dot.com high corp growth predictions the last and only other time this market was in a bubble like this… that’s right, the market cratered. Be wary of market “expectations”, readers. If only I had a nickel for every time a CEO used the word “expect” and fell short.

The rest of what you say concerning yields Doug, I’ll throw you a bone. The Fed is giving investors nowhere else to go in the pursuit of profit other than the markets as we know. Even in the face of 6.8% inflation, the Fed won’t raise rates til’ next year.

Can’t stress how important this one fact is to the near term positivity of the markets but this is only near term extending to next summer or fall and doesn’t factor in a host of other risk nuances so beyond that, it gets hard to predict. Lets explore some.

Rate hikes depend on inflation relative to the dollar but more so, the dollar’s value against the Euro. If the dollar weakens significantly against the Euro in the future, rates will go up faster than most realize. Can’t predict the timeline but the near term is positive for a low rate environment as we already know.

Let’s peruse some more charts to back up what I’m saying. The chart below is a 20 year chart of the U.S. dollar against the Euro:

https://www.chartoasis.com/usd-eur-forex-chart-20-years-cop0/

The link below is a longer chart going back to the Euro’s inception even though its Euro vs Dollar so I thought I would include it:

https://www.macrotrends.net/2548/euro-dollar-exchange-rate-historical-chart

This next link below is a history of U.S. inflation going back to the 1930’s:

https://www.thebalance.com/u-s-inflation-rate-history-by-year-and-forecast-3306093

Now… correlate these numbers with the Fed funds rate going back to the 50’s:

https://www.macrotrends.net/2015/fed-funds-rate-historical-chart

Note how the Fed rate has reacted to the differences between both currencies through time. Note why the Fed raised rates setting off the GFC in 06′ even though the Fed risked destablizing the U.S. economy in doing so (Reason: free falling dollar relative to the Euro). Note too, the low inflation environment the U.S. enjoyed following a weaker Euro from 2014 on as they faced a bond crisis.

But I digress, should the dollar weaken against the Euro significantly, the Fed will be forced to raise rates once again. Not because of domestic complaints of asset inflation, although quite valid going forward among other reasons, but because it has to.

The dollar has strengthened since May of this year. What could further strengthen the dollar? Try a war between Russia and Ukraine. Gazprom has significantly slowed gas exports to Europe, Russia has bought significant tonnes of gold presumably for an alt currency from the dollar and a sizable military buildup at the Russia/Ukraine border has been established.

The knockoff of such a war is presumably a weaker Euro near term, just cause for the Fed to keep rates low. How long would the dollar remain strong against the Euro and how wide the spread following a Russia/Ukraine war assuming one should take place, that’s chart I’d like to know.

What does that future currency chart comparison look like? If we knew, we would likely know the answer to the reaction by the Fed. Low rates don’t paint the full picture, but it says a lot.

Otherwise, I maintain that this market is expensive.
High valuations, nearing debt saturation, these come quick to mind in assessing market risk to investors without the sometimes hysterical and oversimplified reactions applied to the still very real supply/demand constraints by way of the 4 horsemen.

#64 truefacts on 12.26.21 at 11:30 pm

@ #18 Faron…

My family had Delta a few months ago – like you.
We did rapid tests and then self-quarantined.

Wife and I sick for a week or so with a bad flu.
Teens less sick – a few days less.
Kids almost not sick at all.

For a certain health issue, nobody vaxxed.

Overall not a big deal (i’m in my 50s).

Maybe a bigger deal for people over 70 or apparently people who are overweight…

#65 Janice Bow-Lee on 12.27.21 at 12:18 am

What’s happening to our political system in the meantime Garth. If the vast majority of seats are voted by new immigrants whose needs are entirely different from every region and province is it fairly distributed to continue to see all 59 seats in the tightly packed GTA elect a leader who does not appeal to or serve the needs of the vast majority of Canadians? This is not anti immigrant whatsoever, it is a question about how the manipulation of electoral seats has kept an unpopular leader in power to the detriment of the country as a whole as evidenced by our deteriorating standard on every measure. You must have some idea how to make the country more equitable for all?

#66 short horses on 12.27.21 at 12:44 am

“Mix it all up. Whaddya get?”

Downside protection on your bank equity investments.

T2 is doing what he can to make sure people keep borrowing while keeping risk to the banks minimal. We’re on a path to new kinds of CDO-squareds and CDO-cubes, if we’re not there already, with taxpayers insuring the losses. Somebody else’s grandkids can deal with it.

#67 yvr_lurker on 12.27.21 at 12:47 am

Let’s bring in taxes on part-time residents, foreign owners and rental investments to increase real estate overhead.
——-

How does this remotely have anything to do with the end of the last sentence you stated to “goose demand”. Nope. This is a sentence that is faulty; has nothing whatsover to do with the concluding statement.

Bring it on. Tax heavily part-time residents and ban all foreigners from purchasing residential real estate. Once the unlimited immigration starts flowing again and the world opens (i.e. China etc) to purchasing here, please shut the ^&^&**& door. Raise interest rates in spades to curb local speculation and it will make a difference going forward for affordability if no further black swan events occur.

#68 Garth's Son Drake on 12.27.21 at 1:03 am

Rents in the West are going bananas. It basically correlates with the rise in house prices because surprise, surprise, investors are borrowing to buy rental properties, which require more yield as the cost of the property goes up.

Nobody is going to rush the market if rates rise and prices drop because it will still cost you the same, if not more, for the property and if people are dumping properties jumping in immediately is not the time to scoop. The time to scoop is after thing stabilize.

The last time this scooping opportunity happened was from the time the stress test kicked in until the end of 2019, but most good deals did not really present themselves until mid way through 2019 and obviously there was only about a 6 month window of opportunity.

If rates rise, I think this window of scooping opportunity widens, unless they reverse after rising rates.

Rates going up means there will be lots of properties trickling onto the market and supply will ramp up. Nobody knows if it will be a flash flood or a slow drip. It depends how much rates adjust.

If rates stay cheap forget about any affordable housing anywhere in Canada.

As pointed out, a lot of supply is needed and in the near term there is going to be massive upward pressure on home prices.

As a side note, Australia has had house price increases for over 50 years. Your whole life will pass you by if trying to wait out a market like that. And Canada does not seem to be that different from Australia when it comes to housing.

#69 Use Your Supply Side Imagination on 12.27.21 at 1:18 am

Emily turned her Oasis Town House into a 15 bed hostel in North Vancouver.

I think she is working up in Revelstoke as a lot of the houses up there have been converted to about 22 beds, with an average of 17 people per house. This is why an old house in direpair up there now sells for 980 grand. The realtors are quick to point out how much rental income you can make.

But whether angry neighbours like it or not, including curb parking wars, this is where things are headed for the entire country because people still need to find accommodation and the market will take care of itself when government fails on all promises to fix it.

Yes, it is dysfunctional and a lower standard than that of past generations, but life goes on.

You see it all of the time in Langley, BC. A house will go up for rent for about 5,000 per month and 6-8 younger people will group together to rent it. This is quite common in Langley these days.

#70 Adam on 12.27.21 at 1:57 am

The solution to all of this, which won’t upset anyone, and won’t cost any politicians their jobs??? Easy…… just raise the mortgage amortizations back to 40 years. Then 50 years. Then 60 years. Makes perfect sense. You can buy a house at 25 years old and finish paying it off at 85 years old, which is about how long people live. There’s a lot of bullets left in the chamber, we are still on 25 year amortizations. Talk to me when we are hit 60 years.

#71 under the radar on 12.27.21 at 6:16 am

The wealth divide keeps widening and nothing will stop it. Renters will always face insecurity and now more so. We have close to 400 tenants, most do not know what a B&D portfolio is. Property owners who heap on debt to finance lifestyle or build empires may face a reckoning but does not look like its anytime soon.

#72 Wrk.dover on 12.27.21 at 7:31 am

#63 Diamond Dog on 12.26.21 at 11:05 pm
_______________________________________

Had Goldman Sachs Alumnus not assisted Greece in cooking the books, thus torpedoing the value of the Euro against the greenback at that time, many things would be less favorable on Wall Street today.

Therefore, one would assume the Ukraine/Putin situation will be encouraged to sour in NATO moves by Uncle Sam, for a repeat of discouraging the rise of the Euro against the over printed greenback.

I think/assume.

China just laughs as American greatness melts on it’s own accord (MAGA ‘patriots’ et al).

#73 TurnerNation on 12.27.21 at 7:49 am

For all the Statisticians and Virologists in this comments section.

“British Columbia Centre for Disease Control: Mortality Context Chart 2009-2020 Standardized For Age & Sex (bccdc.shinyapps.io)”

https://bccdc.shinyapps.io/Mortality_Context_ShinyApp/?fbclid=IwAR2Gzjo2KwDUo3huPeR-Xw1vkmwDBkX35Tfaw4S1fpUfcDM4BXFe6Ab1fXA

#74 Dharma Bum on 12.27.21 at 9:13 am

#18 Faron

I would like to reveal something to perhaps free up commenters to talk about their looming personal experiences with COVID.
——————————————————————————————————

Sure.

Since you asked.

Why not?

Personal experiences:

No COVID

No Delta

No Omicron

No Flu

No Cold

I got 2 Modernas and 1 Pfizer booster.

Throughout the hysteria since March 2020, I have travelled, stayed in hotels, flew in commercial airliners multiple times, visited friends and family, been to parties, been to concerts (most recently Gordon Lightfoot at the grand reopening of Massey Hall), went skiing out west, ate in restaurants (mostly outside of Ontario), relaxed in cottage country, went to the gun club regularly (skeet shooting primarily), and enjoyed (up until recently) the reduced level of traffic and congestion.

All good.

That’s my personal experience.

Oh, and I never listen to, watch, or read any mainstream media news. I prefer facts and reality. Not lies and propaganda.

#75 Dharma Bum on 12.27.21 at 9:39 am

#71 Under the Radar

Renters will always face insecurity and now more so.
—————————————————————————————————–

The main problem with renting vs borrowing to own, is that at least the people that take on massive debt to buy a house are forced to use almost every penny they have to pay back the loan – a portion of which gets applied to the principal. It’s known as a mortgage.

So, over the long haul, they are at least paying themselves back something.

Historically, the value of what they are repaying has appreciated over time (pretty safe bet that over multiple decades, appreciation will occur). When they are old, there’s at least something there to show for a lifetime of wage slavery. Plus, they got to live somewhere in the meantime.

It’s hard to argue against. For the masses, at least.

The theory of renting vs owning being financially advantageous is sound, provided that the surplus cashflow is invested in a regular and systematically disciplined manner throughout one’s life.

The problem is, it almost NEVER is (or almost ALWAYS isn’t). Average folks don’t operate that way. They just can’t do it. They don’t have the discipline, inclination, mental fortitude, patience, motivation, or knowledge to.

The average consumeraholic drone out there is easily brainwashed into spending impulsively, programmed to crave material goods, squander their money on cheap thrills, excitement, cars, vacations, restaurant meals, clothes, shoes, toys, lottery tickets, smokes, booze, weed, and entertainment.

Renters rarely invest (yah, I know, some do, but they are few and far between).

In a world where people are too stupid to barely even survive, it’s a big ask to expect them to learn how to take a disciplined approach to systematic investing in financial assets. Most can’t even add or subtract in their heads.

For most, assuming debt and locking themselves into a lifelong mortgage is the lesser of two evils. They would otherwise squander every penny and be left virtually destitute.

That’s just the way it is.

Houses are the only “investment” they will ever understand.

In the end, these people are usually better off.

#76 Penny Henny on 12.27.21 at 10:01 am

#53 Bezengy on 12.26.21 at 9:07 pm
A couple days back I was sent out to buy some diapers for the gkid down here in Niagara. Pulled into a big pharmacy and went inside. They had a whole aisle of them. None for kids though, just adults, I [email protected] you not. Clerk said there just isn’t a demand for them. Lots of housing supply coming onto the market here soon, just a matter of time. Not trying to be morbid, but man, half the houses down here still have TV attennas on the roof. Big changes on the horizon imo.

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

On my street in Welland 12 of the closest 15 houses have changed hands in the last 5 1/2 years, mine included.

#77 Shawn Allen on 12.27.21 at 10:25 am

#75 Dharma Bum on 12.27.21 at 9:39 am responded
#71 Under the Radar

Renters will always face insecurity and now more so.
—————————————————————————————————–

The main problem with renting vs borrowing to own, is that at least the people that take on massive debt to buy a house are forced to use almost every penny they have to pay back the loan – a portion of which gets applied to the principal. It’s known as a mortgage.

**** Yeah “a portion…gets applied to principle” – Right, a huge portion over 50% from day 1 at 2.5% interest and eventually the last payment is about 100% to principal.

So, over the long haul, they are at least paying themselves back something.

***Over the pretty short haul too.

Historically, the value of what they are repaying has appreciated over time (pretty safe bet that over multiple decades, appreciation will occur). When they are old, there’s at least something there to show for a lifetime of wage slavery. Plus, they got to live somewhere in the meantime.

***Even without appreciation they have paid down and own a valuable asset. These days a VERY valuable asset.
And your point about it being a place to live is beyond huge.

#78 Ole doberman on 12.27.21 at 10:26 am

Simply put, interest rates are still biggest factor, no rising rates back to 5 percent no housing correction

#79 Shawn Allen on 12.27.21 at 10:31 am

Houses are unproductive?

We often hear that claim and it is, frankly, idiotic.
Houses provide the second main necessity of life after food – shelter

Houses (whether owned or rented) provide a place to live, provide, safety, provide comfort, provide stability (more so if owned), provide a place to work these days, provide the place where we spend usually 12 to close to 24 hours a day.

Houses are unproductive some say? Hilarious.

Houses (and housing of most any kind) are highly valuable because they are highly valued and highly productive.

#80 Love_The_Cottage on 12.27.21 at 11:21 am

#74 Dharma Bum on 12.27.21 at 9:13 am
———
No COVID…No Delta…No Omicron…No Flu…No Cold
…I prefer facts and reality. Not lies and propaganda.
———-
Glad to hear that. The facts are no symptoms from COVID including it’s variants. No way to tell for sure whether any of us have had it but been asymptomatic.

#81 Mattl on 12.27.21 at 11:26 am

I would love to cash our RE cheque but that only works if you can move to a lower cost of living area, and don’t have kids in a great school. Very hard to move a family any time, with RE where it is at you are basically stuck as a young family. Assuming I was willing to move my daughter out of what is a great school, rent for a similar place – 4 bedroom SFH with some land – for the next decade would be 400-600K, which is ludicrous. With money 5% below inflation obvious answer is to stay put and pay down the mortgage. If house prices fall substantially so be it, have to live somewhere.

As you’ve mentioned Garth one of the many downsides to all this RE price growth is mobility. Most of us CAN’T cash in, financially or from a family perspective it wouldn’t make any sense.

#82 Alberta Ed on 12.27.21 at 11:27 am

“The most terrifying words in the English language are: I’m from the government and I’m here to help.” ― Ronald Reagan

#83 Quintilian on 12.27.21 at 11:48 am

#79 Shawn Allen
“ Houses (and housing of most any kind) are highly valuable because they are highly valued and highly productive.”

Sure, ok I’ll take the bait and argue against absurdity.

Productivity is measured by output,value by many measures, but in this case let’s use utility and economic rent.

A house that housed 3 people 3 years ago appraised at 400k is now over a million.

Provides the same amount of shelter.
Time for Shawn to log in to Investopedia again.

#84 Satori on 12.27.21 at 12:03 pm

#75 Dharma Bum on 12.27.21 at 9:39 am

Hmmm, just a little insight: At the end of the morgage, the home owner paid how much for their bit of freedom? Calculate interest, repairs and expenses…

Your post is a good example that home owners aren’t that smart in math either, as they work two jobs, slaving away, commuting and watching their renters “living the life”.

When it comes down to it – its a brain wash. What really does a man need, in a material sense? Food, a form of shelter, 6 feet to lie in, clothing and some kind of work that gives him a sense of accomplishment.

Yet people get caught up in mortgages, time payments, preposterous gadgetry (including ‘homeowners”)… before you know it your tomb of youth is closed. What shall it be? Bankruptcy of Life for a box???

What joy is there to be 85 living in a box – that at that age, you will never move or sell, never enjoy the ‘rewards’ of your hard work… and then, your dead. And if you don’t have a will, 1/2 goes back to the government.

Tick Tock… the doors of life are closing.

#85 Ponzius Pilatus on 12.27.21 at 12:14 pm

#83 Quintilian on 12.27.21 at 11:48 am
#79 Shawn Allen
“ Houses (and housing of most any kind) are highly valuable because they are highly valued and highly productive.”

Sure, ok I’ll take the bait and argue against absurdity.

Productivity is measured by output,value by many measures, but in this case let’s use utility and economic rent.

A house that housed 3 people 3 years ago appraised at 400k is now over a million.

Provides the same amount of shelter.
Time for Shawn to log in to Investopedia again
————————-
Quinty,
Good one.
But some may argue, you can borrow against the equity to buy a “productive” asset such a vacation home.

#86 Shawn Allen on 12.27.21 at 12:48 pm

#83 Quintilian on 12.27.21 at 11:48 am
#79 Shawn Allen
“ Houses (and housing of most any kind) are highly valuable because they are highly valued and highly productive.”

Sure, ok I’ll take the bait and argue against absurdity.

Productivity is measured by output,value by many measures, but in this case let’s use utility and economic rent.

A house that housed 3 people 3 years ago appraised at 400k is now over a million.

Provides the same amount of shelter.
Time for Shawn to log in to Investopedia again.

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

It’s the building of houses, the investment in construction /creation of houses that creates a productive housing unit. This adds to GDP of course.

When a house triples in value in a sale, that does not add anything to GDP except the realtor’s fee and the lawyers fee and such are counted as additions to GDP.

Houses tripling in value but not sold add nothing to GDP. It’s simply not part of the GDP calculation. But they remain productive assets.

The founders of Investopedia were two university students in Edmonton. Cory Wagner and Cory Jansen. I met with them a couple times in the early days. They later sold the company to Forbes. They did very well indeed.

#87 crowdedelevatorfartz on 12.27.21 at 12:58 pm

I was watching the 5pm “politically correct pablum” National news last night.
They interviewed several “pundits” about what their most news worthy item about 2021 was.
“Covid”
“Gay rights”
“The election”
The usual boring drivel.

However the longest discussion seemed to veer into how angry voters were.
Angry at ALL the politicians.
Angry at the Media.
Angry at Covid restrictions.
Etc. etc.etc.

Just wait until the next payroll tax bites hit Jan st.
Then, in March, Freecash announces her budget with more tax hits while handing out more billions to the poor, the rich, the disadvantaged, the successful, the sick, the unemployed, the old, the young, the healthy,….
Essentially billions for everyone…accomplishing…..nothing.

2022 could be a real bell ringer for Canadian public fury.
Hopefully the Conservatives will have dumped the wigless mannequin as leader before the next election.

We ain’t seen nuthin’ yet.

#88 DON on 12.27.21 at 1:27 pm

A bunch of late boomers i know decided to retire early and will be moving in the spring/summer to cash out.

China’s 62 trillion proprty market in a decline after momentum was lost. Pumping QE in an effort to prevent a steep decline.

Australian house prices expected to fall in 2022 due to lack of affordability and the China / Australia / US trade spat.

With prices at unaffordable levels and everything based on credit, even small rate increases will be a shock to the over indebted than add in inflation. It doesn’t take many to start a stampede when everyone is aware of the unprecedented gains.

If the Feds print more money inflation increases…a vicious circle. If they don’t control inflation people start to get mad especially home owners and home speculators hanging on by a thread. The next recession is one year closer.

All we chat about is the lack of supply …when it flips the topic will be lack of demand…prices are already a factor.

#89 ulsterman on 12.27.21 at 1:59 pm

Dharma Bum & ***Shawn Allen
Historically, the value of what they are repaying has appreciated over time (pretty safe bet that over multiple decades, appreciation will occur). When they are old, there’s at least something there to show for a lifetime of wage slavery. Plus, they got to live somewhere in the meantime.

***Even without appreciation they have paid down and own a valuable asset. These days a VERY valuable asset.
And your point about it being a place to live is beyond huge.

This i think is really the most important take away for any young person reading this blog looking for opinions that give them hope for an affordable housing market sometime in the future. You got a place to live for your mortgage payments and would not receive two months notice at the whim of an owner. That’s worth a fortune.

I spent far too long overanalyzing this stuff when i should have been focused on the primary objective – i need a cave to live in that I have determination over – it’s so primitive and yet so appropriate to modern life. Stop timing the market looking for a sensible entry point. That’s fine if you are looking for investment properties, but not your primary home for you and your family. Just buy the cave and pay off the P&I. Move on to other things with whatever spare money you have left.

#90 All lies and manipulated u decide on 12.27.21 at 2:22 pm

#82 Alberta Ed on 12.27.21 at 11:27 am
“The most terrifying words in the English language are: I’m from the government and I’m here to help.” ― Ronald Reagan
———————————————
Indeed. When they show up your screwed. Every policy they enact makes no diff cause their retarded.

On RE
Many here should get a room or take a powder. Find a friend…take a day off..or a week.
10 years of taking RE down here = waist of time.
Know one really knows what the free market will do…
Policies that come out of know where are unpredictable.
So if your scratching your melon on whether to sell or not because the market is ripe. You don’t have near enough money to make that call.
If you have piles of RE then its easy. memememe
Who cares cash is flowing in like a title wave from increasing rents ect. If your in a high demand retirement area like me who cares.
Nothing to think about.
Your poorer than you think if you only own 1 house with a large mortgage.
Ya missed the boat…

#91 All lies and manipulated u decide on 12.27.21 at 3:36 pm

#79 Shawn Allen
“ Houses (and housing of most any kind) are highly valuable because they are highly valued and highly productive.”
——————————
LOL
clown stuff.
They are simple shelter and an inflation hedge.
Currency debasement “the flavor of the day”
causes everything to go up.
Then bubble TV shows up then its monkey see monkey do.
They produce nothing. T2 has exacerbated the issues at hand because he as smart as a sack of hammers.
Get it now?

#92 Shawn Allen on 12.27.21 at 3:53 pm

Lies you decide…

#91 All lies and manipulated u decide on 12.27.21 at 3:36 pm
#79 Shawn Allen
“ Houses (and housing of most any kind) are highly valuable because they are highly valued and highly productive.”
——————————
LOL
clown stuff.
They are simple shelter and an inflation hedge.
Currency debasement “the flavor of the day”
causes everything to go up.
Then bubble TV shows up then its monkey see monkey do.
They produce nothing. T2 has exacerbated the issues at hand because he as smart as a sack of hammers.
Get it now?

******************************
Well, I was taught a long time ago, in about grade 3, that the 3 essentials of life were food, shelter and clothing. It’s still true today.

Housing provides the middle one which you call “simple shelter”. Kind of important in most parts of Canada. Important everywhere when you consider that a secure private shelter protects you from thieves and animals.

Housing provides shelter as you note.

I don’t think I have anything at all to “get” from you.

#93 All lies and manipulated u decide on 12.27.21 at 4:11 pm

#79 Shawn Allen
Cash is trash bro.
Here’s why, its a safe haven likely turned into a bubble.
As stated Govs are dangerous.
All the policies these Dum Dums have propelled for a decade have led us to this. Corrupt regimes like Commie China with zillions of peeps see this country as a no brainer. Easy to get to easy to launder their money.
They don’t give a dam if its a mil or 1.2mil.
We are living a global scene . Ya can buy anything on the internet. Houses aren’t productive their an inflation hedge…so far…..I wouldn’t buy one now. We are living stupid times.

https://www.armstrongeconomics.com/real-estate/canada-looks-to-ban-foreign-home-ownership/

#94 Shawn Allen on 12.27.21 at 4:27 pm

Nut Case Alert

#93 All lies and manipulated u decide on 12.27.21 at 4:11 pm
#79 Shawn Allen
Cash is trash bro.

**********************
Whatever you say. (Certainly I said nothing about cash nor have I said that houses were cheap or affordable, just that they are undeniably valuable and productive.)

You can complain about your hard life all you want.

Others here get on with life and creating their own futures. You’ve Decided, so have I. Bye now.

This guy lives in the easiest most comfortable times in the history of humanity and has nothing but complaints. Sheesh.

#95 Dragonfly 58 on 12.27.21 at 7:58 pm

Shawn Allen, a number of things in the recent decades are better than in the less recent past. Medical care for a number of serious conditions for example. Things that were almost a death sentence not all that many years ago are now treatable , and often with encouraging outcomes.
Canadians are also slowly becoming more health – conscious . Smoking less, and starting to make better diet choices . Perhaps even drinking less, although the covid world seems to be undoing that a bit.
But healthy eating is often more expensive. My wife has been pushing for better food and eating habits in our house. And as I do almost all the shopping I see first hand that the better food is often at an extra cost.
But from a income vs cost of living point of view many of us are on a slow but sure slide downward. And have been for about 4 decades now.
Not exactly sure how that makes present time the easist and most comfortable times ever.
Perhaps if cheap junk from the dollar store or Walmart is perfectly satisfying in your life these are indeed the best of times. I am old enough to have seen where we came from vs where we are now. And in my mind the process has been less than pleasing.
I don’t crave comfort or convience. In fact I live a very basic lifestyle , except I do have a serious interest in old MG’s. Actually they are about as basic as a car comes themselves. I do see these times as an example of many experencing downward mobility. Bit by bit, a percent or two a year.