Gulp

On Friday the stock market laid an egg. That came hours after the US central bank said rates may surge next Wednesday. And they will. As this week opens Mr. Market is taking bets on a hike of three-quarters of a point, maybe even a full 1%. More will come in June, then again in July. In Canada we get the next rate bomb June 1st.

Because the CBs in both countries have watched inflation surge out of control – almost 7% here and 8.5% there – the pace of monetary tightening will be something today’s Millennials (and most GenXers) have never experienced.

It was inevitable, given the asset inflation that happened when mortgages were 2% and the Bank of Canada rate was barely alive at 0.25%. It’s what this pathetic blog yammered about for ages. Rates never stay in the ditch. Year/year gains of 30-40% in real estate are unsustainable. The pendulum always swings back to the middle – usually after it careens into the negative for a while. People suffering from recency bias get clobbered.

This is why you need to have a balanced and diversified investment portfolio, why variable rate debt is lethal and it explains our bleatings for months to be a house seller, not a house buyer.

Now it’s here. Just started, actually.

This note came on the weekend from a blog dog in Victoria – where the average property in March traded for $1.23 million, a 27% year/year hike. But that was last month. April’s cruel.

We listed our house in one of Victoria’s most coveted neighborhoods on April 14th, just before the Easter long-weekend. Lots of optimism to go around. The weeks just prior to listing saw no end to jammed appointments for visits, bidding wars, multiple overpriced or bully offers, and a one-week turnaround from listing-to-sale. In the areas we look at for comparables (up to $2.5M) there were multiple “Sold” per day. Suddenly, and just after the CB rate hike of 0.5% on April 13th, there are crickets. It’s all people talk about now. Only one “Sold” sign in the area since April 16th. We had hoped to catch a buyer with pre-approval from earlier this year when rates were much lower. People seeking mortgage approvals now are dealing with a new reality. And suddenly there’s so many more listings to consider.

For us – one very low offer, only seven visits in nine days, and a deluge of other new listings in the neighborhood. Optimism has been replaced with reality and dread. It’s official. The same shifting factors that affected the GTA market in March are finally here in Victoria. And it’s only just beginning…

In Ontario, ditto. Property values are falling commensurate with a doubling in mortgage rates. “Some people will stop paying their mortgages on time and have no ability to refinance or easily sell at a profit,” says mortgage broker/tweeter Ron Butler. “So Lenders will take action. 97% of the time in Ontario that means commencing Power of Sale legal actions. Big banks and institutional lenders initiate legal action after 90 days of arrears. With private lenders it may be as little as 10 days.”

Hmm. Could all this extra work and lucre for lawyers be far off? Will people who bought houses with 5% or 10% down be able to financially withstand a 15% (or more) drop in values by the end of 2022 (or sooner)?

Look at Vaughan. The GTA suburban city\s average property value of $1.488 million crashed by 6% last month alone. Here’s the recent path of detached prices there – from almost $2 million down into the $1.7 million range in six weeks.

Source: Toronto Regional Real Estate Board

Of course $2 million for an average, boring, so-so, used house in a burb that’s an hour from the core is insane. But that’s what FOMO, recency bias and cheap money do. Not only are we bouncing off a towering wall of unaffordability amid a spate of ill-timed, anti-real estate government measures, but as the resale market freezes over people cannot move up the property ladder with their windfall equity. In fact, we’ll see deals fail all over prior to closing, causing a domino effect.

More than anything, the inverse relationship between house values and the cost of money is coming into sharp focus. It has never been false in the past. It will not be incorrect this time. And you were clearly warned.

Check this out. BMO economists make it crystal – the value of your house is negatively correlated to the cost of money.

Source: BMO Economics, Turner Investments

Well, what about other financial assets? Stocks? Bonds? Your ETF portfolio?

Financial markets hate inflation more than they fear rising interest rates. Investors are whacked at the intensity and speed of the rate changes coming, and the apparent failure of monetary authorities to put down their martinis and see what was happening out on the street. Add in the war, global supply chain problems and political polarization (Trump, Poilievre, Le Pen) and there’s a considerable heap to worry about.

However, corporations are making serious coin, the global economy is still expanding, the slimy little pathogen continues to retreat and consumer spending is erupting. Stay invested in reasonable weightings, do not sell into a storm and eschew debt. You will survive what’s brewing far better than the guy who gloated at you from the window of his gilded new home.

About the picture: “This is a photo of Penny, my approximately year and half old chi-mutt rescue from Texas,” writes Andrea. “Chihuahuas and chi hybrids like Penny are one of the most euthanized breeds in shelters in the US.  Penny was rescued from a full high-kill shelter in the San Antonio area and made her way to me in sunny Ontario via a rescue organization dedicated to saving chis like her. Her favourite pastimes are stealing things (especially socks) chewing things (especially rugs) and whining at people who don’t share their pizza. Here she is pictured doing two of them, stealing and chewing on my N95 mask.”

149 comments ↓

#1 Mike on 04.24.22 at 11:59 am

“Check this out. BMO economists make it crystal – the value of your house is negatively correlated to the cost of money.”

This chart is misleading, it shows ironically that house prices never declined but the axis is designed to make it look that way. Even at its lowest point in 19, it’s showing that house prices were still increasing YoY that year.

#2 TurnerNation on 04.24.22 at 11:59 am

Food Supply/Control over Feeding.
Gee this isn’t soundling like an engineered attack on the Former First World Countries at all, a WW3 suppply chain hit, at all?

.The World Braces for Shortages and Higher Prices as Export Giant China Doubles Down on Its Zero-COVID Strategy (news.yahoo.com)

https://www.zerohedge.com/commodities/fbi-warns-imminent-cyber-attacks-food-plants-after-mysterious-rash-“The FBI’s Cyber Division published a notice this past week warning about increased cyber-attack threats on agricultural cooperatives, which comes at a time when a curious string of fires and explosions damage major food processing plants across the country. ”



Life in Kanada. Isn’t it strange the more they treat us the sicker we get. I wonder why.

https://westernstandardonline.com/2022/04/sask-government-expands-covid-19-outpatient-drugs-as-hospitalizations-hit-record/

#3 crowdedelevatorfartz on 04.24.22 at 12:04 pm

“crickets”

I guess even the potential buyers have decided to wait and see where all this rate hike leads.

1%, 2%, 5% higher can possibly mean a $1 million dollar reduction in the final sale price?

Why not wait?
Only greaterfools rush in.
:)

#4 Ordinary Blog Dog on 04.24.22 at 12:16 pm

Yep. Hoping a b and d portfolio will help me hang in there. I would sell the house, it is paid for, but wifey is hanging in too – she wants to keep it for awhile yet. Sigh …

#5 THE DANDADA on 04.24.22 at 12:21 pm

RENT is surging all across Ontario.

Is that going to be reduced, if not the incentive to buy a home at no matter what price still exists……Renters didn’t rejoice their gains in the last 5 years did they.

The yapping about raising interest rates is apparently to bring down prices in general …… well when’s that going to happen?

It has become crystal clear that the policies created by the fed and the boc are for one reason only… ENSURE THE BANKS KEEP TAKING OUR MONEY!!

#6 Chris on 04.24.22 at 12:21 pm

Yesterday got a lot of comments for a Saturday thread. Glad to see there are others who share my concern about the government debt and deficits. Since we are in the minority I don’t expect much to change though. Honestly I am looking forward to reading sob stories once the overly indebted start wanting bailouts.

#7 Ponzius Pilatus on 04.24.22 at 12:25 pm

#153 crowdedelevatorfartz on 04.24.22 at 11:24 am
@#116 Ponzie’s Payment Ponderings.
“Interesting point.
I’m not sure what the legal precedents are, but this could be a mess.”

+++
Seriously?

Think Germany’s war reparations after WWI
( Versailles Treaty ) that most historians now believe were so punitive it drove Germany onto it’s knees and then the Great Depression hit….ultimately fostering the rise of the German ultra nationalists hatred for Europe…ie Hitler.

https://en.wikipedia.org/wiki/Treaty_of_Versailles
——————————-
Not a precedent!
That was the losing side paying.
I don’t think Putin intends on losing.

#8 Flop… on 04.24.22 at 12:28 pm

Someone stuck this one up in Toronto.

Paid 5.17 seven months ago

Just sold for 4.05

Maybe the same thing that happened in Vancouver in 2017 is happening in Toronto, where it corrected from the top down?

The only thing I know about the Toronto market is that I know that I know nothing about it…

M47BC

https://mobile.twitter.com/investorsackai

#9 Bill on 04.24.22 at 12:30 pm

Why no mention of lack of housing supply? You can’t even find a place to rent. So it’s not like building enough to match average growth and immigration isn’t a factor. Making something more expensive with rising rates won’t make housing more affordable. Supply side needs addressing. Surely that could be mentioned to maintain some balance on the blog.

#10 TurnerNation on 04.24.22 at 12:31 pm

Food supply . Always. Also war on the small business/small producers.

https://globalnews.ca/news/8627683/nova-scotia-farmers-alarmed-avian-flu/
” Those include a 10-kilometre control zone around the affected farm, where 12,000 turkeys had to be euthanized this month.”

— Never saw that coming eh. Been bleating on this for years here, the signs were clear toward global control over our Feeding, Breeding, and Travel/Movements. March 2020 it all went into hyperdrive.

#49 TurnerNation on 09.10.19 at 8:54 pm
I beleive in my lifetime good foodstuffs will be trashed as armed men look on and people are starving. Maybe the correct karbon permit was not applied for, or the WHO claims dread disease and we comply. Trees have more rights than yourself.


— – Our high taxes fund our Social Safety Net! Geez no wonder the government is pushing us toward their new legal euthanization service. Like with diseased farm animals they want us gone here on the tax slave farm.

https://globalnews.ca/news/8768307/canada-covid-surgery-backlog-travel-medical-tourism/
“‘Living in pain’: Canadians travel across the world to avoid surgery backlog”

#11 Ballingsford on 04.24.22 at 12:32 pm

Investors who bought properties and rented them will likely sell them now since the price appreciation has stopped. That windfall is over.

#12 None on 04.24.22 at 12:35 pm

Playing devils advocate here but one thing the plot show is that although interest rates to seem to influence the rate at which houses appreciate — they still always go up, just at a different rate.

Obviously, I don’t agree with that but that’s what a lot of people get from plots like that b/c of recency bias. This plot is exactly why recency bias exists, because this is what people are fed.

#13 North snore on 04.24.22 at 12:39 pm

#41 Søren Angst on 04.23.22 at 12:47 pm

3. ✅ sort of. All the way U-S-A save a Maple ETF. I keep it in Cdn ’cause the numbers bigger on exchange and I use my Momentum Visa Card with % purchase discounts from Italia honored in Canada. Less complicated in other words.

[The Italians don’t believe me when I tell them that on my grocery bill I get 4% cash back]

What is this blasphemy you speak of? Are you living in Italy and using your canadian visa there? Would the exchange rate from visa be so high that it wouldn’t be worth it to use it there for all your transactions?

Curious as I’m relocating to Europe soon and just wondering if I’m missing something with this ‘4% cash back on groceries’ thing

Thanks

#14 Al on 04.24.22 at 12:56 pm

House price correction won’t be too big as real estate will be one of the safe havens when inflation is high.

#15 It's Just Math on 04.24.22 at 12:58 pm

Problems starting in Calgary too. Deals penned before the rate hike were selling above listing. Now, at or below listing and price reduced stickers showing up again.

That was quick.

#16 Theyounggreek on 04.24.22 at 1:00 pm

Hey Garth,

I’m a 49 year old lifetime Liberal voter until the last election. Can’t stand this current crop of Liberals. I get the impression that your not a big fan of Mr. Poilievre. As a former Conservative politician, can you give us your thoughts on this guy. I’m hoping to vote conservative in the next election. Thank you.

#17 Quintilian on 04.24.22 at 1:12 pm

“People suffering from recency bias get clobbered.”

The housing wreckage will be in slow motion, but the equities markets are much more efficient and liquid and therefore will correct in a series of short spectacular dips.

I would imagine that just has homeowners tapped into their equity, so did investors gorge on margin loans.

#18 Shawn on 04.24.22 at 1:29 pm

Alberta is the Place You wanna Be

Friends just sold a very nice extremely well located (across a quiet road from a park and river) in an Edmonton suburb at $1.01 million, $60k over their realistic $950k asking. Got this offer within hours of listing.

People are moving to Alberta once again.

A solitary one million dollars actually gets you basically a dream home in Edmonton. But yes the winters can be a nightmare.

#19 Neo on 04.24.22 at 1:42 pm

So what you are trying to say is that central bankers are the enemies of the Canadian people and should be regarded as an invasion force on par with the Russian invasion of Ukraine .

Let’s all agree that bankers are the main problem facing humanity today.

#20 Ancient Ron on 04.24.22 at 1:42 pm

The biggest difference between playing the real estate market and playing the stock market is choice.

Real Estate puts all of your eggs in one basket, whereas equities offer an almost endless choice. Many sectors will suffer in the coming Bear market, but an equal number of stock sectors will thrive. Real estate on the other ? You are married to it.

There are other concerns not being talked about. While immigration got a big bump after the Covid bottle neck, we also reached a level of Permanent Out migration, not seen since 1970. The top reasons people are leaving are the high price of housing, brutal weather, and the high levels of taxation for the public services provided.

#21 Shawn on 04.24.22 at 1:47 pm

Banks took your money?

#4 THE DANDADA on 04.24.22 at 12:21 pm

It has become crystal clear that the policies created by the fed and the boc are for one reason only… ENSURE THE BANKS KEEP TAKING OUR MONEY!!

*******************
No, the banks CREATE our money. And did you forget to buy some bank shares?

#22 TalkingPie on 04.24.22 at 1:47 pm

I just got back from a week of visiting family in Switzerland. One thing I noticed was that among family members with houses was that the values/prices they stated were in line with what houses cost in the big markets in Canada. Reasons why this is insane: Switzerland has approximately 1/200th the surface area of Canada; the climate is more temperate; there is strong demand from the rich elite from all over the world to buy in Switzerland; houses are primarily built out of concrete, brick and ceramic shingle to a solidity and quality that Canadians can barely imagine; there is a push for a minimum wage in Switzerland to be introduced at the equivalent of just under CAD $70,000/year; income taxes much more in line with the US than Canada; a public transportation network that means a 30 minute work commute is considered mediocre.

Another thing I noticed: the Swiss tend to live much more within their means, higher down payments are expected, and people are liquid. As I was gassing up the rental car before dropping it off at Zurich-Kloten, I noticed a warning on the gas pump: “1’000 franc [CAD $1,300] notes not accepted here.” This stood out to me, living in a country where paying for things with anything higher than a $20 is met with suspicion that I might be a drug dealer.

#23 Concerned Citizen on 04.24.22 at 1:52 pm

Imagine being a central banker watching detached homes averaging $2M in Vaughan (seriously, Vaughan) with inflation at 5% for a year and doing absolutely nothing.

The incompetence is mind-blowing.

#24 YVR Renter on 04.24.22 at 1:56 pm

Didn’t I recently tell you about having to reduce house prices to get buyers to actually close in the early 90’s? We lived it, our friend came out much worse, had to take a sizeable chunk off his house for buyer, but he was hooped. Had already started building his next house.
“It’s only just begun….”

#25 Dogman01 on 04.24.22 at 2:11 pm

“the apparent failure of monetary authorities to put down their martinis and see what was happening out on the street”

This realtor fellow echo’s your statement that the authorities are behind and not in touch with the street.

Mega Rate Hike Coming This June To Canadian Housing Market
https://www.youtube.com/watch?v=d70Qu6pn_Rk

———————————————–
Not being a Geo-political expert but…

– I recall the problems in Egypt, Arab Spring, overthrow of the Government, Muslim Brotherhood etc were directly tied to anxiety over food prices.
– I understand the powder keg of Syria was ignited by crop failures\food shortages – before the world’s “democracies” saw an opportunity for “regime change”.
– If I recall Mexico has a big problem when corn prices skyrocketed a decade ago.

So If we have food inflation that is hurting our affluent 1st world economy what is going on in these more precarious societies? – or maybe our debt addled population is now more precarious.

#26 tbone on 04.24.22 at 2:13 pm

# 8 Flop

Who in their right mind would drop 4 million on a semi ?

LOL , people are nuts , sharing a wall with your neighbour for that kind of money is insane.

#27 Roncey on 04.24.22 at 2:13 pm

Interesting. I have been (idly) looking in Oak Bay & Landsdowne Heights for some time and am on one of those Realtor’s sites showing new and existing listings for the specified area. I don’t see a notable increase in listings at all. Not that I don’t think it is likely to happen, but I just am not yet seeing it on that site.

#28 Reality is stark on 04.24.22 at 2:22 pm

The articles from yesterday and today finally address the elephant in the room succinctly.
Now it’s time to address two more pertinent topics. The timing to move into long dated US treasuries from excess cash in the HISA and the egregious Canadian problem of overpaying risk averse public sector workers by matching pension contributions dollar for dollar.
Let’s talk about concrete solutions to address the deficit.
Allowing social justice warriors to run the country will bankrupt the nation causing widespread poverty to future generations.
These people are angry and do a lousy job running their own lives and generally end up unhappy. Why would we want them to provide direction to the general population?

#29 Søren Angst on 04.24.22 at 2:25 pm

Putin’s French girlfriend lost.

Macron 58.2%
Putin GFF 41.8%

The EU is safe. Vive La France!

#30 IHCTD9 on 04.24.22 at 2:26 pm

#157 crowdedelevatorfartz on 04.24.22 at 11:40 am
@#84 I’m gonna be sick
“#22 Quintilian on 04.23.22 at 11:36 am

Complete and utter BS… You are, quite possibly, an absolute idiot…”

+++

Nah, Quinty’s a self absorbed, overly educated child of the new way of thinking.
Dabbled in philosophy, economics, English.
Smart, smug and still so young.
“Blame the old because you’re young.” mantra, works every time until…..you’re old.

Just wait until the higher and higher taxes, user fees and cancelled govt programs hit him in the face again and again and again…..
———-

Quint, is a young Canadian Lefty. IE. “a sucker for punishment”. I hope the handouts will be worth the cost.

#31 45north on 04.24.22 at 2:28 pm

talking about selling his house in Victoria: Suddenly, and just after the Central Bank rate hike of 0.5% on April 13th, there are crickets.

Steve Saretsky talking about the Vancouver market says sales activity is not moderating. It’s lights out.

In Ontario, ditto. Property values are falling commensurate with a doubling in mortgage rates. “Some people will stop paying their mortgages on time and have no ability to refinance or easily sell at a profit,” says mortgage broker/tweeter Ron Butler. “So Lenders will take action. 97% of the time in Ontario that means commencing Power of Sale legal actions. Big banks and institutional lenders initiate legal action after 90 days of arrears. With private lenders it may be as little as 10 days.”

The Great Canadian Housing Crash is here.

#32 B from Q on 04.24.22 at 2:31 pm

So, pandemic is over?

#33 twisted_sisters on 04.24.22 at 2:32 pm

well,well… the market participants are screaming – WE’RE NOT GONNA TAKE IT!! uhh_uhn…not one more rate hike as big as the last one mentioned. Will our puppeteers blink?

#34 Søren Angst on 04.24.22 at 2:34 pm

#13 North snore

Visa Momentum cash back 4/2/1 % thingy.

All over Europe expenses such as travel I get a discount.

Been getting a few hundred bucks back every year for about 7 years here in Italia.

They know I am in Italia. In fact, in my mailbox downstairs there is a new credit card waiting for me when I decide to get off my buttocks and saunter down there avec mask.

#35 Arcticfox on 04.24.22 at 2:43 pm

I think the end of the cone/decision time is approaching! Germany’s recent ppi was ridiculous and they are now considering blocking energy from Russia. Western dept levels really are unprecedented. Will politicians rescue the currency or pension plans..that is the choice. Richard Russell’s inflate or die is here. Oliver thinks this next round will call into question relevance of Fed(historic boom bust cycles which are occurring more often in last 20 years). Cantellon effect = populism! This Utopia/mmt meme will be adjudicated..markets are nature..in time all manipulation/imbalances will be reconciled. Nothing is new under the sun!

#36 I debt it on 04.24.22 at 2:43 pm

…. ” variable rate debt is lethal”

I really wish you’d stop making these one size fits all, unqualified statements.

VR debt is fine for those who understand it and have the ability to manage it.

I have VR debt and if I need to, I can easily pay it off rather quickly. I can pay off a large portion of the principal today, and every year. I can also double my monthly payments as I wish. Do you know how quickly that reduces my balance? Any renewals coming up soon can be paid off in full.

Over the term of the loan, I have effectively borrowed money cheaper than a fixed rate.

Nope. Fuzzy thinking. If you had locked in five-year debt at sub-3% (as counseled) the cash you’re wasting on prepayments could have been invested for five years, grown by half (or so) then used to pay down the principal more fully. – Garth

#37 crowdedelevatorfartz on 04.24.22 at 2:46 pm

@#7 Ponzie’s Pal on a Pike
“I don’t think Putin intends on losing.”

++
Yeah.
Dictators never imagine themselves in chains…..
It’s why they’re dictators.
Until it’s too late.

Poisoning seems to a be a fave Russian past time.
Let’s see if Vlad The Invader lasts until Sept.
Lots of missing sailors from the Moskba still unaccounted for….
And one wonders when the mothers of thousands of dead soldiers will start wondering why their babushkas arent answering emails.

#38 Søren Angst on 04.24.22 at 2:46 pm

#1 Mike

420 was last week, not this week.

#39 crowdedelevatorfartz on 04.24.22 at 2:50 pm

@#17 Quinty’s Quantitative Queries
“I would imagine that just as homeowners tapped into their equity, so did investors gorge on margin loans.”

+++
Only greedy greaterfools have margin calls to worry about.
I’m still in the game.
No debt.
Loading up on cash for a opportunity to vultch.
6 months, 12 months…..
I can wait.
You?

#40 Søren Angst on 04.24.22 at 2:55 pm

Yup.

You’ve been saying it, rates etc., for a long time and I’ve been agreeing with you for just about as long.

Still don’t believe it’s happening, but it is.

What’s even harder to believe is that a measly 0.5% increase could do so much damage to home prices in such a short time.

It’s just the beginning of what is going to a very, very ugly 2022 financially for a lot of Cdns.

——————

2 Generations about to gain a lot more respect for what us Paleos went thru in the 80s.

Fasten your seat belts kids, it’s about to get rough…for a LONG time. A long, long time.

#41 Final warning! on 04.24.22 at 2:58 pm

More than anything, the inverse relationship between house values and the cost of money is coming into sharp focus. It has never been false in the past. It will not be incorrect this time. And you were clearly warned.

_________

Last chance. As I’ve mentioned on numerous occasions, you may wish to consider REITs.

-Unrelated to SFH prices in fact uses completely unrelated pricing model known as cap rates
-net lease REITs don’t even need to worry about inflation as tenant pays expenses
-good management locked in fixed rates for years when they were LOW
-Better record than stocks in times of inflation
-Track record of gains during rising interest rates over last 4 decades, contrary to what many believe

#42 Søren Angst on 04.24.22 at 3:09 pm

#22 TalkingPie

CH and Luxembourg (and all of London + some islands of theirs) are the:

Money Laundering Capitals of Europe.

A nation of dodgy bankers hiding behind State Neutrality and thus Secrecy.

Ask us Europeans and we’ll tell you that.

If you think their climate is more moderate, you’ll die in Italia for the heat.

And their Airport food is hideous. Squeaky clean persnickety country is about all it is.

And you better like guns, they’re about as gun toting as the Americans. 2 million privately owned guns in a nation of 8.3 million people – thank God they don’t use them much.

—————–

Scary weird little country to me. And I live in Italia. Think about that for a moment.

#43 Dogman01 on 04.24.22 at 3:13 pm

#22 TalkingPie on 04.24.22 at 1:47 pm

Switzerland is run by the Swiss in the interests of the Swiss, a much better model of democracy. it is more like a coop or a Corporation, really a true “commonwealth”.

Hence polices are in the interests of the Swiss.

This is the Animal Farm concept before Napoleon. A True Nation-State.

What we have in Canada is an establishment of Oligopolies that see the Canadian population as a captive and exploitable source of wealth generation. On top of that currently we have a Globalist ruling class who do what is best globally (and for them) not what is good for Canadians. All of this tied together with a media \academic establishment that keep the population anesthetized.

The Animal Farm concept but under Napoleon. A Post-National fiefdom for our ruling class.

#44 twisted_sisters on 04.24.22 at 3:18 pm

(Trump, Poilievre, Le Pen) and there’s a considerable heap to worry about.
—————————————————————–
Le Pen lost the presidency, but the third round of voting will be interesting as it will determine the premiership.

#45 Difference? on 04.24.22 at 3:20 pm

What’s the difference between Russia attacking Ukraine and USA attacking Afghanistan?

…asking for a friend.

Did Ukrainians bomb Moscow? I must have missed that. – Garth

#46 Summertime on 04.24.22 at 3:24 pm

#23 Concerned Citizen on 04.24.22 at 1:52 pm
Imagine being a central banker watching detached homes averaging $2M in Vaughan (seriously, Vaughan) with inflation at 5% for a year and doing absolutely nothing.

The incompetence is mind-blowing.

I said that when houses in Vaughan were under 500 k.

I was thinking at the time about who would be that idiot to pay 500 k for a house in Vaughan. Really.

Then central ‘bankers’ killed the money and we saw what happens.

So we would have either house prices in Vaughan reverting to under 500 k or the money losing 50-70 % of their purchasing power but the second alone is not enough as nobody will increase the salaries by that much.

Maybe a combination of both.

I would not call that incompetence but rather intentional destruction of currency and intentional failure to perform official duty, something close to treason and criminal negligence but due to shortcomings of law, unfortunately not punishable.

#47 HUNGRY BEAR on 04.24.22 at 3:24 pm

They printed $10,000,000,000,000 gave out $1,400 in stimmy checks, sent the rest to their homies and left you with 8% inflation.

#48 Diharv on 04.24.22 at 3:29 pm

We could have had an extra .25% in our back pockets but Macklem was the only one in the universe that thought it was too early to start raising rates in late January. Now he’s playing catch up and that is a more hazardous game.

#49 Rudolf Samoszynski on 04.24.22 at 3:32 pm

The slimy little pathogen, as you call it, is not retreating.

#50 Diharv on 04.24.22 at 3:33 pm

When people start being unable to pay their mortgages, don’t put it past the LibDP govt to introduce a form of CEMB to keep the gasbag inflated. Canada emergency mortgage bailout.

No government is going to pay people’s mortgages and exacerbate the wealth divide. – Garth

#51 Dogman01 on 04.24.22 at 3:36 pm

#47 HUNGRY BEAR on 04.24.22 at 3:24 pm

They printed $10,000,000,000,000 gave out $1,400 in stimmy checks, sent the rest to their homies and left you with 8% inflation.

——————–
Holy Tintinnabulation!

Billions upon Billions from the public purse under the guise of a Health crises and zero extra Hospital’s built , no new medical research labs, no new medical schools, still no capacity to make vaccines.

Nothing to show for any of it but the echo of a giant sucking sound and the clinking of champagne glasses celebrating “Mission Accomplished!”.

#52 Linda on 04.24.22 at 3:38 pm

#9 ‘Bill’ – have to wonder how many folks looked at the perils of becoming a landlord & decided against it. This presumes that flippers, speculators or investors actually had a property that could be occupied. Apparently tons of folks own something not yet built & have been selling/assigning the unbuilt asset. Like that ‘million affordable housing units’ promised by various levels of government. All talk & maybe some paper but no actual ready to occupy units.

#53 A confederacy of dunces on 04.24.22 at 3:47 pm

29 Søren Angst on 04.24.22 at 2:25 pm
Putin’s French girlfriend lost.

Macron 58.2%
Putin GFF 41.8%

With comments like these you realize that the WORLD IS FULL OF IDIOT,S, AND THIS AFTER TWO YEARS OF COVID….LMAO

The EU is safe. Vive La France!

#54 Reality Check on 04.24.22 at 3:49 pm

1 Mike
This chart is misleading, it shows ironically that house prices never declined
————————-

We have had run away price appreciation for the past decade because we have been under emergency interest rate for the past decade. So even when interest rates have “increased” in the last decade it has been an increase to still incredibly low interest rates.

Look out below if we get back to pre GR mortgage rates. And look out for real estate Armageddon if rates go to 1990s levels.

#55 Ed on 04.24.22 at 3:52 pm

DELETED

#56 Sam on 04.24.22 at 4:00 pm

Vaughan is actually a very nice suburb. Clean. Peaceful. Lots of lush parks. Convenient shops and restaurants. Great schools and communities. Lots of families. Safe. Beautiful stone/brick houses with great backyards. Wide roads. Fun things to do and not far from major GTA cities and attractions. Centrally located. Brand new hospital. Canadas wonderland. Subway. GO stations. Highways. Universities. Italian bakeries and markets. Art museum. Bindertwine park. Vaughan Mills. Villages. Great medical offices and doctors. Not far from cottage country. Not sure why the hate. Would you rather live in Russia?

#57 Yukon Elvis on 04.24.22 at 4:04 pm

#7 Ponzius Pilatus on 04.24.22 at 12:25 pm
#153 crowdedelevatorfartz on 04.24.22 at 11:24 am
@#116 Ponzie’s Payment Ponderings.
“Interesting point.
I’m not sure what the legal precedents are, but this could be a mess.”

+++
Seriously?

Think Germany’s war reparations after WWI
( Versailles Treaty ) that most historians now believe were so punitive it drove Germany onto it’s knees and then the Great Depression hit….ultimately fostering the rise of the German ultra nationalists hatred for Europe…ie Hitler.

https://en.wikipedia.org/wiki/Treaty_of_Versailles
——————————-
Not a precedent!
That was the losing side paying.
I don’t think Putin intends on losing.
+++++++++++++++++
Doesn’t matter what Putin intends. Energy revenue streams for Russian state owned enterprises could possibly be “garnisheed” by the international banking systems and given to Ukraine for rebuilding. Yachts and mansions could be sold. The list goes on….. Putin should pay.

#58 Quintilian on 04.24.22 at 4:09 pm

#30 IHCTD9 on 04.24.22 at 2:26 pm
#157 crowdedelevatorfartz on 04.24.22 at 11:40 am
@#84 I’m gonna be sick
“Quint, is a young Canadian Lefty. IE. “a sucker for punishment”

IHCTD9, you are partly right. I am a Lefty, however not by choice.

At heart I am a Libertarian.

Rousseau says:
“man is born free, but he is everywhere in chains,”

But the intellect overrides the heart and I recognize the need for government:

Thomas Hobbes says that without government life would be:

“Nasty, Brutish, and Short”

And so, I vote for the least of the evils.

#59 cuke and tomato picker on 04.24.22 at 4:22 pm

Did not know that Emmanual Macron beat out PUKY PUTIN’S girlfriend but we are very happy also about Alberta, it is a nightmare, not it can be a nightmare.

#60 Leftover on 04.24.22 at 4:22 pm

“Will people who bought houses with 5% or 10% down be able to financially withstand a 15% (or more) drop in values…”

Of course not, but they’re not really on the hook. We all are – it’s called the CMHC.

#61 Summertime on 04.24.22 at 4:25 pm

#56 Sam on 04.24.22 at 4:00 pm

You are kidding, of course. It seems we are speaking about different Vaughan’s. The one I know is crowded, houses with no backyards, with no parks, a few plazes, Rudderford and Highway 7 jammed at rush hours, the crown ‘jewel’ Vaughan Mills busy on the weekends with no places to park, the herd doing stampede around in circles as there is nothing else to do/places to go to.

The biggest attraction being Costco, pretty much.

That about the bricks and stone houses was of course a joke on your part.

——————————

#43 Dogman01 on 04.24.22 at 3:13 pm

Spot on on the oligopolies role in the debt slaves cheap labour camp.

And yet, keep in mind 95 % of the audience has no idea what oligopoly is and how it shapes the life they live.

#62 I don’t know on 04.24.22 at 4:29 pm

Interest rates are a large factor in house prices, but only one of many.

Remember the house you want is the same house everyone wants.

Whazzit mean?

Affordability is about to get worse, not better with higher rates. If you are a first time buyer who waited, bad move. If you are an investor who wants to flip in the next two years, also a bad move.

Everyone else who took our host’s advice and locked in at rock bottom rates? Enjoy life, enjoy your home, and go back to sleep.

IDK

#63 Stone on 04.24.22 at 4:47 pm

This is why you need to have a balanced and diversified investment portfolio, why variable rate debt is lethal and it explains our bleatings for months to be a house seller, not a house buyer.

———

Fully on board with the above.

I am curious though where everyone’s B&D portfolios are currently sitting at year to date. I model 13 different portfolios on top of my own (thankfully automated via google finance formulas) so I can see the spectrum of possibilities while ensuring that I stay at or near the top of performance. Based on that, the average ytd return is currently showing -6.60% and the ytd mean is showing -6.52%.

Anyone willing to chime in on how theirs is doing?

#64 Caffeine Monkey on 04.24.22 at 4:50 pm

Garth, obviously a balanced portfolio is the best place to be, but real estate is directly almost 10% of the Canadian economy, and you have to figure the multiplier must be at least 2x. Given that 20% of the economy must be at risk from the bubble, is that a reason to rebalance a portfolio to be lighter on Canada for a few years?

#65 Senator Bluto on 04.24.22 at 4:54 pm

#14 Al on 04.24.22 at 12:56 pm
House price correction won’t be too big as real estate will be one of the safe havens when inflation is high.
+++++++++++++++++++++++++

The bank decides how much to lend you for a mortgage. They don’t give a hoot about providing people with safe havens.

Our [email protected] has said that they’re already discounting appraised values, so that means smaller mortgages and lower prices.

Not sure why you think other people should shelter you from poor choices.

#66 DON on 04.24.22 at 4:55 pm

#17 Quintilian on 04.24.22 at 1:12 pm
“People suffering from recency bias get clobbered.”

The housing wreckage will be in slow motion, but the equities markets are much more efficient and liquid and therefore will correct in a series of short spectacular dips.

I would imagine that just has homeowners tapped into their equity, so did investors gorge on margin loans.

******
Good question.

That housing slow melt could also quicken depending on all the possible variables associated with being over leveraged. #1 did people lie to stretch themselves etc etc.

Japan is interesting at the moment also with their currency.

China’s housing is not in good shape either.

#67 Stone on 04.24.22 at 4:57 pm

#145 Phylis on 04.24.22 at 9:39 am
#52 Stone on 04.23.22 at 1:21 pm
#106 Phylis on 04.23.22 at 9:31 am
#88 Stone on 04.22.22 at 9:27 pm
…….It’s why, even at -3.83% ytd for my B&D portfolio, I feel pretty good. If you consider that a poor return ytd for 2022, I welcome your feedback indicating that.
Xxxxxxx
Did you bake a little inflation into that number too?

———

No, I didn’t. I’m curious why you ask. Could you elaborate? Thanks in advance.
Xxxxxx
Just wondering, most people don’t calculate real returns (inflation adjusted), self included.

———

I don’t think it matters ultimately. 2022 is a stinker of a year for the portfolio however I made 21.70% for 2021. I guess Mr Market gave me a precursor of what was to come for 2022 when it comes to inflation. When I consider that, seeing No Name chips at No Frills go from $1 to $1.29 , it isn’t all that painful. And since my portfolio dividend continues to sit above an annual 3% which was where it was prior to 2021 starting, I feel I’m keeping up.

I think when people complaining about prices rising and they can’t keep up, it’s because they’re too focused on trying to achieve wage gains when the real power gains sit with a B&D portfolio.

#68 DON on 04.24.22 at 5:02 pm

#58 Quintilian on 04.24.22 at 4:09 pm
#30 IHCTD9 on 04.24.22 at 2:26 pm
#157 crowdedelevatorfartz on 04.24.22 at 11:40 am
@#84 I’m gonna be sick
“Quint, is a young Canadian Lefty. IE. “a sucker for punishment”

IHCTD9, you are partly right. I am a Lefty, however not by choice.

At heart I am a Libertarian.

Rousseau says:
“man is born free, but he is everywhere in chains,”

But the intellect overrides the heart and I recognize the need for government:

Thomas Hobbes says that without government life would be:

“Nasty, Brutish, and Short”

And so, I vote for the least of the evils.

*********

Ah Jean Jacques Rousseau –

#69 NOSTRADAMUS on 04.24.22 at 5:21 pm

BORN AFTER 1970 ?
Hop on my time machine and I’ll take you back to a similar place in time. For those born after 1970, or were too young to understand what was going on at that time.
Grab a beer and join me as we gather around the fire pit and drift back in time. There is now raging inflation out there the majority of people alive in this country have never seen, and it’s not disappearing, it’s raging, and it’s raging globally, and the central banks are watching the beginnings of the collapse of the monetary system, a consequence of global QE and interest rate repression, and their freaking out. They’re going to stop this inflation, and they have the tools to do so. It will be too little too late to stop it now, but over the next few years, and with lots of pain, higher interest rates, and the withdrawal of liquidity (easy money) , they’ll stop it. And tightening globally is how they’re doing it. Because the alternative is a nightmare from hell. Hold on, someone at the door.

#70 DON on 04.24.22 at 5:22 pm

#57 Yukon Elvis on 04.24.22 at 4:04 pm
#7 Ponzius Pilatus on 04.24.22 at 12:25 pm
#153 crowdedelevatorfartz on 04.24.22 at 11:24 am
@#116 Ponzie’s Payment Ponderings.
“Interesting point.
I’m not sure what the legal precedents are, but this could be a mess.”

+++
Seriously?

Think Germany’s war reparations after WWI
( Versailles Treaty ) that most historians now believe were so punitive it drove Germany onto it’s knees and then the Great Depression hit….ultimately fostering the rise of the German ultra nationalists hatred for Europe…ie Hitler.

https://en.wikipedia.org/wiki/Treaty_of_Versailles
——————————-
Not a precedent!
That was the losing side paying.
I don’t think Putin intends on losing.
+++++++++++++++++
Doesn’t matter what Putin intends. Energy revenue streams for Russian state owned enterprises could possibly be “garnisheed” by the international banking systems and given to Ukraine for rebuilding. Yachts and mansions could be sold. The list goes on….. Putin should pay.

***********

There has been recent chatter in the news about an alternative to swift for the nameless countries that will continue to by oil from Russia.

#71 Shirl Clarts on 04.24.22 at 5:32 pm

“We listed our house in one of Victoria’s most coveted neighborhoods”…

They sound drunk on their own koolaid. So much for trying to time the peak. Our neighbours just sold their townhouse in February here in LML for some ridiculous amount of money. They are millionaires now. Others tried to follow suit in March and April with no where near the same result.

#72 I ate lead paint on 04.24.22 at 5:32 pm

Year/year gains of 30-40% in real estate are unsustainable.

Have you ever tried roomates, or sharing your room with roomates for $420 a head? Ease up on the avocado toast and Starbucks, work a second or third job, and pay taxes to fund my retirement in Costa Rica.

Sincerely,

A generation which grew up on lead poisoning.

#73 DON on 04.24.22 at 5:34 pm

#32 B from Q on 04.24.22 at 2:31 pm
So, pandemic is over?

**********

The media rooms must have gotten bored! Next crisis.

#74 Pricedoutmillenial on 04.24.22 at 5:36 pm

Should I expect everything in the B&D portfolio to go down if the market goes south. No cowboy style stocks. Just ETFs as you recommend. I can understand if the stock ETFs are going down but was hoping my preferreds will rescue me but didn’t happen. And I will not mention about my Bond ETFs. Everything in red now. Is it normal or is it my incorrect holdings in a B&D portfolio.

I am religiously following 60/40, with the fixed component being 26% bonds (govy, corps & provs), 13% preferreds and 1% cash as suggested here.

Relax. Stop looking at it every day. Amateur mistake. – Garth

#75 Swan on 04.24.22 at 5:36 pm

DELETED

#76 froggy on 04.24.22 at 5:36 pm

house prices are going down big time and for many year’s how many i figure 7-10 years down what a disaster it’s gonna be boy 6% mortgage will kill 35% off prices and then the slater will commence we’ll get stagflation and all home prices will get shaved 2-3% each year after or maybe a full blown correction u. s. style it’ll be great for rents and imagine where taxes will be

#77 B on 04.24.22 at 5:44 pm

How long until vulch season begins?

Not even close. – Garth

#78 crowdedelevatorfartz on 04.24.22 at 5:50 pm

@#69 Nostro-damn-us

I thought all your dreary predictions for our dismal future were written in quatrains that could be interpreted by everyone differently.
You can’t make rock solid predictions.
They have to be subtle, generalizations that can blend in with a multitude of situations.
Easier to fool the rubes…..

#79 IHCTD9 on 04.24.22 at 5:57 pm

#58 Quintilian on 04.24.22 at 4:09 pm
#30 IHCTD9 on 04.24.22 at 2:26 pm
#157 crowdedelevatorfartz on 04.24.22 at 11:40 am
@#84 I’m gonna be sick
“Quint, is a young Canadian Lefty. IE. “a sucker for punishment”

IHCTD9, you are partly right. I am a Lefty, however not by choice.

At heart I am a Libertarian.

Rousseau says:
“man is born free, but he is everywhere in chains,”

But the intellect overrides the heart and I recognize the need for government:

Thomas Hobbes says that without government life would be:

“Nasty, Brutish, and Short”

And so, I vote for the least of the evils.
———-

If Charest wins – would you vote CPC?

Some folks just can’t do it.

They’d watch the country turn into a facsimile of Venezuela before ever voting C.

#80 Penny Henny on 04.24.22 at 6:05 pm

#63 Stone on 04.24.22 at 4:47 pm
I am curious though where everyone’s B&D portfolios are currently sitting at year to date. I model 13 different portfolios on top of my own (thankfully automated via google finance formulas) so I can see the spectrum of possibilities while ensuring that I stay at or near the top of performance. Based on that, the average ytd return is currently showing -6.60% and the ytd mean is showing -6.52%.

Anyone willing to chime in on how theirs is doing?

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

Not balanced nor diversified.
CDN Blue Chip High Dividend Payers up just over 10% YTD. Last year over 35%.
Currently about 44% cash.

#81 Shawn on 04.24.22 at 6:14 pm

Lower House Prices will have little impact on GDP

#64 Caffeine Monkey on 04.24.22 at 4:50 pm

Garth, obviously a balanced portfolio is the best place to be, but real estate is directly almost 10% of the Canadian economy, and you have to figure the multiplier must be at least 2x. Given that 20% of the economy must be at risk from the bubble, is that a reason to rebalance a portfolio to be lighter on Canada for a few years?

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

What goes into GDP in regards to houses is construction costs, land development costs, realtor fees, legal fees, probably commercially collected rent and I can’t think of anything else.

These are not impacted much if at all by a 20% decline in prices. I don’t think anyone is calling for much of a slowdown in house construction are they? In fact the government is trying to promote home construction including multi-family.

So the worry that a home price reduction will decrease GDP is unfounded.

It also will have little or no impact on property taxes because that’s not the way property taxes work. Municipalities collect what they need and set a mill rate that merely increases if average values decline.

Mortgage interest I imagine is also in GDP under “finance and insurance”. Could that actually go up with higher interest rates? Depends if the net interest margin for banks goes up.

What companies or industry segments on the stock exchange would be directly hurt by lower house prices? I can’t think of much. Big banks only if we get lots of defaults. Non-CMHC lenders would be hurt.

#82 Shawn on 04.24.22 at 6:19 pm

Looking at Investment Portfolio Declines

Relax. Stop looking at it every day. Amateur mistake. – Garth

*********************
Only look on the days it’s up. If it ain’t up, don’t look.

And never ever tell the wife about portfolio declines. She does not want to know. Wait until it’s up a lot and then tell her. On date night.

#83 Captain Uppa on 04.24.22 at 6:29 pm

I am wondering when will be the right time to fulfill my dream of East Coast summer home / future primary retirement residence ownership.

I wouldn’t be taking any family’s home away, this would be not that kind of property.

I have lived quietly among the masses and wondering when would be a good time to strike as the herd runs the other way.

#84 Triplenet on 04.24.22 at 6:32 pm

#77 B
4 years
3 if you know what your doing

#85 IHCTD9 on 04.24.22 at 6:48 pm

#42 Søren Angst on 04.24.22 at 3:09 pm

And you better like guns, they’re about as gun toting as the Americans. 2 million privately owned guns in a nation of 8.3 million people – thank God they don’t use them much.
———

Canada has like 13 million privately owned guns. 4-5th highest in the Western world. But we don’t talk about that stuff.

I’d bet there could be 10+ million more unregistered guns out there sitting in retired farmers closets all over Canada.

#86 Don't connect the dots on 04.24.22 at 6:50 pm

Germany’s war reparations after WWI?

That’s why they created the BIS, to organise the payback, run by Hjalmar Schacht, (his granddaughter’s Godfather was Montague Norman) Hjalmar also escaped the Nuremberg hangman

#87 Yukon Elvis on 04.24.22 at 6:57 pm

#70 DON on 04.24.22 at 5:22 pm
#57 Yukon Elvis on 04.24.22 at 4:04 pm
#7 Ponzius Pilatus on 04.24.22 at 12:25 pm
#153 crowdedelevatorfartz on 04.24.22 at 11:24 am
@#116 Ponzie’s Payment Ponderings.
“Interesting point.
I’m not sure what the legal precedents are, but this could be a mess.”

+++
Seriously?

Think Germany’s war reparations after WWI
( Versailles Treaty ) that most historians now believe were so punitive it drove Germany onto it’s knees and then the Great Depression hit….ultimately fostering the rise of the German ultra nationalists hatred for Europe…ie Hitler.

https://en.wikipedia.org/wiki/Treaty_of_Versailles
——————————-
Not a precedent!
That was the losing side paying.
I don’t think Putin intends on losing.
+++++++++++++++++
Doesn’t matter what Putin intends. Energy revenue streams for Russian state owned enterprises could possibly be “garnisheed” by the international banking systems and given to Ukraine for rebuilding. Yachts and mansions could be sold. The list goes on….. Putin should pay.

***********

There has been recent chatter in the news about an alternative to swift for the nameless countries that will continue to by oil from Russia.
++++++++++++++++++++

I have heard that talk as well. The Swift system is based in Belgium and represents about 3500 banks worldwide. Alternative systems would be based in Russia or China . Who would want or trust that ?

#88 FO on 04.24.22 at 7:07 pm

Word from la familia in the OK – looking to cash out equity and reloc to lower cost cattle country. Listed, sold same day, quick close with a 6 figure deposit. Talk about grabbing the last lifeboat on the Titanic.

#89 Murray the Vet on 04.24.22 at 7:35 pm

Garth -more in line with the value of time, did you see yesterday’s G & M opinion piece by Sheri Elwood: ‘Can you ever go home again?’?

#90 Difference? on 04.24.22 at 7:36 pm

#45 Difference? on 04.24.22 at 3:20 pm
What’s the difference between Russia attacking Ukraine and USA attacking Afghanistan?

…asking for a friend.

Did Ukrainians bomb Moscow? I must have missed that. – Garth

>>>

So an entire country deserved a decade of war, because one dude was apparently there…but actually he was in Pakistan? And after they whacked him they stayed around for another decade, TWO decades in total, and left the place easily much worse than they found it.

Is that really THAT different and any less reckless?

#91 When the Whip Comes Down on 04.24.22 at 7:48 pm

News from our hood in victoria tells of a similar scenario. Easter longweekend open house only 9 viewers. Offer night – nada, nothing, not even an under ask. Yep, there’s a chill in the air alright.

#92 I owe, I owe, it's VR I go! on 04.24.22 at 7:49 pm

#36 I debt it on 04.24.22 at 2:43 pm
…. ” variable rate debt is lethal”

I really wish you’d stop making these one size fits all, unqualified statements.

VR debt is fine for those who understand it and have the ability to manage it.

I have VR debt and if I need to, I can easily pay it off rather quickly. I can pay off a large portion of the principal today, and every year. I can also double my monthly payments as I wish. Do you know how quickly that reduces my balance? Any renewals coming up soon can be paid off in full.

Over the term of the loan, I have effectively borrowed money cheaper than a fixed rate.

Nope. Fuzzy thinking. If you had locked in five-year debt at sub-3% (as counseled) the cash you’re wasting on prepayments could have been invested for five years, grown by half (or so) then used to pay down the principal more fully. – Garth

__________________
Oh Garth. You just don’t get it.

The cash I’m “wasting” on prepayments came from and continues to come exclusively from the investments I made with the money I took out as part of the debt i took on. When this money pours in and has nowhere to go, as is currently the case in today’s market, the best available option is to pay down the debt. Kinda like buying back shares in the corporation… it’s the best use of cash right now!

Besides, half of my HELOCs are fixed rate. But I’ve already had a few years of income and price appreciation based on the stupid low VR debt.

The context was not a HELOC used for investment purposes. – Garth

#93 Steve French on 04.24.22 at 7:58 pm

#63 Stone on 04.24.22 at 4:47 pm

Wifey’s B&D portfolio sitting at minus – 6.8% (including dividends) YTD (since last rebalance).

My B&D portfolio sitting at minus – 2.4% (including dividends) since last rebalance in Aug 2021.

What’s the two-year number? – Garth

#94 crowdedelevatorfartz on 04.24.22 at 8:08 pm

@#87 Yukon
“Alternative systems would be based in Russia or China . Who would want or trust that ?”

++++

Ruthless dictators that answer to no one?

#95 Shirl Clarts on 04.24.22 at 8:09 pm

#83 Captain Uppa on 04.24.22 at 6:29 pm

Your ship sailed long ago, dude. You be paying uppa uppa sticky price now.

#96 Craig on 04.24.22 at 8:10 pm

Just a reminder to anyone that’s interested, the award winning documentary Navalny is on CNN tonight between 9 and 11pm . Repeats again from 11pm to 1am. All times listed are EDT.

#97 crowdedelevatorfartz on 04.24.22 at 8:14 pm

@#90 Big Difference
“Is that really THAT different and any less reckless?”

+++
Only if you live there.

#98 froggy on 04.24.22 at 8:21 pm

#43 hit the nail on the nose and now through your misserie they will lets just say benefit.

#99 Ronaldo on 04.24.22 at 8:23 pm

#26 tbone on 04.24.22 at 2:13 pm
# 8 Flop

Who in their right mind would drop 4 million on a semi ?

LOL , people are nuts , sharing a wall with your neighbour for that kind of money is insane.
—————————————————————-
And they better hope the guy sleeping on the other side is not a snorer like a situation we had on a townhouse we purchased some years back. We had to move from the master bedroom to the spare room it was so loud.

#100 canuck on 04.24.22 at 8:26 pm

Add in the war, global supply chain problems and political polarization (Trump, Poilievre, Le Pen) and there’s a considerable heap to worry about.
___________________________________________

Oh brother… We get it, you don’t care for the direction taken by the right. Deal with it. In the meantime, you keep cheering for Trudeau and Biden because they’re doing such a swell job!
The left keeps moving left(deals cut with NDP) so why would you expect the right to stay moderate and not move further right?
The older I get, the more I align with Right libertarian policy so yeah, I’d vote to PP if he wins the Conservative nod. Truthfully, he’s the key to getting PPC voters back into the fold for that party.
I know I’m not the only one…

Interesting how I am portrayed as leftist by the righties and rightist by the lefties. Must be doing a fine job! – Garth

#101 Quintilian on 04.24.22 at 8:28 pm

#79 IHCTD9 on 04.24.22 at 5:57 pm
“If Charest wins – would you vote CPC?”

Can’t say, insufficient data.

But we know he is a career politician-Strike 1

Pierre has never had a private sector job, unlike Charest. – Garth

#102 Bdwy on 04.24.22 at 9:01 pm

Stoner.

Ytd
Zeo 34.4
Brk 12.2

70/30 brk/zeo works out to 18.9%.

2 days ago was prob over 22%.

#103 TalkingPie on 04.24.22 at 9:01 pm

#42 Søren Angst on 04.24.22 at 3:09 pm

Ask us Europeans and we’ll tell you that.

If you think their climate is more moderate, you’ll die in Italia for the heat.

And their Airport food is hideous. Squeaky clean persnickety country is about all it is.

And you better like guns, they’re about as gun toting as the Americans. 2 million privately owned guns in a nation of 8.3 million people – thank God they don’t use them much.

—————–

Scary weird little country to me. And I live in Italia. Think about that for a moment.

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

Schaetzli, I may not go writing pretentiously in German (or French) in every post on an English speaking blog like you do with Italian, but I assure you I’ve held a European passport and spoken local dialect for a greater proportion of my life than you have, so go ahead and dial back the condescension, please.

The Swiss, or, “we Swiss,” if I’m going to start posting Dolce Vita style, are “gun-toting” in the same way as they’re “money-toting.” The guns (and bunkers, self-destructive bridges and tunnels, oddly large air force for a country that’s barely 300 km wide), and the money are there because they’re very useful tools, but they get deployed judiciously. Go ahead and pull up the statistics on gun violence, and you’ll see that the Swiss folks like to walk softly and carry a big stick. Witness (if you look really carefully or have had family who’ve worked for the Swiss military like some of us have) the hollowed out mountains that serve as military bunkers, the residential bomb shelters, and one of the largest per-capita reserve armies in the world despite being resolutely neutral the last couple of centuries. I can definitely get behind that philosophy. Direct democracy, low crime (the amount of four figure bicycles left safely parked in the cities secured with simple cable locks is a big contrast to Canadian cities), well-maintained infrastructure, and a very effective apprenticeship system for trades that other countries try to emulate are other things I admire.

Switzerland may be guilty of being a hub for money laundering, but then so is Canada. The difference is that one of those countries runs like it’s governed by adults who do what’s best for its citizens. Also, the Swiss flag is a big plus.

#104 Shawn on 04.24.22 at 9:13 pm

Inflation?

Watermelons at an Alberta Safeway just now $17.99 each and not very big! Yes these would be imported melons but… I doubt they will sell many at that price.

Last August I was buying similar Watermelons on sale for about $4.00.

#105 IHCTD9 on 04.24.22 at 9:15 pm

#101 Quintilian on 04.24.22 at 8:28 pm
#79 IHCTD9 on 04.24.22 at 5:57 pm

“If Charest wins – would you vote CPC?”

Can’t say, insufficient data.

But we know he is a career politician-Strike 1
——-

Yes, having a long political career is much worse than uh… blowing 580 Billion dollars for nothing.

#106 Slim on 04.24.22 at 9:37 pm

#18 Shawn:

“A solitary one million dollars actually gets you basically a dream home in Edmonton. But yes the winters can be a nightmare.”

And the summers in places like Kelowna are going to be brutally hot.

https://www.narcity.com/vancouver/bc-2022-summer-weather-forecast-blisteringly-hot-temperatures

#107 Tom from Mississauga on 04.24.22 at 9:58 pm

Quick note: Derek Holt complaint to statscan will have them copy US cpi so used cars will be included. Next month our inflation # will soar over 8%.

#108 THE DANDADA on 04.24.22 at 10:00 pm

HEY SHAWN…….

BINGO. The banks create money – out of thin air. Inflation is what comes next.

Buy some bank shares!?!?…. After paying my bloated RENT, Gas, & Food bills. What money do I have left over to buy for bank shares.

Obviously your one of the fortunate.
Were not all as talented as you are.

—————————————————————-

#21 Shawn on 04.24.22 at 1:47 pm
Banks took your money?

#4 THE DANDADA on 04.24.22 at 12:21 pm

It has become crystal clear that the policies created by the fed and the boc are for one reason only… ENSURE THE BANKS KEEP TAKING OUR MONEY!!

*******************
No, the banks CREATE our money. And did you forget to buy some bank shares?

#109 Yukon Elvis on 04.24.22 at 10:10 pm

#106 Slim on 04.24.22 at 9:37 pm
#18 Shawn:

“A solitary one million dollars actually gets you basically a dream home in Edmonton. But yes the winters can be a nightmare.”

And the summers in places like Kelowna are going to be brutally hot.

https://www.narcity.com/vancouver/bc-2022-summer-weather-forecast-blisteringly-hot-temperatures
+++++++++++++++
You forgot to mention smoky. Summers in Kelowna can be brutally smoky. Not good for the little ones or the elderly.

#110 Ustabe on 04.24.22 at 10:16 pm

#85 IHCTD9 on 04.24.22 at 6:48 pm

I’d bet there could be 10+ million more unregistered guns out there sitting in retired farmers closets all over Canada.

I’m not looking to start some tuff guy, prepper war but I know of three folks who have a gun or guns lathered in cosmoline, wrapped in wax paper, encased in PVC with one welded end and one double gasketed end.

Then underground.

All three are old, no way they could get at these stashes in any hurry. I guess they hope for lots of advance notice.

#111 Difference? on 04.24.22 at 10:18 pm

#97 crowdedelevatorfartz on 04.24.22 at 8:14 pm
@#90 Big Difference
“Is that really THAT different and any less reckless?”

+++
Only if you live there.

***

Yeah, and I’m certainly not trying to justify one with the other. Just pointing out how we justify as fine because “we” are doing it, and condemn the other because “they” are doing us.

Sometimes I wonder if we go places and ruin people’s homes just to make more of that product called immigrants. I am one myself, but would I have left if not for terrible leaders and others making my home a mess?

#112 Doug in London on 04.24.22 at 10:29 pm

On Friday the stock market laid an egg.
——————————————————-
Keep in mind that eggs can produce new life, and this egg can can hatch buying opportunities. Who says Boxing Day sales can’t come in April or May?

#113 Outrage on 04.24.22 at 10:31 pm

A very sad night in France as the Globalist Macron defeated the much loved Le Pen. She would have made France great again but now it will only get worse.
So are inflation rate is 7% but we have 1% interest rates.
The interest rate needs to be 9% just to fight the high inflation we have .We have negative rates for a very long time.
I’m glad I sold some of my etfs when they hit my stop loss. I like the dividends but will buy in the next few weeks or maybe a few months. I’ll be able to buy back later much cheaper with more shares for more passive income in my TFSA. Buy a short etf in the meantime.

#114 Summertime on 04.24.22 at 10:55 pm

#107 Tom from Mississauga on 04.24.22 at 9:58 pm
Quick note: Derek Holt complaint to statscan will have them copy US cpi so used cars will be included. Next month our inflation # will soar over 8%.

That 8 % is the CPI, Real inflation as measured in the 80-es is double that.

It will be ‘addressed’ by a ‘neutral’ top interest rate of 2.5 % that will be only temporary until the dust settles.

That will result in homo ignorantus losing 15 % of their savings and getting reduction of the purchasing power of 12 % of their salaries/;indexed’ benefits in a single year.

And yet nobody seems to care. Just wait until that wealth effect from crappy substandard housing valuations fades out.

Comparing Vaughan to Switzerland made my day.

#115 Jane24 on 04.24.22 at 11:03 pm

I know kelowna well as I have family there but climate change will take it back to what it always was before artificial irrigation – semi-desert. It is a cute summer resort place with just seasonal jobs and a 6 hours drive from a big city. In the winter you can’t drive safely through the mountains anyway so you are cut-off. The summer wildfires and air quality get worse and worse every year. It is like living in the middle of a bonfire. My family keep packed suitcases by the door in the summer.

No way can this town support multi-million dollar RE. Kelowna RE is going to fall hard, very hard and take a lot of folks’ retirements with it.

#116 Diharv on 04.24.22 at 11:31 pm

#50 Diharv on 04.24.22 at 3:33 pm
When people start being unable to pay their mortgages, don’t put it past the LibDP govt to introduce a form of CEMB to keep the gasbag inflated. Canada emergency mortgage bailout.

No government is going to pay people’s mortgages and exacerbate the wealth divide. – Garth

Tongue in cheek on my part Garth. Though they do come up with some wild ideas.

#117 Jake on 04.24.22 at 11:32 pm

#90 Difference
I’ve learned that there is not much difference but it usually takes 20 years to figure it out and memories are short; the West is not always on the right side of history. I’ve also learned that both sides are guilty of propaganda and the masses on both sides probably have more in common with eachother than their respective elites. Strange world. Anyways, my portfolio took a beating last week. Thoughts and prayers would be appreciated.

#118 Big Jake on 04.24.22 at 11:50 pm

DELETED

#119 SoggyShorts on 04.24.22 at 11:59 pm

#34 Søren Angst on 04.24.22 at 2:34 pm
#13 North snore


Visa Momentum cashback 4/2/1 % thingy.
All over Europe expenses such as travel, I get a discount.
Been getting a few hundred bucks back every year for about 7 years here in Italia.

******************************
I think you might be getting screwed. There is a hidden 2.5% FX fee when using almost any Canadian credit card in a foreign currency.
That basically wipes out any gains you get from points.

What you want is the Scotia infinite passport. Zero FX fees (a 2.5% value) and 1 & 2 % cashback rewards (plus some cool perks)

https://www.valuepenguin.com/credit-card-foreign-transaction-fees

#120 Don Guillermo on 04.25.22 at 12:07 am

#90 Difference? on 04.24.22 at 7:36 pm
#45 Difference? on 04.24.22 at 3:20 pm
What’s the difference between Russia attacking Ukraine and USA attacking Afghanistan?

…asking for a friend.

Did Ukrainians bomb Moscow? I must have missed that. – Garth

>>>

So an entire country deserved a decade of war, because one dude was apparently there…but actually he was in Pakistan? And after they whacked him they stayed around for another decade, TWO decades in total, and left the place easily much worse than they found it.

Is that really THAT different and any less reckless?
†*****

The invasion of Iraq was inexcusable. They were one of the most progressive of the middle East. I believe 19 of the 911 bombers were Saudis. No reprocussions there. Obviously Afghanistan was a breading ground for the Taliban so I get that. Bush junior was a disaster. Changed daylight savings time around though.

#121 Don Guillermo on 04.25.22 at 12:41 am

#115 Jane24 on 04.24.22 at 11:03 pm
I know kelowna well as I have family there but climate change will take it back to what it always was before artificial irrigation – semi-desert. It is a cute summer resort place with just seasonal jobs and a 6 hours drive from a big city. In the winter you can’t drive safely through the mountains anyway so you are cut-off. The summer wildfires and air quality get worse and worse every year. It is like living in the middle of a bonfire. My family keep packed suitcases by the door in the summer.

No way can this town support multi-million dollar RE. Kelowna RE is going to fall hard, very hard and take a lot of folks’ retirements with it.
***********”***
You’re right Jane. I won’t play the climate change card but Kelowna is sad. It was a great little town many decades ago. I was a fruit picker throughout the Okanagan in days gone by. Most of the fruit orchards have turned into vineyards that produce very average over priced wines. Especially when talking reds. I used to have cases of average OK wine shipped to Calgary just to help my neighbors. Haven’t done that for 7 years.

#122 crowdedelevatorfartz on 04.25.22 at 12:53 am

@#111 difference
“but would I have left if not for terrible leaders and others making my home a mess?”

+++
True.
Perhaps that’s why Elon is viewing a xeno-option.

A capitalist plutocracy….on Mars……

#123 crowdedelevatorfartz on 04.25.22 at 12:57 am

@#105 IHCTD9
“Yes, having a long political career is much worse than uh… blowing 580 Billion dollars for nothing.”

+++
You call those new socks….nothing?
Philistine!

#124 SHANG HUNG on 04.25.22 at 1:25 am

How will the Chinese support our housing market when they are all locked inside their apartments and screaming….. Trudeau did this!

#125 Dr V on 04.25.22 at 1:30 am

115 jane (describing Kelowna)

” My family keep packed suitcases by the door in the summer.”
—————————————

They could head for Switzerland! Sounds awesome! You can have a great bike, ride it on good roads, and have a trained bike mechanic!

#126 Steve French on 04.25.22 at 2:04 am

Sir Garth:

My B&D performance since starting investing in Nov. 2016 is a healthy 7.8% per annum, including dividends, after expenses, pre-tax.

Thanks to the GF blog!

—–

#63 Stone on 04.24.22 at 4:47 pm

Wifey’s B&D portfolio sitting at minus – 6.8% (including dividends) YTD (since last rebalance).

My B&D portfolio sitting at minus – 2.4% (including dividends) since last rebalance in Aug 2021.

—–

What’s the two-year number? – Garth

#127 willworkforpickles on 04.25.22 at 5:52 am

The Fed will go easy on rate increases or crash the stock market sooner rather than later.
QT won’t last if the Fed really goes down that road.
Inflation is not going to ease off but rise with these tiny rate hikes. It could finish off the bond market taking the stock market down with it before rising rates do.
Its all going to come to a head later this year.
If the Fed puts the boots to QT if they even start it and end rate increases entering a recession opting out for the next round of QE which is most likely…inflation will soar higher and the dollar will start to crash.
Subsequently we will be in another recession , an inflationary recession in a year to 18 months after that .

With inflation levels approaching the extreme at that point in a falling dollar enviro, the bond market will be imploding again anyway and interest rates will be forced higher (to spare what’s left of the economy a while longer) as opposed to the tippy-toe through the minefield rate hike approach the Fed is taking now.

There is no easy fix easy way out. This scenario is developing and unfolding. Looming larger than even life itself.

Said it all here so often before , just saying it again.

#128 Fortune500 on 04.25.22 at 7:28 am

If my house is fully paid for, and it goes down significantly in value, am I worse off? Assuming the other houses around me have also gone down by a similar amount. If we want to move within the province, we sell for less and buy for less. Is there a flaw in my logic?

This is bad for people with big mortgages or those who were planning on ‘cashing in’ to live in Mexico, but for the rest of the 60% of Canadians who own their home, just how bad is this (outside of impacts to the general economy)?

#129 crowdedelevatorfartz on 04.25.22 at 8:24 am

@119 Donny G
“The invasion of Iraq was inexcusable. They were one of the most progressive of the middle East.”

+++
Well.
If Saddam Hussein’s gassing of Iraq Kurdish men, women and children was “progressive” ….then I guess we should expect the same “progressive” tactics from Putin?

https://en.wikipedia.org/wiki/Halabja_massacre#:~:text=From%201985%2C%20the%20Iraqi%20Ba,the%20use%20of%20chemical%20weapons.

3500 dead?

A mere trifle in the estimated 1 million dead during the entire “progressive” Iran Iraq war I suppose.

https://www.hrw.org/reports/1993/iraqanfal/ANFALINT.htm

But when Saddam wanted entire villages wiped off the map ….it was called genocide.

Putin is eradicating entire cities.

#130 crowdedelevatorfartz on 04.25.22 at 8:31 am

@#113 Outrage.
“She would have made France great again but now it will only get worse.”

+++
Even with low voter turnout ….
France dodged a bullet.
Macron may be a pompous dweeb but Le Pen’s simplistic, anti immigrant, anti business, socialist tripe didnt work.
Soundly defeated.
Now France worker’s retirement age will actually reflect the real world. Full pension retirement at 55 bumped up to 65.
Mon dieu!
The horror.
French industry can now compete with the rest of the world.
Germany workers take note.

#131 Pc on 04.25.22 at 9:13 am

Hi Garth – you’ve indicated that housing prices corrected last month but this doesn’t jive with the info not-Terranet provided for the month of March. They showed continued price increases in the GTA. Maybe they’re
Mixing in condos, Could you please clarify what I’m missing? Thank you

Terranet lags. It’s not an accurate barometer of current conditions due to its methodology. Ignore it. Real estate board stats are much more useful. – Garth

#132 Dharma Bum on 04.25.22 at 9:17 am

#103 Talking Pie

Also, the Swiss flag is a big plus.
———————————————————————————————————-

And chocolate.

Don’t forget the chocolate.

Mmmmmmmmmm…..chocolate…….

Oh, and of course, the vaults that contain all the precious belongings of WW2 victims confiscated by the Nazis and now “legally” hidden by the stuffy Swiss bankers and their ilk.

Nice mountains though.

Neutral fence sitters.

#133 crowdedelevatorfartz on 04.25.22 at 9:31 am

DELETED

#134 Dharma Bum on 04.25.22 at 9:41 am

#128 Fortune 500

This is bad for people with big mortgages or those who were planning on ‘cashing in’ to live in Mexico, but for the rest of the 60% of Canadians who own their home, just how bad is this (outside of impacts to the general economy)?
————————————————————————————————–

It’s not so bad for those that are in the position of owning a paid off house, or those that did not over leverage themselves in the hope that “house prices only go up”.

It will affect those that have assumed debt levels that are a stretch, and are facing imminent increases in the cost of servicing that debt. Those people have the double whammy of immediately increased real costs amplified by declining equity values.

Lose-lose.

Leverage is a booster in a rising equity value environment, but a SCUD missile in a rising interest rate/declining equity value situation. KABOOM.

It’s a lesson that gets taught every now and again, although not as frequently as it used to, that the only proper mindset for buying a house is to only buy it if you can clearly afford it (i.e., not over-leveraging, and making sure you have a solid buffer to absorb future rate increases and equity declines) and use it as a home for the long term and never have it mind that you are going to rely on that home as some sort of rising investment or cash trough to finance your life.

If you cannot buy a home and simultaneously save money for the next 30 years in order to systematically invest it in financial assets along the way, you shouldn’t buy the home. You’re not ready yet.

If you do the calculation, and the risk of bankruptcy (not being able to afford the increased mortgage while handling the lower value) then don’t buy until you’re in a position to minimize your debt load and survive any hiccups. Rent, and continue to save/invest your money.

When you find that you’re in a position to truly afford the house, always be sure that you can still put money aside every month for the rest of your working life to invest.

So, to the earlier point, for those that own a paid off house and are not relying on “cashing in” on it to finance their existence, this “increasing mortgage rates and falling house prices” is all somebody else’s problem.

Yes, one can sympathize with those that are not in such a position, but they can thank their lucky stars that it will have no significant effect on their lives.

Prudent financial planning and fiscal discipline starting from one’s teenage years is essential for their future well being and survival. (That, and taking care of one’s own health to the extent possible.)

#135 crowdedelevatorfartz on 04.25.22 at 10:10 am

HMMMM

A softening of the truck shipping spot market a harbinger of things to come?

https://www.reuters.com/business/us-trucking-downturn-foreshadows-possible-economic-gloom-2022-04-25/

#136 Ponzius Pilatus on 04.25.22 at 11:01 am

#125 Dr V on 04.25.22 at 1:30 am
115 jane (describing Kelowna)

” My family keep packed suitcases by the door in the summer.”
—————————————

They could head for Switzerland! Sounds awesome! You can have a great bike, ride it on good roads, and have a trained bike mechanic!
—————————-
Schweiz is far too expensive.
Try Oesterreich.
Made for biking, can bike almost every where.
And after a good day of biking, a hearty rutabaga/turnip stew awaits.
Sailo and CEF approved.
Wash it all down with great Stiegel Beer.
Mention Ponzius sent you and get a complementary shot of Schnapps.
Prost.

#137 crowdedelevatorfartz on 04.25.22 at 11:26 am

@#162 DanK
“How does a Minister of Finance have no background in Finance…

It’s so often forgotten that the person in control of the countries finances has a Bachelor’s degree in Russian history and literature and Masters in Slavonic studies… How did she get this job?”
+++

Easy.
No matter how crazy, how bizarre, how delusional the Prime Ministers utterances are…. she agrees.

#138 Satori on 04.25.22 at 11:42 am

#113 Outrage on 04.24.22 at 10:31 pm
A very sad night in France as the Globalist Macron defeated the much loved Le Pen. She would have made France great again but now it will only get worse.
—————————————————
Uh, did you not read that she supports Putin????!??

France is Glad as HELL she didn’t get in!!
Whoop Whoop, clink to the entire country!!!

#139 El Presidente on 04.25.22 at 12:42 pm

Thanks Elon.. you have saved the free world.

I’m outta jail baby…. Make Twitter Great Again

#140 NoName on 04.25.22 at 1:02 pm

#136 Ponzius Pilatus on 04.25.22 at 11:01 am
#125 Dr V on 04.25.22 at 1:30 am
115 jane (describing Kelowna)

” My family keep packed suitcases by the door in the summer.”
—————————————

They could head for Switzerland! Sounds awesome! You can have a great bike, ride it on good roads, and have a trained bike mechanic!
—————————-
Schweiz is far too expensive.
Try Oesterreich.
Made for biking, can bike almost every where.
And after a good day of biking, a hearty rutabaga/turnip stew awaits.
Sailo and CEF approved.
Wash it all down with great Stiegel Beer.
Mention Ponzius sent you and get a complementary shot of Schnapps.
Prost.

Waht ever you do dont do Osterich! As soon they see foreign license plates, you’ll get pulled and get ticket for for something.

This one time time i rented a car at aiirport and probably left my drivers license at car rental on counter, so me driving up and down on alps i get pulled over as soon as i got on a hwy because i didn’t stopped at booth and buy vignette, i guess that got me flagged… Reason i didnt stoped car had vignette good for a week or two already.

So dude asks me for something pink, drivers license, green card insurance, spare bulbs, triangle and believe it or not chains for tires in august.

Long story short, i poped a trunk open find everything ok – tire chains, but apparently visa and international drivers license with pictures are not valid documents one, for insurance and second one for driving…

I keep remembering dude being so mad, that he must sad SCHKANDAL 100x in span of 1 min. But there is a good ending of this story, he let me go with out ticket.

Side note when they pull that little stop sign out to chek the papers don’t go in front stay behind, i think that was what set him off.

#141 Brian on 04.25.22 at 1:14 pm

Russia’s Plan A and Plan B, explained by analyst US Army retired veteran Jacob Dreizen.

https://thedreizinreport.com/

#142 Shawn on 04.25.22 at 1:29 pm

Banks Create / Print Money?

#108 THE DANDADA on 04.24.22 at 10:00 pm
HEY SHAWN…….

BINGO. The banks create money – out of thin air. Inflation is what comes next.

Buy some bank shares!?!?…. After paying my bloated RENT, Gas, & Food bills. What money do I have left over to buy for bank shares.

**********************************
You have part of the story. Commercial banks TOGETHER WITH A BORROWER create money (out of thin air if you will) through lending.

The borrower must promise to repay the loan for this to happen. Banks cannot create money without a borrower.

The created money will be spent by the borrower and end up with a vendor where it will be a deposit is some other bank or used to repay a loan (which destroys money). Commercial banks have to compete to attract deposits and so there is usually an interest cost for the bank.

The supply of money to lend in the banking system is constrained more by the willingness to offer credit to buyers than anything. The banks do take on a risk with MOST lending. CMHC of course takes away risk on residential real estate.

The increase in the money supply has likely been driven as much by commercial bank lending as by government borrowing by issuing bonds purchased by the central bank.

I would agree that increased money supply is inflationary. It was well controlled for decades but not lately.

And it is interesting to consider that so much new lending was directly tied to real estate and it is real estate values that inflated the most.

If lending dries up then: No lender, no buyer, no price increase, instead price decreases.

#143 Ponzius Pilatus on 04.25.22 at 1:37 pm

#137 crowdedelevatorfartz on 04.25.22 at 11:26 am
@#162 DanK
“How does a Minister of Finance have no background in Finance…

It’s so often forgotten that the person in control of the countries finances has a Bachelor’s degree in Russian history and literature and Masters in Slavonic studies… How did she get this job?”
+++

Easy.
No matter how crazy, how bizarre, how delusional the Prime Ministers utterances are…. she agrees.
——————————-
Given that the current global hotspot is Russia and a Slavic country, I think it would be appropriate that the foreign affairs portfolio should also be under her tutelage.

#144 Ponzius Pilatus on 04.25.22 at 1:46 pm

#135 crowdedelevatorfartz on 04.25.22 at 10:10 am
HMMMM

A softening of the truck shipping spot market a harbinger of things to come?

https://www.reuters.com/business/us-trucking-downturn-foreshadows-possible-economic-gloom-2022-04-25/
————————-
That could be a leading indicator of a looming recession.
Garth and his boys have also talked about a possible recession down the road.
Germany is already putting aside €45 billion to deal with the outfall of the Ukraine crises.
Looks like debt reduction efforts will have to wait a little longer.

#145 crowdedelevatorfartz on 04.25.22 at 1:59 pm

@#143 Ponzies Patronage Pals

“Given that the current global hotspot is Russia and a Slavic country, I think it would be appropriate that the foreign affairs portfolio….”
+++

I have no issue with a non financial person running a Foreign Affairs Dept.
Especially one that has studied Russian history and speaks the languages.
However.
I do have an issue with a non financial person over seeing the largest increase in Canada’s debt in the entire 155 years of it’s existence in 2 years of her “watch”.
Completely out of her depth…..comes to mind.
A bobblehead doll would be cheaper.

#146 Shawn on 04.25.22 at 2:05 pm

Rate Reset Preferred Shares?

These are down again today and have been down a lot lately.

I see it as an opportunity.

In the past they got hammered when interest rates and their forecast reset yields tanked.

They should be holding their own at least in a rising rate environment.

But they also tend to get sold off whenever the market is in a bit of a panic mode. That is probably the case now. The underlying individual rate reset shares are relatively low to quite low in total market cap and thinly traded. That’s recipe for volatility.

I am a buyer today but will not gorge. I see value in hanging on to some dry powder as well.

#147 bdwy on 04.25.22 at 2:11 pm

I think it would be appropriate that the foreign affairs portfolio should also be under her tutelage.
——————
so now experience and education do matter?

then it’s appropriate she is not the finance minister?

a lightweight head bobbing @ss kisser is all i can see here.

#148 jess on 04.25.22 at 3:00 pm

disruptor ?

Nasa to test catapult that flings objects into space at 5,000mph

SpinLaunch accelerator system will ‘eliminate the cost, time, and complexity’ of reaching space

#149 Fortune500 on 04.25.22 at 8:19 pm

134 Dharma Bum thanks, great post