Now & next

The theme this week, of course, has been consequences. Next week we’ll prattle on about opportunities.

There are consequences to buying the biggest asset in your life on emotion. FOMO is a disease. So is familial pressure. The only cure is a bad outcome.

There are consequences to recency bias. That’s believing asset prices can never go down (because they just went up) or that interest rates can never rise (because they recently fell).

There are consequences to thinking you don’t have to go to work anymore, but will still always be paid and valued. WFH is doomed.

There are consequences in moving to a distant place you know nothing about just because properties are cheaper there. Life is not about a house. The intangibles you give up are… consequential. Like culture and a career. And now, equity.

There are consequences to debt. Society is pickled in it. Worse, all this debt is variable-rate, floating debt or at rates which are routinely reset.

We’re entering a storm. Not quite there yet. Just wind and rain. The hail, gale and locusts come later. But we can clearly see where this system is heading. The cost of money takes a big jump in 12 days, then again in a month, then again eight weeks later. Veteran realtor Carly texted me on Friday about a listing (over $2 million) in Bunnypatch north of T.O on three acres. “Got a full priced offer the day after and tons of showings,” she said. “There is panic buying happening before the rates go up.”

(Of course, she and I both know it’s better to wait for lower prices, then buy with a smaller mortgage at a higher interest rate. Affordability remains the same. Debt tumbles. But her job is to reward the seller, not advise the buyer.)

Down the death highway in Kitchener-Waterloo, where prices romped higher 45% in 2021, comes word April sales dropped 25% and listings have increased 48%. The average house price fell $50,000 last month, a 5.2% decline – more than 1% a week.

Michael is a local lawyer. He sends this report:

Sales dropping, dropping, dropping. People can’t afford the gas to go to all the sudden open houses!!!!. A few of my fellow Lawyers in the big smoke tell me their Real Estate Litigation Departments are getting very busy on Agreement of Purchase and Sale/failure to close breach items (with all kinds of creative/stupid answers: ‘The Agent and Lawyer never told me I could not get my deposit back.’ ‘I don’t speak English and it was not explained to me’ (this from a U of T Engineering Graduate who had a Chinese/English-speaking Agent) ‘I overpaid and it’s not fair, my bank never told me my mortgage commitment was not actually firm (good luck when your condo finally gets registered in two years and you qualified on a today interest rate- yikes in two years).

Well, you get what’s happening. Lots of deals inked in March and scheduled for June conclusion will not close. Condo assignment sales are blowing up. Bank appraisals are coming in under sale prices, causing a panic attack for buyers without an extra boatload of cash. And as the stats published here yesterday clearly show, average prices everywhere are heading down – despite some panic buying ahead of the next 50-point CB bomb on June 1st.

Consequences. For sellers who waited too long to hit MLS, they include leaving money on the table. Hundreds of thousands. For buyers brave enough to wade in, here are some guidelines.

First, do not buy before you sell. That was a winning, no-risk strategy six months ago. Today you stand an elevated chance of ending up with two properties, no money, extreme debt and endless marital stress.

So, if you really need to move and find a perfect place to buy, make the offer conditional upon the sale of your existing home. It’s simple. Commit to buying the new property if yours sells within a certain period of time (30 or 60 days). If the seller receives an offer you have 48 hours to firm up, or lose the deal. But the odds of that are low since properties with a conditional offer on them attract less buyer interest. Anyway, your risk is eliminated.

In fact, feel free to make an offer these days on any property with the two key conditions: (a) a satisfactory home inspection and (b) financing. It’s no longer a seller’s market so if the vendor doesn’t like conditions, tough. You da boss.

Regarding financing, get pre-approved. Don’t go VRM but instead lock into a fiver. They’ve swelled in cost but compared to what happens later this year they’re still bargain-priced. And be aware that bank appraisals are dropping faster than Jason Kenney. Lots of buyers are coming up to closing day and learning lenders will be handing over far less than they anticipated.

Rates are not rising briefly, by the way. 2% mortgages are so 2021. We’re heading back to a normalization where loans at 5%, 6% and 7% are common and may be with us for years. So do the math. Can you afford your mortgage if payments soar upon renewal in 60 months?

Finally, always buy what you can sell later. There is no such thing as a Forever Home, like your spouse believes. Understand that once you firm up an offer to buy there’s no backing out. You cannot walk free. At a minimum you’ll lose the deposit, face litigation costs and could suffer a court judgment forcing you to pay the seller that difference between what you offered and the actual discounted sale price when the property moves.

Consequences.

You’ll like next week a lot more. Trust me.

About the picture: “Thank you for all that you do with this informational site,” writes Rob. “My wife showed me your blog a few years ago, and it’s been a part of my daily lunch-time read ever since. The attached photo is Pylot. He’s a Border Collie / Lab X that was in our lives for 15 years. He was smarter than the average grad student, but could still chill out, especially on a beach. He was a rescue from Border Collie Friends Rescue in BC. I will always maintain that I may have rescued him, but he saved me.”

101 comments ↓

#1 THE DANDADA on 05.20.22 at 3:23 pm

Energy shortages, food shortages, shattered supply chains, and now monetary tightening into a historically over-indebted global economy where everyone is short USD.

Went from “inflation is transitory” to a looming depression real quick.

Buying a home is no longer the problem, it’s trying to pay rent that now is the issue.

There is no depression looming. Only in your house? – Garth

#2 Felix on 05.20.22 at 3:30 pm

Happy Feline Friday!

Did you know:

Cats have nearly twice the amount of neurons in their cerebral cortex as dogs.

Cats have the largest eyes relative to their head size of any mammal.

Cats make very little noise when they walk around. The thick, soft pads on their paws allow them to sneak up on their prey — or you!

#3 Linda on 05.20.22 at 3:36 pm

Where will 450,000 newcomers live in Canada? Canadian real estate is a great investment. There will always be newcomers wanting to live in our great nation.

#4 Faron on 05.20.22 at 3:37 pm

Wow, NASDAQ showing greater percent drop than COVID crash. Oversold at the weekly level for the first time since the GFC.

I’ll take this as an entry.

#5 Søren Angst on 05.20.22 at 3:37 pm

I saw this today on CNN Markets:

How stocks are doing in 2022

DOW -15.46%
NASDAQ -29.11%
S&P -19.72%

Updated: 2:38:17pm ET

Went to WebBroker and computed my YTD Time-Weighted Return:

+11.6%

yeah oil. yeah high yield dividends. yeah balanced & diversified. yeah Garth et. al. + a little bit of me in there, somewhere.

Would have been higher if it weren’t for single stock pick Albatross TWTR. *

—————

Instead of Søren Angst, I might even go back to Commenting as:

Dolce Vita

Then again, it’s still a Threadbare Portfolio (becoming less threadbare a bit at a time).

* Mea culpa, mea culpa, mea maxima culpa.

#6 Pain_Trade on 05.20.22 at 3:37 pm

The Fed is the US central bank. Ours is the Bank of Canada. Similar, but different. – Garth
———————————————————————-

Doesn’t matter the names… Same gang

Do you remeber when these guys said that all is well as the consumer is resilient?
https://pbs.twimg.com/media/FTCTbGPWQAAD0vf?format=jpg&name=small

#7 Brad in Calgary on 05.20.22 at 3:43 pm

“Consequences, consequences…” You sound like my parents. YOLO forever!
J/K, great advice that many won’t hear, but should.

#8 Søren Angst on 05.20.22 at 3:46 pm

CONSEQUENCES

True.

None of them UNINTENDED.

Cdns snorfled down debt like there was no tomorrow, plump with Gov handouts and HELOC Bank of Ma & Pa.

CB’s sat fat, dumb & happy whilst watching one of the largest ASSET BUBBLES in history develop right under their noses, all the while Inflation beginning to blow past their “thresholds” – and did NADA.

Ya, ya, war, pestilence etc. contributed.

What will hurt Canada now is not war, pestilence etc., it will be DEBT & rising RATES due to INFLATION.

MIRROR meet

Cdns + CB.

Sad. Very sad for a great country. But as I read the Blog today, TRUE.

—————

PS: looking forward to the opportunities Garth.

#9 Faron on 05.20.22 at 4:00 pm

#91 Ponzius Pilatus on 05.17.22 at 11:02 pm

#101 Yukon Elvis on 05.17.22 at 12:41 pm
#95 My Body My Choice on 05.17.22 at 11:06 am

Regarding the residential school question wherein My Body My Choice and Yukon Elvis take the stance that they were a force for good or, at least, no worse than what other children in Canada faced, we have this:

An account from two people who worked in one of them:

https://youtu.be/I2GWjE8urp4

Yuck. The very least the churches could do is open up their records and be fully transparent about what went down. Who died and how. And if there isn’t full accounting of children in/children/bodies out explain why. It’s history. If they own that history, then they are far more likely to be forgiven as more and more accounts come to light.

#10 I’m stupid on 05.20.22 at 4:04 pm

Sure there is a forever home… I’m in mine, small house on an almost 10000sq foot lot in a good school area. The only way I leave is in a body bag. Originally we bought the home to tear it down if we needed more space as the kids grew. After being here for a few years my wife and I changed our minds. Instead of building a larger home we’re going to keep it small and give our kids life experiences as they grow. Why burn through a million for extra space to clean, instead 20k a year for travelling to all corners of the world sounds better to us.

#11 Faron on 05.20.22 at 4:07 pm

#157 Ustabe on 05.20.22 at 2:55 pm

Hey, Sail Away…has Elon sent you your horse yet?

Ba haa haa. Well done.

22% smouldering craters and the horses are free!

#12 steve on 05.20.22 at 4:07 pm

doomed eh? I guess when you don’t provide substance around the comment, you can say doomed.

however, do you care to quantify doomed Garth?

just for entertainment sake of course.

be specific, just so we can call you out on it in the future, thanks.

#13 Søren Angst on 05.20.22 at 4:07 pm

You look at the Mr. Market Indices today and they’re in the Green in Asia and Europe, all in the Red for the US except the VIX.

All kinds of theories out there in the Financial Press as to why.

Mine:

Fed presided over one of the largest asset bubbles in history, watched inflation blow past their “threshold” and did nothing. Figured they could tiptoe their way around any CONSEQUENCES.

US Mr. Market based on the above stellar performance does not believe the Fed can tiptoe between stomping inflation down with higher rates and not forcing a recession.

Lack of trust is what it is.

Companies are making earnings despite war, pestilence, etc. yet all in the RED is what you get in US Mr. Market indices.

Can’t say I blame them.

There is going to be turmoil until the Fed delivers on its:

Soft Landing tiptoe prowess.

We’ll see until then & in the meantime, I’m staying vested.

————

Qui durat, vincit.

#14 I’m stupid on 05.20.22 at 4:08 pm

I wonder how many high-end cars or boats or all those other expensive toys everyone loved buying with rates in the ditch are going to be sold with 10% or more in the next year or 2 for them.

#15 Flop… on 05.20.22 at 4:10 pm

Flop Drops.

From the stuff I saw this week files.

Well, I pretty much had the bottom of detached in Vancouver proper pegged at 1.5 million, then this stater home just went for 300k less than that.

Small, but livable.

The details…3592 Turner St, Vancouver

Asking 1.19

Sold for 1.19, nine days on market.

Assessment 1.27

So, yeah, it could be an anomaly, only time will tell.

It seems to be at least a tiny indicator that the developers are sitting on their hands more and more.

The infamous Turner Street featured prominently during the Pink Snow correction days, this house isn’t much to look at as you’d expect, but I have seen new builds go for around 2.5 in this neck of the woods, at this price that could still happen, I guess.

I’ve seen some other stuff, will update when I get the chance.

I started typing this post on Wednesday, and had to take the day off work today to finish it…

M47BC

https://www.zealty.ca/mls-R2684752/3592-TURNER-STREET-Vancouver-BC/

#16 Faron on 05.20.22 at 4:11 pm

#5 Søren Angst on 05.20.22 at 3:37 pm

* Mea culpa, mea culpa, mea maxima culpa.

One could say that if one were a Bernie Madoff investor too. At some point, though, sufficient coercion takes some of the culpa off. This world is filled with arse hole grifters and touts. It’s easy to be wooed by them.

Regardless, Twitter appears keen to hold Elon’s feet to the fire. So, you may get your $54.20 after all.

#17 Steven on 05.20.22 at 4:13 pm

Garth is 100% correct…there is no depression coming.

We have been in one since 2009. Only the world’s central bankers printing money like no tomorrow and historical low interest rates, we would have been in one and out of it by now.

But the Bankers know what’s best for them don’t they?

Rates will stop going up and printing will resume in time…possibly before the USA midterms if markets stay low.

What a strange collection of people come here. – Garth

#18 Cottagers STAY THE HELL AWAY! on 05.20.22 at 4:14 pm

Don’t come up to cottage country you inbred southern hillbillies!

We are fueling up our trucks and jerry cans – there will be NO GAS left for you to buy to go back home! Enjoy the $500 taxi ride or taking a bus.

Just.

Stay.

Home.

#19 Søren Angst on 05.20.22 at 4:15 pm

#2 Felix

Go Comment on a Cat Blog or on Twitter, TikTok, YouTube and/or Instagram Cat meow memes.

Give it a rest.

Couldn’t care less about Hairball Puff.

I mean what do you do, run a cat pet shop or something?

Are you a cat?

#20 Sail Away on 05.20.22 at 4:16 pm

#2 Felix on 05.20.22 at 3:30 pm

Cats have the largest eyes relative to their head size of any mammal.

———

Blasphemy!

https://i.pinimg.com/736x/7d/45/a2/7d45a24a12a97ca4bcf7f8f5ef43b926.jpg

#21 Faron on 05.20.22 at 4:20 pm

3.5% peak to trough in ES, 4.9% in NQ. Tell me it’s OPEX in an already deeply negative gamma market without telling me as much. Wow. Fireworks next week guaranteed.

#22 Dave on 05.20.22 at 4:22 pm

Real estate prices for the most part have increased since 2008 financial crisis…with some dips.

Will 5% to 7% really be the norm or will thing change once the Ukraine War is over?

#23 Steven on 05.20.22 at 4:22 pm

There are consequences to debt. Society is pickled in it. Worse, all this debt is variable-rate, floating debt or at rates which are routinely reset.

——————————————————————

Governments too. World wide. That’s why rates will never be high again and why the world is in the middle of a financial war with currencies, food supplies, oil used instead of war as their is not enough inexpensive oil to fight a live one until a country gets desperate.

See Russia, USA, China when their people start starving…

Sri Lanka is just the preview…stay alert and stock up.

The lost decade is upon us….be prepared.

#24 Linda on 05.20.22 at 4:25 pm

‘Pylot’ looks like he led a happy life:)

I have to laugh at the silliness of those who purchased who think the seller or their lender care in the slightest that they 1) weren’t informed – what, you didn’t ask questions or read the legal documents before you signed? Suck it up, buttercup & try for some kind of dignity. 2) can’t speak English so weren’t informed – ah, the ‘no speak English’ defense. Funny how when you thought the deal was in your favor you were able to understand that just fine. 3) I overpaid & its unfair – what are you, twelve? How can you have achieved legal age without understanding that life isn’t ‘fair’? Caveat emptor, baby. Also try not to sulk, blubber & blame others for the choice you made of your own free will. Gah.

#25 Steven on 05.20.22 at 4:27 pm

What a strange collection of people come here. – Garth

Let’s donate $100 to an animal shelter as a gentleman’s bet.

If 3 more rates take place, I donate. If less than 3, you donate.

Are we on Garth?

Take away the Central banks and QE what do you have?

Not much and thinking otherwise is “strange”.

#26 Søren Angst on 05.20.22 at 4:32 pm

#15 Faron

USD $50.89 purchase price. Rolodex, Vegas Slot Machine TWTR at $38.29.

Not waiting for the magic arbitrage number that you correctly quote.

I messed up plain and simple and I’m looking in the mirror at the guilty party.

Debating taking the capital loss and throwing the left over cash into one of my high yield dividends ETFs/ETNs that I own.

Should make the capital loss up in a couple of months worst case, Threadbare Portfolio and all.

Still, it stings. I hate losing what I can I tell you F.

#Time.To.Swallow.Pride.

Also, I hate making more tax calcs than I need to.

#27 IMALWAYSRIGHT on 05.20.22 at 4:32 pm

DELETED

#28 Richard L on 05.20.22 at 4:36 pm

The cheap money party that has been going on for 20 + years is ending.

Those that have been living on debt will not enjoy the next few years.

#29 Søren Angst on 05.20.22 at 4:39 pm

#20 Sail Away

THAT was good.

Very good.

#30 PeterfromCalgary on 05.20.22 at 4:40 pm

It is easy to get depressed when you net worth in temporarily going down. However we still have an amazing world with powerful technology.

Not only is communication instant and almost free but we are living longer. In 1900 the average life expectancy was under 50 and poverty was much more common. We can easily keep fruit and vegetables thanks to refrigeration. Finally, I just discovered that I could make the little box I type these comments in bigger by clicking and dragging that little triangle made with five lines over there. →

#31 Prince Polo on 05.20.22 at 4:43 pm

Not enough capitulatin’ just yet…

https://m.youtube.com/watch?v=BR2003lJmXQ

#32 VicPaul on 05.20.22 at 4:44 pm

Question to all who have a deeper understanding of macro currency trends:

Is it possible that, with rising stability risk in oil prices (to the upside), EU (and global) disdain for anything Russian energy and growing government debt in the U.S., we could see a spike in resource-backed currencies like the Canadian dollar?
One year? two years?

M58BC

#33 april on 05.20.22 at 4:46 pm

#3 And you seem to be of the opinion that all these newcomers will be in a position to buy..not so… The wealthy who can afford to buy are not stupid enough to rush in to buying an overpriced asset. They can afford to rent a very nice place and wait it out until they decide to buy… if they do.

#34 Faron on 05.20.22 at 4:54 pm

#157 Ustabe on 05.20.22 at 2:55 pm

Hey, Sail Away…has Elon sent you your horse yet?

I didn’t know Sail Away was a flight attendant.

#35 Ponnaps on 05.20.22 at 4:55 pm

“panic buying ahead of the next 50-point CB bomb”.. doesnt make sense

statement implies buyers are aware of an upcoming rate hike.. and yet will panic buy at a high price now? sounds counter intuitive dont you think?

#36 VladTor on 05.20.22 at 4:57 pm

#3 Linda on 05.20.22 at 3:36 pm
….There will always be newcomers wanting to live in our great nation.

*********

For sure not now Linda. Bubles, expensive life etc.

I would modify your sentence for current situation like this way:

There will always be newcomers wanting to receive citizenship in our great nation and move back home after!

#37 Sail Away on 05.20.22 at 4:58 pm

#11 Faron on 05.20.22 at 4:07 pm
#157 Ustabe on 05.20.22 at 2:55 pm

Hey, Sail Away…has Elon sent you your horse yet?

——–

Ba haa haa. Well done.

22% smouldering craters and the horses are free!

——–

‘Tis true. My personal Tesla position from January is -22% at present.

I wouldn’t necessary expect tittering and giggling, though. It feels meanspirited.

#38 Yorkville Renter on 05.20.22 at 5:02 pm

#10 – not stupid at all. nice one

#39 wallflower on 05.20.22 at 5:07 pm

KW: The average house price fell $50,000 last month…

I mentioned yesterday prospective buyers should look at all the listings terminations happening. Well, they should also look at the relistings on same.
Absolutely eye popping.
Here is a list from today and yesterday of terminate/relists in my southern Ontariowe city.

835K terminate relist $649K
799K terminate relist 749K
749K terminate relist 639K
620K terminate relist 579K
969K terminate relist 888K [ha ha back to the hook with the lucky 8s tactic!]
599K terminate relist 499K
Just a small sample!

From the way I see it, anybody is a complete fool to buy anything between now and October. These things are doing down further. (To be fair, there is an awful lot of lipstick on pig in this city so that definitely has to work its way out; ie overpricing is significant).

#40 Leftover on 05.20.22 at 5:20 pm

A great deal of pain in the 2008 USA real estate meltdown was felt by parents who took out second mortgages to help their offspring put down payments on their first house. Sound familiar?

What happened, to more people than want to admit it, was equity was lost by parents, not the kids. Many retirement plans were blown out of the water.

BOM (Montreal, not Mom) just put out a missive stating that Canadian real estate is about 38% overvalued. OFSI just tightened HELOC rules. Last time I looked at the numbers in my hood the sales/inventory ratio dipped below 40% for the first time in 4 years.

I think a lot of boomers might be in for a haircut.

#41 Søren Angst on 05.20.22 at 5:20 pm

“Netflix’s woke purge:

Troubled streaming giant’s latest layoffs targeted staff who were among its most vocal social justice warriors working on original content about marginalized communities”

– 150 “woke” fired on Tuesday + 70 “woke” on its social media platforms (not incl. “woke” dozens laid off in April from Tudum). *

https://www.dailymail.co.uk/news/article-10837347/Netflix-layoffs-hit-staff-working-original-content-marginalized-communities.html

The English for once, not all tongue in cheek & dry.

——————

And the pendulum swings from 0 degrees to 180 degrees, never the happy 90 degree point where it ends up after all the turmoil is said and done.

* “woke” according to Google:

alert to injustice in society, especially racism.
“we need to stay angry, and stay woke”

Maybe Netflix got tired of all the alert anger?

#42 crowdedelevatorfartz on 05.20.22 at 5:21 pm

“What a strange collection of people come here. – Garth”

+++
Apologies.
Busy at work.
Whaddid I miss?

#43 Quintilian on 05.20.22 at 5:22 pm

#3 Linda on 05.20.22 at 3:36 pm
Where will 450,000 newcomers live in Canada? Canadian real estate is a great investment. There will always be newcomers wanting to live in our great nation.
==============
https://financialpost.com/real-estate/immigrations-impact-on-home-prices-hard-to-quantify-until-you-take-it-away

“Research in Canada has shown that the overall impact of immigration on housing markets is modest at best in most cases. “.

So jejune.
It seems that Linda lacks common sense, and wanted to be a gadfly.

#44 T-Rev on 05.20.22 at 5:23 pm

5 year bond yields seem to have found some stability. 5 year money still we’ll under 5% today. Negative growth begins Q4 2022, with the recession called after Q1 2023. 5 year money peaks just a shade under 6% in Q4 2022, inflation falls under 5% by January 2023, under 4% by this time a year from now, and by next June we’ve got fixed rates back in the 4-5% range where they shall hover for a while.

House prices will stabilize, and maybe some of the excess in bunny patch will blow off the rest of the country outside the exurbs of Toronto will not see a major real estate correction. 5-10%? Sure. Which is bad enough when you’re leveraged 95%. The 20-30% that small town southern Ontario is going to see….eek.

My prediction.

#45 Triplenet on 05.20.22 at 5:33 pm

#15 Flop
Assessed value and market value are two purposefully different valuations.
Trying to draw parallels or some form of relationship is not recommended nor relied upon and will probably be absent of any validity.

#46 Inadequate on 05.20.22 at 5:46 pm

#1 THE DANDADA

Slow down is when your neighbour’s kid loses his part-time job. Recession is when your neighbour loses his job. Depression is when you lose your job.

#47 DON on 05.20.22 at 5:48 pm

#3 Linda on 05.20.22 at 3:36 pm
Where will 450,000 newcomers live in Canada? Canadian real estate is a great investment. There will always be newcomers wanting to live in our great nation.

********
They can live in one of the vacant units in the newly developed rental buildings that have sprung up in the last while. Lots of units are still vacant…to expensive for local incomes. Second choice more houses for rent come onto the market or buy if you are a rich newcomer with money to burn.

I fought the market and the market turned me red…catchy remix?

#48 No butter on your bread! on 05.20.22 at 5:51 pm

Gee whiz Garth! Everyone talking about the cost of rent going up everywhere, which of course it is, yet you never mention that a multi-residential REIT might provide a safe haven over the next few years, if not longer. (given REITs all locked in at decades low interest rates and are valued on their capitalization rates, not FOMO)

Or perhaps it’s just not something your firm provides so why present it as a reasonable option?

#49 cramar on 05.20.22 at 5:54 pm

Then there’s the stock market…like for investments. Many people hate the ups and downs and bail when there is a collapse. A B&D is the way to go, but they will tell you this time is different, the market is in freefall like everything else in this nutcase economic world. It never is different this time…until it isn’t.

I’m starting to wonder if this really is the “until it isn’t” endgame, since this is the 8th losing week for the Dow. That has not happened since 1923. That was 99 years ago! Maybe this time is different! Maybe all the grains in 2021 are wiped out in months.

#50 Faron on 05.20.22 at 5:57 pm

#34 Sail Away on 05.20.22 at 4:58 pm

#11 Faron on 05.20.22 at 4:07 pm
#157 Ustabe on 05.20.22 at 2:55 pm

I wouldn’t necessary expect tittering and giggling, though. It feels meanspirited.

Chin up bucko! The tittering and giggling is about Elon’s horse trading for snogs. A smouldering portfolio crater that arose from poor decision making regarding an inflated stock headed by a CEO convicted of securities manipulation is serious, somber business. Thots n prayers etc.

While I have you, have looked into renting the sail boat formerly known as Sail Away’s for July? I’m planning my summer right now, so I need to know if you were serious or if, maybe, you were bluffing as a means of issuing a veiled threat of assault or even manslaughter. Not that you would do that, but some other commenters here picked up on that possibility, so I thought I should check. I can be naive. Either way, I gots ta plan, right?

#51 Faron on 05.20.22 at 6:05 pm

#26 Søren Angst on 05.20.22 at 4:32 pm

#15 Faron

To be clear, I don’t think selling TWTR at this point is at all a good idea. I’m making fun of Sailo for his “arbitrage opportunities” because he is a horrible amateur at investing yet foists his ideas here without the humility to own up to the losses. I am also a horrible amateur, but I will happily divulge most anything and am always open for discussion.

Selling TWTR means you believe there is downside here, yet the stock is at it’s long-term median price. Regardless of what Elon does, the stock shouldn’t go down much below its recent $36. The COVID floor was $20.

#52 The Regulator on 05.20.22 at 6:14 pm

DELETED

#53 Dr V on 05.20.22 at 6:15 pm

152 bdwy

“what is most concerning to me is the absence of dip buyers around here .”
—————————————–

I’m a constant nibbler, esp when things are on sale.

#54 Sam on 05.20.22 at 6:16 pm

This is like déjà vu. Garth, you had written similar blogs in 2018 and 2020 when housing started to crater. Both of those times the Fed stopped raising rates and reversed course and housing prices started upward trend again. They’ll do the same again this time around. If the Fed were even slightly serious about raising rates we wouldn’t be at .75% still with the balance sheet still flowing with QE. NeverMind inflation is at 8.5% yet no real significant increases in rates. Fed is waiting for it to peak so he can say he’s done raising rates and may start to lower at the hint of recession. Pin this comment as you’ll need it for I told you so.

#55 Faron on 05.20.22 at 6:18 pm

From the internet:

What with the formula shortage, the expiration of the child tax credit, and Elon Musk’s troubles, it’s been a tough couple months for little babies

#56 DON on 05.20.22 at 6:21 pm

#35 Ponnaps on 05.20.22 at 4:55 pm
“panic buying ahead of the next 50-point CB bomb”.. doesnt make sense

statement implies buyers are aware of an upcoming rate hike.. and yet will panic buy at a high price now? sounds counter intuitive dont you think?

******
Sounds about right…Greaterfool.

#57 THE DANDADA on 05.20.22 at 6:25 pm

#42 crowdedelevatorfartz on 05.20.22 at 5:21 pm
“What a strange collection of people come here. – Garth”

+++
Apologies.
Busy at work.
Whaddid I miss?
——————————————————————

The middle and lower class (the 99%) are in a depression. You know…rent, gas, food keep going up.

Everyone else is flying high in this post-Covid rally.

#58 or_maybe on 05.20.22 at 6:35 pm

What a strange collection of people come here. – Garth
———————————————————————

Here is the least of your concerns as it will get ugly on the streets (uglier depending in which city you live in) as personal and bsuiness bankruptcies have spiked.

“Spike of Insolvency Cases in Canada Could Signal More to Come for Retailers: Expert” _ Retail Insider

Speaking of strange, why this headline is reverberating across the planet from Aussie-land is quite concerning. To even think that there might be an issue with people growing their own food is not even comprehensible. Unless you have a gov that is lying. But why?

“Victoria’s Agriculture Legislation Amendment Bill 2022 will continue to allow Victorians to grow their own food, according to AAP”

“There is nothing in the Bill to stop Victorians growing their own food and an expert told AAP FactCheck the legislation is instead about providing a way of dealing with potential biodiversity issues.” — AAP

#59 PeterfromCalgary on 05.20.22 at 6:42 pm

Stay out of China don’t even go near the Chinese border.

https://www.theglobeandmail.com/world/article-china-accuses-canada-of-political-manipulation-over-5g-ban-of-huawei/

#60 Emma Zaun - Greater Fool Unpaid Intern #007 on 05.20.22 at 6:49 pm

Garth, the North American shortage of baby formula has led to a huge increase in the crankiness of the infantile deplorables coming to this comments section.

We’re not putting up with anymore of this without a big raise in pay.

Otherwise, we are working to rule effective midnight tomorrow.

Emma Zaun
Shop Steward
CUPE (Canadian Union of Peelers and Exhibitionists)

#61 the Jaguar on 05.20.22 at 6:50 pm

GARTH: Clean up. Isle 52.

#62 Sail Away on 05.20.22 at 6:54 pm

#50 Faron on 05.20.22 at 5:57 pm
#34 Sail Away on 05.20.22 at 4:58 pm

While I have you, have looked into renting the sail boat

——–

I have. Not available June-August during prime sailing season.

Not looking promising.

#63 Penny Henny on 05.20.22 at 7:01 pm

#157 Ustabe on 05.20.22 at 2:55 pm
Hey, Sail Away…has Elon sent you your horse yet?
/////////////////

Hilarious!!

One good hand deserves another.

#64 Satori on 05.20.22 at 7:29 pm

#33 april on 05.20.22 at 4:46 pm
#3 Linda
And you seem to be of the opinion that all these newcomers will be in a position to buy..not so… The wealthy who can afford to buy are not stupid enough to rush in to buying an overpriced asset. They can afford to rent a very nice place and wait it out until they decide to buy… if they do.
———————
That’s “IF” they find a place it rent.

Wait lists, 75 emails per rental listing, property owners strapped for cash and increasing their rents to pay higher mortgages… good luck with then ‘trying’ to rent.

#65 Josh on 05.20.22 at 7:31 pm

Reverse mortgage rates are 10% to 11%, mortgage rates other similar terms 5 year lending 8% to 8.5%, government bonds, term deposits, GICs 6% to 6.5%, real estate prices down $500,000 to $800,000 in the typical GTA, Toronto, Vancouver, other high priced areas from the top. Equity markets down 40% to 55% over the next 18 months from the top. Good times are over for several years.

#66 NOSTRADAMUS on 05.20.22 at 7:33 pm

BIG TIME LAG!
There is a lag before the effects of alcohol intake registers. This lag adds to the difficulty of drinkers knowing when to stop. Just like drinking, speculation with excessive borrowed money can provide a temporary( or transitory) high at first. However the effects of speculative leverage kick in later, resulting in a financial hangover that doesn’t go away.
Each generation has to find out the hard way, that the stove really is hot.
Is there anyone out there ? Radio silence on the real estate sales stats, it’s eerie.
Beware of the person who has nothing to lose. Always remember who warned you and who lied to you. The village idiot sometimes asks the toughest questions. Steady lads, hold the line.

#67 Dr V on 05.20.22 at 7:39 pm

4 Faron

“I’ll take this as an entry.”
—————————————-

Mine was a little early. I might try some more again.

Let’s call it a “re-entry”.

#68 Flop… on 05.20.22 at 7:42 pm

So it was about this year I lost my mind wrapped up my sole proprietorship and started trying to repay Stephen Harper for his duplicate signature on my Citizenship certificate.

It got hot, real hot , last summer, by October despite being classified as Caucasian by society I ended up darker than my Indian heritage wife, winning brownest person in the family for only the third time since we’ve been married.

This year, supposed to be repeat of last summer weather wise, but I won’t mind if it’s a bust so I only end up half cooked.

This rainy Spring reminded me of The Oz Rock classic Rain by the band Dragon.

Yeah, the were originally Kiwis like Russell Crowe and Crowded House, but Kiwis become Aussies, famous Aussies become British or American,.

I’m Tasmanian so no one wanted me, I’m just in Vancouver for the sensational climate, affordable real estate and friendly locals…

M47BC

———————————————-

Rain by Dragon.

“It’s been raining for so long

It’s been raining for so long

Oh is it any wonder, the streets are dark
Is it any wonder, we fall apart
Day after day straight rain falls down
All over town, rain coming.”

https://www.youtube.com/watch?v=PTMj2WuUlaY

#69 Reality is stark on 05.20.22 at 7:44 pm

As a bit of a bond vigilante myself let’s take a closer look at what has happened in this country over the last few years.
It seems as though you folks have been borrowing a lot of money to overpay public service pensions, CERB payments siphoned off by criminals, and created ministries with little to no value. Your productivity is flailing and major public sector unions are already looking to strike for significantly higher pay. Productivity headed lower.
And now you want to borrow more money. Guess what?
You are a bad risk and I don’t care how nice you say you are. I am gonna make you pay.
So your government will tax whatever the hell out there still has value.
Suddenly citizens realize they just got hoodwinked.
You borrow a trillion to create 500 billion of value and throw the rest away now it’s time to pay the piper.
And the piper doesn’t work for cheap for someone with lousy credit. Especially for a government whose citizens are heavily levered and facing the squeeze caused by inflation.
Interest costs are about to squeeze social program spending without significant tax increases.
At least we can all agree in this country that we have a love affair with the taxman. As a bond vigilante the taxman is my friend.

#70 AACI Homedog on 05.20.22 at 7:45 pm

Thanks Garth. I’m looking forward to next week now !

#71 Observer on 05.20.22 at 8:17 pm

DELETED

#72 Drinking on 05.20.22 at 8:30 pm

#5 Søren Angst or Dolce or whatever one wants to post or call themselves nowadays. Enjoy your fabulous Italian wines while you can. I just enjoyed a fabulous Bordeaux wine that was priced extra ordinally low for Canadians prices. I suspect that the trade deal with Europe and Britain is finally coming to term, that is for the time been, not for much longer…

Enjoy it while you can because this winter will be an unprecedent challenge to all of us. Prepare!!

#73 The Regulator on 05.20.22 at 8:48 pm

# 61 – The Jaguar : I knew you’d be back. And I like and respect most cats, especially cougars. No offense intended.

#74 Squire on 05.20.22 at 8:52 pm

#23 Steven on 05.20.22 at 4:22 pm
There are consequences to debt. Society is pickled in it. Worse, all this debt is variable-rate, floating debt or at rates which are routinely reset.

——————————————————————

Governments too. World wide. That’s why rates will never be high again and why the world is in the middle of a financial war with currencies, food supplies, oil used instead of war as their is not enough inexpensive oil to fight a live one until a country gets desperate.

See Russia, USA, China when their people start starving…

Sri Lanka is just the preview…stay alert and stock up.

The lost decade is upon us….be prepared.
————————————————-
Hogwash. China will starve way the heck before anyone else does. Sri Lanka is having issues also because of their debt for being suckers to the CCP belt and road initiative which has caused many countries to be stuck with high debts.

#75 Lumber on 05.20.22 at 9:11 pm

Some folks seem pleased that those who have lots of mortgage debt are about to get their comeuppance.

Unfortunately if those same folks work in any business where clients utilize debt, their comeuppance is next….

#76 Love_The_Cottage on 05.20.22 at 9:12 pm

#18 Cottagers STAY THE HELL AWAY!
Don’t come up to cottage country you inbred southern hillbillies!
_________
Phil Harding, Mayor of Muskoka Lakes says everything is open, please come up and shop local:

https://www.cp24.com/video?clipId=2447197

See you tomorrow Phil!

#77 crowdedelevatorfartz on 05.20.22 at 9:32 pm

@#59 Peter from Cowtown

https://www.theglobeandmail.com/world/article-china-accuses-canada-of-political-manipulation-over-5g-ban-of-huawei/

Once again the Canadian “leadership” is many days late and millions of dollars short.

The US, Britain, Australia, New Zealand and….finally ….Canada
Has banned Huawei.

The obvious security ramifications of allowing a communist country access to all of our internet seemed to escape the Trudeau appeasement apologists.

Will our allies ever trust us while the Liberals are in power.

#78 Doug t on 05.20.22 at 9:40 pm

UP NEXT

Well after Covid, War, and now Monkey Pox – I am confident that Aliens will finally arrive by the end of 2023 and either save us from ourselves or wipe us off the face of the earth – I’m good with either

#79 David on 05.20.22 at 9:56 pm

Some people are funny, don’t seem you understand the issue at hand. Rates are going up repeatedly this year to combat inflation, once excess liquidity is mopped up we should get back to normalize but it does take time.

Housing will take a hit, markets should stabilize at these levels until this blows over sometime in 23. 2022 is a write off with the exception of swing trading in case there is another leg down, you want to have cash to buy.

#80 Ponzius Pilatus on 05.20.22 at 10:19 pm

#147 bdwy on 05.20.22 at 12:53 pm
So, you’re saying that The Residential Schools were sought after by native parents who wanted a better life for their children?

——————
yes, for most anyone alive today. after 1948 attendance was by choice of the parents. so again , yes.
——————
Good to hear.
So today’s boomers are made up of a representative portion of Native graduates of the Residential schools.
My problem with that reasoning is, that during my 43 years in Canada, I have not met a single Native that fits that narrative.
Well, maybe they are all above my pay grade.
So again, good for them.

#81 Ponzius Pilatus on 05.20.22 at 10:34 pm

#77 crowdedelevatorfartz on 05.20.22 at 9:32 pm
@#59 Peter from Cowtown

https://www.theglobeandmail.com/world/article-china-accuses-canada-of-political-manipulation-over-5g-ban-of-huawei/

Once again the Canadian “leadership” is many days late and millions of dollars short.

The US, Britain, Australia, New Zealand and….finally ….Canada
Has banned Huawei.

The obvious security ramifications of allowing a communist country access to all of our internet seemed to escape the Trudeau appeasement apologists.

Will our allies ever trust us while the Liberals are in power.
————————
Most of the rest of the world has no problem with Huawei.
Maybe we should stop following the US, and get over the 2 Michaels.
China is a big cheese now.
Get used to it.

#82 Stealth on 05.20.22 at 10:49 pm

Hi Garth,

Your comment about storm coming, is this in relation to just the housing market or also to the stock market?

Thanks.

Stock storm already here. It was be far more brief. – Garth

#83 Observer on 05.20.22 at 11:34 pm

#71 Observer on 05.20.22 at 8:17 pm
DELETED

^^^^^^^^^^^
Sorry Garth.

#84 45north on 05.21.22 at 12:18 am

Cottagers Stay the Hell Away

Don’t come up to cottage country you inbred southern hillbillies!

Love the Cottage

Phil Harding, Mayor of Muskoka Lakes says everything is open, please come up and shop local:
https://www.cp24.com/video?clipId=2447197

Phil Harding “come and shop local, book in advance”

#85 Observer on 05.21.22 at 12:22 am

Garth, I’d love know how you distinquish a housing correction from a housing crash.

#86 the Jaguar on 05.21.22 at 1:02 am

#61 the Jaguar on 05.20.22 at 6:50 pm
GARTH: Clean up. Isle 52.###

#52 The Regulator on 05.20.22 at 6:14 pm
DELETED####

#73 The Regulator on 05.20.22 at 8:48 pm

# 61 – The Jaguar : I knew you’d be back. And I like and respect most cats, especially cougars. No offense intended.###

++++++++++
Hello fellow blog dogs. To provide a little context to the posted sequence above, I will just advise to those of you who may have missed it, that “The Regulator’s” original post which was subsequently deleted by Garth after my ‘alert’ was a homophobic slur that insinuated that anyone who held affection for cats and advanced support and affection for them (especially on Fridays), with friendly and whimsical facts was likely someone who trolled young innocent men in bars with intent to seduce them.

I was shocked and posted my ‘warning’ to Garth. The ‘Delete” is self evident.

What this demonstrates it that the discourse here has gotten progressively more personal. Not in a positive way. One cannot express an opinion on a subject in general or whimsically about cats, (even on an ‘all pets welcome’ blog,) or on other issues or points of discussion.

Note the reply referencing ‘Cougar’, which has nothing to do with my alert to Garth, or any other post. It’s a known derogatory reference to women of a certain age.
( over 35, lol). An attempt to trigger someone. How is it relevant to my alert to Garth, and what does the poster thinks he/she knows about me? The intent to attack is clear. Someone like ‘Regulator’ is my idea of nothing. Doesn’t just hate people who are ‘fond of cats’, but likely others who feed his insecuity. Sad.

I still read this blog. Why would I not ? It’s a wonderful gift from Garth. And I love to read many of the opinions ( not always ones I share, but respect ) of many posters.

A while back I posted that I wasn’t comfortable posting anymore, ( admittedly with a brief comment about the Bank of Canada and their response to inflation).

Today’s episode demonstrates exactly why. It’s attack dog central. If only we could have private chat rooms. Fishman, DON, Damfino, NonPlused, DonG, and a few others.. And of course Captain Ross. Gone (or in the background), but never forgotten, lol. That would be ideal.

Since I am posting though, as much as he will hate it (because he hates me, lol), thank you USTABE for the book recommendation about Natalie Wood. I picked up my copy today, and it looks well researched. Looking forward to it. Some relaxing summer reading. Perfect for the beach. If summer ever arrives. Or maybe I’ll read it in Vantown end of June when I am out on good behaviour.

P.S. to Garth…re Kenney. It was the ‘smart move’ on his part. No other one to make given the circumstances. He may not be perfect, but there is no one who can fill his boots, and the ‘Brutes’ will now reveal themselves. This is an example of the approach that should be taken in the curent environment. Let them come out of the shadows. xxoo

#87 Parksville Prankster on 05.21.22 at 1:49 am

I can’t believe it’s Monkey pox season already. I still have my Ukraine decorations up.

#88 Jane24 on 05.21.22 at 3:49 am

Brother listed his 2 bed mississauga condo on Monday for 800,000. It sold the next day for 825,000. It is lovely but small. I advised a 30 day close and not to spend his winnings until it closed.

#89 Jane24 on 05.21.22 at 4:01 am

Canada may be bringing in 400,000 immigrants per year but about 300,000 previous immigrants leave Canada every year, driven out by awful winters and the high cost of living. I know this as I know many of them.

I am typing this from a lovely cafe in the south coast of italy drinking my one euro coffee and eating a one euro pastry. Then I will go home to my 150,000 euro medieval palazzo to sit in the 30 degree may sunshine. The dolce vita life is very sweet and very cheap indeed. Why would I freeze in my home town of Toronto. I am going for residency in either here or Portugal as pensioner income tax is set at 5 to 10% why would I pay Canadian living costs and taxes? All you need is one eu great-grandparent and you are in. Check it out. Am also buying a two bed flat in southern Spain for the winters. My budget is 75,000 euros. For that I want a pool as well.

#90 Furbearing on 05.21.22 at 5:02 am

You covered most of the clauses that protect a buyer, but what about the vendor? Why ask the seller to take the risk of accepting a privelaged conditional offer?

Disclosure, I wrote and supervised thousands of RE contracts in my heyday, but the “subject to Uncle Joe consulting his hernia specialist” is mythical. Purchasers must take on a legal responsibility when entering into a contract or stay home. A contract is the glue holding our civilization together, without which would be chaos. I’m never once agreed to return a deposit no matter what.

As Elon Musk said recently ” buyers dug their own graves” referring to several US markets where FOMO resulted in mass insanity. All the “back out” clauses you suggest and a deposit return is simply not going to happen. Property market values go up and down over time. If a few thousand speculators got burned, so what?

#91 TurnerNation on 05.21.22 at 6:13 am

Inflation. Haha you think our rulers will let us win one or even stay afloat in the Long Game? Bzzzt.
INFLATION will eat up these savings. And margin calls on the underwater real estate.

.Canadians are sitting on $300-billion in excess savings. What happens next is anyone’s guess (theglobeandmail.com)


— It’s all so tedious! Our amazing high taxation rate continues to pay dividends into June 2022.
But the lives we saved in the lockdowns. Guys.

.’Distressing’ surgical backlog likely to grow in Nova Scotia, says cardiologist (ca.news.yahoo.com)

—- Sooo repetitive. The Feds just extended again the domestic travel medical passport, trapping millions behind our Berlin Wall. (This is the absolute best use of our tax dollars). They are not allowed to leave the country. The problem is the non-compliant. Perhaps a stronger social credit score program is the answer.
Sure glad we won that WW2 tho!

#92 TurnerNation on 05.21.22 at 6:24 am

These man-made shortages and control over our feeding is such a bore. Zzzz.
(Remember, all famines are man-made — that is government-made — check the history books)

https://tnc.news/2022/05/20/taxpayer-funded-factory-sends-all-its-baby-formula-to-china-despite-domestic-shortage/
Taxpayer-funded factory sends all its baby formula to China despite domestic shortage

— Alllmost back to 2019 normal guys, you know they want it! Any day now.

.Canada considering smallpox vaccine for monkeypox cases, says Dr. Theresa Tam (cp24.com)

#93 604Sam on 05.21.22 at 7:12 am

Pylot looks like a good boy.

Have a great long weekend blog dogs.

#94 T Dog on 05.21.22 at 8:22 am

#89 Jane24

Tell me more. I’m on my way. Have my italian citizenship living in Toronto, just trying to get it for my wife. Where are you in Italy.

#95 T Rex and the dinosaur clique on 05.21.22 at 9:47 am

Biggest problem now is government over reach.

Can’t do anything cause the govt gets in the way.

Wanna travel? Gotta get through all that govt nonsense at the airport. Check in with the airline takes 5min. Rest of the lines are the state.

Wanna drive your car? Can’t. Govt says tax and more tax on fuel. They’re virtue signaling to the WEF.

With your freedom. They cancel your freedom to virtue signal to a bunch of rich folk.

Imagine it. Take your rights away. To kiss up to their rich friends.

We can’t live our lives anymore cause we are crushed by the state.

We live in fear of big govt.

I’m not afraid. – Garth

#96 Dharma Bum on 05.21.22 at 10:04 am

#40 Leftover

I think a lot of boomers might be in for a haircut.
—————————————————————————————————-

Well it’s about time!

Damned Hippies!

https://www.youtube.com/watch?v=JwaJMo-YGPU

#97 Sail Away on 05.21.22 at 10:13 am

#87 Parksville Prankster on 05.21.22 at 1:49 am

I can’t believe it’s Monkey pox season already. I still have my Ukraine decorations up.

———-

Haha, good one.

#98 IHCTD9 on 05.21.22 at 10:23 am

#10 I’m stupid on 05.20.22 at 4:04 pm

Sure there is a forever home… I’m in mine, small house on an almost 10000sq foot lot in a good school area. The only way I leave is in a body bag. Originally we bought the home to tear it down if we needed more space as the kids grew. After being here for a few years my wife and I changed our minds. Instead of building a larger home we’re going to keep it small and give our kids life experiences as they grow. Why burn through a million for extra space to clean, instead 20k a year for travelling to all corners of the world sounds better to us.
———

More like “I’m smart”. When the bulls are running, you stay off the streets. There’s probably nothing wrong with your current place anyway. Pay it off and enjoy the cashflow blast when done. Small and paid for is hard to beat.

We’ve camped out in the bunker complex for 21 years now, 7 years worth of that mortgage free. Cost about .05X income to live here now all-in. That’ll drop again when (if) the kids take flight. It’d be irritating as heck to ever have to shoulder a mortgage again. Just forget about these 3-5K/mo. payments that have become the norm.

The old farm house ain’t a status symbol, but life is easy living here. That beats the heck out of keeping up with the Joneses.

#99 millmech on 05.21.22 at 10:53 am

#65 Josh
Good times are just starting, buyers market for at least the next year in equities.

#100 The Regulator on 05.21.22 at 11:04 am

# 86 – The Jaguar : Mabey it was pollitically incorrect to say that. But your insinuation is off base. Older women seducing legally of age young men happens, and vice-versa. It’s human nature, and as far back as “The Graduate” is deemed acceptable in western societies. But to be labeled a Russian troll ad-finitem, for having an opposing opinion is acceptable then? You’re thin skinned (is that acceptable)?

#101 mattbg on 05.21.22 at 11:24 am

We seem to be in that real estate phase where agents have started talking about “moderating prices” and a “more balanced market”, against a market with fewer sales. Of course, it’s still a “great time to buy or sell a house”.

So, there’s a rather unreliable benchmark price, because there are a whole lot of houses not selling at all at current prices.

If I had bought earlier in the year and was due to close soon, I’d be more frustrated by the fact that there are so many more houses to choose from today, and they can be considered at a rather more leisurely pace than the boiler room environment that existed prior to April allowed.