The messenger

It was bound to happen, I guess. Worse, it’s only started.

In recent days the tone on this blog has turned nasty, angry, accusatory. “Why do you overhype the price fluctuation in housing and under hype the price fluctuation in stocks,” a pissy poster says. “Is it because you make your bread and butter on selling stock and not housing? Having balance is an art. If you buy anything overvalued and its momentum falls, yes you go into negative territory. One can’t live in a stock and one can’t even come close to the leverage play you can do with a house.”

For the record, I don’t sell stocks. Or ETFs. Or anything. I help people manage their money and their lifetime financial plans. They pay for their own assets. I guide them, craft a plan, execute it, minimize their tax and for that they pay me as an advisor. Part of almost everybody’s net worth is a house. So we integrate that. Yeah, it’s all about balance.

These days society is grossly out of balance. With $1.7 trillion in mortgage debt and extreme leverage used to goose up home values, no wonder. Debt means risk. Buying something with 10x or 20x leverage is massive risk, especially when the loan carries a variable or renewable rate. All mortgages do. And now we have a social crisis brewing as a result of insane real estate inflation.

As detailed here, we’re in the early stages of a monetary policy tightening that will last months, or longer. Not even half way there yet. Inflation had rallied everywhere and CBs globally are responding. Ironically, attacks on the Bank of Canada which weaken its public credibility will just lead to more aggressive hikes. So you can thank Pepe for making things a touch worse.

In any case, real estate is correcting quickly and significantly. The declines are far greater than the movement with financial assets, and will continue to outpace them. Just as all-in leveraged real estate investors preened and strutted as prices shot higher, they’re now staggering as we tumble down the other side of the mountain.

First, here’s the latest from the once-sizzling York Region, north of the Kingdom of 416. This is not a correction. It’s a crash. A reduction in sale prices of more than a fifth in a hundred days is a disaster. Anyone who bought in the winter with 20% or less down is wiped out. And it’s not coming back anytime soon.

Source: Gina Thanasiou

Meanwhile to the west of the Metropolis, Halton and Peel Regions are densely-populated commutersheds connected to the city by a web of highway and rail corridors. Prices in several of these communities were advancing by $10,000 a week. Now they are devaluing just as quickly.

Source: Toronto Regional Real Estate Board

Mortgage rates are rising again this week. Five-year money is set to cross the 5% mark soon, and the prime rate at the banks will be 4.2%. Variable-rate mortgages are carrying an effective rate of about 3%, to rise steadily during the second half of the year. Most people with VRMs do not see payments augment immediately, but they pay off less debt each month and face a surprise upon renewal.

Here is a thread from grizzly mortgage guy Ron Butler on what to expect:

What Happens at Renewal? First Key Concept: Amortization never changes, you signed for a 30 year amortization so at the end of the 5 year term you now have 25 years left to amortize, less if you prepaid Fixed Rates this is easy

Variable things get harder at renewal Let’s imagine you got a decent discount from Bank Prime on your Variable and got Prime less 1.05% (1.40%) last year. Let’s say Bank Prime increases to 5.20% and your rate goes to 4.15% What happens?

That is NOT negative amortization (the interest cost is NOT higher than your payments) so no Trigger Points to cause lump sums or increased payments to happen. BUT at the end of the first 5 years if the rate stayed at 4.15% you would have paid very little Principal. At renewal it’s basically the same mortgage as you started with, so the change from 30 years to 25 years at the new higher rate means the payment must go up 54%

What can you do? Maybe pay some legal fees and take out a new 30 year mortgage depending how things are at the time But rates may come down again in 5 years (never as low as they were) to allow for a lower rate offer on Renewal. But renewing later this year: No Bueno.

Butler joins this pathetic blog in stating the feds will do diddly to help people who overbought, overborrowed and will face a financing storm as equity disappears. “Likely things will just continue slumping for all 2022,” he says. “BTW, I feel VERY sorry for all the Buyers caught in this awful bind. Very sorry for the average person right now, times are tough and getting tougher But no relief for RE coming right away.”

Meanwhile mortgage guru Rob McLister is just as morose. He points out that inflation is now 253% above the 20-year average, and the CB will keep dropping the hammer. “Left unchecked, inflation gets worse, ultimately leading to severe economic consequences like a falling standard of living, crises for those on fixed incomes, mass unemployment and currency devaluation, to name a few.”

McLister also pinpoints why relatively modest rate hikes have opened up the spigot of fear and reprisal. We’re pickled in debt today. Interest rate jumps – even modest ones – sting deeper when the borrowing has been so great. As CIBC economist Benny Tal says: “Versus 1990, Canada is “93% more sensitive to Bank of Canada rate hikes today. So you can easily say that, relative to the 1980s, it’s more than double the sensitivity.”

None of this is to gloat. Or lack empathy for those folks who allowed house lust to blind them. They followed the herd. They fell to recency bias. Some sold, making windfall gains. Many are now circling the financial drain. And all through this journey a certain blog was saying be careful. Be balanced. Do not buy if it imperils your family finances. And never believe it’s different this time.

For that, no apology.

About the picture: “Despite some of the latest blog lovefests hijacking the comment section, still enjoy the discussion and advice,” writes Ed, “and appreciate your and your staffs continued hard work. These 3 friendlies belong to an acquaintance of my BIL near Port somewhere on Vancouver Island. Note the stick being gleefully shared by all.”

168 comments ↓

#1 Fake Sale on 06.07.22 at 3:44 pm

Whatever. This is like a store listing items at or above MSRP to advertise a 20% off SALE!

Real Estate needs to drop 55% to 60% to make sense vs. renting.

These drops are likely to only solidify March 2020 prices as bottom/sale/good, when they were already detached from average incomes in a big way years before March 2020, maybe even a decade back.

#2 crowdedelevatorfartz on 06.07.22 at 3:48 pm

Port Alberni, Port Refrew, Port McNeil?
Three dogs. Three Ports.

#3 Doug in London on 06.07.22 at 3:49 pm

This is not a correction. It’s a crash.
—————————————————-
Or you can call a reversion to something that has a vague resemblance to sanity. It’s about time.

#4 MC on 06.07.22 at 3:51 pm

Garth you did warn everyone over and over, and if they’d been paying attention, they’d too follow the B&D approach.

You’ve changed my family’s finances for the better and we don’t pay you a nickel. Its all from following this blog.

The only thing I can blame you for is reaching early retirement!

THX!

#5 When the Whip Comes Down on 06.07.22 at 3:53 pm

Benny also says BOC might not follow the fed in number of hikes because average consumer debt for Canadians is higher than that for Americans. As such canada doesn’t need to bump rates as high as market thinks to reign in inflation. His thoughts anyway.

#6 Faron on 06.07.22 at 3:53 pm

Inflation is a major societal problem that will produce conditions that test democracy. Conditions of unaffordability will trigger social unrest and populist uprising (PP for example). Fact and nuance will be ignored in favour of strong man politics if not outright authoritarianism. The 3 decades of deflationary pressures that came out of the tech boom and falling rates allowed the kind of social complacency that prevented mass protest at wars, poor employment conditions, racial inequality etc. That complacency is as over as the $1.5 mil slanty semi. I would wager that Putin was clever enough to see that his war would spike oil prices and further foment western unrest. His primary long goal has been to upset the stable liberal world order that has been in place since WWII. Tucker Carlson is there to stir the pot. Trying times.

#7 domain on 06.07.22 at 3:56 pm

Cycles repeat, and excursions revert to the mean.

No need for Volker-era rate hikes to crack the skulls of the over-indebted when you are starting from 1.4%, it is all relative to the starting point of the loan/commitment.

Very interesting perfect storm we are facing, cost of everything increasing dramatically with a rapid decline in the economy (stagflationary process) on the backs of a decade of debt at the lowest rates possible, what could possibly go wrong? Cue asteroid or solar micro-nova.

#8 TurnerNation on 06.07.22 at 3:57 pm

crowededelevator sez gas is going to $3. He might be right.
No worry you can travel using that extensive network of electric charging stations! You know…that network. Those stations. Umm yeah.
Comrade you will need a Karbon Permit in order to leave your UN Smart City. You think I am joking but this is set to worsen. By design.

Control over our Movements/Travel, Feeding and Breeding.

—- Life in the Former First World Countries. Did I not state that 2020-21 was the training period?
“Essential” vs. “Non Essential” goods shopping:

https://twitter.com/adamscrabble/status/1533802110491537410
” In Germany supermarket chain Rewe warns customers that you can take only one “critical” product – such as pasta and flour, per customer.””



We pay high taxes for our World Class health care system. It’s gold plated! Just like the DB pensions of all the healthcare administrators taking up space.
Next time call a taxi.

“AHS said emergency medical services was challenged with “extremely high volume” at the time of the incident, “meaning there were no ambulances immediately available.”
“EMS responded to this call in approximately 30 minutes,” a spokesperson said in a statement to CBC News. “This is longer than we expect and is outside of our target response times.
Paramedics took the woman to hospital in life-threatening condition, but police say she died a short time later, adding her identity is not being released at this time.”
https://www.cbc.ca/news/canada/calgary/calgary-fatal-dog-attack-1.6479316

#9 red falcon on 06.07.22 at 4:00 pm

sheeple will be sheeple… whether they be buying real estate at the high, or going to get shaved. They deserve it if they don’t listen or have any self-awareness.

Always Uppah you say? not RE prices, but Interest rates!! ahhaha. the whole lot deserves it!

smart cat
meow! =)

#10 Soviet Capitalist on 06.07.22 at 4:01 pm

I feel empathy for those who bought a home because they needed it for their family.
I feel no empathy for those who speculated with 10-20 mortgages and will now be asking the taxpayers to bail them out.

#11 cuke and tomato picker on 06.07.22 at 4:01 pm

Is it not about time that those who are conservative
with their money and have a higher than normal amount
of their money in GICS for security get a higher rate of return. We hope that the higher borrowing rates do not lead to families suffering and family breakdown. Also
higher gas prices in the United States and United
Kingdom were not caused by JUSTIN TRUDEAU.

#12 john on 06.07.22 at 4:02 pm

Keep up the good work Garth!

#13 millmech on 06.07.22 at 4:02 pm

Do not worry it is just a gully!

#14 "NUTS!" on 06.07.22 at 4:03 pm

For years I’ve heard the justifications people use to explain away the value of over-priced RE, particularly on the West Coast.

“Everyone wants to live in Vancouver, it’s the best place in the world”
While it’s true its a nice city, anyone who has even travelled a little can tell you there are many nice places in the world. We don’t have the monopoly on nice, there are many many options.

“We’re running out of land, therefore prices go up”
Again, anyone with an ounce of intelligence will tell you we have an insane supply of undeveloped land. When the pilot tells you you’re on final approach to YVR, have a look out the window, lots of green. Decades worth of supply.

#15 Adam on 06.07.22 at 4:04 pm

Thanks for addressing this bias Garth. Bias is part of life, and anyone who expects otherwise can f-off. Nobody, and I mean NOBODY in this world is 100% unbiased and impartial. Especially in these days. I think Garth does a good job trying to balance his bias and probably better than 99% of the other people could do on here. That being said, Garth may say he doesn’t sell stocks or ETF’s and that is true, but my question would be, is the advisor fee a fixed fee, or is it based on assets held? Most advisors charge a fee based on assets held (a percentage). So let’s say that an advisor holds $1 billion in assets and they collect 1%. That means they would collect $10 million a year in fees. Now, if the market were to drop 50%, that means their holdings would go to $500m and their fees would drop to $5m. But even worse… as the market drops, people would likely withdraw their money and move it to safer haven. So obviously it’s natural for Garth not to want stocks to drop. I will say, it presents an interesting conundrum – I don’t see too many analysts (or anyone?) who predicts a reckoning in the housing market but thinks stocks will be super fine and dandy. Both shiller’s PE ratio and Warren Buffet’s market measuring stick tell us that stocks are grossly overvalued, just like everything. So when Garth tells me that housing is going to crash, I am happy about that. But I wish he would get on the stock market crash train too, but I understand why he doesn’t. If Garth posted here that stocks were going to crash, his clients would call him up and say “Hey Garth, you just said stocks are headed down, so withdraw my funds”. This is a private blog though, and no one forces you people to read it. If you don’t like the small amount of bias here, then go find an unbiased news source or blog… oh wait, they don’t exist. Welcome to the world.

#16 wallflower on 06.07.22 at 4:06 pm

Rearview mirror here we come.
Remember Fort McMurray? Of course you do!
Six years ago NOTHING below $500K.
NO-THING.
Today 275+ MLS listings $500K and below.
And stuff below $100K.
As I recall, a shi**y trailer could not be picked up for $100K back in those days… soooo this past decade.

#17 Facts Matter on 06.07.22 at 4:07 pm

People have not been listening for many years and now they are paying the price.

https://dailynorthwestern.com/2019/05/03/opinion/thuillier-history-is-repeating-itself-right-before-our-eyes/#:~:text=History%20has%20a%20tendency%20to,flows%20based%20on%20the%20generations.

#18 Pain_Trade on 06.07.22 at 4:08 pm

Loved SeeB’s comments (#12 06.06.22) and wallflower (22# 06.06) you are so correct to point out the Canadian RE fraud and ponzi scheme allowed to perpetuate within the FIRE economy. Our governments have become inept at doing anything for the average CDN anymore because they have been totally captured by the banking system which is of course directly tied to the BoC puppeteers.
If anyone has traveled outside Canada to see how certain real estate markets operate in those countries, you will quickly have your eyes opened to see how heavily the stats are manipulated and why it is done. As long as the public will feel that they are ‘paper’ rich, the ponzi will continue. The moment the wealth effect evaporates due to rising rates and overall valuations crater (which is a big IF) then possibly there will be a political will supporting public opinion that the banking system in Canada should work for all Canadians equally and not just the 0.1% That implies redefining the BoC mandate and getting rid of the resident swamp creatures within it. Alas, I may still be dreaming because from what I am hearing and reading, it seems the banks are still at it trying desperately to control any effect on peoples’ spending habits due to these rising rates. When you get not 1, but 2 misdirected emails landing in your inbox that has all the personal loan details of certain clients that are needing refinancing, you know those branch managers are scrambling to contain the effects of the Tiffster as well as following his marching orders on how they will engineer a soft landing.
Anyone else get similar emails? Possibly due to a typo because either their first or last names are similar to yours and the manager simply did not pay attention when the email drop down list on their laptop was displayed. This was not spam, as I followed up with the branch managers to let them know of the wrong destinator.
So many good commentors yesterday and I salute you as well as GT for your posts. GT brings up so many valid points in general but apart from what you call the bunnypatch corner of the RE market, I believe you are not familiar with other areas that 1) does not have land available for building in the quadrillions of sq km, 2) huge bucks pouring from the TAR sands region into properties in BC or elsewhere, 3) As someone posted previously on your blog but I’ve forgotten the name – you’ve been calling for this RE crash and moving money out of RE and into financials for the past decade or so? This is simply an observation and not a quip but there is something to say about those marco economics commentators all over social media using the old axiom of publishing 8 financial news letters and hope at least 25% of those will come to fruition to prove their worth as a ‘Guru’ in economics?

#19 Happy Housing Crash Everyone! on 06.07.22 at 4:10 pm

Better take your Audis to the carwash, Shysters!

Sell them fast or you’ll be eating at the food bank next month!

#20 Habitt on 06.07.22 at 4:11 pm

Thanks again Mr. Turner. Sorry you have to put up with the malcontents.

#21 Calgary on 06.07.22 at 4:11 pm

The local Big Four banks likely to hike mortgage rates again.

#22 Calgary on 06.07.22 at 4:17 pm

Will the new homeowners leave the house keys on the kitchen granite tops for the banks to collect?

#23 Søren Angst on 06.07.22 at 4:20 pm

No Cdn RE skin in the game here.

The first rate increase was in mid-April and here we are, 2 months later, with large drops in price.

How can that even be with a 1% increase?

It really is hard to believe, but there it is.

———————–

Some GOOD news.

Cdn trade balance in Apr +$1.5B. Imports up by +1.5%.

Italia is one of your Top 10 trading partners Canada, who knew? In Mar–>Apr you are buying more from Italia* and Italia is buying less from you.

https://www150.statcan.gc.ca/n1/daily-quotidien/220607/t001a-eng.htm

Canada is mostly a nation of hewers and drawers in $ terms, but getting better I think with finished products.

Top 5 Exports in Apr (Total = $64.3B):

Energy products $17.964B = 28% of Total Export $
Consumer goods $7.529
Metal and non-metallic mineral products $7.11
Motor vehicles and parts $7.069
Forestry products and building and packaging materials $5.1

https://www150.statcan.gc.ca/n1/daily-quotidien/220607/t002a-eng.htm

———————

* Not a clue what your buying from Il Bel Paese Canada…but keep doing it. As always, Italia needs the cash and we are grateful to you Canada.

#24 Leon Umsk on 06.07.22 at 4:21 pm

The housing issue has been apparent for a very long time. We have done this to ourselves with some misguided intervention from every colour of government that helped it along. Doesn’t make it easier for the people who will be hurt but it’s true. It’s been true ever since we got away from the age old 4-5 times income for a house.
One that I don’t get though is gas. Oil was $126 a barrel in 2008 and gas was 1.40 a liter now $120 and 2.15 a liter, I don’t understand that. Can you explain this?
By the way I think you are spelling Pepe wrong, that’s the frog. Pretty sure this guy is Peepee with the poopoo from the bull even though he seems much like those who embraced the cartoon frog.

#25 Not a Bank on 06.07.22 at 4:21 pm

Seeing a lot of price cuts and relistings in bunnypatch. However prices are still +50% higher than early 2020, even with higher mortgage rates.
This crash might only be starting.

#26 Jay on 06.07.22 at 4:27 pm

i dont get how raising interest rates will stop inflation when a lot of the price increases in food, goods and cost of living have to do with extreme gas price increases.

Everything we buy is transported to us on a truck, therefore everyone is increasing costs to do this. I dont think they care what some interest rate is at the time when they calculate shipping costs.

#27 Chris L. on 06.07.22 at 4:28 pm

I’m not sad. The writing was on the wall – about oil stocks. Get in the market now. Prices are still 50% off their peaks, and we’re in for 5 years of oil bull market. Hurry, the train is ready to leave the station. And I’m not complaining. Chu, chu!!!

#28 Mike in Cowtown on 06.07.22 at 4:31 pm

Here is a surprisingly good video talking about the Canadian RE market by a realtor:

https://youtu.be/RQwBxMo0TS8

#29 Meh on 06.07.22 at 4:31 pm

Man alive the prices are still obscene.

What is wrong with this effing country?

#30 Søren Angst on 06.07.22 at 4:32 pm

Inflation. Rising Rates. High debt load.

beget

Cash flow problems. Psyche of feeling less wealthy as RE values go down.

I’m going to be keep my eyes glued on Retail Trade (unadjusted, not seasonally adjusted).

In Mar 2022 Retail Trade was 37% of GDP. Consumer Spending in Apr was 61.5% of GDP.

———

See if Cdns dig their feet in on spending like they normally do in Jan-Feb when XMas bills come a calling.

That will tell the story if Cdns really are having problems making ends meet.

#31 Brock on 06.07.22 at 4:36 pm

You can still get a pretty penny for your house provided you take a little haircut and sell quick. I actually can’t comprehend those that have a lot of bills to pay, sitting in a small, sad, dirty 1970’s era shack holding out for the last penny. It’s like having a winning lottery ticket and not cashing in. CRAZY.

#32 Doug t on 06.07.22 at 4:37 pm

SERENITY NOW

#33 Doug t on 06.07.22 at 4:40 pm

#11 cuke and tomato

Do you have a split personality? Siamese Twin?Alter ego?

#34 Sail Away on 06.07.22 at 4:43 pm

As mentioned yesterday, my companies are jacking rates and jacking salaries to settle into the new money supply equilibrium. Happy employees and not a murmur from clients so far.

Most of our staff in their 20s own houses with mortgage, most 40+ own outright. RE here is high but not insane and salaries decent.

#35 Brett in Calgary on 06.07.22 at 4:44 pm

Turning a home into a commodity was one of the dirtiest tricks of the past 30 years. The second dirtiest was turning that “investment” into an ATM with HELOCs.

I have been very uncool for a long time (i.e. renter) and despite folks’ naivety I don’t feel sorry for them at all. If one makes their bed…

#36 Calgary on 06.07.22 at 4:47 pm

https://www.theglobeandmail.com/real-estate/the-market/remember-when-what-have-we-learned-from-80s-interest-rates/article24398735/

Remember the 80s?

#37 wallflower on 06.07.22 at 4:48 pm

#22 Calgary on 06.07.22 at 4:17 pm
Will the new homeowners leave the house keys on the kitchen granite tops for the banks to collect?

—-
I doubt it because most of them are stuck in two-hour traffic they were not anticipating with RTW, burning up their only free cash on massive gas price increases.
They will probably bail with the keys!

#38 Caffeine Monkey on 06.07.22 at 4:51 pm

The currently widespread coping mechanism among the RE bulls is that yes, this is a pullback in prices, but it’s going to be a *short* pullback. After maybe a year, the BoC will probably retreat on its monetary policy, or bargain hunters will jump in, or immigrants or money launderers will, and real estate will resume its inevitable march upward.

Fat chance. This is just the beginning of the cycle. Canada isn’t special, my friends. Though spectacular in size, this is just an ordinary bubble driven by ordinary factors: cheap money, subprime lending, and mortgage fraud. Odds are that it will take two decades for prices to return to the peak of earlier this year. Strap yourselves in and load up on the anti-depressants.

#39 yvr_lurker on 06.07.22 at 4:51 pm

However, for those who are not too near the cliff it probably makes little difference if they locked in for 5 years and if the valuation has gone down by 20% in the past few months based on recent sales. If they don’t have to sell, they don’t have to absorb the paper loss. It is primarily only those who were near the cliff edge and who HAVE to sell who will be hit the most. I can’t see prices falling by 20–30% in prime neighbourhoods in YVR (near the downtown core) that will make it more affordable. Unfortunate for sure, but immigration is ramping up to YVR and Toronto from HK (this year it is expected that 3 times the number that settled in Canada in 2020), and it will continue to ramp up

https://www.immigration.ca/hong-kong-immigrating-to-canada-in-record-numbers

Many of these people have loads of $$$ from their own insane housing prices…

How many times have we heard the same, tired, discredited story? – Garth

#40 Nick on 06.07.22 at 4:53 pm

.
Lower Brainland prices up >40%in last 3 years. Now they are down 5%….peanuts.
They will be up soon and continue their trend of doubling every 6 years or so.

Nobody beats lower Brainland geniuses.

Buy buy!!

#41 dutch4505 on 06.07.22 at 4:53 pm

Ouch…losing so much equity in a few months. Painful. Hidden is the secondary pain of family members who used HELOCs or savings to assist in the downpayment of the overpriced homes. How are you going to pay mom or dad back when your equity suddenly disappears.

If for example, you use 10% of Canadian homeowners in serious trouble you can probably double it for all the associated pain.

In the long run, it will work out. (10 years?) At least young families will be able to buy housing at reasonable prices based on income.

#42 Søren Angst on 06.07.22 at 4:59 pm

Much to my surprise, Consumer Spending in Canada is higher than quoted by online sources.

Went to StatCan for the source data.

Mar 2022 GDP = $2,045,544,000,000
1st Qtr Consumer Spending = $353,057,000,000
Annualized = $1,412,228,000,000
% of GDP = 69%

Looked at 2021 to compare since above Qtrly and Annualized, here we have the whole year:

GDP = $2,018,388,000,000 (Dec. 2021)
Consumer Spending = $1,322,691,000,000
% of GDP = 65.5%

GDP
https://www150.statcan.gc.ca/t1/tbl1/en/cv.action?pid=3610043401

Consumer Spending
https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3610012401

—————–

Surprise. Surprise.

2022 so far is higher than 2021. Post Pandemic Euphoric spending? About as much as the Americans in terms of % of GDP (1st Qtr 2022).

This is GOOD news to me. Cdns still spending.

#43 DON on 06.07.22 at 5:00 pm

#2 crowdedelevatorfartz on 06.07.22 at 3:48 pm
Port Alberni, Port Refrew, Port McNeil?
Three dogs. Three Ports.

*******
Also Port Alice, Port Hardy.

Judging by the picture and they are standing on sand I will go with Port Renfrew area.

#44 Saved by the bell on 06.07.22 at 5:02 pm

Thanks everyone.

Based on the insightful information I gleaned from this blog over the past few days, i listed my home myself today. Its listed at about 27% less than it was previously valued at a few months back, but heck, that’s a lot better than the 47% I would lose if I sold later. Just praying it goes soon. Because I am trying to sell it myself, I might not lose too much if it goes at this price.

Once it sells, i will be so relieved. Here’s hoping. Never again.

Thanks again for all that you do.

#45 kommykim on 06.07.22 at 5:04 pm

Today I got an email from my bank (The Green One) that went like this:

“You’re pre-approved for Pay As You
Go Overdraft Protection Service – $5 per use
Plus 21% interest per year on overdrawn amount. ”

21% !!!! Hahaha! Really? Why would anyone sign up for that? It’s worse, or as bad as, a credit card.

#46 WhiteWasher on 06.07.22 at 5:10 pm

#39 yvr_lurker on 06.07.22 at 4:51 pm
However, for those who are not too near the cliff it probably makes little difference if they locked in for 5 years and if the valuation has gone down by 20% in the past few months based on recent sales. If they don’t have to sell, they don’t have to absorb the paper loss. It is primarily only those who were near the cliff edge and who HAVE to sell who will be hit the most. I can’t see prices falling by 20–30% in prime neighbourhoods in YVR (near the downtown core) that will make it more affordable. Unfortunate for sure, but immigration is ramping up to YVR and Toronto from HK (this year it is expected that 3 times the number that settled in Canada in 2020), and it will continue to ramp up

https://www.immigration.ca/hong-kong-immigrating-to-canada-in-record-numbers

Many of these people have loads of $$$ from their own insane housing prices…

How many times have we heard the same, tired, discredited story? – Garth

#######

Obviously not enough …since like, everyone that ever owned a house was always in a positive equity position. Too funny how you pick and choose how you “swing” your story.

#47 DON on 06.07.22 at 5:12 pm

#34 Sail Away on 06.07.22

RE here is high but not insane and salaries decent.

*********

What is the average income for folks in Nanaimo?

#48 Søren Angst on 06.07.22 at 5:13 pm

#40 Nick

I know you’re kidding around, well, at least I hope you are.

But that Province always makes my head shake.

Pre-Covid they figured the Salmon, Orcas, Forest Primeval = Norse Gods of Valhalla that they had cooked into their minds was going to render them harmless from Covid.

Well, it didn’t.

In fact they got caught “Cooking the Covid books” to make things look better so Horgan could get re-elected. Then after, the truth came out. No Norse Gods of Valhalla for you BC. Mother Nature saw to that.

So here we go again except this time with RE prices vs. rising rates “immunity”. *

YVR Norse Gods of Valhalla.

* Sorry BC, no Pfizer or Moderna VAX for BoC rate immunity for you. Mr. Market will see to that.

—————–

Yesterday someone Commented that the very rich, if sea levels rise, have the cash to buy something higher above sea level.

Well apparently, not all of them (Shaughnessy YVR):

https://twitter.com/mortimer_1/status/1533954373151182849

#49 DON on 06.07.22 at 5:14 pm

#39 yvr_lurker on 06.07.22 at 4:51 pm
However, for those who are not too near the cliff it probably makes little difference if they locked in for 5 years and if the valuation has gone down by 20% in the past few months based on recent sales. If they don’t have to sell, they don’t have to absorb the paper loss. It is primarily only those who were near the cliff edge and who HAVE to sell who will be hit the most. I can’t see prices falling by 20–30% in prime neighbourhoods in YVR (near the downtown core) that will make it more affordable. Unfortunate for sure, but immigration is ramping up to YVR and Toronto from HK (this year it is expected that 3 times the number that settled in Canada in 2020), and it will continue to ramp up

https://www.immigration.ca/hong-kong-immigrating-to-canada-in-record-numbers

Many of these people have loads of $$$ from their own insane housing prices…

********
House prices in China and Australia are also on the decline.

#50 Adam's apple on 06.07.22 at 5:17 pm

#15 Adam on 06.07.22 at 4:04 pm

What Adam said …. too funny!

#51 Calgary Rip Off on 06.07.22 at 5:23 pm

Dont worry about people criticizing. You are running a blog and dealing with the general public, an ominous task.

At my work it looks like 5 days before the iodine contrast runs out. Management at AHS has no plan, and they shouldve known about the shortage since March. This is only one unit, and as usual, the managers are more concerned about looking the part than actually engaging and formulating plans. And the workers dont dare say anything for fear of retribution.

Also in Calgary, the EMT situation is dire, a woman died on sunday after being mauled by 3 pitbulls and not getting services.

As a patient myself waiting for care, I experienced 5 months of silence from the Rockyview Hospital. Fortunately I know body systems and I figured out what was going on in between zoom calls from the physician at weird times.

What I have learned is to delete social media and be very selective as to what people I expose myself to. I want to operate with a clear mind, an increasingly difficult task as people are angry and on the attack, over petty things.

My wife and I also live in fear over the possibility of fires in Calgary, as the houses are too close together.

The key thing I have learned is to endure continual physical and mental discomfort and to keep my health well preserved because the medical system and human care has shortcomings.

Keep on with your action packed blog Garth.

#52 Søren Angst on 06.07.22 at 5:25 pm

#46 WhiteWasher

Reading the quoted article:

1. Last year, Canada welcomed 2,295 new permanent residents from Hong Kong.

2. Refugees and Citizenship Canada (IRCC) shows 555 Hong Kongers became new permanent residents of Canada in the first two months of this year.

3. That puts Canada on track to receive 3,330 new permanent residents from Hong Kong this year.

——————-

A Tsunami of Chinese immigrants? How wealthy each is, no one knows.

On a non-seasonally adjusted basis, new listings amounted to 91,559 last month, down 10.5 per cent from 102,294 in April 2022.

-CREA, May 16, 2022

#53 yvr_lurker on 06.07.22 at 5:26 pm

How many times have we heard the same, tired, discredited story? – Garth

—–
Discredited in your eyes, but not for important researchers like Andy Yan who collected and analyze the very limited data (owing to the fact that the BC liberals refused to track who the true owners were) largely free of bias that his position at SFU allows him.
It is clear that largely it was locals escaping the city who drove up prices in what you would call bunnypatch, and where the large declines will now be absorbed. However, you have never commented once on Andy’s important work highlighting the influence of international money on housing prices in urban cores, where the declines will likely be rather little.

https://vancouversun.com/opinion/columnists/douglas-todd-fearless-housing-researcher-andy-yan-praised-by-david-eby

or

https://www.theglobeandmail.com/real-estate/vancouver/article-housing-data-immigration-property-ownership/

or

https://vancouversun.com/opinion/andy-yan-making-room-for-whom

There will likely be little long-term declines in housing in the inner cores of our major cities as the system is not closed to international purchasers as yet.

It will be interesting to read in detail the Cullen report when it is released by Eby. However, I can’t see you being interested in even browsing through the conclusions

Classic straw man arguments. Prices are set by the majority and 96% of buyers are locals. – Garth

#54 Calgary on 06.07.22 at 5:27 pm

https://finance.yahoo.com/news/lumber-prices-falling-could-prices-170631972.html

Lumber and RE doing the bungee jump.

#55 JacqueShellacque on 06.07.22 at 5:28 pm

Agreed #6 Faron on the possible repercussions of inflation. It’s not well appreciated by the general public the massive redistribution of wealth that it entails – from the schlubs to the government bureaucracy. Reaction will be brutal as people who’ve never really thought about the future before realize it’s been spent. Look for education, health, and transportation shutdowns in Ontario over the next few years as those workers look for theirs. It’ll get ugly, it may already be.

#56 Squire on 06.07.22 at 5:29 pm

Yikes ! I’ll say again, Yikes.
One can almost taste the stress in the air.

#57 Linda on 06.07.22 at 5:32 pm

Happy pups, so pretty…..:)

Garth, unfortunately those feeling the pain are going to lash out, especially towards anyone who points out reality vs. wishful thoughts. For not a few, their self image of being a rock star ‘winner’ in the RE sweepstakes – you too can be rich & envied by all your friends! – is going to make the reality show currently playing an extremely bitter pill to swallow. The blame game begins…..

#58 BB on 06.07.22 at 5:33 pm

Garth,

Could you do a post for us avid readers that will be facing mortgage renewal next year and discuss our options?

My mortgage is due July 2023 and expecting an increase beyond my current rate of 3.34% (I missed the ultra low interest rates -> tried to capitalize on them last summer but fees out weighed the benefits).
When renewing mortgage rates should we:
1) Break our mortgage early and lock in at todays rates (thinking they will be 1-2% higher next summer)
2) Brace for the storm at take whatever fixed rate is available in a year. (I only owe $180k over 15 years so its manageable)
3)Sign a variable mortgage next summer in hopes rates go down
4)Decrease amortization period and pay more principle (If interest rates are 6% next year and it may be better to pay down the mortgage then invest and only get 7%. Paying down a mortgage is a guaranteed win)

#59 Reality Bites on 06.07.22 at 5:35 pm

This is why you don’t buy real estate depending on low, very low, ultra low interest rates. It is a 25+ years build up by central banks and governments to punish savers and reward real estate, debt junkies. This was all planned and coordinated for decades. Canadians used to saved up to 16% or higher of their income back in the 1990’s. Now, all they think is buy real estate, borrow on it, keep doing it over and over and they will get rich. It never works out that way for 90% of the people. I have no sympathy for those that believe interest rates could be 1.2% for their mortgage and it would last the next 20 more years minimum. Stop and think hard before you do anything Canadians. This is especially true with going into debt with hundreds of thousands of dollars or millions.

#60 X on 06.07.22 at 5:36 pm

I do find it a little comical for the places that have sat for months and haven’t dropped their prices. The RE ship has set sail. If you don’t want to sell, then pull the listing, that’s fine, but some that are still trying to get February prices are in lala land.

Can’t imagine what the next 4 months of rate increases are going to do.

Honestly a 20% reduction is eventually likely to occur in the big cities, more in the burbs for sure.

#61 45north on 06.07.22 at 5:37 pm

First, here’s the latest from the once-sizzling York Region, north of the Kingdom of 416. This is not a correction. It’s a crash. A reduction in sale prices of more than a fifth in a hundred days is a disaster. Anyone who bought in the winter with 20% or less down is wiped out. And it’s not coming back anytime soon.

It hasn’t hit yet. You have a whole industry that’s going to soft-peddle this. Another three months, and there’s going to be panic. Total full-on panic.

#62 Joe on 06.07.22 at 5:39 pm

Can you post the same real estate chart but for a 80/20 balanced portfolio with the same values as the average home but invested in a portfolio? For example $2,000,000 portfolio may also have dropped $300,000 but at least the home you can still live in. Gives a lot more context.

It’s not a race or a contest, and financial portfolios normally carry no leverage, and pay income. So no valid comparison is possible. People should strive to have both a roof and liquid wealth. – Garth

#63 jess on 06.07.22 at 5:39 pm

i would like to add how much was paid by lobbying on top of all the rest of the shite

Tenaris, a Luxembourg-based global manufacturer and supplier of steel pipe products to pay $78 million to settle charges related to Brazilian bribery scheme
FOR IMMEDIATE RELEASE
2022-98

Washington D.C., June 2, 2022
Infinity Q Founder Accused of $1B Valuation Fraud
https://www.investorlawyers.com › blog › infinity-q-ca…
Mar 14, 2022 — James Velissaris, the founder of Infinity Q Capital Management, is accused of overvaluing assets in a $1B valuation fraud.

On 8 March 2022, the European Court of Justice ruled in its case C-213/19 (European Commission v United Kingdom of Great Britain and Northern Ireland) in favour of OLAF’s investigative approach in combatting a customs undervaluation fraud worth billions of euro.

OLAF concluded a string of investigations between 2017 and 2019 concerning the import of large quantities of textiles and footwear from China into the EU. OLAF found that by declaring falsely low values for the imports, fraudsters had managed to evade very large amounts of customs duties over the years. Fraudsters had identified and targeted certain entry points into the EU (“the weakest link”) where abnormally low values of customs declarations were not contested.

https://www.bloomberg.com/news/features/2022-02-10/singapore-elites-shaken-by-1-1b-massive-nickel-trading-scandal
By Matt Robinson and Tom SchoenbergBloomberg
Published On 29 Sep 202029 Sep 2020

JPMorgan Chase & Co. admitted wrongdoing and agreed to pay more than $920 million to resolve U.S. authorities’ claims of market manipulation involving two of the bank’s trading desks, the largest sanction ever tied to the illegal practice known as spoofing.

Over eight years, 15 traders at the biggest U.S. bank caused losses of more than $300 million to other participants in precious metals and Treasury markets, according to court filings on Tuesday.
World spends $1.8tn a year on subsidies that harm environment, study finds

glencore commodity trading $1.186 billion,

The Commodity Futures Trading Commission today issued an order filing and settling charges against Glencore International A.G. of Switzerland, Glencore Ltd. of New York, and Chemoil Corporation of New York (collectively, Glencore), an energy and commodities trading firm, for manipulative and deceptive conduct. The conduct, which spanned from least 2007 to 2018, involved manipulation and foreign corruption in the U.S. and global oil markets, including manipulation or attempted manipulation of four U.S. based S&P Global Platts physical oil benchmarks and related futures and swaps. Glencore is required to pay a total of $1.186 billion, which consists of the highest civil monetary penalty ($865,630,784) and highest disgorgement amount ($320,715,066) in any CFTC case.

The CFTC’s order finds that Glencore’s manipulative and fraudulent conduct—including conduct relating to foreign corruption—defrauded its counterparties, harmed other market participants, and undermined the integrity of the U.S. and global physical and derivatives oil markets. Platts physical oil benchmarks, including those that were the subject of Glencore’s manipulative conduct, serve as price benchmarks for end-users and market participants, and are incorporated as reference prices for the settlement of numerous derivatives.

https://www.cftc.gov/PressRoom/PressReleases/8534-22
https://www.jdsupra.com/legalnews/glencore-s-commodity-trading-fraud-2312231/

Fraud seen as major threat to commodity trade finance
Contributor
Nigel Hunt Reuters
Published
Jun 8, 2021 7:19AM EDT

https://www.nasdaq.com/articles/fraud-seen-as-major-threat-to-commodity-trade-finance-2021-06-08

https://www.justice.gov/criminal-fraud/commodities-fraud

july 14th 2008 WTI ~145

Violation Tracker Parent Company Summary
Parent Company Name: Marathon Petroleum

Headquartered in: Ohio
Major Industry: oil and gas
Specific Industry: oil & gas
Penalty total since 2000:
$1,500,896,702
Number of records:
322

Parent Company Name:
Shell PLC

Headquartered in: United Kingdom
Major Industry: oil and gas
Specific Industry: oil & gas
Penalty total since 2000: $1,303,112,499
Number of records:
430

https://violationtracker.goodjobsfirst.org/prog.php?major_industry_sum=oil+and+gas

https://subsidytracker.goodjobsfirst.org/subsidy-tracker/tx-exxon-mobil-and-saudi-basic-industries-c
Oct 6, 2021 — The fossil fuel industry benefits from subsidies of $11m every minute, according to analysis by the International Monetary Fund.

#64 Sail Away on 06.07.22 at 5:42 pm

#47 DON on 06.07.22 at 5:12 pm
#34 Sail Away on 06.07.22

RE here is high but not insane and salaries decent.

——–

What is the average income for folks in Nanaimo?

——–

In private sector engineering, accounting for recent inflationary bump, an engineer with 10 years experience should have total compensation $120-150k. New grads $65-70k.

Public sector will be a bit less, but with a fine benefits plan.

Not sure about other sectors.

#65 Reality check on 06.07.22 at 5:43 pm

Meanwhile back in Oak Bay (Victoria) people are still reaching. A few house in my area have hit MLS recently. Nice mid sized older homes with ~1500 sq ft above ground with finished basements in the $2 million range.

At 4% mortgage $ 2 million cost about $100,000/year. That means somebody in the family needs to be making $150,000 per tax just to cover the mortgage.

And there are tens of thousands of homes “valued” at $2 million in Victoria now. Are there really that many people out there that can afford these homes as they come to market over the next few years?

I know the “answer” is that Canada’s mass of immigrants are going to keep houses increase in value. But what immigrants can walk into a $100k a year mortgage? Are all our immigrants going to be Canadian certified doctors, accountants and engineers? Certainly not the immigrants I know.

#66 Joey on 06.07.22 at 5:44 pm

Garth you always look at stocks over time even with crashes go up over time so think long term. Why don’t you suggest the same for homes? Canadians seem to be able to withstand the price decreases so far and are in good financial shape for the most part so they can weather the storm and eventually ling term home prices will continue to rise again creating equity tax free wealth. Why not put that positive longer term spin on res estate like you do stocks and bonds and markets in general? Why the negative spin – households seem fine so far. No defaults.

Good luck with your one-asset strategy. Not my choice. – Garth

#67 Jerry on 06.07.22 at 5:46 pm

Justin Trudeau and his Liberal Party’s policies have created even more inflation, taxes and depressed economic conditions. The bottom line is he made the problem much worse. He is a real economic destroyer. GIC rates need to go back to his teacher Jean Chretien days got in power, 1993, 11% to 12%. Pump it up!

The economy is not depressed and the feds are not responsible for $120 oil. Maybe you should save some blame for Putin and all the people who snorfled debt, causing real estate inflation. BTW, 11% GICs ain’t coming back. – Garth

#68 UCC on 06.07.22 at 5:49 pm

#24 Leon Umsk on 06.07.22 at 4:21 pm
One that I don’t get though is gas. Oil was $126 a barrel in 2008 and gas was 1.40 a liter now $120 and 2.15 a liter, I don’t understand that. Can you explain this?

Oh I don’t know, Liberal carbon tax?

#69 Reality is stark on 06.07.22 at 5:49 pm

And some on this blog were more succinct, “Do not buy during this period of real estate insanity period”.
It was nothing more than a government induced sucker job.
They goosed assets that they will have an easy time taxing in the years to come.
They barely improved infrastructure but outrageously overpaid public sector workers.
You are the ultimate sucker for their spending profligacy.
When a government allows for insane debt to GDP ratios they are effectively stealing.
As far as I am concerned it is as close to criminal behaviour as it gets as they reward their gold plated pension friends while they hold your head in the toilet.
That’s about as nice as I can put it.

#70 Bezengy on 06.07.22 at 5:50 pm

Yes the kids are in deep, and I truly feel for them, and no, it’s not all their fault, and there is no reason to gloat about someone else’s misery. I blame Justin Trudeau for much of their pain. When the pandemic started I expected him to clearly state that we were going to lose twenty five percent of our GDP, and things were about to get tough. He could have provided basic necessary help for those who needed it most, and we all could have hunkered down for a couple of years, and now we could be rebuilding. Instead he blew 500b, giving almost every warm blooded Canadian free cash, mostly to try to win a majority government, and told the masses that he had their back, and we would “build back better”. Perhaps the kids were just listening to him? He is their leader after all. When your leader fails to lead with honesty and integrity folks will suffer unnecessarily, and here we are.

#71 Earlybird on 06.07.22 at 5:58 pm

# 13…its just a gully….
Tooo funny!
Great post!

#72 John on 06.07.22 at 6:03 pm

What about the 30% carbon taxes Trudeau has put on everything from gasoline to food prices etc. Also, the relentless attack on energy production and the western province policy with oil, gasoline, coal, natural gas. Trudeau is just like his father. Remember NEP, national energy program, high inflation, high taxes. Put Canada in deep debt and let the Canadian idiots pay for it and their children.You know what I mean. Never say never on anything in life especially interest rates and Canada’s economic future. Canada’s real economic and unemployment environment is much worse than they are telling us. They have to raise interest rates to confuse and say it is the higher interest rates that destroyed the economy but the Canadian government, Bank of Canada did it many years ago. I would not be surprised if you even let this comments get posted here.

#73 Quintilian on 06.07.22 at 6:06 pm

#39 yvr_lurker on 06.07.22 at 4:51 pm
“Unfortunate for sure, but immigration is ramping up to YVR and Toronto from HK (this year it is expected that 3 times the number that settled in Canada in 2020), and it will continue to ramp up”

I’m almost embarrassed to rebuttal this one, and with some trepidation, lest I give it some legitimacy.
But what the heck, it is anonymous….

There won’t be any meaningful impact, the market for Betamax repair business is dead, and the nail salon business is saturated.

RE bubbles always pop.
Tick Tock, Tick Tock

#74 Paul on 06.07.22 at 6:10 pm

Oh,Oh
Politics
2 Conservative MPs switch allegiance from Patrick Brown to Pierre Poilievre
The departures mean Brampton, Ont. Mayor Patrick Brown has only two MPs backing his candidacy
June 07, 2022
Two Conservative MPs have defected from Brampton, Ont. Mayor Patrick Brown’s team to support Pierre Poilievre, his main rival in the party’s leadership race — a move that leaves Brown with just two MPs backing his candidacy.
Hamilton-area MP Dan Muys and MP Kyle Seeback, who represents neighbouring Dufferin-Caledon in the House of Commons, both announced Tuesday they’re abandoning Brown for Poilievre. Their departures come after Poilievre’s campaign said over the weekend that it has sold an eye-popping 312,000 memberships in the race for the party’s top job.
Conservative sources told CBC News that roughly 600,000 party members will be eligible to vote in September’s leadership election.
Over 600,000 CPC members expected to be eligible to decide party’s future: sources
ANALYSIS What the federal Tories can learn from Doug Ford’s big Ontario win
Conservative leadership hopeful Pierre Poilievre tables bill to ban COVID-19 vaccine mandates
A Poilievre campaign source — who spoke to CBC News on the condition of anonymity because they aren’t authorized to speak publicly — said the team is confident Poilievre can win the race on the first ballot given how many memberships he’s sold so far.
The party has not confirmed any of the membership sales figures released by the campaigns.
Brown’s team said Friday the mayor had sold over 150,000 memberships. Former Quebec premier Jean Charest also said he’s convinced enough people in key ridings to take out memberships to allow him to win the race. The party allocates points to all 338 federal ridings and candidates are assigned a point total depending on their percentage of the vote in each riding.
MPs say Poilievre best choice to unite the party
Despite competing claims of membership sales strength, Seeback and Muys signalled Tuesday they believe the winner is already known.
In a statement on social media, Seeback said he “believes there’s one candidate … who can unite conservatives and Canadians to become our next prime minister. That’s Pierre Poilievre.”
Muys, a rookie MP who was first elected to the Commons last fall, said Seeback “is right.”
Muys said that while out campaigning with Ontario Progressive Conservative candidates during the recent provincial election campaign, he witnessed “divisiveness” and he suggested that the best way to heal those divisions is to “unify behind Pierre Poilievre.”
“Canada needs him and us to get this done,” Muys said.
WATCH: Interim Conservative leader: ‘I have no doubt that once the race is over, we will all come together’
Interim Conservative leader: ‘I have no doubt that once the race is over, we will all come together’  (0:58)
The two departures have dealt a blow to Brown. Just two sitting MPs now support the mayor’s candidacy: Calgary MP Michelle Rempel Garner and MP Doug Shipley, who represents Barrie, Ont., the area Brown used to represent in the Commons.
Poilievre has 56 sitting MPs supporting his leadership bid. Charest has been endorsed by 16 MPs.
Chisholm Pothier, a spokesperson for Brown, told CBC News the mayor is “very confident” that he can win the race.
“We like where we’re at, we like our numbers and there’s a weird lack of confidence coming from the Poilievre camp with their over-the-top attacks,” Pothier said, citing some of the social media squabbling that has become a hallmark of this race.
“This isn’t a game for the faint of heart. An endorsement from anyone and two bucks gets you a cup of coffee and one vote. We just lost two votes. We’ll make them up somewhere else,” he said.
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Two Conservative MPs have defected from Brampton, Ont. Mayor Patrick Brown’s team to support Pierre Poilievre, his main rival in the party’s leadership race — a move that leaves Brown with just two MPs backing his candidacy.
Hamilton-area MP Dan Muys and MP Kyle Seeback, who represents neighbouring Dufferin-Caledon in the House of Commons, both announced Tuesday they’re abandoning Brown for Poilievre. Their departures come after Poilievre’s campaign said over the weekend that it has sold an eye-popping 312,000 memberships in the race for the party’s top job.
Conservative sources told CBC News that roughly 600,000 party members will be eligible to vote in September’s leadership election.

Next time use a link. – Garth

#75 islander on 06.07.22 at 6:12 pm

https://www.nanaimore.com/property-search/results/?searchid=2080778#pricepct_-0.05/view_list/pricechangedays_7/

Heading down in Nanaimo…

#76 Paul on 06.07.22 at 6:13 pm

Sorry thought it was A link!

#77 Lorne on 06.07.22 at 6:15 pm

2 crowdedelevatorfartz on 06.07.22 at 3:48 pm
Port Alberni, Port Refrew, Port McNeil?
Three dogs. Three Ports
…………
Port Hardy, Port Alice, Port Albion….3 more ports

#78 TheDood on 06.07.22 at 6:18 pm

#65 Reality check on 06.07.22 at 5:43 pm
Meanwhile back in Oak Bay (Victoria) people are still reaching. A few house in my area have hit MLS recently. Nice mid sized older homes with ~1500 sq ft above ground with finished basements in the $2 million range.

At 4% mortgage $ 2 million cost about $100,000/year. That means somebody in the family needs to be making $150,000 per tax just to cover the mortgage.

And there are tens of thousands of homes “valued” at $2 million in Victoria now. Are there really that many people out there that can afford these homes as they come to market over the next few years?

I know the “answer” is that Canada’s mass of immigrants are going to keep houses increase in value. But what immigrants can walk into a $100k a year mortgage? Are all our immigrants going to be Canadian certified doctors, accountants and engineers? Certainly not the immigrants I know.

_______________________________

1500 sq ft in the two (2) million range in Victoria BC? Who’s going to spend that amount in a falling market? What industries on the island pay the kind of salary needed to support that kind of purchase? The last I looked, the preferred employers in BC were the 3 levels of government and the utility companies, none of whom pay all that well. Perhaps they’ll find some idiots who are not plugged into current events, lots of those around, especially in BC.

#79 Ed on 06.07.22 at 6:21 pm

Cuke…. Also
higher gas prices in the United States and United
Kingdom were not caused by JUSTIN TRUDEAU.

_______________________________________

Of course they are…stifling our production and distribution is a big reason the world is short of oil.
He has failed to put Canadians first.

#80 Hookshott on 06.07.22 at 6:25 pm

#14 “NUTS!” on 06.07.22 at 4:03 pm
For years I’ve heard the justifications people use to explain away the value of over-priced RE, particularly on the West Coast.

“Everyone wants to live in Vancouver, it’s the best place in the world”
While it’s true its a nice city, anyone who has even travelled a little can tell you there are many nice places in the world. We don’t have the monopoly on nice, there are many many options.

“We’re running out of land, therefore prices go up”
Again, anyone with an ounce of intelligence will tell you we have an insane supply of undeveloped land. When the pilot tells you you’re on final approach to YVR, have a look out the window, lots of green. Decades worth of supply.
…….
Do you like eating? That ‘green” is supplying your food…thank goodness!

#81 Kurt on 06.07.22 at 6:31 pm

Garth, thank you for putting up with the crap and continuing to write. Apparently, some people can’t read. Your “rule of 90” is an excellent guideline, and shows that you have no problem with ownership. Others apparently discount the fact that you have actually been through a housing bubble before, and (I will add) that it is never “different this time.”

#82 Saint Herb on 06.07.22 at 6:33 pm

This is not a correction. It’s a crash.

Music to my ears.

#83 The Great Gazoo on 06.07.22 at 6:34 pm

“Just as all-in leveraged real estate investors preened and strutted as prices shot higher, they’re now staggering as we tumble down the other side of the mountain.”

Yep, there is a plethora of real estate geniuses out there – you don’t even have to ask them. Well, hopefully a material correction will finally shut them up!

I have sympathy for those who got caught up in the frenzy and pressure from family – stretched their financing to the hilt and have or will get wiped out in the next year. That said, a major correction is needed to help smarten people up and bring RE prices down for hopefully 5 years to a decade until we do this all over again.

#84 Owl Eyes on 06.07.22 at 6:41 pm

It’s a big price drop in 905… it would be interesting to know just how many people bought last winter with 20% or less down… and how many were planning to flip instead of live for decades in these dwellings.

#85 Juve101 on 06.07.22 at 6:41 pm

What a beautiful photo today! Those cuties are nicely balanced and diversified :)

#86 rknusa on 06.07.22 at 6:41 pm

re: #13 millmech on 06.07.22 at 4:02 pm

Do not worry it is just a gully!

from the Big Short
Florida Real Estate Agent trying to sluff off declining sales

#87 Happy Housing Crash Muppet on 06.07.22 at 6:48 pm

I’m back! Still living in my mom’s moldy basement. Still haven’t been with a girl. But I’m back baby! Fear never sleeps!

#88 Mark on 06.07.22 at 6:56 pm

$800k for a town in some gross suburb an hour from Toronto is still completely ludicrous. the kids buying at these outrageous prices have no idea the pain they are in for. all they’ve known all their lives is cheap money. around 2008 when prices were already nuts I saw people buying towns for 250k, and flipping them 3 years later for 350k. then 500k a fee years after that. then they kept going up for 6 more years after that.

this is the beginning of an epic reckoning which everybody and yet nobody saw coming.
Not entirely their fault I suppose, the government enabled this situationntheough their actions inactions, and general incompetence as usual. prices have been nuts for a very long time. and as they say, you need to live somewhere. we can pity them but we must flog the correct enters of this cataclysmic situation.

#89 The Regulator on 06.07.22 at 7:01 pm

# 30 – habbit : Don’t feel sorry. I believe that Garth has a soft spot for us malcontents. Dog bless him.

#90 ogdoad on 06.07.22 at 7:05 pm

Anybody wanna buy a house? Well kept, through back breaking labor and 10 years of Sundays, Century home in a desirable neighborhood. Ant, mouse, raccoon, skunk, muskrat, student and pot plant friendly. Roof needs replacing. Dryer, washer, dishwasher, fridge, air conditioner, skylights, floors and toilets could all use a little TLC – But its a house…YAY!

Reason for selling? Need more leisure and to finance my obsession with snuggling (little blues are swelling in price:))

Comes with everything. Tools, lawnmowers, snowblowers, dishes, pictures, mold, stink, cats, dog, clothes….pretty much all the crap accumulated for no other reason than we had a place to put it. Full disclosure: pets were fun ’till they ate into leisure…Fascinating..

serious inquiries only: [email protected]

Og

#91 The Regulator on 06.07.22 at 7:05 pm

# 63 – jess : Thank you for this information. Tip of the iceberg?

#92 VladTor on 06.07.22 at 7:21 pm

Garth ….It was bound to happen, I guess. Worse, it’s only started.

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

Right before our eyes you turn into the rider of the Apocalypse!!!

It’s time to show photos of horses instead of dogs!

#93 In the cold on 06.07.22 at 7:28 pm

I do not understand most of the logic (if any) behind Ron Butler’s description of what happens when a 1.4% mortgage is renewed at 4.15%.

Anybody smarter than me can provide some explanation?

Garth, what in the name of our Lord, was Ron trying to say?

#94 Mike on 06.07.22 at 7:30 pm

Hi Garth
Always enjoy your insights. I am patiently waiting to enter back into the real estate market, my wife is very impatient though lol. I’m seeing the tip of the iceberg in a reality check of corrective pricing, but as you’ve pointed out , things are going no where but down at a very steady rate.
I will continue to enjoy reading your insightful blogs and sit on the sidelines waiting.

#95 AK on 06.07.22 at 7:35 pm

“In recent days the tone on this blog has turned nasty, angry, accusatory.”
=================================

Could be because many realtors these days are not very busy and have ample time to read the blog. :-)

#96 Shane on 06.07.22 at 7:38 pm

If you look throughout history of Canada, US, Europe, Australia, New Zealand, UK etc. It is the Liberal, left leaning, socialist etc. parties that have put all of us in major debt and taxed everyone to the maximum possible with utopia propaganda. They always blame it on capitalism but we always get a diluted, socialistic, water downed version of capitalism which they always suck off. They are the master liars and deceivers and the peanuts they give people to believe in their fantasy, utopia, socialist, marxist paradise is full of crap.

#97 Jay (not that one) on 06.07.22 at 7:41 pm

Have to give the Bank of Canada some credit. They aren’t raising rates nearly fast enough, but it sounds like the QT is going to come like a freight train. It might hurt, but even if you believe that the central banks ought to be doing what they’re mandated to do, hard tightening is what they should be doing right now.

Compare and Contrast the Federal Reserve, who is engaging their QT a lot more slowly, and I don’t think they’ll have the cojones to keep doing the right thing once their rich buddies start ringing them up.

I ran a personal stress test, and I think I’ll be ok (not good, but ok) even if mortgages are at 35% by the time I go to renew in 7 years. I think most people should start running stress tests on their own finances to see if they’re going to be OK at the very least if interest rates return to their historical mean of about 8%, let alone the 10 or 15% that have been seen within my lifetimes and most of yours too.

#98 Owl Eyes on 06.07.22 at 7:44 pm

#14 ”While it’s true its a nice city, anyone who has even travelled a little can tell you there are many nice places in the world. We don’t have the monopoly on nice, there are many many options.”

I’m an Ontarian and just came back from a visit to BC. The only thing stopping me from dropping everything and moving there now is RE prices and a vague niggly worry about “The Big One” long-awaited seismic event. I’ve travelled quite a bit and honestly it’s hands-down an enviable place to dwell.

#99 Victor V on 06.07.22 at 7:48 pm

May/June Update from a Lawyers Office: I am seeing the private lending money supply shrink in front of my eyes. Money still remains available but the owners of it are MUCH more stringent with their lending criteria.

“60% is the new 80% LTV” should be on a tee-shirt.

https://twitter.com/MarkinMetaForm/status/1534173162644066304

#100 Greg on 06.07.22 at 7:58 pm

I gave up on investing in a home. real estate and stocks, investments long time ago. I live with my brother and basically he is disabled and lives off his disability settlement. Surprising me is because we split the rent 50% each, he actually has $400 a month left over. He does not really spend money out, he loves to cook as he got disabled in the kitchen at work. He is pretty self sufficient. I buy all the food, go grocery shopping, take care of his and my finances. I am working full time for 15 years now and have managed to accumulate $264,000 mostly in my RRSPs, TFSAs. I am actually doing pretty good as my interest is almost 3 months salary or $10,000 a year. I got the higher GIC rates back in 2019, 3.75% at my local credit unions.

#101 Cici on 06.07.22 at 8:08 pm

#2 crowdedelevatorfartz on 06.07.22 at 3:48 pm
Port Alberni, Port Refrew, Port McNeil?
Three dogs. Three Ports.
______________________________________________

Or maybe… Port Hardy, Port Moody or Port Coquitlam?

#102 Dr V on 06.07.22 at 8:18 pm

24 Leon

“Oil was $126 a barrel in 2008 and gas was 1.40 a liter now $120 and 2.15 a liter, I don’t understand that. Can you explain this?”
—————————————————–

This article details different forces at work. Still feel someone is making a killing.

https://www.ctvnews.ca/business/hurts-like-hell-what-goes-into-the-price-of-gas-in-canada-1.5912432

Yes, very nice puppies on a nice beach!

#103 Dr V on 06.07.22 at 8:20 pm

From the above link

“Earlier this week, oil giant Saudi Aramco, which is 98 per cent owned by the Saudi government, said its profits had soared more than 80 per cent in the first three months of the year, causing it to overtake Apple as the world’s most valuable company.”

#104 Nonplused on 06.07.22 at 8:32 pm

The thing is if we don’t elect “Pepe” with a solid majority next go round the carbon tax will kill the economy. Currently at $50 per ton, it is slated to rise in annual increments to $130 per ton by 2030. At that point just the tax will be well more than what we are paying for gas right now.

These record high pump prices have as much to do with a $50/ton carbon tax as they do with oil prices. Oil hit $140 a barrel before (2008) and hovered around $100 a barrel from 2011 to 2014 and we never saw pump prices anything like this. The difference is the carbon tax, and it’s barely getting started. It’s already a major part of what you pay at the pump, and it going up 160% in the coming years.

The Canadian economy will not survive. Some will say “the money stays in the economy” and it sort of does, but government spending has at best a 30% efficiency, so we are going to outright waste 70% of that money. But that’s more macroeconomic, on the micro-scale families and businesses simply won’t be able to afford to do anything. Including eat and heat their homes.

Trudeau has to be sent packing or we are doomed. His solar calculators and pinwheels won’t save us, they will only waste money. We need relief from the carbon taxes in the meantime and a serious effort to encourage nuclear power if Canada is to not revert to something very primitive and lightly populated.

#105 DON on 06.07.22 at 8:47 pm

#77 Lorne on 06.07.22 at 6:15 pm
2 crowdedelevatorfartz on 06.07.22 at 3:48 pm
Port Alberni, Port Refrew, Port McNeil?
Three dogs. Three Ports
…………
Port Hardy, Port Alice, Port Albion….3 more ports

*****
I forgot about Port Albion.

#106 april on 06.07.22 at 8:51 pm

#40 – It’s only the beginning Dude. Who are you trying to convince…….?

#107 THE DANDADA on 06.07.22 at 8:55 pm

“In recent days the tone on this blog has turned nasty, angry, accusatory.”

HAHA…Like Crypto-Twitter after the bear showed up.

#108 Leftover on 06.07.22 at 8:59 pm

#14 “NUTS!” on 06.07.22 at 4:03 pm

I concur – Vancouver is a nice place, but not that nice, and compared to what?

For example, sell your beater YVR house for USD$2 million (let’s talk real currency for this) and consider some other “nice” places:

USA (pretend you’re a nurse)
Boulder, CO
Asheville, NC
San Diego, CA

Americas (pretend you can speak Spanish)
Bariloche, Argentina
Panama City
San Miguel de Allende, Mexico

Europa (pretend (!) you like wine)
Rhodes, Greece
Lisbon, Portugal
Virtually anywhere, Italy

You’d have at least $1 million leftover (get it?), no rain, decent food and lots of visitors. And this list is the tip of the iceberg.

It boggles.

#109 Old Ron the Realtor on 06.07.22 at 9:03 pm

Agents and the Public alike are expecting instant everything. Real estate trends don’t move nearly as fast as real estate experts can talk.

What we know so far:

Russia + Rates+ The Weight of high prices, threw a bucket of cold water on the market. Toronto dropped about 10% in value from Feb highs. But considering it was up 47% from March 2020, it is still very expensive by any standard.

We are in the second inning of a nine inning ball game. The agents I talk to want everything to return to February of 2022 ASAP. It may not anytime soon.

Further, I don’t really think we will know where the market is going until after the next two hikes. If you must, I mean must buy now, proceed with caution. Having a house that you can’t unload, because you are $200k under water, is like being under house arrest.

Chill, and be patient.

#110 Faron on 06.07.22 at 9:05 pm

#79 Ed on 06.07.22 at 6:21 pm

…stifling our production and distribution is a big reason the world is short of oil

Ha. Wrong.

#111 Faron on 06.07.22 at 9:09 pm

#68 UCC on 06.07.22 at 5:49 pm
#24 Leon Umsk on 06.07.22 at 4:21 pm
One that I don’t get though is gas. Oil was $126 a barrel in 2008 and gas was 1.40 a liter now $120 and 2.15 a liter, I don’t understand that. Can you explain this?

Oh I don’t know, Liberal carbon tax?

Hah, Wrong. Carbon tax is 11 cents per liter. Look up that supply/demand relationship etc.

#112 Faron on 06.07.22 at 9:12 pm

#72 John on 06.07.22 at 6:03 pm
What about the 30% carbon taxes Trudeau has put on everything from gasoline

Wrong. You do the math on 11 cents on 200 cent gas. Yep, 5% tax that is revenue neutral.

Why didn’t anyone else clean up the garbage of these three comments? Facts that are inconvenient for your politics perhaps?

Gross.

#113 Waystar Royco Shareholder on 06.07.22 at 9:16 pm

Keep your eye open for Pepe’s next election promise: The carbon tax will only apply to people who voted for Trudeau and the Libs.

#114 Pit bullsh*t on 06.07.22 at 9:16 pm

#51 Calgary Rip Off on 06.07.22 at 5:23 pm

……

Also in Calgary, the EMT situation is dire, a woman died on sunday after being mauled by 3 pitbulls and not getting services.

__________________

Personally… I love pitties. So sweet and so gentle. Not sure what this is about. I wouldn’t trade my pair for anything. What did she do?

#115 Think Again on 06.07.22 at 9:21 pm

#6 Faron

“I would wager that Putin was clever enough to see that his war would spike oil prices and further foment western unrest. His primary long goal has been to upset the stable liberal world order that has been in place since WWII. Tucker Carlson is there to stir the pot. Trying times.”

It may have felt stable and liberal to you and everyone else residing west of the imaginary east west line agreed upon by the allies and Stalin, but some two hundred million east and central Europeans, not counting the Russians themselves, had a different experience and decided to claim freedom – each nation’s and persons birthright. What is happening there today is nothing less than an attempt to undo the last 30 years of change for the better.

#116 Marxist on 06.07.22 at 9:23 pm

The governments might cut welfare and EI payments to bail out the indebted FOMO and Hoomer feudal class. Ever wondered why Service Canada is deliberately taking long to process you unemployment or pension?

They are using your monies to bail the Hoomers.

#117 Faron on 06.07.22 at 9:24 pm

#47 DON on 06.07.22 at 5:12 pm
#34 Sail Away on 06.07.22

RE here is high but not insane and salaries decent.

——–

What is the average income for folks in Nanaimo?

Low. Too low to afford an SFD. Condo probably. Nanaimo is as unaffordable as other parts of Vancouver Island which is among the worst globally. See below.

https://www.uwcnvi.ca/what-we-do/our-work/NHC/nanaimos-vital-signs-report-housing-and-homelessness

Median household income is about $70k. Per capita is about $30k. Median is very important here as a robust and resistant statistic. Average is trash.

#118 dave on 06.07.22 at 9:25 pm

Am I reading this wrong? House prices will fall in response to rising rates… I think that has been covered in this blog many times.

***********

Despite the accelerated wage growth this year, Capital Economics estimates these mortgage rates would reduce the maximum home price buyers could afford by 23 per cent, which Brown estimates to have four timez as large an impact as the prior three tightening cycles.

https://financialpost.com/news/economy/aggressive-rate-hikes-housing-recession-risks-canada

#119 Financial Planner on 06.07.22 at 9:38 pm

#15 Adam – donkey comment. No sense in you responding again, the tide went out and revealed your tiny….portfolio.

Nobody can effectively time the market at scale other than Renaissance Millennium fund, maybe Point72, and a couple of others. In the world.

Asking Garth or any advisor to go to cash and then reinvest at the best time (which is also when everyone is crying about how poorly their portfolio is performing) is idiotic.

Try doing that with your $12 portfolio and let us all know how it goes.

I’m sure you’ll pretend paper trade your way to millions while criticizing Garth’s free advice and complaining about the fact that he encourages people to look past the next 89 days or whatever fictional time frame you think you need to multiply your money by. If you are actually a long term investor, put your money to work, rebalance a few times a year, and let time and compounding go the work. Stop being crying like a penniless tool.

#120 Ponzius Pilatus on 06.07.22 at 9:44 pm

#157 Dr V on 06.07.22 at 12:28 pm
Gas up again. That would be over $300 fillup on the
F150. It’s a big tank – 136 litres. since March, I’ve kept
it under $100 per month. Also might run it down close to
empty. No use hauling over 200lb of fuel around.
Other gas saving tips:
– keep tire pressure topped up
– drive like there is an eggshell under your foot.
– park once and walk to several destinations.
– don’t buy an F150…….
————————-
Just what the Doctor prescribed.
And take two Aspirins for excruciating headache after filling up.

#121 Indigenous Now! on 06.07.22 at 9:55 pm

GT – The great Mohawk first Nation of the Tyendiniga Mohawk territory would oblige you value the indiginous land acknowledgement as part of you blog posts so that your colonialist readers and yourself understand the importance of the long lasting history that has brought you to reside on our lands and to seek to understand your place in history.

A small paragraph to mention the land acknowlegdgement as intended to bring awareness that coloinalism is a current ongoing process and thank the indigenous people for the use of their lands would be appropriate on your blog posts and emails.

We need to share in Indigenous peoples’ discomfort

#122 crowdedelevatorfartz on 06.07.22 at 9:57 pm

Hmmm.
Weeks ago Crowdie predicted BC Ferry delays this summer due to staff shortages…..( thanks to my amigo at BC Ferries for the heads up).
Now this…and it aint “peak season” yet….

https://www.victoriabuzz.com/2022/06/staff-shortage-prompts-bc-ferries-sailing-cancellations-on-tuesday/

It’s gonna be a loooong summer.

Still 3 weeks to go for my $3/liter gas prediction to pan out.
$2.35/ liter in the lower Brainland today….

A shout out to my geographically succinct BC amigos.
Well done. Impressive.
No one mentioned Port Mellon.
It’s where Ponzie lay’s his massive head.

#123 Russ on 06.07.22 at 10:06 pm

DON on 06.07.22 at 8:47 pm

#77 Lorne on 06.07.22 at 6:15 pm
2 crowdedelevatorfartz on 06.07.22 at 3:48 pm
Port Alberni, Port Refrew, Port McNeil?
Three dogs. Three Ports
…………
Port Hardy, Port Alice, Port Albion….3 more ports

*****
I forgot about Port Albion.
=========================

A few more to add;
Port Mellon, Port Moody, Port Coquitlam and Port Dover,

There is also Port of Vancouver, Port o’ Nanaimo & Port o’ Victoria.

Lest’s not forget the whole wesy of vancouver island… :)

You get the picture…

#124 toronto1 on 06.07.22 at 10:06 pm

Its bad out there, im hearing stories weekly from my visits to various job sites and office towers… word is getting out- will be mainstream by the end of this month. Every single person is talking about inflation!

If what Garth is saying come to pass ( lets give him credit he has been right all along with the rates rising) and rates get north of 6% – there will be panic, IF the rates get to 7% for a fiver, we will be approaching 50% discount from peak….. more then that i have no idea what happens

the 2-3 month buyer remorse will keep repeating for the rest of the year…. buyer who brought in Feb all happy they won a bidding war were feeling remorse in May, buyer who brough the dip in May-June will be feeling remorse by Sept, buyers who buy in Sept will be felling remorse in Dec/Jan until sometime in early 2023 the lows may be in and there is some stability.

every rate increase reduces the potential spending power of eligible borrowers while eliminating the lower end buyers all together, the RE mrket price has to meet this point but that takes time to workes it way through the system- it will overshoot this on the low end just as it overshoot the peak price

#125 DON on 06.07.22 at 10:07 pm

#114 Faron on 06.07.22 at 9:12 pm
#72 John on 06.07.22 at 6:03 pm
What about the 30% carbon taxes Trudeau has put on everything from gasoline

Wrong. You do the math on 11 cents on 200 cent gas. Yep, 5% tax that is revenue neutral.

Why didn’t anyone else clean up the garbage of these three comments? Facts that are inconvenient for your politics perhaps?

Gross
***********

Sometimes there is too much garbage to clean up. It gets tiring.

#126 Doug t on 06.07.22 at 10:13 pm

#102 Greg

Good for you buddy – sounds like your doing ok – keep it up – cheers

#127 Sail Away on 06.07.22 at 10:29 pm

#124 crowdedelevatorfartz on 06.07.22 at 9:57 pm

No one mentioned Port Mellon.
It’s where Ponzie lay’s his massive head.

———-

Young Ponz:

https://youtu.be/IqycJpRdVaY

#128 Russ on 06.07.22 at 10:37 pm

crowdedelevatorfartz on 06.07.22 at 9:57 pm

Hmmm.
….
No one mentioned Port Mellon.
It’s where Ponzie lay’s his massive head.

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

My apologies to some of the additions to the “port’ list.

I see the blog pic story references Vancouver Island ports, and not just the wesy side, so a bunch of the submitted entries do not qualify.

However, may I add Port Alice to the list?

Cheers, R

#129 Nora Lenderby on 06.07.22 at 10:39 pm

#23 Søren Angst on 06.07.22 at 4:20 pm
“…Not a clue what your buying from Il Bel Paese Canada…but keep doing it. As always, Italia needs the cash and we are grateful to you Canada.”

Well, even in our wee small town supermarket the shelves are heaving with Italian products. As a happy result of CETA there are a lot of choices in good food made in Italy. Pasta, canned tomato products, meats and cheeses.

Poor old Brits…some nice cheeses from there have been available recently, but after another year or so, Brexit means that the dairy quota given to the EU is not available to Britain. Happily there are plenty of other choices and Canadian producers are starting to up their game.

We await further developments.

#130 Lee on 06.07.22 at 10:42 pm

#62,

If the $2,000,000 bd portfolio is done right it’s still spitting out $70000 in dividends yearly even if down 15% to 25%, and that’s like $100,000 in yearly income if you structure it right. You can rent a $4M house with that.

#131 Andrewski on 06.07.22 at 10:55 pm

Re: #116 Pit Bullsh…

I also own a pair of Pitties. Tragic story!

https://calgary.ctvnews.ca/86-year-old-calgary-woman-dead-after-neighbour-s-3-dogs-attack-1.5934106

#132 Sara on 06.07.22 at 10:58 pm

Doug t, I know a guy like Greg too. He is really smart and cheap. It takes a special type of guy to d what he does. I think alot of people are either jealous or surprised that over long periods of time, 10, 20, 30 years, it is possible to have $250,000, $500,000, $750,000+. The key is use up all your RRSP contributions and TFSA contributions each year. Take the RRSP tax refunds to cut your savings needed each year, like $15,000 versus $12,000 and even 3%, 4%, 5% annual compound interest can really add up. Debt avoidance where possible is another very critical point or it all gets derailed.

#133 Ponzius Pilatus on 06.07.22 at 10:59 pm

169 cuke and tomato picker on 06.07.22 at 3:14 pm
Saw a tweet today that said they have very high gas prices in the U.S. and U.K. AND THEY DID NOT VOTE FOR
JUSTIN TRUDEAU.
————-++——
God one.
Cukey

#134 Ponzius Pilatus on 06.07.22 at 11:15 pm

#131 Nora Lenderby on 06.07.22 at 10:39 pm
#23 Søren Angst on 06.07.22 at 4:20 pm
“…Not a clue what your buying from Il Bel Paese Canada…but keep doing it. As always, Italia needs the cash and we are grateful to you Canada.”
———————
To bad Dolce.
Germany has decided to spend 100 billion Euros to beef up its army.
Italia gotta find another SugarDaddy, or actually start getting her financial house in order.

#135 TurnerNation on 06.07.22 at 11:38 pm

On the Permanent rolling Economic and Social Lockdowns.
Never forget 2020-21. You were trained. And you complied.
Life in the Former First World Countries.
Next.

https://www.independent.ie/irish-news/politics/return-of-work-from-home-plan-to-save-fuel-in-event-of-crisis-caused-by-ukraine-war-41724210.html
“Return of ‘work from home’ plan to save fuel in event of crisis caused by Ukraine war
A high-level planning exercise proposed three fuel supply deficit scenarios”

Control over travel. March 2020 ended free passage when the world fell that cold week.
Why Kanada, and CHINA, still have the QR codes. This is PERMANENT.
Next.

.Canada issues travel notice as monkeypox continues to spread around the world (globalnews.ca)

.Everything is backlogged’: Air travelers call for lessening of pandemic protocols to cut down on delays (regina.ctvnews.ca)

.Former NHL player slams Toronto Pearson, Air Canada in video after chaotic night stuck at airport (toronto.ctvnews.ca)

.Montreal couple forced into 14-day quarantine for failing to fill out ArriveCAN entry app (cbc.ca)

.Canadian airports call for removal of Trudeau’s vaccine requirements for air passengers. The Canadian Airports Council on Tuesday called for the removal of “all vaccine requirements for air passengers and aviation employees.” (thepostmillennial.com)

#136 Split in hairz on 06.07.22 at 11:38 pm

Garth,

It is true you are not directly selling stocks, but you are selling advice which may include the purchase of stocks. Splitting hairs methinks.

Wrong. We do not steer people into direct equity investing, nor manage stock portfolios. We work to ensure families are financially secure. – Garth

#137 DON on 06.08.22 at 12:10 am

#138 Split in hairz on 06.07.22 at 11:38 pm
Garth,

It is true you are not directly selling stocks, but you are selling advice which may include the purchase of stocks. Splitting hairs methinks.

Wrong. We do not steer people into direct equity investing, nor manage stock portfolios. We work to ensure families are financially secure. – Garth

**********
Time to put on the Greaterfool Flak jackets as people’s misplaced angers explode.

#138 the jaguar on 06.08.22 at 12:17 am

Garth. Post 116 . There are no words..

#139 tkid on 06.08.22 at 12:52 am

Garth, what would your advice be to those who find themselves overstretched financially?

And thank you again for helping me to achieve leanfire.

#140 Jennifer on 06.08.22 at 1:53 am

What makes me ” disgusted” is when Realtors use falling sales, and prices a ” Balanced market”.

Yeah right! To keep real estate ” Balanced”, Bank of Canada should raise interest rates long…. time ago to stop house prices going to Bubble territory. But no, economy must be moving at all cost. If economic growth comes from income or debt, in the early stages economy does not give a sh.t. If it comes mainly from debt, it is only a matter of time before Supernova blows up.

Humans naturally never learn over long periods. They go from ” God please give me another chance, this time I won’t screw up”. Well, screw up is what comes naturally to humans.

#141 T-Rev on 06.08.22 at 2:01 am

Those numbers from southern Ontario are gross.

Are there any stats that show what % of houses changed hands from say Feb 2021-Feb 2022? It would be interesting to know what percent of households are potentially underwater.

Sad situation. Garth save us all.

#142 millmech on 06.08.22 at 2:06 am

#64 Sail Away
Why is the pay so low, just curious.

#143 Ottawa Real Estate Market Stats for May 2022 on 06.08.22 at 2:58 am

Market Summary:

The Ottawa real estate market continued to slow in May 2022. Homes sold decreased by about 20% from a year ago and active listings were up about 18% from a year ago.

Detached homes gained 6.7% from a year ago. They were down about $10,000 on a month to month basis.

Townhomes were up 8.8% compared to a year ago and lost about $30,000 on a month to month basis.

Condos gained about 11% compared to a year ago and were mostly flat on a month to month basis.

Days on market is still very low at 11 days for homes and 13 days for condos. However, I saw a lot of cancelled listings which indicates that many properties went to market and did not receive their desired offer price. After a certain period these homes were either re-listed or taken off the market.

As the Bank of Canada continues to increase interest rates, the cost of financing will continue to go up thus causing a significant headwind for home prices.

Full stats are available via the link below:

https://www.kirilpeev.ca/ottawa-real-estate-market-update-may-2022/

#144 Bileth on 06.08.22 at 3:10 am

Whatever. This is like a store listing items at or above MSRP to advertise a 20% off SALE!

Real Estate needs to drop 55% to 60% to make sense vs. renting.

These drops are likely to only solidify March 2020 prices as bottom/sale/good, when they were already detached from average incomes in a big way years before March 2020, maybe even a decade back.

——–

Can’t agree more with #1. Even a couple with household income of $200k will struggle to afford a $1.2 mil property at today’s rates with a 20% down payment. Prices need to tumble more for some semblance of affordability for detached houses.

#145 Diamond Dog on 06.08.22 at 4:04 am

#106 Nonplused on 06.07.22 at 8:32 pm

At $50 a tonne carbon tax, the Federal government estimates an 11 cents a liter carbon tax at the gas pumps. With $2 buck gas, it’s 5.5% carbon taxed.:

https://www.canada.ca/en/department-finance/news/2018/10/backgrounder-fuel-charge-rates-in-listed-provinces-and-territories.html

At $ 130 a tonne, its a 28.6 cents a liter carbon tax. At current prices, its roughly 14% of the price… if we had $ 2 buck gas in 2030. I don’t see how this math breaks the economy.

I get why Trudeau needs to go but for different reasons, reasons which certainly don’t justify making stuff up like this. The carbon tax is not an economy killer. Climate change is though (as well as air pollution in cities), regardless of what the majority of Conservatives believe, it seems.

https://www.theweathernetwork.com/en/news/climate/impacts/greenhouse-gases-trapped-nearly-50-percent-more-heat-2021-vs-30-years-ago

I also get that if the Conservatives want to win, they ought to concentrate on getting a better team on the field than the Libs have now. It remains to be seen whether they do it. I hope they can but still, it remains to be seen.

I can offer this much, if Polievre becomes the next leader, I’d say it’s doubtful for several reasons first of which, leadership is often top down. Polievre gets high on his own supply, a supply that is Americanized and doesn’t shoot straight. The Cons are in disarray to have Polievre as a front runner at this point (not the first to say it). I hope the party offers better than Polievre as a leader, but once again it remains to be seen.

#146 Pass the Sharmin on 06.08.22 at 6:03 am

#132 Lee. Would love to hear about your steady-Eddy 2 mill portfolio mix kicking out a predictable $70 per annum regardless of the typical haircut. 3.5% is a good start. But I think you’ve got a lot of risk inherent if you have that many equities averaging those returns. Ex: if you have fewer issues that pay better ie: ENB or BCE , TRP ( or add a DFN along with CPD) you’d increase your returns 50% with fewer issues ergo less risk and lower beta. Just sayin’.

#147 KNOW IT ALL on 06.08.22 at 7:15 am

Mortgage demand falls to the lowest level in 22 years, amid rising rates and slowing home sales

https://www.cnbc.com/2022/06/08/mortgage-demand-falls-to-the-lowest-level-in-22-years.html

#148 Basic Math on 06.08.22 at 7:56 am

#95 In the cold on 06.07.22 at 7:28 pm

I’ll use basic math (not accounting for compounding) for the problem Ron outlines. Example 1 Mill mortgage at 1.4% you get $3400 a month payment (30 years) (which over the course of the first year is a total payment of 40000 of which 26,000 is against principle and 14000 is interest.

Ron’s primary point is that you have a variable mortgage that you started last year and after 1 year the rate changes to 4.15. But as noted by Garth most variable rates don’t change your current payment just how it is allocated. So in years 2-5 your slightly less than 1 million mortgage at an interest rate of 4.15% is running an interest accrual of about 40,000 year (note now the value of your total mortgage payment). Which means that instead of paying down anything you spend 4 years paying interest only.

So when the mortgage comes up for renewal instead of having paid off 140,000 of principle after 5 years you have paid off about 30,000 and thus with 5 years of amortization used up to pay interest, under Ron’s assumption that the rate holds at 4.15 percent you are forking 5300/month to pay down interest and principle (25 years left)

This recurring sticker shock and home pressures on renewal over the coming years is why if rates rise the housing market will continue to soften over years.

PS Thanks for the regular posts about all things financial Garth!

#149 mickclean on 06.08.22 at 8:10 am

Thinking certain condos in Toronto might have downward pressure in terms of pricing. City of Toronto now mandates that only principal residences may be utilized as short term rentals. In certain areas of TO such as Fort York up to 25% of the units are being utilized as short term rentals, many units being owned by the same investor
https://www.toronto.ca/legdocs/mmis/2021/ph/bgrd/backgroundfile-167231.pdf
Noticed a house in leafy Willowdale with weeds nudging the realtors sign, looked it up and was shocked at the price, just south of $3 million, taxes nearly $10,000!
https://www.royallepage.ca/en/property/ontario/toronto/427-empress-ave/17331516/mlsc5566765/

#150 Dharma Bum on 06.08.22 at 8:15 am

#141 Don (Previous thread)

Dharma, you spent the past couple of years telling us about you and your son’s real estate. Sounds like you are the one whining now.
—————————————————————————————————–

Hahahahah!

Not really.

His real estate was purchased in Alberta a few years ago at the LOW point. For cheap (i.e., 1/6th of Ontario prices.) With cash (in case you’re wondering, that means “no mortgage”, or zero debt).
So the mortgage rate increases occurring are inconsequential.
Hence, zero consequences. Or zero negative consequences, anyway.

The only whiner on this blog is you.

And Faron.

And….actually, too numerous to mention.

Debt pigs lose.

#151 Bob on 06.08.22 at 9:08 am

Corporate capital structure worldwide has been set up with the firm belief that rates cannot go up; as long as inflation, outside of assets, remained anchored, they were right.

Companies have 3 levers only to make money; 1. Profit Margin (how much you make per unit sold) 2. Asset Turnover (how many units you sell) 3. Leverage. The leverage being employed now is eye-watering. If cost of borrowed money goes much higher, catastrophe for a lot of companies, or at best, profit destruction and elimination of cash back to investors.

Inflation is out of the bottle now, and there is no solution that does not involve serious paper wealth destruction. Unfortunately, that cannot happen in any serious way without the debt markets seizing up. There are just too many levered relationships, all depending on a Fed put. When the pain gets too great, central banks will fold.

By September, we will see rate reductions and more QE. There is no easy way out; there never was. It could have sent on for another 20 years if inflation had not blown up.

In the long run, holding shares of good companies that will pay dividends is always good advice. Owning a home you can afford is another.

Rates are not going down in September. Go back to Reddit and play with the other delusional kids. – Garth

#152 Put In on 06.08.22 at 9:11 am

DELETED (Conspiracy nut)

#153 Steven Rowlandson on 06.08.22 at 9:48 am

“One can’t live in a stock and one can’t even come close to the leverage play you can do with a house.”

True one cannot live in a stock but one can live in a house. Given that much of what goes with being a functional adult canadian citizen is tied to having residence of some sort there is little choice but to buy or rent a place to live or be an outcast and borderline criminal and in this lies the genocidal extortion racket in whole or in part. People are required by the requirement to have residence to pay what the market demands for property and shelter even if it is equal to or greater than ones income. This both true and unreasonable. Since govrnment is part of the problem it is up to individuals to resist Canada’s genocidal extortion racket called real estate by low balling their offers to buy based on an amout that is equal to or less than 3 years pay for one income and a 25% down payment. If your offer is refused, walk away!
Any rent higher than a weeks pay per month is too high and should not be agreed to. Walk away !

#154 DON on 06.08.22 at 9:51 am

#152 Dharma Bum on 06.08.22 at 8:15 am
#141 Don (Previous thread)

Dharma, you spent the past couple of years telling us about you and your son’s real estate. Sounds like you are the one whining now.
—————————————————————————————————–

Hahahahah!

Not really.

His real estate was purchased in Alberta a few years ago at the LOW point. For cheap (i.e., 1/6th of Ontario prices.) With cash (in case you’re wondering, that means “no mortgage”, or zero debt).
So the mortgage rate increases occurring are inconsequential.
Hence, zero consequences. Or zero negative consequences, anyway.

The only whiner on this blog is you.

And Faron.

And….actually, too numerous to mention.

Debt pigs lose.

*********
Let’s go back and check your misguided posts.

I have absolutely no reasin to whine…I don’t care about lost paper equity.

You should go back to pumping real estate…it suits somewhat like you who forgets the past. Back to the reddit crowd for you.

Blank stare….bud.

#155 Chris on 06.08.22 at 10:12 am

Well written and fully agree Garth. So much of this was foreseeable. I never understood the risks folks have taken with RE speculation and spending like money was always going to be free.

#156 Sail Away on 06.08.22 at 10:19 am

#144 millmech on 06.08.22 at 2:06 am
#64 Sail Away

Why is the pay so low, just curious.

——–

It’s related to comparables. There are lots of public service engineers in town, so private corp salaries track close to, but slightly above those.

We encourage our staff to know their value and use it as negotiation at review time. Saves us having to do salary research and develops their persuasiveness.

#157 Mattl on 06.08.22 at 10:22 am

Ironically, attacks on the Bank of Canada which weaken its public credibility will just led to more aggressive hikes. So you can thank Pepe for making things a touch worse.

—————————————————————

Well I guess we do owe him thanks then because that is exactly what we need, more aggressive hikes. And says a lot about the BOC if policy is being influenced by an MP like PP. Based on that hard to believe the PM isn’t influential and that the BOC is completely independent.

Anyways, this is the BOC’s mess, it was pretty clear 12+ months ago that Canadians were sitting on stacks of cash and RE has been out of control for a decade.

#158 Dogs Not Barking on 06.08.22 at 10:35 am

Infinitely more people die in Canada from opioid overdoses than non-gang shootings. Non even in the same planetary system.

Where is Trudeau on sanctioning China to stop them from producing the fentanyl that is killing us?

Just curious, and asking on behalf of all of my kids friends who have died.

#159 The Regulator on 06.08.22 at 10:47 am

# 140 – the jaguar : There are no words.
# 116 – pitbullsh*t : What did she do?
The jag is our new thought policeman.
Pitbullsh*t : What if that was your grandmother? You are an a*****e!

#160 Lorne on 06.08.22 at 11:12 am

#130 Russ on 06.07.22 at 10:37 pm
crowdedelevatorfartz on 06.07.22 at 9:57 pm

Hmmm.
….
No one mentioned Port Mellon.
It’s where Ponzie lay’s his massive head.

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

My apologies to some of the additions to the “port’ list.

I see the blog pic story references Vancouver Island ports, and not just the wesy side, so a bunch of the submitted entries do not qualify.

However, may I add Port Alice to the list?

Cheers, R
…….
Was already added.
But we can add Port Eliza….probably only heard of by commercial and sports fishermen

#161 Slim on 06.08.22 at 11:45 am

#79 Ed
Of course they are…stifling our production and distribution is a big reason the world is short of oil.
He has failed to put Canadians first.

————————————————————

According to Trucker Carlson, it’s all Bidens fault.

#162 Sail Away on 06.08.22 at 11:58 am

#160 Dogs Not Barking on 06.08.22 at 10:35 am

Infinitely more people die in Canada from opioid overdoses than non-gang shootings. Non even in the same planetary system.

Where is Trudeau on sanctioning China to stop them from producing the fentanyl that is killing us?

———-

Well, there is one sure-fire way to avoid dying of an opioid overdose. Exceptionally effective. My new book is titled:

‘Secrets! How to Avoid Getting Fat OR Dying of Self-Administered Illicit Substances’

#163 Bdwy on 06.08.22 at 12:58 pm

Location still matters. Fresh sale. premium price. 250k overask

1800 grant st
Sold Price

 Asking Price (Final)

 Asking Price (Original)

$3,250,000

$2,990,000

$2,990,000

Listing Date

 Days on Market

2022-May-24

6

Sold Date

 Sale Reported Date

2022-May-30

2022-Jun-01

Size of House

 Price per SqFt

3,009 sqft
$1,080Lot Size0.10 

#164 Satori on 06.08.22 at 1:01 pm

DELETED

#165 Bdwy on 06.08.22 at 1:06 pm

Also every one of the handful of sales in june around comm dr. Have been under 9 dom and over ask.
No cooldown here yet.

#166 Bdwy on 06.08.22 at 1:13 pm

163 Slim on 06.08.22 at 11:45 am

————————————————————

According to Trucker Carlson, it’s all Bidens fault

……..

Its a tag team. Both idiots have been choking supply with all thier might.

This was clear last year , a signal to buy zeo in the 30s. 74 today.

The fools in charge have no plan to change and we KNOW global demand only goes one way so get ready for 3+ gas and 150bbl.

#167 Read'em & Weep on 06.08.22 at 5:10 pm

PitBULL

Despite what has been suggested on this blog … here are pitbull facts and fikgures

https://dogbitelaw.com/vicious-dogs/pit-bulls-facts-and-figures

There are no bad dogs. Bad owners are abundant. Stop the prejudice. – Garth

#168 Gcr1968 on 06.09.22 at 3:47 pm

Brilliant Post Garth.

Thank you