Batshit crazy

Stir in two-buck-a-lire gas, the great trade I got on my four-year-old ride, plus $3.49 lettuce and 5% mortgages and whaddya get? Yes, inflation at 7.7%. Up from 6.8% last month. Blowing past the experts’ forecasts. It’s a shocking number.

So now it’s been 40 years since prices were rising so strongly. But in 1983 Canadian household debt wasn’t 185% of disposable income. Your parents hadn’t borrowed $1.73 trillion in mortgages. Crap houses in Vancouver didn’t cost $1.8 million. And a third of new buyers in Toronto did not have debt equal or greater to 450% of their income.

But in 2022, we do. Bay Street didn’t like the number, sending the TSX back into the basement to be spanked. Says The Economist: “A comparison between Canada and other rich countries should give rise to some concern. Since 2000, the average house price has more than tripled in Canada. In America, by contrast, it is up by about 60 per cent.”

Chickens. Coming home to roost. Millions of them. Droppings everywhere. We may be deeper in them than anyone thought.

This fat number means the CB will deliver a big punch in exactly two weeks.

“We have a problem,” says BMO’s head econ, Doug Porter. Inflation may top 8% next month, he warns. “The key takeaway is that the Bank of Canada still has lots of work to do, with a 75 bp hike in July almost fully baked in, and we suspect another 100 bps of tightening to follow that through the remainder of the year. Just like the consensus on inflation, the risks to that view seem tilted to the high side.”

So, if Porter’s right (likely), the chartered bank prime will be around 5.5% at Christmas. Or sooner. HELOCs will have gone from 2.95% to 6%. Ditto for VRMs, also doubling from February. Fixed-rate five-year mortgages will rise more slowly, as the yield curve inverts, sending short-term rates above longs (the yield on Canada 5-year bonds actually fell on the inflation news, signaling stronger recession sentiment).

“If you aren’t over 40,” says TD econ Leslie Preston. “you have never lived through inflation like this, and unfortunately, we are not expecting much of a reprieve going forward. Inflation is expected to remain elevated through 2022 as outlined in our recent forecast. On the shelter side, we are likely to see a continuation of rent price increases alongside rising mortgage interest costs. This will be balanced against the impact of declining house prices.”

Therein lies the conundrum.

This report and the CB’s reaction to it guarantee more troubles for people selling their home. It’s also cold comfort for those lusting to buy. After all, a $1,000,000 mortgage (common) at 2% on a $1.5 million semi in Surrey carried for $4,234 a month (mortgage only). But at 5%, that payment jumps almost 40%, to $5,816 – taking an extra $19,000 a year in after-tax income. Worse, buyers now must qualify at a stress test level of 7% just to get a loan passed. Worse than that, the higher the mortgage rate the less each monthly payment reduces the principal, meaning debt is sticky and renewal is tougher.

Says crusty mortgage broker Ron Butler: “Did 20 months of ultra-low mortgage rates harm recent Canadian homebuyers? Increasingly it looks like: YES.

“Some Canadians did benefit from the lowest rates in history but increasingly it looks like many bought homes at batshit crazy prices , now falling. Only bad results to come.”

Wage increases of 3% can’t pace mortgage costs that are 40% higher. So a $1.5 million semi cannot stay at that valuation. Everybody said there was a ‘housing crisis” when home loans cost 2% and the Mills/Zs were moaning. Now with 5% mortgages properties needs to drop in appraised value to merely equal where we sat six months ago.

In this example, mortgage debt must reduce from $1,000,000 to $730,000, putting the new sale price at $1.23 million – a decline of 20%. And still we’re just back to where we were – unaffordability. So logic suggests the discount will end up being more – likely along the lines of the last real estate purge (1989-1993) when average prices plopped 32%.

“We expect bearish sentiment to build and spread further as the Bank of Canada forges ahead with a ‘forceful’ monetary policy normalization,” says RBC’s Robert Hogue. “We think this will set the stage for broad-based property depreciation in the period ahead.”

Consequences are stacking up. Now Urbanation says about 5,000 condo units in Toronto won’t get built as construction prices romp 20% and buyers retreat. ““It is not just the 5,000 units that are already in the market that could cancel,” adds president Shaun Hildebrand, “it is all of the projects that should have launched over the next little while that are no longer going to be entering into the market. So that puts the supply squeeze not only on today but years down the line when these projects ultimately get delivered.”

Beyond the urban cores, the greatest challenges lie.

A new Bank of Canada study confirms what a certain pathetic blog has been yammering about for months. Prices in Bunnypatch jumped unsustainably over the last two years, wiping away the historic premium for city homes and wildly inflating the value of remote ones. That now puts the burbs, sticks and hick cities at greater risk of rapid decline.

Says Desjardin economist Randall Bartlett: “It’s difficult to envision the housing markets of some smaller communities maintaining their unprecedented pandemic price gains as people return to in-person work on a more regular basis.” With inflation pushing the CB into manhood, it all becomes more acute.

We did this to ourselves. Let’s see how we get out of it.

About the picture: “Garth this is my great grandson Wilder Stanton Hennings,” writes George. “He just turned six months old this week.  Those are my grandson’s dogs. Sitting and smiling at the camera. I read your blog every day and you reassure me that the world is not going to hell in a hand basket.”

183 comments ↓

#1 JOHN PICKETT on 06.22.22 at 11:32 am

One big driver of inflation is the war in the Ukraine. The sooner it concludes the better for one and all. We need both the Russian and Ukrainian economies back on line ASAP. Unfortunately i do not see that happening. Biden is determined to bleed Russia using Ukrainian blood. When Yugoslavia split apart there was a war and Canadian foreign policy was an arms embargo. Why are not ending our support for this war? I thank Justin and Chrystia for catering to the Ukrainian-Canadian Congress. Pure and simple. All about votes. Until this war is settled we will have high interest rates and declining house prices. However, for us Seniors, GIC rates are heading up. Hurray!!!

#2 mitzerboyakaQueencitykidd on 06.22.22 at 11:45 am

Like the old wise blind dude said on Kung Fu everybody eventually gets what they deserve

Dogs r great
beer iz good

#3 crowdedelevatorfartz on 06.22.22 at 11:47 am

A possible 30% plop in housing prices….
Look!
Up in the sky!
Is that a vulture?

Canadian housing returns to sanity after years of media, bank, realtor hype.
Long overdue.

#4 1255 on 06.22.22 at 11:54 am

Agreed. Prices should go back to at least pre-pandemic levels and even those prices are too high.

#5 Philco on 06.22.22 at 11:58 am

Chickens. Coming home to roost. Millions of them. Droppings everywhere. We may be deeper in them than anyone thought.

Just like in the perfect storm.
” Dont go Bobby I got a bad feeling about this”

I agree Garth.
Energy security arguably the most important thing to any country. This fuel issue is on T2 and Mr B.
Now some chickens are going to find out if they can afford to eat along with other bills.
The Trans Pipeline is now toast. And the chickens wont be worried about climate change or any other thing that was pitched at them when survival becomes apparent. Thats what happens when the powers that be virtue signal rather then plan for rainy days or more like a tornado…. now.
I say tornado because its going to miss my house.
BTW coldest July on the wet coast I can remember. Camping was touch and go.

Dont worry so much about climate change. The Yucatan took a meteor that whiped out ever living thing. Mother earth will survive but you wont.

#6 Ponzius Pilatus on 06.22.22 at 11:59 am

I think many small businesses are just riding the inflation bus.
Went to my favourite Vietnamese Bhan Mi store.
The sandwich went from 4 to 5.5.
And the Coke from 1 to 1.5.
50% inflation on the Coke?
It’s still a good deal, compared to the Burger joints, but
Caveat Emptor.

#7 Inadequate on 06.22.22 at 12:02 pm

Can’t wait for a 5 year mortgage to hit 7%, about the same rate when we bought our first house in Toronto in 1996.
It seems like next year or later would be a good time for us to get back into owning again.

#8 Ballingsford on 06.22.22 at 12:04 pm

Early today Garth. Inflation numbers makes people frisky.

I see no way out for a long time. Sales of Depends might pick up while people are starting to shit their pants. Good stock to buy now?

#9 Dave on 06.22.22 at 12:05 pm

Another real estate deal fallen through in Bunny Patch.
Buy/sell history for 13 Valecrest Crt, Caledon (Detached)
$1,668,800
For Sale
List: 2022-06-21 |
W5668555

List: 2022-03-30 | End: 2022-04-06
W5558016
Sold for $1,651,000

The bunnies are hoppin’ all around this neighborhood. They are eating our lawn. We need some more birds of prey or some more coyotes to control them.

#10 LH on 06.22.22 at 12:07 pm

Time to pay off the VRMs… great risk free return
One of the perks of being (mildly) leveraged in the first place

#11 Philco on 06.22.22 at 12:08 pm

Dont take my word for it. Just look to Europe.
A plan where the poorer starve and the middle class suffer.

https://www.forbes.com/sites/michaelshellenberger/2019/05/06/the-reason-renewables-cant-power-modern-civilization-is-because-they-were-never-meant-to/?sh=75077d53ea2b

#12 Love_The_Cottage on 06.22.22 at 12:23 pm

#1 JOHN PICKETT on 06.22.22 at 11:32 am
… GIC rates are heading up. Hurray!!!
_________
You were better off with a 2% GIC and 3% inflation than a 5% GIC and 8% inflation. You’re falling further behind.

I know, math is hard.

#13 Doug t on 06.22.22 at 12:24 pm

yup – one big word…..DEBT – its Canada’s titanic/iceberg
scenario

#14 Blobby on 06.22.22 at 12:33 pm

We did it to ourselves.
But somehow everyone will blame someone else for their own problems. “government/foreigners/take your pick”

#15 Russ on 06.22.22 at 12:37 pm

Here’s a link to a bike that can help deal with transportation costs for all the dogs who own trucks.

Made in Saskatoon.

https://newatlas.com/bicycles/biktrix-juggernaut-xd-ebike/

A video shows it pulling a trailer :)

Cheers, R

#16 Squire on 06.22.22 at 12:42 pm

I smell a McGuinty (Ontario) outcome soon. Possibly September when we have a new Con leader elected. Freeland will be left holding the bag much like Wynne did.

#17 Philco on 06.22.22 at 1:01 pm

#6 Ponzius Pilatus on 06.22.22 at 11:59 am
I think many small businesses are just riding the inflation bus.
Went to my favourite Vietnamese Bhan Mi store.
The sandwich went from 4 to 5.5.
And the Coke from 1 to 1.5.
50% inflation on the Coke?
It’s still a good deal, compared to the Burger joints, but
Caveat Emptor.
————————-
Ponz what I saw was their just covering input costs. Most can’t won’t raise other then that.
I watched at super bowl time a food piece talking to all the pubs and sports bars. I was shocked as then these owners were showing wholesale food cost skyrocketing then. ie chicken wings 50 use to be $65 and they pushed it to $95 and their margins were sinking at that.
Dudes says were just trying to keep them coming in the door and survive!

#18 poopped on 06.22.22 at 1:07 pm

BoC would be foolish to do anything less than a 1% increase next round.

#19 Michael in-north-york on 06.22.22 at 1:08 pm

#1 JOHN PICKETT on 06.22.22 at 11:32 am

One big driver of inflation is the war in the Ukraine. The sooner it concludes the better for one and all. We need both the Russian and Ukrainian economies back on line ASAP. Unfortunately i do not see that happening.
===

Just convince Putin to pull his troops out of Ukraine, and the war will end. Ukrainian troops will not follow them into the Russia proper.

Arms embargo only works if you can block both sides from getting the arms. Putin doesn’t get any arms from Canada; Ukraine does. Arms embargo will help the aggressor.

#20 TurnerNation on 06.22.22 at 1:22 pm

“Don’t trust anyone under 40?” The new phrase for Boomers.

— Our high taxes! Only the best health care system .
Say found a family doctor yet?

https://www.timescolonist.com/local-news/bc-keeping-vaccine-mandates-for-public-servants-health-care-workers-5500861
“Falcon said the vaccine requirement is worsening the critical shortage of health-care workers that has seen the temporary closing of emergency rooms in rural communities on the Island as well as in the northern and Interior health authorities.”


— New CV Study on rodents.
I’ll just file this one under Control Over our Breeding. Dum-ti-dum nothing to see here.
Bats & Wetmarkets Guys. Bats & Wetmarkets.

—-
https://assets.researchsquare.com/files/rs-107474/v1_stamped.pdf
“Aromatization is the process that converts testosterone into estrogen. This is a natural process your body goes through to maintain homeostasis. The reason that this process is called aromatization is because aromatization is named after the chief enzyme involved in the conversion – aromatase”.
“SARS-CoV-2 infection induced CYP19A1 expression in the lung correlates with increased aromatization of testosterone-to-estradiol in male golden hamsters”
“…we show that SARS-CoV-2 infection attacks reproductive organs, causes massive dysregulation of sex hormones and induces elevated transcription of the androgen-to-estrogen converting enzyme aromatase CYP19A1 in the lung.
In male hamsters, SARS-CoV-2 infection causes severely depleted testosterone and highly elevated estradiol levels. In female hamsters, SARS-CoV-2 infection causes reduced estradiol levels. Hormonal dysregulation in infected animals is followed by severe weight loss compared to control groups treated with poly(I:C) or PBS”

#21 Millennial 1%er on 06.22.22 at 1:27 pm

Blood in the streets. Destroyed retirements. Cheap cottages.

Good. I want to see it all burn.

I’m still on track to retire at 40. Maybe I’ll even be able to get my perth cottage by then without risking my retirement date too.

#22 Graeme on 06.22.22 at 1:29 pm

I think a lot more inflation is coming. Ironically, lame rate hikes & QT are only adding to the cost structure of everything in the face of big supply problems.. and it’s a gross understatement to say those aren’t going away any time soon. At some point all this will do is really blow up leveraged/financial assets which have been inflated over the past decade, taking our many useless jobs/companies while stuff we need continues to soar. CB’s will be back probably sooner than most people think and this will be the real surprise. “They can’t ever raise rates” was always clearly wrong. “They can’t raise rates BUT they will try, it will suck, then fail” is still very much in play, being in the second half.

#23 The Regulator on 06.22.22 at 1:31 pm

The Canadian government, and all western governments, are pointing fingers everywhere except at themselves for this slow motion train wreck. It’s Putin’s, fault, it’s climate change, it’s oil company greed. Look in the damn mirror, and accept responsibility for once in your lives, you idiots!

#24 Ponzius Pilatus on 06.22.22 at 1:38 pm

#17 Philco on 06.22.22 at 1:01 pm
#6 Ponzius Pilatus on 06.22.22 at 11:59 am
I think many small businesses are just riding the inflation bus.
Went to my favourite Vietnamese Bhan Mi store.
The sandwich went from 4 to 5.5.
And the Coke from 1 to 1.5.
50% inflation on the Coke?
It’s still a good deal, compared to the Burger joints, but
Caveat Emptor.
————————-
Ponz what I saw was their just covering input costs. Most can’t won’t raise other then that.
I watched at super bowl time a food piece talking to all the pubs and sports bars. I was shocked as then these owners were showing wholesale food cost skyrocketing then. ie chicken wings 50 use to be $65 and they pushed it to $95 and their margins were sinking at that.
Dudes says were just trying to keep them coming in the door and survive!
———————————
As usual, you don’t get the drift of my post.
When I buy my Coke at Shoppers Drug Mart, the price has changed very little.
Read my post again and then respond.

#25 PBrasseur on 06.22.22 at 1:39 pm

To get out of this we need a recession, ASAP!

In order to curb demand and loosen up an incredibly tight labor market, among other things.

The problem is that there is so much debt in this country a recession could make it hard to service that debt and there’s a real risk of a financial debt crisis if a recession hits too hard.

That’s call being stuck between a rock and a hard place.

Question is how to we correct our situation while still servicing ours debts? How do we finance health care if we can’t print money and borrowing costs are spiking?

The chance of all this going well are slim to none IMO.

#26 Old Boot on 06.22.22 at 1:43 pm

#133 Old Boot on 06.22.22 at 1:40 pm

#112 the Jaguar on 06.22.22 at 8:05 am

@#100 Old Boot on 06.21.22 at 11:09 pm

DELETED. This thread is wholly inappropriate for this blog, and is hereby ended. – Garth

#27 The Regulator on 06.22.22 at 1:43 pm

Let’s look at government incompetence, shall we? Trans Mountain to lose money, as construction costs have skyrocketed from 12.6 billion to 21.4 billion. Comrade Premier Horgan and his leftist government stated it’s staunch opposition to the project, pledging to use all avaliable tools to block it. None of these people actually own tools, or toolboxes. All Albertans need to stop wasting their money in B.C.(Bring Cash), and risk their vehicles being vandalized or lug nuts loosened by radicals there. Ingrates are they.

#28 Søren Angst on 06.22.22 at 1:46 pm

Inflation wears a populace down.

Not just monetarily, also psychologically.

Death by a thousand cuts.

#29 Mr Wenslydale on 06.22.22 at 1:47 pm

“We did it to ourselves.”

We certainly did. So much blame goes about: money laundering; real-estate pumping; foreign money; too many immigrants; too few immigrants; oldies; millennials; Cons; Libs etc etc. In the end, Canadians paid what the listing price was and then some, completely high on debt and real estate. I don’t think the gene for detoxifying that combo is strongly expressed in Canada – in fact, it’s been a little suppressed, culturally, over the last two decades.

We just kept pounding back debt and flipping properties like it was the time of our lives.

Borrowed so much from the future I’m surprised some of us don’t already have flying cars.

#30 Diamond Dog on 06.22.22 at 1:53 pm

I’ve been too distracted with the states to follow Canadian economics. Of course, Can CB’s follow the Federal Reserve 90% of the time, not much reason to think it would be different this time but I had hoped inflation wouldn’t romp as high and as usual, find hope to be a weak word.

Another 1.75% in Can CB hikes is a Fed rate hitting 3.5% this year. Sounds about right. This means a fiver nearing 7%. A 32% drop in real estate sounds lucky. Add in recession and some unemployment, who really knows.

It’s just a rough year for investors and the indebted. There may be some reversal after U.S. mid-terms but maybe not. 2022 is proving up to be a risk off year. I like 2023 though, buy low right?

#31 Søren Angst on 06.22.22 at 2:00 pm

EU-wide ban on the sale of new petrol and diesel cars from 2035.

Christian Lindner, German finance minister, says:

EU’s draft policy was “wrong” and that the German government “will not agree to this European legislation this week.”

“Germany will … not be able to agree to the fleet limits with the de facto ban on internal combustion engines”

Die Grünen in charge of Environment, Steffi Lemke, want to keep the target. Then again, Die Grünen Vice-Chancellor Robert Habeck in as many words:

Fire up the coal plants!

———————

Tells you that Carbon Taxes are nothing more than a tax grab. A bunch of FEEL GOOD BULL SH!T.

And the ever capable technically Germans are admitting it.

Take the number of cars in Canada, pretend they are Teslas, calculate how much electricity they take to charge and if they were all to charge in 1 night this happens:

Canada’s entire electricity grid collapses.

Means electricity rationing. No meaningful electrical power being added to the grid in the foreseeable future.

SCAM if ever there was one.

Gov Canada and EV pumpers:

Too stupid to know they are stupid.

#32 Canuck on 06.22.22 at 2:06 pm

We did this to ourselves. Let’s see how we get out of it.
_____________________________________________

Just like we’ve had to do with past recessions, take the kick in the head and move on.

#33 Philco on 06.22.22 at 2:07 pm

The Ukraine Russia war, Taiwan’s toast and the Gennie is not going back in the bottle.
The worlds is changing fast as nothing stays static.
Expensive life stays permanent.
Better dial in on it fast.

#34 Rweinc on 06.22.22 at 2:07 pm

Its time to do away with CMHC mortgages! They continue to support an inflated housing market!

#35 DOWn on 06.22.22 at 2:16 pm

I’ve been reading this blog for years and can’t help but think that Smoking Man would be rolling over in his grave in these rainbowy daze.

I’ve nailed every housing markets top within a week.
So I’m going to bring up the elephant that’s not in the room….yet.

Deflation

#36 crowdedelevatorfartz on 06.22.22 at 2:17 pm

@#24 Ponzie Pop predicament
“As usual, you don’t get the drift of my post.
When I buy my Coke at Shoppers Drug Mart,”

+++
Shoppers?
I figured you for a “Out of Date” or insurance consignment warehouse lurker for your dusty, damaged crate of 500 Coke pop cans at $0.25/can
You could then sneak the pop into the restaurant in your wife’s purse, order water and pour it in a potted plant.
Poof!
$1.50 saved!

I’m very disappointed Ponzie.
Put your money where your large brag hole is.

#37 Grumpy Cat on 06.22.22 at 2:22 pm

Good!

#38 Jane24 on 06.22.22 at 2:26 pm

Canadian inflation is nothing. The British number came out at 9.1% today. We win. The Governor of the Bank of England announced that inflation in Britain will peak at 11% in October. In his dreams. It will be 11% by August and who knows how much higher by October.

#39 Ustabe on 06.22.22 at 2:30 pm

22 years ago when we first moved into this home we often noticed bats flying through the back yard in the evening.

So I placed a couple of bat houses up in the trees towards the rear of the yard, near the creek.

Where they sat for years, 10 probably. This spring I had a feeling…so I borrowed a friends trail camera and set it up and yup, we have bats. For now looks like 3 or 4. A start.

Finally! Hope they are hetero bats, the bat house will hold up to 25 comfortably.

My point is now is the time to do things that will pay off down the road. We have little to no control over the price of a coffee right now but we have immense control over whether you will be able to buy one in a decade.

#40 Søren Angst on 06.22.22 at 2:34 pm

EV for Gov 🍁 Idiots.

Canada Electric Power, 2018:

Own consumption = 522.2 bn kWh
Production = 649.6 bn kWh
Import = 2.68 bn kWh
Export = 73.35 bn kWh
——
Net Surplus Power = 56.73 bn kWh

Tesla Model 3 kwh/yr = 4,260.625
max # of Tesla 3’s w/surplus power, 2018 = 13,314,948

# of Registered Vehicles Canada, 2018 = 35,108,602
Total Tesla’s in Canada, 2018 = 67,373
Vehicles not Tesla that would need power = 35,041,229

Power shortfall per year = 92,567,536,308 kwh
Hoover Dam kwh per year = 4,000,000,000

Canada needs to build = 23 Hoover Dams if everyone charges on the same night. Spread charging out evenly over 7 days (a.k.a., RATIONING), Canada needs to build:

3.3 Hoover Dams
4 Hoover Dams, rounded up.

Cost to build a Hoover Dam, todays $CDN = $1,140,406,704 ($49M US in 1931 to 2021 CDN $, use an Inflation Calculator).

Cost to build 23 Hoover Dams = $26,391,159,745

——————–

There. Now go out and buy that EV you all lust after ’cause pretty soon Canada you will have this Conundrum to ponder over:

Refrigerator, Freezer, Oven, Air Conditioner vs. your Tesla 3.

Enjoy.

PS:

The Fools are worried about decarbonizing the grid by 2035.

https://financialpost.com/opinion/francis-bradley-the-clock-is-ticking-on-canadas-electricity-grid

As I said, too stupid to know they are stupid.

#41 an investor on 06.22.22 at 2:35 pm

“We did this to ourselves.” Garth

I had nothing to do with this. Blame our corrupt politicians who turned a blind eye to money laundering in Canada. Blame the WHO and health bureaucrats in western nations for locking us down and killing small business. Blame Trudeau for his reckless unsustainable stimulus spending. Blame Biden for shutting down the keystone pipeline. Blame Omar for screwing up our airports … I could go on. And don’t try using the ‘we saved you from a deadly pandemic’ … that has a 99% survival rate.

This economic crisis benefits our adversaries. Every problem we are dealing with is manufactured through malfeasance or ineptitude. They knew the lockdowns would destroy our economy and our physical/mental health. This is not 1983 Garth, it is an insurrection.

Nobody made people pay $400,000 over asking without conditions for a crap house in the sticks. Grow up. – Garth

#42 Neo on 06.22.22 at 2:37 pm

DELETED (Anti-immigrant)

#43 Prince Polo on 06.22.22 at 2:46 pm

In this example, mortgage debt must reduce from $1,000,000 to $730,000, putting the new sale price at $1.23 million – a decline of 20%. And still we’re just back to where we were – unaffordability. So logic suggests the discount will end up being more – likely along the lines of the last real estate purge (1989-1993) when average prices plopped 32%.

If this time is so much worse than before, how come declines are expected to be in line with the previous 32%?

It’s gotta be a least a 50% haircut in order to get back to some sort of “sane” level.

Signed,
a loser renter (sans $1M+ mortgage)

PS. All the criers have a legitimate beef only if Poloz or Tiff showed up at each of their houses threatening them to sign for a gargantuan mortgage. Otherwise, shaddup!

#44 Søren Angst on 06.22.22 at 2:48 pm

RE: EV for Gov 🍁 Idiots.

Calculations assume:

1. No EXTRA power needed for a growing population other than to charge Tesla 3’s at 2018 motor vehicle numbers.

AND

Canada to collect C$2.81 billion in direct revenue from federal carbon price in 2019-20

https://www.reuters.com/article/us-canada-economy-climatechange-idUSKBN1ZY215

Gee, that pays for 9 Hoover Dams and some change. Only 14 more to go.

Where is it going?

“Under the federal system, relief is provided for farmers, fishers, residents of rural and small communities, users of aviation fuel in the territories, greenhouse operators, and power plants that generate electricity for remote communities.”

– Mar 22, 2022

You decide Canada, which is it?

Refrigerator, Freezer, Oven, Air Conditioner

OR

Charge you Tesla 3.

—————–

🍁 2035 or earlier if Elon has his way and Trudeau et. al.

#45 Leftover on 06.22.22 at 2:50 pm

1982
1989
2008

What’s past is prelude

#46 Søren Angst on 06.22.22 at 2:51 pm

Nobody made people pay $400,000 over asking without conditions for a crap house in the sticks. Grow up. – Garth

I liked the”Grow up” part.

THAT was good.

Yes. It was.

#47 Gr on 06.22.22 at 2:55 pm

All opinion but first maybe just fear…

Michael Burry’s Warning for the 2022 Stock Market Crash YouTube June 15, 2022 12min (@1:50 Feb 19, 2021 prepare for #inflation)
https://www.youtube.com/watch?v=Cpq7T-v52n8

Warren Buffett: 5 Rules For Investing In Stock Market Crashes June 20, 2022 YT 15min
https://www.youtube.com/watch?v=K6OIu-Vzkic

Warren Buffett: How You Should Invest in 2022
YT Jan 13, 2022 15min
https://www.youtube.com/watch?v=1Hxy2NBD7J8

#48 Paddy on 06.22.22 at 2:59 pm

We have a problem,” says BMO’s head econ, Doug Porter…..
Ummmm I think when Mr. Porter says “we”, he means everybody but the banks…yah they’re gonna be just fine with these rising interest rates….nice try at acting like you care…

Porter deserves more respect than that. – Garth

#49 Søren Angst on 06.22.22 at 3:02 pm

One last little EV tidbit.

Tesla Model 3 kwh/yr = 4,260.625

Avg US Home consumes 10,715 kwh/yr

—————–

Enjoy.

EV 🍁 2035

All new power 23 Hoover Dams JUST for your Tesla. Forget about ANY population growth electrical needs.

If so, well you’ll need ++ 23 Hoover Dams to be built Canada. Again, at 2018 levels of power consumption.

May not live to see 2035…glad for that tender mercy from Mother Nature.

#50 Big Bucks on 06.22.22 at 3:11 pm

Better to rent a room in your house(it looks like there will be quite a pool to choose from)than sell your house and have to rent in this market.Remember rent control or not rent increases are tied to inflation (CPI) so 5-7% annual increases can’t be ruled out.Spring 2022 RE prices are probably the high for years(maybe 10 or more) but rents are likely to double over the same period.

#51 islander on 06.22.22 at 3:12 pm

https://www.sightline.org/2022/05/09/how-low-taxes-lead-to-high-home-prices-in-vancouver-bc/

Check what Vancouverites pay in property taxes…

“Low Property Taxes Boost Prices and Speculation

All else equal, when property taxes go down, home prices go up. In Portland, Oregon, for example, the owner of a typical million-dollar home would pay $16,000 a year in taxes, compared with just $2,900 for a home of the same value in Vancouver. That’s a difference of more than $14,000 per year, or $1,000 a month. Another way of looking at this is that, depending on the interest rate, that’s about the same as the difference in mortgage cost between a $1,000,000 home and an $800,000 home.”

#52 Summertime on 06.22.22 at 3:12 pm

Yep, Stan Brooks got it right on inflation.

He was laughed at.

My gut feeling is telling me that this is just the beginning of our BIG inflation worries.

Just waiting for the coming fertilizers shortage and doubling and then tripling food prices.

Welcome back, Stan. – Garth

#53 Zhorgon on 06.22.22 at 3:13 pm

If you look on Zillow now, you can enable a filter to only show or map houses with price reductions, and view previous prices too. There are tons of reductions now all over Canada compared to almost zero a couple months ago. These price drops appear,however, to be realtor orchestrated, almost all are magically “only” ca. 5 % (mostly Bunnypatch). Still way too high. Reality check is coming fast.

#54 The Regulator on 06.22.22 at 3:16 pm

Senator Bill Hagerty (R-TN) addressed the Biden narrative, noting that “the problem [of inflation] hasn’t sprung out of nowhere,” before asking Chair Powell the following question : “Would you say the war in Ukraine is the primary driver of inflation in America?”
Fed Chair Powell’s response was shocking in its frankness. “No, inflation was high, certainly before the war in Ukraine broke out.” Nuff said.

#55 Stone on 06.22.22 at 3:17 pm

More dividends being declared for my B&D portfolio. And it just keeps rolling in regardless of the gyrations on the financial markets or the eventual decline in home price valuations.

It’s good to be free.

#56 Summertime on 06.22.22 at 3:17 pm

Welcome back, Stan. – Garth

touché

#57 Stone on 06.22.22 at 3:24 pm

#52 Summertime on 06.22.22 at 3:12 pm
Yep, Stan Brooks got it right on inflation.

He was laughed at.

My gut feeling is telling me that this is just the beginning of our BIG inflation worries.

Just waiting for the coming fertilizers shortage and doubling and then tripling food prices.

Welcome back, Stan. – Garth

———

Fertilizer shortage? Pffft! Build a couple compost boxes in the backyard and start filling it with vegetable scraps, leaves and garden waste. Don’t forget, always be B&D. Even with your compost box.

1/3 green stuff, 2/3 brown stuff. And no meat/dairy although washed out eggshells are fine.

In the fall, turn over the pile in the first compost box into the second one. By the spring, the second box is ready to use. Your (veg) garden will thank you. Rinse and repeat.

Fertilizer shortage? Pffft! There’s always a solution if you have brains.

Oh…

#58 Spring Fwd on 06.22.22 at 3:29 pm

“WE did it to ourselves, let’s see how WE get out of it.”

Yes, no one put a gun against anyone’s temple but if the thieves at every single Central Bank had a Freaking CLUE, they would have been RESPONSIBLE and raised rates FAR MORE QUICKLY AND stopped the flood of cash into worl markets.

Please call it as it really is, ok? The so called experts clearly co-ordinated to do this but like Tramp and his call for insurrection , it can’t be proven. But c’mon we all know they set the stage for the bubbles in everything.

From here on out til WAR it’s STAGFLATION baby.

Buy oil as your only hedge, cash and everything else is essentially garbage til this DEBT INFESTED SHIT SHOW ORCHESTRATED perfectly by the Central banks is resolved.

#59 Roofer on 06.22.22 at 3:30 pm

People have lots of money… nobody hurting. High end Restaurants full of people eating and drinking like there’s no tomorrow and that was lunch. Houses need to go down 65% for people to change spending habits . 50% decrease only takes us to 2019 prices.

#60 Søren Angst on 06.22.22 at 3:33 pm

Saint Warren Buffet bought more Occidental Petroleum.

https://finance.yahoo.com/news/why-warren-buffett-bought-occidental-160000057.html

Today: -2.8%
Past month: -14.2%
YTD: +80.9%

He’s in it for the long haul. Imagine that?

———

Michael Bury Shorts –

Apple, Tesla (exited bet), Ark.

Warns of a looming consumer recession and more earnings trouble.

—————-

Nothing Earth shattering from either.

yeah oil.

High Inflation outcomes.

—> Pedestrian if you were to ask me.

I do my own thinking.

And for the record, +17% YTD rate of return just like Bury a few weeks ago (excl. dividends). YTD NYSE: BRK.A = -10.29%.

#61 Spring Fwd on 06.22.22 at 3:39 pm

Recently back from Cuba to see what real destruction to humanity looks like….

People eating 1 meal a day, Families ashamed to send their children to school because they have nothing to eat, etc, etc.

Ironically the only people doing ok were living off the land on their farms with ample food to eat just like my dad said how well his family survived during the depression years.

Yea, Cuba choose their path, like people buying houses in a bubble BUT I wonder how the irresponsible bankers get off scott free while Millions worldwide slowly starve to death.

I guess they have an inside track to the afterlife where they can take their “hard earned” cash with blood and death on their hands that us mortals will never know.

#62 Spring Fwd on 06.22.22 at 3:50 pm

#48 Paddy on 06.22.22 at 2:59 pm
We have a problem,” says BMO’s head econ, Doug Porter…..
Ummmm I think when Mr. Porter says “we”, he means everybody but the banks…yah they’re gonna be just fine with these rising interest rates….nice try at acting like you care…

Porter deserves more respect than that. – Garth
– – – – – – – – — – – – – – – – – – – – – — – – – – – — – – – – – — – —

Paddy:

Oh he cares 100% for the banks profits to whom he works for and serves.

Remember the elites protect and serve their own. Always and everywhere….even here.

Please know your place and respect the banks. After all they own the politicians, media and most of the world.

R.E.S.P.E.C.T.

Porter is one of the country’s most experienced economists. I have followed his work for decades. Not everyone is a shallow vessel for their employer. You will learn. – Garth

#63 wallflower on 06.22.22 at 4:02 pm

Could it get any Wilder?

#64 Garth vs. 45 on 06.22.22 at 4:05 pm

Blogger vs. Mogul

45 says rates are heading towards 21%.
Other financial commentators are saying rates are going over 10%, and the Fed Rate is heading to between 15% and 20%.
These predictions could make Garth’s peak interest rate target a speed bump on the way to much higher rates.

Are interest rates spiking higher by design to crush real estate in time for Agenda 2030-The Great Reset where “you will own nothing and be happy”?

#65 Editrix on 06.22.22 at 4:06 pm

How much of this inflation is companies jacking prices to make a profit – grabbing while they’re able to and blaming the war/inflation/COVID/supply chain/government?

When the dust settles, I’m still planning to buy a house and rent it back to the owners who over-extended themselves. A 32% decrease in my neighbourhood for a small house will make it about $650K.

#66 Bonobo on 06.22.22 at 4:10 pm

Yah, and yet we still have diehard Lib-NDP Coalition supporters on this board even while your socialist pals, JT and Jagmeet, are draining your wallet faster than water gets sucked into the dry earth in the Sahara Desert.

Well you got what you voted for and it’s just going to get worse. Hopefully PePe and Trump can bring us back to some sanity in the next two years.

Buy and EV you say…

Go and price out a Tesla for yourself. In AB we don’t want rear wheel drive EV’s we want AWD vehicles. These vehicles are out of reach for most Albertans – crazy prices.

Trudeau’s answer is spend even more money to try and control inflation. No end in sight of this stupidity until the next election in both US and Canada.

#67 PeterfromCalgary on 06.22.22 at 4:10 pm

Top up your tank in the next week. Biden is proposing to suspend the gas tax for 90 days so consumers in the US will all top up when that comes into effect. Many will probably run close to empty before that in anticipation of the gasoline tax cut.

So that gives you a small window of opportunity to fill up in the next few days while US gasoline demand it artificially low in anticipation of that tax cut.

Since Midterms are soon and cutting gas taxes is popular this will probably pass.

#68 Faron on 06.22.22 at 4:12 pm

#51 islander on 06.22.22 at 3:12 pm

FYI Oregon has no sales tax.

#69 Søren Angst on 06.22.22 at 4:15 pm

Talking about Batsh!t Crazy today…

Monthly payments on variable-rate mortgages could increase as borrowers near their ‘TRIGGER RATE’

https://www.theglobeandmail.com/business/article-variable-rate-mortgage-trigger-rate-increase-monthly-payment/

When monthly interest is > the monthly mortgage payment.

Of course, they provide no sample calcs or how many are affected other than 37% of Cdn mortgages are variable and depends on the mortgage contract (i.e., pay extra in separate lump sum payments or monthly payment goes up, etc.).

—————–

Misery for Cdn RE variable rate, high leverage, debt holders. Awhile ago Garth mentioned about 8% of mortgage holders if memory serves correct. That’s a lot of households (8% = 440,000 economic families/individuals in Canada, 2019, 5.5M total that year with a principal residence mortgage).

Rains. Pours.

#70 OK, Doomer on 06.22.22 at 4:17 pm

#21 Millennial 1%er on 06.22.22 at 1:27 pm
Blood in the streets. Destroyed retirements. Cheap cottages.

Good. I want to see it all burn.

I’m still on track to retire at 40. Maybe I’ll even be able to get my perth cottage by then without risking my retirement date too.

+++++++++++++++++++++++

I retired at 36. Took up golf. Bored sh8tless after 3 months and then went back to work. That was in the mid 1990’s.

Haven’t thought about retiring since. I realized that retirement is like single malt scotch. Too much and it’ll kill you.

Never wish ill on other people; you’re one of them.

#71 It's #Justinflation on 06.22.22 at 4:25 pm

difficult to understand the excitement over 30% drop in house prices…that 1950’s asbestos-filled , one-owner bungalow worth $1.8 mill in the GTA will be worth $1.26 Mill…with rates for a 5 yr tasting 6% and wage increases stuck at 3%.. what’s to be excited about?

#72 Brett in Calgary on 06.22.22 at 4:40 pm

Met with my team in person today (IT-ish so we still work in PJs) and the topic of rates/houses came up. One poor young lady “bought” a new house in Feb 2020 and due to all sorts of supply restraints and escalations in cost will not step inside it until Feb 2023. The interest rate when she made the initial decision was about 2%, but given the builder’s inability to finish the house her mortgage won’t kick until in the New Year when her bank can offer her the great new deal of 5.4%. That’s what you call getting screwed on multiple fronts.

#73 NOSTRADAMUS on 06.22.22 at 4:41 pm

WHOA NELLIE!
I don’t know which way to turn anymore, up is down, down is up. Imagine being a misinformed real estate buyer today. Too many families have zero financial knowledge in the household. They read an article created by the self serving cartel, and published with no fact checking by their buds in the news media. Why wouldn’t they think that buying a house is a great idea? Add a bent realtor to the mix, offering self serving free advice, no wonder the average homebuyer has no clue to what is really going on.
New point. With the market in decline, the majority of smarmy realtors with less than 12 years sales experience are about to learn that opening a door and saying “this is the kitchen” isn’t a high paying skill set.
New point. Every now and then droplets of reality splash on the noggins of the Central Banker big thinkers. Whoa Nellie! Looks like the “B”-“S” has hit the fan. Steady Lads, hold the line.

#74 Daveyboy on 06.22.22 at 4:44 pm

@51 , I live in Portland Oregon, the wages are much higher than Vancover , BC.

#75 Polecat on 06.22.22 at 4:47 pm

Damn, this inflation will mean Adele tickets are going up, will I ever see her again?

#76 BCWally on 06.22.22 at 4:51 pm

I can’t imagine what it must be like to be trapped in a monster mortgage with the house worth -32% of what you bought it for.
You and your partner working for years for a prison of your own making. Imagine the resentment after a while. No nice new vehicle, no vacations, every dollar counts and having to creatively finance just to hang on. Don’t lose your jobs! Moving out of town is not an option.
You can’t sell without realizing a huge loss that follows you long after.
Even if you decide on a northern one horse town strategy after the horse dies, that is financial combustion by accidently dropping a Molotov cocktail at the gas water heater after loosening the pipes you still will only get market value for the house.
Soul crushing.

#77 TurnerNation on 06.22.22 at 4:52 pm

Control over our Feeding…is the plan into 2030. We will starve, or eat bugs, for ‘the climate’.

https://www.thecattlesite.com/news/58765/dutch-farmers-protest-governments-strict-nitrogen-rules/
“Dutch farmers protest government’s strict nitrogen rules 22 June 2022
Farmers are expected to reduce livestock numbers by 30%
Thousands of farmers gathered in a village near the centre of the Netherlands on Wednesday to protest a government plan to curb nitrogen pollution, reported Reuters, many travelling by tractor from all corners of the country and snarling traffic.
The protest in Stroe, 70 kilometres east of Amsterdam, follows the introduction last week of targets for reducing pollution by harmful nitrogen compounds in some areas by up to 70% by 2030 – the latest attempt to solve a problem that has plagued the country for years. ”

—-
—-
Known many years ago, if one was paying attention.

#91 TurnerNation on 12.17.19 at 8:06 am
For years now I’ve stated a time will come whereby armed government men destroy perfectly good food stuffs while desperately hungry people look on. Maybe the WHO says there is a virus, or maybe the correct ‘carbon permit’ was not obtained beforehand

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

#28 TurnerNation on 05.28.20 at 9:07 pm
yeah the spoils of this War are already being divided up. Meet the shadow govt.
I’ve posted may times for years on here they I expect soon perfectly good foodstuffs forced into waste as we hunger, or wailing families kicked to the curb, all by armed govt men

#78 You know Val on 06.22.22 at 4:53 pm

We do not do this to ourselves Garth , that is reserved for the point 00001 percenters

#79 Inequity on 06.22.22 at 5:01 pm

@51 I bet if you look at a million dollar house in Portland and compare that to Vancouver, you will get some context.

#80 Victor Llearna on 06.22.22 at 5:22 pm

The sheep that bought in bunny patch are about to get fleeced and learn a lesson

#81 inflation is rampant on 06.22.22 at 5:23 pm

i warned you months ago. even as early as March 2021… they should have raised rates last year to 3%.

Central banks are run 100% to blame

1. there is a hard recession coming.

2. stock prices are MASSIVELY OVERVALUED.

but this will only be the first step. the excesses of the last 12 years need to be unwound. it will take a decade or more.

wrap our head around that.

Not a chance. – Garth

#82 Shirl Clarts on 06.22.22 at 5:24 pm

#18 poopped on 06.22.22 at 1:07 pm
BoC would be foolish to do anything less than a 1% increase next round.

^^^^^^^^^^^^^^^^^^^^
Agreed, especially since Apr to May inflation went up almost a full 1%. The whole idea is to get in front of this inflation beast. Years of low rates has made everyone soft. It’s like the CB’s are trying not to beat the history books…

Historical events calls for historical measures.

#83 Dr V on 06.22.22 at 5:26 pm

44 Soren RE: EV for Gov Idiots.
——————————————————–

Below is the energy profile for BC

https://www.cer-rec.gc.ca/en/data-analysis/energy-markets/provincial-territorial-energy-profiles/provincial-territorial-energy-profiles-british-columbia.html

A newscast did the quick math on the goal of electrifying the “fleet” or generally all ground transportation in BC.
They stated the current grid capacity needed
to…….triple. Looking at the charts in the link, that appears about right.

They also stated that was the equivalent of adding another 15 Site C dams. I did the napkin math and only got about 5, but that may have been based on peak power capabilities as opposed to sustainable.

#84 yvr_lurker on 06.22.22 at 5:35 pm

It is unfortunate that economic trends cannot be examined through controlled experiments. I would be curious to know what fraction of the inflation is due to soaring energy costs (fuel etc…), spiked by the war in Ukraine. Transportation costs of food/products are a huge issue in Canada due to the great distances involved.
If the CB goes too hard on interest rates they can trigger a major recesssion; I think it all depends on what the energy costs will be over the next year. Get that down, and inflation will be tamed somewhat….(or at least not at bat-shit crazy levels)

#85 Mattl on 06.22.22 at 5:43 pm

Chickens. Coming home to roost. Millions of them. Droppings everywhere. We may be deeper in them than anyone thought

—————————————————————

A lot of people felt there was a big crash/correction coming. It only made sense that the correction would be proportionate to the run up. I mean, that stat that 50% of Canadians were 200 bucks from being insolvent was posted here a few times – of course rising rates and increased debt servicing costs were going take out millions of households.

And this is the reason some of us believe they will never be able to normalize rates without creating economic chaos. Debt is integral to the economy, take away access to free and cheap money and there is very little left. Corp profits are going to get crushed and this thing has just begun. Corp world knows this, and I’d expect to see them get ahead of it be significantly reducing the expense line, including a pause on hiring and layoffs. I don’t believe Mr Market has any of what’s to come priced in.

Garth you are rightfully a big believer in ‘history repeats’. I expect equities to react the same way they have to other bubbles by giving back 40-50% of recent gains.

Of course not in a post-pandemic economy with historically-low jobless stats. – Garth

#86 Dave on 06.22.22 at 5:44 pm

I wonder how Linda feels now.

https://www.greaterfool.ca/2016/04/22/tnltb-speaks/

#87 Mattl on 06.22.22 at 5:49 pm

#3 crowdedelevatorfartz on 06.22.22 at 11:47 am
A possible 30% plop in housing prices….
Look!
Up in the sky!
Is that a vulture?

Canadian housing returns to sanity after years of media, bank, realtor hype.
Long overdue.

————————————————————-

While I agree that this is long overdue, and personally couldn’t less about the value of my home, how does this vulching you keep bragging about work? Is it really a huge win for you to buy a house at 2016/17 prices, at mortgages prices 2-3x higher? Also, I believe you are in the trades. No concerns about what this will do to business? A recession is going to crush the trades.

Not wishing you ill by any means, hope you get a great house, but the math is shaky is you’ve been holding out since 2010-2018.

#88 Reality Check on 06.22.22 at 5:50 pm

#1 John Pickett

Why are not ending our support for this war?
—————-

Because from a longer term strategic it would reward Putin’s unprovoked aggression. If Russia is allowed to take the Ukraine or big chunks of it unopposed it send the message that the west is ok with Putin invading other countries. Do we seriously want to see Russian absorb all the non-NATO countries in Europe and recreate a form of the USSR?.

Imagine a much bigger Russia in league with China – very dangerous for world peace and democracy.

#89 Barb on 06.22.22 at 6:03 pm

The CPI graph excludes food and energy.
Pity.

#90 Sail Away on 06.22.22 at 6:05 pm

#83 Dr V on 06.22.22 at 5:26 pm
44 Soren RE: EV for Gov Idiots.

———-

Below is the energy profile for BC

https://www.cer-rec.gc.ca/en/data-analysis/energy-markets/provincial-territorial-energy-profiles/provincial-territorial-energy-profiles-british-columbia.html

A newscast did the quick math on the goal of electrifying the “fleet” or generally all ground transportation in BC.
They stated the current grid capacity needed
to…….triple. Looking at the charts in the link, that appears about right.

They also stated that was the equivalent of adding another 15 Site C dams. I did the napkin math and only got about 5, but that may have been based on peak power capabilities as opposed to sustainable.

———-

Alternatively… power use must to reduce by 2/3.

Same thing government needs to do with their spending: reduce, don’t multiply.

#91 Tony on 06.22.22 at 6:07 pm

Re: #70 OK, Doomer on 06.22.22 at 4:17 pm

I just did what I did before I retired after I retired. Nothing really changed. Almost 30 years later I still do the same thing but I gave up smoking about 17 years ago.

#92 The real Kip (Ret) on 06.22.22 at 6:11 pm

Times like this make me glad I’m a Boomer. Hope everyone enjoyed the stimmy cheques.

#93 Bunnypatch Carnage on 06.22.22 at 6:12 pm

This deal will not go through. There is no way the bank will grant a loan to these people.

$1,575,000
Sold
List: 2022-06-03 | End: 2022-06-15
W5644833

$1,699,500
Terminated
List: 2022-05-10 | End: 2022-06-03
W5611219

$1,799,900
Terminated
List: 2022-05-02 | End: 2022-05-10
W5599785

$1,849,900
Terminated
List: 2022-04-19 | End: 2022-05-02
W5582078

$979,900
Suspended
List: 2019-07-16 | End: 2019-07-24
W4518693

#94 Ed on 06.22.22 at 6:16 pm

I predicted the Trans Mountain expansion would cost over $31 billion after I found out the Libs took the project over.

So far they’re doing better than expected….Kudo’s.

#95 Faron on 06.22.22 at 6:31 pm

#89 Sail Away on 06.22.22 at 6:05 pm

#83 Dr V on 06.22.22 at 5:26 pm
44 Soren RE: EV for Gov Idiots.

don’t multiply

What if I “must to reduce by” multiplying by 2/3?

#96 crowdedelevatorfartz on 06.22.22 at 6:35 pm

@#76 BC Wally
“I can’t imagine what it must be like to be trapped in a monster mortgage with the house worth -32% of what you bought it for.”
+++
I rented a house in Burnaby in the early 1980’s with a bunch of university students.
The house was “worth” 220k in 1981
It sold in 1984 for 126k.
Punishing interest rates ground the economy to a halt.

#97 Kurt on 06.22.22 at 6:41 pm

““Did 20 months of ultra-low mortgage rates harm recent Canadian homebuyers? Increasingly it looks like: YES.”

BS. 12 years of too-low mortgage rates followed by 20 months of ultra-low rates harmed our entire economy because no-one had the guts to strangle the bubble in its crib. We’ve had billions of dollars of malinvestment in non-productive assets, and the chickens are comming home…

#98 Quintilian on 06.22.22 at 6:41 pm

#93 Ed on 06.22.22 at 6:16 pm
“I predicted the Trans Mountain expansion would cost over $31 billion after I found out the Libs took the project over.
So far they’re doing better than expected….Kudo’s.”

Ed unfortunately politics trump logic and prudence.
I put the blame on the Rightwing nutters from Alberta who basically extorted the Fed Liberals into this stupid antiquated bottomless pit.

#99 Cars on 06.22.22 at 6:48 pm

#130 Faron on 06.22.22 at 11:30 am
#114 Sail Away on 06.22.22 at 8:41 am
#108 Dr V on 06.22.22 at 1:23 am
95 cars (bikes?)

Towed 50lbs of basset, 10lbs of gear and another 10lbs of trailer over 80kms last weekend for a camp out. I even wore spandex.

—-

70lbs of stuff and you’re worried about aerodynamic drag with the spandex?

Admit it…your tushie likes the extra padding of the spandex shorts.

#100 crowdedelevatorfartz on 06.22.22 at 6:52 pm

@#87 Mattl
“Also, I believe you are in the trades. No concerns about what this will do to business? A recession is going to crush the trades.”
+++
Yep.
In the trades.
We focus on maintenance.
Some Govt mandated maintenance for the public and private sector.
Recession or no recession.
Maintenance must be done to remain govt certified and to be legally covered in the event of an insurance claim..
Maintenance IS recession proof.
I’ve been working nonstop at various trades for 40 years.
Last EI cheque for me was in 1981.
As for housing.
Sold in late 2012.
Figured that was the top.
Triple the original purchase price.
Invested the money.
Did very well.
Not as well as if I sold in February but who is psychic?
I have friends that are kicking themselves now for not selling before Feb…..Buyers backing out.
Sh!tshow.

As for “vultchering”….
I feel better being the “consumer” than the “consumed”.
No amount of schooling, free friendly advice or severe financial loss seems to teach the stubborn and the stupid. ( stubbornly stupid seems to be a matching pair)
Over the years I have seen family, friends, coworkers repeatedly mess up.
They repeat the screw ups again and again and again.
Not my fault….. and there is no point giving advice that isnt want or followed time and time again.

Hence the name of this blog Greaterfool

#101 Overheardyou on 06.22.22 at 6:56 pm

Bailout?

#102 The Regulator on 06.22.22 at 6:57 pm

Ukraine once had the largest standing army in Europe. Trained and mentored for many years by N.A.T.O. no less. Now their military is being destroyed daily, their country is in ruins, and their death toll grows. Amateur prognosticators abound with their one sided commentaries of it’s all Russia’s fault. Or that Ukraine is winning, or they seek revenge and demand WE retaliate. It’s not our fight, and we’re prolonging the Ukrainian peoples’ misery, and the world moves closer to Armageddon. There will be no winners.

So give it to Putin? Then Poland? – Garth

#103 Km on 06.22.22 at 6:59 pm

Just from anecdotal evidence, this may get much worse than expected due to the massive amount of speculation the past decade. Many did well however many also just kept using Helocs etc to keep getting more mired in debt. We need it to go much lower to be even close to affordable, more pain yet to come. I won’t even pretend to feel bad for them as all we have heard the past ten years is work harder or just move or blame yourself for not having bought in sooner.

#104 Happy Gramps on 06.22.22 at 6:59 pm

Just got notice of a rent increase for August of 4%. Looks like I’ll have to give up one bottle of wine to compensate. I wonder if this increase was because of the inflation everyone is talking about.

#105 crowdedelevatorfartz on 06.22.22 at 7:03 pm

YeeHaw!
B.C. wins the inflation race to the bottom.
8.1%

https://www.burnabynow.com/local-news/bc-inflation-overtakes-national-average-hitting-81-in-may-5506284

#106 miketheengineer on 06.22.22 at 7:05 pm

Garth et al:

My home in the bunny patch that I have been dying to purchase for 20 plus year, is soooo un-affordable right now, that I will likely never purchase anything in this country.

I would like to sell my slanty Mattamy semi, but I need someplace to sleep that may be close to employment.

Can afford to purchase my dream, can’t afford to sell my nightmare.

Good luck Bloggers.

Michael

#107 Linda on 06.22.22 at 7:10 pm

Well, looks like Canada’s official inflation rates are slowly catching up to the official USA numbers. Still not at par – the most recent USA number was past 8% – but at least getting somewhat more in line with what is being posted down south. I’m still of the opinion our numbers should in reality be higher than those in the USA, as we import so much from them & our RE prices are much higher as well.

#108 Bezengy on 06.22.22 at 7:19 pm

#51 islander on 06.22.22 at 3:12 pm
https://www.sightline.org/2022/05/09/how-low-taxes-lead-to-high-home-prices-in-vancouver-bc/

Check what Vancouverites pay in property taxes…

“Low Property Taxes Boost Prices and Speculation

—————————-

Correct. Here in Ontario, Timmins, as well as Sudbury and North Bay have mill rates 300 percent more than Toronto. It’s all about votes. I see it as extortion. Give us money and you will get our votes. What’s surprising is City mayors don’t even try to hide it.

https://www.google.ca/amp/s/www.cbc.ca/amp/1.2946407

And of course low tax rates caused in part by Provincial and Federal subsidies inflate house prices. I bet if everyone in Vancouver was paying $10k per year on that million dollar shack, like they are in Prince George it would definitely impact prices.

#109 crowdedelevatorfartz on 06.22.22 at 7:28 pm

My goodness.
I remember commenting here two years ago when the Liberals rammed through the new gun control Legislation for the banning of 1500 listed types of firearms.

“How long have they been sitting on this lengthy, detailed list waiting for something to happen?
The govt bureaucracy NEVER moves this quickly…..”

https://www.halifaxexaminer.ca/featured/rcmp-commissioner-brenda-lucki-tried-to-jeopardize-mass-murder-investigation-to-advance-trudeaus-gun-control-efforts/

The Liberals used this mass murder to win votes.
Disgusting doesn’t even come close to describing it.
Political ghouls.

#110 Never on 06.22.22 at 7:29 pm

Never rely on anyone who got you into a mess, to pull you back out.

#111 jess on 06.22.22 at 7:31 pm

DALL-E 2 job replacer for graphic designers?

..” an artificial intelligence that takes verbal requests from users and then, through its knowledge of hundreds of millions of images across all of human history, creates its own images—pixel by pixel—that are entirely new. Type “bear playing a violin on a stage” and DALL-E will make it for you, in almost any style you want.

#112 baloney Sandwitch on 06.22.22 at 7:32 pm

Paul Krugman has a column in NYT. His thesis is that low interest are due to demographic factors (aging population) and not just due to CB’s. Old people have too much savings, keep working and writing public service blogs and don’t party much. (Like our dear host).

https://www.nytimes.com/2022/06/21/opinion/inflation-interest-rates-fed.html?unlocked_article_code=AAAAAAAAAAAAAAAACEIPuomT1JKd6J17Vw1cRCfTTMQmqxCdw_PIxftm3iWka3DLDmwbiOMNAo6B_EGKZKxtY9Iv3jOdAd5HLLI1Sedui_VWI0F2Dgelrt2EhJEBaW0TmL6EY1kXjdjLTKxqtnjjdHW4I-Nyg-Xu40LZaWK-RPOL0SA-IF0xpY9vIg6sxSYJwvzDGuYk09F-3ewzRcwvHUd2byaAvPbvCRt9KY_GOkmasl9qLrkfDTLDntec6KYCdxFSCj_GTnB_5mU66rBMKY9dffa_f1N7Jp2I0fhGAXdoLYypG5Q0W4PU8r5rurXJohGNo9GkiQEhSSADD4ZZ5eRQroeXNQ&smid=url-share

#113 kommykim on 06.22.22 at 7:33 pm

RE: #64 Garth vs. 45 on 06.22.22 at 4:05 pm
Blogger vs. Mogul
45 says rates are heading towards 21%

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

45 doesn’t know what he’s talking about 99% of the time. Just useless noise and a waste of time.

#114 The Toronto Sun. ...editor on 06.22.22 at 7:35 pm

“Garth, could you come into my office please? …this ‘Batshit crazy’ headline for your piece…it won’t fly. Need you to tweak it please.”

…ahh the freedom of not having an editor Garth…it’s so wonderful.

By the way, is the bat referred to and his poop…the one who started the whole flu mess?

Oops…can we call it a flu finally or still no?

#115 Mattl on 06.22.22 at 7:40 pm

Of course not in a post-pandemic economy with historically-low jobless stats. – Garth

———————————-
Not sure that full employment offsets 10% inflation and we have never had these levels of debt. Hard to see consumer discretionary spending holding up. Trickle up economy that is dependent on consumer spending and consumer debt. Q3/4 earnings is where it will get interesting

#116 crowdedelevatorfartz on 06.22.22 at 8:14 pm

@#102 The Regurgitator
“There will be no winners.”

+++
Something we agree on.

Lets see how long Putin can continue to keep a tight clamp on the Russian media/internet/public opinion.

Eventually the mothers, wives, sisters of the dead soldiers that haven’t called, written or visited home…..will raise questions.
Fill the jails with Russian women demanding answers?
I think not.
Sept. 2022? Dec.2022?
Putin’s on borrowed time.
He’s a pariah.
His stolen billions , nothing more than a gilded cage.
Ukraine has the moral high ground.
Putin’s has fear.
And when the people aren’t scared of him any more.
He’s done.

#117 Mr Fox on 06.22.22 at 8:21 pm

Sometimes pain is necessary to bring the people down to earth. We’ll see how much pain this will bring, but some are already crying like small children.

#118 mickclean on 06.22.22 at 8:36 pm

Shudder to think of the traffic when even more workers head back to the office in TO. At 4 pm gridlock on Bayview Ave. Should be a summer reprieve but come September, 2019 will look like a walk in the park.

#119 Doing my Part on 06.22.22 at 8:44 pm

Don’t be fooled by the bitcoin “dead cat bounce”, it is going to zero. Get out while you can.

#120 The Regulator on 06.22.22 at 9:09 pm

# 102 – So give it to Putin? Then Poland? – Garth
Over the centuries, Ukraine has been part of many different empires. U.S.S.R. was the latest one, besides the Polish/Lithuanian Empire. We’ll see.
# 116 – farter : Once again, relying on C.B.C. or C.N.N. for your worldview manifests itself in your weak rebuttals. Sorry:(

#121 DON on 06.22.22 at 9:11 pm

#100 crowdedelevatorfartz on 06.22.22 at 6:52 pm
@#87 Mattl
“Also, I believe you are in the trades. No concerns about what this will do to business? A recession is going to crush the trades.”
+++
Yep.
In the trades.
We focus on maintenance.
Some Govt mandated maintenance for the public and private sector.
Recession or no recession.
Maintenance must be done to remain govt certified and to be legally covered in the event of an insurance claim..
Maintenance IS recession proof.

*******************
Going through two recessions in the 90s and one in the dotcomish time, I started to think about recession proofing my sources of income, mainly the job part.

When things get tough assets are only worth as much as the next buyer can afford or is willing to afford. We are still early into this quagmire and things have yet to play out.

#122 Satori on 06.22.22 at 9:17 pm

#71 It’s #Justinflation on 06.22.22 at 4:25 pm
difficult to understand the excitement over 30% drop in house prices…that 1950’s asbestos-filled , one-owner bungalow worth $1.8 mill in the GTA will be worth $1.26 Mill…with rates for a 5 yr tasting 6% and wage increases stuck at 3%.. what’s to be excited about?
————————————–
hmm, good point.

#123 ohm on 06.22.22 at 9:18 pm

DELETED

#124 Faron on 06.22.22 at 9:27 pm

#99 Cars on 06.22.22 at 6:48 pm
#130 Faron on 06.22.22 at 11:30 am
#114 Sail Away on 06.22.22 at 8:41 am
#108 Dr V on 06.22.22 at 1:23 am

Admit it…your tushie likes the extra padding of the spandex shorts

Yeppers. Top speed is 20kph for hound safety. Anyone here know if dog helmets exist?

#125 crowdedelevatorfartz on 06.22.22 at 9:33 pm

@#117 Mr Fox
“some are already crying like small children.”

+++
Yep.
Heard a kid the other day on the radio moaning about how “stressed” they were over high gas prices….”I can’t cope!”

Perhaps Ponzie can start courses in money management….one empty Coke can at a time….

#126 DON on 06.22.22 at 9:49 pm

#122 Satori on 06.22.22 at 9:17 pm
#71 It’s #Justinflation on 06.22.22 at 4:25 pm
difficult to understand the excitement over 30% drop in house prices…that 1950’s asbestos-filled , one-owner bungalow worth $1.8 mill in the GTA will be worth $1.26 Mill…with rates for a 5 yr tasting 6% and wage increases stuck at 3%.. what’s to be excited about?
————————————–
hmm, good point.

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

God forbid we return to a situation where house prices are more in line with incomes and doctors and lawyers can afford a house in Canada.

So many people bitching about not having a family doctor…duh.

I am sure a doctor would love it if a homeowner in distress allows him/her to rent a room. Every distressed homeowner will need a renter to survive. How many renters want to rent a room in someone’s house? Acceptance takes longer for some than others.

#127 I don't know on 06.22.22 at 9:57 pm

Cold comfort indeed. Cash is complete junk, houses are becoming less affordable by the day, rents are going up, stocks are going down.

As our host has said, there is nowhere to hide.

What should one do?

Nothing. Stay invested and wait for equity markets to realize rates aren’t going anywhere near as high as some think, and that assets are attractively priced. Inflation will not stay where it is for long, so these juicy bonds with higher yields will sell fast, causing yields will fall.

Houses? Anyone locked in at a low rate can go back to sleep and enjoy life as they pay in increasingly devalued dollars for their homes.

Those who are hording junk (cash) and thought this was a unique time in history, or, that we are living through something big will be left behind… like usual.

IDK

#128 Shawn on 06.22.22 at 10:05 pm

The CPI all-items Graph includes food and energy

#89 Barb on 06.22.22 at 6:03 pm
The CPI graph excludes food and energy.
Pity.

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

Look closer. There are two lines. One is all items CPI. The other is excluding food and energy.

#129 Satori on 06.22.22 at 10:07 pm

#76 BCWally on 06.22.22 at 4:51 pm
I can’t imagine what it must be like to be trapped in a monster mortgage with the house worth -32% of what you bought it for.
You and your partner working for years for a prison of your own making. Imagine the resentment after a while. No nice new vehicle, no vacations, every dollar counts and having to creatively finance just to hang on. Don’t lose your jobs! Moving out of town is not an option.
You can’t sell without realizing a huge loss that follows you long after.
Even if you decide on a northern one horse town strategy after the horse dies, that is financial combustion by accidently dropping a Molotov cocktail at the gas water heater after loosening the pipes you still will only get market value for the house.
Soul crushing.
——————————————-
Most people I know aren’t hurting at all.

Surprisingly, I also have no idea how much money they make, how much they owe, how much they invest… so I won’t go projecting some bleak imaginary future for them as if they were all two hundred bucks from broke…

I think I will just sit back, relax and enjoy this long June day and the sunset.

#130 Michael in-north-york on 06.22.22 at 10:09 pm

#102:

To stop the misery in Ukraine, tell Putin to pull his troops out.

It is not our fight YET. Ukrainians are willing to fight the invaders, and are doing that quite well. We only have to support them with the weapons shipments.

If we let Putin win in Ukraine, then he will attack Poland or Lithuania next. Those countries are NATO member states, and we will get dragged DIRECTLY into the war. The risk of a nuclear war will be much greater.

Do the needful, support Ukraine now.

Or, abandon Ukraine, buy a few months of reprieve, then deal with the emboldened mad dictator, and a much greater and more dangerous conflict.

#131 crowdedelevatorfartz on 06.22.22 at 10:14 pm

@#120 The Regurgitator
“Once again, relying on C.B.C. or C.N.N. for your worldview manifests itself in your weak rebuttals.”
+++
Haven’t watched CBC in ages and CNN in at least 5 years.
nah .
I read.

Lets have a bet.
I say Putin will end up dead either by his own hand or his immediate associates.
Do you expect him to live a long and comfortable life after he “retires” ?
From the Presidency he has ruthlessly controlled by jailing, beating or assassination of anyone who opposes him?
Uncle Putin has food tasters to ensure he isnt poisoned by his own people.
A corrupt, paranoid, evil murderer with his finger on the nuclear key.
Quite a hero you have chosen to defend.

#132 Sail Away on 06.22.22 at 10:32 pm

#125 crowdedelevatorfartz on 06.22.22 at 9:33 pm

Perhaps Ponzie can start courses in money management….one empty Coke can at a time….

———

I saw a character at Richmond KFC eating a 37 cent biscuit, then scurrying around the tables in $300 New Balance footwear and very expensive-looking orthotics filling a spare tub with leftovers, while singing softly to himself in a truly beautiful voice.

When I looked directly toward the strange man… Poof! he vanished into thin air…leaving behind only a faint clopping of retreating orthotics and the last ethereal haunting tunes of ‘Edelweiss’.

#133 Ponzius Pilatus on 06.22.22 at 10:39 pm

130 Michael in-north-york on 06.22.22 at 10:09 pm
#102:

To stop the misery in Ukraine, tell Putin to pull his troops out.

It is not our fight YET. Ukrainians are willing to fight the invaders, and are doing that quite well. We only have to support them with the weapons shipments.

If we let Putin win in Ukraine, then he will attack Poland or Lithuania next. Those countries are NATO member states, and we will get dragged DIRECTLY into the war. The risk of a nuclear war will be much greater.

Do the needful, support Ukraine now.

Or, abandon Ukraine, buy a few months of reprieve, then deal with the emboldened mad dictator, and a much greater and more dangerous conflict.
————————-
There is the fear that Ukraine will become the next Syria.
One big wasteland, and a war without end.
And abondened by the West.

#134 neptunian on 06.22.22 at 11:04 pm

Yes, we did this to ourselves, and we Canadians like to over react. We made the price to this insane level by ourselves – greed!, and we will make the price much lower than what it should be, by ourselves – fear!.

not 32%, 50% down it will be;

this time is not different, nothing new!

#135 DON on 06.22.22 at 11:19 pm

#129 Satori on 06.22.22 at 10:07 pm
#76 BCWally on 06.22.22 at 4:51 pm
I can’t imagine what it must be like to be trapped in a monster mortgage with the house worth -32% of what you bought it for.
You and your partner working for years for a prison of your own making. Imagine the resentment after a while. No nice new vehicle, no vacations, every dollar counts and having to creatively finance just to hang on. Don’t lose your jobs! Moving out of town is not an option.
You can’t sell without realizing a huge loss that follows you long after.
Even if you decide on a northern one horse town strategy after the horse dies, that is financial combustion by accidently dropping a Molotov cocktail at the gas water heater after loosening the pipes you still will only get market value for the house.
Soul crushing.
——————————————-
Most people I know aren’t hurting at all.

Surprisingly, I also have no idea how much money they make, how much they owe, how much they invest… so I won’t go projecting some bleak imaginary future for them as if they were all two hundred bucks from broke…

I think I will just sit back, relax and enjoy this long June day and the sunset.

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

All those oustanding HELOCs paint a different picture. It only takes a few to ruin a party.

#136 In the cold on 06.22.22 at 11:22 pm

If the correction is smaller than 50% from the Feb high, it will not matter. RE prices going back to 2010 might be justifiable, anything higher and our kids will need to become mortgage slaves, still unable to live a normal life.

#137 Midnight’s on 06.22.22 at 11:26 pm

Good article, Garth. Interesting to note that all the experts never get printed or asked on Mainstream TV shows. They don’t get the invite back because their news never sells. You have to keep the positive spin, as you know. One can’t tell the m(asses) the truth.

#138 Observer on 06.22.22 at 11:29 pm

#131 crowdedelevatorfartz on 06.22.22 at 10:14 pm
@#120 The Regurgitator
“Once again, relying on C.B.C. or C.N.N. for your worldview manifests itself in your weak rebuttals.”
+++
Haven’t watched CBC in ages …
nah .
I read.

^^^^^^^^^^^^
So you read CBC then? Good for you!

#139 DON on 06.22.22 at 11:39 pm

#127 I don’t know on 06.22.22 at 9:57 pm
Cold comfort indeed. Cash is complete junk…

Those who are hording junk (cash) and thought this was a unique time in history, or, that we are living through something big will be left behind… like usual.

IDK

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

I fixed it for you…

Those who are hording debt and thought this was a unique time in history, or, that we are living through something big will be left behind… like usual.

Rather has cash than debt in a depreciating asset that I over paid for. Trying to make others feel your debt pain is childish.

#140 Bob Loblaw on 06.23.22 at 12:03 am

So what’s it going to take to bring down the price of that $15 million semi in the 416? 99% mortgage rates? Putin turning the city into radioactive glass with nuclear weapons? As far as I can tell that’s what it would take.

#141 Michael in-north-york on 06.23.22 at 1:03 am

#133 Ponzius Pilatus on 06.22.22 at 10:39 pm

There is the fear that Ukraine will become the next Syria.
One big wasteland, and a war without end.
And abondened by the West.
===

This is a major crisis and it comes with much suffering and a lot of risks. We don’t really have a good way out.

That said, supporting Ukraine with the weapons shipments is the best option, just because anything else is worse. There is a good chance Ukraine will either defeat the invading army, or will hold for long enough to see the Putin’s rule collapse under the stress of the war casualties combined with the economic hardship.

For one thing, Putin’s troops suffered many times more casualties in Ukraine in just 4 months than they did in the 6+ years of the Syrian war.

#142 DQ on 06.23.22 at 1:43 am

‘Yes, Virginia…if we’re not careful M2 CAN grow from trees’

(Still greyed out on 0Hedge)

#143 Another in North York on 06.23.22 at 2:23 am

Yup, Canada should stand up to the mad dictator, and send all of its 82 Leopard tanks to fight for freedom.

#144 Steven Rowlandson on 06.23.22 at 7:01 am

“Batshit crazy”
Outside of me there is a lot of that happening where it should not. But like the ancient Greeks said,” whom the gods would destroy they first make mad.” Mad as in batshit crazy and evidently proud of it.

#145 Ken on 06.23.22 at 7:11 am

If you have a realtor app on your phone and you’re watching your local real estate…..Is it me or are these small little homes with a single garage still asking ridiculously high prices outside of the GTA? These Real estate agents are real pieces of work! They know that the homeowner wants that big price so the agent fish hooks them only to have that homeowner drop that price when no offers surface, which is happening now. These poor homeowners trying to get February 2022 prices need to wake up and realize that if they get 30% less of what they’re asking, they should take it. This time next year, I think we’ll see valuations majorly readjusting 35% lower than what they’re currently posted as mortgage rates climb higher then we all thought. We are in uncharted waters huge here. That million dollar house could be selling for $650,000 in Guelph et al. Don’t shake your head at that! This will be a reality. If you’re looking to buy a house, turn your phone off for about 9-18 months. Patients will be rewarded. Buying a house right now and you could be throwing approximately $300,000 out the window when you wake up in December 2023. This is going to get weird!

#146 Fool on 06.23.22 at 7:28 am

#130 Michael in-north-york on 06.22.22 at 10:09 pm
#102:

To stop the misery in Ukraine, tell Putin to pull his troops out.

It is not our fight YET. Ukrainians are willing to fight the invaders, and are doing that quite well. We only have to support them with the weapons shipments.

If we let Putin win in Ukraine, then he will attack Poland or Lithuania next. Those countries are NATO member states, and we will get dragged DIRECTLY into the war. The risk of a nuclear war will be much greater.

Do the needful, support Ukraine now.

Or, abandon Ukraine, buy a few months of reprieve, then deal with the emboldened mad dictator, and a much greater and more dangerous conflict.

———————————

You don’t have the first clue of what you are babbling about.

Please stop what you are doing, take the next flight to Kiev or Keev or however it’s pronounced now, grab a wooden rifle and fight the good fight. We’ll all even pitch in for the body bag.

It is your destiny.

#147 Felix on 06.23.22 at 7:52 am

While ‘Batshit crazy’ may seem like a useful description of dogawful mutts like those in today’s photo, feline scientists have determined that canines have only about 20% of the IQ of Chiroptera feces.

#148 miketheengineer on 06.23.22 at 7:59 am

Garth et al:

Business and cash flow will suffer with restrictions. As the world has become ‘OPEN’ for business, Canada remains difficult to adopt to what the rest of the world is doing. No restrictions in Italy now. Green pass was voted down by their courts.

I read this today, “The 14-day quarantine unvaccinated Canadians must complete after they re-enter the country has proved to be prohibitive for the international getaway”

So you have people with money in their pocket, they are just willing and waiting to spend it and the government just makes it nearly impossible for them to do so, thereby hurting Canadian airlines and all those good folks that work there. Restrictions are just bad for business.

Good news is, when you are out and about shopping, you get to see the faces of the sales people, and customers, you can talk and joke freely now. Seeing a smiling face is soooo refreshing.

#149 Jim on 06.23.22 at 8:05 am

You liked low interest rates and out of control, central bank manipulated interest rates, suck it up buttercup.

#150 crowdedelevatorfartz on 06.23.22 at 8:22 am

@#143 North York
“Canada should stand up to the mad dictator, and send all of its 82 Leopard tanks to fight for freedom”
+++
Ukraine doesnt want 40 year old junk that won’t last 5 minutes on a modern battlefield…
Same with our CF-18’s.
The Canadian Armed Forces.
Great training. Poor Equipment.
Bereft of officers after the latest Stalinesque purge of the top command structure.
It will take at least a decade or two to rebuild.
Fingers crossed China doesn’t invade Taiwan and our Nato alliances demand we attend the party.

#151 crowdedelevatorfartz on 06.23.22 at 8:41 am

@#133 Ponzie’s Poor Parallels
“There is the fear that Ukraine will become the next Syria.”
+++

Your comparison is ridiculous.
As usual.
Ukraine was invaded.
Syria is a ruthless dictatorship that was almost overrun in a brutal civil war until ( poison gas and helicopter barrel bombs on civilians ring a bell?)…..

https://en.wikipedia.org/wiki/Use_of_chemical_weapons_in_the_Syrian_civil_war#:~:text=Investigations%20have%20found%20that%20both,chlorine%20was%20systematic%20and%20widespread.

Putin decided to help his dictator pal Bashar.
The rooskii’s step in with intel, advice, planes, troops, etc etc etc. in an endless civil war.
Should be interesting to see if Russia quietly pulls out of Syria to bolster the troops in the Ukraine war now that Nato is offering intel, equipment, tanks, planes, etc.

https://en.wikipedia.org/wiki/Bashar_al-Assad

Big Head Bashar wouldnt last a week without Russia’s help to maintain the dismal status quo where the cities are under their control and the countryside is a “no go zone”
The Russian war in Afghanistan ring a bell?

Wrecked cites, smashed infrastructure, starved submission of the local populace.
Newer, modern bombs with the same result.
The Russian military strategy since WWII.
Win or lose.
Russia will eventually leave and another country on their border ….will hate them for generations to come.

#152 the Jaguar on 06.23.22 at 8:42 am

Morning NP snippets……….

‘The market most sensitive to interest rates is housing. That’s one of the reasons why home prices exploded during the pandemic after the Bank of Canada dropped its benchmark interest rates to almost zero. The central bank has now pushed that rate to 1.5 per cent and has promised to go higher still. Home prices and sales are now correcting as you’d expect.’
‘After three consecutive hikes, Bank of Canada senior deputy governor Carolyn Rogers on Wednesday did not rule out a 75-basis-point hike in July.+++

A recent survey by Manulife Bank found that more than 20 per cent of homeowners expect rising rates to have a “significant negative impact” on their mortgage, financial and debt situation, with 18 per cent reporting that they believe they can no longer afford the home they’re in. Almost one in four said they’ll have to sell if rates climb much higher.’ +++

‘Switzerland imported gold from Russia for the first time since the invasion of Ukraine, showing the industry’s stance toward the nation’s precious metals may be softening. More than three tons of gold was shipped to Switzerland from Russia in May, according to data from the Swiss Federal Customs Administration. That’s the first shipment between the countries since February. The shipments represent about two per cent of gold imports into the key refining hub last month. It may also mark a change in perception of Russian bullion, which became taboo following the invasion in February. Most refiners swore off accepting new gold from Russia after the London Bullion Market Association removed the country’s own fabricators from its accredited list.’

#153 Steve French on 06.23.22 at 9:11 am

So I went for a walk this morning through the back streets of small town Elora Ontario, 20 km north of Guelph.

Population 2,500 back when I was growing up here. A town of modest, mostly conservative and staid rural folk back then.

And holy comoly– the amount of $3, $4 $5, $6, $8 [?] million dollar properties recently finished or under construction here is unbelievable.

Then a Lambo and a Ferrari went by. On a Thursday morning.

Explain to me the basis in the regional economy that could sustain this level of property investment.

I felt like the guy in The Big Short.. touring the Florida property market in 2007.

Either the little town of Elora Ontario has discovered the secret to never ending wealth, or this is going to all come down like a ton of bricks.

But I keep my views to myself !

#154 Quintilian on 06.23.22 at 9:16 am

#112 baloney Sandwitch on 06.22.22 at 7:32 pm
“Paul Krugman has a column in NYT. His thesis is that low interest are due to demographic factors (aging population) and not just due to CB’s. Old people have too much savings, keep working and writing public service blogs and don’t party much. (Like our dear host).”

For sure Krugman has insight, heck he is more accredited than Sail Away and Faron, but I think the USA is a slightly different market.

The Canadian pathology is rooted in psychology rather than demographics.

This Canadian investor/author/ lawyer makes a strong case:

“Canada is hooked on real estate. It needs a detox”

https://www.cbc.ca/news/opinion/opinion-canada-real-estate-addiction-morris-1.6492967

#155 Dharma Bum on 06.23.22 at 9:46 am

House prices will scale back, but don’t expect a drop significant enough to make them even remotely affordable.
The long term trajectory for house prices is up.
Pullbacks, setbacks, recessions, inflation, interest rates, monetary policy, unemployment, boom, bust, rinse, repeat, will have an effect on pricing, for sure. But the drop downs are limited. Don’t expect 2005 pricing, kiddos.
It’s like the game shows – say, Who Wants To Be A Millionaire – where every so often the gains are “banked” and locked in. They may flatline for a while, but then up she goes. Not too different than a stock market chart over time. The long and steady climb upwards. Pullbacks, definitely, but recovery eventually and always, into the future. Time keeps on ticking, ticking, ticking…..
And besides, “they ain’t makin’ any more land, eh!”
Hahahahahahahaha – I love that line.

#156 crowdedelevatorfartz on 06.23.22 at 9:50 am

@#133 Ponzies Perpetual Pothole

Keep digging your self deeper.
Here you go Ponzie.
Before and After pictures of Syria.

https://www.boredpanda.com/before-after-war-photos-aleppo-syria/

From Russia with love.

#157 Or Best Offer on 06.23.22 at 9:59 am

I would really like to know what is in that consumer “basket” that determines inflation is at 7.7%.
Every single thing I buy has bumped more in the range of 20%-25%..

#158 T Rex and the dinosaur clique on 06.23.22 at 10:13 am

RE: #130 Michael in-north-york on 06.22.22 at 10:09 pm

The problem you have with the situation in Eastern Europe is that Russia is looking attractive to a lot of the folks on the Eastern flank, because Western Europe isn’t doing very well.

There is a power balance in that part of the world and two power brokers, the USA on the West side and Russia on the East.

Up until recently, the USA was the country that everyone wanted to cozy up to. Recently, that sentiment has changed. If this continues to unravel, you will see Eastern Europe gradually pivot eastward, and you will end up with all these messy ground wars with Russia supporting the separatists and the west filling the void with rhetoric and propaganda, but very little action.

This is the problem when you get the USA entering into a period of decline and inwardness (caused of course, by the Iraq war, which was the biggest mistake made by any country since Napoleon decided to march on Russia).

As support for the USA declines, Russia and China fill in the power vacuum and become the power brokers in the east.

That is what is happening in Ukraine right now. If Russia didn’t have support from the East Ukrainian separatists, they could not continue the war.

#159 millmech on 06.23.22 at 10:33 am

Looking like a five year closed variable will be around 6% EOY, that means coworkers carrying those 800k at 1.5% are looking at going from $3200 to $5400 per month.
There are other coworkers who gifted their children $400k+ down payments who will now be looking at payments of $3000/mth for the gift, going to be tight going forward now.

#160 Michael in-north-york on 06.23.22 at 10:51 am

#146 Fool on 06.23.22 at 7:28 am

You don’t have the first clue of what you are babbling about.

Please stop what you are doing, take the next flight to Kiev or Keev or however it’s pronounced now, grab a wooden rifle and fight the good fight. We’ll all even pitch in for the body bag.

It is your destiny.
===

Instead of babbling here, go take the next horse cart to Moscow as all flights there are cancelled. Equip yourself with a Nerf gun, and join your master’s army.

Comrade Putin needs more cannon fodder. It is your destiny.

#161 Ponzius Pilatus on 06.23.22 at 10:52 am

At least Musk is honest about the state of his Tesla factories.
Says the Texas and German factories are “burning billions”.

#162 Genghis on 06.23.22 at 10:53 am

Very interesting quote from The Economist, Garth.

According to this piece, in the Globe and Mail, there are lots of buyers caught, having bought before they sold their existing homes. An estimated 1 in 30 buyers in the GTA currently in this situation. Many of these buyers are stuck, unable to access the equity required to finance their new purchase. They are either walking away from their deal or looking at a bridge loan, available from some none-prime lenders, at a rate of around: 9.5%! However these lenders will only cover up to around 80% of the shortfall.

https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-as-the-housing-market-slows-costly-bridge-mortgages-are-an/

Never buy a house without having sold your existing home first was the golden rule. But that was so last century. Now this rule needs to be re-learned?

#163 Yukon Elvis on 06.23.22 at 10:59 am

#151 crowdedelevatorfartz on 06.23.22 at 8:41 am

Putin decided to help his dictator pal Bashar.
The rooskii’s step in with intel, advice, planes, troops, etc etc etc. in an endless civil war.
++++++++++++++++++

Putin does not give two shyts about Assad or Syria. Putin wants to hang on to the Russian naval/airbase on Syria’s Mediterranean coast which he might lose if a different regime existed in Syria. Same reason he took Crimea, Russia might lose its naval base in Sevastopol on the Black Sea if an unfriendly Ukranian regime became part of the EU or Nato.

#164 Ponzius Pilatus on 06.23.22 at 11:00 am

It’s June 23.
And gas prices in the Lower Rainland are going down.
Right now, quite a way off from the 3 bucks that the resident “gas Buddy” predicted.

#165 Ponzius Pilatus on 06.23.22 at 11:07 am

#153 Steve French on 06.23.22 at 9:11 am
So I went for a walk this morning through the back streets of small town Elora Ontario, 20 km north of Guelph.

Population 2,500 back when I was growing up here. A town of modest, mostly conservative and staid rural folk back then.

And holy comoly– the amount of $3, $4 $5, $6, $8 [?] million dollar properties recently finished or under construction here is unbelievable.

Then a Lambo and a Ferrari went by. On a Thursday morning.

Explain to me the basis in the regional economy that could sustain this level of property investment.

I felt like the guy in The Big Short.. touring the Florida property market in 2007.

Either the little town of Elora Ontario has discovered the secret to never ending wealth, or this is going to all come down like a ton of bricks.

But I keep my views to myself !
————————
Well,
What I find in my neighbourhood is, that many new immigrants seem to be quite wealthy.
Some South Asians moved into next door.
Nice new cars.
And nice people, too.
Canada attracts the cream of the crop.
And for good reasons.

#166 Ponzius Pilatus on 06.23.22 at 11:09 am

#157 Or Best Offer on 06.23.22 at 9:59 am
I would really like to know what is in that consumer “basket” that determines inflation is at 7.7%.
Every single thing I buy has bumped more in the range of 20%-25%..
———————-
Please be more specific.

#167 crowdedelevatorfartz on 06.23.22 at 11:18 am

@#161 Ponzies Profit predicament
“At least Musk is honest about the state of his Tesla factories.
Says the Texas and German factories are “burning billions”.”

+++
Has Tesla ever posted a profit?
The only “magic” was the share price.
The fact that Musk has admitted he’s burning through billions means…..it’s bad and getting worse.

#168 T Rex and the dinosaur clique on 06.23.22 at 11:20 am

RE: #159 millmech on 06.23.22 at 10:33 am

Looking like a five year closed variable will be around 6% EOY, that means coworkers carrying those 800k at 1.5% are looking at going from $3200 to $5400 per month.
There are other coworkers who gifted their children $400k+ down payments who will now be looking at payments of $3000/mth for the gift, going to be tight going forward now.

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

Yup. And a package of chicken thighs now is approaching $20.00, which is dinner for four + vegetables (also increasing daily in price).

There is no way that this is going to hold up. People are getting crushed. From what I can see, folks are putting the extra on their credit cards and lines of credit and hoping to pay it off later.

Where I live in Toronto, houses are just sitting. It is like someone turned off the tap. There is one down the street, massive old place, three levels, parking, almost 3500 square feet. Offered at 1.2

And it is crickets. In February, there would have been 20 or 30 offers and they could have gotten close to 2 mil for it.

Now they can’t sell it for 1.2 Everything is just frozen. Cash is king, but no one has any.

It looks like we are entering into a period of structural stagflation. Severe shortages of everything driving up the prices, no one has any money, and people are getting crushed by their own debt loads.

#169 The Regulator on 06.23.22 at 11:25 am

BANNED (You were warned about abuse. – Garth)

#170 Ponzius Pilatus on 06.23.22 at 11:33 am

#158 T. REX
Unfortunately, your comment has lots of good points.
The West needs to wake up and smell the new reality.
As the Foreign Minister of India said:
For the West it’s only a problem if the problem affects the West.
And, as we speak, Putin is meeting with Xi, Modi and Bolsonaro.
And Biden is visiting Israel and the Saudis.

#171 The Regulator on 06.23.22 at 11:38 am

DELETED. (You are done here. Scram. – Garth)

#172 Dragonfly58 on 06.23.22 at 11:39 am

Steve French #153 It’s the same out here in what used to be Rural, Langley B.C. I have been here just under 30 years , and the changes are almost beyond belief. Use to be a mostly hobby farm with a relatively small amount of residential.
As the farm properties change hands one of the first things that typicaly happens is an absolutely massive house is built, generally completely surrounded by blueberry fields. And a bunch of high end vehicles on the property.
The majority of the previous owners lived a very non – conspicious lifestyle. Smaller hobby farms generally are not big money makers .
But the new group are as in your face as possible.
Similar in the residential areas. All the new construction is very high end. In the older subdivisions, perfectly livable but 40 – 50 year old, middle class homes are often replaced with a much more upscale new place.
Where is all this money coming from ? Those farm properties are all several million $ and up. { used to be $300,000 – $400,00 when I first moved here . } Can you imagine the payments if it is largely borrowed money ?

#173 Alison S on 06.23.22 at 11:40 am

#126 DON on 06.22.22 at 9:49 pm
#122 Satori on 06.22.22 at 9:17 pm
#71 It’s #Justinflation on 06.22.22 at 4:25 pm
difficult to understand the excitement over 30% drop in house prices…that 1950’s asbestos-filled , one-owner bungalow worth $1.8 mill in the GTA will be worth $1.26 Mill…with rates for a 5 yr tasting 6% and wage increases stuck at 3%.. what’s to be excited about?
————————————–
hmm, good point.

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

God forbid we return to a situation where house prices are more in line with incomes and doctors and lawyers can afford a house in Canada.

So many people bitching about not having a family doctor…duh.

I am sure a doctor would love it if a homeowner in distress allows him/her to rent a room. Every distressed homeowner will need a renter to survive. How many renters want to rent a room in someone’s house? Acceptance takes longer for some than others.
————————————-
Don, I think the big difference is Savers vs. Spenders.

I work at the hospital. Doctors make $200,000 – $500,000 per year. I can afford a house without a mortgage, and I make $48,000 a year. The majority of my colleagues doing my lower paying job, own homes. The majority are single – ‘meaning’ no spouse for a second income. And we don’t get over-time hours.

No violins from me for any doctor ‘renting a room’.

#174 Michael in-north-york on 06.23.22 at 12:03 pm

#158 T Rex and the dinosaur clique on 06.23.22 at 10:13 am

RE: #130 Michael in-north-york on 06.22.22 at 10:09 pm

The problem you have with the situation in Eastern Europe is that Russia is looking attractive to a lot of the folks on the Eastern flank, because Western Europe isn’t doing very well.

There is a power balance in that part of the world and two power brokers, the USA on the West side and Russia on the East.

Up until recently, the USA was the country that everyone wanted to cozy up to. Recently, that sentiment has changed. If this continues to unravel, you will see Eastern Europe gradually pivot eastward, and you will end up with all these messy ground wars with Russia supporting the separatists and the west filling the void with rhetoric and propaganda, but very little action.

This is the problem when you get the USA entering into a period of decline and inwardness (caused of course, by the Iraq war, which was the biggest mistake made by any country since Napoleon decided to march on Russia).

As support for the USA declines, Russia and China fill in the power vacuum and become the power brokers in the east.

That is what is happening in Ukraine right now. If Russia didn’t have support from the East Ukrainian separatists, they could not continue the war.
===

East Ukraine has a mixed population. Some favor Ukraine, some favor Russia, the majority just wants to live in peace. There wasn’t a single episode of an ethnic armed conflict between those groups before 2014. In 2014, Putin purposefully ignited it.

While the Western powers are in decline now, Russia is in decline likewise. Their share in the global population and global GDP is shrinking. Russia has less than 2% of the population and less than 2% of the GDP today. In the beginning of the 20-th century, they had 7% of the population and 10% of the GDP.

In a way, Russia is more vulnerable than North America or Europe. Russia has a very long land border, and they will have troubles defending it as the technology balance continues to tilt against them.

China is on the rise for sure, and if we ever get pitted against China, that will be a massive challenge for us. But, that’s a problem for another day. Today, enough to say that China doesn’t support Russia as much as Putin attempts to claim. Whether Russia wins or loses, China can benefit from either outcome.

Ukraine has a good chance to defeat the Russian invasion. Not guaranteed. But, supporting Ukraine is the right thing to do, both morally and pragmatically. Morally, because the Ukrainians are defending their land against the invasion. And pragmatically, because they are delaying and weakening the enemy that threatens to attack the NATO countries next.

#175 Mattl on 06.23.22 at 12:13 pm

Ya the doctors not being able to afford homes is a new angle. Maybe not the best homes in Kits, but if you can’t afford in home anywhere in Canada on 300K per year income, you have a serious spending problem. At that income you can likely afford 95% of the homes for sale in this country at any given time.

RE has gone nuts and that needs to change but these sob stories are pathetic. 70% of Canadians own homes, we don’t have a home ownership crisis. And a whole whack of new buyers is about to get a look at more affordable housing, if they miss this coming window we shouldn’t feel sorry for them in 12 years when the next bull run is in swing.

We all have choices to make, mine was to drive used cards, skip the trips to Europe and instead get into a home when I was young.

#176 Shawn on 06.23.22 at 12:27 pm

What’s in that 7.7% CPI basket?

#157 Or Best Offer on 06.23.22 at 9:59 am

I would really like to know what is in that consumer “basket” that determines inflation is at 7.7%.
Every single thing I buy has bumped more in the range of 20%-25%..

**************************************
Assuming you actually want to know, look here:

https://www150.statcan.gc.ca/n1/pub/71-607-x/71-607-x2018016-eng.htm

And particularly click the link within to here:

https://www150.statcan.gc.ca/n1/pub/71-607-x/2018016/cpi-ipc-eng.htm

Every item in the basket is shown. And you can click to the data tables to see inflation over time by item.

A few weeks ago I posted a link showing inflation by individual grocery items. There was about 50 items Pretty sure it was from Statistics Canada but I can’t find it now.

#177 Penny Henny on 06.23.22 at 12:42 pm

Paging Dr V.
Have a look at ZWU. It might be right up your alley.

#178 Ponzi Point to Ponder on 06.23.22 at 1:03 pm

#165 Ponzius Pilatus on 06.23.22 at 11:07 am

Well,
What I find in my neighbourhood is, that many new immigrants seem to be quite wealthy.
Some South Asians moved into next door.
Nice new cars.
And nice people, too.
Canada attracts the cream of the crop.
And for good reasons.

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

Why are Canadians so often such self-congratulatory a-holes? Is it a giant collective insecurity?

Seems to generally be a smug “I got mine” type of thing with the older set. Under 35’s I meet not quite so happy with the place these days.

Hmmm.

#179 DON on 06.23.22 at 1:27 pm

#173 Alison S on 06.23.22 at 11:40 am
#126 DON on 06.22.22 at 9:49 pm
#122 Satori on 06.22.22 at 9:17 pm
#71 It’s #Justinflation on 06.22.22 at 4:25 pm
difficult to understand the excitement over 30% drop in house prices…that 1950’s asbestos-filled , one-owner bungalow worth $1.8 mill in the GTA will be worth $1.26 Mill…with rates for a 5 yr tasting 6% and wage increases stuck at 3%.. what’s to be excited about?
————————————–
hmm, good point.

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

God forbid we return to a situation where house prices are more in line with incomes and doctors and lawyers can afford a house in Canada.

So many people bitching about not having a family doctor…duh.

I am sure a doctor would love it if a homeowner in distress allows him/her to rent a room. Every distressed homeowner will need a renter to survive. How many renters want to rent a room in someone’s house? Acceptance takes longer for some than others.
————————————-
Don, I think the big difference is Savers vs. Spenders.

I work at the hospital. Doctors make $200,000 – $500,000 per year. I can afford a house without a mortgage, and I make $48,000 a year. The majority of my colleagues doing my lower paying job, own homes. The majority are single – ‘meaning’ no spouse for a second income. And we don’t get over-time hours.

No violins from me for any doctor ‘renting a room’.

**********
Agreed no violins, but the reality in Canada is that high house prices are a barrier to recruitment. Brain drain to the US again…history repeats?

#180 DON on 06.23.22 at 1:34 pm

#176 Shawn on 06.23.22 at 12:27 pm
What’s in that 7.7% CPI basket?

#157 Or Best Offer on 06.23.22 at 9:59 am

I would really like to know what is in that consumer “basket” that determines inflation is at 7.7%.
Every single thing I buy has bumped more in the range of 20%-25%..

**************************************
Assuming you actually want to know, look here:

https://www150.statcan.gc.ca/n1/pub/71-607-x/71-607-x2018016-eng.htm

And particularly click the link within to here:

https://www150.statcan.gc.ca/n1/pub/71-607-x/2018016/cpi-ipc-eng.htm

Every item in the basket is shown. And you can click to the data tables to see inflation over time by item.

A few weeks ago I posted a link showing inflation by individual grocery items. There was about 50 items Pretty sure it was from Statistics Canada but I can’t find it now.

***********
Thank Dog they include furniture cause we all have to buy furniture on a daily/weekly basis.

#181 Concerned Citizen on 06.23.22 at 1:44 pm

Expect more tent cities to spring up across the country going forward. I think it’s only right that our illustrious housing minister visit these tent cities to explain the importance of protection “Mom and Pop investors”.

And don’t think for a moment they’ll do anything substantive to fix it. They’ve done nothing substantive to fix it for decades, and that won’t change going forward. Trudeau has your back – except, of course, when it comes to keeping a roof over your head. What, that absurd $500 one-time hand out doesn’t pay more than a quarter of your rent for a month?

Young people/renters – get out while you can. Either to a lower cost of living/province, or another country. Living house poor your entire life in order to appease “Mom and Pop investors” is no way to live.

#182 JOHN PICKETT on 06.24.22 at 6:39 am

Love The Cottage makes the point that I am better off with a 2% GIC and 3 % inflation rather than a 5% GIC and 8% inflation. Two factors to consider. One is I have more cash to budget and spend at 5% versus 2%. You cannot spend what you do not have. Secondly, is losing your capital/principal. Not much point in a dividend paying stock paying 6% and having the stock lose 20%. I cannot live on 2% as I and many other seniors are finding. At 5% and more inflation it becomes a matter of budgeting ie no more trips to Tim’s, no more booze, no more cigs and filling up at my local First Nation if i am in the neighbourhood.

#183 Suraj Maan on 06.24.22 at 7:01 am

Great article, inflation and the upcoming recessionary trend is not going to fare well on many peeps.