Lowballers

Joan’s been a realtor for long enough to know the last few years were off-the-chart goofy. Buyers got reckless. Sellers turned predatory. But, oh my, what a flip.

“I’m working on a situation this weekend you might find interesting,” she writes. “List price is 3.2M, my clients offered a month ago and we went back and forth but didn’t come to anything as the sellers were not reading the markets…. Seller called yesterday and verbally offered property to my buyer for 2.5M with whatever conditions they want!”

So, a $700,000 reduction – 22% – in a month. Plus conditions, like an inspection or financing. The shoe is on the other foot. Buyers rule.

But, wait, where are they?

As recently as May, there were more than 45,000 showings a month happening in Toronto and region, for example. By last week that had absolutely plummeted to fewer than 8,000. With new listings closing in on the 20,000 mark, it’s not hard to see that sellers are getting very, very, very lonely.

Click to enlarge. Source: Brokerbay

This is the most interesting aspect of current conditions. Fear of missing out (FOMO) has turned into fear of getting screwed (FOGS) and, of course, fear of over-paying (FOOP). Ironically, the odds of being Hoovered and violated were far greater six months ago when sellers were voracious and greedy, every sale was a bloody competition, conditional offers were non-existent and asking prices were mere suggestions.

Yes, mortgages were cheaper in February when you’d probably never heard of Harry Styles, Diljit Dosanjh or Vladimir Zelenskyy, but it was the worst time in human history to bid on real estate in a major Canadian city (or Bunnypatch). Prices, greed and aggression all hit new extremes. Be a seller, not a buyer, this pathetic blog urged. It’s peak house.

As you remember, everybody called it a crisis. Real estate was the focus of the federal election of late 2021, as it’s been in every recent provincial vote. Now house prices have tumbled, inventory has exploded higher, blind auctions are gone, conditions are back, down payments have fallen along with valuations and competition’s vanished. Sellers – like the one Joan spoke to this weekend – are highly motivated. Lowball deals beckon. And now we get headlines this this…

 

Apparently the real-estate-costs-too-much crisis is now a prices-could-crash crisis. That’s the meme as we pivot from greed to fear. What all the scared homeless Mills and Zs need to recall is that buying for less with a lower debt level and a higher rate beats paying more with an epic mortgage at a cheap rate. The price of borrowing fluctuates. The debt does not. And finally, understand this: we’re not going to 10% mortgages. The central bank will not turn the lights out. 2022 will suck, yes. But the odds are we’re stabilize with mortgages somewhere near 5% for a few years.

That means (a) most of the rate pain is already priced in and (b) people will over time get used to it (like they always do), which leads to the conclusion that (c) real estate valuations will continue to fall for months to come – until the bottom is reached. Then it’s over.

In other words, rutting season 2023 will not look at all like this year, when the spring market went flaccid. Govern yourself accordingly.

Now, with regard to rising rates (this will be ongoing until the autumn), Steve in London has a question:

Our mortgage renewal is due in almost exactly 1 year. We owe $260,000 with 2.89% interest on a house worth a billion or two in London Ontario.  Up until recently our prepayment charge was around $11,000 which is quite steep. I just checked again this morning and it’s down to about $1800. But now I’m even more unsure. Do I cough up this relatively small sum, but lock in at 5% or higher for another 5, betting that rates will be higher than that in a year? I’ve calculated that will cost us $5500 in extra interest for the next year. Or wait until next summer and take our chances, hoping rates won’t be above 7%. But what if they are?

No, rates will not surge past 7% and stay there. Too much. Too extreme. Too many macroeconomic consequences. Stop obsessing about your mortgage. Paying the break fee now and turning your 2.89% loan into one at 5% will cost you more than seven grand in after-tax dollars. That’s a big insurance premium. Personally I’d wait and feel smug about my cheap home loan, then see the lay of the land in a year’s time. If you’re really insecure, talk to the bank about a blend-and-extend on a three-year term. It’s the mushy middle. Very Canadian.

Oh, and John from Abbotsford just wandered in to use the men’s room, and says he also has a question:

We have $35,600 left on our mortgage at 2.67% and the rate is locked in until August 2025. At the current payment schedule, the mortgage should be fully paid before it’s time to renew. We also have a $40,000 investment loan using our HELOC. The $40,000 is invested in a balanced and globally diverse portfolio of low cost funds. The interest rate for the HELOC has crept up to 4.2%. Right now we are paying interest only on the loan like you advise in your blog. What should we do with the extra $4,000 we have left at the end of each month? Start paying down the HELOC investment loan or get aggressive with the mortgage?

Sweet. A loan at 2.67% for three years when inflation is about to crest 8%. That’s free money, John. Do not trash it. Don’t make prepayments. Besides, it’s a trifling amount. The HELOC’s another story. The rate on that will be north of 6% soon as the CB adds 75 bips in two weeks, and heaps on more after that. Yes, the loan interest is (unlike your mortgage) is deductible from taxable income, but it’s time to start reducing the principal.

Next time come with a real problem. You just made the kids boil.

About the picture: “This is our 6 year old shiba inu, named Rio,” writes Robert from Montreal. “Always acting like one of the kids!!”

131 comments ↓

#1 None on 06.26.22 at 12:43 pm

I was really surprised to see this:

“That means (a) most of the rate pain is already priced in”

Are they? People still have rate holds sub 3% and variables are still very low. Sure, perhaps in the twitter verse where everyone is obsessed with the numbers (like this blog) they have started but most people don’t even know where prime is and is going.

The big change is going to be August – September. Then, all the cheap 5-year fixed rate holds will be washed out, inflation will keep doing it’s dirty work, and another 1.25-1.5 (doubling it) will be on to the target rate. For context, that will mean that variable rate mortgage payments (if not fixed payments) will increase about $660 per month on the average mortgage in canada. It will be WAY more for those FTH in the GTA and GVR. People are likely looking at close to an extra grand per month once you factor in all the inflation impats.

That’s when it gets real and the pricing in STARTS.

Pricing in in real estate takes years. It’s not the stock market.

The statement obviously referred to the price of money, not the price of houses. – Garth

#2 Søren Angst on 06.26.22 at 12:52 pm

I ‘dunno Garth.

Between the lines you are assuming inflation will be brought under control with the now baked in rate increases expected.

And that’s fine. That’s the here and now and what we know.

The fear to me is inflation instead will get a whole lot worse.

Bank of England thinks it will hit

11%

by October.

UK has currently about the same inflation and bank rate as Canada. G7 outfit.

If that forecast manifests, rates will be a lot higher than 5% and there will be rate increases into 2023.

https://www.theguardian.com/business/live/2022/jun/16/bank-of-england-interest-rate-decision-markets-pound-ftse-business-live

#3 PeterfromCalgary on 06.26.22 at 12:55 pm

I think we are starting to see progress on inflation. Copper and oil prices are down from their peak. Gasoline prices will probably remain high until at least after July 4 (US independence day and peak driving time) but will probably fall in the fall.

Also COVID19 seems manageable. The University of Calgary keeps track of the COVID19 in people’s poop. Probably a fun task they delegate to a student. Anyways the virus shows up before people get sick and the amount of virus in peoples poop is way down.

https://covid-tracker.chi-csm.ca/

#4 Laurie Fujiki on 06.26.22 at 1:00 pm

But what about what Rich Dad has to say? https://finance.yahoo.com/news/robert-kiyosaki-says-hot-inflation-130000247.html

#5 Reality is stark on 06.26.22 at 1:03 pm

Real estate markets are local, prices won’t fall in Calgary unless we enter a deep recession and oil prices crumble.
This war looks like it will last a while so oil prices will remain high for an extended period.
Real estate agents are well aware that the value of a GTA home is 50 % of the peak value in Feb. 22.
Very few will admit it.
That 3.2 m home was likely peaking at 3.5 m in Feb.22 and is therefore only worth 1.75 m.
That is the appropriate counter offer, take it or leave it.
A good real estate agent is supposed to know how to play hardball, perhaps 5% of the profession.

#6 Coopoiler on 06.26.22 at 1:06 pm

Well. Now that inflation is as high as it was in 1983 I will tell you a story from 1983. At my job the old guys (not me then). Would start a conversation with. Well guess what? The bank called again this week and asked if I wanted to pay off my mortgage, they would waive the year payment fee! I said no thanks, then they would all laugh about it. So i asked what is your rate. They would look at each other and then they would say mine is 2.5% or 3%. Etc. The mortgage I had just taken out was 18.75% Quite the difference. That fall they laughed again as they bought Canada savings bonds paying 19.5%. Still not taking the bank up on their generous offer for free repayment of mortgage. I obviously was not buying canada savings bonds, all my money went for mortgage payments and baby formula. I had a place to live and children for entertainment, all ended well

#7 Søren Angst on 06.26.22 at 1:08 pm

Apparently the UK’s “The Economist” has lost its mind and all common sense.

Cdn MSM trumpeting that Calgary*, Vancouver** and Toronto* made the top 10 list ***.

You have to understand that the UK for 8 months out of the year is a dreary, rain soaked, perpetually overcast (like Vancouver) and thus a TOTAL LACK OF

Vitamin D

will make you DELIRIOUS. Even The Economist.

https://my.clevelandclinic.org/health/articles/15050-vitamin-d–vitamin-d-deficiency

Look at the other “Top 10” equally dreary like the UK in Winter:

Vienna *, Copenhagen ** (also windswept), Zurich *.

* Require IGLOO for 8 months out of the year.
** Requires NOAH’S ARK for 8 months out of the year.

*** Also, one has to be fond of towers of glass, concrete and steel rooted in asphalt with vehicles mucking about as if a trail of army ants.

CONCLUSION:

MISERY does indeed like company.

———————-

Lived in the Cdn “Top 3 of 10” for many years.

Why I am happily retired in NE Italia. Our weather. Our culture. Our cuisine. Our landscape. Our history, Rome celebrates its 2,775th birthday this year.

And Vitamin D, gobs of it.

#8 Interstellar Old Yeller on 06.26.22 at 1:14 pm

The head-shaking aspect of this becoming a “buyer’s market” is that prices are still wildly unaffordable. I played around with a mortgage calculator a few days ago. Forget it. Rent is a deal, we’re staying on the sidelines and feeding the investment portfolio.

#9 Millennial Investor on 06.26.22 at 1:21 pm

How will mortgage rates stabilize at 5% for a five year fixed when inflation is hovering at 8%? Won’t real negative interest rates continue to spur higher levels of inflation?

Inflation will not stay at 8%. – Garth

#10 Felix on 06.26.22 at 1:22 pm

“Lowballers”

A good match for today’s dog photo.

Low-balling means deliberately underestimating something for a fraudulent purpose, such as the PITA factor of owning a dog, which is why dog owners get sucked into the misery of those dogawful burdens instead of the sheer pleasure of having a cat live with them.

Lost your FOGS? Here come the DOGS.

(Dog Owners Get Screwed)

#11 rk n usa on 06.26.22 at 1:23 pm

re: In other words, rutting season 2023 will not look at all like this year, when the spring market went flaccid. Govern yourself accordingly.

you think things (prices and sales) will turnaround i.e. up in spring 2023?

Will people still not be buying houses if rates stabilize? What do you think? – Garth

#12 Quintilian on 06.26.22 at 1:31 pm

“In other words, rutting season 2023 will not look at all like this year, when the spring market went flaccid. Govern yourself accordingly.”

Are suggesting that the Central Bakers will have inflation under control by next spring?

Wait and see. But it won’t be 8%. – Garth

#13 Cash is King on 06.26.22 at 1:31 pm

Would definetely not be buying overpriced, money laundered homes in Canada until the prices rolled back to pre 1997 pricing probably a lot lower with the stock crash

#14 crowdedelevatorfartz on 06.26.22 at 1:34 pm

@#7 Angst
“Why I am happily retired in NE Italia. Our weather. ‘
+++
So you keep telling us ad nauseum.

Has the Po river dried up yet?
That “worst drought in 70 years” seems to be eradicating it’s tributaries.

https://www.youtube.com/watch?v=5NVJCAm5Iq8

Perhaps all the effluent from those glorious cities could help the flow…..

But it would have to be renamed the Poo river.

#15 yvr_lurker on 06.26.22 at 1:35 pm

Unless there are large job loses due to a recession, our realtor neighbour in Kitsilano thinks that the market will just freeze up over the next year. People afraid of over-paying, while sellers not wanting (or needing) to sell at prices lower than a few years ago. Stalemate, unless people need to sell owing to job loses and not being able to carry the increase at renewal time…

#16 Bunnypatch Burnout on 06.26.22 at 1:37 pm

These sellers are all over the place with their asking prices! Around and around she goes and where she stops, no one knows. A few months ago this price would have caused eyebrows to rise….no it is blasè.

Buy/sell history for 31 Backwater Tr, Brampton (Freehold Townhouse)
$989,000
For Sale
List: 2022-06-25 |
W5674511

$1,099,000
Terminated
List: 2022-05-02 | End: 2022-06-24
W5599052

$999,000
Terminated
List: 2022-03-20 | End: 2022-05-01
W5542673

$1,199,900
Terminated
List: 2022-03-11 | End: 2022-03-19
W553271

#17 Linda on 06.26.22 at 1:47 pm

I thought today’s blog dog was ‘one of the kids’. Looks very happy in the dog themed bed:)

I don’t know what to think about inflation & how the powers that be are dealing with the situation. My take is that the numbers are being manipulated to present the best scenario possible. The statements from the powers that be are in my opinion very carefully worded to a) give them plausible deniability if the outcome worsens & b) soothe the public into thinking inflation will be temporary – in other words, over & done before the end of this calendar year. Or at the very least repressed back to the desired target range of between 1-3%, with 2% being the sweet spot going forward.

So let’s say that action on the part of the BoC does indeed put the brakes on by the end of 2022. So if the 12 month average for 2022 was for instance 5%, that translates into paying $1.05 instead of a $1 for stuff. Moving forward into 2023, the BoC has tamed the beast & the 12 month average is back down to 2%. Success! The only issue I have with this is that insofar as I can make out, that 2% doesn’t equate more money in the pocket. The reality seems to be this: the item that went from $1 to $1.05 in 2022 will cost $1.07 in 2023, not $1.02. In other words, that 2% gets added on top of the price increases that already occurred.

#18 wallflower on 06.26.22 at 1:47 pm

Regarding young people buying houses… from those I talk to, dual income, they cannot even qualify to rent the space they need (young child or children).
I sense the ramp for qualifiable renters and buyers is getting awfully squeezed.

So it won’t really matter how many months of inventory (which is growing like my groundcover here in my southern Ontariowe city)… and the greed/need of sellers won’t matter either.

I predict post October, we go into a very long, slow transactional market that slays the mom and pop specuvestors along the way.

What happened 2018 through 2022 will become the stuff of legend and eventually, urban myth.
Oh, and the numbers of RE license holders will plummet.
The job will hold a ‘squeeze nose’ factor.

#19 TurnerNation on 06.26.22 at 1:59 pm

What is your real estate dollar buying you in the Toronto core?

Under the cover of ‘Corvid’ our cities were ruined.
I present, life in your Crowded, Fetid UN Smart city:

https://torontosun.com/news/local-news/solution-or-problem-residents-says-neigbhourhood-a-shadow-of-former-self-due-to-esplanade-emergency-shelter
A sudden rise in loitering, fires, broken retail windows — whether shelter residents were responsible or not — for many left the neighbourhood unrecognizable.
Retiree Denise Moore, who lives in a condo near to the emergency homeless shelter, said crime has tapered off slightly in recent days because Toronto Police has stepped up but major problems persist.
“They’ve set our recycle bins on fire, they were pulling our fire alarms at night, there’s open defecation, they perch in our alleyways all strung out and high,” Moore said. “Many (businesses) around here have been robbed multiple times, poor mom and pop restaurants.”

The City of Toronto leased the Novotel Hotel at an estimated rent of up to $625,824 to provide physically-spaced homes to people who were incredibly vulnerable, both to COVID-19 outbreaks in overcrowded existing facilities and to the other pandemics, chronic homelessness, a deadly spike in drug overdoses and mental health issues.
Although 45 The Esplanade was labelled as temporary, an extension until next April has been granted.
Toronto signed contracts with 29 hotels across the city to provide additional emergency shelter and in March had 3,900 people staying in 2,900 rooms.

—– A commenter on that article noted:

“Come visit 21 Park Rd. it looks like the Tenderloin District in San Francisco, I’m SURE that having the “respite shelter” there was one of the mitigating factors to close the Hudson’s Bay store at Yonge and Bloor. You cannot walk around here safely at night anymore….”

#20 Shawn on 06.26.22 at 2:02 pm

Faulty memory on 1983 mortgage rates

#6 Coopoiler on 06.26.22 at 1:06 pm
Well. Now that inflation is as high as it was in 1983 I will tell you a story from 1983. At my job the old guys (not me then). Would start a conversation with. Well guess what? The bank called again this week and asked if I wanted to pay off my mortgage, they would waive the year payment fee! I said no thanks, then they would all laugh about it. So i asked what is your rate. They would look at each other and then they would say mine is 2.5% or 3%. Etc.

*******************************
I am certain your memory is faulty. No one had a 2.5 to 3% mortgage in 1983. You think maybe a 25 year fixed rate mortgage taken out in 1963?

Did Canada ever have 25 year fixed rate mortgages? Maybe it did. I was told by my elders (oral history) that the banks were not in the mortgage business until the 1960s. Possibly because the rate was fixed for 25 years and you can’t safely fund that with short-term deposits. Apparently life insurance companies used to fund mortgages. Things change.

No I can’t see this being anywhere near correct. 5% I might be able to buy in rare cases, not 3%.

Your point is still valid they could have had mortgages way below the the then going rate. Just not 3% range.

Someone care to look it up?

#21 Complicated on 06.26.22 at 2:30 pm

Hey Garth. Are you saying that you think house prices will start going up again next year when rates stabilize? I thought you saw a few years of prices going down. We sold a year ago and thinking of buying at some point the next 2-3 years. You think we wait or think about it next year?

I did not say that. But the sales drought will end. – Garth

#22 Victor Llearna on 06.26.22 at 2:31 pm

Those sheep that bought in Feb better learn a lesson on budgeting when their monthlies skyrocket.
Toronto is probably the worlds most overpriced hellhole. Toronto Housing prices are a lot like the maple leaf players, overpriced and mediocre at price. Can Thank Kyle (Dumbass) Dubas for overpaying the likes of Marner etc, and the sheep for taking on wayy too much debt.

#23 DON on 06.26.22 at 2:37 pm

https://www.zillow.com/homedetails/709-Kelly-Rd-Victoria-BC-V9B-2A8/313990665_zpid/

This house went on the market in the last week of March for 850k. Sold in 9 days. My friend heard that a younger realtor bought the house and is going to rent it out for a bit. Lucky a young family didn’t buy at Peak.

In general, a funk seems to be settling over the World due to the current situations.

#24 Flop… on 06.26.22 at 2:39 pm

Flop Drops.

Go and lowball this place, you’ll probably be accused of picking on people with purple houses.

I said in a post the other day, I had tagged a few houses to see the lay of the land, might as well put this one on the record while I wait for my appetite to kick in to eat my Vietnamese sandwich.

The details…

2049 Kitchener St, Vancouver.

Asking 1.37

Assessment 1.58

We know from previous Flop Drop posts that the detached bottom rung in Vancouver proper is 1.4, so when I clicked the love heart button on this one, I expected it to be gone in a couple of days, we’ll over asking.

Might still go for a decent number, but developers main obsession at the moment, in Vancouver, seems to be land assembly on arterial routes.

Duplexes at number two.

Laneway houses picking up the bronze on the speculation podium.

Could have priced the Kitchener house at this number to get the Hipsters competitive juices flowing, I don’t know, I don’t even go down that way anymore.

The last video and DVD rental shop in Vancouver just closed down there yesterday, too progressive a community for me, what’s next traffic lights?

The local paint store must love it when people decide to paint their houses in these gaudy colours, as it gives them an opportunity to sell all the paint they made mistakes on when tinting them…

M48BC

https://www.zealty.ca/mls-R2701617/2049-KITCHENER-STREET-Vancouver-BC/

#25 Paddy on 06.26.22 at 2:54 pm

It’s interesting how when house prices sky rocketed to the moon, that’s all you would hear about from MSM, work colleagues, friends etc…but nobody ever talked about how the stock market went berserk(except on this blog)…selective hearing I guess.
Whenever we hear a story about people overpaying for a house and being underwater, the general consensus is: “oh those poor people, all they wanted was a place to live”…..but when the stock market plummets, the general consensus is: “yah, the stock market is risky, that’s what you get for gambling with your money”….

B&D all the way and I sleep well at night.
Thanks again for all you do Garth and gang.

#26 mark on 06.26.22 at 2:58 pm

did someone actually just ask whether they should pay off a 2.67% loan or a 4.2% loan first? good grief where do these people come from

#27 Philco on 06.26.22 at 3:07 pm

Sorry way behind.:

Fully charged? Resting voltage or spacific cell for that battery.
Simple lead acid in your ICE or your bootup batt in your EV is 12.6 at resting. A discharged batt is at 11.6 volts and below.
We will see how far the lithiums go with voltage supression over time.
Ie my Tundra needs no major repairs untill 500,000 if all goes well.
If my Leaf degrades say 30% at 250,000 or more then Im footing the big bad bill for a new batt.
Then you can throw that opp cost in and carbon burn to dig another one outa the ground?
The Leaf Batt is 480 Volts DC. The level 3 is CHADEMO direct charges at 50 Kilovolts. My newer Leaf will accept a wopping 100 Kilovolts or a 100,000 Volts but very few chargers provide that.
Maybe leave the car at that level!
Level 1 & 2 uses the on-board inverter to charge AC level to DC.
I just charge in my gargae at the 240v level. I had to upgrade the cable and breaker from my prior car. Its at 6.6kw consumption. Original Leafs were 3kwatt
Pretty impressive stuff but their not the silver bullet to anything. YET

#28 Caffeine Monkey on 06.26.22 at 3:12 pm

Mortgages are one thing, but I think the level of outstanding HELOC debt is the large alligator sitting patiently in the weeds, ready to eat all our faces. HELOC rates are variable too, those numbnuts using HELOCs to buy Audis and dine out four times a week are in for a world of pain, and soon. And there are a lot of numbnuts out there.

#29 KNOW IT ALL on 06.26.22 at 3:16 pm

Whoever is NOT taking Garth’s advice either A) hasn’t followed him long enough to tabulate his impeccable track record or B) has squid tentacles for brain cells.

#30 Quintilian on 06.26.22 at 3:17 pm

Garth, you better get your instrument panel calibrated.
The readings are from outdated specifications.

Never before have we accumulated so many layers of stealth inflation, and with-it asset bubbles on top of asset bubbles.

Money supply completely out of acceptable range, (Crypto influence adding to the mess), full employment, stimulus still about to burst through the pipeline, and feedback and spin-off will come through at a torrid flow, terminal rates based on fiction, wealth effect from RE still has thrust.

The Central Bank tightening so far is only a media event, the spendthrifts, the debt junkies, are not convinced.

They will keep feeding inflation.

What will the Central Bankers do?

Yeah, never, ever been this bad. (Kids are so cute.) – Garth

#31 Bunnypatch Central on 06.26.22 at 3:42 pm

Does anyone know what the new Greaterfool Realtor Audi Index is currently sitting at?

#32 RJ on 06.26.22 at 4:30 pm

In 2008, with the rates we have now or are about to have, median household income to benchmark house was about 4.4x. Even with the changes since Feb, we’re still around 8.2x. Look at stats can, crea, etc for numbers.

Is this just the new normal then? How does that work long term? Affordability is worse than ever even with recent price changes. The recency bias and decades of conditioning are just so firmly entrenched. None of this makes sense for another 2 decades.

#33 Tony on 06.26.22 at 4:32 pm

Re: #21 Complicated on 06.26.22 at 2:30 pm

It’s hard to predict inflation and interest rates so far out but with the 2024 election in America they want inflation falling coming into the election so interest rates should peak no later than around the start of 2024. Inflation and interest rates look like they’ll drift lower into the end of this year starting in August but inflation will take a second leg upwards at the start of 2023 in America. The cost of living allowance for social security for 2023 is based on the 3 months July, August and September of this year and last year and the midterms are this November. This is why I see interest rates and inflation going lower starting this August into the end of this year but inflation taking a second leg upwards around the start of 2023. Around the beginning of 2024 might be the time to buy a house.

#34 Diamond Dog on 06.26.22 at 4:34 pm

No, rates will not surge past 7% and stay there. Too much. Too extreme. – Garth

Excellent subject to bring up. What happens if renewals come with 5’ers at 7%? Go variable until fixed rates come down because at some point they will. Is a 5 year mortgage fixed term at 5% acceptable? Let’s look at where variables are at now with the Fed rate at 1.5 – 1.75%:

https://www.mortgagerates.ca/mortgage-rates/variable/5-year

I would float with the spreads @ 1.5 – 1.75% between variable and fixed and the Fed likely to pump the breaks @ 3.5%, but there is risk in doing this. I bring up the Fed because most of the time our CB north of the line follows the Fed. Plus, Canadian banks borrow from the Fed to lend to Canadian mortgage holders, so the Fed rate really matters in this equation and it goes without saying, the Canadian CB has no control over the Fed rate.

Looking at risk outside of the Fed rate, with variable mortgages there is always a risk getting blind sided by a black swan forcing spreads to narrow between variable and fixed. If Canadian banks get wobbled for example, spreads could narrow. Severe recession coupled with high unemployment and bankruptcy rates, climate turns geographic areas uninhabitable or uninsurable, there are unforeseen events that could force banks to raise variables to offset losses from bankruptcies regardless of potential for systemic risk. All that being said, variables are likely (I say likely) to hit 5% or just edge past, but they won’t stay there and should come back down to 4% or less. At some point, we should see fixed terms below 4%, but it’s unlikely to do so next year.

If the Federal reserve is correct in stating that 2.5 to 2.75% is “neutral” (neither growth or recessionary and take note “if”, the Fed is saying it), then the Fed will have to lower rates below these numbers once inflation is under control to re-inflate the economy out of recession.

That said, how high can the Fed rate go? 3.5 to 4%. A few will say they can go higher or need to go higher, but the Fed would open the door wide open to systemic risk to go higher than 3.5%. They could do 4 I think, but only briefly. Someone said the Fed could raise rates to 6% a couple months back, but likely didn’t realize that close to 50% of treasuries are at 2 years or less and thus need to be rolled over on short timelines so debt service on public debt does become a big issue with a higher Fed rate, not to mention that bond markets would freeze up on CCC’s well before (they could freeze @ 3%, volumes are off by 75% now, zombie corps beware) and for the most part BBB’s and AAA’s would fall off a cliff well before 6% (BBB’s would freeze up in the 4’s or less). A 6% Fed rate is extreme, we will not see this guaranteed any time soon even with a currency crisis, I’d bet my life on it.

Can the Fed tame inflation at 3.5%? Yes, but only if they keep it there to induce a recession so we are truly going to find out if the Fed is telling the truth about 2.5% to 2.75% being neutral. (I think they are, if wrong, a lot of rich folks would be PO’d, heads would roll)

The only way the Fed can tame inflation is to induce a recession. The reason why there is no other way, is because they have to reverse not just consumer but pricing behavior and this unfortunately takes a recession.

Think of it this way, if the markets believe the threat of inflation is over, the markets go up. If the markets go up, m2 goes up and if m2 (money in savings accounts) goes up, prices on everything stays high or goes up. So, the only thing that would force the markets to go down and stay down is recession. The one thing that can make that happen is? Fed rate hikes past neutral.

I’ve touched on the lag between m2 and prices (12 to 18 months) or broad money (18 months to 2 years) for a reason because this is the historical norm. To be an outlier from these timelines of historical norms, the markets would have to go straight down and they generally don’t, not with money on the sidelines to jump back in. The bear market rallies, the relief rallies, any kind of rally for whatever reason (like last week) stretches out the timeline to within these norms. The only thing that will take down prices overall? Suck money out of the supply, i.e. recession.

Getting back to housing, what is the Fed’s weapon in inflating or deflating the markets? Of course its interest rates. (QT will help too in raising bond yields) In 2020, they went too far inflating (zero rates, bond buybacks). People should know the Fed went way to far even for a pandemic which looks to be politically motivated (soft corruption, buying an election through wealth effects).

When the money supply increases too quickly, we get an overheated economy, everything bubbles and then we get high inflation. Did no one find it odd that the markets kept going up and up and up “during a pandemic”? Just look at how high inflation is (and take note, the CPI is a cooked number). The Fed has been way late in reacting to high inflation which they themselves have caused because “inflation is always and everywhere, a monetary phenomenon”, their delay in raising rates looks politically motivated at this point (a triggered recession in time for the midterms which normally crushes the governing political party) and there isn’t much else to say other than for readers to pay attention, learn how rate hikes and drops effect the bond markets (how U.S. politics can effect it’s institutions like the SC on Friday or the Fed) and understand what the Fed really needs to do to get the inflation they themselves created, under control. (cripple demand or raise supply, they have no control over supply) Coming off an everything bubble, there’s more pain ahead.

#35 Desperate Realtor, part-time Passport Consultant on 06.26.22 at 4:40 pm

Garth, I need some work and income and would appreciate your help as things have really slowed down in the market

Any readers here in the GTA who need a passport, please send your details to me via this website.

I will hold your spot in line for up to 72 hours at the passport office, for a flat fee of $5000, far less than my usual 2.5% commission for a sale in Toronto.

I provide my own Depends and sleeping bag.

#36 bdwy on 06.26.22 at 4:48 pm

#24 Flop… on 06.26.22 at 2:39 pm
Flop Drops.

2049 Kitchener St, Vancouver.

Asking 1.37

Assessment 1.58

Could have priced the Kitchener house at this number to get the Hipsters competitive juices flowing, I don’t know, I don’t even go down that way anymore.
/////
ha. this is my hood. a couple nice kids bought it for 775 back in 2017. was shocked at the low price this week. same color since mid 90’s at least!
it is a smaller 25′ lot. recent high water mark had 33′ for 2m so a 25 footer at 1.5m could be said to be the peak.

duplexes are put on 25′ lots around here but usually only when they can do 2 at a time ( splitting a larger 50′) as 33 seems the minimum for duplex+laneway
////

The last video and DVD rental shop in Vancouver just closed down there yesterday
///

ha – i know this guy too. in 2014 when blockbuster died i asked him what his next plans were (i don’t think he liked it) never would have believed he’d make 8 more years.

#37 Dave on 06.26.22 at 4:50 pm

My EV uses 2 watts per km….when peddling. The bike/motor/battery combo weighs about 80 pounds. Peddling up hill alone requires some motor assistance. Peddling down hill with brakes gently applied gives some regenerative braking as does peddling on the railtrails when I exceed the motors speed settings.

#38 Brunett43 on 06.26.22 at 5:01 pm

And another one…my b/f inherited his mothers’ estate in London, ON. It’s a 5000sq foot home right next to the university. She died last Oct. 2021. It’s circa 1970 interior that needs a total reno. This home features 5 beds, 7 baths, large LR, FMR, DR, Office, and a large kitchen. L shaped pool in the backyard and a sauna in the lower levels. I’ve been reading your blog for years, and told him you’d better get it listed asap because rates are going to rise soon. He sat on it for several months, during which time he sold off most of the furniture. I told him to list it no more than $1.5 mill. because it’s too dated. He didn’t listen, he listed it a month ago for $2.4. No interest, now he just reduced it by $300k. Still no buyers. He should have listened to you through me but he didn’t. Btw…property taxes on this place are about $14k a year.

#39 Cec on 06.26.22 at 5:01 pm

Didn’t you recently say GICs wouldn’t hit 5%?

#40 Tony on 06.26.22 at 5:06 pm

Re: #12 Quintilian on 06.26.22 at 1:31 pm

The U.S. dollar should fall into the end of this year especially in November and December which will ease worldwide inflation outside of America possibly as far out as the spring of 2023.

#41 bdwy on 06.26.22 at 5:08 pm

#137 Phylis on 06.26.22 at 4:15 pm
The engineer said you didn’t provide enough information. I didn’t use google.

——————-
the engineer is correct.
kind of a trick question. as our resident paul bunyan pointed out it depends on the batt voltage.
amp x v = w
amph x v = wh

individual ’12v’ lithiums run hotter than lead acid. if i see 12.point.anything i ‘m approaching empty. 13.4 is full.
https://diysolarforum.com/threads/lifepo4-voltage-chart.3156/

#42 Bob Loblaw on 06.26.22 at 5:19 pm

Most of the rate pain is priced in and Toronto home prices are still 400% higher than they were at the turn of the millenium. So I guess in 20 years the average Toronto home price will be $20 million, while the average take home household income will remain under $100k. Makes sense.

#43 bdwy on 06.26.22 at 5:31 pm

#37 Dave on 06.26.22 at 4:50 pm
My EV uses 2 watts per km….when peddling.

………..

like influence peddling? or simple vending? ;)

but…
2 watts per km
is mathematically meaningless like
saying my car uses 60miles/hr to go to a km.

2 watt*hours is an ‘amount’ of electricity.
2 watts is an instantaneous rate (like 60mph)

you prob bike a km 2 minutes.
2 Wh consumed in 2 minutes is a 60W draw. you motor likely uses much more.

from the ‘rectangle of knowledge’ ie google;
Re: 48V 20ah battery
Watt hours can be used to see how many miles pr unit of energy you can go. So a 48v 20ah battery has 960 watt hours (48 * 20 = 960). A bike going roughly 25mph unassisted will use roughly 20-25wh/mile. So if you get 20wh/mile, the bike will go 48 miles pr charge.”

so it looks like you are off by a factor of 10.

#44 Flop… on 06.26.22 at 5:39 pm

Flop Drops.

These posts are supposed to focus on real estate, but why not mix in a bit of sarcastic social commentary as I go, what could go wrong?

As I alluded to in my last post, America would be a better place if all the Blockbusters were brought back, that’s where things went wrong, without that all you’re left to focus on is women’s rights, and where to put the next traffic light.

Ya see, no problems here, just a lack of focus.

Here’s another house I tagged, let’s see what happens with this one.

The details…

590 E 30TH Ave, Vancouver.

Asking 1.5

Original ask1.88

Assessment 1.99

So here’s one in Flopville, after starting the bidding at 1.88 and dropping down to 1.7, they recently took another 12% off and is down to 1.5 but they haven’t stitched up a deal yet.

I looked at the photos, see lots of potential on the positive side, little bit of dampness in some photos on the negative side.

11 days at new price, I thought it would have gone, that’s only 100k over the price of a starter home in the city core, it’s only 25 years old and it’s infrequent to see someone serving something up at only 75% of assessed value, when booming most sellers seem to want 20% on top of this number.

https://www.zealty.ca/mls-R2689777/590-E-30TH-AVENUE-Vancouver-BC/

O.k enough real estate talk, back to the kids, poor things have only just discovered Kate Bush.

Stranger Things went easy on them featuring Running Up That Hill, things are going to get real messy when they find out the same lady did Babooshka.

Heads will explode.

https://www.youtube.com/watch?v=6xckBwPdo1c

I’ll keep trying to behave.

I’m pretty sure that there’s something in Vancouver tap water that doesn’t mix well with Tasmanians, and makes me behave like one of the characters in the Gremlins movie…

M48BC

#45 Verbal diarrhea on 06.26.22 at 5:53 pm

#34 Diamond Dog on 06.26.22 at 4:34 pm

No, rates will not surge past 7% and stay there. Too much. Too extreme. – Garth

….. Ad infinitum.

——-

Garth, you need to start charging this guy by the word every time he posts to your blog.
He is selfish to think that anyone is interested in reading what he has to say in his long-winded posts which are typically the wordiest on your blog.

Get your own blog! And for heaven’s sake.. Take some Imodium!

#46 latestarter on 06.26.22 at 6:10 pm

I’ve seen Garth mention the B&D portfolio – can anyone shoot me a link to the description or make up of it? I’ve tried going back a number of posts and don’t see any way of searching etc.

Obviously coming late to this blog – any help is appreciated.

#47 Reality Check on 06.26.22 at 6:12 pm

real estate valuations will continue to fall for months to come – until the bottom is reached. Then it’s over.
——————-

Or possibly a near term modest correction, maybe 10-20%, followed by a decade of flat prices during which the real “value” of a home continues to depreciate by the annual inflation. This is what occurred post 1990, with the real value of a house in some markets falling 50-60%.

For example, just 4% annual inflation depreciates an asset in real terms by 48% over 10 years. And 5% annual inflation results in a 63% drop.

While real estate in Canada has been a screaming investment over the last 20 years it could be worse than dead money for the next 20.

#48 Gr on 06.26.22 at 6:19 pm

I almost commented the “a house worth a billion or two in London Ontario” but I’m sure it is just a typo and should have been million. And certainly I shouldn’t be casting stones as far a spelling is concerned LOL.

And thinking of billion billion, some might find this interesting from June 24, 2022,

-The world’s latest fastest supercomputer, Frontier at Oak Ridge National Lab, in Tennessee, is so powerful that it operates faster than the next seven best supercomputers combined and more than twice as well as the No. 2 machine. Frontier is not only the first machine to break the exascale barrier, a threshold of a billion billion calculations per second, but is also ranked No. 1 as the world’s most energy-efficient supercomputer.
https://spectrum.ieee.org/frontier-exascale-supercomputer

And if your interested in see what some of the robots are doing in the amazon warehouse scroll down to find a link with a videos.
https://spectrum.ieee.org/

#49 Lines at pass offices on 06.26.22 at 6:22 pm

DELETED

#50 Dr V on 06.26.22 at 6:42 pm

43 bdwy

“Watt hours can be used to see how many miles pr unit of energy you can go. So a 48v 20ah battery has 960 watt hours (48 * 20 = 960). A bike going roughly 25mph unassisted will use roughly 20-25wh/mile. So if you get 20wh/mile, the bike will go 48 miles pr charge.”
————————————————-

Hmmm. I dont have a power meter on my bike, but from others, and from my stat bike which does have a meter, I estimate that a 180k ride I did in 6 hours a few years ago was at around 150W. So 900Wh.

Question. Who needs a battery?

#51 stage1dave on 06.26.22 at 7:04 pm

#20 Shawn

If memory serves, banks were barred from the residential mortgage market until 1969, which is when the recently (back then) bank act review was enacted.

It was credit unions and finance companies (HFC, etc) for residential mortgages all the time I was growing up in the sixties.

#52 Steven Rowlandson on 06.26.22 at 7:08 pm

“The shoe is on the other foot. Buyers rule.

But, wait, where are they?”

If they have any sense they will boycott real estate until prices are like they were in the mid 1960s.

#53 crowdedelevatorfartz on 06.26.22 at 7:17 pm

@#30 Quinty’s Quandry
“Never before have we accumulated so many layers of stealth inflation, and with-it asset bubbles on top of asset bubbles.”
++++

It was called the 1980’s.
Big inflation.
Big unemployment.
Big hair.
Big shoulder pads.
Yes, it was bad.

#54 crowdedelevatorfartz on 06.26.22 at 7:23 pm

@#44 Floppie
“11 days at new price, I thought it would have gone, that’s only 100k over the price of a starter home in the city core, it’s only 25 years old and it’s infrequent to see someone serving something up at only 75% of assessed value, when booming most sellers seem to want 20% on top of this number.”

+++
This is just the beginning Floppie.
Wait until July 13th went the BOC gongs the interest rate bell and hike it another 0.75%

The greaterfools that bought or are so leveraged they can’t possibly make their payment will get that nauseous feeling in the pit of their stomach.
Fear.
Financial ruin staring them in the face..
But it’s still summer and most people won’t be paying attention.
Septembers rate high will have the panicked specuvestors scrambling to list.

Vultures watch the living but still wait to………………. eat the dead

#55 Steven Rowlandson on 06.26.22 at 7:23 pm

“Inflation will not stay at 8%. – Garth”

Since war with Russia is a policy objective of western elites and governments and war and deficits generate inflation one should anticipate even higher inflation than 8% Providing the little brass keys aren’t turned and we all don’t get fried or conquered the situation will be bad for debtors without a license to print the official currency and better for savers if interest on deposits goes up. Government will print to pay interest on its debt. They will print to cover pensions too. They will print until it is useless to do so. It is the easy way out for them. Besides it is almost too late to practice austerity and there is no political will to do so.

#56 Ponzius Pilatus on 06.26.22 at 7:59 pm

Lived in the Cdn “Top 3 of 10” for many years.

Why I am happily retired in NE Italia. Our weather. Our culture. Our cuisine. Our landscape. Our history, Rome celebrates its 2,775th birthday this year.
————-
Dolce, you forgot.
Our corrupt Government and Polititians.
I heard Berlusconi is coming back.

#57 Just curious on 06.26.22 at 7:59 pm

Complicated on 06.26.22 at 2:30 pm
Hey Garth. Are you saying that you think house prices will start going up again next year when rates stabilize? I thought you saw a few years of prices going down. We sold a year ago and thinking of buying at some point the next 2-3 years. You think we wait or think about it next year?

I did not say that. But the sales drought will end. – Garth

Would you say sales drought will end next year even if we happen to be in recession by that time and unemployment increases? Thanks

#58 Ponzius Pilatus on 06.26.22 at 8:21 pm

#51 stage1dave on 06.26.22 at 7:04 pm
#20 Shawn

If memory serves, banks were barred from the residential mortgage market until 1969, which is when the recently (back then) bank act review was enacted.

It was credit unions and finance companies (HFC, etc) for residential mortgages all the time I was growing up in the sixties.
———————
VanCity C.U. is still the largest Residential Mtg lender in BC.
Quite often, lender of last resort.
They are proud of that.
Their Board of Directors is an NDP stronghold.

#59 CJohnC on 06.26.22 at 8:32 pm

Word Count Winner:

Garth…………. 1022 words
Diamond Dog..1043 words

#60 CEW9 on 06.26.22 at 8:34 pm

“#46 latestarter on 06.26.22 at 6:10 pm

I’ve seen Garth mention the B&D portfolio – can anyone shoot me a link to the description or make up of it? I’ve tried going back a number of posts and don’t see any way of searching etc.

Obviously coming late to this blog – any help is appreciated.”

____________________________________________

latestarter, here is one
https://www.greaterfool.ca/2018/04/09/get-balanced/

A little old but you get the picture.
if you want an actual book, I benefited a lot from Garth’s book “Money Road”, though ity may be a bit dated

There are lots of other books and websites on creating a balanced portfolio. In the interest of reducing risk, it might be good to take a survey of other ‘balanced’ portfolio builds as well, but for me the one on GT’s blog post above has mostly served me well as a starting point.

#61 bdwy on 06.26.22 at 8:35 pm

180k ride I did in 6 hours a few years ago was at around 150W. So 900Wh.

Question. Who needs a battery?

——————
nice workout!
for 180k ride? i dont need a battery.
as a fat lazy smoker i need one of these … https://www.suzuki.ca/hayabusa/

#62 Plop on 06.26.22 at 8:37 pm

Real estate is just like the stock market and the economy going forward.

You had all year to position out in some shape or form.

If you didn’t or you parked more into those items you are the greater fool.

Get used to it, this fall there is no PRACTICAL REASON for things to get better.

#63 YVR Renter on 06.26.22 at 8:46 pm

Two houses we’ve been watching sold in the last few days here in CTown. On Plewes Dr & 6th St at Oak. Both listed a bit too late for $1,399,000. Both were ridiculously overpriced, and took time to sell. Both sold in the $900’s—$400+ thousand below original ask. One a century home, other 1700. + change square foot builder crap. Still stupid prices for Collingwood. But 1/3 less than original list.

#64 Wrk.dover on 06.26.22 at 8:55 pm

#20 Shawn on 06.26.22 at 2:02 pm
Did Canada ever have 25 year fixed rate mortgages?
_________________________________________

NS Housing issued 11% for 25 years to a lucky group of peeps below a certain income level in June 1981.

We qualified @ $100/anum below peak, pre July raise.

It was completely open too! We paid ours out in 1987.

#65 Ustabe on 06.26.22 at 8:59 pm

#50 Dr V on 06.26.22 at 6:42 pm
Hmmm. I dont have a power meter on my bike, but from others, and from my stat bike which does have a meter, I estimate that a 180k ride I did in 6 hours a few years ago was at around 150W. So 900Wh.

Question. Who needs a battery?

I do.

Be me, 16 years old, walking back to school, in a cross walk, hit with initial impact being left hip by a vehicle going an estimated 40 mph. 60’s vehicles, nice chrome bumpers, this one also had a metal deer guard.

Wake up in hospital a few days later for reasons other than my hip but from that day forward had a “sore” hip from time to time.

No physio, no nothing, don’t know if they didn’t know, didn’t care, maybe didn’t even have the knowledge back them?

Any way as I age that soreness becomes more and more prevalent, becomes actual pain at times, so much so that my Dr allows me to walk around with narcotic pain killers…its a bitch being half way around a northern lake on a easy trail, my wife and I both enjoying the experience and have your hip tell you that you are going to crawl the rest of the way.

So, battery assisted bikes have given me back the ability to, well, bike. I can pedal or not. I can pedal with assist or not. I can just use throttle and cruise along…or not. Nice to have the choice back.

#66 Dr V on 06.26.22 at 9:04 pm

20 Shawn
51 Stage1dave

Yes, insurance companies were the main institutional lender, while most other mortgages were from individuals.

I dont know if the Bank Act was the trigger, or the National housing Act and the creation of CMHC

Good read here (I just glossed over it)

https://www.researchgate.net/publication/5151489_Where_Credit_Is_Due_Residential_Mortgage_Finance_in_Canada_1901_to_1954

#67 TurnerNation on 06.26.22 at 9:09 pm

Canada Day? This sounds more like a military checkpoint operation. Fitting for this global WW3 we are living.

“As per the news release, the motor vehicle control zone will be in place from June 29 to July 4 and will affect travel within the city in several ways.
Firstly, all vehicles belonging to people taking part in any form of demonstration, event, protest, or rally are outright banned from going near Parliament Hill, while local and business traffic, pedestrians, cyclists, and public transit will be permitted to move through the control zone freely.
Moreover, those who do not comply with the protester vehicle ban will face ticketing, and “barricades, heavy equipment, or police officers and vehicles will be at various access points surrounding the control zone, to filter lawful traffic onto those streets.”” (thecountersignal.com)

—- Latest update on Global WW3. It was kicked off that cold week March 2020. Year 3 we almost back to normal?

.UN chief warns of ‘catastrophe’ from global food shortage (ctvnews.ca)

— Comrades wartime rationing is in effect.

https://www.rt.com/news/557801-german-vice-chancellor-shower-time/
“Economy Minister Robert Habeck says he has had to once again “drastically reduce” the time he spends in the shower in an effort to cope with what he describes as an acute energy crisis.
Not heating apartments in winter would also greatly help Germany to overcome the difficulties allegedly caused by Russia, the minister told Der Spiegel magazine in an interview published on Friday.”

#68 crowdedelevatorfartz on 06.26.22 at 9:18 pm

As mentioned earlier this Spring.

The “Summer of Strikes” may be hitting BC
393,000 BC govt union members want a raise.

A 1% wage increase x2 years would cost $930/million more per year.
3% x2 years = 2.8 billion more per year
5% x2 years( the union demand) = $4.6 billion more per year.
Members are voting overwhelmingly in favor of strike.
The govt is arguing inflation will be dropping and will make their offer this week.
Just when the economy is getting kicked.
Stay tuned.

#69 David on 06.26.22 at 9:29 pm

Piece of advice to everyone panicking about inflation, don’t be, inflation is so yesterday. US ISM fell under 50 meaning we are contracting. Diminishing demand from wealth destruction based on falling asset values are doing an excellent job destroying inflation. Come December you will hear of coming rate reduction to stem off a deflationary wave. Rates are going up in July and a pause in September as things will start becoming much more clear that we are months into a recession

#70 Ronaldo on 06.26.22 at 9:35 pm

#51 stage1dave on 06.26.22 at 7:04 pm
#20 Shawn

If memory serves, banks were barred from the residential mortgage market until 1969, which is when the recently (back then) bank act review was enacted.
————————————————————–
My first home, a townhouse in North Van, I had a mortgage with CIBC in Dec. 69 at 9 3/8%. The BOC rate at the time was 7.75%.

#71 45north on 06.26.22 at 9:45 pm

Flop

The details…
590 E 30TH Ave, Vancouver.
Asking 1.5
Original ask1.88
Assessment 1.99

when you say Assessment 1.99, you mean the notice the property owner got January 1, 2022, saying what the property was worth July 1, 2021. BC Assessment will send another notice January 1, 2023. So here’s some idle speculation. BC Assessment sends out 2 million notices. It’s pretty easy to calculate the difference between July 1, 2021 and July 1, 2022 for each property and then add them up. I get 2 million X .5 million = 1 trillion. So January 1, 2023, BC is going to be $1 trillion poorer.

it’s going to be a tough time to be the mailman?

#72 Ponzius Pilatus on 06.26.22 at 10:11 pm

68 crowdedelevatorfartz on 06.26.22 at 9:18 pm
As mentioned earlier this Spring.

The “Summer of Strikes” may be hitting BC
393,000 BC govt union members want a raise.

A 1% wage increase x2 years would cost $930/million more per year.
3% x2 years = 2.8 billion more per year
5% x2 years( the union demand) = $4.6 billion more per year.
Members are voting overwhelmingly in favor of strike.
The govt is arguing inflation will be dropping and will make their offer this week.
Just when the economy is getting kicked.
Stay tuned.
———————-
I think Labour Unions are making a comeback.
But your company, CEF, has nothing to fear.
I hear you treating your workers well, and even have a profit sharing plan.

#73 Doug t on 06.26.22 at 10:20 pm

FOMA LOL – “fear of missing anything” apparently is the new norm – crypto, stocks, rocks, real estate, used cars etc ….. we are screwed haha

#74 Juste pour rire... on 06.26.22 at 10:30 pm

Townhome is back! I should say “townhome” because it’s just a ground floor condo sandwiched between 2 garbage storage areas of 2 apartment complexes.

https://www.realtor.ca/real-estate/24585935/th-112-1830-bloor-st-w-toronto-high-park-north

Down from $1,624,999.

Still cost you nearly $10K a month to carry mortgage/fees/taxes after you drop nearly $400K upfront to take the keys for the 20%

OR

You could rent the same 3 bedroom with infinitely better view a block over in professionally managed building for under $3K per month and have $7K to…I don’t know, spend on manscaping equipment. EACH AND EVERY MONTH.

Tell me again please how these houses shouldn’t be dropping 66% to make any sense vs. renting.

#75 Sunny on VI on 06.26.22 at 10:35 pm

25 yr. mortgages, yup! My 87 dad told me the first house he bought in 1970 was 25 yrs, and that that was all that banks offered.

We then moved in 1981 to a small hobby farm – they got a “deal” as the builder who had built it for his own family went broke. They sold a decade later due to divorce. Had to sell – didn’t gain or lose from the sale.

There was no timing in his method…just bought and sold according to his own needs at the time.

#76 Reynolds753 on 06.26.22 at 10:55 pm

#6 Coopoiler on 06.26.22 at 1:06 pm
#20 Shawn on 06.26.22 at 2:02 pm

I wondered the same thing. Who had a 3% mortgage? I bought my first house in the east end of Toronto in 1981. It came with a first mortgage of 11.25% with a five year term if memory serves me correctly. That was considered a selling point. The house cost $100,000 and it always seemed to track the average home price in Toronto. I had to take a second mortgage out at about 18-19% even with a $25,000 down payment. I do remember paying that second mortgage down as quickly as possible. I also had some 19.5% CSBs. Those were the days.

#77 Satori on 06.26.22 at 11:03 pm

#65 Ustabe on 06.26.22 at 8:59 pm
I didn’t realize how useful electric bikes were until your post, makes total sense. Happy your out there together doing fun stuff! The occasional movement might also be helpful to alleviate some pain, sorry to hear about your accident.

#78 Keith on 06.26.22 at 11:06 pm

@Shawn #20

Anecdotally, people took out thirty year mortgages in the late fifties at a fixed rate of less than four percent from the teacher’s credit union in B.C. By the seventies the offers to pay out the balance with no penalty were coming thick and fast.

By the seventies, there were lots of people with “old” mortgages who were making more money in cash, CDIC insured than they were paying in mortgage interest. People have no idea how good and low risk life was for people born in the thirties, before the baby boom. My dad bought a house in Victoria in 1961 for $8500.

I remember advertisements in the seventies, selling houses with an “assumable” mortgage in the seven percent range. A great selling feature when the prevailing mortgage rate was higher. Different times.

The best story I heard was a family friend, who had a terrible track record as an investor. He was downsized in the early eighties, and took the buyout and all the money he had in the world, and bought a life annuity at the peak of nominal interest rates. He got 15% guaranteed on his capital, and sailed off into a comfortable retirement. If you live long enough you see everything.

#79 Basic Math on 06.26.22 at 11:07 pm

#46 latestarter on 06.26.22 at 6:10 pm

This will send you back a few years in Garth’s blog, but he has been consistent in his B&D recommendations

https://www.greaterfool.ca/2014/05/15/the-millennial-portfolio/

#80 EmmEmm on 06.26.22 at 11:12 pm

Recently got a call from CIBC. The lady introduced herself as the new branch manager of my home branch. She “reminded” me that I also have a home line of credit that I could use anytime. And the bank will “blend” the rate with my existing fixed mortgage running at 1.74% until June 2026. And she tried to coax me into buying CIBC GICs, which, in her opinion is the best bang for the buck as the stock market is headed for a crash!!

Earlier the realtor shenanigans and now the banker shenanigans, seems like I’ve seen it all!!

#81 morrey on 06.26.22 at 11:16 pm

DELETED

#82 Terry on 06.26.22 at 11:22 pm

The U.S. Fed funds rate peaks at 2.25%. That’s just 50 more basis points to go and then the Fed pauses. Once the U.S. recession really picks up steam later this fall and into the winter QE starts again……….also because the Covid disease comes back due to vaccine disease enhancement clinically known as ADE. Good luck.

#83 Dr V on 06.27.22 at 12:02 am

65 Ustabe – ride safe! Helmet, lights, and always be aware of your surroundings.

We are all only one bike crash away from…..???

#84 Ponzius Pilatus on 06.27.22 at 12:38 am

Our Prime Minister at the G7 in Bavaria

https://www.stern.de/politik/ausland/g7-gipfel-in-elmau-in-bildern–kuehe–proteste-und-politiker-auf-kuschelkurs_31985784-31985768.html

#85 Nonplused on 06.27.22 at 1:09 am

“No, rates will not surge past 7% and stay there. Too much. Too extreme.”

Well, normally. But with inflation at 8%, 7% mortgages are still “cheap”. So inherent in that call is also a forecast that inflation will go down.

But will it? Hmmm. I don’t know. Governments are still spending recklessly and it is money they don’t have and will likely never get that they are spending. That means the printing press goes “brrrr” all night long.

But the more worrying factor is the energy predicament. Fact is, the economy is fossil fuels (or the consumption thereof). Nuclear helps but nobody but the Chinese, Russians, and Indians want more of that. Solar calculators and pinwheels only help a very little bit and they don’t scale. Hydro is mostly all built out, nature has only provided so many good places to build a dam. So until we get serious about Gen IV nuclear what we’ve got is fossil fuels.

Remember folks, the economy is nothing but a massive energy dissipation mechanism. Energy is the economy. There is no economy without energy, no matter the source. If you want to know how your economy is doing, it is just as useful to measure energy consumption as it is to measure GDP.

Unfortunately, 3 of the largest holders of fossil fuels (Venezuela, Russia, and Iran) are all enemies of the west (or at least that is what the west thinks) and are under sanctions and there are no conditions offered for reduction of those sanctions except complete deconstruction of those nation states as they currently stand. So there is quite an impasse, seeing as how those states don’t want to be deconstructed.

I’d add Canada to the list as well, seeing as how we are under a partial embargo. Sort of like how Lithuania is going to blockade Kaliningrad (possibly starting WWIII), the US is increasingly hostile to Canadian fuel exports or transits (Keystone, Line 5, anything to do with the oil sands).

I’m not sure how the west intends to survive by refusing to purchase the energy they need, like a tyrannical little 6 year old that won’t eat his dinner. The grownups are not phased. They know the 6 year old is only going to persist until he gets hungry. Well, we’re getting hungry. We are in the early days of a full blown energy crisis here in the west, of our own making. The economy will not survive these prices. They are too far detached from labor. Sure, prices will come down, they always do. But the healthy way to reduce prices is to increase supply. That ain’t going to happen because fossils are defined as bad, evil even, nuclear is unthinkable, and the only choice we give ourselves is to set up Chinese built solar panels and pinwheels that don’t work (aren’t fit for purpose) and need to be landfilled after 20 years. Or just left to rot on the poles.

If we don’t quit this nonsense and elect some adults and do some adult thinking, that is what our economy is going to do too. Rot on the poles. We won’t even have the money to bury it.

#86 crowdedelevatorfartz on 06.27.22 at 1:12 am

@#72 Ponzie’s Precise Predictions
“I hear you treating your workers well, and even have a profit sharing plan.”
+++

You hear correctly.
Far more than they have received from their union over the past few years of exorbitant dues and little else.

#87 Screwed Millennial on 06.27.22 at 2:32 am

Inflation could stay at 7-8% into 2023 and 2024. The job market is still hot, war rages in Europe stoking inflation, China has ongoing Covid lockdowns, government deficits are high, and the supply chain has been slow to heal. It’s very possible.

At 8% inflation, the US ten year bond rate could get to 5-6%, putting a US 30 year mortgage rate at 7-8%. Heck US mortgage rates are already at 6% right now, and that’s basically just pricing in a 3.5% fed funds rate by year end. There’s lots of room for 7%+ mortgage rates and Canada won’t be far behind.

In a recession, Falling home prices hurt people that don’t have a home or have more than one home, and unemployment hurts the few that are out of work. Inflation hurts everyone. Central banks are going to raise rates until inflation is toast.

#88 crowdedelevatorfartz on 06.27.22 at 8:08 am

@#84 Ponzies Political Pals
“Our Prime Minister at the G7 in Bavaria”
++++

Sorry Ponzie.
The two official languages in Canada are English and French (with smattering of 400 unseceded indigenous dialects.).
We don’t Sprekken zee Von Dutch.
Could you translate the entire article and give us the Coles’ Notes version?
Appreciate that.

#89 Dharma Bum on 06.27.22 at 8:12 am

Over time, real estate is a good hedge against inflation.
The results of the actions you take today will materialize in the future.
Play the long game, while doing your best to survive in the short run.
Delayed gratification is the best gratification.
Take the road less travelled.

#90 crowdedelevatorfartz on 06.27.22 at 8:44 am

Goodness.
The Reverse Mortgage ads are popping up like flies on a roadkill in a heatwave.

#91 Ponzius Pilatus on 06.27.22 at 8:58 am

#86 crowdedelevatorfartz on 06.27.22 at 1:12 am
@#72 Ponzie’s Precise Predictions
“I hear you treating your workers well, and even have a profit sharing plan.”
+++

You hear correctly.
Far more than they have received from their union over the past few years of exorbitant dues and little else.
——————-
I also hear, sarcasm is hard to detect for some people.
Feeding your self-importance is easy.
You bought that one hook, line and sinker.

#92 Ponzius Pilatus on 06.27.22 at 9:03 am

#88 crowdedelevatorfartz on 06.27.22 at 8:08 am
@#84 Ponzies Political Pals
“Our Prime Minister at the G7 in Bavaria”
++++

Sorry Ponzie.
The two official languages in Canada are English and French (with smattering of 400 unseceded indigenous dialects.).
We don’t Sprekken zee Von Dutch.
Could you translate the entire article and give us the Coles’ Notes version?
Appreciate that.
———————————
Every picture tells a story.
Which one, is up to you.

#93 crowdedelevatorfartz on 06.27.22 at 9:27 am

@#91 Ponzies Pedantic Patter
“You bought that one hook, line and sinker.”
+++

You mean your unsolicited compliment ….wasn’t?
I’m shocked! Shocked I say!
And very disappointed………
At your lame attempt at sarcasm.

#94 YVR Renter on 06.27.22 at 9:27 am

I recall asking my late dad about his mortgage around 1979. We’d learned all about mortgages in math class, and 17 yr old me thought I knew everything. I asked why he didn’t just pay it off, per my teacher’s advice. He said because he ONLY paid 6%. It was locked in for 25 years, and his payments were only something like $125/mth. He probably took it out when he bought in 1965, but don’t know. Folks today have got to get a grip and realize 2% mortgages are NOT reality and cannot perpetuate if the economy is be healthy.

#95 baloney Sandwitch on 06.27.22 at 9:38 am

I think if we remove “recency bias” from our thinking the crystal ball becomes a little less murky. So inflation will come down, interest rates will go up and we will muddle along. But the big picture remains the same.
Overall, inflation has been engineered so that debt can be eroded. Basically, the govt took on a lot of debt during covid, has no hope of paying it back through taxation and is now embarked on a campaign to make it worthless through inflation. In the process people on fixed income are chopped liver.

There is no conspiracy to create inflation. How do people believe such tripe? Oh, Pepe… – Garth

#96 Just pour rire... on 06.27.22 at 9:53 am

#78 Keith
@Shawn #20

All I’m getting from your exchange is that not only is the BoC the issue with their irresponsible interest policy, but the banks have gotten greedy and are chugging along in the land of usury. The terms you describe are but a dream today.

We should remember that what is paying for the home you “own” is after tax dollars as well. To pay for that crappy $1.6m condo I highlight above in snowflake super-special Toronto, you need to earn probably double that. And let’s not forget that the bank will take close to that amount in interest from you as well over the mortgage.

So in reality…$1.6M in after tax dollars for the condo, and budget $1.6M in after tax dollars for interest on the mortgage over 25 years. $3.2M of after tax earnings, which in Canada means $6.4M of pre-tax salary required to “own” that thing in 25 years, averaging out to about $250,000 CAD salary just to pay the costs here.

Honestly, when Garth talks about all the resetting that’s taking place right now from the pandemic insanity all I can think of in my head is “whatever”. Rolling pricing back to pre-pandemic March 2020 levels is NOT EVEN CLOSE to making ownership in Canada make sense.

May I say to you…FRANCE IS READY TO WELCOME YOU!

419,000 EURO, or $570,000 CAD.

https://www.french-property.com/sale-property/1676-FRP143340-2306

Don’t even ask about the weather.

#97 Gr on 06.27.22 at 10:09 am

An option from last Wed.

The world economy faces a 50% chance of slowdown, according to Deutsche Bank CEO
https://www.rt.com/business/557648-global-recession-risk-warning-issued/?utm_source=Newsletter&utm_medium=Email&utm_campaign=Email

#98 J.M.Keynes on 06.27.22 at 10:47 am

Can some economic genius on this blog explain how inflation is going to be brought down from its current 7.7% in May to the wonderful band of 2-3% that Central Bankers the world over try to attain? When we had this level of inflation in Canada in 1983, the variable rate mortgage was 10.70% and the 5 year fixed was 13.50%. What new level of economic theory have I missed where you can bring down inflation with lending rates below the inflation rate?

#99 Ponzius Pilatus on 06.27.22 at 10:49 am

The demolition of the separation of State and Church is gaining speed in the US.
The next Leader may be called Ayatollah, instead of President.

#100 crowdedelevatorfartz on 06.27.22 at 11:08 am

Ho hum.
Another week… another…. Ultra conservative quasi religious US Supreme Court ruling.

https://www.reuters.com/legal/government/us-supreme-court-endorses-football-coachs-on-field-prayers-2022-06-27/

Businesses take note.

Boardroom Prayers interrupting meetings are now “the Law”.

Seems the partisan political Supreme Court nominations by US Presidents ( Trump got 3 ultra cons in ) are starting to bite.

The 9 “appointed for life” Supremes are now 6 Republican to 3 Democrats ( and the 3 Dems are in their 70’s).
The 3 Trump appointees are in their 50’s so they aint goin any where for a long long time.

The youngest judge is Amy Barrett.
A “Charismatic” Catholic ( The Vatican doesnt even recognize “Charismatic” Catholicism…? ) mother of 7 kids who has repeatedly stated that abortion is wrong.

So much for “Justice being Blind” when religion and US politics is involved.

The irony of a woman, who is highly educated, successful legal council and still votes against abortion never ceases to amaze in the on going religious gong show that is “modern” US society.

Billions will be spent in legal appeals at every level.
Perhaps that was the long term intention…..

#101 Shawn on 06.27.22 at 11:11 am

Bank Usury?

#96 Just pour rire… on 06.27.22 at 9:53 am
#78 Keith
@Shawn #20

All I’m getting from your exchange is that not only is the BoC the issue with their irresponsible interest policy, but the banks have gotten greedy and are chugging along in the land of usury. The terms you describe are but a dream today.

***********************
Oh, grow up. You want your mommy to protect you from banks? And what are you smoking when banks have recently been giving just about free money with literally the lowest interest rates in history.

Read this blog for another few years and get educated. This blog is for grown-ups.

Anyone using the word usury in reference to banks today has zero credibility.

#102 Gr on 06.27.22 at 11:18 am

With some input from WB, YT June 26 11min

Warren Buffett: How To Profit From Inflation (feat. Mohnish Pabrai)
https://www.youtube.com/watch?v=W6VC0YYmyAY

#103 Alan on 06.27.22 at 11:22 am

“A loan at 2.67% for three years when inflation is about to crest 8%. That’s free money, John”

—————————————-

Hi – Can someone please explain this to me. I’m pretty novice. Why is a loan interest rate that is less than inflation valuable? Thanks.

#104 Sail Away on 06.27.22 at 11:31 am

Quick update on the Sail Away BD Heloc borrow to invest:

Entered equal positions on 5/27 and 6/17 at an interest rate of prime +0.2%. Portfolio weighted div of 2.76%.

Currently -1.39% overall
Biggest loser: XIC.TO @ -3.54%
Biggest gainer: RSG @ +1.77%

#105 Faron on 06.27.22 at 11:34 am

#98 J.M.Keynes on 06.27.22 at 10:47 am

1) The delta can be as impactful as the absolute.
2) A portion of the inflationary picture will not be impacted by rates (food and fuel).
3) disinflation (the process of inflation dropping from 8% to 3%) still involves positive price change.

#106 Faron on 06.27.22 at 11:36 am

#83 Dr V on 06.27.22 at 12:02 am
65 Ustabe – ride safe! Helmet, lights, and always be aware of your surroundings.

We are all only one bike crash away from…..???

Theologians are in broad agreement that some will go to heaven and some will be relegated to Nanaimo.

#107 Philco on 06.27.22 at 11:40 am

#50 Dr V on 06.26.22 at 6:42 pm
43 bdwy

Gents depends on a pile of things. Ambiant temp. Tire diameter, wheel diameter rolling resistance. How fat your are, if you have alot of clothing or your naked..ect ect lol. Have fun!
i got a real bike you have to peddle.

#108 Philco on 06.27.22 at 11:48 am

#84 Ponzius Pilatus on 06.27.22 at 12:38 am
Our Prime Minister at the G7 in Bavaria

Its easier to cruise other countries kiss behinds and be a big fake than deal with issues at home. The guys disgust me and everyone else i know.
I could write a list but noone has that kinda time!

#109 Sail Away on 06.27.22 at 11:50 am

#100 crowdedelevatorfartz on 06.27.22 at 11:08 am

Ho hum.
Another week… another…. Ultra conservative quasi religious US Supreme Court ruling.

https://www.reuters.com/legal/government/us-supreme-court-endorses-football-coachs-on-field-prayers-2022-06-27/

Businesses take note.

Boardroom Prayers interrupting meetings are now “the Law”.

Seems the partisan political Supreme Court nominations by US Presidents ( Trump got 3 ultra cons in ) are starting to bite.

The 9 “appointed for life” Supremes are now 6 Republican to 3 Democrats ( and the 3 Dems are in their 70’s).
The 3 Trump appointees are in their 50’s so they aint goin any where for a long long time.

The irony of a woman, who is highly educated, successful legal council and still votes against abortion never ceases to amaze in the on going religious gong show that is “modern” US society.

Billions will be spent in legal appeals at every level.
Perhaps that was the long term intention…..

——-

That’s actually what free speech is all about. Do the haka, have a football chant… or pray. Others can ignore or participate using their own individual right. Religion or non-religion are both equally protected.

And nobody ruled against abortion. The ruling removed the abortion decision as one the federal government has constitutional authority to mandate.

#110 crowdedelevatorfartz on 06.27.22 at 12:27 pm

@#109 Sail Away
“Religion or non-religion are both equally protected.”
+++
The Supreme court case in question ruled in favor of a High School Coach who was repeatedly asked by school officials not to hold prayer sessions on the field immediately after the game. It offended some of the non religious students and parents attending the games.
(Apparently God cares about High school football games and none of the other suffering on the planet)

He refused to stop his prayers and was fired.
He now gets to sue for wrongful dismissal.

Seems to me the Supreme Court…….
With it’s majority ultra orthodox Christian religious leanings is incapable of separating Church from State.

A sad day for objective democracy when the religious zealots take over the Supreme Court.

This religious undercurrent with rapidly erode citizens “faith” in the objectivity of the entire Court system.
As Ponzie said, What’s the next “ruling” religion in the Supreme Court?
Charismatic Mormonism?

#111 Quintilian on 06.27.22 at 12:29 pm

#98 J.M.Keynes on 06.27.22 at 10:47 am
“What new level of economic theory have I missed where you can bring down inflation with lending rates below the inflation rate?”

It’s called Politics.

It is a realm beyond the understanding of science or logic.

Within that dimension, all is possible.
The laws of Physics and Economics can be suspended for some time.

Notice “suspended for some time”.
But not indefinitely.

Tick Tock, Tick Tock

#112 T Rex and the dinosaur clique on 06.27.22 at 12:35 pm

DELETED

#113 spelling police on 06.27.22 at 12:38 pm

#107 Philco on 06.27.22 at 11:40 am
#50 Dr V on 06.26.22 at 6:42 pm

i got a real bike you have to peddle.
———–
craigslist is a better way to sell it than going around peddling it.

#114 Rad on 06.27.22 at 12:47 pm

Hi Garth,
If John from Abbotsford had invested in US ETF that does not pay dividend, would the loan interest on this investment be deductible?

Yes. – Garth

#115 Don Guillermo on 06.27.22 at 12:48 pm

Some ramblings about Canadian energy inspired by some of Saturday’s comments.

The last nuclear power plant built in Canada was Darlington with a nameplate of 3512 MW (for comparison Site C nameplate is 1100 MW). The approval was in 1977, construction started in 1981 And the final unit 4 came on line in 1993. I worked on site for 2 years in the mid 80’s as a field E&I engineer. It was the most boring job I ever had – for all the right reasons. I can’t imagine what it would be like in today’s regulated environment – again, for all the right reasons. This means that conceptual engineering began in the early 70’s. That’s 20 years between concept and completion and this was before the environmental sky was falling. Think of the rage from the fruit fly specialists and Eco Terrorists today. Nothing should be more basic than twinning the existing Trans Mountain pipeline and look how well that’s going.

The SMR (modular reactors under 300 MW) could be very useful in many situations. The oil sands could lower their carbon footprint substantially. I’m sure the fruit fly guy wouldn’t like that. There are many remote parts of Canada using diesel generators that could use SMRs (87 alone in BC, 2 in AB).

Hydro power has issues with permanent land flooding. The James Bay project would be difficult to build today. Well maybe not in Quebec as they tend to have special considerations, think recent aluminum smelter. James Bay flooded an area the size of New York State and produces 16527 MW. First nations displacement, mercury poisoning and destruction of 10,000 plus caribou are just some of the damage done yet Quebec politicians love to brag about their clean energy while finger wagging at Alberta.

Canadian studies report that we would need to double or triple our power generation to achieve this government’s 2035 to 2050 net zero goals. Things will get interesting.

#116 Rahul on 06.27.22 at 12:48 pm

“In other words, rutting season 2023 will not look at all like this year, when the spring market went flaccid. Govern yourself accordingly.”

Garth… by this do you mean 2023 spring season will see more activity in housing market?

#117 Ponzius Pilatus on 06.27.22 at 12:53 pm

#100 crowdedelevatorfartz on 06.27.22 at 11:08 am
Ho hum.
Another week… another…. Ultra conservative quasi religious US Supreme Court ruling.

https://www.reuters.com/legal/government/us-supreme-court-endorses-football-coachs-on-field-prayers-2022-06-27/

Businesses take note.

Boardroom Prayers interrupting meetings are now “the Law”.

Seems the partisan political Supreme Court nominations by US Presidents ( Trump got 3 ultra cons in ) are starting to bite.

The 9 “appointed for life” Supremes are now 6 Republican to 3 Democrats ( and the 3 Dems are in their 70’s).
The 3 Trump appointees are in their 50’s so they aint goin any where for a long long time.

The youngest judge is Amy Barrett.
A “Charismatic” Catholic ( The Vatican doesnt even recognize “Charismatic” Catholicism…? ) mother of 7 kids who has repeatedly stated that abortion is wrong.

So much for “Justice being Blind” when religion and US politics is involved.

The irony of a woman, who is highly educated, successful legal council and still votes against abortion never ceases to amaze in the on going religious gong show that is “modern” US society.

Billions will be spent in legal appeals at every level.
Perhaps that was the long term intention…..
————————
Why would Canadians care?
It’s “irrelevant”.
And by the way, this is a financial blog.
(Sarcasm off).

#118 Faron on 06.27.22 at 1:00 pm

#109 Christian Fundamentalist Sail Away on 06.27.22 at 11:50 am

#100 crowdedelevatorfartz on 06.27.22 at 11:08 am

Others can ignore

Bzzzzzzt. WRONG. It is not the case when it’s forced upon you in your school or workplace. More so when there isn’t equal space for all religions.

And nobody ruled against abortion.

Bzzzzzzzt. WRONG again. The ruling was made with the full knowledge that a multitude of states had highly restrictive anti-abortion legislation on the books. Thus, it was a ruling against abortion rights. It can’t be made any more clear than what they have done. They knew full well that their ruling was an anti-abortion ruling in those states and that it would lead to severe restrictions in others. Claiming that this is simply punting power to the states is a stupid stance and raises the very real possibility that all kinds of civil rights may now be eroded.

Just own it bud. As a Christian, you love the fundamentalist Christian ideology of this court even as it’s rulings work to de-legitimize the Supreme Court of the United States and further cut away at an increasingly unstable political system in the US.

This court has essentially ruled that stare decisis applies at the whim of the majority and can be bent to whichever political ideology is in play at any given time — a notion that had been resisted for decades and whose rejection had been cornerstone of the court’s standing in the US balance of power. Alito and Thomas have made it clear that it’s okay for five people (Roberts did not support the Dobb ruling) can change any and all precedent at a whim and thus wield tremendous power with no enfranchised check on that power. That is destabilizing for a rule of law that is based on continuity and incremental change.

#119 wallflower on 06.27.22 at 1:03 pm

#96 Just pour rire… on 06.27.22 at 9:53 am
Spent April in Europe (France for 8 days).
Just about anywhere in Europe makes Canada housing prices look insane.
I go to Europe because it’s a much cheaper and far more glorious time than travelling Canada.
Canada has become expensive on every metric, except
‘petrol’ where Europe still charges higher.
But Europe has FAR superior public transit options, including air flight!

#120 inflation is rampant on 06.27.22 at 1:08 pm

inflation is RAMPANT

https://www.clevelandfed.org/
The Cleveland FED is telling you CPI is going to 10% next month.

Cleveland Fed Inflation NOWCAST

CPI +10.3%
CORE +6.33%
PCE + 7.1%

does anyone think raising rates to 2.5-3% will do anything?

that … coupled with GDP near 0 +/- ?? (final number will come out soon enough)

and you guys want to own stocks and bonds??

#121 Faron on 06.27.22 at 1:09 pm

#110 crowdedelevatorfartz on 06.27.22 at 12:27 pm

@#109 Sail Away

A sad day for objective democracy when the religious zealots take over the Supreme Court.

This religious undercurrent with rapidly erode citizens “faith” in the objectivity of the entire Court system.
As Ponzie said, What’s the next “ruling” religion in the Supreme Court?
Charismatic Mormonism?

Exactly. And in all of these decisions are deeply in the minority of the will of Americans. (deep) Minority rule is a highly unstable place to put a democracy.

And watch what happens once non-christians attempt to take up those rights. Can you imagine the outrage if a Muslim coach asked his or her team to kneel before mecca before, during or after a game? Watch what happens when a non-christian school attempts to get public funding in Maine. Bluster and hand wringing and new laws will make it impossible for them to have the same rights and it will become achingly clear how much of a farce these rulings are.

This court has tossed out incrementalism for the purpose of their ideology and the court will never be the same for that. Either the Democrats will stupidly expand the court or the current court will continue to make the will of the minority to law over the majority.

#122 Nonplused on 06.27.22 at 1:16 pm

Here’s the laugh of the day:

“G-7 Agrees to Cap the Price of Russian Oil Using a Buyer’s Cartel”

You can tell we are in serious doo-doo because our leaders have gone batshit crazy.

#123 Stone on 06.27.22 at 1:20 pm

#46 latestarter on 06.26.22 at 6:10 pm
I’ve seen Garth mention the B&D portfolio – can anyone shoot me a link to the description or make up of it? I’ve tried going back a number of posts and don’t see any way of searching etc.

Obviously coming late to this blog – any help is appreciated.

———

See the following article from November 2021.

https://www.investmentexecutive.com/newspaper_/building-your-business-retirement/model-portfolios-inflation-protection-for-senior-clients/

I’ll be adding it to my comparable portfolios which can be found below.

https://www.fomotina.com/

#124 Dr V on 06.27.22 at 1:31 pm

98 Keynes

“What new level of economic theory have I missed where you can bring down inflation with lending rates below the inflation rate?”
————————————————–

You have to think about the economy as a whole. This includes existing and potential future debt, energy costs, supply line issues, and a myriad of other factors,
including the basket of goods used to measure inflation.

#125 Faron on 06.27.22 at 2:10 pm

#115 Don Guillermo on 06.27.22 at 12:48 pm

First nations displacement, mercury poisoning and destruction of 10,000 plus caribou are just some of the damage done yet Quebec politicians love to brag about their clean energy while finger wagging at Alberta.

These are valid points. However, keep in mind that the externalities of O+G combustion are vastly undercounted and/or misattributed or most often completely ignored by you, me and pro oil policy makers. For example, the next $10 billion dollars of hurricane damage may have a substantial attributable component to fossil fuels, but the recovery money will come out of the pockets of bodies distant to the oil companies who will just send thots-n-prayers.

A mind blowing corollary is the analysis that showed that the Deepwater Horizon probably did less economic damage through its fire and subsequent massive oil spill than would have been done had that oil been burned.

Externalities are very significant yet they escape the ken of many and that makes crafting ugly pictures of all other energy sources easy although very disingenuous/integrity-free.

#126 Just pour rire… on 06.27.22 at 2:14 pm

#101 Shawn on 06.27.22 at 11:11 am
Bank Usury?

#96 Just pour rire… on 06.27.22 at 9:53 am
#78 Keith
@Shawn #20

All I’m getting from your exchange is that not only is the BoC the issue with their irresponsible interest policy, but the banks have gotten greedy and are chugging along in the land of usury. The terms you describe are but a dream today.

***********************
Oh, grow up. You want your mommy to protect you from banks? And what are you smoking when banks have recently been giving just about free money with literally the lowest interest rates in history.

Read this blog for another few years and get educated. This blog is for grown-ups.

Anyone using the word usury in reference to banks today has zero credibility.

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

Shawn, I enjoy your comments on here, but today you seem to be a bit irritated. Please forgive if I caused this.

I strongly believe they have influenced the politicians into policies that are highly profitable for them. Profits, which come from huge books of mortgages. Mortgages which are insured by you and me and as noted carry little to no risk for the banks.

Various loans, including exotic revolving lines of credit are offered to let people hang themselves with additional debt. Oh sure, it’s not interest specifically as per definition, but is the percentage the only concern in usury? Or is it the enslavement in debt that’s the core concern?

While one may focus on percentages, let me point out the obvious that 50% of $10 is not nearly the same as 5% of $1,000,000.

I have been reading the blog, thank you for your audit. It is repeatedly mentioned here that principal is significant point to keep in mind.
It has been repeatedly noted here that low interest gives people a false confidence to borrow way more than they otherwise would.

Oh sure, you shift from one column to the next, but the net result is identical.

And so, the banks make up for margin with volume as we can see. Good old tried and tested approach. Since principals are bigger than ever, and Canadians owe more than ever, I believe my point about usury is supported by they outcome. Oh sure, it’s not high % on low amounts you see in Money Mart as noted, but the interest dollars collected are way above amounts in the past.

Back in the day, you’d borrow $200K and pay $400K in interest over 25 years due to high rates.

Today you borrow $1.6m and pay $1.2M in interest over 25 years with the lovely low rates, if you’re lucky.

Tell me again please which one is worse.

#127 1255 on 06.27.22 at 2:54 pm

“So, a $700,000 reduction – 22% – in a month. Plus conditions, like an inspection or financing. The shoe is on the other foot. Buyers rule.”

The ask was too high to begin with so it’s not as if house have dropped 22% in price. They might as well listed it at $10 million.

They are still over priced.

#128 Don Guillermo on 06.27.22 at 3:25 pm

#125 Faron on 06.27.22 at 2:10 pm
#115 Don Guillermo on 06.27.22 at 12:48 pm

First nations displacement, mercury poisoning and destruction of 10,000 plus caribou are just some of the damage done yet Quebec politicians love to brag about their clean energy while finger wagging at Alberta.

These are valid points. However, keep in mind that the externalities of O+G combustion are vastly undercounted and/or misattributed or most often completely ignored by you, me and pro oil policy makers. For example, the next $10 billion dollars of hurricane damage may have a substantial attributable component to fossil fuels, but the recovery money will come out of the pockets of bodies distant to the oil companies who will just send thots-n-prayers.

A mind blowing corollary is the analysis that showed that the Deepwater Horizon probably did less economic damage through its fire and subsequent massive oil spill than would have been done had that oil been burned.
******
Two important points:
1. Hurricane activity has decreased over the century (higher cost is related to human density not climate)

https://www.cnn.com/2022/06/27/weather/tropical-cyclone-frequency-21st-century-climate/index.html

2. The Deepwater Horizon blow out wouldn’t have happened in a Canadian jurisdiction. The safety designs required by Canadian regulations would have prevented it.

#129 Philco on 06.28.22 at 12:08 am

#113 spelling police on 06.27.22 at 12:38 pm
#107 Philco on 06.27.22 at 11:40 am
#50 Dr V on 06.26.22 at 6:42 pm

i got a real bike you have to peddle.
———–
craigslist is a better way to sell it than going around peddling it.
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Love it! Waz taught how to spell how it sounds.
I have to think about it after i wrote it by default.
I usually just ask the wife as her 2nd language is English as she was taught the right way.
Ya know what matters? Math.
My net worth is in 8 figures and counting with zero debt. Now the jokes on you pale lol.

#130 Philco on 06.28.22 at 12:16 am

You name the piece of of equipment, computer, desiel. Motor, plumbing, electrical. Ect i cant run or fix…ill be surprised. Thank god i cant spell :-)
Proud has hell of that bro..

#131 Stuart Moir on 06.28.22 at 7:32 pm

WEF seeks to force the civilization states India, China and Russia to comply with WEF insanity. How? War in middle east 2023 oil doubles and inflation to 25%. By their logic to win against poorer Russia you expand the war. How can they do that and prevent bank bail-ins? Or are bail-ins needed to bring in CBDCs where the governments get to spend more of the newly created money by preventing banks from creating money. Garth aren’t you a tad optimistic with clowns in charge? GICs? You might as well pick up nickles in front of a bulldozer. Same with stocks if they are held by brokerages who use leverage. They all do don’t they? Assets like gold not held by institutions exposed to leverage are prudent insurance. Why is Canada at war with Russia? We need instead to spend that money building pipelines and force the banks to stop paying dividends. Shouldn’t people who will be caught in a debt trap liquidate and pay down debts while they still can? If they do so now they will help prevent our banks from failing. I remember all those people losing their homes in 1982-85, all those broken families and bank managers spending their days calling in loans. We can’t stop it but we can prepare for the worst.