Expectations

Here’s the latest: rents are going yup. Houses are going down. The CB has just confirmed inflation’s out of control. What an interesting world – when the value of the biggest asset people own is being shellacked while the price of everything else goes up. It’s a formula for wealth destruction.

In Toronto, here’s the dichotomy. Average rents are higher by $400 a month, which is 18% more than a year ago. It’s a great extreme example of what escalating prices can do to cash flow. It also makes a joke of the current Liberal ‘remedy’ for renters, which is to send them a one-time payment of five hundred bucks. Wo-hoo.

Additionally, this underscores what must happen to wages.

According to the Bank of Canada’s report dropped Monday, businesses figure they must give workers 5.8% more over the next year. That’s a record. It’s one factor among many (higher energy costs, supply chain bottlenecks, labour shortages) why inflation expectations have hit an all-time peak. The CB has found both consumers and employers are bracing for romping prices over the next couple of years, which kinda makes inflation a self-fulfilling prophecy.

So, more confirmation another 75 bips will be tacked onto the central bank rate next Wednesday. The chartered bank prime will then be 4.45%, apparently on its way to 5.7% by the time your pumpkin gets frosty. Already the stress test rate for mortgages is in the 7% range, which is causing the housing market to freeze over.

Eventually price pressures will moderate. But not yet. Not soon. When they do, don’t expect interest rates to fall back. That would only add stimulus and threaten to unwind the work a higher cost of money was supposed to do. CBs want higher rates. They’re a weapon against economic downturns, when rates can be lowered to quickly stimulate demand.

Economists figure our BoC guys will add 2% to the current 1.5% bank rate over the next six months. We will have then gone from 0.25% to 3.5% – the fastest ascent on record. Yes, this is a rate still just one half that of inflation, but look at the consequences already.

For example, here’s a chart of the on-the-ground street value of detached houses in the county’s largest real estate market. The average sale price has declined from almost $1.7 million in mid-February to the $1.3 million range. That’s a 24% reduction in five months. Mr. Google tells me that’s the most rapid decline in residential real estate in Canada’s history. But, no wonder. That came on the heels of the most frenetic, emotional, speculative increase ever.

Down she goes. Low-rise home prices plop 22%

Zahilda says she and her squeeze follow this blog closely, “and you recently discussed someone who was concerned about a house they purchased being re-appraised at a lower value, and they’re uncertain about how to move forward.

“I’ve noticed a lot of homes that sold in feb/march have been relisted and sold (or renegotiated based on what you posted earlier). Do you anticipate this continuing? Was this predictable? Are sellers really losing out that much considering when they initially sold they were really just getting super lucky and maybe now they are getting a more “accurate” price? Anyway, just some things we’ve been discussing. Thanks again for your insightful and always entertaining posts.”

True. The pandemic honed seller greed and handed unearned windfall gains to many. But we have a new issue now. Sales that fail to close because buyers walk or don’t qualify are leading to a cascading effect in the marketplace. Six months ago nobody sold before they bought. Now nobody sane is buying before they sell. At these price levels, real estate is a long chain. The source of cash to buy is the money flowing from a sale. When the chain breaks (as it is), the market seizes.

Is this going to last? You bet. Just started, actually. Housing’s darkest days will include July and August.

Remember, if the 1989 bust is to be repeated (a 32% price reduction overall) with the same recovery time, we won’t see February ’22 pricing for many moons. A repeat of past experience would put that date at 2036.

I’ll be here to tell you so.

About the picture: “Garth,  displaying the same positive attitude that you manage to do with your daily blogs, our 8 months young rescue Border Collie has the same high hopes as this picture shows: almost 6 feet off the ground chasing the elusive trash talking backyard squirrel. Nobody told ” Skip ” that he couldn’t climb trees, so he does.  MSU expected and given.  Cheers Kris and Colleen from the Prairies.”

 

137 comments ↓

#1 Marxist on 07.04.22 at 1:47 pm

It’s sickening how uber-capitalism is affecting the Canadian housing market, while socialism is for the billionaire oligarchs and the elite, via, bail out and tax subsidies for the dairy and chicken egg industry.

#2 Søren Angst on 07.04.22 at 2:11 pm

I’ll be here to tell you so.
Wo-hoo.

– Garth

———————–

https://youtu.be/SSbBvKaM6sk?list=RDSSbBvKaM6sk&t=15

#3 mark on 07.04.22 at 2:15 pm

honestly I don’t see “peak to xx” being a useful metric, given the insane, irrational and short-lived parabolic blow-off prices we saw. only the greatest of the greater fools got caught up there. it was a blip. if prices “crash” 20% from that peak, it’s completely meaningless information for anyone looking to buy. prices are still detached from reality. coming back to normal does not equate to a “crash”. a more useful metric that would represent true decline from normal levels would be measuring from early 2020 as a benchmark. after all, what has actually changed since then…covid is “over”, right? have demographic trends changed? are current immigration rates higher than early 2020? is sentiment higher? no. what’s changed? the cost of money. significantly higher. so until prices have adjusted meaningfully below early 2020 prices, all this talk about a “peak to xxx crash” is just noise and flub.

#4 Captain Uppa on 07.04.22 at 2:15 pm

It is amazing to me how many people I talk to who don’t realize the severity of what is happening.

Many are still very bullish on housing.

It’s like talking to brick walls. I can’t believe it.

#5 Klaus on 07.04.22 at 2:18 pm

Took a day off from bashing crypto… GOOD JOB!! talking about real estate- of which you know something about…

BTW- The BIS(Rothschilds) just advised ALL of their associated banks to allocate at-least 1% into BTC…just saying…BIS is owned by 63 central banks, representing countries from around the world that together account for about 95% of world GDP.

#6 Felix on 07.04.22 at 2:20 pm

Expectations.

Reduce them all if you are a dog owner.

#7 yvr_lurker on 07.04.22 at 2:21 pm

and handed unearned windfall gains to many…

—-
Why does this term “unearned windfall gains” seem to apply only to real estate (in Garth’s view). Unearned windfall gains could have been used to describe the extreme rise of crypto (before its crash), huge surges in the stock market during Covid fueled by Gov’ts largesse…. Seems to me that the meteoric rise of the market from 2020-2022 led to unearned windfall gains from those who could benefit from the opportunity to enrich themselves on Gov’t stimulus.

Windfall gains (and now large loses) can arise from a variety of investments, not just the housing market that Garth seems to deplore.

However,

#8 ElGatoNeroYVR on 07.04.22 at 2:28 pm

Yeap , rents going up. They will go up even more as governments will respond by evens more stringent rent increase controls which will make people want to be a small time landlord even less ,so less availability as the LL will take over and sell or just don’t rent anymore to strangers as they likely would have kids that can boomerang.
In that way the ” Keep your rent movement ” would have literally meet their goal .They will get to keep the rent money as they won’t be able to rent anything on the pittance they can afford .
The only way to make rent affordable is the Singapore model where the government is the biggest landlord and runs everything at basically a loss -good luck with that one over here.
We need to rethink rental housing here in Canada and get tenants to actually be responsible for minor repairs and maintenenace and get them evicted in 2 weeks tops if no payment or no fulfillment of obligations (noise ,smoking ,unauthorized appliances, distruction of property).
Just ask BC Housing how good is it to provide subsidized housing and what happens when people only have rights and no obligations ( as no enforcements of landlord rights is equal to none) .
No different than it was in my ex Europen block country when the commies where running it and everyone was guaranteed a place through their workplace.

#9 Søren Angst on 07.04.22 at 2:38 pm

TRAVEL TIP Igloo & Ark Dwellers

Europa for flying is a MESS (except Italia)

– The epicenter of the inconveniences: United Kingdom (in particular London Heathrow and Gatwick), Amsterdam (Schiphol wants to arrive 4 hrs before your flight incl. Continental flights), Frankfurt, Paris-Charles de Gaulle, Hamburg, Brussels and Spain.

– 11,000 flights were canceled June (3X that of 3 yrs ago), since 1 April there are at least 70,000 cancellations.

– July, August and September, airlines canceled another 41,000 flights (7 million people involved) – Lufthansa, Swiss, Austrian Airlines, Eurowings, Air France-KLM, British Airways, easyJet, Sas.

– In Spain, a nine-day strike in July (from 1st to 3rd from 15th to 17th and from 29th to 31st of the month) was called by the employees of Ryanair, EasyJet and Volotea employees.

– When will all this be resolved? The most optimistic insiders say October-November, the most pessimistic to April 2023.

– UNAFFECTED is Rome Fiumicino, FCO, largely because Euro Recovery Funds spent keeping employees on the job. Milano airports fine unless delays, cancellations from above countries. I checked Venice Marco Polo today and only 1 cancelation, To/From Frankfurt by Lufthansa.

————————–

Fly to FCO direct from Canada to get to Europa and back my advice.

Cancellation, lost luggage etc. here in Italia go to, no charge, 4.9/5 Trustpilot rating:

ItaliaRimborso
https://www.italiarimborso.it/rimborso-per-volo-in-ritardo.php
[Scroll to bottom of page for the latest flight cancellations & passenger compensation]

PS:

36 deg C today in Pordenone. Only a yellow warning that we might get a thunderstorm tonight. If that were YVR, the Cdn Navy would start shelling Mt. Seymour for effect. I’m just sayin’.

Benvenuti in Italia you 🍁 Beavers you (if you can get here from another Europa airport).

#10 Søren Angst on 07.04.22 at 2:43 pm

#6 Felix

Expectations.

Reduce them all if you are a dog owner.

—————–

Seek help. You are in need.

#11 PeterfromCalgary on 07.04.22 at 2:45 pm

The Financial Times did a great article on how today’s inflation is different than 1970 inflation. It acknowledged we have a serious problem but not as bad as the 1970s a decade in which oil increased from $3 per barrel to $40 an increase greater than 10 times.

https://www.ft.com/content/3fe38639-5121-4a44-8fd6-4787da87eff3

#12 Rook on 07.04.22 at 2:46 pm

I, for one, hope you’re still around and lucid enough to be writing this blog in 14 years.

But I will definitely be questioning your sanity if you are.

How do you know I’m not already an AI crypto bot? – Garth (ID 1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2)

#13 Søren Angst on 07.04.22 at 2:47 pm

As Garth implies, other Paleos here besides me have said in effect:

High Inflation will wear a populace down.

And for the “immediate gratification” non-Paleo Generations, High Inflation is not going to go away fast like you would hope for.

Death by a thousand cuts.

#14 Kevin on 07.04.22 at 2:52 pm

CB rate hikes. The rate needed to slow this inflation down is not even being thought of at BoC. Forget housing, everything is going up and people are still spending like maniacs. The line up at Tim’s, Macdonald, the grocery store and everywhere else is as long as it ever was. Nobody is slowing down there spending.
There is billions cad and a trillion US to clear out of the North America markets before sanity returns. All that money has to find a permanent home and your bank account ain’t it. Everything in the modern age happens much faster than it did in the 80s. This CB tightening is just starting. Turkey has 72% inflation today, it can happen here.

#15 Mr Fox on 07.04.22 at 2:54 pm

I am sure the vote-hungry political parties will introduce some measures like (sarcasm mode on):
– 100 years mortgages if the 50 years fail
– Make the joint purchase of houses very easy (2-3 families to buy one dog kennel)
– CMHC to become the co-owner of houses if the borrowers can’t pay.
– Just give free money to people to buy (by then the 10 million) 100 sq feet condos, because “we have to help the first-time buyers”.
(Sarcasm mode off).

Generally, I really hope these rate increases will screw up the super indebted borrowers. Got to learn it the hard way if the brains are absent. But I know that as usual, the government will try to make things worse again so the party could continue…

#16 Tim on 07.04.22 at 2:59 pm

Houses are certainly not tanking anywhere on the West Coast. Vancouver two bedroom condos are still be sold for more than $700K

#17 Sail Away on 07.04.22 at 3:01 pm

A plea from Twitter:

‘I’ve been in a relationship with this guy for 2 years and recently I asked him if he loved me and he was a bit evasive. I tell him I love him every day but he’s never said it back. I feel like I do a LOT for him so idk am I being unreasonable? Oh I should add I’m F(35) he’s M(2).’

#18 Shawn on 07.04.22 at 3:20 pm

Inflation with lower House Prices

“Houses are going down. The CB has just confirmed inflation’s out of control. What an interesting world – when the value of the biggest asset people own is being shellacked while the price of everything else goes up.”

***************************
I suppose consistency and intellectual honesty will now require all the people who said inflation was way under-stated for years and years by not directly including house price gains to now rant that CPI inflation is now over-stated given house price declines are not directly included.

I’ll wait to see such comments.

#19 Crystal ball futurist on 07.04.22 at 3:25 pm

Increasing salaries will increase affordability, while increasing rates will do the opposite. Where will the forces balance will determine how far we fall.
A further 40% decline is likely per the crystal ball :)
May the force be with you.

#20 Shawn on 07.04.22 at 3:26 pm

Windfall unearned gains?

#7 yvr_lurker “Windfall gains (and now large loses) can arise from a variety of investments, not just the housing market that Garth seems to deplore.”

***************************
At risk if incurring his wrath I think it’s pretty clear that Garth “talks his book”. His investment approach is the only sensible one etc. All others are not even remotely sensible.

Then again he also believes his book and so why not talk it. He even writes his book which makes it easier to talk it.

#21 BacktoFundamentals on 07.04.22 at 3:26 pm

Median Family After Tax Income: 5.5K

Average $1M Mortgage @ 5.23% Fixed: 6K

Room to go … plus… always overshoots to the upside/downside.

#22 TurnerNation on 07.04.22 at 3:28 pm

A public service reminder to please spay and neuter your Blog Dogs.
This comments section is littered enough.

—50 year mortgages? Is this what is meant by ‘You will own nothing and be happy’?

—– The Global Corps will own it all, and have their finger on the software remote kill switch of you EV.
Keep up your Social Credit Score Comrades!

https://jalopnik.com/ford-credit-wont-allow-lessees-to-buy-out-its-evs-1849105752
Ford Credit Won’t Allow Lessees To Buy Out its EVs
According to Ford, EVs must be returned to the company to help with costs and carbon neutrality.

— ….and you will eat bugs? The soft sell continues. Control over our Feeding is permanent.

https://www.thestar.com/opinion/contributors/2022/07/03/we-need-insects-its-time-to-stop-the-hate.html
We need insects — it’s time to stop the hate
Insect loss is a global, extinction-heralding problem. Our survival is inextricably linked to healthy insect populations and we are failing.


— Show me the science? I would like to trust it.

https://www.reuters.com/legal/government/fda-will-not-require-clinical-trial-data-authorize-redesigned-covid-boosters-2022-06-30
“FDA will not require clinical trial data to authorize redesigned COVID boosters -official”

#23 Søren Angst on 07.04.22 at 3:37 pm

#11 PeterfromCalgary

Take Author name. Go to LinkedIn.

Got his BA in French & Economics in 1992.

So, like he would know what living in the 70’s were like whilst happily sucking on a rubber or plastic teat in his crib (and playing with his toes as Garth would say).

Then, falling upon his own sword he happily writes:

“And that point leads to perhaps the biggest difference of all. We can learn from history if we choose to.”

—————–

New Suggested Article Title:

When it comes to inflation, I haven’t a clue…like the rest of my Generation.

#24 Neo on 07.04.22 at 3:37 pm

DELETED (Anti-immigration)

#25 JSS on 07.04.22 at 3:37 pm

“Remember, if the 1989 bust is to be repeated (a 32% price reduction overall) with the same recovery time, we won’t see February ’22 pricing for many moons. A repeat of past experience would put that date at 2036.”

If this pattern holds again, then 2026 might be the year to buy another house.

#26 JSS on 07.04.22 at 3:40 pm

“According to the Bank of Canada’s report dropped Monday, businesses figure they must give workers 5.8% more over the next year. ”

I’ll ask for 5.8% increase next year, but I’m sure the boss will tell me “sorry no wage increase this year. Due to inflation, it’s costing us at Dunder Millflin more. If you don’t like this answer, then there’s 300 other people who will take your job at half your current pay. Now go back to your hybrid cubicle.”

#27 Balmuto on 07.04.22 at 3:45 pm

Rising rents should be supportive of housing, at least for the condo segment. It means buyers of investment properties are able to pass on the higher cost of money to the the renter. And that has knock-on effects on the other market segments.

#28 Candy on 07.04.22 at 3:52 pm

#9- To many pilots injure/dead or refused(retired early) from the jab…just the start.

#29 Is anybody listening? on 07.04.22 at 3:53 pm

THE WOLF STREET REPORT: Leverage & Interconnectedness Are Blowing Up Crypto & DeFi

Wolf Richter gives a good explanation on the crypto blowup and why it happened.

https://wolfstreet.com/2022/07/04/the-wolf-street-report-leverage-interconnectedness-are-blowing-up-crypto-defi/

#30 Stormy Daniels on 07.04.22 at 4:06 pm

Garth, I can’t wait until 2036! We need to settle this now. Have you left Lunenburg? I need my $130,000 now, inflation’s driving me crazy.

#31 Philco on 07.04.22 at 4:08 pm

#121 JRinVic on 07.03.22 at 11:01 pm

Indeed. We have the worst people in power.
Now many suffer from policy.
You are in the matrix. Everything is corrupt and I can prove it. They are bold about it now. In the past you would be stoned in the town square.
Look how many times T2 did poopies in his bed?
And he roams the planet like hes important.
While homless roam the streets here he was handing out carbon tax cheques and everthing else Kanadians pay for. I asked him to visit he aint coming.
I just plopped $70,000 in land tax I pay my share.

Anywho on a finer note philco finaly gets a free bee.
BC Hydro is giving me $10,000+ to install EV chargers at my office space.
Is that cool with you? Your paying for it as its the govs plan to save earth…meanwhile my heats on as its a cold July here. I could have took down a pile of loot from covid loans cause i structured myself in a good way.
So i finally decided if they want to piss money away I might as well get in line cause I sure as hell pay alot of taxes and put up with alot of crap.
I bust my carcus to get where I am and T2 is a super flake.
I said right here years ago look out.
Like Bank Of Nova scotia says your richer than you think!
Yup bring on that inflation and handouts l…Awsome.

And Al Gore the crook. Said we would not be able to ski cause no more snow cause his fake BS parabolic global warming chart. They were skiing on Mt Washintin on fathers day. Lmao.
When is enough enough? $14 gas?
If your stampded as a lib at birth and love T2 get the eraser out and start thinking for yourself.
It all about fear and control.
He dont work for us…

#32 Landlord no more on 07.04.22 at 4:17 pm

#4 Captain Uppa!
I concur with you.
I cannot believe how many people insist houses are still selling at even higher prices.
One recent example:
“I’ve been watching the real estate market, they’re still selling at even higher prices” says one who recently bought and even added thousands of dollars in repairs and upgrading.
“Hmm maybe those houses were just taken off the market?” said I.
“Oh no, I’ve been watching!!” said she.

And I thought, “I’ve been watching the market too.
Better change the subject.”

#33 Daydreamer on 07.04.22 at 4:37 pm

Who cares? Someday I will retire to the Sky Hotel and spend my days cruising in the lower atmosphere:

https://www.youtube.com/watch?v=ZrodDBJdGuo&ab_channel=HashemAl-Ghaili

Elon, make it so please!

#34 Philco on 07.04.22 at 4:38 pm

The covid hangover has arrived. Worse than I thought. Buckel up theres turbulance ahead. Stagflation anyone? Its a killer for some.
Some good comments here thx.
Soren tap the dang brakes no wonder I cant keep up.

I gave the crew the day off its Julyuary and was pouring ran.
I said theres no rush. Im not beholden to the the bank to build my project.
I knew better.

#35 Overheardyou on 07.04.22 at 4:40 pm

Since prices are down 20%+ in five months and we’re estimating a repeat of 1989, would this mean the bottom would be hit bottom by the end of summer?

After 1989 the market took three years to bottom. – Garth

#36 Islanddave on 07.04.22 at 4:47 pm

#5Klaus
Umm… do you have a link to the bis where they suggest this bitcoin reserve?
Thanks
Dave

#37 T-Rev on 07.04.22 at 4:49 pm

I know how Toronto-centered the Canadian conscience is, but there’s a more recent example of a large Canadian market that went stratospheric and then crashed who’s recovery to peak pricing is debatable: Alberta 2005-2007.

The oil boom was ripping, anyone who could fog a mirror could make $100k (if you had a high school education, a strong back, and a clean drivers’ abstract up that to $150k), we had 40 year mortgages with questionable proof of income, and houses doubled in two years. Similar to Ontario now, a lot of the smaller towns and cities saw the biggest appreciation percentage-wise, as when you’re working camp jobs in the patch, who cares where you lay your head? Calgary and Edmonton saw valuations double, and some small oil towns saw them triple or even quadruple.

Depending on who’s numbers you use, Teranet or the local RE Associations, Calgary took until covid to recover, and according to the Teranet numbers Edmonton is still 3% behind the spring 2007 peak, although data conflicts with the RE association who would say prices recovered at the peak here in March/April 2022 just in time to start to dip again.

Most people who bought houses in those small towns at the peak will never see the values come back in their lifetime. Those in the big cities and close subburbs are just seeing those prices regained this spring, and likely won’t see them sustainably surpassed for another several years.

So there’s more than just the 1989 TO crash for parallel- we’ve seen this more recently in Alberta, in a market of 4.5 million souls.

PS Alberta didn’t get the big run-up in prices that we did elsewhere over covid, but we still saw 10%-15% (20% for land parcels close to the City) over COVID, and have given back about a third to a half of those gains in the past 8 weeks.

#38 Bk on 07.04.22 at 4:49 pm

Hopefully these price declines hit bc. So far holding strong. Chilliwack has never been so expensive, albeit lower sales…

#39 T-Rev on 07.04.22 at 4:52 pm

^^^missed some critical info: Edmonton and Calgary crashed by 35% between spring 2007 and late 2008.

Some of those small town where prices tripled lost 70% of value, and prices today are still 40-50% below peak

#40 PutinsSon on 07.04.22 at 4:55 pm

Turkey has 72% inflation today, it can happen here.
———–

And? Turkey’s real estate price doubled in a year.

Garth is wrong. Again. As he was for 7 years predicting housing crash every year. When you say something for 30 years, well it might just happen. It is a nature of economy. Cycles.

We have a 2017 scenario. Uncertainty. The first decrease in interest rates or no raise will push RE prices back where they were.

There is too much demand. There is a lack of supply projected for decades. There are millions of people arriving to Canada.

Rates will start going down next year. High inflation will make people hide money in real estate. 8% inflation will make RE go up even more. Just like government works, debt will just be prolonged and become unlimited.

Income in India is $200/mo. There are tons of developments selling homes for $500K. Income does not equal RE prices. Same in Turkey, Russia, Portugal, Spain, Thailand and most of the world.

Ownership of the property will be for the chosen. Other peasants will own nothing and be happy renting.

#41 Steven on 07.04.22 at 4:56 pm

Never count out the U.S A .

Except when Biden is in charge.

He even makes the arrogant idiot in charge here look promising.

#42 Shawn on 07.04.22 at 5:00 pm

Garth and Lunenburg

Garth once said he would tell us sometime why he and Dorothy moved to Lunenburg.

Things have changed but I wonder what the reasoning was back a few years ago.

#43 Doug t on 07.04.22 at 5:13 pm

CRACK BANG KABOOM BUST

#44 gfd on 07.04.22 at 5:14 pm

#4 Captain Uppa on 07.04.22 at 2:15 pm
It is amazing to me how many people I talk to who don’t realize the severity of what is happening.

Many are still very bullish on housing.

It’s like talking to brick walls. I can’t believe it.
———————————————————————————————————————————-

They don’t realize it until they list.

#45 Pure Polyester on 07.04.22 at 5:16 pm

This is all the fault of the central banks and we need to immediately move our entire currency system to crypto backed by the latest in blockchain technology.

#46 Philco on 07.04.22 at 5:18 pm

DELETED

#47 Omicron Kenobi on 07.04.22 at 5:27 pm

“A repeat of past experience would put that date at 2036.

I’ll be here to tell you so.”

In your dreams, everyone.

We’re coming after all of you. This summer.

https://www.thestar.com/news/gta/2022/07/04/ontarios-covid-signs-point-to-the-start-of-a-summer-wave.html

Monkeypox will have any leftovers for dessert :)

#48 Leon Umsk on 07.04.22 at 5:27 pm

Considering that we’ve being living in a world of artificial rates since 2008 and that was with some experiments not before tried. Also government intervention by parties of both colours in housing market. Clearly we can’t return to anything like what was normal without a lot of pain for many.
House down the street listed about 6 weeks ago for just shy of 1.3, reduced a couple of times now just shy of 995. Nice enough place, looks well taken care of but pictures show it still has wood paneling downstairs. Not a lot of updates. Doesn’t look like a lot of interest either.
Bet they’d have done a lot better listing 3 or 4 months sooner.
Farther up street one that was listed similarly and sold a few months before is being turned into a two story from a bungalow right now. Timing for the mortgage I guess.

#49 yvr_lurker on 07.04.22 at 5:28 pm

#20 Shawn
At risk if incurring his wrath I think it’s pretty clear that Garth “talks his book”. His investment approach is the only sensible one etc. All others are not even remotely sensible.

Then again he also believes his book and so why not talk it. He even writes his book which makes it easier to talk it.
—————-

In the view of most people who go to work every day and earn a salary, or run their business, or put in some kind of sweat equity, this is the only form of “earned income”. Getting windfall gains on bitcoin, on rapid housing appreciation (principle residence or speculation on multiple units), or from playing the market during the past few years of rapid gains, are all effectively in the same “unearned windfall gains” category. Whether the “investor” was shrewd, had the leverage to participate, or just plain dumb luck to rapidly climb the ladder is irrelevant. It was a passive process , little labour was required, and so should be labelled “unearned”.

Garth’s definition of “unearned windfall gains” only seems to relate to housing appreciation, and not the rapid increase of other passive investments.

At this stage it is moot, as everything is coming down the roller coaster, and people who took a high risk position in any of these asset classes are being roasted. Life by the sword and die by it.

Nobody with a balanced/diversified portfolio is being ‘roasted’. – Garth

#50 Roofer on 07.04.22 at 5:29 pm

Disagree! 50% decline in houses will be minimum the next 6 months and captures/offsets the doubling in house prices the past 2 years. Once the recession hits and people lose their jobs, expect another 50% off for a total of 75% of peak house prices.

#51 WTF on 07.04.22 at 5:35 pm

How do you know I’m not already an AI crypto bot? – Garth (ID 1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2)
—————————————————————–
AI indeed

Is your dog named Spot?

https://www.bostondynamics.com/products/spot

Happy 4th of July to the USA!

#52 Subscription is coming for the lemmings on 07.04.22 at 5:39 pm

DELETED

#53 JSS on 07.04.22 at 5:43 pm

On a positive note, RBC’s high interest e-savings account is giving 0.5% interest.

#54 RMTL on 07.04.22 at 5:44 pm

#42 Shawn on 07.04.22 at 5:00 pm
Garth and Lunenburg

Garth once said he would tell us sometime why he and Dorothy moved to Lunenburg.

Things have changed but I wonder what the reasoning was back a few years ago.
#

Google is your friend
https://www.greaterfool.ca/2019/07/30/why/

Some day I’ll tell you why we left. – Garth

#55 Philco on 07.04.22 at 5:45 pm

#33 Daydreamer on 07.04.22 at 4:37 pm

lol wife says you can just go to West Ed Mall…Much cheaper Im sure.
Meanwhile back on planet goof ball mega peeps are starving.

#56 Philco on 07.04.22 at 5:49 pm

#43 Doug t on 07.04.22 at 5:13 pm
CRACK BANG KABOOM BUST

lol my fav

#57 April on 07.04.22 at 5:50 pm

Hate to admit it, but I come here regularly for the dog (and cat) photos. Sometimes I don’t feel like reading any more data at the end of a long work day, so I just check out the photo of the day. Cheers.

#58 Shawn on 07.04.22 at 5:54 pm

Unearned Income

YVR Lurkers says:

It was a passive process , little labour was required, and so should be labelled “unearned”.

***********************************
I do believe Adam Smith in 1776 spoke of the wages of labour but also the wages of land and the wages of capital (buildings, tools machinery etc.)

Wages of capital and especially land can be very lumpy.

The typical worker bee might call the wages of capital and land “unearned”. The owners of land and capital as well as economists have a different view.

Human labour capacity has basically never changed. So why have standards of living risen dramatically in the past few hundred years? Thank capital for that.

What is interesting is that the governments actually impose far less tax on the wages of capital and land versus the wages of labour.

#59 45north on 07.04.22 at 6:00 pm

For example, here’s a chart of the on-the-ground street value of detached houses in the county’s largest real estate market. The average sale price has declined from almost $1.7 million in mid-February to the $1.3 million range. That’s a 24% reduction in five months.

and the decline has happened in the spring. The time when real estate normally blossoms like a flower.

Is this going to last? You bet. Just started, actually. Housing’s darkest days will include July and August.

by the end of August, we’re going to be in full-on panic. Justin Trudeau and his Liberal government are already there.

#60 45north on 07.04.22 at 6:01 pm

Captain Uppa It is amazing to me how many people I talk to who don’t realize the severity of what is happening.

It’s pretty amazing to me too. The people that know aren’t saying.

#61 Philco on 07.04.22 at 6:03 pm

Still catching up.

#123 Reality is stark on 07.03.22 at 11:05 pm

Well done. But I think naive and not stupid.
Turn off the brainwashing devices.
The system sells instant success and granite counter tops.
Your better off to live in a trailer park where you can afford to live.
You richer than you think right Bank of Nova Scotia…nope

#62 Barb on 07.04.22 at 6:07 pm

The Liberals still haven’t learned that handing out money doesn’t fix anything. Simply kicks the can down the road.

And rents increased 18% vs year ago? Wowsers.
Good ole Comrade Horgan brought the hammer down at 1.5% now that the pandemic “rent freeze” has ended in B.C. (as of January 1/22).

#63 yvr_lurker on 07.04.22 at 6:10 pm

Point taken. Roasting is too harsh a word, and B+D is doing the “best” of the worse. However, let’s not minimize the rather steep and unexpected downturn in the market over the past 6 months that has impacted B+D significantly as well.

B+D portfolio defined contribution pension managed by my large employer, down 5.5% since January. ZBAL down 15% since January, and completely flat across 3 years rendering it effectively a tie as with keeping $$$ under a mattress.

S&P 500 posts worst first half since 1970, Nasdaq falls more than 1% to end the quarter.

https://www.cnbc.com/2022/06/29/stock-market-futures-open-to-close-news.html

And we still likely have a ways to go down this steep slope.

Not saying that there is an alternative to B+D at this stage, but all classes of investments are rather strikingly down in this short period.

It is clear about the wealth-destroying aspect, especially as inflation is unlikely to be tamed in the short term. With the current near full employment, employers will have to keep some pace with wages to keep the best of their workforce.

#64 Reality is stark on 07.04.22 at 6:11 pm

Where do you people get your brains?
Rents are increasing because landlords are no longer willing to subsidize rents for capital appreciation.
The capital is depreciating and will soon be subject to much higher property taxes.
Provinces will see a large decrease in revenue as a result of the slowdown in the housing market. They will transfer less money to municipalities as a result.
As hard as the moderator here tries to educate the steerage section I would posit that they are actually not learning anything.
It is truly remarkable.

#65 Ed on 07.04.22 at 6:14 pm

I’m pretty sure the woke tards in Looneyburg made you decide to leave…life is too short to share air with those.

#66 Pure Polyester on 07.04.22 at 6:22 pm

#64 Reality is stark on 07.04.22 at 6:11 pm
Where do you people get your brains?
Rents are increasing because landlords are no longer willing to subsidize rents for capital appreciation.
The capital is depreciating and will soon be subject to much higher property taxes.
Provinces will see a large decrease in revenue as a result of the slowdown in the housing market. They will transfer less money to municipalities as a result.
As hard as the moderator here tries to educate the steerage section I would posit that they are actually not learning anything.
It is truly remarkable.

————

The elites control the monetary system and I believe it’s time to time it back for everyday hard working Canadians.

PP

#67 Jeppy on 07.04.22 at 6:25 pm

UPPA UPPA UPPA!!

#68 Penny Henny on 07.04.22 at 6:36 pm

#17 Sail Away on 07.04.22 at 3:01 pm
A plea from Twitter:

‘I’ve been in a relationship with this guy for 2 years and recently I asked him if he loved me and he was a bit evasive. I tell him I love him every day but he’s never said it back. I feel like I do a LOT for him so idk am I being unreasonable? Oh I should add I’m F(35) he’s M(2).’
////////////////////

A plea from Sail Away and Faron.

Someone please engage in conversation with me. Please.

#69 Dutch farmers protest government lunacy on 07.04.22 at 6:36 pm

This may not be mentioned on main stream CBC, CTV television in Canada but Dutch farmers by the thousands now protesting an insane government restriction on animal farming to curb emissions!
It’s almost as though Mr. Trudeau is over there running their country, just as he crushed Canada’s oil industry.

The world is waking up more and more to the scourge of the world economic forum, (while some still call it right wing nutbar-ism)

#70 wallflower on 07.04.22 at 6:37 pm

More than half the 1B1B units of new build condos rented last ten days this southern Ontariowe city June reduced ask price a lot.
MLS sample list:

DOM ASK REDUCTION FROM ORIGINAL
34 $2,100 $100
82 $2,150 $45
37 $1,975 $525
68 $1,875 $50
35 $2,350 $100
26 $2,200 300++
42 $2,000 $250
88 $2,050 $275
73 $2,100 $195
82 $2,100 $225
86 $2,125 $225
43 $2,295 $205
45 $2,200 $300
14 $2,100 $200

DOM is actually higher as I did not update DOM once they went off MLS but it would not be more than an additional 4 days. It is highly likely that contracts were written for even less than the ASK price we see here as going into fourth month of listing…
Since the inventory of new build condos for rent is growing, it is clear that absorption is going to slow.
Is it because the pool of potential tenants who can qualify based on income is disappearing?
Then what? for all these specuvestors?

#71 Diamond Dog on 07.04.22 at 6:37 pm

I probably used this chart below 50x last year on this site:

https://www.multpl.com/shiller-pe

Can anyone tell me what’s wrong with this chart?

Last year’s Shiller peak went to 40x from the same website, not the 37 1/2 or whatever they say it was now. The S/P 500 Shiller chart P/E ratio’s closed last year above 38 for a good 2 months or more (from the same site), peaking at 40 in mid November. In effect, the creators of this chart above are falsifying historical data for effect.

But I wander, I wanted to revisit the chart above to compare it for some historical context. According to the somewhat discredited chart below:

https://www.multpl.com/shiller-pe

We have the 1929 bubble, the 2000 dot.com bubble and the everything bubble of 2021 on clear display above with the S/P 500. The previous 2 bubble peak to troughs appear to be about 2.5 years. It took the NASDAQ 2.5 years to find it’s bottom from the dot.com peak. It took the S/P 500 8 years to find it’s full bottom triggered finally by the GFC. Now… lifetimes can happen in 2.5 years never mind 8 years, just pointing out historical bubble timelines from peak to trough.

Currently, P/E’s sit historically high at 29+ and we are in the 8th month slide past the everything bubble peak with the Fed raising rates into recession. As Mark Twain twice said, “history doesn’t repeat but it does rhyme”. In a historical context of going long in the markets, not to sound overly redundant, a defensive posture is required here.

A couple more charts for comparison, the NASDAQ (go to 1 and 5 year charts):

https://www.cnbc.com/quotes/.IXIC

And now Bitcoin (again, go to 1 and 5 year charts to compare):

https://www.cnbc.com/quotes/BTC.CM=

Bitcoin is tracking fairly closely to the NASDAQ specifically with the 1 year charts. Knowing how the tech laden NASDAQ tracks confidence and speculation, one could fairly confidently say Bitcoin tracks the same metrics.

Where the NASDAQ goes, so goes Bitcoin as evidenced by 1 year charts. How long did it take for the NASDAQ to go from the dot.com boom to bust again, 2.5 years? Where are we, coming off the 8th month of the everything bubble peak with a Fed looking to raise rates into recession?

No one here has a crystal ball but all sorcery aside if history is any indication specific to the NASDAQ in these inflationary times, it’s early days for Bitcoin’s search to bottom, early days to wit, we all make mistakes…. can all misread the room, make poor judgments… to err is human as they say. But one can’t help but think about Pierre Polievre’s this year declaration of Bitcoin as a good hedge against inflation in this context. If this was true, why is Bitcoin tracking the NASDAQ instead of inflation?

Now… I’m just a simple investor browsing history and looking for what could go wrong (like a flop for choice of Conservative leader in Canada). If I’m wrong about what could go wrong, it won’t move the needle in the minds or economics of Canadians. But Pepe Polievre is a career politician (all he’s ever known btw) with a party finance critic pedigree that purports to know economics and further exudes a bellicose state of ready as the next prime minister of Canada. If he flops, it will move the needle.

The simple reality that Polievre doesn’t know certain basic facts about Bitcoin speaks volumes as to what this man does not know about economics as a whole. It’s an akin comparison to a basketball player who says he’s ready for the NBA and can’t shoot a layup.

At the 16 minute mark of the video below, Polievre tells us in the video below that he plans to make Canada “the blockchain and Crypto capital of the world”:

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

Seasoned investors (like me) know Pierre is dead wrong with Crypto (among other things). Anyone who looks at the practicality of Crypto as currency hopeful’s in actual practice with transaction fees alone compared to Fiat see it for what it is. This is aside from Crypto’s wild west unregulated casino history filled with Ponzi scams and insolvencies, a market where sustained functionality is long overshadowed by the goal to get rich quick, a market relying solely on confidence and greater fools where anyone can do and say anything they want without legal consequence.

It somewhat mirrors the history of a confused and/or dishonest politician, doesn’t it.

Perhaps the rest of us Canadians should know this as well:

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

#72 Damifino on 07.04.22 at 6:44 pm

#7 yvr_lurke

Why does this term “unearned windfall gains” seem to apply only to real estate (in Garth’s view).
—————————————–

The biggest tragedy is “unharvested” windfall gains.

That’s much more likely in residential real estate where it’s frightening to hit the sell button on an asset you currently reside in. But at least it’s not taxed.

#73 crowdedelevatorfartz on 07.04.22 at 6:48 pm

@#16 Tim
“Houses are certainly not tanking anywhere on the West Coast. Vancouver two bedroom condos are still be sold for more than $700K”

+++

Thats why its called the Lowerbrainland…..

#74 Jenna on 07.04.22 at 6:48 pm

wow…”sounds” like real estate prices are taking a nose
dive.

Reality….homes and condos are still selling over asking.

Sellers will hold on to property because prices are sticky in Canada…and majority will not take a loss.

#75 crowdedelevatorfartz on 07.04.22 at 7:01 pm

@#65 Ed
“I’m pretty sure the woke tards in Looneyburg made you decide to leave…”
+++
Every small town has its idiots as well as the self important people ( Big fish small pond) that have never travelled.
I’ve been working/living/vacationing in a lot of small towns across Canada over the decades.
Cookie Cutter issues/people/politics/dynamics.
Amazing listening to people that have never been further than 100 miles from where they were born opine on issues they are dangerously ignorant about.
And they vote.
I do enjoy the peace and quiet one can get from living in a rural setting.
However.
There is something to be said for the anonymity one can have in a large metropolis.
Unfortunately with larger populations comes large amounts of stupidity.

#76 Linda on 07.04.22 at 7:11 pm

A tree climbing pup. Is this dog evolution in action?

Rents climbing isn’t a surprise to me. The cost of higher servicing of debt, higher prices for heating/utilities/appliances/labor/materials etc. will naturally be passed on. If the point of owning a rental is to make money, can’t do that if the cost of supplying the rental is higher than the rent being received. As always, those whose incomes are on the lower end of the scale feel the impact of rapidly rising costs the most. Heaven help those on ‘fixed’ incomes.

#77 Concerned Citizen on 07.04.22 at 7:14 pm

To all those complaining about wealth destruction, I would point out that wealth is not actually being destroyed. Rather, the prices of assets are declining. Value and price are two different things.

For example, GME trades north of $100/share. However, if you consider its balance sheet and forecasted cash flows, the stock is likely worth less than $20 share. Canadian homes have roughly doubled in price in 6 years, but that doesn’t mean they’re providing any more value to occupants than they were 6 years ago. In both cases, the price has increased, but the underlying value hasn’t.

Price is what you pay, value is what you get. If someone bulldozes a perfectly good house, that is a loss of wealth. If the price of a home declines, it’s still providing the same value to the occupants of that home.

I’ll tell you the moment I realized just how awful our current economic leadership is. It came when Tiff Macklem (or as I affectionately call him, the Tiffster), commenting on the rapid home price gains, said “We need the growth we can get.” The fact that the Tiffster appears to believe – based on this quote – that price growth equates to economic growth (that is, increased value) was and is highly disturbing, given he holds likely the most important economic post in the entire country. Add in the federal housing minister stressing the need to protect “Mom and Pop investors” while tent cities pop up across the country and inflation rages, and I am positively distraught over the economic prospects of this country.

I hope some fiscal conservatives find their way into the liberal party again. The part of Chretien and Martin it is not.

#78 Quintilian on 07.04.22 at 7:25 pm

#38 Bk on 07.04.22 at 4:49 pm
Hopefully these price declines hit bc. So far holding strong. Chilliwack has never been so expensive, albeit lower sales…

Fraser Valley
Lowest June sales in over 20 years.
Honest Realtor will say it’s just a late spring market.

Tick Tock, Tick Tock

#79 Philco on 07.04.22 at 7:25 pm

Garth you always delete my best pieces.
Im going to fill out a Hurt feelings report.
The tooth hurts. Told ya my spelling sucked. Maths ok though.
lol

#80 MC on 07.04.22 at 7:26 pm

I have zero confidence in BoC. They got inflation wrong in 20/21 when they said it was transistor. They will get it wrong again and jack up rates to high to fast sending the country into a recession. Good job Tiff

#81 Sail Away on 07.04.22 at 7:38 pm

Why leave Lunenberg? Hmmm… speculating… it likely had something to do with one or more of the following:

Small town politics
Access to services
Climate
Quality of life
Subpar local pheasant population

#82 Philco on 07.04.22 at 7:42 pm

#78 Concerned Citizen on 07.04.22 at 7:14 pm

Yup Call T2.
Its all in the management.
Been sliding for years and now its wake up time.
Ask Peter Brown he was on Campbell. Hes 100% correct.

#83 Sail Away on 07.04.22 at 7:44 pm

#68 Penny Henny on 07.04.22 at 6:36 pm
#17 Sail Away on 07.04.22 at 3:01 pm

A plea from Twitter:

‘I’ve been in a relationship with this guy for 2 years and recently I asked him if he loved me and he was a bit evasive. I tell him I love him every day but he’s never said it back. I feel like I do a LOT for him so idk am I being unreasonable? Oh I should add I’m F(35) he’s M(2).’

——–

A plea from Sail Away

Someone please engage in conversation with me. Please.

——–

Haha. I actually consider commenting here a civic service.

#84 Wrk.dover on 07.04.22 at 7:46 pm

The $4.50/lb fresh-today-haddock door to door guy just took $9.00 from me for todays lb.

Something, something, Diesel.

#85 RC on 07.04.22 at 8:07 pm

“I’ll be here to tell you so.”
Amen to that!
Thanks Garth

#86 Doing my Part on 07.04.22 at 8:18 pm

More wishful thinking, “prices are sticky in Canada, most won’t take a loss”.
This thing just started, rates are historically low, wait till they go up another couple percent and it has time to disturb household cashflows.
People may hold out but things may get worse, some sales have to happen, deaths, divorces, job loss/changes, etc.
When the tide goes out, all boats follow it down.
Here in Victoria we see more listings, less sales, longer on the market and lot’s of price drops.
Westcoast is not immune, may be a little sticky, but down she goes.
If you are living in it, can afford it, and don’t need to sell who cares.
If you got in at the top or are “investing” with your equity, look out.

#87 Doing my Part on 07.04.22 at 8:19 pm

Oh yeah,
Bitcoin, going to zero, get out while you can.
Take the proceeds and invest in something real.
This is a public service announcement.

#88 Victor Llearna on 07.04.22 at 8:30 pm

“$1.7 million in mid-February to the $1.3 million range”
Salaries don’t justify the ridiculous prices in as Ray Whitney Said is “The Worst place on earth” The horrid airport reflects everything about toronto, city has worst traffic, worst commute times, worst public transportation (TTC s a joke, GO trains are just as bad).
Anyone stupid enough to be paying 1.7 million to live in this hellhole absolutely deserve to go bankrupt.

#89 yvr_lurker on 07.04.22 at 8:34 pm

#58 Shawn
What is interesting is that the governments actually impose far less tax on the wages of capital and land versus the wages of labour.
——–

And yes…. this is a problem… I agree that there should be some reduction in taxes for those who take some risks, but it is far easier for Gov’ts to simply keep on increasing the marginal rates on labour for those “uber high” earners making a more than 210K per year (sarcastic). However, sparing of course those who are really well off (i.e. T2’s wealth class) and those who live on the proceeds of passive investments, all the while collecting their dividends and rents sipping lattes all day.

#90 TurnerNation on 07.04.22 at 8:38 pm

#9 Søren Angst on 07.04.22 at 2:38 pm

^ As air travel is being wound down one man-made crisis at a time, we exclaim “If only we’d had a hint!”

.Pearson so bad that backups a National Fire Code violation (torontosun.com)

>>>Posted here March 20, 2020 — 2.5 years later what has changed?:

“#129 TurnerNation on 05.30.20 at 8:13 am
From late March, seen elsewhere:
“We’re in an experiment. We’re now getting a glimpse of what a high tech, low carbon, limited mobility civilization looks like. The technocrats must be loving this – they’re going to have so much data to analyze after the experiment is over. Other major interest groups will use this experiment to further their agendas”

—–
Maybe that maple leafs incompetence guy is on to something…

https://www.blogto.com/sports_play/2022/07/toronto-maple-leafs-fans-ranked-worst-entire-nhl/

—-
Almost back to normal
Fact: 2021 they signed contact$ for does enough into 2024. My question, is how much more ‘hospital capacity’ did they also sign up to build?

https://torontosun.com/news/national/two-doses-are-no-longer-enough-canadians-required-to-get-covid-shot-every-nine-months
‘TWO DOSES ARE NO LONGER ENOUGH’: Canadians required to get COVID shot every nine months

#91 Flop… on 07.04.22 at 8:42 pm

Flop Drops.

I’ve seen a couple go below 1.35 but this one is probably worth put up just so a few people can recalculate a few things.

Don’t worry about the assessment, they say, on the way down the mountain, it only matters on the way up.

Yeah, yeah hear me out.

I showed one the other day that was being offered up at only 75% of assessed value, let’s see what happened to this one at the very bottom of the Vancouver proper detached market.

627 E 21st Ave Vancouver.

Original Asking 1.59

Sold for 1.36

Assessment 1.70

So they dropped it down a couple of weeks ago to get it done and reap the gain from a 2011 purchase.

Gone at on 80% of assessment value is the dawn of a new day, pretty soon at this pace we see regular sales in the 1.2 range.

Just saw one in Burnaby on an oversized lot go for 1.2 something, but this is Flop Drops, so I’m just focusing on East Vancouver.

It’s becoming rather refined around here, I can’t remember the last time someone tried to rob a bank…

M48BC

https://www.zealty.ca/mls-R2697904/627-E-21ST-AVENUE-Vancouver-BC/

#92 Zed on 07.04.22 at 8:50 pm

#54 RMTL on 07.04.22 at 5:44 pm

Some day I’ll tell you why we left. – Garth

That’s what i like about Garth, going quietly among the masses. He bought that general store/ice cream parlor north of TO a few years back then pumped it up/dumped it. Similar thing with Lunenburg, probably sold to a greater fool from TO. Taking advantage of a situation (lust) but not of people.

High taxes in NS and maybe lack of health care services does not help the location and when you can sell high, it is nice, not that i would know anything about that.

#93 crowdedelevatorfartz on 07.04.22 at 8:54 pm

@#76 Linda
“A tree climbing pup. Is this dog evolution in action?”
+++
Definitely evolution.
2009 video

https://www.youtube.com/watch?v=3QH916abg-k

#94 crowdedelevatorfartz on 07.04.22 at 8:57 pm

@#89 Victor
““$1.7 million in mid-February to the $1.3 million range””
++++

Yep.
A buddy of mine just confirmed his Feb sale was finalized late last week.
$1.8 mill baby!
The peak.
He’s investing, waiting, vultching….in about 2 years or so.
:)
The smarter get richer.

#95 Interstellar Old Yeller on 07.04.22 at 8:58 pm

We will be lucky blog dogs if you aren’t absolutely sick of us by 2036.

Actually, we’re lucky you aren’t completely sick of us now. Thanks for your patience and generosity, Garth. :)

#96 Nonplused on 07.04.22 at 9:03 pm

But I figure if house prices going up isn’t inflation (house prices are not in the CPI) then house prices going down isn’t deflation. Rents they care about though and if they just went up 18% that is highly inflationary.

Likewise the CPI does not include stocks. When stocks went up it wasn’t considered inflationary; likewise it won’t be considered deflationary if stocks go down. There probably isn’t any Fed CB “put” under stocks.

The effect would be that if houses and stocks go down enough, the “wealth effect” might go away and people will spend less money. But I wonder how much of this “wealth effect” is real. After all house prices and stock prices do not affect the money supply. In order to sell a house or a share or a bitcoin somebody has to buy it, so it doesn’t really matter what the price is the amount of money is the same. That is unless the bank makes a loan against those assets. That does create money.

Leave it to the Liberals though to think the solution to inflation is to give people more money. Don’t they realize that that is what caused the problem in the first place?

#97 Philco on 07.04.22 at 9:04 pm

#87 Doing my Part on 07.04.22 at 8:18 pm
—-
Exactly. If you never jumped in when it got stupid. No worries

#88 Doing my Part on 07.04.22 at 8:19 pm
Oh yeah,
Bitcoin, going to zero, get out while you can.
Take the proceeds and invest in something real.
This is a public service announcement.
———–
HAHA yup maybe a bounce here. Something al least then drink flush and gargle.

The wealth effects gone into full reverse.
Everything turned into Casino Royale.

I’m cutting lumber tomorrow and the boyz are working on my 2nd foundation cause 4 years out we packed with tenants and T2 is GONE!!
IDCare that lumbers down cause my cost is near zip. Just sweat.

#98 Cow Man on 07.04.22 at 9:13 pm

Best news I have heard in days that you will still be writing in 2032.

Thanks

#99 yvr_lurker on 07.04.22 at 9:21 pm

#93
That’s what i like about Garth, going quietly among the masses. He bought that general store/ice cream parlor north of TO a few years back then pumped it up/dumped it. Similar thing with Lunenburg, probably sold to a greater fool from TO. Taking advantage of a situation (lust) but not of people.
———

No need to assume the motive. I would be super-pissed if my Canada flag got stolen from my storefront and the city council just ignores the issue and deflects. Although I was annoyed by the phrase “unearned windfall gains” today, let’s not pre-assume the reason why he has left Lunenberg. For me, if I was retired and living in a smallish town with enough resources it would be good, and I would completely divorce myself from anything political… it is a cesspool….

I am sounding like Faron today with the number of posts… cease and desist…

#100 KLNR on 07.04.22 at 9:32 pm

ahhh, thanks a ton for the commentary on here folks.
I was feeling a little too good about life after this Canada day long weekend. all fixed now.

#101 Bob on 07.04.22 at 9:40 pm

Hey Garth, am I required to spend all the money withdrawn from an RRSP under the HBP on the house? If I withdrew 70K say, could I spend 50K on the house and 20K on retiring my credit card debts?

#102 David Pylyp on 07.04.22 at 9:48 pm

Interest rate buydowns,
Second Mortgages,
Vendor Take back then discount…
Blending rates…..

It was the best of times. It was the worst of times.

And it’s all coming back….

#103 Faron on 07.04.22 at 10:01 pm

Another day, another mass shooting in the US. Thots’n’prayers no doubt from the Republicans the. The whole mental health thing. Then armed guards. The elephant in the rooom will be ignored by the Ted Cruzes and the McConnels and the usual tools of the GOP.

The events are heartbreaking in and of themselves, the inaction is downright sinister greed. I’m ashamed of my country of birth. Might be time to cut the ties.

#104 Matt on 07.04.22 at 10:28 pm

“A repeat of past experience would put that date at 2036.

I’ll be here to tell you so.”

Although I tend to agree with most things said here, this seems to be a bold prediction. And I mean about housing prices, not whether or not you’ll make it to 2036 to brag about your prediction.

Concerning rents, if house prices continue to decline, would rent levels be negatively correlated? And what explains rent prices increasing as hoise prices decline anyway?

I predicted nothing, citing historical precedent. Meanwhile try researching supply and demand. – Garth

#105 Barb on 07.04.22 at 10:59 pm

I don’t know why people think Garth has left Lunenburg.
Just for Canada Day!

#106 Philco on 07.04.22 at 11:10 pm

#105 Matt on 07.04.22 at 10:28 pm

Monetary policy will predict everything bro.
If the keep handing out free loot like my EV chargers then it impossible to predict ho high and how far.
If the velocity of money ceases bro its a depression.
There’s a housing shortage
Housings over priced yes we know that.
Rents stay tight houses likely fall hard, developer’s say bye bye cause renters are winners and they want controls. They have no clue and the int rates rise so says don’t do it developer cause its all on you for risk.. Its just math. I know what’s next.
please chime in Garth

#107 Faron on 07.04.22 at 11:20 pm

#90 yvr_lurker on 07.04.22 at 8:34 pm

I am sounding like Faron today with the number of posts… cease and desist…

Have at ‘er. Thanks for taking up the baton. There’s only one censor that matters here. The rest are just blowhards.

#108 meslippery on 07.04.22 at 11:37 pm

#54Google is your friend
https://www.greaterfool.ca/2019/07/30/why/

Some day I’ll tell you why we left. – Garth
——————–
That was a good blog but it flies in the face of your now return to the office position. Is that why you left?

I have multiple offices. All full of happy colleagues. – Garth

#109 the Jaguar on 07.04.22 at 11:49 pm

Re:

#54 RMTL on 07.04.22 at 5:44 pm
#42 Shawn on 07.04.22 at 5:00 pm
Garth and Lunenburg

Garth once said he would tell us sometime why he and Dorothy moved to Lunenburg.

Things have changed but I wonder what the reasoning was back a few years ago.
#

Google is your friend
https://www.greaterfool.ca/2019/07/30/why/

Some day I’ll tell you why we left. – Garth+++++

////This is kind of interesting. Not sure why the interpretation/ understanding of his comment is that G & D have ‘left’ Nova Scotia. The Turners ain’t no quitters, after all. I read this as more about why they did not choose to retire to some bunnypatch equivalent in Ontario. An easier commute to the big smoke when required, so seems to be a story. I think there is a disconnect here… Or maybe it’s me that has it mixed up. Sometimes the ‘Wu Wei’ goes astray…

I do wonder why only one photo of the new fluffy white dog has been posted though……Bandit’s photo and name surfaced more frequently. How is the new doggie doin’?

#110 bob on 07.05.22 at 12:16 am

Hi Garth,
I’m more interested in your crystal ball that can tell me the bottom…

will read daily to find out…

#111 Warren Peace on 07.05.22 at 12:43 am

House prices falling? Nosirre: Not in Nanaimo

#112 Dr V on 07.05.22 at 1:18 am

VIREB (not incl Victoria) stats here

http://www.vireb.com/index.php?page=20

Stats comprise the 6 most populous up-island areas. As each area is quite small, I look at the totals to get the biggest picture.

Last four months, sales down in every month from last year as well as month to month.

Since March this year, ave price has declined over 7%.

I’ll keep watching and trying to live the charmed life like that other poster……

#113 millmech on 07.05.22 at 2:29 am

#59, 45North
Panic will be next spring when the super cheap sub 2% mortgages come up for renewal at 8%+, that is when you will see it. Like a slow boiling frog right now, everyone believes that the government will save them and real estate is too big to fail.
We shall see!

#114 Shell on 07.05.22 at 5:43 am

Nomura calls a recession for Canada. Batten down the hatches. Why concern when an international makes a call like this? Because it guarantees that not a single dime of foreign investment will come to Canada. Direct foreign investment is zero now, it’s about to get officially locked into that status. It will likely take years for another opinion . Canada manufacturing is already failing, Trudeau is out of money, everything he’s promising is new debt. This week the G7 promise to supply “energy” to Europe was torn open. The bad news is piling on.

Such drama queens on this site. Recessions are normal. Growth is not constant. Get over it. – Garth

#115 Dharma Bum on 07.05.22 at 7:59 am

“A repeat of past experience would put that date at 2036.
I’ll be here to tell you so.” – Garth
————————————————————————————————-

Excellent.

The new build I started in 2021 should be just about ready by then.

Perfect timing.

#116 the Jaguar on 07.05.22 at 8:05 am

Morning NP Snippets, beginning with an ‘ENERGY IS GDP’ snippet:

“Norwegian offshore workers on Tuesday began a strike that will reduce oil and gas output, the union leading the industrial action told Reuters. The strike, in which workers are demanding wage hikes to compensate for rising inflation, comes amid high oil and gas prices, with supplies of natural gas to Europe especially tight after Russian export cutbacks. A further planned escalation by Saturday could see close to a quarter of Norway’s gas output shut, as well as around 15 per cent of its oil production.” ++++

“CONSUMERS ARE GETTING CRANKY (THUD!) ” – Short-term expectations of inflation climbed to the highest since the central bank began polling consumers in 2014. “Canadians think the likelihood of inflation remaining high for a long time has increased,” the report said.
In the United States, the Federal Reserve, which is facing even hotter inflation, increased its benchmark interest rate three-quarters of a percentage point, an outsized move that underlined the worry that central bankers are losing their grip on inflation expectations. Expect the Bank of Canada to do the same when it updates policy on July 13. It could even choose to go a full percentage point. Macklem has said he thinks he can engineer a soft landing. A growing number of Canadians want prices back on the ground, and if that requires a thud, so be it.” ++++

A NEW LOW:

“Student guide slams Red Ensign. The federal government shouldn’t be telling K-12 teachers to monitor and discipline students for holding certain political views. But it’s part of a project the Department of Canadian Heritage paid $268,400 to do.

The guidebook goes on to list the Red Ensign, the official flag of Canada until 1967 and the one under which we fought fascists in the Second World War, as a symbol of hate promotion. “Its usage denotes a desire to return to Canada’s demographics before 1967, when it was predominately white.” ++++

#117 crowdedelevatorfartz on 07.05.22 at 8:38 am

A billion here.
A billion there.
When you’re a Liberal wastrel and spendthrift.
It’s only money.

https://nationalpost.com/news/canada/canadian-press-newsalert-20b-settlement-for-first-nations-children-approved

Anyone lose their family doctor to retirement lately?

#118 mickclean on 07.05.22 at 8:52 am

If you’ve ever wondered if there are ETF’s where you can invest in a pool of high interest savings products, well those cash ETFs certainly exist Horizons High Interest Savings ETF (CASH-T) is one example, only some of the Big Banks including the green and blue ones discount brokerages would prefer you not have access and instead buy their own inferior HISA products.
https://www.theglobeandmail.com/business/article-banks-block-etfs/

#119 Shell on 07.05.22 at 9:28 am

Re: 115 Shell.

http://www.bnnbloomberg.ca/a-recession-would-be-worse-in-canada-than-u-s-economist-1.1787641

“Recessions are normal” you say. I suppose if you’re unaffected you can call out the bedroom window to the peasants scavenging through your garbage. “ Let them eat cake” quipped Marie.

What’s that line, Milton Freedman I think. “It’s a recession when your neighbor loses his job, a depression when you lose yours”.

http://www.bnnbloomberg.ca/a-recession-would-be-worse-in-canada-than-u-s-economist-1.1787641

This is a Liberal Party recession. No one is denying that. All the dismissive waves to the fate of lumpen prols will end up describing a recession as ‘normal’. If I’m drama, you’re arrogant.

Yup, recessions are normal. You cannot escape the fact growth is not constant. But you can always prepare, which is exactly what this blog has been preaching for years. Corral debt. Live within your means. Eschew unstable assets. Resist FOMO. Keep your job. Sounds like you didn’t listen. – Garth

#120 crowdedelevatorfartz on 07.05.22 at 9:36 am

Well well well.
A week ago
The BCGEU ( govt employees union) voted 95% in favour of strike.

https://www.cbc.ca/news/canada/british-columbia/bcgeu-strike-vote-1.6499549#:~:text=CBC%20News%20Loaded-,Inflation%2C%20rising%20cost%20of%20living%20prompts%2095%25%20strike%20vote%20by,for%20cost%20of%20living%20wages.

And now all talks have broken off.

https://vancouver.citynews.ca/2022/07/04/bcgeu-and-b-c-government-break-down/

The summer of picket lines….
Rolling into a winter work slow down.
Good times.

#121 Quintilian on 07.05.22 at 10:24 am

#118 crowdedelevatorfartz on 07.05.22 at 8:38 am

“When you’re a Liberal wastrel and spendthrift.
It’s only money.”

Crowdie:
Do you not think before you post?
Are you suggesting the Government not follow the law?

Some curmudgeons are so ridiculous.

“The Canadian Human Rights Tribunal ruled in 2016 that the federal government had discriminated against First Nations children. The Liberal government appealed that ruling, asking a court to quash it. The court declined.”

#122 Lorne on 07.05.22 at 10:40 am

#112 Warren Peace on 07.05.22 at 12:43 am
House prices falling? Nosirre: Not in Nanaimo
……..
You may wish to look at selling prices, not asking prices. Sellers real estate agents are still originally posting prices based on the past peak in February and they hope they can find 1 greater fool who will fall for that. Down the line, reality sets in.

#123 Jay (Not that one on 07.05.22 at 10:44 am

One thing to remember about inflation is the rule of 75. That is, you take 75 and divide the current inflation rate, and that’s how many years it takes for prices to double.

At the current posted inflation rate, it’s about 12 years.

Man, I hope the Millennials among us have the humility to realize this is why “the boomers got such good deals on houses”. We’ll all be making 100k, and we’ll all be paying taxes as if we make 100k, but a loaf of bread will cost 10 bucks.

#124 Rick on 07.05.22 at 11:15 am

I hope everything doubles in price overnight. This way we get this inflation BS out of the way. It is about time people learn about the real economics of the left, socialists, central banks money printing money made out of thin air and how much Canadians social benefits, programs really cost.

#125 Popeye the sailor man on 07.05.22 at 11:26 am

#37 T-Rev on 07.04.22 at 4:49 pm
I know how Toronto-centered the Canadian conscience is, but there’s a more recent example of a large Canadian market that went stratospheric and then crashed who’s recovery to peak pricing is debatable: Alberta 2005-2007.
____________
We bought really nice 2 story house in Spruce Grove in late 2009. The 2008 financial crises was still dragging things. The Original owners bought in late 2006 and there property assessment at the time was 590K.

Three years later they sold to us at 435K a 155K hit plus closing costs and selling costs they likely lost 200K. A big hit for a young family. We have done about 50k in improvements (basement, fence, roof) and I would guess we got close to 600K but have likely dropped back to 570K over 13 years that averages out to a gain of 6K/year before discounting closing and future selling costs.

The House is just getting close to the past Alberta peak, but still not there!

#126 MD on 07.05.22 at 11:49 am

Recession and debt deflation will be happening at the same time and hopefully inflation will stay high enough to prevent money printing to infinity.

#127 Dragonfly58 on 07.05.22 at 12:01 pm

Crickets in Langley. House is on the market. After months of delay ALR finally approved my property for re development with 2 houses. In theory at least, that put our price back up to where it was 25 years ago compared to lower end small acerages in the area. More or less the same with some extra money put in on our part.
But clearly a tear down / property for developers, despite years of work the existing house has many problems.
6 months ago it would have sold quickly, who knows how long it will now be before development properties are in demand again.
Don’t want to live in a “earmarked for demolition” house for several further years , every nickel spent from this point onward is money down the drain. But what are you going to do ? At least most owners of similar properties have a decent second house to actually live in, rent the doomed house out to lower end tennents.
I sure was hoping to be in our ” forever home ” before my 70’s. Fat chance now.

#128 Dr V on 07.05.22 at 12:37 pm

123 Lorne

“#112 Warren Peace on 07.05.22 at 12:43 am
House prices falling? Nosirre: Not in Nanaimo
……..
You may wish to look at selling prices, not asking prices”
———————————————–

You betcha Lorne. From the link I provided above, average price Nanaimo

March 2022 $971k
June 2022 $883k

Whether it indicates a longer term trend we will have to wait and see. Still very expensive.

#129 Dr V on 07.05.22 at 1:00 pm

128 Dragonfly

“After months of delay ALR finally approved my property for re development with 2 houses.”
—————————————————–

Congrats and good work dragonfly. The ALR is not an easy beast to tame.

Generally, the commission wants to encourage farming, or at the very least not hinder or reduce its viability. They issued this bulletin a few years back for more clarity on the second dwelling.

https://www.alc.gov.bc.ca/assets/alc/assets/legislation-and-regulation/information-bulletins/ib_05_residences_in_the_alr.pdf

Do you only have approval for the second dwelling, or do you have approval to subdivide (very rare)?

#130 Overheardyou on 07.05.22 at 1:18 pm

Thank you for your comment, Hon. Mr. Turner!

#131 Dragonfly58 on 07.05.22 at 1:56 pm

Stratification to allow 2 seperate dwellings. Property is in ALR but far too small for farming. This lot should have never have been created in the first place, a small row of very small properties in a area of 5 , 10, and 20 acre and larger hobby farms / working farms. But in 1962 or so when it was done the rules were far more relaxed. Basicly a few residential properties for members of the extended familly of the large farm the corner was carved off of.
Now non conforming to septic regs etc. Needs an Engineered system, big additional expense. And a very old house that long pre dates the origonal subdivision. Probably built in the great depression. By farmers, not house builders.
We bought it for all the wrong reasons. 26 years ago.
We were living on a slightly less than 5 acre property nearby, that belonged to my wifes grandfather. Wife and I wanted to buy the property, but wife knew the person who would inherit the deciding say in the property was a snake in the grass and not to be trusted. Every one else in both our famillys really wanted us to end up with it. The one person that mattered was willing to do almost anything to ensure we did not.
So wife insisted we have a plan B if the person played things out in a manner true to form.
Bought this place to rent out, maintain our price point in an evolving market, and sell to buy the other place when her grandfather passed away.
Long story short , the close familly member stayed true to form , made 100% sure the place was sold to someone outside the familly. Grasped at and used the last major controll they could bring to bear on my wife. A very grasping, manlipulative person. Ugly to the bone.
All these years later we are still stuck here. Still no resolution in sight. Pretty gutted. So close, but still years away from putting this whole episode behind us.
Our lives are going by in a very undesirable situation.

#132 DJT on 07.05.22 at 2:25 pm

After the Liberals finish rolling out their AriveCan, they will move to ban paper money and make the Loonie a crypto-currency.

#133 DJT on 07.05.22 at 2:31 pm

Seeing discounts of perhaps 15% so far on older homes in Niagara, newer 5%. Older homes can be good option for young, energetic people without a lot of money but are willing to live in them while they fix them up. Of course only if the price is right and at least one inspection.

#134 crowdedelevatorfartz on 07.05.22 at 3:11 pm

@#122 Quinty’s Tax burden

“Crowdie:
Do you not think before you post?
Are you suggesting the Government not follow the law?”
+++

Will pumping MORE billions into the hands of people improve things?
Especially when the money is being paid by you?

A person that is so far removed from the original people that made these decisions decades ago as to render any “apology” pointless.
Is it really about the apology now or the money?
One wonders.
The National holiday in Sept is a good way to apologize.
Everyone has a day to reflect the past. Like Remembrance Day in Nov.
Period.
No more money.
Unless you want 100% of your tax dollars to be endlessly pilfered while the last of the doctors in our “free medicare system” run screaming in frustration towards the US border.

#135 Froggy on 07.05.22 at 3:12 pm

Hi Garth thanks again for your wonderful blog and the comment section just would like to say a few things one prices are not sticky we’ve had the biggest reduction in realestate prices in Canada so far in only 3 month’s 25% huge and in only 3 month’s unbelievable so from 1700000 to 1300000 so what I see is the vivid froth gone then anothor 25 % and we’re at 950000 and then free fall probably 600000 anyone with cash and good credit will vulcu mark my words rates at 6% and beyond will burn realestate don’t matter if you manage to hang on there will be many thousands of homes that need to sell to a population that’s just had there credit worthiness cut in half

#136 Old Boot on 07.05.22 at 3:38 pm

#104 Faron on 07.04.22 at 10:01 pm

Another day, another mass shooting in the US. Thots’n’prayers no doubt from the Republicans the. The whole mental health thing. Then armed guards. The elephant in the rooom will be ignored by the Ted Cruzes and the McConnels and the usual tools of the GOP.

The events are heartbreaking in and of themselves, the inaction is downright sinister greed. I’m ashamed of my country of birth. Might be time to cut the ties.

***********

Maybe he just got thrown out of the women’s washroom at the Bass Pro Shop, and he was unhinged by his near-death experience with transphobia .

Goodness knows, men would never disguise themselves as women to commit crimes.

https://www.nsnews.com/national-news/july-4-suspect-planned-attack-concealed-identity-by-wearing-womens-clothes-police-5548776

#137 The Watcher ... 12th Post on 07.05.22 at 6:34 pm

Hi Garth,

Did you know they passed a bylaw, in Lunenburg, a couple days ago, for “No fireworks”, the day before Canada Day? A neighbor said they did it because you wanted to let off fireworks off the roof of the wee bank.