Aftershocks

The fallout from the CB’s testosterone surge continues.

That 1% hike was unexpected, aggressive, macho and underscores just how much central bankers have been behind the curve. They never expected inflation to pop from 1% to 7% in a year. Nobody did. Because that rapid an increase has never happened. So here we are. Coping.

Yes, GIC rates will increase – good for the timid among us who fail to understand whacked financial markets are a blessing. Buy low, sell high. Remember that? People selling at a loss and locking up their cash for years now are guaranteed to miss Mr. Market’s big snapback. The timing is unknown. The certainty is not.

This 1% hike will sure make a difference to the variable-mortgage crowd (over 50% of recent borrowers). Most folks with VRMs in place won’t see higher monthlies, but they’re now paying extraordinarily more interest and will find debt levels elevated upon renewal. For those borrowing, there is no more skirting the stress test. They now have to qualify at 6.25% or more. Says West Coast rockstar realtor Steve Saretsky, “Prospective buyers who were planning to go with a variable rate mortgage lost about 10% of borrowing power today as a result of the now higher mortgage stress test.”

Rates will continue to swell.

The US producer price index came in scorching on Thursday at over 11%, meaning inflation will barrel through to the retail level. The odds of the Fed raising rates by 75 bips in ten days is 100%, and a 1% increase is being given 50% odds. Don’t be surprised if that happens, or if our guys go up another three-quarters in September. The chartered bank prime will then be just under 5.5% with HELOCs at 6% and a credit card rate you don’t even want to think about.

As a result of events thus far, house prices are falling in many markets, and soon will decline in every nook of urbanity and Bunnypatch. Nobody’s immune. And I’m talkin’ to you, Victoria and Halifax.

In the mighty GTA the average property price so far has fallen to $1.086 million. It was $1,334,500 in February. This is a decline approaching 19% in a hundred days, rolling back 17 months of gains. By the way, here is realtor Ivan Gorbadei’s tracing of the plop..

Source: Ivan Gorbadei, Re/Max Condo Plus

Typical of current talk is that everything – high rates, high inflation, recession plus houses and food nobody can afford – results from one man’s incompetence or lack of vision. It’s a stretch to lay it all at the feet of Bank of Canada boss Tiff Macklem, of course, when every central bank in the world is facing the same issues and surprises with an identical toolbox of clumsy implements – like interest rates and bond-dumping.

But this fact doesn’t stop folks from throwing mud and deflecting their own role in the real estate crash. Broker and media hound John Pasalis, for example, just climbed on his high horse named ‘Ethics’ and called out Macklem. As if predatory pricing, blind auctions, offer nights and ramped-up realtor FOMO had nothing to do with making housing go crazy…

“It is a lot clearer today that the BOC’s policies, in particular their encouragement for people to take on more debt and their promise to keep rates low for long, helped fuel a housing bubble in Canada. It has also left Canadian households far more indebted than they were before the pandemic leaving households and Canada’s real estate market far more vulnerable to today’s higher interest rate environment.”

So what now, that we’re clearly in the middle of a rate storm?

Financial markets will shed some more as corporate earnings are impacted (US banks reporting now) and traders fret about how deep or long a recession might be. But there’s never been a time when equities have not jumped in anticipation of recovery, and we already know the duration of the typical decline – 17 months (five are already gone).

Real estate is different. Bear markets (20% decline or more) typically take about three years to find bottom, then up to a decade to restore (not taking inflation into consideration). Some people think if the economy goes south CBs will immediately slash interest rates again. But disabuse yourself of that notion. Ain’t happening.

Why? Simple. A rate cut during a time of inflation would just fuel higher prices making the outcome worse. Rates would ultimately have to increase bigly (twice I have had mortgages at 14%) in order to restore equilibrium. Yesterday Tiff said inflation will remain elevated until 2024 – so you can bank on mortgages in the 5-7% (or more) range enduring until then.

Now combine that with the stupid real estate values we achieved in 2021-22, historic levels of household debt plus the fact investors are bailing (and almost four in 10 people with mortgages must renew in the next 18 months – at payments 40% higher) and you know what’s coming. Houseaggedon.

128 comments ↓

#1 BlogDog123 on 07.14.22 at 3:08 pm

in other news,

with Hockey Canada…
It’s the ‘cover-up’ or attitude to ‘sweep this under the rug’ that’s worse than the crime…

#2 AK on 07.14.22 at 3:11 pm

First…

#3 Tripp on 07.14.22 at 3:16 pm

“ and you know what’s coming. Houseaggedon.”

In other words, return to normal. We will learn (unfortunately) the hard way.

Toronto and Vancouver are not London or Paris, and will never be.

#4 Prince Polo on 07.14.22 at 3:20 pm

The shyster cartel needs extreme obliteration, since they obviously can’t police themselves appropriately.

Fiduciary Facilitators are the future of real estate!

#5 Captain Uppa on 07.14.22 at 3:21 pm

Rockstar Realtor Steve Saretsky staunchly claimed many times over that CBs could not raise rates very much as world Debt-to-GDP was way too high for said hikes.

He’s now very quiet.

He also had the red laser eyes. Not anymore.

#6 I’m stupid on 07.14.22 at 3:22 pm

It’s starting… I just got word Menkes capped 2 condo towers in Toronto. I guess that’s the first of many to come.

#7 Søren Angst on 07.14.22 at 3:23 pm

“airmageddon”

https://edition.cnn.com/2022/07/14/business/delta-bags-no-passengers-heathrow/index.html

#8 Ian on 07.14.22 at 3:23 pm

Hi Garth, thanks for the read! I appreciate it! Just keep socking away and investing with Turner Investments. I think one day we will pull the trigger, but probably not before leaves hit the ground and my dog looks for grass.

#9 TurnerNation on 07.14.22 at 3:23 pm

Kanada has not really existed since the regime of T1.
At best it only was a Crown conquest.
Check the back of your coins, Peasants.

Each 1/4 point rise in the rate of interest knocks tens of thousands more people out of the home buying ring.
Kanada is a unique combo of still-inflated home prices + the rising rates.
Behold, the Renter Class. (So, they will own nothing and be happy?)
The Long Game lads, see how it is played.

—— Food supply! You. Will. Eat. The. Bugs. Comrades

https://twitter.com/MarkFriesen08/status/1547018271550996482
“Better start reading labeled folks. They’re putting crickets in your food whether you like it or not.”

—— Health Care? LOL this guy should have taken my advice and hopped a taxi to Niagara USA hospital.
He would be lucky if without permanent damage or a limp or infection. “But it was fixed for free!”??

“‘What century are we in?’ Man waited 4 days in Ontario hospital hallway for surgery to fix shattered leg”
https://www.cbc.ca/news/canada/london/hallway-healthcare-ontario-1.6519209

#10 McSteve on 07.14.22 at 3:24 pm

Everything you said makes sense. But I’ve discovered that people in charge are no longer sensible like they might have tried to be 20 years ago. Everything is so hyper-political, I half expect a Fed/BoC pivot if the heat gets too high in the kitchen

#11 Søren Angst on 07.14.22 at 3:28 pm

Poor financial decisions based on debt will come home to roost.

Right you are Garth.

The Bank of Canada did not make people take on high debt.

Authors of their own destiny.

#12 Melinda on 07.14.22 at 3:29 pm

I sure wish the young buyers in Halifax would read your blog… Real estate is still hot and people on the street are saying that prices will never fall. “Look at all the Ontarian plates; everyone wants to be here!” People are still happy to go well over-asking and to pay peak market prices. They trust the selling agent implicitly when he/she says that there is another offer or 5 on the table (no proof required, of course). We’re very trusting in Nova Scotia. “It’s different here.” “We’re the fastest growing metropolitan area in the country.” “Halifax has always been robust and didn’t fall in 2008; we won’t fall now.”“Things were flat for 10 years prior; this is just catch up.” These poor young people are racking up the debt thinking it’s now or never.

#13 Tim on 07.14.22 at 3:31 pm

More than 15,000 millionaires expected to leave Russia
https://www.theguardian.com/world/2022/jun/13/more-than-15000-millionaires-expected-to-leave-russia-in-2022

Hey maybe they can afford a two bedroom on the West side of Vancouver.

#14 Drop on 07.14.22 at 3:32 pm

So the US 2008 crash did -30%.

Will Canada 2022 be the same drop, or worse?

#15 Dave on 07.14.22 at 3:35 pm

Finally seeing some price cuts on Vancouver Island of 5-10%. Then there are the delusional sellers who think they will be able to sell at pandemic inflated prices. I’ve seen some homes listed for over a month. Some will drop the price, others may take their home off the market–only to find prices much lower a year from now. The party is just getting started. Easy gains on the way up from record low rates, easy decline on the way down now that rates are normalizing.

#16 Richard L on 07.14.22 at 3:37 pm

Houseageddon – I like that word!

#17 TurnerNation on 07.14.22 at 3:41 pm

Did I call it here on Jan 1st or what.

#8 TurnerNation on 01.01.22 at 11:17 am
2022 schedule (Thanks to our sponsor, Fizer):
January: TFSA contribution; 3rd booster
March: RRSP contribution; 4th booster
June: 5th booster
September: 6th booster
December: 7th booster. Annual winter lockdown


— Control over travel…is permanent. Random testing is back.
And Service levels are so bad that there’s an app to prove it so sucks. Betcha so glad we pay the high taxes for this?

https://www.blogto.com/travel/2022/07/random-testing-pearson-toronto-canada-mandatory/
“…Canada’s federal government has announced the reinstatement of mandatory random COVID-19 testing for passengers arriving at any of the country’s four major airports.”

.The Globe and Mail reports in its Thursday edition that Toronto’s Pearson International Airport is launching a new digital tool aimed at helping passengers navigate through the current strained air transportation system. A Canadian Press dispatch to The Globe says that the interactive infographic available on the airport’s website will provide passengers with information on every step of their journey, from check-in and security to customs and baggage pickup. Passengers will be able to click on links to learn about which industry partner (airport, government agency or airline) is responsible for each step, and what each partner is doing to try to fix the delays and backlogs plaguing the system.”
(stockwatch.com)

#18 Linda on 07.14.22 at 3:41 pm

Ivan’s chart looks apocalyptic. RE that sold for $1.3 million may be selling at under $800K by the end of this July? Yowza. That having been said, $800K is still more debt than the average Canadian can afford to take on.

Also interesting is the concession (finally) that high inflation is going to stick around for more than a few months. Wasn’t very long ago that the pundits were claiming inflation would be tamed by the end of this year. Now the prediction is 2024 (maybe). This game of debt laden musical chairs is going to end with a lot of sore butts!

#19 paddy on 07.14.22 at 3:41 pm

Could it be true Garth? Could this really be Houseaggedon? Oh please say it is. Zero sympathy shall be felt for the over indebted…at least on my behalf. All those unnecessary purchases are gonna come back to haunt people. I believe the saying is “The chickens have come home to roost”?

Good point on ol’ Tiffy boy, he was handed a poop show to deal with after Stevesy peace out. All the other countries basically did the same thing. So I guess they all effed up?

I just don’t see how handing out money the way they did and not having inflation the way we have it now wasn’t forecasted or even mentioned before this whole debacle started.

#20 sailedaway on 07.14.22 at 3:50 pm

#3 Tripp on 07.14.22 at 3:16 pm

“Toronto and Vancouver are not London or Paris, and will never be.”

————————————————————-

Amen.

#21 sailedaway on 07.14.22 at 3:52 pm

#9 TurnerNation on 07.14.22 at 3:23 pm
Kanada has not really existed since the regime of T1.
At best it only was a Crown conquest.
Check the back of your coins, Peasants.

——————————————————-

One no longer uses the term “peasants”
we much prefer ‘plebs”

Elisabeth II

#22 Shawn on 07.14.22 at 3:53 pm

There is no lenders strike

The real ugly would be if lenders lost their apetites to lend. There is zero sign of that yet.

Meanwhile “If you will lend it, he will come and borrow it”.

There are always plenty of people willing to borrow if they can possibly qualify. They will worry about the consequences later. If the lenders were suddenly a lot more reticent instead of eager to lend, that would change everything.

#23 Shawn A on 07.14.22 at 3:58 pm

Very interesting indeed to read that those on Variable rate mortgages will not generally face immediate hikes in payments.

That will delay the pain for a lot of people.

Those on HELOCs get hit immediately.

I just can’t see how retail spending can fail to decline. If groceries and gasoline are up and HELOC payments are up. Something’s gotta give.

Retail sales should be down easily 5 to 10% in volume. I will watch for the data. Watch those credit card balances too.

#24 WTF on 07.14.22 at 3:59 pm

Yes, saw the Pasalis comment on twitter yesterday. Not too self serving…..”today’s higher interest rate environment.”

Was compelled to point out to him that interest rates are still abnormally, historically, low. Not sure WTH he is blabbing about. Oh wait, his kingdom shrinking? Profits tanking…..

But no, As a house sales professional his only concern is for you, the cherished commission.

Im sure he is the canary in the coal mine and it will be constant from the RE industry for some time. The wailing will be epic. Then Starbucks gets some new employees and Audi gets their cars back.

Pretty sure the John-ster hates you more today

#25 Old Boot on 07.14.22 at 3:59 pm

Feeling a little better about gifting my daughter and sil enough money to pay off his debts last winter, which he had nursed for the last decade. It rubbed me the wrong way, but it was the most sensible use of the money and still serves my daughter’s future financial well-being.

Now if they manage (as promised) to save the former high interest, unsecured debt payments for a dp on a house, they will be in prime position to capitalize on the predicted market bottom in a few years.

Of course if they get divorced instead, he had better learn to cross busy streets quickly, with his head on a swivel.

#26 Arctic Gringo: Qalunaaq on 07.14.22 at 4:01 pm

What are the stats/numbers of buyers whom choose to get at 10-year mortgage when rates where at bottom? Weren’t 10-years hovering around 3.5% less than 12 months ago?

Seems like a genius move back then (and, I think, Garth suggested 10’ers to a select few buyer-types at the time??).

Next crisis – global US dollar debt. Maybe.

#27 Stone on 07.14.22 at 4:19 pm

The odds of the Fed raising rates by 75 bips in ten days is 100%, and a 1% increase is being given 50% odds. Don’t be surprised if that happens, or if our guys go up another three-quarters in September.

———

Nothing to stop the BoC to squirt another increase between now and September. Has happened before and the BoC is now playing catch up so it’s a possibility.

Also, did you and John Pasalis kiss and make up? No mention today that he hates you.

#28 West New West on 07.14.22 at 4:26 pm

Houseageddon? Is that one step below Housepocalypse?

#29 The Original Jake on 07.14.22 at 4:29 pm

#3 Tripp
Toronto and Vancouver are not London or Paris, and will never be.

But… haven’t you heard Toronto is the “new” New York and Vancouver Hong Kong and prices never go down lol. We will see this Fall what happens. I’m expecting listings to hit records and inventory pile up as prices melt.

#30 Big Bucks on 07.14.22 at 4:30 pm

“The snap back is certain” but it might take decades.The FTSE is lower than it was in late late 90’s and the Nikkei is still down 30% from over 30 years ago.

#31 Mike on 07.14.22 at 4:32 pm

Being a central banker in Canada one does to appear relax and ‘appy as well as nonchalant and insouciant…so inflation ? …mange les maisons!

#32 Tom from Mississauga on 07.14.22 at 4:34 pm

Peter Zeihan absolutely predicted this, including the Ukraine war.

https://youtu.be/Ac0BOavsWaY

#33 DON on 07.14.22 at 4:35 pm

#5 Captain Uppa on 07.14.22 at 3:21 pm
Rockstar Realtor Steve Saretsky staunchly claimed many times over that CBs could not raise rates very much as world Debt-to-GDP was way too high for said hikes.

He’s now very quiet.

He also had the red laser eyes. Not anymore.

*******

Yup.

I used to follow him on twitter for a bit. Basically repeating the main themes of Garth’s blog, where he surely got all of his twitter material from.

Victoria…trying to find a SOLD sign is getting more and more like trying to find waldo. The more affluent areas like Oak Bay may still be selling?

Cumberland, (Van Island) PRICE REDUCED signs are popping up as properties sit on the market. Rental buildings going up in every community that I drive through.

Angst and disbelief combine to create the current mood. Tofino is not as busy as previous years. Prices for hotel rooms are stupid at most if not all places on the Island, not just Tofino.

The weather is great though. Time to enjoy the little things.

#34 RichardTO on 07.14.22 at 4:37 pm

Another anti-Russian, pro-war European government just fell: Italy’s Mario Draghi was punted by the rapidly expanding chorus of Europeans coming to their senses that hitching their wagons to the Anglo-American Imperial crusade against Russia is pure folly.

#35 DER on 07.14.22 at 4:38 pm

Yes, it’s happening in Victoria as well although local real estate board is trying to hide it…they share the increase in listing numbers (approx 1000 units over last year or 49%) and sales numbers ( down approx 40% over last year) but they keep showing the Housing Price Index ( HPI) going up. I requested information on how the HPI is arrived at from both the Board and an experienced agent and no one seems to know how it’s calculated or even WHO calculates it. Perhaps someone can enlighten me? However, I noticed average sales prices are down about 6 %.
Just the tip of the iceberg as I constantly see new listings, price reductions and “removed from market” notices.
Stay liquid…I suspect there will be some good buys about 18 months from now.

#36 The Original Jake on 07.14.22 at 4:38 pm

“we already know the duration of the typical decline – 17 months (five are already gone)”

S&P peaked early Jan so then 6.5 are gone no?

#37 Mandatory and random in the same sentence, how Trudeau and soviet on 07.14.22 at 4:43 pm

DELETED (Anti-vaccine)

#38 Crystal ball futurist on 07.14.22 at 4:43 pm

Why is ZPR going down. Should it not go up with the 5 year bond? Or does it lag for the rate resets to reset? Any opinions?

#39 Stephen on 07.14.22 at 4:45 pm

I would think the FED controls and/or talks to the other central banks in the Western world at least.

They are all to blame for the corner they painted themselves into and see no easy way out.

But don’t worry folks…there will be no punishment for their expertise, only Iceland had the guts to do that.

Long live the FED er Banks!

#40 Leftover on 07.14.22 at 4:50 pm

Had a 13.75% mortgage in 1989, renewed at 8.5% in 1992. So 3 years, and the whole time the economy felt like the pits.

Still, 8.5% was like robbing a bank.

Can’t imagine what it must feel like to be on the hook for $800k at 2% with a $150k income, to renew next year. Bet that $150k income is what it takes to be considered “rich” by T2 and the gang, a tax cow to be milked.

Oh, the horror.

#41 Diamond Dog on 07.14.22 at 4:51 pm

Variables are likely pushing 4.5% now. The big question is where they top, how long it will plateau for and what is the 5 year variable rate average.

That said, knowing that Canada’s CB follows the Fed most of the time, “if” the Fed is correct with a 2.5 to 2.75% Fed rate being neutral, how far past neutral do they need to go? How long can or will they sustain that for? When will high inflation break?

I’m going to go on a limb and say inflation is near peaking in the U.S. now. I don’t see CPI going into double digits from here. I also don’t see the Fed going past 3.5%. I think they’ll remain at a .75% hike for July and raise another .5% in September regardless of what inflation does. Why do I say this, because they are at 1.5 – 1.75% now, .75 puts them at 2.25 – 2.5%, another .5% hike in September puts them at 2.75% – 3.0% and perhaps a .5% puts them at 3.25% to 3.5% in October.

Or, they could squeeze in an extra .25% somewhere, putting them at 3.5 to 3.75% in October and ride this number into the mid terms.

Can they go higher? Not without a great deal of difficulty. Once mid terms are over the Fed will likely try it sideways at 3.5% for a while, knowing they are past neutral (unless they lied to everyone about that). Assuming neutral is at 2.5 – 2.75%, 3.5 would induce a recession which would have to last long enough to reverse prices.

In theory, we should see a high inflation scenario with a Fed rate at 3.5% into next summer in an effort to break price behavior. That might work. But if the Fed reduces rates after the midterms and begins to stimulate again, high inflation will be around til’ 2024. This would be a grave mistake to do so.

There are 2 solid reasons why the Fed will keep the Fed rate at 3.5%. One is, if the Fed tries to lower the rate from here, Biden has the option to appoint one more governor to the Federal reserve, but he would still have to get his nominee past the senate in any case so it comes down to the midterms… which the Republicans will win. Hmmm.

Another centers on the question of currency. If the Federal reserve does in fact top out at 3.5% and drop their rate below neutral and begin to stimulate the economy past the mid terms, the U.S. dollar will begin to trend down and likely keep trending down. It would be good for world inflation and commodity prices, but bad for U.S. inflation.

Lets remind, the U.S. dollar has outperformed world currencies everywhere having a positive effect on U.S. inflation although one wouldn’t know it, because the U.S. runs trade deficits and is a debtor nation. Where inflation would be without the strength of the dollar…. the reverse happens when the dollar weakens. There’s a lag to it (I’ve heard 5 months, haven’t confirmed). The U.S. dollar trending down would keep inflation running higher meaning there is a very real reason why the Fed would want to find a spot to induce a recession and keep it there until data says otherwise.

As for mortgage holders floating variable in Canada, 90% of the time or more, our CB follows the lead of the U.S. Fed. We are at an easy 4.5% variable mortgage rate now… floaters could be looking at 6+% but hopefully by next fall rates will come down below 5%, probably somewhere around 4% or less in 2024 where mortgage holders should lock into terms.

There is a good chance that Canada’s CB rate rises higher than the Fed. There is also a chance that if inflation remains high through to the latter half of 2023 and into 2024, risk of bankruptcies begin to erode bank profits, systemic risk sets in and the spread between variable and fixed terms narrows thanks to a bust in housing. This is the worst case scenario for those floating on variables, one of high inflation, the Fed doesn’t act in the nation’s best interests and recessions become worse than most imagined.

All things considered, if I had a 5 year term up for renewal I would float but be prepared for variable rates as high as 7% in Canada just in case with a realistic hope of locking in at 4% or less in the latter half of 2023, early 2024.

Remember, CB’s can’t tighten credit forever.

#42 Quintilian on 07.14.22 at 4:58 pm

“They never expected inflation to pop from 1% to 7% in a year. Nobody did.”

That’s not true Garth.

Some of the titan minds like myself, argued at nauseum even with your weekend guest bloggers, that inflation was not only understated, but was about to engage the high gears.

Some of the lesser minds even declared hyperinflation.
The hyperbole naturally needs to be excused, as the knowledge source would have been from talk radio shows ,and not institutions of knowledge.

#43 AK on 07.14.22 at 4:59 pm

“Broker and media hound John Pasalis, for example, just climbed on his high horse named ‘Ethics’ and called out Macklem.”
===================================

After hiking the bank rate a whopping 2.25%, Tiff Is no longer a friend of the real estate pimps.

#44 tbone on 07.14.22 at 5:02 pm

Sure hope those realtors return their audi to the dealer soon.
Then, hopefully, the dealer will stop pestering me to sell mine back to them . I own mine .

#45 Grumpy Cat on 07.14.22 at 5:06 pm

GOOD

#46 Barry on 07.14.22 at 5:13 pm

Garth, with a lot of people blaming the BOC and the federal government, trying to claim they’re up to 100% responsible for inflation and all related economic problems, I’m curious what actions you would prioritize if, by some magic, all federal political parties agreed to make you finance minister for the next five years and give you a say on BOC policy. I mean, other than throw up at the overwhelming responsibility. Thanks.

#47 willworkforpickles on 07.14.22 at 5:17 pm

BANNED (Abusive)

#48 Mike hall on 07.14.22 at 5:18 pm

Tiff has no credibility, surprised to see you quote him..!

Mike

I didn’t. – Garth

#49 Don on 07.14.22 at 5:20 pm

Maybe I will look at a house in 2024. So I am gonna use all these mortgage payments, interest, and property tax and travel IN Canada these two summers. Not go anywhere else. I would rather spend it on Canadian hotels and farm products because we have depleted our Canadian Peso by feeding failed Ukraine war experiments.

#50 OK, Doomer on 07.14.22 at 5:30 pm

As if predatory pricing, blind auctions, offer nights and ramped-up realtor FOMO had nothing to do with making housing go crazy…
++++++++++++++++++++++++++++++

I don’t buy that these were the causes. They were merely the symptoms.

The ultimate cause was free money.

The market reacted to free money the same way that volunteers at political campaigns react to free beer. All kinds of shenanigans until the beer runs out then everyone goes home with a whopping headache.

Where did I say ‘causes’? I have oft written about about the inverse relationship between rates and house prices. – Garth

#51 Mr Wenslydale on 07.14.22 at 5:34 pm

Mr Turner was right, we should have stayed away from the interwebs this week.

I get a little protective of virtuous words like “ethics” when Realtors try to use them. I suppose it’s all relative for the seemingly few good ones.

When all this is said and done, when Canadian RE, and peoples finances, look like a scorched and smoldering forest after an oh-so-necessary wildfire, we should be amazed (but not surprised) if that profession escapes some serious scrutiny. This is a group that resists external regulation because they can police themselves: after all, they signed a… code of conduct.

They were the gate keepers and enablers of this mess. This was their wheelhouse, it happened on their watch, it was their responsibility. Blaming policy for the transactions they mediated, my fat foot.

#52 Old Ron the Realtor on 07.14.22 at 5:41 pm

I can handle 6% mortgages. Been there done that. But i heard something today that sent chills through my bones. The LCBO is raising prices !!!

#53 millmech on 07.14.22 at 5:43 pm

Mr Pasalis is just doing damage control, once Canadian homeowners who bought in the last couple of years get financially eviscerated they will be looking to pin the blame for their own financial self immolation on someone, anyone but themselves.
Just go to any home/personal finance sight and look at how those that were crowing about variable rates being the smart move over fixed rates are now claiming to have been suckered, swindled, deceived etc.
Hopefully people will learn something from this about themselves, FOMO, sound financial planning but I doubt it.
Best to be in the legal profession now as litigation will be the money maker going forward both in real estate, bankruptcy and family law as the people look to get out from under financial duress in all these areas in the next five years.

#54 NOSTRADAMUS on 07.14.22 at 5:50 pm

TIC-TOCK- TIME RUNS OUT.
As people amass more and more of their life savings later in life they have less and less time to grow back their losses. The extent to which they are protected from down cycles becomes the most defining element of real life investment outcomes. Once asset markets do mean revert at the end of secular over-valuation periods like 1929, 1968, 2000, and now 2022 it typically takes more than 20 years to recover capital losses thereafter. Question, old-timer, do you have 20 years before the sands of time run out?
For retirees there are big problems on the horizon. The cruel result of all this, is that those who are least risk tolerant have no time to make back loses, and consequently are today, the most risk exposed. A huge credit boomerang is heading back to hit when Canadian old timers can least afford it. For a lot of people, their golden years will be a difficult time.
The number one reason people involved in a vehicle accident give is “I didn’t see it coming.” Is this not also true for economic conditions, debt—debt—debt—???
Instead of planning to retire, find a job you love because chances are, you’ll be at it for the rest of your life. Steady lads, hold the line.

#55 Graeme on 07.14.22 at 5:55 pm

The real economy IS going south and while they’re still hiking now, it will need to end once the next big financial crisis ensues. The path we’re on is obviously unsustainable. It’s just a question of how it shakes out. Hiking until everything perfectly comes into balance (“soft landing”) is a very narrow path in the scope of possibilities. Hiking to quickly get ahead of inflation is clearly not happening else they would have raised 10%. What else is left? They keep getting further behind inflation while the hikes add even more to the overall cost structure of everything. It is possible that the relationship between financial assets and real stuff has gotten way out of wack and is now in the process of an epic mean reversion, including the suckers’ rallies.

#56 Saint Herb on 07.14.22 at 5:56 pm

“you know what’s coming. Houseaggedon.”

From Garth’s blog to God’s ears.

#57 Happy Gramps on 07.14.22 at 5:56 pm

It’s Happy Time. My daughter listened to me and held off buying a house for the last five years. Now she is going for it. I advised her to put an offer it 35% lower than the asking price, and include a house inspection. If they counter go back with 40% reduction, etc. Now she is in the drivers seat. Owners previously milked the system with the realtors, time to burn them for this greed.

#58 Carlyle on 07.14.22 at 5:57 pm

What is “return to normal”

$275,000 for a Mattamy townhouse that I paid in 2009? $189,000 for the same townhouse my brother paid in 2005?

It goes for something like 700k today.

If the return to normal isn’t 300k ish I still can’t buy at a safe 3X family income ratio.

Are 300k townhouses in GTA back on the table?

#59 Hindsight on 07.14.22 at 5:57 pm

There’s a reason why it’s the exact same for all central banks…..eyes wide open Garth, eyes wide open!!

#60 OK, Doomer on 07.14.22 at 6:04 pm

Where did I say ‘causes’? I have oft written about about the inverse relationship between rates and house prices. – Garth

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

True. The point that I was making (poorly) was that all of the nastier sides of this are side effects of having a free market.

In a free market, people are free to be as stupid or as greedy as they want. Eventually, the market corrects for this.

I don’t think legislating against these behaviors is worth it, as people will just find other dumb stuff to do when the market is at it’s extremes.

#61 Rogerhomeinspector on 07.14.22 at 6:05 pm

#3 Tripp

Bang on. The reasons that truly make say Berlin expensive are far different than what makes Toronto or Vancouver different. Living on top of each other in Canada is a choice- Germany? Not so much.

Germany-
Pop.- 83.2M
Land Area- 350,00 km2

Canada-
Pop.- 38.1M
Land Area- 9,985,000 km2

Less than half the population in an area almost 30x as large. And the Germans can drink beer on the sidewalk. That’s got to be worth another $100k in mortgage on its own.

#62 Kurt on 07.14.22 at 6:09 pm

#47 willworkforpickles on 07.14.22 at 5:17 pm

Garth is the most open-minded moderator I’ve ever encountered. If you can’t stay within the very wide lane he provides us, you need to go away and stop bothering him. Go to 4chan or something if you need to express yourself that way.

#63 Old Ron the Realtor Part Deux on 07.14.22 at 6:10 pm

Most of the buyers out are using 60 to 90 day old pre approved Mortgages. They were 1.5% lower than today. These rates will expire around Labour Day, then the affordability issue really starts to gain traction.

We will have a Mexican standoff. Sellers don’t have to sell, particularly if they have a low rate mortgage or no mortgage, and buyers can’t qualify for what the Sellers want. Keep in mind that a $700k mortgage @ 5% requires $153k annual household income to cover PIT+Utilities (39%GDSR) An income that is in the 95th percentile of all Ontario.

#64 Nesty on 07.14.22 at 6:29 pm

CBs have allowed wealth growth to decouple from economic (GDP) growth via monetary policy. This was not always like so; it has been a deliberate choice in the last few decades. Now the chickens have come home to roost via inflation.

Take the Fed for instance (the most important of all and to which the BoC is pegged):

https://www.epsilontheory.com/hollow-men-hollow-markets-hollow-world-2/

#65 Penny Henny on 07.14.22 at 6:37 pm

The big 5 banks are yielding almost 5% as of close today.
Buy more and get 4.84% tax free or buy GIC and get ~4% ? taxed fully.
Easy decision, but is there more downside? Who knows.

Still above water for the YTD, but all the gains are dividends and capital gains are down a titch.
Not complaining though, up 2.5% is better than down 2.5%.

#66 Jesse on 07.14.22 at 6:37 pm

#4 yvr_lurker on 07.13.22 at 10:32 am
However, let’s be a little humble here. Nobody would have predicted back in December what inflation would have run this hot (causing rates to need to rise this high and this quick).

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

Virtually everyone was screaming back in March 2020 that lockdowns followed by money printing (don’t forget about CERB) would lead to rampant inflation, business failure and all kinds of supply chain issues. This was basic common sense, the entire business community around the world was against this from DAY 1. Once CERB started pretty much everyone was saying this would lead to insane amounts of inflation… don’t pretend for even one second that what we’re seeing now wasn’t predicted.

#67 Dead Cats Bounce on 07.14.22 at 6:47 pm

It’s over.

#68 Quintilian on 07.14.22 at 7:13 pm

#58 Carlyle on 07.14.22 at 5:57 pm
Are 300k townhouses in GTA back on the table?

Maybe, maybe not.

But perhaps the curmudgeons on this blog might tell us if at the time when they bought, if they could possibly believe that mortgages would someday be at less than 2% ?

“Impossible is only in the dictionary of the ignorant”

#69 Rita on 07.14.22 at 7:14 pm

Who said anybody has to have their money in stocks, bonds, mutual funds, real estate, ETFs, gold, diamonds, whatever else. GICs are for the timid. Higher interest GICs are competition to all this other stuff.

#70 CL on 07.14.22 at 7:19 pm

I think CB’ers are incompetent and painted themselves in to a corner with rates too low for too long even minus the pandemic. They knew inflation would come with too much stimulus and millions of people with record forced savings from things being closed for so long. However, nobody forced people to take on the debt that they did either.

I’ve also made many wrong decisions but those decisions were also not forced upon me. So, nobody to blame but myself.

#71 Wrk.dover on 07.14.22 at 7:20 pm

#65 Penny Henny on 07.14.22 at 6:37 pm
The big 5 banks are yielding almost 5% as of close today.
_________________________________

RY down 5.63% today. You are already underwater on that plan.

I never dreamt I’d see a move that deep from our infallible big bank!

#72 The Original Jake on 07.14.22 at 7:36 pm

#40 Leftover on 07.14.22 at 4:50 pm
Had a 13.75% mortgage in 1989, renewed at 8.5% in 1992. So 3 years, and the whole time the economy felt like the pits.

I had a “builder’s special” at 12.75%. Bought in ’87 and sold in ’95. Zero capital gain. The last 20 years has been a bull market, throw the dart, everyone is a winner. That’s about to change again.

#73 45north on 07.14.22 at 7:38 pm

Linda Ivan’s chart looks apocalyptic. RE that sold for $1.3 million may be selling at under $800K by the end of this July? Yowza. That having been said, $800K is still more debt than the average Canadian can afford to take on.

I’ve never seen anything like it. If the RE that sold for $1.3 million sells for $800K the banks can draw a line under the transaction. Somebody takes the loss of $500,000 and somebody else signs up for $800K. Problem solved.

#74 HateTiff on 07.14.22 at 7:39 pm

But Garth, how is it fair that the Boomer and GenX got that long period of low interest to build up their outrageous wealth and not us youngster? The entitled generation(s) I would say.

#75 Observer on 07.14.22 at 7:40 pm

#66 Jesse on 07.14.22 at 6:37 pm

Once CERB started pretty much everyone was saying this would lead to insane amounts of inflation… don’t pretend for even one second that what we’re seeing now wasn’t predicted.

^^^^^^^^^^^^^^^^
Would you extrapolate that our PM is responsible for world-wide inflation post-pandemic? Or that he could have prevented it?

#76 Flop… on 07.14.22 at 7:56 pm

These guys need to get a bit more Flop Drops into their diet…

M48BC

“Vancouver realtor cites “massive price drops not getting reported” in housing market.


What’s not captured in these reports is what Vancouver realtor Marty Majerski describes in a note to the Straight as “some shocking stats”.

“There have been MASSIVE price drops from the peak of the market in the early part of this year, and they are simply not getting reported accurately by our real estate boa[r]d,” the REMAX Crest agent wrote.”

https://www.straight.com/news/video-vancouver-realtor-cites-massive-price-drops-not-getting-reported-in-housing-market

#77 BoE on 07.14.22 at 8:04 pm

If you think the US and Canada are far behind on the inflation curve then look at the Bank of England. In June they raised the rate only .25% for the fifth straight time , rate is only 1.25% now but inflation is 9.1% and rising ? Apparently the BoE has never raised rates by more than 0.25% at a single meeting in its 25 years of independence over monetary policy. Time to get serious Mr. Bailey.

#78 Yukon Elvis on 07.14.22 at 8:37 pm

#71 Wrk.dover on 07.14.22 at 7:20 pm
#65 Penny Henny on 07.14.22 at 6:37 pm
The big 5 banks are yielding almost 5% as of close today.
_________________________________

RY down 5.63% today. You are already underwater on that plan.

I never dreamt I’d see a move that deep from our infallible big bank!
++++++++++
Back up the truck and buy the Big 5 in the dip.You get paid a nice tax advantaged dividend while u wait for the market to recover and give u a nice capital gain as well. No brainer.

#79 Ohm on 07.14.22 at 8:42 pm

Have not posted this many posts in months and probably to the relief of many I will not again in a numerous fashion, but I feel these are exceptional times and many (including I) need help. This is not normal and nor should any of us accept this….

I happen to come across the recent release of Lord of the Rings trailer, quite interesting for those who are interested.
https://www.dailymail.co.uk/ushome/index.html

I enjoyed the quote ” we either move forward or die with it’! Interesting, anyways, good night all!

#80 Cici on 07.14.22 at 8:54 pm

To be fair here, in addition to Garth, I’ve been following John Pasalis and Steve Saretsky for quite some time and neither of them are shills or deserve any hate.

John seems like a very good and very decent realtor. And he’s also been complaining about the bank rate and housing policy for over year, even when times were good. I seriously believe he loves real estate and is extremely devoted to helping Canadian’s find decent housing for themselves and their families. In addition, he’s stuck his neck out several times over the past two years, taking aim at certain realtors’ associations, institutional buyers, federal government housing programs and lax lending practices, while also warning people not to get in over their heads. It’s all over Twitter.

Steve Saretsky is “data driven,” meaning he only looks at what’s happening on the ground and comments on that and where he thinks it will lead things in the short-term. He apparently used to provide longer-term predictions that were quite bearish in tone, but gave up on that after being proven wrong time and time again.

In any case, I listen to both and don’t always like everything they have to say, but still very much appreciate their experience and insight. They are both sharp and professional, and I’ve learned a lot from them. If you want to check them out on YouTube, they recently started a monthly Move Smartly Roundtable aimed at prospective buyers, and Steve also hosts an awesome weekly macro show called the Loonie Hour featuring two other interesting blokes, both CFAs. It’s a wild and really fun ride ;-)

And of course I love Ron Butler too. He is also awesome and very dedicated.

But who do I love most? Could it be GT?…shhh, don’t tell Dorothy ;-)

#81 Victor Llearna on 07.14.22 at 8:57 pm

It took over a decade in the making, but those annoying, entitled, dillusional, stupid, braindead, liberal-voting sheep that ran up the price of houses are finlly about to learn their lesson.

#82 Damifino on 07.14.22 at 8:58 pm

#75 Observer

Would you extrapolate that our PM is responsible for world-wide inflation post-pandemic? Or that he could have prevented it?
———————————–

He can do exactly as much about world-wide inflation as he has already done about climate change.

#83 DJT on 07.14.22 at 9:04 pm

I remember growing up the the 70’s and 80’s and the high interest rates. At one point I asked my Dad how people deal with the high rates?

He said, ‘when times are tough, its not that interest rates are high, its that no one has any money to lend, no matter what the rate’.

#84 Al on 07.14.22 at 9:05 pm

After a long wait and thought, the BoC decided to get serious about inflation, but something tells us that the Liberals will reverse and lead us into a big economic upheaval

#85 Randy on 07.14.22 at 9:40 pm

DELETED (Anti-vaccine)

#86 bob on 07.14.22 at 9:42 pm

Could you please define what Houseaggedon looks like, in terms of time and percentage losses?

e.g. in prior years, you felt houses would not crash, perhaps lose e.g. 10%, 20% of its value and have a slow burn for say 5-8 years.

What do you see happening now? e.g. another 20% drop within the next few months? 30% drop? Then what happens in 2023 and beyond?

Or is Houseaggedon means we’ll prices back at 2020 levels (i.e. say 80% drop) in the next few months?

#87 Ballingsford on 07.14.22 at 10:28 pm

Hi Garth. Purchased a new townhome last October and now need to get a vinyl fence built. Cost about $6000.

Money seems to be getting tighter, don’t have as much disposable income.

My TFSA in B&D is down. Should I withdraw some of that now or put it on my LOC (not Heloc because I havent gone there), and wait for the turnaround and then withdraw?

I also have other options to come up with $6000. Chequing acct for mortgage payments is sitting at $10,000, but I’d like to keep that as a buffer.

And theres also other accounts besides RRSP to dip into, but not good.because I have to pay tax on it. Then theres the account to cover next years RESP contribution, but would rather not use that.

I’m thinking of.just using LOC and then pay it down.

Anyway, your advice.would be appreciated. After the fence, I’m not spending any more money for large items for a while. I prefer not to carry balances.

#88 John Figueria on 07.14.22 at 10:45 pm

Saretsky and Pasalis are both clowns.

Pasalis makes a living selling real estate well constantly saying on Twitter “I feel so bad for regular people/first-time buyers.” Yet, here he is, making money at the margin like everyone else. What what I say, not what I do.

Saretsky was calling for a market crash after the pandemic. Then the market rallied. He then constantly commented that the BoC/Fed wouldn’t raise rates materially. Yet here we are. Wrong about two major calls in two years.

Both Saretsky and Pasalis are influencers in a culture filled with young people desperate to be in the real estate game. Canada has a real estate obsession problem, these guys are both evidence of it.

#89 Froggy on 07.14.22 at 10:49 pm

Hi Garth good evening #13 what debt at 7 % rate nova Scotians won’t qualify for 300,000 in debt on the high side they weren’t hit in 2008 but not they’ll fly out of the park

#90 Balmuto on 07.14.22 at 10:57 pm

Houseageddon will be confirmed once $500k in Toronto buys you more than a parking space.

Until then…

#91 Michael in-north-york on 07.14.22 at 11:25 pm

#75 Observer on 07.14.22 at 7:40 pm

#66 Jesse on 07.14.22 at 6:37 pm

Once CERB started pretty much everyone was saying this would lead to insane amounts of inflation… don’t pretend for even one second that what we’re seeing now wasn’t predicted.

^^^^^^^^^^^^^^^^
Would you extrapolate that our PM is responsible for world-wide inflation post-pandemic? Or that he could have prevented it?

===

Obviously, our PM cannot influence much larger U.S. or E.U. Rather, we got into the same situation as them, and opted for the same solution.

Either pay people for not showing up for work, incur a large deficit, and accept high inflation down the road. Or, mandate the closures without giving support to the affected people, and see them working illegally and driving the infection rate to the point where the hospitals can’t treat all patients. No real choice.

No need to blame T2 on this occasion, he opted for the lesser harm. But we need to stick it to some of the lefty commenters who claimed that the government can print as much money as it wants, and never face any consequences. Everything comes with a price.

#92 the Jaguar on 07.14.22 at 11:51 pm

Reading through the comments here or elsewhere, it’s back to the old blame game of ‘Round Up The Usual Suspects’. If misfortune lands in the lap of the greedy, the speculators, ‘instant gratification cause I am owed it’ types’ etc.. . ..well…it just has to be someone else’s fault.

It’s Tiff, or the realtors, or the government that doesn’t build enough housing, or the offshore investors/immigrants, or blame it on a full moon.

Anybody that wants to waste their time on that exercise can burn up the last of the fuel in their shuttlecraft of a life, but it won’t get them a seat back on The Federation Starship Enterprise. Be sure to repay your undeserved CERB payments ( where taken falsely) before you detach from the mothership you lazy bastards. ( Yeah, I said that. And I am not taking it back.)

I knew this guy. He was from Scotland, where a lot of the smartest people in the world come from, including Border Collies and some ancestors of the Jaguar.. ( the Viking DNA, lol).

He told me it was a Scottish tradition that all debts should be paid off before the start of the New Year.
Not always practical in modern times, but it says a lot about living within one’s means, trying to live a simple life and enjoy everyday pleasures that are more about people than things, and not jeopardizing your financial safety by taking on unacceptable risk. Limit the footprint you occupy and enrich it with art, nature, people. Not square footage or stuff you don’t really need.

Well, that disappeared like a fart in a hurricane some time ago.

Sometimes one is given an opportunity to get a really close up view of what’s really going on in people’s lives.
On a macro and micro level. It isn’t always pretty, and while some might say it is impolitic to judge, the reality is that it’s hard not to do that. People often make their own trouble, though just as often they get bad advice and act on it.

And while we all navel gaze on what’s going on in our own country the jungle drums are beating louder everyday. Like these headlines about certain countries applying to join the BRICS group ( the five major emerging economies). Especially one particular one.

I guess I am going to be deleted for that reference, but there are some interesting things at play in the world…………….. Good luck to everyone.

#93 Rent the Podium on 07.15.22 at 12:20 am

House prices are unlikely to fall in Victoria. People wash ashore daily from the mainland or Eastern Canada with bags of money to throw at houses.

#94 Nonplused on 07.15.22 at 12:36 am

We have to be careful of our use of words here:

“Yesterday Tiff said inflation will remain elevated until 2024 – so you can bank on mortgages in the 5-7% (or more) range enduring until then.”

“Inflation” remaining “elevated” means, in clearer words, “prices will continue to rise at a rapid rate “until 2024”. It doesn’t mean prices will remain where they are now (high) and then fall back down (to what we thought was normal). Inflation is a year over year change, or just generally a measure of the rate of change. It is not an absolute number. So Tiff is saying prices will continue to rise until at least 2024, at above 2% per year (elevated). They ain’t coming back down, not never. That would be deflation.

Housing and stocks do not factor into the CPI directly. They use rents for housing. So don’t expect rents to come down.

The PPI coming in at 11% is interesting. Double digits is impossible! At least that is what all the pundits told us. Can it go higher still? It’s possible.

Buy all the things.

#95 Ben Sharp on 07.15.22 at 12:42 am

You say that it’s unfair to lay the blame at one man’s feet, but I disagree. During the period which coincides with the Trudeau- Obama time frame we have the very influential Klaus Schwab at the center of a globalist nightmare web which picked climate change as a catalyst for a reorg of the world.

Klaus and all the little sycophants have been busy instituting the New World Order, didn’t you notice and alignment of policy and interest? Trudeau isn’t doing some individual evil brainiac thing, Justin is no genius, he’s just following along for an occasional pat on the bum. This globalist thing on finance and political power swept up Marc Carney, Joe Biden etc etc and they’re all working for Klaus. So dude, when you say there isn’t just one guy to blame, think about Klaus and his WEF.

Get help. – Garth

#96 MalcolmM on 07.15.22 at 12:52 am

“Rockstar realtor” – I hope that is sarcasm.

However I do agree that the BoC was foolish to promise to keep interest rates suppressed for years. We are all adults and responsible for making our own financial decisions but the BoC shouldn’t have been feeding the housing frenzy.

#97 Physicist on 07.15.22 at 5:08 am

Enjoying a nice time in sunny Portugal right now.

Travel experience 100% fine out of Pearson…the media sure loves to scare.

Oh well, time to forget about Toronto and enjoy more sun, food, and drink…..

#98 Cici on 07.15.22 at 7:43 am

Anyone notice the Italian government is teetering on the brink of collapse?

https://www.theguardian.com/world/2022/jul/14/italian-coalition-faces-collapse-five-star-sits-out-confidence-vote-mario-draghi

Scary times. And why is the Dutch government so intent on following the same path that led to Sri Lanka’s recent demise? Everything the globalists have been doing lately seems to make the West weaker but Russia stronger and richer. Please someone enlighten me, I just don’t understand at all what benefits could come from such short-sighted decisions? Would the point be to deprive Russia of nitrogen/potash sales? By starving your own citizens? Or by forcing them to buy their food from potentially hostile nations who are still and will then be buying more Russian potash and in turn getting richer from the proceeds of their agricultural boom? I hope I’m wrong and they’ve put a lot more thought into this?

But watching the Twitter gong show between Trump and Elon has me worried about that our some of the people in power may not be as smart as they’ve told us they were.

And when it turns out that many of Turner Nation’s calls are coming true time and time again, we should start being very worried!

#99 Randy on 07.15.22 at 7:53 am

When people wake up….Big Pharma will be sued into oblivion.

#100 Politicians on 07.15.22 at 8:23 am

All the hate toward Tiff is undeserved. It should be hate toward CBs.

Tiff was just toeing the line of those before him, so granted the anger toward CBs lands at his lap.

Politicians, CBs…they all try to appear different, but they’re all cut form the same cloth. It’s a quality one must have to lie to others because they think they are better than us by having inside knowledge and we just can’t handle the truth. From what you’ve told us over the years, this is why you probably weren’t welcome Garth. You wanted to tell the people things and ask them how they feel about it…HOW DARE YOU! We are politicians, WE TELL THEM WHAT TO THINK AND HOW TO FEEL!
Note, you were under Cons, because they are quite the same as the Libs in the end. It doesn’t mater who’s in power, they all do the same to us.

Just look at the comments on here, or elsewhere. No one buys their BS anymore. It’s over. THEY HAVE LOST ALL CREDIBILITY! Now that is very concerning.

Here, check out the comments on this G&M piece, people look at the guy in the CB seat as a joke:

https://www.theglobeandmail.com/business/article-bank-of-canada-blames-oil-price-shifts-for-inflation-forecasting/

Now…the question to ask is why? Why was he playing this game of fibs, just like the predecessors before him? Pumping and pumping and pumping and now acting surprised?

My theory? Western economies are collapsing. This pumping of billions during GFC (Great Financial Crisis) and now trillions during….ehm….GFC2 (Great Flu Crisis) along with over a decade of emergency rates was because western economies are sick to the core. Future Cancer is the diagnosis. They pull from the future generations to have it easy now. Debt. Piles of it. Everywhere. From every lever to government to a guy who buys a house and 5 years latter sells it expecting to pay $0 for living there, and the next guy to borrow enough to cover his 5 years of interest on debt, repairs, maintenance, water bill, IKEA purchases.

If inflation is a problem, surely 20 trillion of debt added to fight Covid is…crazy problem yet to be faced. And did any of it get spent on a new hospital for the future anywhere in the world? Certainly none of the money in Canada went on anything crazy like new hospitals for the future. Tent ones sure…now folded.

#101 Politicians on 07.15.22 at 8:26 am

And while we’re talking Central Bankers…let’s talk Poloz.

Certainly not innocent. After all, he sat on those low rates for a long time, dropped them, even if he did try to raise them up a bit after.

BUT…didn’t he quit because he just had enough of the fibbing and the deceptions and “The Game”?

#102 Politicians on 07.15.22 at 8:34 am

Of course you all saw this?

https://nationalpost.com/news/canadians-disapprove-of-justin-trudeaus-job-as-prime-minister-and-feel-he-is-divisive-national-opinion-survey-says

I like comments on articles…so here is one from the above that caused coffee to irrigate my nose.

>>>
“Dislike for Trudeau was strongest in B.C. and Manitoba and Saskatchewan, at 60 per cent, followed closely by Alberta and Quebec at 58 per cent.”

A sad day for Ontarian’s.

We didn’t even make the list.
>>>

But the funny thing?
Justin gets the last laugh.

He locked himself into the PM gig for what…another 3 years?

…even after someone found the negative of that black face indecent, did a high-res high quality colour corrected scan of it, so that the entire world would have a high quality photo to enjoy.

#103 Wrk.dover on 07.15.22 at 8:43 am

#87 Ballingsford on 07.14.22 at 10:28 pm
Hi Garth. Purchased a new townhome last October and now need to get a vinyl fence built. Cost about $6000.

I’m thinking of just using LOC and then pay it down.
__________________________________

Think harder. Not having 6 Grand for a vinyl fence is not your biggest problem, if you don’t have 6 Grand for that nickel and dime level of purchase in the float!

How secure is your income, and it’s ability to maintain your lifestyle going forward?

What percentage of your total NET worth would the fence represent when paid for, anyhow?

#104 Chameleon on 07.15.22 at 8:44 am

Happy Feline Friday!

Yo Felix, have you seen? Toronto now demands cats are leashed! LEASH THAT WILD CLAWED BEAST!

https://nationalpost.com/opinion/jesse-kline-toronto-finally-tackles-the-scourge-of-outdoor-cats

The article has a hard opening worthy of copy/paste.

>>>
“It’s a wonderful thing that Canada’s largest city has solved all its major problems, turning Toronto the Good into Toronto the Perfect. No more tents in parks, traffic congestion or gun violence. Gone are the scourges of opioid overdoses, petty crime and overcrowded subway cars. Now, city council can focus its attention on the true terror plaguing the city … hordes of kitty cats roaming the streets.”
>>>

I’m thinking this is all because of dog owners being scared for their helpless dogs, who through past few decades of sitting on sofas and watching TV and getting treats delivered by DogDash turned soft and forgot they were apparently above cats on the food chain. Or maybe it is the infestation of these small annoying barking little fashion lap dogs that die when a cat looks at them.

Now that cats are to be leashed, surely next step is to have cat off-leash areas. I wonder what those will look like!

#105 Re-Cowtown on 07.15.22 at 8:59 am

Just read that Europe expects nat gas price to triple over the winter. Two ways to explain this:

1. Green policies have been a disaster and they need to end immediately.
2. Green policies are just starting to work and need trillions more in taxpayer support.

Anyone care to guess which path Trudeau supports?

#106 T on 07.15.22 at 9:16 am

#95 Ben Sharp on 07.15.22 at 12:42 am
You say that it’s unfair to lay the blame at one man’s feet, but I disagree. During the period which coincides with the Trudeau- Obama time frame we have the very influential Klaus Schwab at the center of a globalist nightmare web which picked climate change as a catalyst for a reorg of the world.

Klaus and all the little sycophants have been busy instituting the New World Order, didn’t you notice and alignment of policy and interest? Trudeau isn’t doing some individual evil brainiac thing, Justin is no genius, he’s just following along for an occasional pat on the bum. This globalist thing on finance and political power swept up Marc Carney, Joe Biden etc etc and they’re all working for Klaus. So dude, when you say there isn’t just one guy to blame, think about Klaus and his WEF.

—————

I know more than just a few people who strongly believe the same nonsense. Try to convince them otherwise, open their eyes, and they start calling you out for being blind / a sheep / libt…

They have one thing in common, they have never travelled out of the country, most have never left the province. Small minded people…

#107 J on 07.15.22 at 10:06 am

“It’s a stretch to lay it all at the feet of Bank of Canada boss Tiff Macklem, of course, when every central bank in the world is facing the same issues and surprises with an identical toolbox of clumsy implements – like interest rates and bond-dumping.”

It’s easy to lay it at the feet of the Bank of Canada. All their friends jumped off a bridge so they did too. They should have known better. We knew better with subprime mortgages leading to 2008 which is why we were in great shape when the rest of the world was crushed. It doesn’t take a rockstar economist to predict that printing trillions of dollars out of thin air and shutting down economic production will lead to shortages and inflation, nor to see that the housing market was in a bubble.

Semi-related: all the MMT folks sure have gotten quiet lately.

#108 the Jaguar on 07.15.22 at 10:07 am

Chickens coming home to roost……

“Historically, when oil prices have gone up, the Canadian dollar has acted as a bit of an automatic stabilizer in the economy,” Macklem said.

“When the price of oil in U.S. dollars goes up, the Canadian dollar tends to appreciate. What does that do? One, it dampens the inflationary shock for households at the gas pump, because it means the price in Canadian dollars doesn’t go up as much because the Canadian dollar absorbs some of that,” the governor added. “The other thing it does is that it spreads the benefits to Canada of a higher oil price because we’re an oil exporter. It spreads it more across the economy.”

Macklem said the link between oil prices and the loonie has broken down for two main reasons: a shift in the longer-term outlook for Canadian oil exports and expectations for U.S. monetary policy.

“We are not getting the historical investment boom in oil and gas that we’ve had when oil prices go up sharply like they have,” Macklem said, adding that the investment has largely gone toward enhanced extraction and not big projects as the country shifts to lower-carbon growth. “You’re not seeing a big investment boom; so, you’re not seeing a big influx of foreign investment; you’re not seeing as much of an increase in demand for Canadian dollars; and so you’re not seeing as much of a boost of Canadian dollar.”

#109 T on 07.15.22 at 10:11 am

#17 TurnerNation on 07.14.22 at 3:41 pm
Did I call it here on Jan 1st or what.

#8 TurnerNation on 01.01.22 at 11:17 am
2022 schedule (Thanks to our sponsor, Fizer):
January: TFSA contribution; 3rd booster
March: RRSP contribution; 4th booster
June: 5th booster
September: 6th booster
December: 7th booster. Annual winter lockdown


— Control over travel…is permanent. Random testing is back.

————

I love how we have our own Q on this blog. So cute.

#110 IHCTD9 on 07.15.22 at 10:20 am

#108 the Jaguar on 07.15.22 at 10:07 am

…so, you’re not seeing a big influx of foreign investment

_______

And we won’t, not until Trudeau is kicking pebbles. Big investment dollars go where they are welcomed and profitable. Neither takes place anymore in post-Trudeau Canada.

#111 Linda on 07.15.22 at 10:21 am

#73 ’45North’ – I agree, the banks most likely won’t be impacted. There is a reason why they continue to post record profits. That posited $500K loss however – if it was a loan from parents, how does that impact the parents ability to provide for themselves in (presumably) retirement? If it is a loss to the young, they should have time to recover but that is one smoking hole in future finances to make up. It isn’t like living expenses stop happening when a financial loss occurs.

#112 @T on 07.15.22 at 10:33 am

I can hear T bleating incessantly and annoyingly from the comfort of my pyjamas

A laptop class warrior with a brain, unlike most govt apologists on this blog.

#113 Shawn on 07.15.22 at 10:44 am

Hey Albertan Carbon Tax Haters

Ontario plus the prairie provinces are on the Federal carbon tax and are getting half a year’s climate action rebate in their bank accounts today.

Amount differs by Province.

https://www.canada.ca/en/revenue-agency/services/child-family-benefits/cai-payment.html

It’s not means tested. We all get it.

If you bought an electric car or stopped driving or went of grid you still get it. That’s the incentive.

Ontario is a good bit lower. Saskatchewan is higher. Check your amount here. Again this is only Ontario and the prairie provinces.

https://www.canada.ca/en/revenue-agency/services/child-family-benefits/cai-payment.html

#114 Damifino on 07.15.22 at 10:47 am

#105 Re-Cowtown

Just read that Europe expects nat gas price to triple over the winter. Two ways to explain this:

1. Green policies have been a disaster and they need to end immediately.
2. Green policies are just starting to work and need trillions more in taxpayer support.

Anyone care to guess which path Trudeau supports?
————————————-

Trudeau obviously supports #1 as evidenced by the government’s recent decision to override its own
Russian sanctions and release equipment needed to ensure natural gas ships to Europe this winter.

#115 Quintilian on 07.15.22 at 10:51 am

#96 MalcolmM on 07.15.22 at 12:52 am
“We are all adults and responsible for making our own financial decisions but the BoC shouldn’t have been feeding the housing frenzy.”

The BOC deceitfully planned/engineered the wealth effect by creating the demand, and supplied the money.

All the while sounding off hollow warnings, to the debt junkies not to take on too much debt, simultaneously, plying them with free money.

Sure, some of the culpability lies with the junkies, but most rests with the BOC, who should have or “ought to have known”.

I call it moral malpractice.

#116 DON on 07.15.22 at 10:53 am

Had a moment in to check out Reddit subjects (interest rates, housing market and personal finance) to get a jist of the crowd thoughts.

So many people ‘think’ without any consideration of the many factors invovled. “I think” seems to negate all need for weighting of the variables and subsequent analysis. A breeding ground for group think and cognitive dissonance.

Like walking through deep mud with plastic shoes.

#117 Shawn on 07.15.22 at 11:15 am

All quiet on the 5 year fixed mortgage front?

Canada 5 year bond unfazed by the 100 beeps. Sitting about unchanged at 3.1% Did the 5 year fixed mortgage rates change this week?

#118 Green Dream on 07.15.22 at 12:09 pm

#105 Re-Cowtown

You ever consider that the green policies are there to help oil increase prices indiscriminately?

“Green” is the best thing to happen to oil. If I didn’t know any better I’d say it’s their own marketing and lobbying effort.

#119 Pbrasseur on 07.15.22 at 12:58 pm

Why do you thing governments support RE so much?

Because it is by far the most efficient and powerful way to stimulate an economy. Nothing even comes close.

Problem is, what is true on the way up remains true on the way down.

So buckle up!

#120 Dr V on 07.15.22 at 1:09 pm

107 J

“Semi-related: all the MMT folks sure have gotten quiet
lately.”
——————————————–

I dont know if I’m “MMT folks” but I do enjoy discussing the topic. The issue for most people is they do not understand it’s a matter of degree, not an all or nothing
proposition.

Same with UBI. Many just write it off without any
consideration.

#121 Michael in-north-york on 07.15.22 at 1:55 pm

#114 Damifino on 07.15.22 at 10:47 am

Trudeau obviously supports #1 as evidenced by the government’s recent decision to override its own
Russian sanctions and release equipment needed to ensure natural gas ships to Europe this winter.
===

Those turbines is a very special case. Canada is sending them to Germany, and letting Germany handle the issue with Russia directly, rather than standing in between. Makes sense. Canada isn’t dependent on the Russian gas, Germany is.

Germany wants to fill the gas storage facilities before winter, and then find other suppliers. Russia could use the absence of turbines as an excuse to stop the gas delivery early and cause troubles. When the turbines arrive, they won’t have that excuse.

Of course, Putin can cut the gas deliveries anyway. Then he will prove to those in Europe who are still hesitant, that Russia can’t be counted on as a reliable energy supplier. Either way, that works for the strategic goal of weaning Europe off the Russian oil/gas dependency.

#122 Chris L. on 07.15.22 at 2:30 pm

DELETED & BANNED (Anti-vaccine, Libel)

#123 Dr V on 07.15.22 at 2:31 pm

121 Michael in NY

Good explanation.

#124 Michael in-north-york on 07.15.22 at 2:36 pm

#120 Dr V on 07.15.22 at 1:09 pm

I dont know if I’m “MMT folks” but I do enjoy discussing the topic. The issue for most people is they do not understand it’s a matter of degree, not an all or nothing proposition.

Same with UBI. Many just write it off without any
consideration.
===

If it’s a “matter of degree” then it’s not MMT, but a good old small/sustainable deficit. The first M in MMT stands for the crazy idea that any level of deficit is just fine.

UBI is an interesting topic indeed, but it doesn’t have to be linked with MMT. You can have UBI + a fully balanced budget, you just need to find a way to collect a lot in taxes.

#125 Dr V on 07.15.22 at 3:38 pm

124 Michael in NY

“If it’s a “matter of degree” then it’s not MMT, but a good old small/sustainable deficit. The first M in MMT stands for the crazy idea that any level of deficit is just fine.

UBI is an interesting topic indeed, but it doesn’t have to be linked with MMT. You can have UBI + a fully balanced budget, you just need to find a way to collect a lot in taxes.”
———————————————

Disagreed on the first point. MMT seems quite clear that the trade-off is with inflation and confidence in the currency. So it’s a “matter of degree” to which you can tolerate or absorb those. MMT also explains how a
“small/sustainable deficit” works and of course has
been applied for decades – the STAB model.

Agreed on the second point. I should clarify that I do not pair UBI with MMT, but mentioned both to
illustrate that many people immediately eliminate both. Yes, taxes would support UBI, just as they support many current programs, which would then either be
eliminated or overhauled. Not intended as a “social justice” solution, but rather an economic one.

#126 Linda on 07.15.22 at 4:38 pm

Michael & Dr V – respectfully, have to point out the flaw in the UBI argument. Which is ‘you just have to collect a lot in taxes’. Who pray tell is going to pay said taxes? A deficit by definition is more money being paid out than revenue coming in. My understanding is that UBI would cover basic living expenses. Why then would anyone work? So they can pay higher taxes for someone else to live off UBI? And if no one is working, where are the taxes coming from? The government could just print money/run a deficit which would not result in UBI for all & a balanced budget to boot.

As for UBI eliminating all previous programs, good luck with that. The day it was declared the special interest groups would be lobbying to keep the program they had in addition to UBI – & vote seeking politicians would agree to do just that. Which Dr V at least acknowledges with the ‘overhauled’ comment. Overhauled is not eliminated!

#127 Lorne on 07.15.22 at 5:02 pm

#101 Politicians on 07.15.22 at 8:26 am
And while we’re talking Central Bankers…let’s talk Poloz.

Certainly not innocent. After all, he sat on those low rates for a long time, dropped them, even if he did try to raise them up a bit after.

BUT…didn’t he quit because he just had enough of the fibbing and the deceptions and “The Game”?
……..
But he did warn all Canadians they were spending too much and utilizing credit to do so. BUT, he never bothered raising interest rates to add some focus to his statements….instead he just assumed that everyone would listen! Very sad.

#128 David Greene on 07.17.22 at 10:59 am

Oh, yeah that’s hilarious. Cause it was only Liberals that ran up house prices. Got any other standup comedy for us?
==================================

#81 Victor Llearna on 07.14.22 at 8:57 pm

It took over a decade in the making, but those annoying, entitled, dillusional, stupid, braindead, liberal-voting sheep that ran up the price of houses are finlly about to learn their lesson.