All over everywhere

The nice reporter from The National was, I sense, a little miffed. A story a few days ago in the National Post had stolen the thunder of his real-estate-nightmare-on-Main-Street story. In it the Post talked about Bunnypatch prices plopping by two hundred grand, and was a nice rewrite of this pathetic blog.

Anyway, he pressed on. The state broadcaster is hot on the trail of broken Millennial dreams and newbie buyer massacres because these events are so shocking. So unforeseen. “Are you surprised?” he asked me. “What happens now?”

Of course I told him what you know. Nothing goes up 30-40% in a year and retains those gains. Moreover, the conditions that fueled house FOMO were unique. Unlikely to be replicated. And they could never last. The Ascent of Bunnypatch resulted from a once-per-century pandemic, the first-ever WFH episode, urban flight, cocooning, carloads of federal CERB and Covid cash, an historic household savings rate, terrified central bankers crashing rates, scuzzy realtor tactics boosting competition, Zoom, and 2% mortgages. This combo is over. Forever.

Speculative excess and emotional buying always bring retrenchment and remorse.

Next?

Real estate corrections are long. A decade in the US for the last one. Fourteen years here. People waiting to sell will get less. Buyers jumping in will pay a premium.

Now, here’s the latest news. It all reinforces the above.

First, Euro rates just jumped for the first time in 11 years as the European Central Bank hiked by half a point – twice the anticipated amount. Recession is around the corner there, people are (literally) keeling over from the heat, Italy is headless again, the Ruskies are playing energy roulette and inflation’s out of control.

“Price pressures are spreading across more and more sectors,” said Christine Lagarde. “Most measures of underlying inflation have risen further. We expect inflation to remain undesirably high for some time.”

This matters because for the last eight years Europeans put their faith in subzero borrowing costs to keep the economy alive through slow growth, Brexit and then pandemic. At one point, in some places, banks gave out mortgages with no payments. Didn’t work. Now central banks across the entire developed world are tightening, squeezing and hoping.

Us, too. This week Tiff said our inflation will be “painfully high” for the rest of the year. That came after we heard the latest – 8.1% in June. The most since 1983. Back then the CB rate was 9.55% (it’s now just 2.5%) and five-year mortgages were 13.5%. Five years later I was first elected to the House of Commons. Dorothy and I bought a townhouse in Ottawa, and needed a mortgage. Our rate was 14.25%.

In other words, our monetary policy guys are still behind the curve. There’s zero chance rates will do anything but augment throughout 2022. It’s a faint, grainy hope a reduction will happen in 2023. Maybe a levelling-off, with home loans staying north of current levels.

Yesterday we yakked here about houses vs financial assets. What’s critical to understand is that real estate takes a long time to recover and only does so when affordability levels improve. Since interest rates aren’t going back down to pandemic levels, it means property prices must. And will. All of the pandemic growth will have to go.

Stocks, in contrast, will swell giddily when data starts confirming inflation has moderated. Even in recession, markets anticipate the future, and you can be assured that with 90 central banks around the world now moving in concert,  inflation will be corralled.

On the other hand, recessions impact people more than markets. They bring economic slowdown, job losses and business failures. Combined with the unravelling of real estate (there are more realtors in Toronto now than teachers), it’s a recipe for hurt. Tiff’s right. The remainder of 2023 will not be fun on the street.

Now go and re-read yesterday’s post. The legs are being systematically kicked out from under our condo economy. Those four points tell you what to expect. How to survive.

About the picture: “I’ve been reading your blog ever since Covid hit,” writes Kyle. “I’ve fallen prey to the FOMO over the past two years overbidding on homes just to get in the market and start a family. Luckily we lost all our bids and are on the sidelines observing the carnage and hoping to jump in as the knife falls. Although, we didn’t pause on the starting a family part, we are two millennials that got a puppy, married, and evidently twin girl and boy babies all during Covid. Needless to say we’ve been busy during Covid and are quickly outgrowing our two bedroom apartment. Keeping watch on your blog everyday. Thank you for keeping us sane during these crazy times. Enjoy the pic of our pup, Leia! She’s a Mini Australian Shepherd that loves to climb and sit on everyone’s lap.”

91 comments ↓

#1 Omicron Kenobi on 07.21.22 at 4:17 pm

Yes, my team is indeed, all over everywhere.

We have Biden today.

https://www.cnn.com/2022/07/21/politics/joe-biden-covid-19/index.html

You are all next.

#2 The Original Jake on 07.21.22 at 4:18 pm

“Now central banks across the entire developed world are tightening, squeezing and hoping.”

The radical right will argue it’s a home grown problem…. Trudeau and Biden are to blame for inflation and rising rates.

Politics and truth have but a glancing relationship. – Garth

#3 None on 07.21.22 at 4:20 pm

Maintaining the belief that ‘this time it’s NOT different’ and buying a house has an unacceptable level of risk for someone of my age and financial position has been at extreme personal expense (Fiance left). Being right is nice and if my Fiance left because I wouldn’t buy a house at FOMO peak you know she would have left when we were 30% underwater.

It’s still frustrating and hurtful to have so much of your life influenced by global, federal and provincial decisions well beyond your control.

Anyway, at least when I’m the eligible bachelor b/c I DIDN’t buy a house that’ll be nice.

Had a date this weekend with a home owner and things were going great until she asked ‘what I thought the housing market was going to do’. Of course, she thought housing would stay flat. I disagreed. We are not going out again. So weird.

#4 TurnerNation on 07.21.22 at 4:24 pm

ENERGY. How our rulers (The globalist ghouls) will be controlling us. he planned shutdown of the Former First World Countries. human behavior came under global control March 2020.
All under the guise of “Climate” and “Corvid:
We will however have the best climate! Amazing climate I cannot wait.

“The National Post reports in its Thursday edition that the oil patch fears Ottawa’s proposed cap on oil and gas emissions could force the industry to cut production to stay within a regulated limit by the end of the decade. The Post’s Meghan Potkins writes that Pathways Alliance vice-president Mark Cameron doubts “the sector could achieve that level of reduction. The biggest risk is if we just can’t comply and don’t have the mechanisms that allow us to comply, that we would have to shut in production as opposed to investing in technology to reduce emissions.” Pathways consists of a group of energy companies that account for 95 per cent of production in Alberta’s oil sands. The federal government is considering two options to drive down emissions: a cap-and-trade system with a set number of allowances distributed to oil and gas facilities, or a modified carbon-pricing system that could see the industry pay a higher carbon price.” (stockwatch.com)

——- Winter (electronic) LOCKDOWNS Coming — via QR code. (There is no more news only the manufacture of consent.)
We will be so healthy, enjoy such health. I cannot wait!

.Majority of British Columbians support return of COVID-19 mask mandate, poll suggests (globalnews.ca)

.German health minister hints at stricter winter COVID rules (www.dw.com)

https://www.thestar.com/opinion/contributors/2022/07/19/trying-to-live-with-covid-is-not-a-winning-strategy-its-time-to-let-the-public-discuss-plan-b.html
Trying to ‘live with’ COVID is not a winning strategy. It’s time to let the public discuss Plan B
We’re now in the seventh wave of the pandemic. Government needs to have an open public discussion about whether we want a more aggressive approach.
Ramping up our emergency response in the face of the next wave will save lives and protect hospitals, while leaving us vulnerable to all the others impacts of COVID-19.

#5 Richard L on 07.21.22 at 4:25 pm

Realtors and teachers are often one and the same.

#6 Søren Angst on 07.21.22 at 4:35 pm

Yup.

Italia is very headless officially as of a few hours ago.

We go to polls Sep 25.

https://www.rainews.it/maratona/2022/07/diario-della-crisi-21-luglio-verso-le-dimissioni-draghi-alla-camera-e-poi-al-quirinale-d7be732d-38f3-447a-ae58-430425e97b00.html

Will NOT vote for the nutbar “Centre” Right nor the wonky M5S that created the dissolution of Gov.

Back to my age old Left of Centre roots, sorry Garth, but the so called Centre Right here are far right nutters (Salvini, Meloni and Berlusconi).

We had a coalition PM that had International Gravitas and now we are left with little to choose from.

————-

Povera Italia.

Yet, Viva La Repubblica.

We have been thru a lot worse over the past 2775 years and that’s just Dies Romana, still CAPUT MUNDI of culture and you name it.

This pint sized country has given humanity much over the ages arguably more than any other country on Earth and she still continues to do so.

Pity though, about her Gov.

——————————-

Again, an honest Blog today Garth. Indeed. Keep them coming.

#7 truefacts on 07.21.22 at 4:36 pm

@The Original Jake

“The radical right will argue it’s a home grown problem…. Trudeau and Biden are to blame for inflation and rising rates.”
________________________________________

Trudeau/Biden exacerbated inflation with stupid policies.

For example, high oil prices increase inflation and both did everything in their power to reduce domestic oil production (and LNG terminals, etc).
Following Greta has proven foolish as they kneecapped their own economies AND made climate change worse…because of gas shortages, countries like Germany are now going to use more coal.
Would have been better if we were exporting LNG to Germany – more money and jobs here, less greenhouse gases globally, and less reliance on Russia.

#8 Søren Angst on 07.21.22 at 4:42 pm

#3 None

You are better off.

Ask her out on a date again end of year.

See if she still has a house.

#9 Russ on 07.21.22 at 4:44 pm

Omicron Kenobi on 07.21.22 at 4:17 pm

Yes, my team is indeed, all over everywhere.

We have Biden today.

https://www.cnn.com/2022/07/21/politics/joe-biden-covid-19/index.html

You are all next.
=============

The wife picked it up a couple of weeks ago. Home kit test +. Sore throat, loss of taste and her smeller didn’t work for a while.

She gave it to me and I had it mild, fever one night only like a quick bout of the flu.

The day naps were very nice in the warm weather though.

It really is just the flu now, common and weak enough.

Curiously, the BC gov has just emailed us an offer for the 4th shot.

Cheers, R

#10 baloney Sandwitch on 07.21.22 at 4:47 pm

(there are more realtors in Toronto now than teachers). My niece a smart dynamic young woman of 28 just announced that she is quitting her job with a big 4 downtown accounting firm because you know it is so booring (I agree) and becoming a realtor.
I said, Good Luck – but was thinking next year she will be begging to get her boring but well paid job back.

#11 Suddenly and Unexpectedly on 07.21.22 at 4:54 pm

I live in the bunny patch and I can confirm that bag holders out here are getting absolutely rekt. Met a nice lady a few months ago at a garage sale… she was selling her house and fleeing with windfall profits – or so she thought… Listed for 1.4, dropped to 1.3, 1.2, 1.1 and now listed at 989k. 400k drop. Still no takers. One of many similar stories out here. A year ago, for sale signs turned into sold signs within days, fast forward to today, I haven’t seen a sold sign in months.

In other news, my prayers go out to the family of Paul Duncan, former Denver Broncos lineman, died from a heart attack while out for a jog. He was 35 years old. RIP.

#12 Scott in Gibsons on 07.21.22 at 5:00 pm

My apologies to Jake and Garth. I was under the misconception that Trudeau and Biden WERE responsible for the trillions of dollars of emergency relief that has contributed greatly to our current inflation rise. Who IS responsible then?

Pandemic payments alone did not cause inflation. When an entire economy is depressed (like, by a once-in-a-century disease) it will run hot upon recovery, especially when monetary policy is weak. This was not caused solely by politicians nor will they (any of them) fix it. Way too simplistic and naïve. – Garth

#13 Søren Angst on 07.21.22 at 5:00 pm

About the picture – Kyle

“twin girl and boy babies all during Covid…we’ve been busy”

Ya think?

Nice to read. Good luck to you and your family.

That dog is rope-a-doping you for now. Cute.

Give it a backyard and she will be herding you, wifey and the twins. Buy some sheep to wear her down and mow your future lawn.

#14 Home owner on 07.21.22 at 5:00 pm

Let me buy this house.
Let me pay everything that needs to be paid for me to get the keys.
Let me pay the mortgage for 5 years.
Let me pay the electric bill for 5 years.
Let me pay for all the maintenance, upgrades, patio furniture, garden hose.

5 years passed?

Let me add it all, add $200,000 on top, and sell it on.

Living free, getting paid.

How long can that last?

#15 Josef on 07.21.22 at 5:11 pm

Preferred shares are continuing to bleed. Yes, they throw off income but they aren’t stable or helping with inflation at this point. I can’t wait to get rid of mine but it seems that this day will never happen.

#16 In Flat Ion on 07.21.22 at 5:20 pm

Europe? Half a point? Ha ha ha.

What’s next?

US going up to 2.5%?

oooohhhhh….look at these monster crazy high rates.

JOKE.

Enough so far to be crushing real estate and spooking investors while hastening recession. You want nukes? – Garth

#17 Søren Angst on 07.21.22 at 5:20 pm

It’s not fair.

Hit 38 C today (36 C forecast, I told you Italia lies) and all we got was:

Extreme High Temperature – Orange.

What do I have to do to get a Red warning here in Italia like Canada gets?

I know. Move back to Canada * for a Red Heat – Warning, todays:

Halifax 25 C (23 C at 4 PM)
Montreal 30 C (28 C at 3 PM)
Trauma 30 C (28 C at 3 PM)

[a.k.a., Spring weather in Italia & Canada does the opposite of Italia and ADDS 2 C to the forecast to keep the tourists there even though there is not much to see or do]

Tomorrows Pordenone forecast is 38 C (will probably hit 40 C). Hopefully we will get a Red warning so I can FAKE commiserate with Canada.

—————–

* Wuss Igloo/Ark Dwellers

[the Lower Brainland has not yet figured out they had Summer last week and are now headed into Fall, you too Alberta – REVERSE Climate Change]

#18 ogdoad on 07.21.22 at 5:22 pm

Keep your house, kids. And never be concerned with price fluctuations until you don’t care anymore – Which is not far off…just sayin’.

Your emotions are far older than today’s manufactured sentiments that evoke them. Just make sure that you hug (I can help), get your noses out of the sky (brain see’s nothing but awe) and develop keen oxy pathways (full. dis. Mine are good and I love the teaching process!!!).

Happy day of the week?

Og

#19 Sail Away on 07.21.22 at 5:29 pm

Kyle could greatly expand options by enlisting in the US Army for 4 years, then emerging with dual citizenship and a simply enormous market of reasonably-priced homes in a plethora of locations.

Then if it still makes sense to pay 5x more for a house in a place with marginal climate and low to middling salary… hey, go wild.

#20 Juste Pour Rire on 07.21.22 at 5:29 pm

High Park 2 bedroom condo

https://www.realtor.ca/real-estate/24659129/712-1830-bloor-st-w-toronto-high-park-north

$1,265,000 asking
$4000 annual property taxes
$720 monthly maintenance fee

20% is $253,000, add $50,000 for land transfer.

You need to drop $300,000 up front to get the keys.

You’re left with $1,000,000 mortgage at $6000 a month.
You need $1053 monthly to cover monthly fee and taxes.

$7000 a month to live in this 2 bedroom with a master bedroom that is 9 ft ,10 in x 10 ft ,2 in “big”.

OR

You can rent one in a professionally managed building block over for 1/3 of that monthly cost, $300,000 in your pocket, $0 mortgage liability.

Please explain how this makes sense?

This Condo hardly makes sense at $500,000 price, considering the density of building for one, and the fact that even at $500,000 you’d need to drop $120,000 up front and with $2400 mortgage for the $400,000 plus $1053, you’d be paying a grand more than rent next block over with no mortgage at all.

#21 Sam on 07.21.22 at 5:30 pm

Garth “nothing goes up 30% 40% forever and retains those earnings” Garth, by nothing do you mean this doesn’t apply to the markets either?

Of course. Gains are incremental, not linear. – Garth

#22 Søren Angst on 07.21.22 at 5:37 pm

#14 Josef

Be grateful.

Had a Split Fund fall below its NAV and no divs for the month.

Lucky I have other div funds and that $1K per month dividend loss won’t sting.

Speaks volumes about B&D. Again, Grazie Signore GARTH et. al.

——————-

PS:

Doug’s Oil Blog recommendations a while ago doing rather well I’d say, 5 of his picks, YTD:

https://www.google.com/finance/quote/ENB:TSE?comparison=TSE%3ATRP%2CTSE%3ASU%2CTSE%3APPL%2CTSE%3ACVE&window=YTD

Cdn ETF Albatross, the Big 5 Banks, YTD:

https://www.google.com/finance/quote/BNS:TSE?comparison=TSE%3ATD%2CTSE%3ACM%2CTSE%3ARY%2CTSE%3ABMO&window=YTD

My Threadbare Portfolio skating close to 0% YTD, at:

+1.8%

excluding dividends.

Still better than kick in the nards, YTD:

S&P 500 -16.63%
Nasdaq -23.83%
Dow Jones -12.43%

Jul 21, 5:06:54 PM UTC-4

GARTH I can smell a turnaround coming maybe sooner than October. I think July is the bottom, Sep the rally starts timid, Oct full stea ahead.

Fingers crossed.

#23 TurnerNation on 07.21.22 at 5:37 pm

The tent people are back! Occupying some downtown TO parks and under Gardiner Distressway near Lakesnore Blvd.
Tents even hammocks. What’s next bouncy castles?
As long as they are not displaying/waving Canadian flags the cops will not be touching em………..

—— Food supply/feeding always non-stop. Who may afford to eat out, these days?

https://www.blogto.com/eat_drink/2022/07/restaurants-canada-inflation-toronto/
“”We’ve seen costs across the board go up at least 30 per cent and in some cases things have double or tripled,” he tells blogTO. Aboudi notes that flour prices have gone up almost 100 per cent and cooking oil that used to cost $20 is now at a staggering $52.50.
“The bigger issue is the constant game of missing products, there was a sugar shortage – literally you couldn’t buy sugar,” he recalls, a huge disadvantage for a bakery.

.Canadians are holding nationwide protests on Saturday, July 23, to stand in solidarity with Dutch farmers fighting for their livelihoods in the Netherlands.
As for a brief list of just some of the cities that will see demonstrations, organizers have said they plan to drive through Ottawa, Toronto, Vaughan, Edmonton, Calgary, Grande Prairie, Red Deer, Lloydminister, Montreal, Winnipeg, and Vancouver, making this truly a nationwide demonstration.
Moreover, farmers and truckers plan to do slow-rolls from city to city, expanding the scope further. (thecountersignal.com)

#24 Arctic Gringo: Qalunaaq on 07.21.22 at 5:40 pm

A Christine Legarde quote, “… it was like there was a tsunami coming and everyone was trying to decide which swim trunks to wear” in reference to Hank Paulson and the US Treasury back in 2008.

Is the ECB still deciding which swimming trunks to wear?

#25 NOSTRADAMUS on 07.21.22 at 5:40 pm

MY REALTOR TOLD ME, NOW IS A GREAT TIME TO BUY!
Yes, there are still homes being sold. However, nowhere near the number as duly posted by the real estate cartel only a few short months ago. As each month passes the cartel rationalizes why now is a great time to buy. Prices are down, you can bargain hard. This sleazy tactic is hard to get my head around, isn’t it their contractual duty to get the highest possible price for their seller? Mmmm, A conflict of interest definitely comes to mind. Along with the decline in sales, there is a corresponding decline in the end sale price. This brings up the issue of financing. As you realize the lenders only lend on appraised value. Actual sold property, not a realtors” Free Opinion Of Value! ” As the first round of lowered sold comparable (comps) hit the market, along with the inventory pile up, the smartest potential sellers will lower their asking prices and be the first to exit the burning building. Besides, my realtor has the stats to verify that prices are in decline. Because as this downturn picks up speed each successive round of new comps indicates a falling market. Consequently the negotiating power of the buyer gets stronger. Mmmm, now I see the logic of the realtor promoting now is the time to buy. Buy now and follow the market down, This makes perfect sense from a realtors perspective. With two sets of readily available stats, (BUYER AND SELLER) he has all the bases covered. But, and this is a big but, many sellers still think they are living three months ago when mortgage rates were less than 3%. And there are still some buyers who think home prices will rebound. My realtor told me so, and he has yesterdays stats to prove it. Sorry, the rest of the year will totally change the psychology of the real estate market. (Stats or no stats) Just wait for those falling comps and rising inventory levels. Steady Lads, hold the line.

#26 Victor Llearna on 07.21.22 at 5:46 pm

Tiff said our inflation will be “painfully high”.
SHeep taking it on both ends, everything getting way more expensive except for the crappy house they recently bought which is losing value. SHeep with HELOCs or Rev Mortgage will get screwed even worse.

#27 45north on 07.21.22 at 5:46 pm

None Maintaining the belief that ‘this time it’s NOT different’ and buying a house has an unacceptable level of risk for someone of my age and financial position has been at extreme personal expense (fiancée left). Being right is nice and if my fiancée left because I wouldn’t buy a house at FOMO peak you know she would have left when we were 30% underwater.

yeah she would have and blamed you for your lack of investment acumen

baloney sandwich (there are more realtors in Toronto now than teachers). My niece a smart dynamic young woman of 28 just announced that she is quitting her job with a big 4 downtown accounting firm because you know it is so boring (I agree) and becoming a realtor.
I said, Good Luck – but was thinking next year she will be begging to get her boring but well paid job back.

she announced that to you, but maybe she is having second thoughts

#28 yorkville renter on 07.21.22 at 5:47 pm

Way too simplistic and naïve.

Yup, sounds about right for those on the right… and THANK DOG we don’t tie our currency to crypto.

FWIW, I also dislike Trudeau – but, I’m not a dummy – I can see this issue abounds around the world.

#29 Juste Pour Rire on 07.21.22 at 5:49 pm

It gets event better!

Instead of paying $7000 a month to own a 2bdrm in that building I posted about above, which by the way can be rented for $2500/month block over with a better view and much larger bedroom at 15 x 11 foot in size , you can rent a 2bdrm for $2999/month all in the SAME BUILDING you’d have to pay $7000/month in to own!

https://www.realtor.ca/real-estate/24655788/506-1830-bloor-st-w-toronto-high-park-north

DOES NOT COMPUTE!

That 2 bdrm for sale above for $1,265,000 event is WAY overpriced. 50% drop would still leave it overpriced vs. rent.

This is all after tax money let us not forget.

#30 RichardTO on 07.21.22 at 5:55 pm

I’m financially ruined.

#31 Søren Angst on 07.21.22 at 5:57 pm

#19 Sail Away

So true.

Was watching yesterday’s NBC Nightly News and they are crying about a median home price of:

$416K (a high)

The average Cdn home hunter looks at that and starts to lay out their Hara Kiri ritual kit.

https://youtu.be/k5u0XvkiwTM?t=835

Hell, if I was a younger Mill or GenZ…Uncle Sam here I come.

Where do I sign up?

#32 Søren Angst on 07.21.22 at 6:02 pm

#24 Arctic Gringo: Qalunaaq

EU 2 Choices:

1. Recession.
2. Death by a thousand cuts High Inflation.

They’ve chosen #2 hoping #1 will be “soft” – unlikely.

So has your 🍁 CB – you know, the one that wasn’t going raise rates any time soon.

Misery loves company.

#33 Timmy on 07.21.22 at 6:13 pm

THere are more realtors than teachers in TO” That’s probably why Doug Ford got elected.

#34 Yes and No ... Canada Prime Monster on 07.21.22 at 6:16 pm

DELETED

#35 JacqueShellacque on 07.21.22 at 6:21 pm

“Stocks, in contrast, will swell giddily when data starts confirming inflation has moderated. Even in recession, markets anticipate the future, and you can be assured that with 90 central banks around the world now moving in concert, inflation will be corralled.”

I wouldn’t be so sure about that, Garth. Financial assets are also wildly overvalued due to the amount of currency created in the last 14 years or so, which is where a lot of that money went, straight off the presses. Interest rate hikes would tend to make these less valuable, not more (by decreasing their PV – Ryan missed this over the weekend as well). And if inflation isn’t about interest rates at all, but about the money supply, then these rate increases may not help.

#36 Broader Mind on 07.21.22 at 6:31 pm

So how is it that the 5 year bond yield is trending down and can barely hold 3% ? I guess someone knows there is a plan to start giving money away again very soon. Very strange days indeed.

#37 Apocalypse NOW on 07.21.22 at 6:42 pm

War is coming soon.

“China warns US of ‘forceful measures’ if Nancy Pelosi visits Taiwan”

https://www.cnn.com/2022/07/20/china/china-warns-pelosi-taiwan-visit-intl-hnk/index.html

Assume nothing after the nuclear anniversary day of August 6.

PREPARE

#38 Politicians on 07.21.22 at 6:55 pm

Diamond Dog, a question to continue our chat…

Would a real estate crash not help reduce money supply?

#39 Observer on 07.21.22 at 7:00 pm

#30 RichardTO on 07.21.22 at 5:55 pm
I’m financially ruined.

^^^^^^^^^^^^^
What happened?

#40 Fruit Vendor on 07.21.22 at 7:21 pm

DELETED (Anti-vaccine)

#41 Reality check on 07.21.22 at 7:27 pm

$7000 a month to live in this 2 bedroom with a master bedroom that is 9 ft ,10 in x 10 ft ,2 in “big”.

OR

You can rent one in a professionally managed building block over for 1/3 of that monthly cost, $300,000 in your pocket, $0 mortgage liability.

Please explain how this makes sense?
———————
Isn’t it because they are going to appreciate by 20-30 percent a year forever and be bought by all those millionaire immigrants working in service jobs and driving Uber.

…….funny how all those people that used to preached that have disappeared from the comment section.

#42 chalkie on 07.21.22 at 7:41 pm

Watching a few homes that have now reduced twice in price in the last couple months, more pain still on the horizon for the seller. A few home flippers in the big smoke have been caught with their pants down this time around, home prices the way they were going North, even a green horn investor could say, “I told you so”. Home flippers beware, this is going to hurt with those multiple purchases that you still have to unload, renting won’t put a dent into those costly bills piling up, land transfer taxes, cost for contractors, mortgage payments, maintenance, heat, hydro, gas and even security, should you decide not to rent and to wait out the downturn, its going to be a long winter. Banks and financial intuitions have little remorse for excuses when your monthly payment is due, their atmosphere quickly turns to, find a way to pay us or put it on the market. The longer you hold out, the bigger the lost. If you have the stomach to buy now, don’t hesitate to offer 20% less than the asking price, that’s where the market will be in 6 months & don’t forget it’s a conditional offer with a professional home inspector.

#43 Balmuto on 07.21.22 at 7:46 pm

Bunnypatch values definitely hit bubble territory but don’t think their correction is any indication that WFH is over.

Rumour at my work is that we’re going from 3 days in office a week to 2 days in, with shared cubicles. The “hot desk” or “hotel desk” concept. Part of the reason I’m sure is that very few employees are actually coming in all three days a week. Everyone has an excuse to stay home at least one of those days and no-one is enforcing the three day a week rule. Also most meetings are still being held online. I’m sure others have experienced the same thing at their workplaces.

So when the commute is at most for 2 days a week Bunnypatch still looks appealing. This is a secular change we’re experiencing in the real estate market and it’s far from over.

#44 PeterfromCalgary on 07.21.22 at 7:50 pm

It still seems odd to me that negative real interest rates can tame inflation. At the risk of messing up the arithmetic or statistics I will try to explain.

Inflation is now 8.1% but the Bank of Canada overnight lending rate is 2.75%. That means the real interest rate is negative -5.35%.

In July of 2020 that Bank of Canada rate was 1.5% but inflation was 0.72% so the real interest rate was positive 0.78%. Or less stimulative than it is today.

To have real interest rates the same as in July 2020 the Bank of Canada would have to raise interest rates by 6.13% from where they are today. Granted inflation will probably come down which raises real interest rates but I doubt inflation will go down by 6.13% soon. The plan seems to be raise interest rates a little and hope it is enough to reduce inflation which would further raise the real interest rate.

Feel free to correct my math if I messed up.

#45 Love_The_Cottage on 07.21.22 at 7:52 pm

#9 Russ on 07.21.22 at 4:44 pm
wife picked it up a couple of weeks ago. Home kit test +. Sore throat, loss of taste and her smeller didn’t work for a while.

She gave it to me and I had it mild, fever one night only like a quick bout of the flu.

It really is just the flu now, common and weak enough.
_____
Thank you so much for this post. Up to now I’ve been following the sciences. But given your experience we can clearly extrapolate that to the entire population. You are a saint and a genius.

#46 jess on 07.21.22 at 7:54 pm

the mad king will lose his crown /markets will rejoice!

#47 Love_The_Cottage on 07.21.22 at 7:55 pm

#28 yorkville renter on 07.21.22 at 5:47 pm
Way too simplistic and naïve.

Yup, sounds about right for those on the right… and THANK DOG we don’t tie our currency to crypto.

FWIW, I also dislike Trudeau – but, I’m not a dummy – I can see this issue (inflation) abounds around the world.
__________
Sorry Shawn, I have a new favourite. Another person with a brain posting in the comments. That makes 2 out of ….Be still my heart.

#48 DJT on 07.21.22 at 7:58 pm

With reality setting in that Biden has no exit plan(ie. energy) for The Democrat’s War in Ukraine, its all looking pretty grim right now/or at least until The Midterms.

#49 Mehling on 07.21.22 at 8:03 pm

Blackstone Prepares A Record $50 Billion To Snap Up Real Estate During The Coming Crash

https://www.zerohedge.com/markets/blackstone-prepares-record-50-billion-snap-real-estate-during-coming-crash

#50 Itchy Feet on 07.21.22 at 8:25 pm

Hi Garth

I have appreciated your blog now for sometime. Thanks for the free advice. We locked into a good 5 year fixed rate for our YYZ condo before rates really started up.

We’re hoping to upgrade to something larger in bunny patch for our growing family however we realize we will have to wait a little while.

If you had the opportunity to get out of dodge (Canada) to work elsewhere for a few years where would you go?

It’s easy to be frustrated with the current state of affairs in Canada. But it looks to me that most of the World is the same or worse at the moment. Who do you see recovering first from inflation/rising rates/home prices?

#51 Reality is stark on 07.21.22 at 8:47 pm

In Durham the average loss since the peak is $100,000 a month.
I suppose it’s only money.
$300,000 to go.
You should be able to get $800,000 sometime this fall.
Then you get to pay interest and pay back some of the principal. Lucky you.
An $800,000 hit after tax is a lot of money, but the extra interest tacked on during a stagflation is what really hurts.
Reality is stark.

#52 Stone on 07.21.22 at 8:51 pm

It’s interesting to see how central bankers around the world are raising rates quite forcefully now (Federal Reserve, BoC, ECB) and yet bond ETFs like XLB, VAB and even VSB shrug it all off. Especially XLB. Over the last month, it has roared up almost 7%.

Dead cat bounce or something more?

#53 Blobby on 07.21.22 at 9:00 pm

@#12 Scott in Gibsons

I love the idea that somehow Trudeau is SOOO powerful that he’s responsible for inflation around the world.

I didn’t even vote for the guy – but I’m amazed that PeePee has put this idea into people’s heads that he’s THAT powerful!

Canada has suddenly become the biggest power in the world, just because we have a non-conservative government?

Wow! His haircut must have a lot of power. (which must be why all the right wing rags are seemingly obsessed with him doing what millions of people do every day – get a hair cut)… And what’s even more mind blowing about this, is the people writing those stories are okay with Trump and Boris*.

(I wont say anything about Harpers “hair” here.. although.. it does make me wonder what these people are on)

* Well, Suddenly they’ve all gone against Boris.. Funny that.

#54 WTF on 07.21.22 at 9:08 pm

#29 “DOES NOT COMPUTE!”
—————————————————————-
Yup, have droned pedantically here about the 2 unsold waterfront apartments in my building in DT Van. The open house two days ago ? Crickets.

Same scenario as you highlight in TO. Buy and pay THOUSANDS more or rent for a relative pittance, and watch asking prices melt.

Needs a monumental drop in prices before I consider buying. The B+D down about 8% and Sitting this RE lunacy out till sanity returns is hands down the best financial course of action for us.

#55 Shawn on 07.21.22 at 9:11 pm

Financially Ruined? It could be worse.

#30 RichardTO on 07.21.22 at 5:55 pm

I’m financially ruined.

********************************
At least you are not ruined in the sense that eligible young debutants sometimes found themselves “ruined” a 150 years ago. Or perhaps a lot more recently.

#56 millmech on 07.21.22 at 9:59 pm

Now that the country did not collapse with the 100 basis point rate hike the BoC will continue with these hikes until they get in front of inflation.
I would not be surprised to see another 3 100 basis point hikes by the end of year and at least two more 100 basis point increases early next year.
Savings will be making a comeback as GICs will be paying 8%+ next year for those Boomers that sold their houses to the Millennials.

#57 Randy on 07.21.22 at 10:36 pm

DELETED

#58 The General on 07.21.22 at 10:44 pm

SARCASM ALERT! I truly feel sorry for the German people. They will suffer for the decisions of their leaders this coming winter. If only there was a brand spanking new pipeline able to fill their depleted natural gas reserves. ⛽ A pipeline which could be activated immediately to supply all their needs.

#59 Sail Away on 07.21.22 at 11:16 pm

#45 Love_The_Cottage on 07.21.22 at 7:52 pm

Up to now I’ve been following the sciences.

———

They said follow the science, so I did, and it turns out that men can’t turn into women and women can’t turn into men.

Or is woke science flexible?

#60 Ponnaps on 07.21.22 at 11:45 pm

Countries across the western world are severely debt ridden… this after amassing centuries of loot from now impoverished countries…

It must take a special kind of incompetence to squander over $45 trillion looted from countries like India alone and still end up drowning in debt in under 80 yrs. Like an undeserving heir inheriting billions and still managing to end up bankrupt before they croaked..

#61 Russ on 07.21.22 at 11:54 pm

Love_The_Cottage on 07.21.22 at 7:52 pm

#9 Russ ….
Thank you so much for this post. Up to now I’ve been following the sciences. But given your experience we can clearly extrapolate that to the entire population. You are a saint and a genius.

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

Glad to have you on board LTC.

Here’s the science, notice the death rate has been steadily dropping from something that was not really all that fearful for the general populace anyhow;

https://www.worldometers.info/coronavirus/worldwide-graphs/#case-outcome

The knowledgeable among us know now that it is not a matter of “if’ we get covid, it is a matter of ‘when”.

At long last and with ample preventative measures the missus & I finally and inconceivably contracted the deadly China Flu.

The comment was simply our experience with this pathogen. YMMV.

Cheers and in good health, R

#62 Dan Bergdorf on 07.22.22 at 12:18 am

Note that Pref Share ETF yield has hit 5%. My adjusted cost is $11.87 in a portfolio mix that settled down 7% during the last few months hiccup. It’s a ‘coulda woulda shoulda’ holding for me. I have other equities which have performed more positively in the downturn also paying dividends. Will CPD show any capital gains this year? The jury is out.

#63 Robert James on 07.22.22 at 12:22 am

millmech on 07.21.22 at 9:59 pm In regarding interest rates ,,, Let her rip ,, Keep raising them… Sorry debt slaves ,, you were warned .. As someone said ,, the stupid always get hurt more… Try living within your means next time around… As a tax payer,, I don`t want to have to pay for you greedy mongrels ..

#64 mark on 07.22.22 at 1:18 am

A lot of people still trying to offload at 2021 prices in Blind Bay. Wow

#65 under the radar on 07.22.22 at 5:09 am

House prices falling but rates rising. Affordability is getting worse not better. Rents in 416 taking flight. Zero turnover in our remaining purpose built , unlike pandemic depths, as renters now have even fewer choices.
Owning a home outright is still the burning desire , smart or not, its provides security of tenure and a measure of control over your environment. Our former purpose built is now the epicentre of intensive work by contractors . Noise daily from 8 to 6 until December . Careful what you wish for.

#66 Dharma Bum on 07.22.22 at 8:51 am

#58 The General

SARCASM ALERT! I truly feel sorry for the German people.
—————————————————————————————————-

Germans without gas?

Hmmmmmmmmmm…………..

That could be a good thing.

They have misused it in the past.

#67 KLNR on 07.22.22 at 9:04 am

trudeau/biden responsible for world inflation?
more laughs than usual on here lately.
good grief people.

#68 Shawn on 07.22.22 at 9:10 am

Western countries owe debt? The end is nigh?

#60 Ponnaps on 07.21.22 at 11:45 pm
Countries across the western world are severely debt ridden… this after amassing centuries of loot from now impoverished countries…

It must take a special kind of incompetence to squander over $45 trillion looted from countries like India alone and still end up drowning in debt in under 80 yrs. Like an undeserving heir inheriting billions and still managing to end up bankrupt before they croaked..

***********************************
Fear not. Western debt is manageable.

Are you under the impression that these western world countries owe the debt you refer to India and the eastern world as opposed to mostly their own citizens and corporations. (Yes China is owed some and Japan especially).

Here is a link to countries were U.S. debt is owed to foreign countries although it my often not be owed to
governments. This does not include the U.S. debt owed within the U.S. which I suspect is the vast majority.

https://ticdata.treasury.gov/Publish/mfh.txt

#69 Shawn on 07.22.22 at 9:16 am

Inflation and home prices

For years so many here said inflation was under-stated because it was based on cost to own house rather then just the price to buy a house.

Now that rents are rising fast and home prices are sinking fast will these same people say that inflation is now under-stated as a result? I’m waiting for them to say so. Or will they maybe admit that StatsCan approach was not so bad after all? I suspect I may wait awhile for that admission.

#70 Shawn on 07.22.22 at 9:31 am

Retail sales are up again in May

“In volume terms, retail sales were up 0.4% in May.”

This is versus April.

Incredibly retail sales in May were up 14.1% year over year in dollars and 5.2% year over year in volume terms (constant dollars)

People keep buying higher volumes at higher prices. Where they getting the money? How long can this continue? More jobs and a reopened economy are a big part of this but at some point we lap the opened economy and the full employment.

Anyhow no sign whatsoever of recession in these numbers. Screws have been tightened since with higher loan rates but looks like a dip in consumer retail spending is not imminent. A glance at the shopping mall parking lots confirms it anecdotally

I have the links to this.

https://www150.statcan.gc.ca/n1/daily-quotidien/220722/t002a-eng.htm

https://www150.statcan.gc.ca/n1/daily-quotidien/220722/dq220722a-eng.htm?CMP=mstatcan

#71 Communism on 07.22.22 at 9:36 am

Have you noticed how everything is getting bogged down with excessive administration and complicated processes?

EVERYTHING.

This is a trademark of communist countries, for those who may know.

It is fascinating how instead of using technology for improved efficiency, now we’ve bogged down with form after form after form after page after page after page of administration. Or Apps to be installed that have a primary purpose of tracking you.

These apps…they could all be just a website, a web link you click and access. But NO, they insist on being installed on your phone and having all kinds of constants non-removable access to your location data, contacts, calls made, active listening, you name it.

Welcome to the surveillance world. Take a number.

#72 Morning Irony on 07.22.22 at 9:41 am

Hockey Canada needs a ‘real reckoning’, Trudeau says

https://www.theglobeandmail.com/canada/article-hockey-canada-needs-a-real-reckoning-trudeau-says/#comments

The pot calling the kettle black?

Oh wow…have you ever seen a saying fit like a tight body glove?

#73 Shawn on 07.22.22 at 9:50 am

Grocery store volumes are down year over year.

Probably mostly due to market share gains at Costco and Walmart which are likely in general merchandise category.

Not many categories are down. Shoe sales are up an incredible 64% – hmmm Garth said something about return to office is on bigly and you might need new shoes for that.

https://www150.statcan.gc.ca/n1/daily-quotidien/220722/t003a-eng.htm

#74 Talia on 07.22.22 at 9:57 am

I missed the great days of the Italian Lira and high interest rates getting 15%+ back in the early 90’s. The whole Euro and ECB, EU is basically communism. A union of tyranny is what it is.

#75 Philco on 07.22.22 at 9:59 am

If ya got got caught up in any of those highfly tech stocks or other fly by nighters that got crushed you will never get your money back. Tech in general will take years to get back to their highs if they do. And Crapto.. It was all a bubble.
Meanwile back at all my commercial opps not a scratch. Rents are all coming in like clockwork.
My 2 new storage building cost $600k producing about $120k a year. And there are no tenant rights. You no pay you get das boot.

Im not a big fan of the stock market but i did say here 5 months ago if it poops the bed Ill be a buyer. Getting closer.
Ya see back in 2009 an ahole broker lost me $900k.
It was ugly and sad as that was all i had other then my house. I got my ass back to work now at at 8 didgits.
So if your taking a beating…you will recover if you are determined.
Off to complete my foundation!

#76 Read that twice on 07.22.22 at 10:14 am

Have you noticed how everything is getting bogged down with excessive administration and complicated processes?

EVERYTHING.

This is a trademark of communist countries, for those who may know.

It is fascinating how instead of using technology for improved efficiency, now we’ve bogged down with form after form after form after page after page after page of administration. Or Apps to be installed that have a primary purpose of tracking you.

These apps…they could all be just a website, a web link you click and access. But NO, they insist on being installed on your phone and having all kinds of constants non-removable access to your location data, contacts, calls made, active listening, you name it.

Welcome to the surveillance world. Take a number.

READ THIS TWICE…ONCE THIS STAGE IS REACHED COLLAPSE IS COMING 5-10 years away…

I love it

#77 Observer on 07.22.22 at 10:23 am

#61 Russ on 07.21.22 at 11:54 pm
Love_The_Cottage on 07.21.22 at 7:52 pm

#9 Russ ….
Thank you so much for this post. Up to now I’ve been following the sciences. But given your experience we can clearly extrapolate that to the entire population. You are a saint and a genius.

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

Glad to have you on board LTC.

Here’s the science, notice the death rate has been steadily dropping from something that was not really all that fearful for the general populace anyhow;

^^^^^^^^^^^^^^^^^
As a clever guy, I am sure you are aware that there are more than two possible outcomes from a COVID-19 infection. It’s not just a matter of death versus fit as a fiddle, but rather a whole lot of in between.

The more times you are infected, the greater the risk of “Long Covid”.

And since immunity wanes, viruses mutate, and many are refusing boosters, Canadians and by extension our healthcare systems will be dealing with the fallout from repeated infections for years, likely forever.

#78 Sail Away on 07.22.22 at 10:48 am

#70 Shawn on 07.22.22 at 9:31 am

Retail sales are up again in May

“In volume terms, retail sales were up 0.4% in May.”

This is versus April.

Incredibly retail sales in May were up 14.1% year over year in dollars and 5.2% year over year in volume terms (constant dollars)

———-

Yep. The next big wave is coming and might be here now. All my buys on the drop are blinking black, individual stocks are leaping, and economies are strong. Activision arbitrage Warren and I are playing still +20% benefit by next June.

Time to get rich! er!

#79 Shawn on 07.22.22 at 10:50 am

Philco and missed boat?

Philco said “Im not a big fan of the stock market but i did say here 5 months ago if it poops the bed Ill be a buyer. Getting closer.”

*********************
Actually it’s entirely possible we already bounced off the bottom and you will wait forever now. Why not put in some percentage of cash each month at least? Garth hates dollar cost averaging, but I think he hates staying out of the market on fear even more. Invest when you got it he says. Or was that flaunt it if you got it? Let’s do both. Investing some on this dip might be better than waiting.

On a related note, Did Jess in fact grab Canadian Western Bank at about $24 like he said? Low was $24.11, $24 rounded. Now back to $25.75. Will it hit $24?

#80 Satori on 07.22.22 at 10:52 am

#3 None on 07.21.22 at 4:20 pm

You think 2 gals don’t like you because of ‘housing’ then you might wanna to some introspection.

Pointing fingers at housing, dude, maybe it’s just you… when things start to repeat in your life, it’s you, not them.

#81 Shawn on 07.22.22 at 10:53 am

I’m in Nova Scotia this month. I was sent from Alberta to see if the equalization wealth we (I know it’s not true) send is being spent wisely. Wonder if I should bring it up in conversation with the locals that their province is on equalization pogey.

I think that book How to Win friends and influence people might frown on bringing it up. Dale Carnegie. Oh well, too late.

#82 Zxcvbnm on 07.22.22 at 11:20 am

Region ban Italian IP range please please please please please

#83 Shawn on 07.22.22 at 11:20 am

Philco

Actually I see Philco is worth 8 digits so over $10 million. He can afford to miss the bottom of stocks or just ignore the stock market forever.

#84 Mathew Webb on 07.22.22 at 11:40 am

I think you have stumbled upon a new *critical* frankennumber that should speak simply to a broad audience…
The ratio or realtors(ers) to teachers…or more apt, to nurses! I started looking it up, and where the data is available, it tells you exactly what you would expect: Our priorities are misguided.

#85 Wrk.dover on 07.22.22 at 12:12 pm

About 4% of front plates say ‘Ontario” in SW NS.

Easy to spot as we have no front plates here.

#86 Sail Away on 07.22.22 at 12:20 pm

#82 Zxcvbnm on 07.22.22 at 11:20 am

Region ban Italian IP range please please please please please

———

Take a hike, Z

#87 MD on 07.22.22 at 12:34 pm

Unless BOC brings back rates to 0.25 the Great Canadian Housing market is done for now. The bottom will most likely be around 4-4.5 times average household income for the average house prices in each provinces.

#88 Sail Away on 07.22.22 at 1:00 pm

#85 Wrk.dover on 07.22.22 at 12:12 pm

About 4% of front plates say ‘Ontario” in SW NS.

Easy to spot as we have no front plates here.

——-

And the other 96% of front plates say things like this:

“One man’s garbage is another man person’s good un-garbage.”

“When you’re growing up, you gotta do illegal things once in a while, have a bit of fun and maturinate into a better person.”

“Thing with me is that… I am smart. And I’m self-smarted basically by myself.”

“If I get my grade 10, I’ll be kind of an equaller person to Julian.”

“Let the liquor do the thinkin’, bud.”

#89 Nice quote on 07.22.22 at 3:49 pm

“If I get my grade 10, I’ll be kind of an equaller person to Julian, or to grade 5 I will be smarter than Justin T. the dimmer..

#90 European Genius on 07.22.22 at 5:00 pm

#66 Dharma Bum on 07.22.22 at 8:51 am
#58 The General

SARCASM ALERT! I truly feel sorry for the German people.
—————————————————————————————————-

Germans without gas?

Hmmmmmmmmmm…………..

That could be a good thing.

They have misused it in the past.
——————————-

The German innovator creators of quality and superior inventions you enjoy on the daily…. we need to lock you in a dollarama for a few years, then maybe you can appreciate what other cultures have done to make your life easier.

You need to flush, cause ya stink.

#91 Fran on 07.22.22 at 7:46 pm

Communism, this is why I was never fascinated with technology, computers, software, programs as young as 13 because I had a computer programmer in the family. He would show all the crap future companies and governments would use their technological know how for. More fraud, more administration, more bureaucracy, more things that will go wrong. I don’t see how it is worth it convenience if you have more security and things go wrong. The problem is the average person on the street is always responsible and gets shafted with more control, technology now.