The c-word

It continues.

Yesterday we busted the myth that BC’s steamy little housing lustfest is immune to current flaccidity. Nope, down she goes. More to come.

Today it’s the GTA’s turn to expose its vulnerable underbelly. Bunnypatch may be gushing blood from multiple orifices, but there’s serious bleeding going on in the big city as well. This is the latest news: average properties are devaluing by about $2,200 per day. Since the February peak, real estate of all kinds has declined an average of $260,000. This is almost exactly 20% – an erosion that would be called a ‘bear’ market, were we talking equities.

In other words, prices have rolled back an entire year, and we’ve likely only started. The real estate cartel in the Big Smoke tried to fudge things (like their Vancouver brethren) by pointing out prices are up 1% year/year. But do not be deceived because (a) that’s still a 7% decline after inflation and (b) the trend down is undeniable. A quarter million dollars+ in five months. Detached houses have now shed almost a third of their value, making recent buyers into, well, greater fools.

Says Old Ron the Realtor, our insider blog dog:

Remember, July Stats do not take into consideration that the July 13 rate hike has not fully impacted buyers. Most are carrying around Pre-Approval rates which are good for 60 days. Some may be using old rates as low as 2.5% variable. Mid September will spell the end of the old rates, and by then we will have the September 7 rate hike to consider. Sales-wise the market is totally stuck. Only 1,817 properties changed hands in the (416), a stat that resembles a December number from the mid 1980s.

Sellers hold out much hope that three things will happen. 1) The Bank’s will lower rates becuase real estate is too important to the over-all economy. 2) Millions of people from other lands will come to Toronto to drive up prices, 3) The high price of rent in Toronto will drive people to purchase a home. I wouldn’t hang my hat on any of them. As George, the Oracle of the Greektown mentioned last week, “I can buy a Villa on the ocean in Greece for less than $200,000 Euro’s. ($260,000 Canadian)” Makes you think about the fair value of a roof over one’s head.

Indeed. There are many reasons why, at least in the short-term (the rest of 2022), this market is smoked. Sales are a mess – down 47.4% year/year, and off 24% from the previous month. Worse that YVR. Sellers are unaware of what’s happening, with a huge number of delistings taking place. Old Ron is right. The blinders are on.

Incredibly, there were over 2,800 listing terminations in June, which was a 680% increase over the number in January. But despite fewer places to choose from, prices continue to plop – so just imagine what happens after the next interest rate increase when owners understand this horse is not going back into the barn.

Says the Chief Wizard of the real estate board: “With significant increases to lending rates in a short period, there has been a shift in consumer sentiment, not market fundamentals,” as he called on Ottawa to being in measures that would shield buyers from the impact of higher mortgage rates. An end to the stress test, maybe? A return to those 40-year mortgage amortizations? Maybe even a re-run of the Flaherty/Harper 0% down strategy?

In other words, the realtors suggest, the feds should ride to their rescue with fiscal stimulus to wipe away the impact of the cut in monetary stimulus by the central bank. Seriously. They said that.

The price of a detached house (on average) is now $1.36 million. Yes, lower than a year ago. But here’s the key stat: in February the average 416 detached was fetching $2,073,989. Last month that became $1,515,763. The difference of $558,226 is $111,645 per month. The decline in that period of time is 27%. In the last serious housing crash (which started in 1989) it took three years for the market to shed 32% – so you can see we’re now on Warp Speed.

This blog has long warned you exactly such an event could happen to the market overall. We told you 2% mortgages were an aberration. We suggested you lock into a low rate, maybe even a 10-year at 3%. We told you in February it was a lousy, dangerous time to buy. We encouraged anyone thinking about selling to do so last winter. And for the past 14 years the credo has not changed. Be balanced. Be diversified. Do not have a one-asset strategy. Buy a house if you need one and can actually afford it. And know that it’s never ‘different this time.’

Having said that, five years ago we never heard of Covid, WFH, CERB, Peloton and couldn’t imagine mortgage rates at a buck 99. Housing went ballistic. We lost our minds. This is the inevitable result. Not a flatline. Not a melt. Not a correction. But a crash.

About the picture: “Here’s an updated photo of Ziggy our thoroughly West Coast Aussie Doodle,” writes Lloyd, the pushy pet parent. “Previous photo a year ago she was forest-bathing. This time she’s hanging out in Cox Bay in Tofino. She has happily become a devoted water dog. Updated MSU: still a charter member daily reader with continuing benefits and prosperity from much of your (and your colleagues’) generous advice – thank you!”

153 comments ↓

#1 Doug t on 08.04.22 at 4:14 pm

BURN IT DOWN

#2 Flop… on 08.04.22 at 4:15 pm

Flop Drops.

This ain’t good.

You wanna call this one Pink Snow, go ahead, I’ll just present the case, your honor.

The bubble blew out to the valley, via the hot air coming out of Vancouver, I’ve been showing a bit more of Chilliwack than I thought I might, but when some of the stuff I’ve been discovering is happening, it’s worth pausing for a minute, or two.

The details…

46285 First Ave, Chilliwack.

Asking 875k

Just sold for 675k

The seller apparently only bought the property in January 2022, before things started to unravel for 875k.

So they were trying to get out of it with a realtor commission hand smack, and ended up losing 200k, plus the smack.

After all is said and done, probably a 25% loss in a short span of time.

The main story with this one is it happened at the bottom rung of Greater Vancouver detached ladder.

Vancouver still has a long way to go down to get back to 2017 levels, but the last wave of 2022 real estate investor graduates are up against a tsunami of marketplace change.

Probably no Christmas card for the realtor this year…

M48BC

https://www.zealty.ca/mls-R2684336/46285-FIRST-AVENUE-Chilliwack-BC/

#3 Nat on 08.04.22 at 4:17 pm

>> This is the inevitable result. Not a flatline. Not a melt. Not a correction. But a crash.

Hate to say it but love to see it

#4 Dave on 08.04.22 at 4:18 pm

3.4 million for a two thousand square foot 20 year old home in Vancouver.
https://www.realtor.ca/real-estate/24737613/3347-trutch-street-vancouver

#5 Bob in Hamilton on 08.04.22 at 4:20 pm

So, I guess the question on everyone’s mind here in Canada today is how low will this “crash” take us?

We live in interesting times….

#6 jess on 08.04.22 at 4:20 pm

so who created those “affordability” indexes/

New association to represent realtors in region
The Kitchener-Waterloo Association of Realtors and Cambridge Association of Realtors have amalgamated to become the Waterloo Region Association of Realtors
CityNews Kitchener
about 24 hours ago

#7 mitzerboyakaQueencitykidd on 08.04.22 at 4:21 pm

Dogs r Great
beer is good
people git what they deserve

#8 crowdedelevatorfartz on 08.04.22 at 4:23 pm

If houses aren’t selling and moving in the Summer…. taking them off the market for a few months is flipper and speccer suicide.

It’ll be a bloodbath in the Fall ( “fall” ha ha get it?) when the greaterfools pull their collective heads out of the Real Estate sand and rush in to list….

#9 No Fool on 08.04.22 at 4:24 pm

$1.8M to $1.9M was the highest back in Feb in my little pocket of the east GTA Pickering. Now they sit at $1.4M ask unloved…

But bigger fools changing the dishwasher, fridge, windows, carpet all for staging. Doesn’t mean squat.

Next step, delist.

#10 Penny Henny on 08.04.22 at 4:27 pm

#128 crowdedelevatorfartz on 08.04.22 at 1:28 pm
@#123 Ponzies Paradigm

What’s next?
Accountants moonlighting as circus clowns for cash?

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

It’s actually the other way around, easier pivot.

#11 A01 on 08.04.22 at 4:33 pm

Garth please do cottage country!!!

#12 Dreeeemer on 08.04.22 at 4:34 pm

I’ve been a bear since 2004 and reader since 2008. I’ve waited a long time for this crash. Lol. Perhaps my kiddos will be able to afford a home one day.

#13 Omicron Kenobi on 08.04.22 at 4:34 pm

Indeed, we’re now on Warp Speed.

The crash is just like my variants, and my BIL Monkeypox.

No point in running away, we’ll have you all soon.

#14 Senator Bluto on 08.04.22 at 4:35 pm

This kind of makes sense: my kids are far more conservative than I would have expected, and the pandemic and it’s fallout have made them grow up much quicker than we had to.

Going straight from Jagmeet to Pepe. No stop in the middle to smell Trudeau’s hair.

https://nationalpost.com/opinion/sabrina-maddeaux-pierre-poilievre-is-eating-jagmeet-singhs-lunch?

#15 valleyranter on 08.04.22 at 4:37 pm

Bunnypatch getting kicked in the thickets.

#16 That is why Canada is now toast on 08.04.22 at 4:38 pm

Real estate is the economy

#17 Me Ed on 08.04.22 at 4:40 pm

so just imagine what happens after the next interest rate increase when owners understand this horse is not going back into the barn.
——————————————
Yup not going back cause the barn just burnt down.

#18 Jeff on 08.04.22 at 4:41 pm

Its amazing how no media outlets are reporting reality right now.

#19 Stone on 08.04.22 at 4:45 pm

But here’s the key stat: in February the average 416 detached was fetching $2,073,989. Last month that became $1,515,763. The difference of $558,226 is $111,645 per month. The decline in that period of time is 27%. In the last serious housing crash (which started in 1989) it took three years for the market to shed 32% – so you can see we’re now on Warp Speed.

———

Maybe the real estate market has taken on certain characteristics of the stock market. Quick drop. Quick rise back up.

I have a hard time believing that it would actually be the case but funny to consider. I guess only time will tell.

Why would prices rise in the absence of any changed conditions? – Garth

#20 Kurt on 08.04.22 at 4:49 pm

I remember you predicting a step-down in price and then a multi-year melt. It’s good to see people change their positions when conditions change. Crash. I can only hope that governments keep their hands in their pockets and let this long-overdue correction work itself out on its own.

#21 Froggy on 08.04.22 at 4:50 pm

Garth you say it like it is. It’s not avoidable it’s a crash like l thought and l hope no one gets hurt but if you were greedy and made it harder to get in a house good for those that could not afford and for those that scrapped and saved and then borrowed from your parents well there goes your inheritance as well or a big chunk of it maybe now you can think of all the consequences during this long
Crash congrats

#22 Dave on 08.04.22 at 4:52 pm

Back when rates were 5.5%…you could buy a crack shack in Metro Vancouver for $275,000

We are now close to 5%….is there any chance the same house will be less then $1M?

#23 Dave on 08.04.22 at 4:59 pm

What if there is a Global Recession….will rates Rise?

#24 Prince Polo on 08.04.22 at 4:59 pm

Says the Chief Wizard of the real estate board: “With significant increases to lending rates in a short period, there has been a shift in consumer sentiment, not market fundamentals.

The market has fundamentals?! What a diabolical and heartless shyster! Raze the entire “profession” and start over with Fiduciary Facilitators of Real Estate. Now that’s a government intervention I can endorse with my pathetic vote.

#25 45north on 08.04.22 at 5:04 pm

the c-word = crash

Incredibly, there were over 2,800 listing terminations in June, which was a 680% increase over the number in January. But despite fewer places to choose from, prices continue to plop – so just imagine what happens after the next interest rate increase when owners understand this horse is not going back into the barn.

I imagine that some owners are going to bail. Those who can, will just leave the country. Most won’t but they aren’t going to be happy campers. Most home owners are going to be affected in some way shape or form. People who thought they could sell their house for $2 million and retire to some remote place like Nova Scotia are going to find out that’s not going to happen.

I imagine that it’s going to be very easy for Pierre Poilièvre to run. He just needs to say “I’m not Justin Trudeau”. Not that I’m a fan.

#26 Paul on 08.04.22 at 5:07 pm

#11 A01 on 08.04.22 at 4:33 pm
Garth please do cottage country!!!
————————————————————————————————
There are only so many tears right now.
When the cottage folks are paying for multiple mortgages, Heloc’s and credit lines in the fall and winter look out below.

#27 Drew on 08.04.22 at 5:09 pm

Down 20%+ and still overpriced

#28 Leanne on 08.04.22 at 5:10 pm

I know you say everywhere.. but any chance you have the stats for this year for Calgary?

#29 yorkville renter on 08.04.22 at 5:10 pm

just like George, the Oracle of Danforth, I often look at properties in nicer climes and wonder how and why people spend 5x – 10x to live in this winter hell hole called Canada (I do love Canada for 8 months of the year!)

#30 Summertime on 08.04.22 at 5:12 pm

Of course it will be a crash.

The sellers who delist now will get really nervous in the fall.

60-70 % down in GTA from the top seems a no brainer.
Just a note that houses increased by 52 % in the last 2 years alone. It will require 33 % decline to revert just that. It will be a reality pretty soon.

For prices to go back to ‘normal’ and with predicted (Zoltan Posnar, Credit Suisse) potential interest rates of 5-6 % for quite some time/mortgage rates of 7-8 %/ decline of 60-70 % seems pretty realistic.

Speedy crash and then slower decline for a very, long time. Combined with inflation of necessities that will crash disposable income….

Not a pretty picture for those who bought at the top.
Thinking about it for sellers in Toronto – for 6 months decline of 500 k is quite some number. The good news is that this is just the beginning.

#31 Stone on 08.04.22 at 5:13 pm

#19 Stone on 08.04.22 at 4:45 pm
But here’s the key stat: in February the average 416 detached was fetching $2,073,989. Last month that became $1,515,763. The difference of $558,226 is $111,645 per month. The decline in that period of time is 27%. In the last serious housing crash (which started in 1989) it took three years for the market to shed 32% – so you can see we’re now on Warp Speed.

———

Maybe the real estate market has taken on certain characteristics of the stock market. Quick drop. Quick rise back up.

I have a hard time believing that it would actually be the case but funny to consider. I guess only time will tell.

Why would prices rise in the absence of any changed conditions? – Garth

———

I did say I have a hard time believing that.

I also said it would be funny.

Never said it would actually happen.

In a scenario where infinite multiverses occur, that exact scenario is actually playing out…right now. And you Garth, are the head of the real estate board. OMG!

Did I just make everyones brains explode?

#32 Adam Smith on 08.04.22 at 5:14 pm

And some associates making maybe $170k just bought another house on a variable rate in Victoria, making it three they now own in this city, all bought in the last four years. Really gambling everything on the idea it’s different here. Guess we’ll find out if they are right.

#33 IHCTD9 on 08.04.22 at 5:16 pm

#4 Dave on 08.04.22 at 4:18 pm

3.4 million for a two thousand square foot 20 year old home in Vancouver.

——-

…built on a crumbling 1952 foundation. That listing slaps harder than Will Smith.

#34 Big Bucks on 08.04.22 at 5:16 pm

Garth the scary part is even a 50- 60% crash would only take us back to 2019 prices.If I remember correctly 2019 prices were considered absurb and many were calling for a crash then.How ugly could this situation get?

#35 Fool on 08.04.22 at 5:21 pm

I read in FP a realtor asking for more transparency with the mortgage stress test.
This is the same bunch of people that run blind bid auctions and they now gripe about transparency.

#36 Well travelled on 08.04.22 at 5:22 pm

You just know that the Liberals must do something if they are retain any support at all from younger voters. My guess is the return to 30, 35 or even 40 year amortization rates.

#37 IHCTD9 on 08.04.22 at 5:24 pm

#8 crowdedelevatorfartz on 08.04.22 at 4:23 pm

It’ll be a bloodbath in the Fall ( “fall” ha ha get it?)

———

“I’ve gotten burned over Cheryl Tiegs,
Blown up for Raquel Welch.
But when I wind up in the hay it’s only hay, Hey Hey.”

#38 Nihilist on 08.04.22 at 5:28 pm

Tiff Macklem still has to hike some more.

Let the real estate prices fall some more!

I can’t wait till the WFH crowd has to return to the office, and they are forced to liquidate their small town homes, lest their jobs be offshored to emerging markets.

Do you know that one can hire an office worker from Jamaica, Philippines or Thailand for $400 a month and they will do a BETTER job than those UNIFOR, CUPE and OPSEU employees who are paid on average $400 per day?

#39 Søren Angst on 08.04.22 at 5:30 pm

“…busted the myth that BC’s steamy little housing lustfest is immune to current flaccidity”
– Garth

Really?

I keep Commenting here that you need to be more forthright in your assertions.

Say what you mean. Geez. Louise.

————–

THAT was good Garth. It was.

#40 Nonplused on 08.04.22 at 5:34 pm

Well, this is what you get when you let a bunch of government educated bureaucrats mess with market rates. Interest rates should be set by the market. The Fed banks should only follow with the correct amount of money. Attempts to increase the money supply through artificially low rates got us here, and they didn’t help the economy. And returning rates to normal won’t hurt the economy either except that there are now a lot of price distortions that have to be undone.

Always remember that inflation is always and everywhere a monetary phenomenon, and there is no such thing as an “overheated economy”. The answer to increased demand is increased supply and that mechanism is “self healing” if you leave it alone. The answer is not demand destruction via higher rates. However, artificially low rates cause bubbles everywhere and all bubbles must pop. Not because we want them too, but because they must, their time on the wind is limited.

The real estate bubble was on its way to popping even with low rates because prices were far to distorted. It would have happened anyway. The Fed is responsible for blowing the bubble, not its popping. Like a child blowing soap bubbles, the effort is all in making the bubbles, they pop on their own.

#41 Dave on 08.04.22 at 5:34 pm

From the Globe
“TRREB said this wild increase in lending rates has changed the sentiment in the market. Board president Kevin Crigger urged the federal government to reassure homeowners they will be able to stay in their homes despite the rising cost of borrowing.

“The federal government has a responsibility to not only maintain confidence in the financial system, but to instill confidence in homeowners,” he said in a news release. The board urged policy makers to consider lengthening the mortgage amortization period to 40 years from the current 25 years.”

The Feds created this bubble by dropping the rates to absurd levels and now this idiot thinks they should make the amortization period 40 years. LOL

#42 The General on 08.04.22 at 5:35 pm

Why should the rest of us pay for this evolving fiasco? Who drilled into these people’s heads that they must buy real estate at all costs? This has gone on long enough, and reality is gonna bite these greaterfools in the ass. A great philosopher once said “stupid is as stupid does”.

#43 Mattl on 08.04.22 at 5:38 pm

And that crash will take out the economy. It has to, there is no reasonable scenario where 2T in RE equity gets wiped out while the cost to carry the debt associated doubles. Commerce is going to grid to a halt, and based on July spend numbers I’ve seen, same store sales are about 1/3 of what they were at the beginning of the year, and adjusted for inflation, negative. The Q3 retail report is going to be ugly. And we haven’t even seen job losses yet, those will put further downward pressure on consumer spending.

I’ve been saying on the blog careful what you wish for. Yes homes will be become much cheaper, which is a good thing, but there will be a price to pay for an economy that is dependent on cheap money and the belief that we are “richer then we think”. Turns out we aren’t, and when this tide goes out, look out.

#44 The General on 08.04.22 at 5:38 pm

Unfortunately for the rest of us, the Jag and Justin clown show can just click-print more dollars and make it all better. Orifice’s be damned.

#45 Math is Hard on 08.04.22 at 5:42 pm

I’m always bothered by assuming that capital tied up in a house is just a lost opportunity cost. That seems a bit simplistic.

Maybe it should be treated as a call option and valued as such? That makes more sense to me as there’s an expiry, a volatility and a risk free capital rate.

You might make money or lose money, depending on timing and the market conditions. Thoughts?

#46 Victor Llearna on 08.04.22 at 5:43 pm

Prices in the big smoke need to come down 80-90%. I have lived in 4 other cities and Toronto is by far the worst place to live by far yet houses cost more than double. I thought they were overpriced back in 2008 .

Toronto has the worst of everything. Worst airport, worst traffic, worst public transportation worst commute times worst gun crime in Canada etc…

#47 crowdedelevatorfartz on 08.04.22 at 5:46 pm

@#37 IHCTD9
““I’ve gotten burned over Cheryl Tiegs,
Blown up for Raquel Welch.
But when I wind up in the hay it’s only hay, Hey Hey.””
+++
Only Greaterfools are The Fall Guy these days.
:0

#48 Brian on 08.04.22 at 5:46 pm

LILLEY: Faulty policy partially to blame for hospital staff shortages

https://torontosun.com/opinion/columnists/lilley-faulty-policy-partially-to-blame-for-hospital-staff-shortages

#49 jess on 08.04.22 at 5:47 pm

Rigor and Transparency in Research Reliability

https://www.gao.gov/products/gao-22-104411

https://retractionwatch.com/2022/07/30/weekend-reads-50-years-after-tuskegee-is-psychological-science-self-correcting-the-peer-review-system-is-broken/#more-125339

==========================
Altered images? paper goes back to 2006

Blots on a field?
A neuroscience image sleuth finds signs of fabrication in scores of Alzheimer’s articles, threatening a reigning theory of the disease

21 Jul 2022ByCharles Piller

https://www.science.org/content/article/potential-fabrication-research-images-threatens-key-theory-alzheimers-disease?utm_source=citynews%20kitchener&utm_campaign=citynews%20kitchener%3A%20outbound&utm_medium=referral
============================
The U.S. Justice Department has opened a criminal investigation into Cassava Sciences Inc (SAVA.O) involving whether the biotech company manipulated research results for its experimental Alzheimer’s drug, two people familiar with the inquiry said.

#50 Søren Angst on 08.04.22 at 5:50 pm

As a Paleo that lived the 80s and reading some of the Comments people are making here where they think it, Cdn RE, will all be better very fast according to their personal schedule.

It will get worse with the numbers from today/yesterday than the 80s ever were.

AND the CB fun has just begun.

A decade of hurt for reckless Cdn RE investors. They will be ruined financially by higher rates and rampant inflation, taken out of the economy for that decade. That money instead will be put in the hands of others. See what they do.

————-

Welcome to:

Creative Destruction

You did it to yourselves. Too late to make amends.

#51 islander on 08.04.22 at 5:52 pm

Oh and did we mention??

“Buying a house is a significant investment—for most of us, it’ll be the largest purchase we’ll ever make, and the biggest debt we’ll ever take on. Which can cause heart palpitations,……especially when you realize the house itself is just a collection of home repair bills waiting to be paid.”

https://lifehacker.com/the-true-costs-of-deferred-home-maintenance-1849355574?utm_source=pocket-newtab

#52 NOSTRADAMUS on 08.04.22 at 6:05 pm

S.O.S. MARITIME DISTRESS SIGNAL.
That deafening sound highly leveraged real estate speculators are hearing is their good ship” S.S.PARTY DREAMS,” crashing against the bankers locked-barred iron doors. There is no longer solidarity between the bankers and their clients in that the bankers have no policy in place to ward off the nightmare engulfing the speculators. The delusional assumption that they can always access credit whatever happens, even if they have to pay usury rates is not to be. It is not just a question of price, as short term financing costs have matured , rolled over and doubled up. As Garth has preached for years, interest rates would eventually rise from the dead. It has been a tale of drift, culminating in the speculators ship “S.S. PARTY DREAMS” crashing on the bankers barred iron doors. S.O.S. (SAVE OUR SOULS) S.O.S.—S.O.S.— S.O.S. No one is coming. New point. The great economist Frederic Bastiat in the 19th century emphasized that the real costs of policy-inspired destruction aren’t what you see but what you don’t see. It’s the investment that did not take place, the income we did not make, the savings we otherwise would have socked away but did not, the technologies that might have come into being, the jobs that would otherwise have been created, the art and music that never saw the light of day, the progress that would have defined our times that we never saw. I don’t think anyone can argue with his point of view as to the destructive policies (madness) we have endured . Steady Lads, hold the line.

#53 Spia on 08.04.22 at 6:16 pm

Same thing is happening in Australia. Not just a Canadian problem. China’s ress add restate is imploding too. With heloc money drying up no more buying of big ticket items (Walmart not selling TVs) = no more demand at factories = less jobs, firings at retail, less commodities, firing at mines. This will become a real mess. Hang on to your jobs.

#54 Real men ride real bikes! on 08.04.22 at 6:18 pm

Nice of you to bring up Peloton in a piece about flaccidity.

Yikes.

How does one catch a flat…without having tires?

Peloton is down 60% all time. But down over 90% from peaks.

#55 Retro Blogs on 08.04.22 at 6:22 pm

I’m not sure I like these % drops measured from Feb 2022 crazy peaks. Pricing was way out of whack Dec 2019.

The fever Covid caused should be an exception and noted as such.

May I remind you what was posted December 2019, when prices were already way detached from incomes or affordability?

>
The average detached house price crested two years ago, but the composite benchmark price hit a new all-time high just last month. It was $815,000, up almost 7% year/year. In 416 the benchmark was $903,700, according to real estate board stats.

https://www.greaterfool.ca/2019/12/26/the-envelope-please-2/

If the 416 last month was $1,515,763, are we not $600,000 away from December 2019 still?

My point Sir, is that we’re some ways away from any sort of affordability. And 50% drop means nothing. It still means $100,000 more than Nov/Dec 2019 in Pre-Covid days.

Houses/Condos need to drop 60% to make a real dent.

#56 Quintilian on 08.04.22 at 6:23 pm

“Maybe even a re-run of the Flaherty/Harper 0% down strategy?”

Memo to the Trudeau bashers:

The vote buying scheme was hatched by the Conservatives, the Liberals are an accessory to the injustice after the fact.

#57 Ponnaps on 08.04.22 at 6:28 pm

After much procrastination and deliberation, the oracle has spoken.. a “crash” has finally been declared..

Thing’s are about to get real serious out there.. watch out folks!

#58 The Forecaster on 08.04.22 at 6:30 pm

The facts are now showing a crash. No surprise here.

This line follows what the forecaster has been saying since last year.

If I make the mark on another one of my calls, I would like some props, since everyone is calling me an idiot, seeking click bait, totally wrong.

When in reality I nailed the 09′ stall (not just calling it) putting money on it, and again in 2018 and possibly again right now as the “crash in progress” is only half over and has not crash landed yet.

This is going to be like the big real estate crash 30 years ago with more valuation at stake and a loooooooooooong sideways trading (13-15 years) of slow recovery starting next May IF rate hikes stall out, THEN.

IF rate hikes keep going into 2023, the falling ain’t over by next May, AND IF rate cuts appear, THEN whipsaw time in adjusting to increased lending capacity.

However, the damage being done right now is gonig to morph into big job loss and 2023 is going to suck, so a rate cut might not have the same effect if everyone worried about jobs, which is a double whammy for real estate and going to completely melt down.

The talk about the big one. This could be it. I mean, I think it is.

Let’s see what happens.

#59 Ponnaps on 08.04.22 at 6:35 pm

When is a good time to consider taking out equity from your current home, renting it out to cover costs and using the equity as a down payment if one is looking to upsize..

The idea being to sell the rented property once the market returns, even if it takes 2yrs to carry

Never. – Garth

#60 Yukon Elvis on 08.04.22 at 6:36 pm

#36 Well travelled on 08.04.22 at 5:22 pm
You just know that the Liberals must do something if they are retain any support at all from younger voters. My guess is the return to 30, 35 or even 40 year amortization rates.
++++++++++++
I can see that happening. Maybe a fixed rate 30-35 year mortgage. No down payment. They will be desperate to prevent a full blown crash.

#61 Steven Rowlandson on 08.04.22 at 6:38 pm

One third drops in price do not make homes affordable.
It takes much more than that pathetic bloodletting before anyone doing real work can afford to live in Canada.

#62 TheDood on 08.04.22 at 6:39 pm

#34 Big Bucks on 08.04.22 at 5:16 pm
Garth the scary part is even a 50- 60% crash would only take us back to 2019 prices.If I remember correctly 2019 prices were considered absurb and many were calling for a crash then.How ugly could this situation get?
______________________

We’re gonna find out aren’t we?

______________________

#36 Well travelled on 08.04.22 at 5:22 pm
You just know that the Liberals must do something if they are retain any support at all from younger voters. My guess is the return to 30, 35 or even 40 year amortization rates.

______________________________________

So the government creates conditions to make it easier for more dummies to buy real estate they can’t afford? Good idea.

#63 Dave on 08.04.22 at 6:41 pm

DELETED (Anti-immigrant)

#64 Reality is stark on 08.04.22 at 6:59 pm

To all those who mock the great US of A and spend too much time contemplating conspiracy theories ask yourself what has happened to the former El Qaeda leadership group.
Don’t bet against the mighty US dollar and don’t deride US citizens.
The forefathers wrote the brilliant constitution and for the most part the people buy into it.
Socialism sounds tempting but they’ll take your soul if you let them ….so don’t you let them.

#65 Ponnaps on 08.04.22 at 7:09 pm

Never. – Garth

only 200k left on the current mortgage.. current value is 1.3m … looking to take out 800k equity for the down payment ..refinance not heloc for better rates.. rents are 4K

There absolutely has to be an inflection point when this strategy starts making sense.. it can’t be never

#66 Wrk.dover on 08.04.22 at 7:19 pm

My dropping RE mkt value, helps me comply with the Garth rule of 90 without adding in new earnings.

This is good?

#67 OK, Doomer on 08.04.22 at 7:23 pm

#60 Yukon Elvis on 08.04.22 at 6:36 pm
#36 Well travelled on 08.04.22 at 5:22 pm
You just know that the Liberals must do something if they are retain any support at all from younger voters. My guess is the return to 30, 35 or even 40 year amortization rates.
++++++++++++
I can see that happening. Maybe a fixed rate 30-35 year mortgage. No down payment. They will be desperate to prevent a full blown crash.

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

And now you know why the Woke-Progs want everyone to think math is racist because it was invented by a bunch of old white guys.

If the youngsters ever learned math they would never vote for any leftist policies.

#68 IHCTD9 on 08.04.22 at 7:24 pm

“Maybe even a re-run of the Flaherty/Harper 0% down strategy?”
———-

Whatever our numpty PM does, we can rest assured it’ll be the worst possible decision anyone could make.

We’d have to exhume Hugo Chavez to find a worse PM. And if we failed to bring him back from the dead, his lifeless corpse would still do a better job running the country than Trudeau.

#69 The General on 08.04.22 at 7:26 pm

Deutsche Welle reports 80% of Russian commodities are traded via Switzerland. Swiss trading houses Vitol, Glencore and Gunver as well as Singapore based Trafigura continue lifting large volumes of Russian crude products. Is it cool for everyone to hate everything Swiss moving forward?

#70 Dogman01 on 08.04.22 at 7:35 pm

#18 Jeff on 08.04.22 at 4:41 pm

Its amazing how no media outlets are reporting reality right now.

#20 Kurt on 08.04.22 at 4:49 pm

Crash. I can only hope that governments keep their hands in their pockets and let this long-overdue correction work itself out on its own.

—————————————————-

When you see this being promulgated by our MSM it will come as a campaign of several weeks, many sob stories of unlucky deserving families, a campaign on all MSM outlet, coordinated to set a narrative in the mind.

Then, as if by a miracle you see a “program” announced by our benevolent government to help those poor indebted Canadians, supported by the Canadian Banking establishment.

Media, Government, Finance – “all the king’s horse’s and all the king’s men trying to put Humpy back together again”

This is why the young are moving to Pepe, they realize the system is rigged to support a status quo, “it’s a club and the young are not in it”.

It is no longer Left & Right It’s more accurately described as top/bottom. Lords/serfs.

https://nationalpost.com/opinion/sabrina-maddeaux-pierre-poilievre-is-eating-jagmeet-singhs-lunch?

#71 The General on 08.04.22 at 7:35 pm

Was my non deleted, vaporized into the ether comment a little too hot to handle, Garth?
“The more you say I can’t say something, the more urgent it is for me to say it.”
Dave Chappelle

Irrelevant to the post or the discussion here. – Garth

#72 The Original Jake on 08.04.22 at 7:36 pm

“Only 1,817 properties changed hands in the (416), a stat that resembles a December number from the mid 1980s”

I am one of those 1,817 properties… house successfully closed end of July. Glad to be out.

#73 Wrk.dover on 08.04.22 at 7:36 pm

#66 Wrk.dover on 08.04.22 at 7:19 pm
My dropping RE mkt value, helps me comply with the Garth rule of 90 without adding in new earnings.

This is good?
____________________

Actually though, at Book Value I have always been in compliance.

#74 The Original Jake on 08.04.22 at 7:41 pm

#12 Dreeeemer on 08.04.22 at 4:34 pm
I’ve been a bear since 2004 and reader since 2008. I’ve waited a long time for this crash. Lol. Perhaps my kiddos will be able to afford a home one day.

correction… I’m with you… but we are still miles from anywhere near affordable still. Prices today are still roughly double from those of 8 years ago, GTA anyways.

#75 The General on 08.04.22 at 7:53 pm

#64- Reality is Stark: A Constitution written by humans may be well intentioned, but is still flawed. As for El- CIA-Duh, you tell me where they went.

#76 KLNR on 08.04.22 at 7:55 pm

that villa on the ocean in Greece is lookin’ pretty good as more and more employers come to the realization that WFH is here to stay.

#77 The General on 08.04.22 at 7:56 pm

It’s still true, and you can’t make that $%&@ up! Thanks, Garth, you’re cool in my books.

#78 KLNR on 08.04.22 at 8:00 pm

@#5 Bob in Hamilton on 08.04.22 at 4:20 pm
So, I guess the question on everyone’s mind here in Canada today is how low will this “crash” take us?

We live in interesting times….

would have to crash hugely just to get back to last years prices. if you bought recently with the intention of flipping for a big profit it sucks to be you.

#79 KLNR on 08.04.22 at 8:03 pm

@#12 keep Dreeeeming on 08.04.22 at 4:34 pm
I’ve been a bear since 2004 and reader since 2008. I’ve waited a long time for this crash. Lol. Perhaps my kiddos will be able to afford a home one day.

bizarre way to go through life.

#80 KLNR on 08.04.22 at 8:09 pm

@#63 Dave on 08.04.22 at 6:41 pm
Re 46 “Toronto has the worst of everything. Worst airport, worst traffic, worst public transportation worst commute times worst gun crime in Canada etc…”

That’s because the Liberals have flooded the country with immigrants and many end up in Toronto.

ahh , the old blame the immigrants for everything trope.
immigration has been the same going on 30+ years.

#81 Eco Capitalist on 08.04.22 at 8:16 pm

Garth, does comment 63 need a second look?

Yes. Thank you. – Garth

#82 That Guy on 08.04.22 at 8:18 pm

Ok, so now it’s time that keep your powder dry folks. With higher interest rates it’s easier to save your down payment.
With lower prices it’s easier to break even on rental income.

The rich get richer, full steam ahead!

#83 Brian on 08.04.22 at 8:30 pm

DELETED (Conspiracy nut)

#84 Quintilian on 08.04.22 at 8:33 pm

#60 Yukon Elvis on 08.04.22 at 6:36 pm
“I can see that happening. Maybe a fixed rate 30-35 year mortgage. No down payment. They will be desperate to prevent a full blown crash.”

You can’t say stupid stuff like that and be forgiven, unless you are an economist(marketer) from the RE Board.

#85 crowdedelevatorfartz on 08.04.22 at 8:42 pm

@#56 Quintillian
“The vote buying scheme was hatched by the Conservatives, the Liberals are an accessory to the injustice after the fact.”
+++
Vote buying has been going on for hundreds of years and Canadian Conservatives didn’t invent it.
But Liberals may have perfected it with a blown budget and the country $500 BILLION deeper in debt in 3 years.

I was at the liquor store in the Maritimes a few weeks back and when my bag of bottles clanked in the back seat of the Rental, my 90+ year old uncle reminisced about the pickup truck loads of pint bottles of booze that were delivered to the various district “bosses” to hand out to voters on polling day….all across the Island.
Each district “bagman” would go to the local bank branch several days before the election and withdraw thousands in cash to buy booze.
The different party bagmen would literally pass each other entering and leaving the bank with bags of cash to distribute to the booze buyers.
Elections.
The only thing that has changed about the voting bribes is the amounts….
And we call it “National Daycare”….. as our Health Care collapses.

#86 crowdedelevatorfartz on 08.04.22 at 8:51 pm

DELETED

#87 DON on 08.04.22 at 8:52 pm

#12 Dreeeemer on 08.04.22 at 4:34 pm
I’ve been a bear since 2004 and reader since 2008. I’ve waited a long time for this crash. Lol. Perhaps my kiddos will be able to afford a home one day.

***********
At least the bear didn’t get caught in a greater fool trap. A house is only worth as much as the next buyer can afford.

#88 Grunt on 08.04.22 at 8:58 pm

American SW lower Colorado basin. Lakes Meade & Powell inch towards deadpool. A huge legal entanglement.

#89 DJT on 08.04.22 at 9:02 pm

What I’m seeing is a frozen market, no one is buying, until prices actually start to drop anything can happen.

#90 Randy on 08.04.22 at 9:21 pm

I know…the c-word is CARMA….I can’t read cursive either (KARMA)

#91 DON on 08.04.22 at 9:25 pm

#43 Mattl on 08.04.22 at 5:38 pm
And that crash will take out the economy. It has to, there is no reasonable scenario where 2T in RE equity gets wiped out while the cost to carry the debt associated doubles. Commerce is going to grid to a halt, and based on July spend numbers I’ve seen, same store sales are about 1/3 of what they were at the beginning of the year, and adjusted for inflation, negative. The Q3 retail report is going to be ugly. And we haven’t even seen job losses yet, those will put further downward pressure on consumer spending.

I’ve been saying on the blog careful what you wish for. Yes homes will be become much cheaper, which is a good thing, but there will be a price to pay for an economy that is dependent on cheap money and the belief that we are “richer then we think”. Turns out we aren’t, and when this tide goes out, look out.

*******
I remember lots of your past posts…

The whole ‘careful what you wish for’ is bunk. Inevitable reality can not be wished away. There is no shared pain here. Everyone’s mileage will vary.

But I do agree that things are not looking good world wide.

#92 THE DANDADA on 08.04.22 at 9:54 pm

I enjoy reading your blogs from bottom paragraph to top.

Takes the drama out the equation.

#93 crossbordershopper on 08.04.22 at 9:55 pm

like millions of canadians we own our home outright, we live in the home, it might not be the biggest or the nicest but its paid for and Canada is a cold country its nice to be inside in the winter.
up down what does it matter, I personally am never going to move, my daughter of 16 will be willed it and she will live in it, we should stop thinking of these homes as an asset, a commodity, etc, its a home, not a house, there is a difference.
my total cost to maintain my home is like 8 or 9 grand for the whole year. nothing really. today is wednesday, i didnt even leave my house today, no expenditure or anything, watched the rain from my sunroom. working sucks, cost of going to work sucks, working for the banker sucks, get out of debt, own your home, and then everything else falls into place. once you get one home paid for, its easier to get another, but no landlord or banker will tell you what to do.

#94 Stuck in NB on 08.04.22 at 10:01 pm

Crash or meltdown, with today’s interest rates, affordability hasn’t improved yet:

Spring 2021 – $250k mortgage at 2.14% (10 yr fixed) equals $1076 monthly

Summer 2022 – $1076 monthly equals $184k mortgage at 5.09% (5 yr fixed)

I.e. ~33% drop from the peak price barely returns the buyer to 2021 numbers.

#95 Outrage on 08.04.22 at 10:02 pm

#63
Victoria is becoming like Toronto. I’ve been here 25 years and it’s never been like this . Thanks JT and the crime rate severity is of the charts. Unbelievable how it’s changed.

#96 DON on 08.04.22 at 10:03 pm

#62 TheDood on 08.04.22 at 6:39 pm
#34 Big Bucks on 08.04.22 at 5:16 pm
Garth the scary part is even a 50- 60% crash would only take us back to 2019 prices.If I remember correctly 2019 prices were considered absurb and many were calling for a crash then.How ugly could this situation get?
______________________

We’re gonna find out aren’t we?

______________________

#36 Well travelled on 08.04.22 at 5:22 pm
You just know that the Liberals must do something if they are retain any support at all from younger voters. My guess is the return to 30, 35 or even 40 year amortization rates.

______________________________________

So the government creates conditions to make it easier for more dummies to buy real estate they can’t afford? Good idea.

**********
All governments have been pressured to deal with housing affordability. Not one gov really wanted to be seen as pricking the bubble. The bubble got pricked by inflation forcing increases in interest rates and no doubt unaffordable stupid levels. The debt ball and chain is HUGE…it has three moons orbiting it. The bubble did the dirty work for the govs. The govs at all levels may try to appear to be coming to the rescue…but timing is everything. Most govs don’t react until the damage is done.

Besides, Adults entered into contracts on their own.

How about the folks using their house like a piggy bank or those using reverse mortgages?

So many other factors to weave in…will stop by saying…Dog Pile!

#97 Doug in London on 08.04.22 at 10:05 pm

So at long last house prices will come to something that bears a vague resemblance to normal. It’s long, long, long, long overdue and at long last will fulfill that long awaited dream to Make Canada Great Again. Yahoo, bring it on!

#98 Ronaldo on 08.04.22 at 10:15 pm

#21 Froggy on 08.04.22 at 4:50 pm
Garth you say it like it is. It’s not avoidable it’s a crash like l thought and l hope no one gets hurt but if you were greedy and made it harder to get in a house good for those that could not afford and for those that scrapped and saved and then borrowed from your parents well there goes your inheritance as well or a big chunk of it maybe now you can think of all the consequences during this long
Crash congrats
————————————————————-
Yes, and the kiddies who had no skin in the game can declare bankruptcy and walk away and mommie and daddie are stuck with a $250,000 reverse mortgage with rising interest rates and putting off their retirement plans and watching the equity in their house melt away. Smart move. Hopefully they did not co-sign for the mortgage for Suzie otherwise they are hooped as the bank comes after them for any losses. Lawyers are going to be very busy indeed.

#99 Gr on 08.04.22 at 10:17 pm

Some might find this interesting.
Stock picking is talked about starting @7:13 of 17:58

The 4 things it takes to be an expert
https://www.youtube.com/watch?v=5eW6Eagr9XA

#100 Faith on 08.04.22 at 10:23 pm

Will the crash be felt just as much in provinces like SK and MB?

#101 DON on 08.04.22 at 10:32 pm

https://www.cbc.ca/news/canada/british-columbia/vancouver-tech-firm-unbounce-lays-off-47-employees-1.6541758

Citing current economic conditions.

#102 45north on 08.04.22 at 10:40 pm

Ponnaps only 200k left on the current mortgage.. current value is 1.3m … looking to take out 800k equity for the down payment ..refinance not heloc for better rates.. rents are 4K

so the bank is going to give you $800,000. Let’s see at 5% interest that works out to $6,666.67 a month.

as if

#103 al on 08.04.22 at 11:24 pm

I wonder if next February they will continue to use the year over year number , or use another one that looks better, as the yoy will look catastrophic. However after next February, the yoy number will probably improve!! ( “the markets coming back!” they’ll cheer).

#104 Shirl Clarts on 08.05.22 at 12:13 am

Garth, can you or your suspender snapping porsche dudes (or that sharp dudette) provide another update on a market equities bottom? I think you’ve mentioned late fall or winter, or even early 2023.

Could it be that the bottom was around middle of June? (haven’t sold anything).

VUN is up 12.96% since June 16th.
VCN is up 6.82% since July 14th.
ZRE is up 8.39% since June 16th.

Or will the market continue to be mauled by the Bear?

Then again, Hospitals are short staffed and closing down just in time for the COVID season, Pelosi just green-lit China to invade Taiwan, American Drone strikes in Afghanistan (Biden still can’t read a tele-prompter). And Trudeau has bad hair now? I gotta stop watching the news.

At least there is Woodstock 2029 to look forward to.

#105 Charlene Tripper on 08.05.22 at 12:14 am

Yup, the recession is here. Bougie faux meats aren’t selling and haven’t been for the past two quarters. Is that proof of the exact definition of recession? Beyond Meats and Maple Leaf foods both taking a shellacking on failing sales. What this really shows is that ‘substitution’ is well under way.

What are people buying more of? If you guessed cheese then you can see the shares of Saputo and Burger King rising fast on stellar earnings. I’ll be following the trajectory of all “luxury foods” brands and why dollar stores, fast food and thrifting will come back strong as the credit economy sinks.

The toxic spiral of ‘substitution’ is just starting to spin folks. Real estate is the last to recover from recessionary forces. That’s why the average cycle is well over a decade . The last super swoon we had ‘90 to ‘02 took so many people down we stopped even noticing the carnage as if the market didn’t exist.

#106 Dr V on 08.05.22 at 12:43 am

54 Real men ride real bikes!

Yes, yes they do. How do you feel about Zwift?

#107 fishman on 08.05.22 at 1:05 am

Canada sends 225 troops to train Ukrainian soldiers. I guess sloppy seconds are better than nothing eh Ms. Freeland. I’d prefer the three month head start the Russians got with the Canadian General trained & designated to be in charge of our whole army. I bet he’s teaching the Ruskies a thing or two about Nato’s strategy & tactics. Who would you rather have as financial instructor/mentors? Dr. Gartho or 225 of his bloggie doggie keeners?

#108 fishman on 08.05.22 at 1:28 am

DELETED

#109 Miss Boomer on 08.05.22 at 1:40 am

Oh oh, the overall inflation, rate hikes, food costs soaring, home energy costs rocketing, industrial gas costs tripling, increasing unemloyed and unemployable, etc etc etc. It’s going to be a very divided winter between the have it’s among those special coddled and the hard grind of everyday citizen . Oh Canada, pull the flag down and just give up.

#110 Jane24 on 08.05.22 at 3:37 am

Garth in the late 1980s the market did a slow melt for years as there was no internet. Us Realtors knew there was trouble but the man on the street didn’t until they tried to sell! With the WWW this crash will be huge and super-fast.

I am waiting for the lawsuits to start from screwed over buyers. They brought based on what was practically guarantees from agents and RE boards that the market would never correct. These claims are in writing today, captured forever on the web. Such agents and RE Boards should now be held accountable surely for losses. If I was a Canadian RE agent still today I would indeed be looking at the villa in Greece. I seem to remember that agents and brokers leaving Canada with their gains is what happened last time.

When my parents immigrated to Canada in 1967 they were broke. They would not have purchased multi-million dollar house!

#111 Romulus on 08.05.22 at 6:53 am

Hey Garth, I would like to see some Cottage Country data and what’s going on in the US real estate market(s)?

#112 crowdedelevatorfartz on 08.05.22 at 8:33 am

@#107 fishman

Now that Canada’s new top Lawyer leader of the Military has purged all the military officers under her command.
We will start over.
Our soldiers will train the Ukrainians on how to fight the Russian hordes with polite, politically correct, gender neutral strategies on how to apologize for defeating the enemy.
“When I fall, which one of you (he/she/they) will pick up this flag and carry on?”
They will also prepare the Ukrainians on the cost of reparations 100-200 years from now.
God help us all.

#113 crowdedelevatorfartz on 08.05.22 at 8:40 am

@#111 Remus
” I would like to see some Cottage Country data and what’s going on in the US real estate market(s)?”
++++
The US market wasnt as frothy as ours.
Cottage country won’t get hammered for a few months yet. People are still having fun and in denial.
After Summer is over and the visa bills start washing in like the tide…. sphincters will pucker up.
Then the Great Vacation Property reset will commence.

I noticed a house yesterday that sold a few months ago.
The “Sold” sign is long gone but there is a 5 year old, mint condition, Jeep in the driveway “For Sale”.

First the toys go.
THEN the rec properties.

#114 Sail Away on 08.05.22 at 8:43 am

Here’s a good Harvard Business Review article on Elon Musk’s actions:

https://hbr.org/2022/07/does-elon-musk-have-a-strategy?utm_campaign=mb&utm_medium=newsletter&utm_source=morning_brew

#115 Sail Away on 08.05.22 at 8:52 am

#102 45north on 08.04.22 at 10:40 pm

so the bank is going to give you $800,000. Let’s see at 5% interest that works out to $6,666.67 a month.

———

You may want to doublecheck that

#116 Dharma Bum on 08.05.22 at 9:29 am

#65 Ponnaps

There absolutely has to be an inflection point when this strategy starts making sense.. it can’t be never
———————————————————————————————————

Don’t forget to factor in the $500,000.00 expense of totally gutting and renovating the house you rented out to crack addicts and meth-heads who initially presented themselves as “really nice people”.

Those that naively believe that becoming a residential landlord is a guarantee for easy money are deluded.

#117 Bryer on 08.05.22 at 9:33 am

The obsessed, gullible Canadians loved low interest rates and binging on debt, real estate and laughed at savers, gicers. Now, renters pay 20% more right more coming down the road add another 25% on top of that and your real estate is going down 50% soon. Payback was going someday.

#118 Is anybody listening? on 08.05.22 at 9:35 am

If your going to lie-Make it a Big one!

I am not the least bit surprised. The FED and the administration are desperate to stop the inverted yield curve from shi__ing all over their narrative, that we aren’t in a recession and that they have to keep tightening. I mentioned a while back that conveniently, ADP suspended their monthly job report until Aug.31. This paved the way for today’s total fabricated numbers. They couldn’t have ADP contradicting this pinocchio tale. I was surprised only in the size of the number and the size of the revision for last month. I don’t know why I should be. The only way they were going to get the market to move against the recent trend, bond interest rates lower and gold and silver higher, was to have a blowout number. Voila, we got one. If you believe it, I have this little bridge in Brooklyn that I’d be willing to sell you for a steal. What today’s fairy tale number does, is to allow the FED and their various talking heads to perpetuate the narrative for at least the rest of August. The numbers that aren’t controlled by the government will provide a more accurate story of a slowing economy, but the charade will continue for a while longer.

#119 YVR Renter on 08.05.22 at 9:41 am

#59 – Ponnap
We lived through the 80’s and 90’s. It’s not normally a 2 year turnaround for housing prices to recover, it’s over a decade! Forget anythign you saw happen during the pandemic, it’s not reality. Stop looking at housing as an investment, and talk to Garth & gang about a B&D portfolio, grasshopper.

#120 Observer on 08.05.22 at 10:21 am

#93 crossbordershopper on 08.04.22 at 9:55 pm
like millions of canadians we own our home outright, we live in the home, it might not be the biggest or the nicest but its paid for and Canada is a cold country its nice to be inside in the winter.
up down what does it matter, I personally am never going to move, my daughter of 16 will be willed it and she will live in it

^^^^^^^^^^^^^^^^^^^^^^^^
She will? What if you don’t drop dead until your 90? Will she be living with you until then, or will she move out as a young adult, then move back in when you croak?

#121 crowdedelevatorfartz on 08.05.22 at 10:23 am

@#107 fishman

Perhaps Canadian money would be better spent preparing the Ukrainian troops for a winter war with …..clothing.

The cold and snow will be blowing across the steppes in less than 4 months.
Ukraines fighting troops will need tens of thousands of winter boots, socks, pants, shirts , jackets, hats, etc etc etc.

I’m amazed the anti violence Liberal govt hasn’t yet volunteered to pump millions of Federal $$$$ into gearing up Canadian factories to supply the necessary clothing.
A ‘win -win” in the eyes of a Peace Flag waving Prime Minister.
But they better hurry.
Winter is coming.

#122 Mattl on 08.05.22 at 10:24 am

#91 DON on 08.04.22 at 9:25 pm
#43 Mattl on 08.04.22 at 5:38 pm
And that crash will take out the economy. It has to, there is no reasonable scenario where 2T in RE equity gets wiped out while the cost to carry the debt associated doubles. Commerce is going to grid to a halt, and based on July spend numbers I’ve seen, same store sales are about 1/3 of what they were at the beginning of the year, and adjusted for inflation, negative. The Q3 retail report is going to be ugly. And we haven’t even seen job losses yet, those will put further downward pressure on consumer spending.

I’ve been saying on the blog careful what you wish for. Yes homes will be become much cheaper, which is a good thing, but there will be a price to pay for an economy that is dependent on cheap money and the belief that we are “richer then we think”. Turns out we aren’t, and when this tide goes out, look out.

*******
I remember lots of your past posts…

The whole ‘careful what you wish for’ is bunk. Inevitable reality can not be wished away. There is no shared pain here. Everyone’s mileage will vary.

But I do agree that things are not looking good world wide.

———————————————————

Don I’m not suggesting anyone can wish away what is coming. What I’m pushing back against is the idea that a RE crash can happen, with all other factors remaining the same. Of course YMMV, and some people will pick up homes on the cheap, most likely those that already are in a strong cash position, current homeowners adding second properties, etc. Wishing for a crash that will push us into recession for a lot of people is wishing for your job to be eliminated, for your financial assets to erode. RE in Canada is religion, as Garth points out every day, you can’t decouple it from the broader economy.

And like that the economy shed another 30K jobs in July, second month in a row. Economists somehow had a forecast of 20K jobs added. Not a huge number but getting worse MOM and this thing has barely started.

FWIW I think house prices, the way they have trended, are horrible for Canadians and the economy. I welcome this reset but I don’t think most people understand how this likely plays out. I would love for someone to convince me that 2T in RE equity can evaporate overnight with no major impact to a 2T economy. That consumers dependent on cheap money and credit will keep spending without access to it.

#123 IHCTD9 on 08.05.22 at 10:26 am

The OECD has a detailed report out on Canada’s future, and it ain’t looking too good. As a result of our incompetent Leadership, the youth of Canada will suffer for the bulk of their working careers, and have to retire will a lot less. Decades of stagnation and decline – all thanks basically to one Man.

Canada was in so much better shape back when Harper got the boot – I think we got 3 months or so out of Trudeau before things started to nosedive – and they haven’t stopped nose diving since. Now houses are up 100%, public debt is up 100%, blackface is up 100%, and Canada is a totally fractured society.

Boomers, X’ers, and early Mils – be glad. Be glad you came of age under good leadership that cared about Canada and her people. Leaders like Martin, Chretien, and Harper gave you prosperity.

But most of all, rejoice and shout loud hallelujahs that you are not a young obsequious lefty crippled by Stockholm Syndrome, and still with his whole life ahead of him.

#124 Love_The_Cottage on 08.05.22 at 10:32 am

#111 Romulus on 08.05.22 at 6:53 am
Hey Garth, I would like to see some Cottage Country data and what’s going on in the US real estate market(s)?
__________
I don’t think the band takes requests, but I also would like to get some info on the Ontario cottage country market.

#125 Cottage Cheese on 08.05.22 at 10:44 am

#124 Love_The_Cottage

#111 Romulus on 08.05.22 at 6:53 am
Hey Garth, I would like to see some Cottage Country data and what’s going on in the US real estate market(s)?
__________
I don’t think the band takes requests, but I also would like to get some info on the Ontario cottage country market.
__________

Why would you want to sink good money into something you can use a few months a year at best, half of which you end up spending maintaining the property, fixing broken things, etc. Stressing because of break-ins, or flood, or local fire or…whatever nature can come up with. You drive up 3 hours each way in the dead of winter to check up on it.

All to end up renting it to strangers to try and cover costs.

Garth likes to talk about metals being a bad thing to buy…I say nay.

Cottage? If it’s cheese, sure.

#126 the Jaguar on 08.05.22 at 10:47 am

Maybe Larry Summers was on to something when he said that millions of Americans might need to lose their jobs in order to tame inflation. Lots of news items detailing job cuts here in Canada as well. Demand seems to be falling for more than just real estate. As GT might say, “Down she goes..”. I would add ” and where she stops, nobody knows…”

That dog Ziggy is a yellow eyed dog. Good luck trying to pull any ‘fast ones’ on her.

#127 Real men ride real bikes! on 08.05.22 at 10:51 am

#106 Dr V on 08.05.22 at 12:43 am

Yes, yes they do. How do you feel about Zwift?

Basically a fancy trainer.

Let me update that…

Real men ride real bikes…outdoors!

Although the case for Zwift is decent in Canada, because of the 6 month winters.

Ah…Canadians…instead of getting the heck out of here with their bike, they buy super fancy expensive carbon bikes that have a creaking press fit bottom bracket in a few months only to end up clipping them to a trainer. As if they don’t know that a perfectly good low maintenance spinning bike with a nice 40lbs+ flywheel can be had for a grand or less with no monthly subscription fee attached. Obvious choice…if you’re going to end up riding your $11.795.99 carbon bike indoors anyway.

Maybe that’s the way to justify having a 416 detached for $1,515,763 average – so you can ride your bike!

#128 Sail Away on 08.05.22 at 10:52 am

#116 Dharma Bum on 08.05.22 at 9:29 am
#65 Ponnaps

There absolutely has to be an inflection point when this strategy starts making sense.. it can’t be never

———-

Don’t forget to factor in the $500,000.00 expense of totally gutting and renovating the house you rented out to crack addicts and meth-heads who initially presented themselves as “really nice people”.

Those that naively believe that becoming a residential landlord is a guarantee for easy money are deluded.

———-

Agreed. People are the worst. If the gods are good, I will never landlord (residentially) again.

I’d much rather run a dog kennel.

#129 Ponzius Pilatus on 08.05.22 at 11:20 am

#128 Sail Away on 08.05.22 at 10:52 am
#116 Dharma Bum on 08.05.22 at 9:29 am
#65 Ponnaps

There absolutely has to be an inflection point when this strategy starts making sense.. it can’t be never

———-

Don’t forget to factor in the $500,000.00 expense of totally gutting and renovating the house you rented out to crack addicts and meth-heads who initially presented themselves as “really nice people”.

Those that naively believe that becoming a residential landlord is a guarantee for easy money are deluded.

———-

Agreed. People are the worst. If the gods are good, I will never landlord (residentially) again.

I’d much rather run a dog kennel.
——————
We rent our condo to a couple of guys who play for the other team.
Not that there’s anything wrong with that.
Nicely and tastefully decorated.
And clean as a whistle.

#130 Philco on 08.05.22 at 11:23 am

In other words, the realtors suggest, the feds should ride to their rescue with fiscal stimulus to wipe away the impact of the cut in monetary stimulus by the central bank. Seriously. They said that.

That’s insane! That’s what’s wrong with this country.
What the hay ever happened to the free market.

#131 Ponzius Pilatus on 08.05.22 at 11:29 am

Fri, August 5, 2022, 5:05 AM·2 min read
Off topic.
But I just love physicists pulling practical jokes:
——————-
A world-renowned scientist has been forced to apologise after he shared what he claimed was a stunning picture of a star – and turned out to be a slice of chorizo.
Etienne Klein, a celebrated French physicist, shared an image of what he said was Proxima Centauri, the nearest star to Earth. He said the picture had been taken by the James Webb Space Telescope, from which a host of stunning images had been revealed in recent weeks.

#132 Steven Rowlandson on 08.05.22 at 12:32 pm

Burn it down? What a temptation. Free Canadians of their genocidal and diabolical materialistic obsession with real estate values by burning down their homes and the realtors offices let’s say Dukhobor style. Best be kept legal as a penalty for defying price roll back orders and other regulatory measures to end the financial insanity that plagues the nation…. Remember people real estate is just a place to live and not an investment….

#133 epic bear on 08.05.22 at 12:59 pm

The coming recession will be epic. No way to stop inflation without wildly higher rates. Already a 40-50 bots inversion in the 2-10 US yield curve. Bear market continues .. and will get nastier.

#134 Sail Away on 08.05.22 at 1:17 pm

#129 Ponzius Pilatus on 08.05.22 at 11:20 am

We rent our condo to a couple of guys who play for the other team.
Not that there’s anything wrong with that.
Nicely and tastefully decorated.
And clean as a whistle.

———

That’s what you think. After they move, you’ll find out they were running a ferret breeding operation in the attic.

#135 Don Guillermo on 08.05.22 at 1:27 pm

132 Steven Rowlandson on 08.05.22 at 12:32 pm
Burn it down? What a temptation. Free Canadians of their genocidal and diabolical materialistic obsession with real estate values by burning down their homes and the realtors offices let’s say Dukhobor style.
*******
Okay, that brings back old memories. As kids we used to sing:

“My dynamite won’t go off, My dynamite won’t go off.
I’ve planted it all over the place, I’m a big disgrace to the Doukhobor race, my dynamite won’t go off”.

Of course that wouldn’t be acceptable today but we were kids and they did blow up a lot of stuff in the Kootenays. Much before my time leader Peter Verigin was killed in a mysterious explosion on a train between Nelson and Grand Forks in 1924. Verigin’ s Memorial Park can be visited near Castlegar.

#136 Sail Away on 08.05.22 at 1:45 pm

Wow, Millmech, you just killed it on BBBY. Next round on you.

What triggered you to buy it last week?

#137 tbone on 08.05.22 at 1:46 pm

I agree with Sail Away. I sold the rentals and bought bank stock a while ago . I like collecting dividends as opposed to rent . Taxed more favorably too .

#138 Marco on 08.05.22 at 2:59 pm

Would it be completely out of sorts to think prices could revert to around 2008 levels when the housing market should have been left to correct without Government intervention?

#139 SAGI Confirmed on 08.05.22 at 3:16 pm

It. Never. Fails. When Sail Away chirps, short the hell out of his subjects for a quick 5%. Case in point:

” #14 Sail Away on 08.03.22 at 5:11 pm

TSLA +20% in the same time…. And free for you…”

TSLA off 6.5% since then. LOL. I’d run a back-test on it, but there’s no point. Easier just to make money off the poor sot.

Lesson: don’t listen to internet clowns pumping stonks of any kind. Nobody beats the market. Egotistical goofs like Sail Away especially.

#140 Sail Away on 08.05.22 at 3:24 pm

#139 SAGI Confirmed on 08.05.22 at 3:16 pm

It. Never. Fails. When Sail Away chirps, short the hell out of his subjects for a quick 5%. Case in point:

” #14 Sail Away on 08.03.22 at 5:11 pm

TSLA +20% in the same time…. And free for you…”

TSLA off 6.5% since then. LOL. I’d run a back-test on it, but there’s no point. Easier just to make money off the poor sot.

———

TSLA +11% in last week. Yowza!

#141 Curious on 08.05.22 at 3:24 pm

#115 Old Boot on 08.04.22 at 11:00 am

What’s it like having views only a stones throw away from those that lead to outright genocide? Seems kinda fash to me.

#142 KLNR on 08.05.22 at 3:33 pm

@#117 Bryer on 08.05.22 at 9:33 am
The obsessed, gullible Canadians loved low interest rates and binging on debt, real estate and laughed at savers, gicers. Now, renters pay 20% more right more coming down the road add another 25% on top of that and your real estate is going down 50% soon. Payback was going someday.

Everybody has been laughing at GICers for decades now. with good reason.

#143 jess on 08.05.22 at 3:35 pm

…regarding vertically integrated &closed tech/musk

don’t forget how many taxpayer dollars went into those companies!

#144 jess on 08.05.22 at 3:46 pm

uk pawnbrokers – an industry that is experiencing a boom as customers struggle for cash to pay rising bills.

#145 DON on 08.05.22 at 3:59 pm

#122 Mattl on 08.05.22 at 10:24 am
#91 DON on 08.04.22 at 9:25 pm
#43 Mattl on 08.04.22 at 5:38 pm
And that crash will take out the economy. It has to, there is no reasonable scenario where 2T in RE equity gets wiped out while the cost to carry the debt associated doubles. Commerce is going to grid to a halt, and based on July spend numbers I’ve seen, same store sales are about 1/3 of what they were at the beginning of the year, and adjusted for inflation, negative. The Q3 retail report is going to be ugly. And we haven’t even seen job losses yet, those will put further downward pressure on consumer spending.

I’ve been saying on the blog careful what you wish for. Yes homes will be become much cheaper, which is a good thing, but there will be a price to pay for an economy that is dependent on cheap money and the belief that we are “richer then we think”. Turns out we aren’t, and when this tide goes out, look out.

*******
I remember lots of your past posts…

The whole ‘careful what you wish for’ is bunk. Inevitable reality can not be wished away. There is no shared pain here. Everyone’s mileage will vary.

But I do agree that things are not looking good world wide.

———————————————————

Don I’m not suggesting anyone can wish away what is coming. What I’m pushing back against is the idea that a RE crash can happen, with all other factors remaining the same. Of course YMMV, and some people will pick up homes on the cheap, most likely those that already are in a strong cash position, current homeowners adding second properties, etc. Wishing for a crash that will push us into recession for a lot of people is wishing for your job to be eliminated, for your financial assets to erode. RE in Canada is religion, as Garth points out every day, you can’t decouple it from the broader economy.

And like that the economy shed another 30K jobs in July, second month in a row. Economists somehow had a forecast of 20K jobs added. Not a huge number but getting worse MOM and this thing has barely started.

FWIW I think house prices, the way they have trended, are horrible for Canadians and the economy. I welcome this reset but I don’t think most people understand how this likely plays out. I would love for someone to convince me that 2T in RE equity can evaporate overnight with no major impact to a 2T economy. That consumers dependent on cheap money and credit will keep spending without access to it.

**********

I agree and get what you are saying.

There will be pain for the over indebted, over leveraged folks and lots of collateral damage to the rest of us depending on individual circumstances and what type of industry you work in. Social issues such as divorce will make things much worse. Financial stress is a relationship breaker.

As for the recent jobs decline in Canada. Companies are still hiring for now, mostly to replace the mass retirement of the last of the working boomers…still got some years to go. And no doubt their lottery home winnings played a role in those retiring earlier than planned. A few I know are already starting to look for part time jobs with minimal accountability to fund their additional short term needs.

Even bloomberg is playing the emotional shiny new bit of information moulding game, they just want to see the stock markets go up and ‘return to normal’ It is amazing how wrong they are on their analysis. For instance oil has been wavering lately. One economist warned that come harvest season as happens every year the demand for diesel fuel will increase again pressuring the price to go up. He also addd that winter is on the way forcing many back in their cars due to nasty weather.

yah things don’t look good…at the moment.

#146 Mattl on 08.05.22 at 4:04 pm

#139 SAGI Confirmed on 08.05.22 at 3:16 pm
It. Never. Fails. When Sail Away chirps, short the hell out of his subjects for a quick 5%. Case in point:

” #14 Sail Away on 08.03.22 at 5:11 pm

TSLA +20% in the same time…. And free for you…”

TSLA off 6.5% since then. LOL. I’d run a back-test on it, but there’s no point. Easier just to make money off the poor sot.

Lesson: don’t listen to internet clowns pumping stonks of any kind. Nobody beats the market. Egotistical goofs like Sail Away especially.

—————————————————–

Hey Faron

#147 Hater confirmed on 08.05.22 at 4:08 pm

The guy cherry picking a one day move in a stock which has one of the best long-term performances in the last decade thinks he should be listened to and not the guy who has consistently recommended buying it, even when it dropped, as the haters smugly and prematurely claimed victory.

He must really think people reading his comments are stupid.

We aren’t.

#148 Jenna on 08.05.22 at 7:11 pm

KNLR, laugh all you want at me for being a saver, GIC investor. My husband and I are retired accountants, always conservative by nature and with no debt, no reverse mortgage, 62 years old and net worth of $1.7 million with 30% in my personal real estate residence, 70% in RRSPs, TFSAs, GICs. We are also, $4,000 a month positive cash every month.

#149 chalkie on 08.05.22 at 7:21 pm

The real estate market right across Canada and the United States will become so bad in the next two years, it will be like the Fort MacMurray departure some years back, leave the keys to the home, the four wheel drive and the ATV on the kitchen table, and then call the bank, to come and get them, what else is there to do, when you are beyond repair. Unfortunally, someones lost is most often another persons gain.

#150 Hyde on 08.05.22 at 7:23 pm

Bryer, I don’t know why GICs are such a big deal to talk about and say how bad they are for most Canadians. They are just savings vehicles. There are people that just save but never are comfortable being a long term, multi decade investor through different asset classes.There are people that are content with 2%, 3%, now 4%+ rates on their money. I would just add if you are only comfortable with GICs just make sure protect from taxes the interest from GICs in tax advantaged accounts like RRSPs, RESPs, RDSPs, RRIFs, LRIAs,LRIFs, TFSAs.

#151 Genna on 08.05.22 at 8:42 pm

KLNR, another jealous Canadian that can’t save a dime to live his life. He is probably some government worker going to suck alot more money from taxpayers when he or she retires. The problem is will it be there and what value will it have after Trudeau’s, freeland’s inflation rampage.

#152 Warren-the-lagging_indicator on 08.05.22 at 9:57 pm

The recession may be mild from an overall perspective but it is sure gonna feel like a deep one for those that took on the debt load. Like a bifurcated recession. Those with cash that buy cheap assets coming down the pike will feel fine.

#153 Gravy Train on 08.06.22 at 11:14 am

#116 Dharma Bum on 08.05.22 at 9:29 am

Don’t forget to factor in the […] expense of totally gutting and renovating the house you rented out to crack addicts and meth-heads who initially presented themselves as “really nice people”.

Those that naively believe that becoming a residential landlord is a guarantee for easy money are deluded.

Have you ever seen a rental application form? And if you have seen and actually used one, has it not occurred to you to verify each and every piece of info on the form? :)