Fed dread

Stephen Harper was the PM. Jack Layton passed. So did Osama bin Laden, as President Obama solemnly announced.

It was 2011. Just over a decade ago. The oldest Millennial was turning 30.

Eleven years ago the average five-year mortgage rate was about exactly where it sits today – 5.4%. But house prices were far, far detached from 2022 reality. The average Toronto property, for example, was trading hands for $464,989.

That meant with a 20% down payment ($92,000) the place carried with a mortgage payment of $2,246. That’s about what a 700-foot, one-bedder condo rents for in urbanity these days.

By 2017 mortgage rates had drifted lower along with the bank rate. Newbie buyers could get five-year, fixed-rate financing for just over 2%. But that increased demand, sales and FOMO. The average Toronto property now cost $822,510. To buy it with 20% down required $164,000, but the mortgage payment was just $2,810.

Rates tanked more when the pandemic arrived. By 2021 a fiver had declined to just 1.4%. But cheap money and real estate lust had pushed the average price to $1,136,280. To buy now required a down payment of $227,000, with a monthly financing charge of $3,600. The mortgage debt on the same property had grown by a factor of three since 2011.

Now here we are. 2022. Rates are normalizing, as we told you they eventually would. The big monetary experiment with ever-lower interest is over. It helped the economy get through a credit crisis and a pandemic, but it completely distorted asset values and infected brains.

Now a five-year mortgage is again 5.4%. Prices in Toronto (as in Vancouver and everywhere) have softened, but the average still sits at $1,079,500. To buy that with 20% down requires $216,000 in cash and a monthly payment of $5,221. To qualify for this – even with a huge cash down payment – necessitates an income of more than $200,000. (The average household income in Ontario is just over $79,000.)

The above is self-explanatory. (a) As rates go down, houses go up. (b) Because we’ve just seen the cheapest interest ever, real estate is insanely priced. (c) Home ownership is now largely unattainable. Detached from incomes. (d) Central banks have indicated rates will rise more, and stay there. The Fed made that clear yesterday. (e) Therefore we may be on the cusp of one of the largest drops in housing equity ever.

This is going to be messy way beyond our borders. But Canada’s housing bubble was inflated far more than that of the US. Source: Bloomberg
.

The above is reflected in the latest stats on Canadian home ownership. The rate peaked at 69% in 2011 and has been fading since then. For kiddos under 30, it’s fallen from 44% a decade ago to 36%. Those in their thirties have seen a drop from 59% to 52%. Concurrently the cohort of renters has grown steadily to one-third of the population.

It’s hard to minimize the change now taking place. Seems all those sellers who withdrew their listings, waiting for a ‘better’ market next Spring, and the Re/Max execs who told you everything would be hunky by October, just don’t get it. Real estate was inexorably poisoned by monetary policy. Average people cannot afford average houses. Building more over the next ten years won’t change a thing – since a lack of homes was never the reason for escalating prices. The cause was low rates. The cure is high rates. Prices must, and will, reset.

This will take time. Most owners still think they won the lottery and are loathe to sell for what they perceive as a loss. Recent buyers refuse to believe they’re under water. Millions of families with mortgages taken at 2%, 3% or even 4% will be renewing soon at 5%, 6% or higher. This is happening while the cost of everything else (food, gas, insurance, Netflix, kibble) has shot higher and as we enter an engineered recession. Central bankers are telling us there’s some ‘pain’ up ahead. Unemployment rates will rise. Income gains will stall.

In other words, society is now paying the price for overly accommodative monetary policy (cheap rates) and fiscal policy extremes (CERB cheques, pandemic business subsidies and a $400 billion deficit). The pendulum swung wildly in our favour. It’s now swinging back.

Those who swarmed this pathetic blog for the past few years saying real estate could never go down and interest rates never rise – because the world was so indebted – were wrong. And – after the Fed’s stark message this week – we now have a glimpse into the next few years. For the indebted, the FOMO victims, the realtor-ravaged and the over-extended, it’s dystopian.

For the vultures, it will eventually be mealtime. Yum.

About the picture: “Garth, this is Louis,” writes Aaron, “a Retriever / Bernese mountain dog mix weighing in at over 100lbs, and Skittles, his older brother. As you can see, the extra large dog bed from Costco was a great investment, gives Skittles more room to stretch out.”

144 comments ↓

#1 Dave on 09.22.22 at 3:42 pm

Rates sure don’t seem to be causing much in the way of price drops in Vancouver or Victoria. Sold prices are maybe five percent less than asking. Things seem to be sitting on the market longer. Buyers are delusional, many still asking prices higher than last year’s assessment.

#2 Fact Checker Fred on 09.22.22 at 3:45 pm

Beautiful cat!

#3 905K on 09.22.22 at 3:45 pm

Oh to be first just once…I bought my first house in 1989. I sold it 10 years later for a $3K loss. During that whole time interest rates were falling. I feel bad for anyone overextended — they are stupid, but I still feel bad for them.

#4 crowdedelevatorfartz on 09.22.22 at 3:47 pm

Bring on the pain….

Speaking of pain…
One million British Columbians are waiting for a specialist…..not a doctor…. a specialist.

https://www.burnabynow.com/local-news/one-million-british-columbians-waiting-for-a-specialist-says-doctors-group-5857446

“People are getting sicker and dying waiting for a specialist. The health care system is crumbling….”

As our Minister of Health stutters, sputters and dithers.

#5 Captain Uppa on 09.22.22 at 3:48 pm

A home just sold down the street for me for $1.3M in 5 days.

It’s an ok-house.

Some ppl are still going for it, I guess.

#6 Sarcastic Socialist Stallin on 09.22.22 at 3:51 pm

Where will the 1.2 million newcomers that Trudeau plans to bring in live?
Now is the best time to invest in Toronto real estate. I heard that international students are willing to pay $800 a head to share a room with a roommate in a bunker.
The Canadian dream. Emulating Hong Kong cage lifestyle.

#7 William Murray on 09.22.22 at 3:52 pm

“Human sacrifice, cats and dogs living together…mass hysteria!”

#8 Chris on 09.22.22 at 3:54 pm

Once layoffs start being reported in the MSM, I would imagine we will start to see more realistic prices for housing. Right now, many think this is just a short term blip in the economy. Sort of like what happened in 2017.

If big Fortune 500 / TSX companies start with cut backs, people may start to panic a bit more. I get the impression that people think the slow down is not really going to impact them.

#9 Cash is King on 09.22.22 at 3:59 pm

Run on moving boxes and ear plugs. Kids and grandkids all moving back into their parent’s basement.

Time to buy and RV and head south for 6 months of peace and quiet.

Many will sell to buy their dreamhouse in the USA and forget about ever owning in Canada again

#10 Snowbird on 09.22.22 at 4:00 pm

Can you explain the significant gap between Can and US treasury yields?

#11 Felix on 09.22.22 at 4:02 pm

The superior feline deserves the cushion. The dog can lie down on the driveway.

#12 MC on 09.22.22 at 4:03 pm

Ok ok.. you got your “i told you so” in, definitely was coming. Now can you move onto some more positive stuff for your next post before the weekend? More of the opportunity side?

#13 Squire on 09.22.22 at 4:05 pm

“…Recent buyers refuse to believe they’re under water. Millions of families with mortgages taken at 2%, 3% or even 4% will be renewing soon at 5%, 6% or higher. This is happening while the cost of everything else (food, gas, insurance, Netflix, kibble) has shot higher and as we enter an engineered recession. Central bankers are telling us there’s some ‘pain’ up ahead. Unemployment rates will rise. Income gains will stall.” Dystopian indeed.

#14 jess on 09.22.22 at 4:05 pm

…How to deconstruct the offshore secrecy system. o
offshore misbehavior
panama /paradise /usb, hsbc scandals , luxleaks, luanda papers etc all of these scandals have been reported and unveiled. criminal global interlocking financial secrecy jurisdictions

bank prosecutions amount to paying a parking ticket and a promise to sin no more with tax judgments that are uncollected

where money hides, democracy dies,
what can’t be found can’t be taxed
what cannot be seen cannot be prosecuted

Massive secrecy structures in the financial system enable tax evasion, money laundering, and corruption. These realities drive inequality in both rich and poor countries, undermining political cohesion. Capitalism operating in secrecy and democracy attempting to operate transparently are incompatible. Urgent reforms are required if the democratic-capitalist system is to survive.

The Role of the Media in Financial Transparency
The DC Forum, a new project of Global Financial Integrity, will address this scourge with two goals in mind. First, it will fill a gap in the public discourse by arguing that a transparent, equitable capitalist system is a prerequisite for strong and stable democracies. Second, the project will convene, collaborate and catalyze action that will work to deconstruct the offshore secrecy system.
=========================
the civil fraud lawsuit Donald Trump
artful stealer and now an oracle as he can declassify the secret records by “thinking about it.”

I bet on James to win

The Chickenshit Club: Why the Justice Department Fails to Prosecute Executives Hardcover – July 11 2017
by Jesse Eisinger
==========
send the 1 trillion dollar bill over to the Russian people and see how they react.

#15 The real Kip (Ret) on 09.22.22 at 4:11 pm

There we go. Haven’t heard the “vulture” word in a long time.

#16 Another fine mess on 09.22.22 at 4:13 pm

Yum indeed. While it is rough sledding for the near future, and perhaps a bit longer, the gains in the equity markets will likely be good. There will be greater inequality whereby the haves will soon be worth more and the have-nots will have to absolve losses and they will struggle to make their mortgage payments and pay their taxes. There won’t be a lot of disposable income to be had.

A lot of kids are going to be affected. Families will be under enormous pressure. When we have the next Federal election, it will be interesting to see how things play out.

#17 Parksville Prankster on 09.22.22 at 4:16 pm

When asking prices for serviced lots are banging on 700K out here in sleepy little Parksville, finding decent digs for under a millski are becoming increasingly rare.

https://www.realtor.ca/real-estate/24631765/lot-18-ridgefield-dr-parksville-parksville

#18 Prince Polo on 09.22.22 at 4:16 pm

The average Toronto property, for example, was trading hands for $464,989.

Assuming 3% annual price increases, this average Toronto property should cost $643,654.

Why is a 50% annihilation (from insane valuations) out of the question?

#19 Richard L on 09.22.22 at 4:16 pm

Bang on the money today Garth.

#20 Dogman01 on 09.22.22 at 4:17 pm

Comming soon….

https://www.youtube.com/watch?v=DrUB0g8Vjgg

I been laid off from work
My rent is due
My kids all need
Brand new shoes
So I went to the bank
To see what they could do
They said son – looks like bad luck
Got-a hold on you
Money’s too tight to mention
I can’t get an unemployment extension
Money’s too tight to mention
I went to my brother
To see what he could do
He said brother like to help you
But I’m unable to
So I called on my father father
Oh my father
He said
Money’s too tight to mention
Oh money money money money
Money’s too tight to mention
I can’t even qualify for my pension
We talk a-bout reaganomics
Oh lord down in the congress
They’re passing all kinds – of bills
From down capitol hill – (we’ve tried them)
Money’s too tight to mention
Cut-backs!
Money money money money

#21 wallflower on 09.22.22 at 4:19 pm

It’s slavery. This cat, dog, owner thing.
The pets have the formula all figured out.
Who da boss?

#22 Linda on 09.22.22 at 4:19 pm

“Cats were once worshiped as gods. They have never forgotten this.” For example, Skittles:)

Before the masses get too excited, keep in mind that housing prices are unlikely to return to the amounts they went for in 2011. If they did do, I would expect a reprise of the Great Depression. Though given the reliance on food banks these days maybe that isn’t such a stretch of the imagination.

#23 Søren Angst on 09.22.22 at 4:20 pm

State of the Cdn Confederation today.

A sad epitaph.

People will hang on to FOMO homes for as long as they can but as history has shown, they will have to eventually give them up due to high costs (and underwater “investments”). The multiple HELOC crowd, as Ron the Mortgage Guy pointed out today on Twitter, are the first to succumb and after them will be the Variable Trigger Rate crowd – which will become de facto renters.

Much of that, has yet to happen and takes a few years as Garth alluded to today …

————————-
“Millions of families with mortgages taken at 2%, 3% or even 4% will be renewing soon at 5%, 6% or higher.”
+
High Inflation.
+
Engineered Recession
————————-

More pain to come. For years. 1980s all over again.

Good riddance to the greedy, get rich quick, highly leveraged buying multiple properties, they will be taken out of the economy for a decade or more as a result of their reckless actions.

Saddest of all, will be those that bought a family home and were just looking for no more than that.

#24 yvr_lurker on 09.22.22 at 4:29 pm

Indeed prices are going to come down much further as interest rates rise, but especially in the burbs and in small towns that experienced huge pandemic increases. However, I don’t think that within the core of our major cities we will see epic declines back to the price/income ratio of the late 1980s. Many people have long paid off their homes and have no need to sell and will simply hold onto the property until they are old and then either gift or sell (on the family plan…i.e. very reduced price) to a family member. Most people that I know in our neighbourhood have this in mind.

So I would not hold out in the anticipation of being able to buy something in a desirable inner-core area at prices that are at the same price/income ratio as 30 years ago. More like we will revert to 2017 prices….

#25 Love_The_Cottage on 09.22.22 at 4:30 pm

I personally never said interest rates couldn’t rise. But I did say they could only rise so much because of the level of debt. That’s exactly what’s happening, the bank of Canada rate will stop at 4% because that will trigger a recession and bring down inflation.

For the 1 or 2 people who post continuously post here that rates need to be higher than inflation you are wrong. Demand is already being destroyed which will bring down inflation. 4% will be sufficient keeping in mind that other factors like the war are immune to rate hikes.

#26 Mr Fox on 09.22.22 at 4:34 pm

I partially agree, however we have to consider that:
1. Yes, the rates are the same as 11 years ago, but the incomes have grown quite a bit since then.
2. Quite a big bunch of people became richer because of the RE prices going up all these years. A close friend of mine who is 100% into RE, had about 100k to spare in 2010-2011, now he has about 2M. Also he was smart and sold all his assets (except the primary residence) in January-February.
3. Were the Banks of Mom lending to their kids 100-300k for their first home in 2011 as they were in 2022?
4. How many houses were build in GTA versus how many people came to live here in the last 11 years?
5. When you were waiting on the sidelines for 8-10 years (like me) and were waiting for the RE prices to normalize, you might as well see a 1.4M townhouse as an amazing opportunity when it was 1.9M in February. Now, how many other people think the same way? I think there’s a lot of them.

Conclusion: everybody wants a piece of RE. Everybody understands that this will be a once in 30 years opportunity. So i think once the rates stop going up, prices will stop dropping as well.

#27 Søren Angst on 09.22.22 at 4:37 pm

I told you so.

But it is coming much quicker than even I thought.

“Once 30 or 40 percent of cars are EVs, it’s going to start significantly impacting what we do with the grid,”

– Stanford University

https://www.washingtonpost.com/climate-environment/2022/09/22/its-common-charge-electric-vehicles-night-that-will-be-problem/

Electrical grid in Western US, a.k.a. EV country, starting to buckle under the charging strain at peak hours.

Hell, I have Commented here multiple times that will happen here in Canada w/high EV ownership rates. In fact, I calculated using 2018 Cdn Electrical Grid numbers that the MOST THE GRID CAN HANDLE IS THIS MANY EVs that year:

37.9%

[Me and Stanford agree]

and that using the ever efficient Tesla 3 as a baseline.

You don’t need Sandford, just common sense, an inquisitive mind and some basic Math to have come to the same numbers.

PS:

All you “I’m so green ’cause I have an EV” braggarts …

Tesla 3 Avg kwh/yr consumption = 4,260.625
Avg US Home = 10,715

+40% of electricity consumption vs. a home.

SO GREEN.

PS. PS:

They talk about charging during the day to offset night time grid loads.

Stupid beyond belief esp. in California during the day, in Summer.

Electricity rationing coming to an EV plug in near you. Pray Tesla and the rest build a whack of Solar Powered charging stations quickly. How many so far?

1 One Une

in Arizona.

#28 Faron on 09.22.22 at 4:44 pm

#126 crowdedelevatorfartz on 09.22.22 at 3:40 pm
@#120 Faron.

Sorry.
I bailed out in the first 45 seconds before the “bitcoin” ad was finished……

Yeah I had the same urge. He critiques bitcoin towards the end and seeing the crestfallen look on his host’s face is worth the slog. Cem is sharp and his macro read has been spot on.

+The popular notion that Volker crushed inflation is a myth. It was the fed and fiscal policy including neoliberalism. Earlier fed presidents raised rates substantially amd inflation came right back because the fiscal policy didn’t support the monetary.

+Today the Fed has too little control and will need to raise rates much higher. The countervaling fiscal response to any recession will fuel a sharp return to inflation if/when the fed pivots.

+The rise of populism and the separation of the global order into Asia vs the rest of the world will be inflationary.

+The days of real returns from a 60/40 are gone. Equities likely flat over decades and sharply negative in real terms. As in the late 1960s until the 80s where real returns were very negative.

+Invest in cash gushing sectors and avoid growth at all costs. These will be healthcare, energy, defense and infrastructure.

+bitcoin is an unserious, utopic notion that the global order will crush.

#29 Observer on 09.22.22 at 4:46 pm

Ha Ha! Love the photo! You know what they say, ‘Cats rule, dogs drool’.

#30 Alberta Ed on 09.22.22 at 4:50 pm

Average Canadians ($83,000 income) pay 42.5 per cent of their income in taxes, according to the Fraser Institute. That figure may be even higher when myriad hidden taxes are added, not to mention inflation eating into everyone’s pocket. No wonder houses are out of reach for the average Canadian today.

#31 mj on 09.22.22 at 4:51 pm

I haven’t heard any media talk about this yet. How will the government debt effect Canadians now that rates are much higher. Can’t be good

#32 Chaddywack on 09.22.22 at 4:52 pm

@Dave (#1)

Seeing the same thing in Vancouver. No price movements at all really. I talked to a neighbour who is selling and he said to me “It’s just slow now, eventually someone will come along and pay the price I want. I know what I can get for it.”

I guess it hasn’t sunk in yet. A realtor I know casually told me that he’s even seen buyers put in the realtor notes (that the public doesn’t see) “full price offer or no deal.”

Vancouver is delusional in many respects (look how people there vote) but I think they’re the most nutty when it comes to real estate. They are waiting for prices to shoot up again or a flood of Chinese buyers to come in and save them.

#33 Søren Angst on 09.22.22 at 4:53 pm

Yesterday some talked about that we too have nukes in reference to Putin nuclear threats.

EASY DOES IT there boyz, gurls + Bill C-16.

Ukraine war: US says it takes Putin nuclear threat seriously
https://www.bbc.com/news/world-us-canada-63000444

Tell me about it.

I live in Pordenone, 8.5 km as the bird flies, from Aviano Airbase. Today, so many jets flying overhead – more so that than the first few days of the Ukraine war & the 7 years I have lived here.

Italia has about 100 nukes, 45-60 Kt each (Hiroshima, Nagasaki were 15-20 Kt) in Ghedi near Brescia and Aviano near me. Air dropped via bombers.

Ghedi under Allied control for using them.

Aviano all American control, drop them when they want to.

So ya, US taking Putin nuclear threat seriously and ME TOO. Hopefully those jets flying overhead today did not have nukes on them for practice runs (ME worrying they accidently drop one).

———————–

So Beavers, EASY ON THE NUKE TALK. Uncle Sam is a little wound up now ’cause of Putin. Don’t fan the flames.

#34 twisted_sister on 09.22.22 at 4:56 pm

OK! so conspiracies aside (WEF&TheGang), with urban densification, no more car pollution because let’s face it – there are no cars to buy! And a limited of protein to eat in the near future… You will own less and less and less till you own nothing and be happy?

#35 Mike Willis on 09.22.22 at 4:58 pm

We cannot and must not ignore the fact that the central bank of this Country give it citizens a direction “borrow now and borrow plenty” which appears to have been a purposeful misdirection, that will ultimately destroy thousands of Canadian families.

Shame on Tiff, shame on the government. Both should be sacked and replaced immediately. This should not go un-punished.

#36 The Original Jake on 09.22.22 at 4:59 pm

“For the vultures, it will eventually be mealtime. Yum.”

Mealtime is still a couple of years off as stubborn owners will refuse to drop their ask but it’s coming. 2014 prices are on their way which is another 40-50% from today’s levels. Delicious.

#37 Scott in Gibsons on 09.22.22 at 5:00 pm

“society is now paying the price for overly accommodative monetary policy “ The 99% will pay. The 1% will say “no one could have seen it coming “. Rinse, repeat.

#38 SW on 09.22.22 at 5:01 pm

I’m circling….

#39 oneils on 09.22.22 at 5:02 pm

Skittles: Man, this bed is awesome.

Louis: Man, that bed sure does look awesome.

#40 active on 09.22.22 at 5:04 pm

home prices in 2024/2025 are gonna look real juicy…yummy is right.

#41 san on 09.22.22 at 5:06 pm

I bought my first house (detached, single car garage, 1600 sq feet) in Oshawa in 2011 for 282K. Put 70K down and held a mortgage of 210K.

In 2009, that same house was worth about 210K, just 2 years earlier. At the time when I purchased (2011), it seemed we were in a bubble and I remember the media saying things like that. But I figured a first-time house, we need to be ready for a 200K mortgage, so I went ahead and got it, bubble be damned.

The price went up to about 360 in 2014, then shot up since then. Easily over a million now.

I couldn’t buy that house today. The entire mortgage I had in 2011 would be what I need as a downpayment today, while holding an 800K mortgage.

#42 Doing my Part on 09.22.22 at 5:08 pm

Dave the real estate pumper is at it again, no matter how many times you say prices aren’t going down, doesn’t make it true, but, keep trying to convince us.
Maybe bitcoin isn’t down from it’s high either.

#43 Islandgirl on 09.22.22 at 5:10 pm

I’m sure it will take time for prices to decline, but talking to a friend who is currently in a variable mortgage (they bought more recently than we have) their mortgage goes up about $100 every 2 months. And our neighbors who I am sure remortgaged every time they made an update and maxed out how much they could borrow against it, are probably also on a variable mortgage and bound for a world of hurt.

It’s going to take time for the reset to happen but so glad we stayed within our means. Although I admit I splurged recently and bought a camper just for fun. Now to work on paying it off before it’s time to renew our mortgage (got 2 more years to go).

#44 When the Whip Comes Down on 09.22.22 at 5:11 pm

Hard to dispute the history here.
But in 2011 house prices were still detached from income. Not a new story now. Shameful that average people couldn’t afford average home then nor now. Will they ever be able to is the question. Even with mother of all corrections on the horizon they will still not be able to imo.

#45 PBrasseur on 09.22.22 at 5:13 pm

In 2011 we were already in a real estate bubble.

Now it’s completely of the charts, a bubble is not enough to describe it. I’d call it a Ponzi scheme. As scam based on corrupt economic policies with cheap and easy credit offered to you graciously by your Federal government and it’s banking cartel.

The consequences have not even begun!

#46 BC res on 09.22.22 at 5:13 pm

In the province of BC it was reported years ago that general revenues were being used to pay government workers’ pensions (municipal,provincial etc…) The funds in the pension schemes were not enough. You can google it. So, the municpalities with their ever increasing property valuations needed the extra income in their coffers. The plan to extract the hundreds of billions in savings from the older savers worked magic between the RE, banking and municpal participants. this was all cooked up to amke the numbers work somehow but the very fact that most provinces are still running deficits makes you wonder where they will find more sources of income. Behold – the Green Bill taxes!

#47 Chris on 09.22.22 at 5:16 pm

Just our of curiosity, are there any stats on what the average and median mortgage is in Canada. For example, a person who is in the 15th or 20th year of paying may have less than 50 thousand remaining, while someone who bought in Jan may have a million. So how many people really owe a lot, or is it just people from the past 2-3 years who purchased first homes? My guess is lots of people have no mortgage, lots have much paid off and only a small percentage are first time buyers who owe a massive amount. Do such stats exist?

#48 Søren Angst on 09.22.22 at 5:16 pm

“Deutschland Erwache”

Brushing up on it after I read today the Poll of Polls for the Italian National Election this Sunday.

Centre Right (a.k.a., the “new” Fascists) projected to take (think Republic like America):

247 House Seats (201 for a majority)
125 Senate Seats (104 for a majority)

Not voting since in my Region of Friuli-Venezia Giulia (FVG) the probability of ALL House and Senate Seats going to the Centre Right is:

100%

We invented Tiramisù. Let that sink in the next time you have some.

——————–

“Los ist die Schlange, der Höllenwurm!”

Well, at least they got that part correct in Sturmlied (soon in Italia).

Italian desperation for change in Gov, crazy way to do it if you ask me.

https://en.wikipedia.org/wiki/Sturmlied
https://politiche2022.netlify.app/

#49 Lord Garth of Izar on 09.22.22 at 5:17 pm

Mark my words. Your stupendously corrupt federal government will reintroduce the investor migrant program to shore up prices. Restart the money laundering machine. There is nothing these vermin will not to to ensure young Canadians will never own home or produce children.

#50 Westcdn on 09.22.22 at 5:18 pm

I look at the average debt people are carrying to income and cringe. I have my problems with debt but compared to many, I will survive okay. Granted, I sacrifice fun for stability. I like to sleep well.

Still on my mission to reduce my Helco. It helps to get in front of the curve. My preferred shares are paying off through redemptions or renewals at higher rates. Based on cost, renewals are paying over 10% based on cost (discount buying) and capital gains from redemptions are being used against my Helco’s.

My next problem are REITs. They are paying well but will it last? I have been cashing in US$ dividends. More on the way. I was expecting pain in the markets and it is not worse than guessed so far. I do not set prices but it is nice the SEC is looking at front running. Pump and dump, I thought this was a disgusting game.

What comes next? I do not know but I will adapt and fight back. Small is it may be. My heart lies in conscious ideals. As much I despise Central Canada politics, I will stand for the quo for now. I will stand for Canada but don’t expect to come free with a bunch of BS’rs – particularly the fat ones who sit happy and fed.

I know I am hard on Public Servants but someone has to be. As a group, I see them as expensive and contribute little to GNP. Still there are services that must be done. Further, there are many good ones that do work hard. What value to attach. I say if you make it free, you can not make enough. I guess many will be happy I have been wrong but don’t think I will surrender. I have have learned and know things are to learn. I will teach if God gives me the time and will learn from the students – it goes both ways.

#51 Fact Checker Fred on 09.22.22 at 5:21 pm

#6 Trudeau isn’t bringing anyone in. The Canadian people are welcoming immigrants like they always have, under all stripes of government, including PP and the conservatives. Hopefully, they always will!
Son of an immigrant.

#52 Agenda 2030 Roswell Tinfoil diapers on 09.22.22 at 5:27 pm

DELETED (Conspiracy doodle)

#53 Reality Check on 09.22.22 at 5:33 pm

Amazing how a decade of historically interest rates distort peoples’ views of what is “normal”.

I know so many people that are convinced that given a few months or maybe a year rates will back to what they were 4 months ago. Basically a return to “the world is ending” emergency rates. And these dreamers include people in their 50s and 60s – people that lived during times of what were truly normal rates.

They do not understand that in the context of the past 80 years today’s interest rates would still be viewed as a pretty sweet deal. And that in the longer term there is much more risk of higher rates than lower rates.

Sorry my delusional friends as far as mortgages rates go, the new normal will very likely be the old normal of 5-8%.

#54 IHCTD9 on 09.22.22 at 5:39 pm

For all the recent homebuyers, I offer my condolences, and and outlet for your frustrations:

https://www.youtube.com/watch?v=pdEvL6jxUYA

#55 Brian on 09.22.22 at 5:42 pm

A Global Depression By 2025? | Trade Expert Simon Hunt Predicts That’s Inevitable

https://www.youtube.com/watch?v=m1V6QNIRMHg

When Simon first appeared on this program back in March, he forecasted that extremely volatile times lay ahead that will be punctuated by fierce rallies & sharp declines — with the overall trend moving from stagflation to deflation.

This seems to indeed be the script playing out here in 2022.

He also told us that by 2025, Simon sees a good chance the massive pile of $trillions in global unserviceable debt will go into default, resulting in an immensely painful economic crisis.

#56 DON on 09.22.22 at 5:44 pm

#8 Chris on 09.22.22 at 3:54 pm
Once layoffs start being reported in the MSM, I would imagine we will start to see more realistic prices for housing. Right now, many think this is just a short term blip in the economy. Sort of like what happened in 2017.

If big Fortune 500 / TSX companies start with cut backs, people may start to panic a bit more. I get the impression that people think the slow down is not really going to impact them.

******
You mean like Meta(Facebook) and Google which was announced recently and some of the big financial firms that were announced in the last week or so.

#57 yorkville renter on 09.22.22 at 5:49 pm

still sitting on the sidelines… with a few 100K waiting.

now my wife is happy we didn’t “win” on our bids (as am I) and if prices do what we suspect I might score an even better place and have a mortgage well under 1mm (thank DOG for that!).

I always say – better to borrow less at a high rate than borrow more at rock-bottom rates because rates change but the debt doesn’t!

It’s WAY easier to pay off $500k at 9% than $1mm at 2%

#58 Wrk.dover on 09.22.22 at 5:53 pm

Doom and Gloom? Top this!

When this link updates in a while, check out the local NS 6pm TV weather forecast. A new Canadian record wind speed in the making, according to one of the graphics.

https://www.cbc.ca/news/canada/nova-scotia/hurricane-fiona-storm-nova-thursday-1.6590918

#59 David W2 on 09.22.22 at 5:54 pm

Hmmm, so when will financial markets turn around and reach new highs? Certainly doesn’t look like 2022, or 2023 for that matter. Will be lucky if BD portfolios break even in 4 yrs.

#60 Søren Angst on 09.22.22 at 5:54 pm

#1 Dave
#32 Chaddywack

a.k.a. The Alt Universe Crowd and Homeplate of Statistically Insignificant Observations – for the Lower Brainland and the Island.

Here you go, by Jesse Klein (honest Realtor):

https://twitter.com/jesse_kleine/status/1565789650471755776

ALL down, down, down. And that was Peak to August.

Same for Victoria, also down:

https://www.mortgagesandbox.com/victoria-real-estate-forecast

————————-

BC looking for the Passover, not going to happen. Not immune to Rates Up, Home Prices down.

Recall how well you did during Covid when you all thought you were the Norse Gods of Valhalla immune to disease ’cause of your forest primeval, Orca’s and Salmon.

THAT worked out well.

#61 crowdedelevatorfartz on 09.22.22 at 5:55 pm

@#28 Faron.
Interesting.
I’ll check it out.

#62 crowdedelevatorfartz on 09.22.22 at 5:58 pm

@#18 P Polo
“Assuming 3% annual price increases, this average Toronto property should cost $643,654.

Why is a 50% annihilation (from insane valuations) out of the question?”

+++
Possibly.
That will come to pass.

#63 Agenda 2030 Roswell NWO on 09.22.22 at 6:37 pm

You might think I’m a conspiracy doodle but like in your field of financial forecasting, I too predict the future.
In 2030, our standard of life will erode so bad we are gonna be begging for a piece of bread from caged wire like the children in 1917 Armenia.
The politicians in Canada all strive to make us into serfs.

Doodle is too kind. – Garth

#64 chalkie on 09.22.22 at 6:49 pm

Day after the US Fed’s interest rate and the markets move on, what direction is yet to be seen over the next few weeks. There is an old saying on Bay Street, “if you don’t like the markets, wait 10 minutes”, it’s getting close to this scenario now.

I listened to one elderly lady yesterday afternoon tell a recent home owners’ story on her granddaughter, she said their granddaughter and husband will be putting their home up for sale, it was bought in November 2021, it was their second home and things have not gone well for them, they are not capable of making the payments. They both know their loss will be four to five hundred thousand. They took out a variable mortgage that has now skyrocket out of sight in payments, they had a loan of $100,000 from her parents, they both work at the same company and that company has been recently sold and the new owners will stop production and import the merchandise from overseas. The homeowners have a major decision to make, it has left them very little room to get out of this one, they are faced with the difficult decision of bankruptcy or not. Both him and her have had several mercy visits with the mortgage lender, it’s been to no a-vail. I would guess that there are many similar neighborhood stories going on around us.

Before the dust settles on Canadian interest rates next year, what we will be shy of 5% for the BOC won’t be enough to even worry about, the damage is already done and the hole is getting bigger. United States set Canada’s next example of pain yesterday, 7% for five-year mortgages will be close to the second quarter next year, that is just over the horizon

There is money to be saved, if you are buying, don’t be scared to negotiate with banks, they always have a margin of room from their posted rates, but they will never tell you. Buying a mortgage is no different than buying a car, the salesman always makes it look complicated, he/she is experienced enough to read your body language and string you along, by silly statements like I have to run that by the sales manager, it’s a game of let’s see what I can get from you. When you are ready to close the deal, it’s done with a list of, how about undercoating, extra warranty, gimmicks at a high cost, with little to no value added to your vehicle. If you are selling and using an MLS agent, negotiate the rate, start around 3% and see where it ends. Real estate sells, the commission is usually split evenly 50% for both the selling agent and 50% for the listing agent. Realtors dont like to be talked down in their rates, so who cares, its your money, unless you are a sucker to make people happy. Research shows that a listing agent usually only sells your home 3% of the time, if they are lucky enough to sell your home, they get to keep the full percentage listing agreement.
Then there is always choices like Property Guys, One Percent Commission or do a Private Sell yourself, you do the showings, advertising and negotiation, you may get surprised in what you are able to do and SAVE big bucks.
Even if you get an immediate offer, you’ll need to wait for your buyer’s confirmed mortage loan to wrap before the house is sold, a realtor’s sell is no different, there is most often always a wait and see, unless of course there are no conditions.

A few short 8 to 10 ago, the average MLS real estate Toronto price to sell was 5% costing a seller $22,500.00 and today it’s still 5% but costing the seller $45,000.00. Are you making an extra 100% on your salary, “did not think so”.

Refuse to be ripped off, 5% is highway robbery on what real estate transactions are on selling a home for you, the governments need to intervene on this outrages home owner cost to sell, they have no skin in the game to lose, it’s all your risk, don’t be an easy target.

CREA said that Home Sales on a National Level: Breaking it down regionally, most of the monthly declines in recent months have been in markets across Ontario and, to a lesser extent, in British Columbia; however, in August it was Ontario markets that contributed most to the overall national decline: Did anyone bother to tell them that 40% of Canadian population resides in Ontario, “wow”, they are so smart, of course it would be, for the record: Canada consists of 13 political divisions: 10 provinces and 3 territories and they make a statement like Ontario markets contribute most to the overall national decline.

When buying or selling, interview at least four of five agents and get references, don’t be stuck with a loser, there are plenty to chose from, they are lined up in droves to get your listing and or buying services, “. Prove me wrong and I will sing you a Song”.

You have probably guessed by now; realtors are not my favorite likes.
Your quote for today: An investment in knowledge pays the best interest and Dividend.

#65 Yukon Elvis on 09.22.22 at 6:50 pm

#33 Søren Angst on 09.22.22 at 4:53 pm
Yesterday some talked about that we too have nukes in reference to Putin nuclear threats.

EASY DOES IT there boyz, gurls + Bill C-16.

Ukraine war: US says it takes Putin nuclear threat seriously
https://www.bbc.com/news/world-us-canada-63000444

Tell me about it.

I live in Pordenone, 8.5 km as the bird flies, from Aviano Airbase. Today, so many jets flying overhead – more so that than the first few days of the Ukraine war & the 7 years I have lived here.

Italia has about 100 nukes, 45-60 Kt each (Hiroshima, Nagasaki were 15-20 Kt) in Ghedi near Brescia and Aviano near me. Air dropped via bombers.

Ghedi under Allied control for using them.

Aviano all American control, drop them when they want to.

So ya, US taking Putin nuclear threat seriously and ME TOO. Hopefully those jets flying overhead today did not have nukes on them for practice runs (ME worrying they accidently drop one).

———————–

So Beavers, EASY ON THE NUKE TALK. Uncle Sam is a little wound up now ’cause of Putin. Don’t fan the flames.
+++++++
Of the three nuclear powers in NATO (France, the United Kingdom and the United States), only the United States is known to have provided weapons for nuclear sharing. As of November 2009, Belgium, Germany, Italy, the Netherlands and Turkey are hosting U.S. nuclear weapons as part of NATO’s nuclear sharing policy.

#66 the Jaguar on 09.22.22 at 6:57 pm

I keep a few ‘gems’ on file to re-read now and then. This is one of Garth’s from some time ago, but seems so relevant to today’s post, I thought maybe some of the ‘newbies’ might benefit. The last paragraph which references ‘until economic conditions change’ as it relates to our current environment should be on everybody’s dinner plate as we move forward. Hope I won’t be thrown in the hoosegow for re-posting it. I’ve said and done worse… Here it is: +++++

” So, I will say it once more. In crayon.

Sales fall first. Prices later. Usually a lot later. For example the US housing market peaked in the autumn of 2005 in terms of sales, but prices did not crest until two years later. The reason is simple. There are always people ready to buy a house who don’t follow the capital markets, monetary policy or leading indicators. Instead they have hormones, emotions and parents screaming at them to grow a set and get a mortgage.

So sales may decline, but prices stick. And as fewer foolish buyers show up with offers, more homeowners take their properties off the market. So listings fall while prices don’t. This stage can last for some time – maybe a year, even – until economic conditions change, forcing people to sell homes.

Those could include a moribund economy in which families have too much debt, rising interest rates or taxes, another financial crisis, or it could be house-rich retiring boomers realizing all of the above. Whatever. Once real estate has achieved unaffordable levels, and people realize it is both overpriced and vulnerable, then falling sales become falling prices. ” GT

(note- I did edit a small reference to percentage of listings included at the time this was written so as not to confuse the mutts.).

p.s. Love the photo. Maybe Louis is just a ‘gentleman’ and has offered his dog bed to Skittles as a show good will.

#67 The Original Jake on 09.22.22 at 6:57 pm

You know what they say “real estate always goes up”. Now you just flip the chart.

#68 jack on 09.22.22 at 6:58 pm

Biggest issue for the housing market right now is the cost to build. I built a 3200 square foot custom bungalow on an acre two years ago – total cost, me being the contractor was 1.3M (300k for the land). If I were to build today it would cost another 300k. Same must hold true for suburban detacheds… the cost to build is the cost to build. Labour is sky high as well of you can find it. I guess new home builders will just stop building … but with the population ever increasing the demand will far exceed the supply and house prices will go up – or at least not drop as much as you think.

#69 crowdedelevatorfartz on 09.22.22 at 7:03 pm

@#63 Tinfoil diapers

Those diapers should be… on… your… head.

#70 crowdedelevatorfartz on 09.22.22 at 7:14 pm

@#41 san
“I couldn’t buy that house today. The entire mortgage I had in 2011 would be what I need as a downpayment today, while holding an 800K mortgage.”

+++
Yep.
When high paid doctors and lawyers can’t afford to buy a house at these ridiculous prices.
Time for real estate to take a bath, wash off the grime, step out into the light, towel off and start over.
650k for a house in Van and Toronto in 2024? 25?

And all during the meltdown the Realtors will be telling you, “It’s the BEST time to buy!”

#71 Sheena on 09.22.22 at 7:15 pm

It is about time interest rates get normal or higher and house prices drop meaningfully. In Toronto and elsewhere, we will see the repeat of the late 80’s, early 90’s to mid 90’s. The more expensive the house the bigger the price decline. Housing prices will decline more than 40% maybe up to 60% over the next 50 to 60 months. It just took over 25 years to get this finally done.

#72 Steven Rowlandson on 09.22.22 at 7:16 pm

The vultching will eventually happen but probably after 95% or more of the price of homes is expunged and is in harmony with the 1970s incomes people are still getting based on the 3 years pay rule as described by Morton Schulman in the book anyone can be a millionaire. The rule was made to ensure that people didn’t offer too much for a home and could live within their means. Today we see the results of that rule being ignored…. A gigantic financial and demographic disaster looking for a place to happen.

Your elite double income super earners Garth are more the exception, not the rule. If the working class can’t make it society and the economy have had the biscuit.

#73 jess on 09.22.22 at 7:19 pm

trump is channelling Carnac the Magnificent ! “mystic played by johnny Carson who could psychically “divine” unknown answers to unseen questions.

============
i wonder how that is going?
RBC plans to enter Islamic finance market – The Globe and Mail
https://www.theglobeandmail.com › article1056849
Jul 7, 2008 — Islamic banking forbids interest and obliges deals to be based on physical assets, not on speculation. Sharia-compliant products seek to …

#74 Tasty Treasures on 09.22.22 at 7:20 pm

How is the home ownership rate calculated? Looks like it might be the number of owned homes divided by the total number of homes. Doesn’t seem like that gives a great representation of the actual rate.

#75 Linda on 09.22.22 at 7:24 pm

#68 ‘Jack’ – I agree in principle, but would add to your sky high labor costs increased costs for land, materials & let us not forget, taxes. Land transfer tax is not (as yet) ubiquitous throughout Canada but it exists in a lot of places. No way are those taxes going to drop or disappear & they add a very considerable chunk of change to any RE purchase where they apply.

#76 Frina on 09.22.22 at 7:25 pm

Snowbird, maybe the Bank of Canada is quietly buying Canadian, provincial bonds to keep yields lower for the time being as a desperate attempt by the Trudeau Liberals to keep interest rates lower for now.

#77 Quintilian on 09.22.22 at 7:33 pm

“This is happening while the cost of everything else (food, gas, insurance, Netflix, kibble) has shot higher and as we enter an engineered recession. “

I think engineering a recession is going to take a lot longer than the eggheads think.

Although I do respect academia, they, along with the investment gurus who achieve autoeroticism when featured in the media, have a huge blind spot.

They do not get invoices from suppliers and manufacturers who have pricing power, and don’t know just how much inflation is in the cost of production.
Steep price increases are in the pipeline, and will be passed on to consumers at rapid fire.

Less demand will mean less production, and layoffs, but not necessarily lower prices.

Corporations prefer higher margins rather than higher volumes, for as long as economies of scale can be maintained.

#78 THE DANDADA on 09.22.22 at 7:33 pm

“The time to buy is when there’s blood in the streets, even if the blood is your own”

….Rothschild

#79 Victor Llearna on 09.22.22 at 7:50 pm

Ahh 2011, things were so much better back then. At the time they didn’t seen great, but little did we know Trudeau would become prime minister and wreak havoc on every aspect of life in this country. dystopian.

#80 The Future is Female on 09.22.22 at 7:54 pm

We should be happy that men are losing their jobs due to #MeToo.
We don’t need men. That includes you Garth

#81 jess on 09.22.22 at 7:56 pm

real estate trust merging

Duke Realty is set to be acquired by Prologis in a $25.6B
https://www.ibj.com/articles/last-days-of-duke

Dignity Mortgages?

The dignity mortgage is a new type of subprime loan, in which the borrower makes a down payment of about 10% and agrees to pay a higher rate interest for a set period, usually for five years. If he makes the monthly payments on time, after five years, the amount that has been paid toward interest goes toward reducing the balance on the mortgage, and the interest rate is lowered to the prime rate.

#82 Nonplused on 09.22.22 at 7:57 pm

Oh well maybe inflation will help those deeply indebted homeowners. We’ve got everything possible to drive inflation up, high taxes, low interest rates (still below inflation), government spending (heck it’s not even spending of the type where the government buys something, there is just handing out free money too), energy shortages, war, regulations, bureaucracy, supply constraints, unions, and of course the minimum wage. So I don’t think house prices are ever going back to 2011 levels. It costs just too dang much to build a new one, and that will always affect the rest of the market.

(Yes, minimum wages. When the minimum wage goes from $7.50 to $15 per hour the “invisible hand” eventually moves the price of everything else from X to 2X such that the purchasing power is the same. It has to. Labor is too large of a portion of the economy to suffer government mandated price controls. Otherwise we could just set the minimum wage at $100/hr and be done with it. We could all be rich according to the liberal lefty minded. But alas, it just doesn’t work that way. Somebody has to pay those wages and that somebody is you.)

#83 giving up on 09.22.22 at 8:10 pm

So Garth, the $1,079,500 question, is how low and in how long?

#84 Flop… on 09.22.22 at 8:27 pm

Flop Drops.

Let’s circle back to where gumboots are considered formal wear.

It been a few years since we’ve seen anything sound slightly desperate like the following.

“Back on the market at a Drastically Reduced Price!!! We need to sell this so ADVANTAGE BUYER!!”

Let’s see how it panned out.

The details…

45858 REECE AVENUE

Chilliwack

Original ask 899k

Assessment 766k

Just sold for 525k

https://www.zealty.ca/mls-R2709354/45858-REECE-AVENUE-Chilliwack-BC/

No interior shots, maybe it was being rented at the time of the photos.

It’s possible this house is like me.

Not much to look at, but full of potential…

M48BC

#85 jerry on 09.22.22 at 8:27 pm

“Rates sure don’t seem to be causing much in the way of price drops in Vancouver or Victoria. Sold prices are maybe five percent less than asking. Things seem to be sitting on the market longer. Buyers are delusional, many still asking prices higher than last year’s assessment”

The buyers who are delusional don’t matter because they are the ones who are not selling and will likely be chasing the market down in the next couple of years. The people who are selling are pricing lower and are setting the new lows in your neighborhood. You may not have noticed but the median price of a detached home in Victoria is down close to 20 percent since the peak set in March. That would likely be the largest and fastest price drop in history here. I believe greater Vancouver median price drops are similar. Sales in Victoria are also currently down almost 50 percent this month compared to last year and inventory has almost doubled here. Considering most people are still using rate holds from months ago and the full impact of current rates have yet to be felt its hard to make the case that things haven’t drastically changed. I would argue that the price and sales declines seen in just a few short months here are historical and stunning.

#86 DON on 09.22.22 at 8:28 pm

#47 Chris on 09.22.22 at 5:16 pm
Just our of curiosity, are there any stats on what the average and median mortgage is in Canada. For example, a person who is in the 15th or 20th year of paying may have less than 50 thousand remaining, while someone who bought in Jan may have a million. So how many people really owe a lot, or is it just people from the past 2-3 years who purchased first homes? My guess is lots of people have no mortgage, lots have much paid off and only a small percentage are first time buyers who owe a massive amount. Do such stats exist?

********

How about all those who bought investment properties…their primary house may not have a mortgage…but the others may. You also are assuming people didn’t dip into equity to buy toys etc.

#87 45north on 09.22.22 at 8:28 pm

PBrasseur In 2011 we were already in a real estate bubble. Now it’s completely off the charts, a bubble is not enough to describe it. I’d call it a Ponzi scheme. A scam based on corrupt economic policies with cheap and easy credit offered to you graciously by your Federal government and its banking cartel.
The consequences have not even begun!

yeah, it’s more than a bubble now and the consequences are just starting to be seen. Actually more felt than seen because if you have to renew at a higher rate you’re going to feel it but nobody else is going to see it. At some point, the felt consequences will be seen.

#88 Catholic on 09.22.22 at 8:29 pm

But why are the 5 year yields way lower than the 1 month and 1 year bond yields?
Is there manipulation from insiders? Is it possible that the powers that be want mortgages rates to be low at any cost.
BRB gonna get some carbs and binge watch conspiracy theories like your Roswell truther above.
Canada is making us mentally ill. Happiness can only be found in believing in Jesus Christ.

#89 Snowbird on 09.22.22 at 8:39 pm

#76 Frina

Don’t think so. The BOC is doing quantitative tightening right now (as is the Fed). As far as I can tell people are anticipating a higher terminal rate in the U.S. due to a very slightly higher core inflation rate (depending on how you measure such things). Personally I don’t see it, maybe 25bps at most but the treasury yields are exaggerated compared to this. Maybe we’ll see a favorable shift in the next couple of months. The DXY is at 111 right now and that’s not good news for snowbirds.

#90 crowdedelevatorfartz on 09.22.22 at 8:52 pm

@#28 Faron.

Interesting video.
Cem made a lot of sense.
The next 6,12, 24 months will be an exercise in intestinal fortitude.
Hard to concentrate with a smart Brunell brunette peppering him with questions.

#91 crowdedelevatorfartz on 09.22.22 at 8:59 pm

@#78 The Dandada
“….Rothschild”

+++
Baron Von Rothschild.
Came from money.
Easy for him to toss more money onto the bonfire.
Or should I say, have his servants toss more money onto the bonfire.

#92 jess on 09.22.22 at 8:59 pm

Technoscience Rent: Toward a Theory of Rentiership for Technoscientific Capitalism

Tractors
…”The reason for this is that tractor manufacturers have made it increasingly difficult, legally speaking, for farmers to do “unauthorized repairs” on their tractors. I stress “their” because Wiens (2016), writing in Wired, argues that tractor manufacturers are basically claiming that farmers “don’t own their tractors” anymore after farmers sign license agreements in which they are forbidden to “tamper” with their tractor’s software and electronics, copyrighted by the manufacturers…..https://journals.sagepub.com/doi/10.1177/0162243919829567

Zelle is a peer-to-peer payment system that was created by banks for banks—

One of the more contentious discussions involved Zelle, the private peer-to-peer payment network jointly owned by the banks. Zelle has come under scrutiny because of rising complaints of bank customers unknowingly authorizing payments to scammers via Zelle, and being unable to get their funds back. In contrast, fraud and scams on credit cards are generally covered by the credit card companies.

“The issue is that a customer authorizes a transaction and it later turns out to be a scam, banks shouldn’t be on the hook for that,” said Brian Moynihan,

A reporter for Politico, Josh Gerstein, asked the following, highly relevant, question:

Gerstein: “How did he get away with what you’re saying he got away with, for such a long period of time. A lot of these transactions are with some of the largest financial institutions and insurance companies in the state of New York. Did they just not check anything that people tell them or they presumed it was true. Or did they have hints that these things were not true that they were being told. And what does it tell you about those institutions that they would take his word for it?”

Attorney General James said Deutsche Bank, the large German bank that was Trump’s largest lender, was cooperating with her investigation. A more comprehensive answer is that all of the major banks that Trump dealt with have been, themselves, charged with repeated frauds. As Senator Bernie Sanders has frequently stated, the business model of Wall Street is fraud.”

https://violationtracker.goodjobsfirst.org/summary?offense_group_sum=financial%20offenses

#93 crowdedelevatorfartz on 09.22.22 at 9:13 pm

Global 6pm News
Squamish
A month ago vehicle that jumped a curb, mowed down two women sitting on a bus bench, pinning the women under the a Ford F250.
Witnesses helped the two women AND the driver out of the truck.
The driver ran and police arrested him several hours later.
One of the women died.
RCMP are ASKING the driver to “Please come in for further questioning…..”

https://globalnews.ca/news/9149141/squamish-hit-and-run-witnesses/

#94 Daniel on 09.22.22 at 9:22 pm

Garth did say I told you so but he also said it was too expensive 11 years ago! A lot of what he preaches is sound conservative advice. I thinkwe should consider that most of the crazy house prices have come from massive money printing devaluing our dollars

#95 Victor V on 09.22.22 at 9:26 pm

Got this email blast today.

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

Hi everyone,

As I mentioned, the variable rate has gone up another 0.75%.

If you are with TD, your payment has stayed the same; with most other banks your monthly payment has gone up.

As a solution to offset your monthly payments. We have a program to get you approximately $800 per month for every $100,000 invested.

Example:
Mortgage Amount: $800,000
Interest rate: 4.3%
Your monthly payment: ~$4000

Now lets say we turned your 200,000 (RRSP, RESP, savings, line of credit) into $1,600 per month

Your new monthly payment would be 4000 less 1600 which works out to 2,400 a month!

Curious?

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Funding mortgages since 2002
Purchase | Refinance | Renew | Construct

Monty Sands | Lead Mortgage Planner

#96 Longterm on 09.22.22 at 9:32 pm

#30 Alberta Ed on 09.22.22 at 4:50 pm

Sorry to rain on your high tax making houses unaffordable narrative, but the percentage paid in taxes in Canada has hardly fluctuated in decades – some years up and some down.

Have a look at the Fraser Insitute’s own data in the link below – table in page 3. But ignore the spin about how they have benchmarked the increase to conveniently chosen 1965 [and not accounted for inflation of incomes and tax] and instead look at say the % paid in tax in 1981, 2000, 2019 or any year in the past 40 years and you aren’t going to see a wild difference from one year to next. It’s almost always hovering around 40% give or take a few percentage points from year to year for decades.

https://www.fraserinstitute.org/sites/default/files/canadian-consumer-tax-index-2020.pdf

#97 WTF on 09.22.22 at 9:45 pm

#35 “Shame on Tiff, shame on the government. Both should be sacked and replaced immediately. This should not go un-punished.”
—————————————————————–
Mike Mike Mike,

Natch, somebody else is to blame

All those house horny lemmings were hanging on every word from the CB Gov? Nobody did anything till his utterances? Please, 90% of the debt pickled (pay cheque to pay cheque) financially incompetent idiots have no idea who he is, much less listen to his opaque utterances.

Does personal responsibility, greed, and living within your means have anything to do with this?

Hubris and FOMO my friend, you can’t fix stupid. Price to rent and income matters, always did.

#98 Doug t on 09.22.22 at 10:02 pm

YO YO don’t dread the Fed
Get it in your Head
Ignore the dread and just go to bed
And if you ain’t dead and have some Bread
Listen to Dr. Garth and do as he said
Word

#99 fishman on 09.22.22 at 10:18 pm

#68 Jack’s numbers are pretty good. $300/sq. ft. with owner doing contracting. I did a commercial property upgrade as owner contractor during Covid. I’m with Jack in that you have to experience it to realize just how expensive materials & labour is. Double your estimate then add 50% if your an old-timer been away from the game a few years. The price reduction will have to come out of land costs. Plus there are always guys like me & Jack who know value. Always on the case to cherrypick something for the kid from a victim. There’ll be deals for the innocents. A chance to learn the game fixing up an old toilet.

#100 B on 09.22.22 at 10:27 pm

You always have to consider a reasonable price for the land and what it would actually cost to build the same house.

2000 sq ft @ $300 a square finished is $600k. What’s a serviced city lot worth in the lower mainland? $400k, $500k, $600k, $700k?

It ain’t hard to get over $1M building a small house today.

#101 Cold fish on 09.22.22 at 10:53 pm

DELETED

#102 Karlhungus on 09.22.22 at 11:16 pm

2 more rate hikes – max

#103 DON on 09.22.22 at 11:22 pm

#77 Quintilian on 09.22.22 at 7:33 pm
“This is happening while the cost of everything else (food, gas, insurance, Netflix, kibble) has shot higher and as we enter an engineered recession. “

I think engineering a recession is going to take a lot longer than the eggheads think.

Although I do respect academia, they, along with the investment gurus who achieve autoeroticism when featured in the media, have a huge blind spot.

They do not get invoices from suppliers and manufacturers who have pricing power, and don’t know just how much inflation is in the cost of production.
Steep price increases are in the pipeline, and will be passed on to consumers at rapid fire.

Less demand will mean less production, and layoffs, but not necessarily lower prices.

Corporations prefer higher margins rather than higher volumes, for as long as economies of scale can be maintained.

*******

Invoices…What industries? Please share Quint!

#104 The General on 09.22.22 at 11:24 pm

# 80- The Future is female: You sound like Felix, with an anti-male bent. Instead of puddy tat supremacy doctrine. How quaint.

#105 DON on 09.22.22 at 11:31 pm

Garth, you might have to hold the next `I told you so’ moment in the Greater Fool Bunker with all gates secure. People ain’t gonna like the truth.

A house is only worth as much as a buyer can afford when the times get rough and the mood changes from greed to fear.

#106 DON on 09.22.22 at 11:45 pm

Why wouldn’t the cost of building a house come down when there is a lot of contractors chasing few housing starts and reno jobs. Cost of lumber will go down as well, Canfor just announced a slowdown in production in BC.

Vancouver Island’s boom came mostly from a retirement boom which isn’t sustainable. Here for a good time not a long time scenario. Recency bias may not go over well in tomorrow’s World.

#107 Gone Dog on 09.23.22 at 1:06 am

#4 crowded

The media is solely focused on the health care unions demands. There’s no talk of improving health care. Surgery is near non existent. There are no appts available.

Specialists have their own waiting lists that makes it into a multi year wait for heart , cancers. Services are barely functioning because Covid rules went into effect shutting down ER for everything except those with flu symptoms.

For ex: the waiting period for MRI or CT scan is officially 297 days nationally. In fact that wait only gives you an appt to be put on a specialists waiting list, years long as of today. First you’ll be mailed a series of questionnaires and not receiving an actual diagnosis.

This and a long list of other bureaucratic impediments is why so many people show up on deaths door to a ER, perhaps have been waiting days for an ambulance. These people have to be dying and many of them die in the hallways and reception area. Persons waiting for critical diagnosis report cardiac and cancers going from treatable to terminal during the long waits.

Read the info on the Health providers site and learn that you have to be pre-vetted and agree to participate in research programs of unknown reasons. It’s a horror show.

I know it’s not going to be welcome , but my advice is to get out of Canada if you’re sick and need immediate intervention. Thailand has American owned and administered private hospitals that are still cheap by western standards. Canada might advertise free health care but there’s too many people dying unnesscarily to die on an ideological hill.

Excellent facilities in Singapore and Japan, especially in cancer treatment are beyond anything Canada offers. The cardiac program at Bangkoks best attracts people from around the world. It’s literally a United Nation as you step into what resembles a five Star hotel.

Everyone here is aware of “ medical tourism”, well this is what the world goes to these destinations while only birth tourism is Canadas claim to fame because it comes with a free passport. So, do you want to die on a gurney in the back of an ambulance so that you can leave Junior an estate or do you want to live a bit longer paid for by your lifetime of hard work?

In fact Canada ranks low in healthcare delivery. We’re at number 27 and that’s an insult to every taxpayer because it means that non G20 countries offer superior care. Maybe Justin can sing a song about it.

#108 Nora on 09.23.22 at 1:31 am

Agree with #1 Dave: I sure don’t see much in the way of declines in Vic or Van. Some softening in the gulf islands. Even that is modest.

#109 Faron on 09.23.22 at 1:57 am

#90 crowdedelevatorfartz on 09.22.22 at 8:52 pm
@#28 Faron.

Hard to concentrate with a smart Brunell brunette

yeah, easy on the eyes. Cem seemed to be enjoying himself too.

#110 under the radar on 09.23.22 at 5:38 am

68 ,99
That is the first order of business to properly value what you are buying or selling. Cost to build and cost of land. When you know these numbers you are in control. The reality is neither input is going down. The foam is coming off the top for sure, but a true deal is buying for less than the input costs. Those deals are not here until higher rates and a sharp recession induce “selling at any price. ”

Watching forex as central banks scramble to keep up with the Fed. Unbelievable the lows being made against the invincible greenback. The Fed is ahead of every other central bank and likes a strong dollar.

#111 Tony on 09.23.22 at 5:56 am

Re: #72 Steven Rowlandson on 09.22.22 at 7:16 pm

That was based on a single income or as the book stated 3 times the husband’s income.

#112 Steven Rowlandson on 09.23.22 at 6:23 am

“How will the government debt effect Canadians now that rates are much higher? ”

It won’t have any direct effect unless you have a debt or own government bonds.
However:

Government debt is owed by the government and not by the citizens. Who is the government that contracts the debt? It is a group of political parties that legislate, do their own thing, borrow, tax and spend based on their agendas and those of the globalists and other groups including the royals. Every 4 or 5 years they have a political puppet show called an election where they ask or shame you into voting for people you don’t know, don’t control and don’t really work for you.
It is an exercise to pick a control group who don’t work for you and hold God, Nation and race in contempt.
You are a liability to them, and you are in their way.
You are tolerated as a source of revenue and henchmen for them and that is about it. Your name is not on the bonds as the debtor, is it? Then it is not your debt.
What will happen with default or higher rates? The general cost of borrowing will rise impacting everyone who owes a debt and eventually benefiting savers a little if there is no default, high inflation or excessive taxation. With default the problem will be the cancelation of currency because currency is created by contracting debt. If the debt is no good the currency representing it is no good and if they print cash to buy back the debt you have high or hyperinflation and then they lop 6 to 9 zeroes off the currency supply and issue a new currency.
A billion dollars becomes one dollar for example.

Everyone gets mad at the government and banks for messing with their money. There is a revolution and regime change or the sheep get over it and go back to sleep as usual.

#113 Fiona on 09.23.22 at 7:58 am

GARTH, GET THE HELL OUT OF LUNENBURG!

I’m on Bay Street. Storm here, too. – Garth

#114 crowdedelevatorfartz on 09.23.22 at 8:18 am

@#80 The future is misandry.
“We don’t need men. ”
+++
Awesome.
I don’t have to change flat tires anymore?
Kill icky bugs?
Fix the toilet?

Finally!
Equality!

#115 crowdedelevatorfartz on 09.23.22 at 8:40 am

Ponzie hasn’t posted in a day.

https://www.reuters.com/news/picture/in-pictures-oktoberfest-returns-after-tw-idUSRTSBF0SU

He’s busy serving Budweiser.

#116 slick on 09.23.22 at 8:46 am

I watched the interview with the Parlimentary budget officer. (PBO). I wanted to reach into the screen and grab that smug bastard. That is our dividend moeny that they want to tax. Banks did everything they were asked of during the pandemic, and now the gov’t wants to tax it back.
The smirk on that pricks face was disgraceful.

#117 Dharma Bum on 09.23.22 at 8:47 am

My B&D portfolio is now melting at about the same rate as the glaciers.

I blame climate change.

Where is the outrage?

This is real.

Manmade.

Etc.

#118 Diamond Dog on 09.23.22 at 9:19 am

Another excellent commentary, Garth.

I only got pieces of what Powell said yesterday, but what I did hear was what I thought the market “needed” to hear. It wasn’t positive, but realistic. Will rates at 4+ stopping at 4.6% do the trick?

Again, it depends on where one defines “neutral”, but if Larry Summers is correct with neutral being somewhere between 4 and 4.5% (sure seems like the Fed believes that now), along with taking $60 billion a month off the Fed balance sheet, to do this for more than 4 or 5 quarters… I think it will be enough to correct the monetary blunders. The Fed is basically one giant psychological operation but there are times when they have to shoot it straight. Yesterday might have been one of those times and the market is selling off because of it.

The big question is the severity of the recession we’ll get out of this. New money as we know, is created through bonds and banks, through credit. When the Fed is sucking old money out of the system and decreasing the money supply, credit conditions won’t just be tight, CCC’s will freeze up, likely BBB’s… we could see entire sectors like emerging markets or commercial real estate freezing. We may see some municipal bond markets freeze up as an example. Maybe we don’t need that curling rink or overpass right away but we do need that water plant, y’know?

It really depends on how frozen credit conditions gets out there, to determine how long and to what degrees defaults hit the system. It’s a question of the right mix of necessary pain coupled with monetary necessity now to tame inflation.

How bad could it get… looking at historical norms:

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

With multiples at 28 with the S/P 500… worse. Initial easy guess is below 20. I just don’t see much for positive earnings going forward.

What’s that translate into for indexes… pure speculation here… the DOW in the low 20’s, the NASDAQ below 8,000 (meaning Grantham is right), it really depends to what degree the markets upset the Apple cart but yeah, below 8,000. The TSX, could bottom at 12,000 to 14,000, I’m thinking closer to 14, we’ll see. I’m still a bull on commodities through at least the mid 20’s, maybe the entire decade now, but fear is fear, TSX is not the only market and Canada is not an island.

Scott Minerd is thinking year end is a great time to be back in equities and a 20% selloff is coming before then, I’m thinking it’s later, some time early to late next year with a couple rallies in between but I agree with him on the markets having a post dot.com feel to it. As they say, time tells all.

#119 Shawn on 09.23.22 at 9:20 am

How is Home Ownership Rate calculated

#74 Tasty Treasures on 09.22.22 at 7:20 pm
How is the home ownership rate calculated? Looks like it might be the number of owned homes divided by the total number of homes. Doesn’t seem like that gives a great representation of the actual rate.

*********************************
The source data here contains may interesting facts:

https://www150.statcan.gc.ca/n1/daily-quotidien/220921/dq220921b-eng.htm?CMP=mstatcan

#120 jack on 09.23.22 at 9:23 am

re #75 Linda

I paid my share of taxes, don’t worry. Luckily land transfer is only on the cost of the land not the improvements when self building. Did pay $130k in hst. Sure, you can get some of that back (up to 25k) – limit established when the average house was 200k. I determined the only reason the government still does this is to catch contractors who don’t collect hst – cash deals. I only had to send details of contractors who didn’t charge hst – so they can prosecute.

#121 crowdedelevatorfartz on 09.23.22 at 9:41 am

Yo Soren.

Has Berlusconi been tested for dementia lately?

https://www.reuters.com/world/europe/putin-was-pushed-into-ukraine-war-says-italys-berlusconi-2022-09-23/

#122 PBrasseur on 09.23.22 at 9:48 am

Productivity dropping like a stone in the US, likely helped by WFH.

Excellent video from WSJ about productivity and the relation with inflation:

https://youtu.be/JnUH_-7EOjA

In this world of big government spending and stimulus the lower the productivity the better chance of inflation.

Anyone surprised?

#123 45north on 09.23.22 at 10:04 am

chalkie: I listened to one elderly lady yesterday afternoon tell a recent home owners’ story on her granddaughter, she said their granddaughter and husband will be putting their home up for sale, it was bought in November 2021, it was their second home and things have not gone well for them, they are not capable of making the payments. They both know their loss will be four to five hundred thousand. They took out a variable mortgage that has now skyrocketed out of sight in payments, they had a loan of $100,000 from her parents, they both work at the same company and that company has been recently sold and the new owners will stop production and import the merchandise from overseas. The homeowners have a major decision to make, it has left them very little room to get out of this one, they are faced with the difficult decision of bankruptcy or not. Both him and her have had several mercy visits with the mortgage lender, it’s been to no a-vail. I would guess that there are many similar neighborhood stories going on around us.

yeah I guess

#124 George on 09.23.22 at 10:05 am

Fed banks have turned the printing presses off folks

lessoned learned to all , i hope.

#125 Quintilian on 09.23.22 at 10:05 am

#103 DON on 09.22.22 at 11:22 pm
Invoices…What industries? Please share Quint!

Don, my GF is a purchasing agent for her father’s business.

Costs have been going up at warp speed. The suppliers of alloys that require nickel, chrome in particular are pushing through price increases and won’t respond to any push back.

Also, machinery and equipment from the US are up a whopping 30% plus.

Industrial gases, like Argon, Helium and Nitrogen is just off the charts.

And if the company wants to keep the right people wages have to increase, and have done so, twice in the last 18 months.

#126 Shawn on 09.23.22 at 10:26 am

Recession watch

With prices way up, consumers eventually have to cut back.

July Retail sales fell 2.0% in volume terms versus June and 2.5% in nominal dollars (remember, we got slight deflation in July versus June prices). Almost every category was down. This is seasonally adjusted numbers.

With all the talk of recession now and higher interest rates and home wealth evaporating and portfolio wealth evaporating, we should see a noticeable decline in retail sales in September but we won’t see that figure until late November.

#127 jess on 09.23.22 at 11:03 am

who is on first? vaccine profiteering ?
MorseLife enrolled in the LTC PPP and scheduled its first vaccination clinic at MorseLife on Dec. 31, 2020 (the vaccination clinic) for residents and staff of the Joseph L. Morse Health Center, a skilled nursing facility on MorseLife’s campus. The settlement resolves allegations that MorseLife knew that the LTC PPP covered only LTCF residents and staff, but nevertheless invited and facilitated the vaccination of hundreds of ineligible persons at the clinic by characterizing them as “staff” and “volunteers,” many of whom MorseLife targeted for donations. Specifically, the United States alleged that MorseLife
(1) characterized board members as “staff,”
(2) directed the organization’s fundraising arm to invite donors and potential donors to the vaccination clinic, and
(3) allowed the Vice Chairman of the MorseLife Health Systems Inc. Board and his brother to invite close to 300 ineligible individuals to receive the vaccine at MorseLife.

….”MorseLife’s CEO allegedly allowed the Vice Chairman of the MorseLife Health Systems Inc. Board and his brother to invite approximately 290 people to the vaccination clinic, none of whom lived or worked on the MorseLife campus and most of whom did not volunteer on MorseLife’s campus and had no prior affiliation with MorseLife. A significant number of these invitees were members of the same country club as the Vice Chairman and his brother, and some of the invitees flew to Florida just to get vaccinated at the clinic. As reflected in a MorseLife Foundation strategy document, “[t]his group was ‘recruited’ by [Vice Chairman and his brother] and owe allegiance to them at least as much as they owe it to us;” “[w]e allowed these people to be vaccinated mostly because [Vice Chairman and his brother] wanted us to;” “[t]hese prospects understand that and owe allegiance to [Vice Chairman and his brother] for arranging for them to get the vaccine;” and [w]e should use that allegiance to effectively get significant gifts from that group in a short amount of time.” The United States alleged that MorseLife falsely characterized donors and potential donors who had no previous affiliation with MorseLife, but were invited by the Foundation or the Vice Chairman and his brother, as “volunteers” for purposes of the LTC PPP.”

Ultimately, the United States alleged that of 976 persons vaccinated at the Dec. 31, 2020, clinic, 567, or more than half, were ineligible to participate in the LTC PPP.

read more @https://www.justice.gov/opa/pr/morselife-nursing-home-health-system-agrees-pay-1.75-million-settle-false-claims-act

#128 Shawn on 09.23.22 at 11:04 am

Link to July Retail sales drop figures

https://www150.statcan.gc.ca/n1/daily-quotidien/220923/t002a-eng.htm

#129 Faron on 09.23.22 at 11:26 am

#126 Shawn on 09.23.22 at 10:26 am
derp watch

(remember, we got slight deflation in July versus June prices)

Uh, no. No we didn’t.

#130 From the UK on 09.23.22 at 11:27 am

#25 Love_The_Cottage on 09.22.22 at 4:30 pm
I personally never said interest rates couldn’t rise. But I did say they could only rise so much because of the level of debt. That’s exactly what’s happening, the bank of Canada rate will stop at 4% because that will trigger a recession and bring down inflation.

For the 1 or 2 people who post continuously post here that rates need to be higher than inflation you are wrong. Demand is already being destroyed which will bring down inflation. 4% will be sufficient keeping in mind that other factors like the war are immune to rate hikes.

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

Core CPI is still far far above BoC’s stated goal. There’s obviously still lots of demand still to quell. The various Fed rates may be higher or lower than inflation but there’s nothing magic about 4%, it very well may have to go a lot higher.

And the central bank’s main mandate isn’t to prevent a recession, it’s to contain inflation. Not happening. In the UK – who’s way behind in raising rates, which is one of many factors contributing to some of the highest inflation in Europe – they just bumped the BoE rate by .5%, even though the country is or probably is already in a recession.

They fear inflation far more than recession and rightly so.

Lots more increases to go everywhere. No choice.

#131 Faron on 09.23.22 at 11:33 am

#117 Dharma Bum on 09.23.22 at 8:47 am
My B&D portfolio is now melting at about the same rate as the glaciers.

I blame climate change.

Where is the outrage?

Climate change has and will continue to kill people, especially those who benefitted the least from the economic activity that caused CO2 emission.

To the chagrin of many, your portfolio meltdown is a harmless “first world problem” of the planet’s wealthiest and will not cause your early demise. SNS. Don’t be a selfish a-hole, it’s not befitting the Dharma.

#132 Fiona on 09.23.22 at 11:39 am

GARTH, GET THE HELL OUT OF LUNENBURG!

I’m on Bay Street. Storm here, too. – Garth

___

DAMN!

Stephen Harper told me I could get you on the east coast – how the hell do I turn around !?

#133 TurnerNation on 09.23.22 at 12:12 pm

Dear Advisor/Adviser. I can’t take it any longer!
Get. Me. To CRASH.

I just want to BUY — but will wait till Monday.

Today is the Everything-Index Crash:

Butcoin
Gold
US Treasury Blondes
Natural Gas
Oil
All US Index sectors (that I can see)

#134 NorthOf49 on 09.23.22 at 12:13 pm

#121 crowdedelevatorfartz on 09.23.22 at 9:41 am
Yo Soren.

Has Berlusconi been tested for dementia lately?

https://www.reuters.com/world/europe/putin-was-pushed-into-ukraine-war-says-italys-berlusconi-2022-09-23/

——————-

Berlusconi is not wrong. 7 years of violation of the Minsk Accord and significant Ukrainian military buildup under the guidance of NATO advisors. Excellent YouTube video by a retired West Point general gives all the details.

#135 Bo Jangles on 09.23.22 at 12:24 pm

Faron #117

More people died from extreme weather a hundred years ago in climate related occurrences. More extreme hurricane were recorded in the 1949 through ’60 ‘ s than in the past ten years. A recent massive south Pacific volcano called ” the hunga” occured last year and it shot up billions of gallons of water into the atmosphere and climate freaks named a new species of climate change aka, atmospheric rivers. The moisture will stay in the atmosphere until it drops. It’s not climate change, it climate hysteria.

#136 Shawn on 09.23.22 at 12:36 pm

July Inflation

#126 Shawn on 09.23.22 at 10:26 am
derp watch

(remember, we got slight deflation in July versus June prices)

Uh, no. No we didn’t.

*********************************
Upon checking you are right, July prices were up 0.1% versus June. My apologies.

https://www150.statcan.gc.ca/n1/daily-quotidien/220816/dq220816a-eng.htm

It was August that had a slight decrease in prices versus July.

https://www150.statcan.gc.ca/n1/daily-quotidien/220920/t001a-eng.htm

#137 IHCTD9 on 09.23.22 at 1:19 pm

#125 Quintilian on 09.23.22 at 10:05 am
#103 DON on 09.22.22 at 11:22 pm
Invoices…What industries? Please share Quint!

Don, my GF is a purchasing agent for her father’s business.

Costs have been going up at warp speed. The suppliers of alloys that require nickel, chrome in particular are pushing through price increases and won’t respond to any push back.

Also, machinery and equipment from the US are up a whopping 30% plus.

Industrial gases, like Argon, Helium and Nitrogen is just off the charts.

And if the company wants to keep the right people wages have to increase, and have done so, twice in the last 18 months.
——————

All that stuff has definitely gone bonkers, but from where I sit the end is nigh. Some Aluminum from new stock is down a buck or so on extrusions. Mild steel coil has dropped quite a bit this year, 3/4” and up 96” wide plate is still way high. Stainless warehouses reporting business is slowing. Nickel is up, but it’s still half of what it was in ‘08 on the LME. Our shop rate went up huge over the pandemic to cover wage increases and consumables.

Scrap prices have been great though, and material markup in dollars are up 100+% right alongside the material cost increases. Sometimes even nearing the price of the labour on some jobs – which is a first for me.

Everything is still 100% or more high compared to 2019, but at least now it appears some of it is nosing over. This even despite the Loonie getting pounded. Hopefully, it keeps going.

#138 Blessed Vendor on 09.23.22 at 1:43 pm

House prices in the lower mainland are so veiled, it’s disgusting! Real estate offices are saving themselves, all while helping buyers put the noose around their necks!
We were blessed to sell our house of 9 years in May 2022 for $1.6mill, this week a neighbor, same size house, lot and vintage, sold for $1.1mill!!!
Real estate is going to destroy a lot of families in the Fraser Valley!

#139 Love_The_Cottage on 09.23.22 at 1:49 pm

#130 From the UK on 09.23.22 at 11:27 am
#25 Love_The_Cottage on 09.22.22 at 4:30 pm
Core CPI is still far far above BoC’s stated goal. There’s obviously still lots of demand still to quell. The various Fed rates may be higher or lower than inflation but there’s nothing magic about 4%, it very well may have to go a lot higher.
________
You have to factor in the lag effect of interest rate increases. You don’t see the full effects until months and in the case of some mortgages and layoffs even years later.

Agreed nothing magical about 4%, but the point is this will be high enough to have a major impact due to the historical high debt levels. We’ll see but I’d put money that 4 – 4.25% is as high as it goes.

#140 Ronaldo on 09.23.22 at 1:57 pm

#133 TurnerNation on 09.23.22 at 12:12 pm
Dear Advisor/Adviser. I can’t take it any longer!
Get. Me. To CRASH.

I just want to BUY — but will wait till Monday.

Today is the Everything-Index Crash:

Butcoin
Gold
US Treasury Blondes
Natural Gas
Oil
All US Index sectors (that I can see)
================================
Down but still up 56% from the March 2020 thrashing. A ways to go yet. Better deals down the road.

#141 Max Tout on 09.23.22 at 2:42 pm

Oh yes, the time value of money is being restored, finally.
ALL asset classes are tied to the price of money, ie. interest rates. Cost of money goes up, stocks, bonds and physical assets must come down.

If the Fed put is really not coming back, the investor bonanza of the past 15 years is over until the system can flush out the leverage. All simple math.

A lot of screaming matches coming for investment advisors who did not go to cash this summer when they had the chance. If the Fed put is still alive, I will be wrong.

#142 Max Tout on 09.23.22 at 3:02 pm

There will be much wailing and knashing of teeth as this finally breaks.

The only way it does not break is if the Fed says to hell with breaking inflation, gotta save asset prices. A terrible binary choice, thanks to not letting the system reset in 2008, and coming to the rescue every time the markets got the vapours.

#143 BillinBC on 09.23.22 at 3:15 pm

Faron,
I’m enjoying your posts lately now that you’ve stopped (permanently I hope) insulting posters left and right

#144 Bdwy on 09.23.22 at 3:34 pm

Quantitative frightening .

3200 sp getting talked about on the radio but a bounce is due.

Oil getting thrashed. May be a buy.

Uk tories firehouse of cash should be helpful for inflation /s