The haircut

Whadda week. And more to come. 2022 belongs to those central bankers who now control… everything. Markets, politics, the economy, jobs, real estate, portfolios, consumer spending and the fading value of your daughter’s condo (that you financed). Oy. When will it stop?

No time soon. On Friday Fed officials opened their yaps again, saying rates would likely head higher than Mr. Market had been anticipating. So stocks fell again. Bond yields jumped. And it’s clear the housing market’s prospects in Canada are being massively downplayed by authorities and participants who do not want you to freak out. That would include Re/Max marketers, the humpers at Royal LePage and CMHC plus the big bank lenders. It’s now more than likely the average house price will suffer a peak-to-trough plop of at least 40%. In some places, even more.

Now, here’s why. Below is a chart plotting the yield on a five-year Government of Canada bond, which reflects the Bank of Canada rate and helps determine the cost of five-year, fixed-rate mortgages. We haven’t seen a yield at this level since 2008. That’s when an average Toronto property was selling for $379,080.

By the way, in 2008 a five-year mortgage cost 7.2%, Ottawa eliminated 40-year amortizations, and replaced 0% down with a requirement for 5% in order to gain CMHC insurance. The elfin deity known as F was finance minister. Harper was re-elected. The credit crisis was about to hit. And the entire nation was aroused when this pathetic blog debuted.

Anyway, here’s where we sit.

The current thinking is the Bank of Canada rate, now at 3.25% after five aggressive increases, will top out – or at least pause – at 4.25%. To get there will take increases on October 26th, December 7th and early in 2023.

Five-year fixed rate mortgages at the Big Six now range from 5.1% to 6.1% (a 14-year high). The prime rate is 5.45%. By Christmas home loans will be a lot closer to 7% with the stress test hurdle resting well above 8%. The chartered bank prime will be 6.2%, on its way to almost 6.5%. Today HELOCs are close to 6.5%, and will be well over 7% in the new year. Already reverse mortgage rates approaching 9%.

Or everything might be more. Fed talkers on Friday were saying the US CB rate could hit 5%. If our bank doesn’t match that, the loonie would be further squished. Imports would rise in value. Inflation would go the wrong way. The Bank of Canada would be forced to go further.

Can real estate values withstand an increase in fixed mortgage rates – in one year – from below 2% to 7%?

Nope. Impossible. Houses are not $379,080 any more. The average detached in Toronto is $1.6 million. In Vancouver it’s $1,906,400. In Victoria, $1,201,100. The higher-rate shock has caused a number of things to happen. First, sellers have withdrawn as prices adjust in the ridiculous belief conditions will be better in 2023. The opposite. Second, low inventory levels have kept sale prices higher than they should be – something that will change quickly next year. Third, the upper end of the market is braking fast with far fewer sales, while the cheaper stuff continues to change hands. Fourth, the pandemic made us weaker, less ambitious, more indebted, less diversified and more dependent on employment income just as the economy tilts into recession and job loss.

It’s the perfect storm. Astute people know this. Many are afraid to share it.

Royal LePage’s latest ‘report’ gives up the company’s prediction (three months ago) of a 5% gain in national real estate prices this year. Now the decline is forecast to be 0.5%. That’s rich, given the monthly drop in major markets has been 2%.

Also squandering its depleted credibility is CMHC. Prices will be 2.6% higher this year, it says, then shed 6.3% in 2023. Of course the average detached in Toronto is already 23% cheaper, and areas in Bunnypatch have seen a 50% crash.

Some people think the CB will pivot as the economy is impacted, house values fall and politicians are flamed. Surely, they say, authorities will change course and cut the cost of borrowing as recession takes hold.

Phooey, relies BeeMo econ Sal Guatieri. There is unlikely to be any pivot next year, and not until inflation declines in a meaningful way – a process that could take several years. This means the 47% of Canadians with a mortgage to renew in the next year-and-a-half will see the monthly cost jump, debt repayment slow and more equity in their home disappear.

Fewer and fewer will be able to afford houses, no matter how many new ones are thrown up. So, as asked here a few times: does the market freeze solid over the winter, or do prices take an epic haircut?

There’s only one answer.

About the picture: “Long time reader Garth and appreciate everything you do,” writes Ballingsford. “Here is Jasper, choc lab, and our cat sleeping by the fireplace in our new home. He seems to be not really worried about interest rate hikes. Just waiting for spring to arrive.  Cat in background is for Felix, who I think also owns a dog.”

Have a beast to share with the pack? Email me a picture and some words. The address is ‘[email protected]’.

Special consideration will be given to animals that are pictured actually doing something. – Garth

150 comments ↓

#1 kommykim on 10.14.22 at 3:23 pm

Real estate agents caught on hidden camera facilitating mortgage fraud for a fee:
https://www.cbc.ca/news/business/marketplace-mortgage-fraud-1.6614132

#2 Mattl on 10.14.22 at 3:31 pm

All you waiting for an epic crash to vulch, careful what you wish for.

Have we ever had a scenario where markets and RE were off 35-40% and rates were in the 7s? With inflation at 6-8%?

Even at a 40% discount, this puts us at what, 2018 prices? With lending rates 2-3x what they were in 2018, and the average portfolio getting crushed.

These events never benefit the middle class. This will crush people, and not just those that are overleveraged. The guy that invested and bought what he could afford is still going to get hammered, and the rich will get significantly richer like they did post 2008. Expect an angry middle class to get even angrier and all the political stuff that follows.

#3 Paddy on 10.14.22 at 3:32 pm

Jasper looks like a good boy. I personally think Labs are the best breed. High energy yes but they love to cuddle and belly rubs….and the occasional kiss on the jowels. Best hiking/adventure companions as well.

#4 Predictor on 10.14.22 at 3:33 pm

House prices will bottom when everyone stops talking about houses and, nobody brags about how house rich they are .

#5 Paul on 10.14.22 at 3:39 pm

So, as asked here a few times: does the market freeze solid over the winter, or do prices take an epic haircut?
————————————————————————————————
Both,

#6 Captain Uppa on 10.14.22 at 3:40 pm

I was so close to that 10yr 2.8% mortgage. I am kicking myself. I took a five year fixed maturing in 2026 all for just over a 1% discount.

I’s a fool, but at least I didn’t go variable lol.

#7 jess on 10.14.22 at 3:41 pm

prisoners dilemma?

https://www.theguardian.com/world/2022/oct/14/daphne-caruana-galizia-brothers-admit-murder-first-day-trial

conservative party uk in a hot mess
hunt back in sacked Kwarteng

#8 chalkie on 10.14.22 at 3:44 pm

CREA put out their numbers and as expected, home sales and dollar figures were down again. For whatever reason, the numbers don’t read like the sites show the discounts, there is a disconnect somewhere.

My money is on the homes taking a haircut and it might be a buzz cut.

Things you do or should know and it’s OK to be a little mad and ask why?
Canada has the highest milk prices in the world, followed by Argentina who came in second, that’s a big statement, when we say the world. You only have to cross the US Border to see the difference in dairy cost products versus Canadian prices. The reason for Canadian milk prices being so high are, Canada’s dairy sector has been under the top-down control of a state-sanctioned cartel since the 1970’s.

You will soon be docked a premium charge for using your credit cards in Canada. It’s the grocery stores that will be hitting the consumer very hard, it won’t be accepted with a friendly note by the people, given how expensive groceries already are, eating is a necessity for survival. As of May 2021, there were 46 percent of grocery shoppers paying with a credit card, 39 percent with a debit card and 15 percent with cash.

Cell phone plan’s cost you $144.00 with 100 gigabytes in Canada, verses in Europe, the same cell phone bill would cost you $30.00, TELUS, Rogers and Bell, control over 90% of the wireless market and there is no appetite for this to change with the current or the past governments.

Canada came in sixth spot for the cost of the most expensive airline travel in the world. Over 90% of Canadian domestic air travel is done by Air Canada and WestJet, there are few foreign flights within Canada and we also have the most expensive landing fees, keeping our domestic air travel very costly to use.

One piece of news that is not surprising, Toronto does have the Bubbliest housing market in the world, that’s right folks, in the world. This is really telling us something, the higher you go, the further the fall.
Keep your dollars for now, your best home deals in real estate are a good 12 to 18 months out yet, Toronto and Vancouver has plenty of room to roll back their prices. It had to come to this, the bubble is thin now and it won’t take much for it to bust at the seams, the rest of Canada will follow suit in dropping home prices right behind Toronto and Vancouver. If houses were a normal commodity, the makers would simply build new ones. Canada has issues with so much red tape that makes it harder and more expensive to do so.

Canadians have higher taxes, with fewer savings and more expenditure.

Oil: There is a $30 per barrel difference for Western Canadian Select (WCS) from what Canada gets for their oil on the international markets, vs what the Americans get for their West Texas Intermediate (WTI), is there not something wrong with this picture for Alberta crude? Why is it that Canada always gets the —— end of the stick?
With an average of 5 million barrels per day exported, that’s a 150-million-dollar difference or shortfall every day of the year, something not right here. I know there are many driving factors causing the price difference, but to the tune of 150 million dollars in refinery cost per day, it puzzles a lot of us.

Don’t be in a hurry to buy that Christmas gift just yet, Retailers are stuck with more stock than they are ever going to unload. Retailers ordered early to ensure supply, but the situation changed for production and there are far too many products available then were ever anticipated.

Christmas Eve is only 71 days away, there will be many discounts and deals offered early, in order for retailers to have funds available to purchase their regular seasonal inventories. It’s not going to be a robust year for retailers, money is tight and being carefully spent by consumers this year.
For those retailers who don’t offer discounts will miss the boat and will find themselves in trouble with overstock that will have to set in warehouses and storage for another year.

Royal Lepage is announcing today that the Q4 will not be so robust in sales, they have lowered their estimates, “WOW” “Hello, have they been asleep at the wheel, or just not following the day-to-day markets’.
It seems you and I knew the housing downturn was here, but the experts who should be guiding us, finally announce something when the barn door has been left open and the horse is long gone, always after the fact and the arrow had been pointing in the downward direction for months, including the information that will hold the price rollbacks.
When Royal Lepage, REMAX and the entire bunch of the realtors look at the dollar sales in Canada for Q4, they will fall off their chair in disbelief.

That’s right folks, the sales party has come and gone and the realtors were not invited to attend our knowledge party with us in Q3 to discuss this quarter, we will just let the realtors find the results on their own this time around.

RBC forecast a historic correction, I side with them, the downturn has just poked its head through the clouds and it has a high view from above, far and wide. Get prepared to see many realtor signs with reduced prices right across Canada, for the few sellers that are brave enough to list their homes at fair value, even fair will be a challenge to close a deal quickly.
Home Conditions are back on the final to purchase offers, fast and furious.

Before home prices return to late 2021 prices, today’s 10-year old’s will be asking to borrow the car. The run-away train home prices were a short-term coming in the making, but will have long term hardship and consequences for many buyers who truly never understood the risk in the real estate markets. Us old timers are saying, nobody listened anyway, been there, done that so let’s move on to the next chapter.

Get your realtor to check out how many times the home have been listed, some of these homes have been listed 5 or 6 times this year, with sellers hoping to create a bidding market, but its not happening: simply walk away, don’t play that game with them.

Unfortunately, there are still home owners not understanding the market and listing their homes at yesterday’s market values, standing no chance of even coming close to getting their asking price, big reductions make a realtor look bad, the truth is reality for references.
Realtors need to explain to their clients in detail, after a few price reductions, buyers become Leary and don’t even want to enter the home to view it, thinking there must be a problem. It’s Not much different when homes are marked sold and then back on the market again, there must be a problem, NOPE, just a jumpy realtor who got ahead of themselves in most cases, not waiting for final and solid confirmations, again, Buyer’s antennas go up, believing there must be a problem with the home, causing the home to stay much longer on the market then needed.

Quote of the day: These days, man knows the price of everything, but the value of nothing.

#9 Brett in Calgary on 10.14.22 at 3:44 pm

Buzz cut.

#10 Disko L'Inferno on 10.14.22 at 3:48 pm

I think fair value in Toronto is around 500-700k. Most of the houses are far too old, and in poor condition generally. The city has less and less to offer every year, there’s not much incentive to buy for lifestyle.

#11 cuke and tomato picker on 10.14.22 at 3:51 pm

Another excellent post with invaluable information and
written in a format that is easy for the average person
to understand. Raising rates may shock some people
because they were only used to low rates and felt they were here to stay. Low rates for 14 tears was a trap and now comes REALITY.

#12 ogdoad on 10.14.22 at 3:52 pm

oh man. 40% peak to trough drop in average prices? More in some places (Like Kelowna – don’t fret, Kelowna. You don’t wanna leave anything to your greedy offspring anyway).

What a time to be a renter. Hopefully all you renters out there are lapping it up. Noses in the air, exuding importance, eschewing teslas…saving money. Let’s go!!!

To me, excess during these times looks really, really tactless.

:):):)

Back to JJN and E

Julie:Good thing you bought that tesla, Jason. We can barely afford mortgage, tax, lightbulbs and groceries…let alone tesla payments.

Jason: Hey, part of the package, remember? Your friends bought a hybrid mini-van after buying their house. You wanted to out-do them, remember? Oh, and the toilet upstairs is busted…do you know how to fix it?

Julie: Just call the freakin’ landlaaaa…never mind. Just google it….there’s a home depot like 20mins away.

Jason: Now I gotta start goin’ to home depot? Your the engineer, can’t you fix it?

Julie: Uuuuug?

Jason: What? On my phone. You want Uggs now?

:):):)

Og

#13 Steven Martin on 10.14.22 at 3:55 pm

If I had 2 wishes:

1. That all the children of the world would gather together to sing in peace and harmony.
2. That I would be first in the comments section.

Thank you

#14 Yorkville Renter on 10.14.22 at 3:55 pm

does the market freeze solid over the winter, or do prices take an epic haircut?

could be both, no?

#15 Nonplused on 10.14.22 at 4:04 pm

House prices and mortgage rates are inversely related, a point often made on this blog. At least the “bezel”.

Throwing up new houses can soften the market (supply and demand), but not below the cost to build. However we are a long way from that. The “bezel” in YVR and YYZ is huge!

And no, the central bank don’t care about your house price. The “bezel” isn’t and never was an important part of the long term economy. Sure, it gives a house seller a huge unexpected windfall. But on the other side of that is a buyer, forever a debt slave. One can spend more; the other must spend less.

(Therein lies one of the flaws in taxing primary residences. Sure, the seller looks like he has a windfall the government can tax, but the buyer still has to pony up the money. That means more years at work. More money out of private hands and into the hands of government, to be wasted on the current thing.)

Unfortunately, falling house prices will not substantially reduce inflation. Other than as inflation affects the cost of new homes, house prices only really affect who has the money and who has the debt.

#16 Sunny Ways on 10.14.22 at 4:05 pm

Rents are still high as hedgehog, and we have a government which insists on increasing the number of wage slaves in Toronto, but doesn’t create more housing.

Real estate will be fine in Toronto and Vancouver. We will just be competing to rent mattresses in rooms for $1000 a month and sharing a bathroom with ten other people like a concentration camp.

#17 Linda on 10.14.22 at 4:05 pm

To add to consumer RE woes apparently mortgage fraud is far more prevalent that I had imagined. CBC reported on that & further, the chain of fraudsters doesn’t just include Realtors. As per CBC, employees at both mortgage firms & banks are part of the action, charging a fee in return for filing fraudulent paperwork regarding income levels & employment. Immigrants are a lucrative lot. Their unfamiliarity with how the process works means they are paying ‘fees’ for paperwork that go into the pockets of the paper pushers who are weaving this web of lies. Such payments naturally are not recoverable when or if mortgage fraud is uncovered.

Meanwhile, there is a petition in BC where those who ran up more than they could finance are wanting the government to step in & protect them from rising rates. While I expect these folks will learn their actions actually DO have consequences, BC is a province where such an action might actually succeed. At taxpayer expense, of course.

#18 Faron on 10.14.22 at 4:09 pm

RE, how we got here:

https://www.nytimes.com/2022/10/11/podcasts/the-daily/californian-housing-single-family-homes.html

RE, where we at (RE story buried in there):

https://www.marketplace.org/shows/marketplace/a-rule-that-could-upend-the-gig-economy/

Where we goin’? Shrug

#19 Søren Angst on 10.14.22 at 4:12 pm

All I read today, besides depressing facts/news , is an

Impoverishment of the Wealth

of Cdn people.

47% will be paying a lot more for their mortgages. Big Banks with about 70% of mortgages unsecured with a mortgagee downpayment cushion disappearing (for the banks) and 1/3 of mortgages are variable so the higher rate pain is being felt in real time as I type.

It will not end well. How bad?

Who knows?

Expect the Unexpected.

——————–

“First, sellers have withdrawn as prices adjust in the ridiculous belief conditions will be better in 2023.”

THAT was good.

#20 Leftover on 10.14.22 at 4:13 pm

We are fragile creatures surrounded by hostile facts.”Price discovery”, as the realtors describe a rout, is always harsh.

The scarcity of listings is simply the first stage of grief, denial. Next is anger (hostility in the market), bargaining, depression and, finally, acceptance.

That sounds exactly like a typical real estate transaction in 2023 if you’re selling.

#21 Cash is King on 10.14.22 at 4:16 pm

People think we have been wrong since 2015. Not a chance – we have seen this movie many times over the past 40 years. Throw cheap money, ruthless politicians, immigrants, builders, developers and car dealers etc. all into the same tent and watch what happens.

#22 Shawn on 10.14.22 at 4:17 pm

Just move to Alberta then…

Danielle will pass a Sovereignty Act that will probably say that federal central bank rates don’t apply here.

#23 I don’t know on 10.14.22 at 4:17 pm

My estimate is that market freezes solid in the winter.

Buyers and sellers are trying to gauge the situation, but life marches on. People get married, have children, and desire backyards and garages. For people who can afford homes, waiting has and will continue to benefit no one.

Give anyone a million dollars and ask what they would do with it. The vast majority would say “buy a home” before anything else.

Locked in ultra low rates for five years? Go back to sleep and let inflation inflate the debt away.

Anyone else who is struggling with payments will cut out everything before they miss mortgage payments and eat Kraft dinner every night if they have to. They may even push out the amortizations to keep payments in line, if necessary.

Multi property owners will just raise rents, as is happening already as marginal buyers are forced on the sidelines forcing rents upward.

IDK

#24 No Fool on 10.14.22 at 4:19 pm

It’s stunning to watch listings expire asking peak prices from the past year, only to relist for a few percentage point less on a relisting. They have no idea. Same as GTA cottage country.

On a different note, its easy to go into one of the real estate sites, and see GTA cottages 3 or 4 times relisted, and the ask is now 40% LESS, and not even a bid. There you have it – discretionary spending it not on the radar. Watch for the fire sales on RVs and boats come the spring time.

#25 Faron on 10.14.22 at 4:21 pm

Hey Garth,

Can you ask Sinan if he ever worked with or supervised my quant and macro crush Cem Karsan at RBC Capital?

Thanks!

#26 Cleb on 10.14.22 at 4:22 pm

Yep HRED on TSX = little green arrows for some time. But what’s better in this scenario DRV on NYSE? Better to have both I guess…

#27 Sail Away on 10.14.22 at 4:32 pm

“Special consideration will be given to animals that are pictured actually doing something. – Garth”

——–

Sure. A problem I foresee is that after 18 years, I’m still not convinced our cat actually does anything besides sleep. Food and water levels drop and the occasional dead bird or rat appears, but very rarely is there observable movement. Similarly mysterious to the way things get done at work and my clothes magically become washed and pressed. Uncanny.

#28 45north on 10.14.22 at 4:33 pm

Can real estate values withstand an increase in fixed mortgage rates – in one year – from below 2% to 7%?
Nope. Impossible. Houses are not $379,080 any more. The average detached in Toronto is $1.6 million. In Vancouver it’s $1,906,400. In Victoria, $1,201,100. The higher-rate shock has caused a number of things to happen. First, sellers have withdrawn as prices adjust in the ridiculous belief conditions will be better in 2023. The opposite. Second, low inventory levels have kept sale prices higher than they should be – something that will change quickly next year. Third, the upper end of the market is braking fast with far fewer sales, while the cheaper stuff continues to change hands. Fourth, the pandemic made us weaker, less ambitious, more indebted, less diversified and more dependent on employment income just as the economy tilts into recession and job loss.
It’s the perfect storm. Astute people know this. Many are afraid to share it.

that’s what I think. The people that know aren’t saying.

Danielle Park Equities and real estate have not yet priced in the gravity of this down cycle

#29 Søren Angst on 10.14.22 at 4:34 pm

Many saying US Fed raising rates fast, aggressively.

I say not aggressive enough.

FRED PCE Inflation vs. Effective Rate, Click Max:

https://fred.stlouisfed.org/graph/?g=1ED0

Historically, it is clear that the Fed Rate > Inflation Rate to stomp inflation down.

Looks like 2X to me.

Hopefully, people are in worse shape now than they were in 1980-90 and that the current/projected rates will do the trick.

Somehow, I don’t think so.

Inflation has to be stomped down. People chose to put themselves into high debt but people trying to feed their families and pay for transportation to go to work have no choice.

The highly indebted, financially reckless will suffer greatly, taken out of the economy for a decade as history repeats.

It is the way of the World.

#30 Bill zufelt on 10.14.22 at 4:34 pm

But Garth Tim Hudak says home prices are only going to go up—which one of you is right?

#31 Grumpy Cat on 10.14.22 at 4:34 pm

GOOD!

#32 Shawn on 10.14.22 at 4:39 pm

CPI base year affects

We shall soon start to “lap” the high inflation numbers of last year. At that point the year-over-year gains will wither fast.

In September of last year inflation was 4.4% and then 4.7% in October and November.

We could therefore see a year-over-year number in the 4% range soon. Certainly under 6%. At least, I hope so.

Consumers have been complacent and need to shop around harder to bring inflation down.

#33 NOSTRADAMUS on 10.14.22 at 4:43 pm

A TRUE DEVIL’S ADVOCATE.
With the banks hitting the brakes hard on their lending criteria, it would appear a lot of overindebted people are going through the windshield. I guess buckling up with a reserve of cash never occurred to them. Mmmm- maybe cash isn’t trash after all.
On a more serious note. I no longer have the dopamine rush of youth, but I do have the after glow of quiet reflection which allows me on a number of occasions to be the Devils Advocate to the consternation of our host.
If we listen with some detachment to informed Devil’s Advocates, we might even change our mind. No crystal ball is unclouded, but being flexible enough to change our minds when presented with evidence is a positive trait.
If we want to avoid the dangers of confirmation bias by marrying our positions, Devil’s Advocates become our best friends. Devil’s Advocates delight in probing the consensus or popular view for weaknesses, and exploring how and why the consensus of popular view might be riskier than advertised, or evenly completely wrong.
In closing, anyone who helps me re-think a position is a friend, not a threat. Devil’s Advocate.

#34 Old Boot on 10.14.22 at 4:43 pm

#122 Faron on 10.14.22 at 3:07 pm
#115 Old Boot on 10.14.22 at 2:01 pm

proponents of harm reduction have no evidence to claim it does anything but cause more deaths.

Now you are embarrassing yourself. Just. Stop.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3928290/

Dozens of peer-reviewed controlled trial publications provide support for the effectiveness of harm reduction for a multitude of clients and disorders without indications of iatrogenic effects

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

Congratulations on responding with facts, not insults.

See? Motivation works!

Unfortunately, it seems you only read the first page.

Of course safe injection sites reduce od deaths, but only WITHIN the confines of a safe injection site. Which should be self-evident, as any trained and equipped person can easily reverse uncomplicated narcotic ods that occur right in front of them, or call 911 for more complex cases.

However, the mere presence of safe injection sites has no affect on the 100% of od deaths in BC that occur outside their confines. Those numbers grow year over year.

I’ll agree that amongst largely street-entrenched chronic drug users who visit safe injection sites (who’ve always been their intended clientele), some lives are saved. But even if said user shoots up 7x a day in one, the one time they decide to skip it and hit up in an SRO could be the killer.

But a narrow focus on this specific population of drug users who voluntarily use safe injection sites has failed to save the drug users who used and died elsewhere.

Safe injection sites are only effective in geographically confined areas with a large population of chronic drug users (think DTES).

No one is driving from Shaughnessy to the 100 block E. Hastings 4x a day, to snort, smoke, or inject drugs, nevermind the logistical impracticalities for those users living in Salmon Arm, Langford, or the back 40 around Prince George.

What you, and many other well-intentioned people, fail to grasp is the demographic reality of today’s od deaths. It was almost unheard of to attend a narcotic od outside of the downtown core when I was a new paramedic in 1991, save for the occasional prescription opiate misadventure, but now there’s hardly a suburb, res, or small town that doesn’t have a problem.

Recreational drug contamination is part of the problem, but no one is going to give recreational users a safe supply of meth, E, cocaine, or heroin.

Safe injection sites have their uses, but are not a blanket solution because their use is voluntary, confined to a specific population, and geographically constrained.

Prescription opioid replacements have their uses, but are not a blanket solution because their use is voluntary and requires access to a willing GP or addiction’s clinic.

Prevention, enforcement and treatment were never seriously pursued and we misplaced our faith in safe injection sites as a panacea.

Stand alone harm reduction is inadequate. Focusing on fentanyl as a cause is inadequate, because only 24% of od deaths are attributed to fentanyl.

Safe supply will not eradicate the black market (see: cannabis)

Some people will use intoxicants despite knowing full well it could kill them. Others will use because they know it could kill them.

Prevention, enforcement, treatment; they’re all shaking their heads at our intransigence and stubborn pursuit of magic bullets.

#35 Parksville Prankster on 10.14.22 at 4:46 pm

Out here on the island in Parksville, from my observations, things have pretty well ground to a halt. Quite a few houses and condos sitting on the market 90-120 days and then the For Sale sign is quietly withdrawn.

Maybe folks are just testing the market, maybe waiting for sunnier days for prices, maybe needing every dollar for a move up/out.

For the sake of the oldsters trying to squeak every last nickel out of the sale because their retirement depends on it, I hope prices stay high.

For young families, that need the space for them and their kids, I hope prices drop.

I’m not convinced how this Mexican stand off will end, but neither Buyers nor Sellers seem willing/able to give an inch.

I don’t really have a dog in this fight, as I’m not selling or buying, but it has to be a pickle for either side, given the present stagnant market conditions

#36 Søren Angst on 10.14.22 at 4:48 pm

6/10

Mortgage Fraud.

https://www.cbc.ca/news/business/marketplace-mortgage-fraud-1.6614132?__vfz=medium%3Dsharebar

Assess on your own.

PS:

– The Real Estate Council of Ontario (RECO) would not talk to Marketplace on camera.

– In the past five years, RECO says it has disciplined seven real estate agents or brokers and laid charges under the Provincial Offences Act against several others.

– Mortgage fraud pushed through at Canada’s big banks.

etc.

#37 Sammy on 10.14.22 at 4:54 pm

Hey Garth, I am looking at at townhouse in Vaughan which sells for $1.4MM (haven’t seen prices come down yet). When they plop 40% to $840,000 PLEASE LET ME KNOW I WANT TO BUY ONE!! I’ve been waiting watching them go from $650,000 to $1.4MM in a decade. But if they crash 40% I want to scoop one up!!! This is middle unit so it’s cheaper I want the end unit https://www.zolo.ca/vaughan-real-estate/98-sandwell-street

#38 Ole Doberman on 10.14.22 at 4:57 pm

First!

#39 Ole Doberman on 10.14.22 at 5:01 pm

…I mean third!

Doesn’t look like anyone hangs around anymore hitting the refresh button. Boy have things changed around here.

#40 Asadullah Malik on 10.14.22 at 5:08 pm

Very accurate assessment of the scenario. Today’s drop in S&P 500 was an indicator of the things to come

#41 Ronaldo on 10.14.22 at 5:09 pm

There will be many who become slaves to the banks and others will simply walk away and move back in with Ma and Pa just as in 2008/9. Here’s a place that’s been for sale in my town for quite some time. Assessed July 1/21 at 1.3 million, previous year 1.1 million. Newly built 2021. Trying to sell for $2.2 million. Good luck with that one. Totally dillusional.

Huge wealth destruction happening right now both in housing and stock markets. I would much rather be in the stock market right now which will recover unlike the housing market which could see a 10 to 20 year drought.
https://www.rew.ca/properties/4410858/3250-ferguson-road-nanaimo-bc

#42 Old Boot on 10.14.22 at 5:20 pm

At the risk of sounding argumentative –

Unless human nature and immigration undergo a massive, unexpected shift, SFHs are only rolling back to pre-pandemic levels at worst. Admittedly still quite a drop that will squish some reckless buyers in some areas.

It’s the most desired form of housing, even without obscene equity increases, and the number of SFHs in desirable cities is only shrinking in both absolute numbers and relative to population increases.

Until rents start to roll back via massive investment in PBRs, condos in magnet cities will be both desirable and necessary to house everyone.

I’m hopeful that proposed zoning changes and promises to streamline the development permit process will bring some relief to cities like Van and Vic, but we have a quite a job ahead of us to catch up to present demand, nevermind meeting projected future demand.

#43 Prince Polo on 10.14.22 at 5:22 pm

Is it national capitulation day?

BMO’s Belski finally comes on CNBC and revises his year-end SP500 target to 4300 (from 4800).
&
This blog comes close to acknowledging 50% potential price plop may be in the cards.
&
Shyster cartel says average detached in GTA should cost 600K-700K.

Ok – I made that last one up, but one can dream!

#44 WTF on 10.14.22 at 5:36 pm

#2 Mattl”Even at a 40% discount, this puts us at what, 2018 prices? ”

Not so sure about that.

Van today $1,906,400 minus 40% ($762,400) is $1,140,000 still idiotically stupid but way below 2018 prices I believe.

Gonna be minimum 50% haircut in Vandelusional. Capitulation hasn’t even started. Spring commencement. Blood on the streets for the heavily leveraged.

#45 JPN on 10.14.22 at 5:39 pm

# 12 ogdoad “more price drop in Kelowna” ?

Yet another hopeful to see Kelowna fall. Why so many comments on Kelowna “almost weekly” ? That’s because so many want and “are” moving here .. Its an awesome place to live. Kelowna is adjusting like everywhere else .. But crash ? Fuggetaboutit !

#46 Foggy on 10.14.22 at 5:39 pm

Market’s will freeze this winter and take off next spring as the Liberal’s feel the heat from the indebted and the real estate industry while watching the economy slow drastically and unemployment rise due to increased interest rates.

Felling the heat they will be motivated to ‘do something ‘! In comes the new home savings account and a return to 0%, 40 year mortgages. Hell, why not 50 year mortgages too!

The Liberal’s and NDP will not sit back and watch housing correct 40% or more, which funny enough is what is needed to make them more affordable!

#47 Steven Rowlandson on 10.14.22 at 5:46 pm

It’s going to take a 95%+ drop in home prices to impress me.

#48 WTF on 10.14.22 at 5:52 pm

#42 OB “Unless human nature and immigration undergo a massive, unexpected shift,”

“we have a quite a job ahead of us to catch up to present demand, nevermind meeting projected future demand.”
—————————————————————-
Please Explain why houses aren’t selling and prices ARE dropping if supply is the driver.

The metrices used forever by every reputable reporting agency use (Price to rent and income) they still matter and are completely out of whack. so no, I don’t believe declines stop at the much-bandied and magical arbitrary date of “pre-pandemic prices”. Does that mean pre as in 2001?

The market will revert to the mean like it always has. Always.

Picking when and how does remain the conundrum. It appears accelerating interest rates may be the catalyst this time

#49 Victor Llearna on 10.14.22 at 5:54 pm

Its the ‘everything’ crash. houses/stocks/crypto etc. Food prices go up, should have sold all my stocks in January and invested in canned goods

#50 CL on 10.14.22 at 5:56 pm

I don’t know which one is / was more tiresome, the pandemic or all of the central bank jawboning about interest rates. Again, they caused the problem and now they’re the ones who will fix it. They were the ones saying rates wouldn’t rise until end of 2023. Do you really believe what they say? Just raise the rates and be done with it. It’s like an ongoing threat when they keep, well, threatening to raise rates. I think it’s more jawboning with hopes their jawboning will bring inflation down alone. We will see.

As I said long ago when CB ers were talking about a soft landing, I said there would be no soft landing and now the headlines are starting to indicate that. It was inevitable with a +8% inflation rate that rates would go much higher than 3 to 3.5.

Gov’t will cave and diddle with housing and drop the stress test. The odds likely increase by the month that 30 to 40 year amorts will surface again.

#51 Adam on 10.14.22 at 6:00 pm

Gillian
Avg cost: $20.292 @ 1600 shares
$17,800 left

Adam
Avg cost: 20.5129 @ 4800 shares
$59,836 left

Goal is to end up with an ACB of $18 a share at $16 stock price.

Begin deploying TFSA cash at $14 share price with a goal of full deployment at ACB of $12 at $10 share price

An entire generation of young folks (mostly those 35 and under) have never really thought of money as having a cost. They grew up in a time when savings accounts paid half a percent, and money was plentiful. But it turns out, money does have a cost.

The Mrs. and I were looking at a house here in Edmonton. We currently own a condo and have been wanting to upgrade for a while. We found a beautiful 20 year old bungalow for $600,000 that we love in a great neighbourhood. We looked at the history… it sold for $580,000 back in 2012. The owners originally listed it in April for $699k, then $669k in May, then $639k in August and finally just lowered it to $599k a few days ago. What an example of chasing the market down.

So we did the math… can we afford it? Should we buy it? Let’s do the math. To start, we put a 20% down payment on it of $120,000 and carry a $480,000 mortgage at 5% fixed. In the first year, we would pay $24,000 in interest on the mortgage, plus lose another ~$6,000 in interest on our $120,000, which we will have to pull from our TFSA (assuming invested in a 5 year GIC). So that’s $30,000 a year gone, right there, just to interest. Now… let’s factor in other costs.. like… maintenance. We figured we would need to save up approximately $600 a month for maintenance (1% rule), another $500 a month in property tax, plus $300 a month for utilities (garbage, water, sewer, drainage, etc), $200 for home insurance, and $50 a month for HOA fees. That’s another $1650 that a homeowner would be covering if we rented.

Add it all up… drumroll please… $4,150 a month in lost money to interest, maintenance, property tax and utilities. For a $600,000 home. Keep in mind, this home would never rent out for $4k. Nicer homes in the area are renting out for $3,000. So that’s a loss of $1,150 a month. If your propertly isn’t gaining value of 13k a year, or is losing value, then you’re losing money by owning. Finally, let’s add in expenses that a renter would pay, to see the total cost of monthly payments. This includes the mortgage principal ($850 a month), heating/air conditioning (~$400 a month) or cable/internet/phone ($200 a month). Add another $1450 for those and the total monthly cost required to maintain this house would be $5600 a month.

After seeing this, needless to say, my wife and I decided to stay put in our nice little condo, at least for now. We will watch the house though, like hawks, and see how far the homeowners decide to chase the market down. So far they seem to be doing a great job at it. Maybe we’ll reconsider if it hits $500k.

#52 ogdoad on 10.14.22 at 6:02 pm

#45 JPN on 10.14.22 at 5:39 pm

Good point! When I turn 75 I’ll give it another a look. (full. dis. Didn’t impress at 25…but I’m open)

Og

#53 KuatoLives on 10.14.22 at 6:10 pm

I read somewhere the housing market was being buoyed by pre approved mortgages from months ago.

#54 Rich on 10.14.22 at 6:17 pm

Hi Mr Turner, would be great to hear yours or others of reputation of thoughts metro by metro (the Canada between Van and Tor)
Edmontoian here…. prices rose 5% this year and people got batshit crazy for a few months…prices before that did not move for a decade. What is our worst credible case?
Thanks!!!!!!

#55 Sail Away on 10.14.22 at 6:22 pm

In the last 9 years, the loonie has lost fully 40% relative value to the USD. This is a real issue when the US is our main trading partner.

Canada is similar to an island trading cowrie shells worth something only on the island.

While it’s nice to be raking in a lot of cowrie shells, it’s important to recognize their fast-eroding value.

#56 Reality is stark on 10.14.22 at 6:22 pm

Peak to trough haircut of 50% as prognosticated by none other than yours truly long before the rest.
But that is only your capital loss.
The real pain comes as your Variable mortgage rockets.
One little mistake during the pandemic and you stare down bankruptcy.
If you read my posts it’s all crystal clear.
T2 wasn’t your friend after all.
His profligate spending hasn’t done you any favours unless you find bankruptcy appealing.

#57 Penny Henny on 10.14.22 at 6:22 pm

#25 Faron on 10.14.22 at 4:21 pm
Hey Garth,

Can you ask Sinan if he ever worked with or supervised my quant and macro crush Cem Karsan at RBC Capital?

Thanks!
////////////

translated

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

Hey Garth,
no one wants to talk to me and I am needing my dopamine fix from the comments. Please respond or I will be forced into dragging others down in the mud with me and making a mockery of your comment section.

Please don’t take longer than 15 minutes as I am an addict.

#58 The real Kip (Ret) on 10.14.22 at 6:24 pm

These stupid low interest rates will do nothing but fan the flames. The incentive is to borrow more as inflation rips through the economy. The spread is as wide as ever. The CB’s are in control of nothing.

#59 Tmac on 10.14.22 at 6:25 pm

Wait until the level of populism that stems from this batch of wealth gap increase.
Even the hardened centrists among us will be swayed from this exchange I fear.

#60 Jens on 10.14.22 at 6:26 pm

2008…an average Toronto property was selling for $379,080
[2022] The average detached in Toronto is $1.6 million.

Garth, you are comparing apples and oranges here (any property vs. single-family). No need to make the numbers more impressive than they already are.

#61 Interstellar Old Yeller on 10.14.22 at 6:26 pm

Special consideration will be given to animals that are pictured actually doing something. – Garth

Listen Garth, I know you are anti-quiet quitting but this is taking it a bit far. Let sleeping dogs lie! :-)

#62 jess on 10.14.22 at 6:26 pm

read em and weep

https://www.vice.com/en/article/7k87yx/secret-service-jan-6-messages

faron :

How Koch Industries, Fake Scientists, and Rush Limbaugh Invented Climate Denial
A new book, “The Petroleum Papers”, goes inside a 1991 conference whose goal was to make people doubt climate change is real.

Geoff Dembicki, which pulls from hundreds of confidential documents to tell the story of how oil companies have been lying to the public since at least 1959.

https://www.vice.com/en/article/n7zqxm/how-koch-industries-fake-scientists-and-rush-limbaugh-invented-climate-denial

#63 Wrk.dover on 10.14.22 at 6:28 pm

#90 IHCTD9 on 10.14.22 at 10:24 am
While living in a Van does have some kind of morbid appeal, I still have dependents that I am responsible for quasi-in house. I think if I was going to live in a machine, it’d be a boat.
________________________________

They make RV’s for people with entourages.
Deserts, mountains, shorelines, plains, valleys, Grand Canyon, San Padre Island, so much going on, you haven’t got a grasp on just how tunneled your life is.

I got the living on the boat fantasy checked off my list in the winter of 73/4 in Fla., on a 35′ power boat, fresh out of H.S.

You would have enjoyed seeing my pimpley face when the hammerhead shark snatched the fry pan I was rinsing at six a.m. while hanging over the transom, in the dim light of the parking lot at the end of the dock. His head was two feet wide and ugly. It all happened much too fast.

Can’t do that on Lake Ontario!

#64 Old Boot on 10.14.22 at 6:39 pm

#46 Foggy on 10.14.22 at 5:39 pm

Market’s will freeze this winter and take off next spring as the Liberal’s feel the heat from the indebted and the real estate industry while watching the economy slow drastically and unemployment rise due to increased interest rates.

Felling the heat they will be motivated to ‘do something ‘! In comes the new home savings account and a return to 0%, 40 year mortgages. Hell, why not 50 year mortgages too!

The Liberal’s and NDP will not sit back and watch housing correct 40% or more, which funny enough is what is needed to make them more affordable!

**********

I fear that you’re correct.

No politician or party can survive presiding over a middle-class blood bath brought on by rate shock colliding with a credit bubble, a credit bubble specifically induced to cover up the inexorable decline of wages and real productivity in a service-based economy that demands constant lifestyle inflation to survive.

“Has access to credit” should be the dictionary definition of middle-class. Remove it, and you’re left with feudalism.

And maybe such a blood bath shouldn’t be allowed to occur. One could argue that the effect on society would be seriously destabilizing, and we’re already unstable enough.

Human nature is a constant; you can lecture people all day long to mend their human ways, but it’s not gonna happen.

#65 Kurt on 10.14.22 at 6:41 pm

#34 Old Boot on 10.14.22 at 4:43 pm

Prevention, enforcement, treatment.

Yeah. Good idea. Given the choice between higher taxes, reducing funding for other priorities, and simply ignoring the problem, the public always chooses ignoring the problem. Good luck with that.

Just curious: are you still working as a paramedic?

#66 Dogman01 on 10.14.22 at 6:43 pm

“And it’s clear the housing market’s prospects in Canada are being massively downplayed by authorities and participants who do not want you to freak out.”

——————————-
In Canada a cabal of establishment interests, Big Media, Government , Academia now believe it is their duty to obfuscate and hide the truth from their Citizen. This phenomena is becoming ever more ubiquitous in our nation.
As our institutions become ever more inept, ineffective and dare I say corrupt the “watchdogs” become aligned and indistinguishable from the “ruling class”.

“The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which.” – Animal Farm

#67 Ronaldo on 10.14.22 at 6:47 pm

#54 Rich on 10.14.22 at 6:17 pm
Hi Mr Turner, would be great to hear yours or others of reputation of thoughts metro by metro (the Canada between Van and Tor)
Edmontoian here…. prices rose 5% this year and people got batshit crazy for a few months…prices before that did not move for a decade. What is our worst credible case?
Thanks!!!!!!
—————————————————————–
Rich, looking at prices on units for sale at the lower end I cannot see where there would be much of a drop if any. A friend bought a condo suite at the top in 2007 for $249m. She tells me that she would be lucky to get $120m now. As I recall, Edmonton and Winnipeg were the two places that were the last to the party during those bubble years. Now the top end, that is where the price destruction will occur as always.

#68 jess on 10.14.22 at 6:50 pm

seriously folks

We didn’t create the Earth, so how could we ever save the Earth, or save all the animals even on the Earth, or save the polar caps?” Wilks said that day in July 2013, according to a recording obtained by the watchdog group Right Wing Watch. Ultimately, the fate of the planet was up to God alone: “If he wants the polar caps to remain in place, then he will leave them there.”

https://www.vice.com/en/article/y3p33j/fracking-farris-dan-wilks-prageru-climate-crisis-denial-shapiro
THE TOXIC TEN
How ten fringe publishers fuel 69% of digital climate change denial
https://counterhate.com/wp-content/uploads/2022/05/211101-Toxic-Ten-Report-FINAL-V2.511722.pdf

#69 Jason on 10.14.22 at 6:56 pm

Working in the industry, I can say the most common fraud we see is what Donald Trump has been repeatedly accused of. Self employed folks falsely claiming lower income to the CRA, and then claiming higher income to lenders to get their mortgage approved. Doesn’t work that way – the net income you claim on your taxes is what is used for qualifying income. And most reputable lenders use a 3 year average for those people that are self employed, so you can’t just change it the one year you need a mortgage / HELOC / refinance. It’s amazing how often people try to break the rules.

#70 Terry on 10.14.22 at 7:02 pm

We are in a debt driven Recession inside a larger 2nd Great Depression. This is at least a 10 year trip that started in September of 2019. Having said this if you continue to buy and add quality investments to your portfolio’s while also taking advantage of the GREAT on sale prices to be had right now and into the future you will do fine. It’s just going to take a few years to see the benefits of prudent moves today.

#71 DON on 10.14.22 at 7:03 pm

#2 Mattl on 10.14.22 at 3:31 pm
All you waiting for an epic crash to vulch, careful what you wish for.

Have we ever had a scenario where markets and RE were off 35-40% and rates were in the 7s? With inflation at 6-8%?

Even at a 40% discount, this puts us at what, 2018 prices? With lending rates 2-3x what they were in 2018, and the average portfolio getting crushed.

These events never benefit the middle class. This will crush people, and not just those that are overleveraged. The guy that invested and bought what he could afford is still going to get hammered, and the rich will get significantly richer like they did post 2008. Expect an angry middle class to get even angrier and all the political stuff that follows.

**********
This isn’t a careful what you wish for moment.

It’s a ‘I have borrowed to much because I thought interest rates could never rise and they did moment’.

Didn’t something similiar happen in the 80’s. This time people borrowed much more. Things change but if you have cash and good credit you have a much better chance. Hard to imagine housing going unloved but money pain changes perspectives fast.

How does an average or even above average wage pay off a 1 – 1.5 million dollar house. Most can’t even afford a 500k house.

But everyone was doing it…so the huge debt was a no brainer.

Everyone’s milieage will vary…and if we go into recession…Yikes!

#72 jess on 10.14.22 at 7:06 pm

6 Søren Angst on 10.14.22 at 4:48 pm
….”prosecution for falsifying information or assisting in the falsifying of information can result in fines up to $50,000, prison for up to two years, or suspension or revocation of the agent’s RECO registration.
==============

bankruptcy for profit

The four ingredients of the recipe for fraudulent CEOs of lenders to maximize the bank’s (fictional) short-term reported income and (real) longer-term losses are: 1. Rapid growth 2. Making loans at a premium yield even to the uncreditworthy 3. Extreme leverage 4. With grossly inadequate allowances for loan and lease losses (ALLL)

The officers that control the lenders that follow this recipe achieve what Akerlof & Romer aptly termed a “sure thing.” The recipe is mathematically guaranteed to produce record short-term income (until the bubble collapses) and, with modern executive compensation, make the officers wealthy. The lender fails (or is bailed out), but the controlling officers walk away rich. Akerlof & Romer’s title emphasized that dynamic – “Looting: the Economic Underworld of Bankruptcy for Profit.”

https://www.businessinsider.com/only-lying-lenders-made-liars-loans-2011-3

#73 PeterfromCalgary on 10.14.22 at 7:07 pm

Inflation is sticker than we would like. However, at some point it inflation will go down. Car prices are heading down as is lumber and many other commodities.

#74 PBrasseur on 10.14.22 at 7:10 pm

#46 Foggy – The Liberal’s and NDP will not sit back and watch housing correct 40% or more

And they will do what exactly to make credit cheaper?

The only way they can print money and manipulate interest rates again is if the US does too, otherwise the CAD will sink like a stone and make inflation explode. Not likely the US goes back to printing and emergency rates IMO because US households are in far better shape than Canadian households, and contrary to popular belief public finances are in worse shape in Canada as well, not to mention we have no fiscal margin left.

The 2008-2009 GFC was the great US meltdown, not this time, now it’s someone else’s turn, probably everybody else including Canada.

Canada is cornered plain and simple, it just took long enough!

#75 Sail Away on 10.14.22 at 7:11 pm

#63 Wrk.dover on 10.14.22 at 6:28 pm

You would have enjoyed seeing my pimpley face when the hammerhead shark snatched the fry pan I was rinsing at six a.m. while hanging over the transom, in the dim light of the parking lot at the end of the dock. His head was two feet wide and ugly. It all happened much too fast.

——–

Ponzie also fits that description, and I wouldn’t put stealing a fry pan past him.

#76 Dogman01 on 10.14.22 at 7:14 pm

Royal LePage’s latest ‘report’ – “the decline is forecast to be 0.5%. That’s rich, given the monthly drop in major markets has been 2%.”

Also squandering its depleted credibility is CMHC. Prices will be 2.6% higher this year, it says, then shed 6.3% in 2023. Of course the average detached in Toronto is already 23% cheaper, and areas in Bunnypatch have seen a 50% crash.

————————————

If you see fraud and do not say fraud, you are a fraud.” — Nicholas Nassim Taleb

“We know they’re lying, they know they’re lying, they know that we know they’re lying, we also know that they know that we know they’re lying, but they still lie.” – Alexander Solzhenitsyn

#77 Dogman01 on 10.14.22 at 7:17 pm

Real estate agents caught on hidden camera facilitating mortgage fraud for a fee

https://www.cbc.ca/news/business/marketplace-mortgage-fraud-1.6614132

Truly shocking….or ubiquitous?

#78 Nonplused on 10.14.22 at 7:19 pm

#41 Ronaldo on 10.14.22 at 5:09 pm

“Huge wealth destruction happening right now both in housing and stock markets.”

What the spreadsheet giveth, the spreadsheet can taketh away.

Money is not real. It is a unit of measure, not the thing being measured. It is the relative value of things that matters. When the dust settles, no actual houses will disappear. The river will still flow. Dog will still be in his heaven. The sun will still rise. A couple bankers will be pissed off, but who cares?

#79 What am I missing? on 10.14.22 at 7:19 pm

#41 Ronaldo on 10.14.22 at 5:09 pm

There will be many who become slaves to the banks and others will simply walk away and move back in with Ma and Pa just as in 2008/9. Here’s a place that’s been for sale in my town for quite some time. Assessed July 1/21 at 1.3 million, previous year 1.1 million. Newly built 2021. Trying to sell for $2.2 million. Good luck with that one. Totally dillusional.

Huge wealth destruction happening right now both in housing and stock markets. I would much rather be in the stock market right now which will recover unlike the housing market which could see a 10 to 20 year drought.
https://www.rew.ca/properties/4410858/3250-ferguson-road-nanaimo-bc

—————

20% down @6% mortgage = $11,250/M mortgage payments.

People are off their rockers, this is insanity lol

#80 45north on 10.14.22 at 7:25 pm

Chalkie : wow 1281 words but good stuff!

CREA put out their numbers and as expected, home sales and dollar figures were down again. For whatever reason, the numbers don’t read like the sites show the discounts, there is a disconnect somewhere.

if you have to sell your house, you could be staying up at night fraught with worry. CREA is worried too, but not about you.

Canada has the highest milk prices in the world
The quota system adds social stability to the agricultural areas.

Cell phones’ plans cost you $144.00 with 100 gigabytes in Canada, verses in Europe, the same cell phone bill would cost you $30.00, TELUS, Rogers and Bell, control over 90% of the wireless market and there is no appetite for this to change with the current or the past governments.
a couple of years ago, VERIZON was looking into entering the Canadian market. TELUS, Rogers and Bell made an all-out effort to stop them. They still refuse to inter-connect. Packets between the carriers, go through Chicago.

One piece of news that is not surprising, Toronto does have the Bubbliest housing market in the world, that’s right folks, in the world. This is really telling us something, the higher you go, the harder you fall.


Garth It’s now more than likely the average house price will suffer a peak-to-trough plop of at least 40%.

I assume he’s talking about the national average price. It’s going to be a lot more in the Toronto hinterland. I think at least 50%.

Canadians have higher taxes, with fewer savings and more expenditure.
Facts they will keep hid. For as long as they can.

Oil: There is a $30 per barrel difference for Western Canadian Select (WCS) from what Canada gets for their oil on the international markets, vs what the Americans get for their West Texas Intermediate (WTI), is there not something wrong with this picture for Alberta crude? Why is it that Canada always gets the —— end of the stick?
We’re getting the wrong end of the stick because of the proponents of Green Energy. In pursuit of Green Energy, they have put barriers in the way of oil and gas. Oil and gas are the cheapest and most efficient source of energy. Nobody understands climate well enough to enforce the drastic and costly move to Green Energy. We cannot afford it.

#81 baloney Sandwitch on 10.14.22 at 7:32 pm

Solid post. The crap has hit the fan and is now splattering far and wide in slow motion. The S&P 500 is bumping at the bottom (I hope) as investors waffle between hope and fear. We are looking at 8% mortgages next year. Unless the two of you have blue chip jobs, forget about owning a house in YYZ or YVR. Side question: Why is Victoria worth so much? There is nothing there except flowers and vistas.

#82 TurnerNation on 10.14.22 at 7:32 pm

If yesterday was a “Best Day”, I surely do not like today.

——–

Just another day in the Former First World Countries. Gee maybe one day we will figure out health care. Trust the Science! Soooo close to normal. It’s the plan yes??

.Biden extends COVID-19 public health emergency until January 2023 (latimes.com)

.Canadian military presses ahead with discipline for unvaccinated troops despite easing mandate (nationalpost.com)

.Ontario pediatric hospitals are under strain, and some are transferring kids far from home (thestar.com)

.Study links coronavirus lockdowns to birth rate drop in Europe (bbc.co.uk)

.Babies born in lockdown were less likely to have said their first word by the time they turned one (dailymail.co.uk)

.Emergencies Act wasn’t needed to quell convoy protests, Ontario police force says (theglobeandmail.com)

#83 Old Boot on 10.14.22 at 7:38 pm

#48 WTF on 10.14.22 at 5:52 pm

#42 OB “Unless human nature and immigration undergo a massive, unexpected shift,”

“we have a quite a job ahead of us to catch up to present demand, nevermind meeting projected future demand.”
—————————————————————-
Please Explain why houses aren’t selling and prices ARE dropping if supply is the driver.

The metrices used forever by every reputable reporting agency use (Price to rent and income) they still matter and are completely out of whack. so no, I don’t believe declines stop at the much-bandied and magical arbitrary date of “pre-pandemic prices”. Does that mean pre as in 2001?

The market will revert to the mean like it always has. Always.

Picking when and how does remain the conundrum. It appears accelerating interest rates may be the catalyst this time

***********

“In desirable cities” was the operative qualifier I used. No, not 2001 prices.

Unless im/migration patterns and numbers change, low rental vacancy rates, insecurity of tenure, and costs will keep a floor under condo and house prices in desirable cities. What that floor looks likes? I don’t pretend to know the precise number.

Affordability waxes and wanes in multi-year cycles, but the overall home price trend in magnet cities is always up. Prices crest, drop marginally, wages catch up, up go the prices.

Yes, prices relative to income are out of whack currently, but that’s nothing new.

Relative affordability will return. It may be via wage increases, longer amorts, by acceptance of less home for the buck, or a combination of the three.

Just because you or I wouldn’t live in a 300 sq. ft cubby hole with a shared kitchen and bathroom doesn’t mean that others won’t, or don’t already in many cities.

We simply don’t have adequate supply of rental housing, in the right places; places like Van and Vic.

I agree with Garth that widespread WFH will not survive, certainly not once this little worker shortage is resolved one way or another. So city centres in TO, Van, Vic will remain pressured.

So long as historical constants remain constant, the market reverts to the mean. I think population growth is the wild card.

Governments can wallpaper over a lot of problems via immigration. Don’t think they won’t open it up and let her rip to get themselves out of a jam.

If immigration added numbers proportionally across every Canadian city, we wouldn’t be in quite such a housing pickle, but it doesn’t so we are.

A politically unstable world means plenty of folks will be looking for a safe haven, which Canada still represents to many.

Cheer up, it’s going to get worse and may never get better!

#84 Steven on 10.14.22 at 7:42 pm

What no response to Central banks controlling everything?

You must be cahoots with them.

Interest rates are controlled by CB. When they lower them, stocks move UP as do house prices.

When they raise them the inverse situation.

No? It’s that easy. Just admit it or does that take away from your business?

Please prove me wrong…this should be great to read.

The inverse relationship between rates and asset values has been detailed here many times. You sound unhinged. – Garth

#85 Shawn on 10.14.22 at 7:45 pm

Home prices in Alberta won’t fall much…

Not with “everyone” moving here.

#86 Old Boot on 10.14.22 at 7:48 pm

#65 Kurt on 10.14.22 at 6:41 pm

#34 Old Boot on 10.14.22 at 4:43 pm

Prevention, enforcement, treatment.

Yeah. Good idea. Given the choice between higher taxes, reducing funding for other priorities, and simply ignoring the problem, the public always chooses ignoring the problem. Good luck with that.

Just curious: are you still working as a paramedic?

*********

Sadly, people will always settle for looking concerned about social problems over actually solving social problems. Definitely costs less up front. Human nature being what it is, I’m not convinced all of them are solvable.

Not working in field anymore. Finally driven out by injuries and now licking my wounds in early retirement, thanks to the 2017 YVR RE surge.

#87 Victor Rajkotwala on 10.14.22 at 7:58 pm

yield on five-year Government of Canada bonds is rising, so why are preferred shares falling?

#88 the Jaguar on 10.14.22 at 7:59 pm

“Can real estate values withstand an increase in fixed mortgage rates – in one year – from below 2% to 7%” ? GT ^^^^

It’s a pretty big country, though many haven’t a clue what goes on outside of GTA/GVA..

While the price of things like ‘gas’ may vary from one province to another, (significantly higher in BC), the common denominator is inflation & interest rates. Those are the two universal issues we all share. But will the impact be felt equally across this big country? I don’t think so.

Everyone knows who the big ‘gasbags’ are in the room, and it ain’t Saskatoon, Calgary, Edmonton or Quebec City. Bunny Patch will require a deeper post mortem dive to understand who left the GTA during the pandemic as will points far east (Maritimes).

The ‘coping mechanism’ for what’s coming down the track will vary and be subject to issues which will include immigration, but specifically immigration from where and with what skills, local job economy, what kind of jobs exist in specific economies, and median mortgage amount carried by household. Never, ever will demographics be so important. Stay tuned for a hard lesson in the price of illusion. ——-

‘It’s the perfect storm. Astute people know this. Many are afraid to share it.’ GT ^^^^

Presume this is a reference to ‘inside sources/ amigos de Garth’ in the ‘financial and real estate industry’ who know what’s ‘on the books’ and ‘what’s really at risk’. ( hint: LOTS ).

Hollywood couldn’t write this story as fiction. Or did they already do that with ‘The Big Short”? This one is a thriller, where real estate goes Frankenstein due to low interest rates , money printing for years, and then comes crashing down due to a world wide pandemic, supply chain woes, and a completely avoidable western world war, with the country once looked upon as the shining city on the hill falling apart like a cheap suit.

Fade out, Roll the Credits, ‘The End’.

Sleep tight my Beauties.

#89 The Original Jake on 10.14.22 at 8:01 pm

Real estate is still a gasbag that needs a 40% minimum haircut. Equity markets, while in bear territory, will see another 10% haircut minimum. S&P 3300 removes the covid excess but 3000 closes the gap. We’re close so too late to sell.

Real estate though, is a different story. If anyone has a chance to get out… run!

#90 Steven Rowlandson on 10.14.22 at 8:07 pm

Hair tends to grow back. Not so easy with money.

#91 Yukon Elvis on 10.14.22 at 8:15 pm

#25 Faron on 10.14.22 at 4:21 pm
Hey Garth,

Can you ask Sinan if he ever worked with or supervised my quant and macro crush Cem Karsan at RBC Capital?

Thanks!
+++++++++++++++++++
I had lunch with him today so I asked him that. He said you were a bozo and asked if you were off your meds again.

#92 Shawn on 10.14.22 at 8:21 pm

#64 Old Boot on 10.14.22 at 6:39 pm

“Has access to credit” should be the dictionary definition of middle-class. Remove it, and you’re left with feudalism.

*********************************
Well, that’s not in the definition in the first place but anyhow…

Yes credit is the grease of the economy.

Very little can get done without credit.

Look at the correlation between the rise of credit availability and the rise in standards of living.

Without credit do you think farms could have ever got tractors?

All hail the wonders of credit!

#93 Shawn on 10.14.22 at 8:25 pm

Low investment leads to low interest rates?

Can someone graph the long term trend in investment as a percent of GDP? I suspect investment as a percent of GDP was far higher in the say the 1970’s.

Now the western world is much more built-out. The major highways and bridges and dams are done.

Now consumption is likely a higher proportion of GDP.

In that scenario there should be less demand for credit and lower interest rates? Will we return to that?

#94 Dan in Nanaimo on 10.14.22 at 8:27 pm

The Barber of Seville is sharpening his scissors. Thing is that the next act ain’t going to have any comic relief

#95 Ed on 10.14.22 at 8:30 pm

Climate activist religion proponents are gaining traction here tonite…matter of time before someone posts an NFT of tomato soup over Garth’s mugshot.

#96 Honest money on 10.14.22 at 8:32 pm

#84 Steven on 10.14.22 at 7:42 pm

What no response to Central banks controlling everything?

You must be cahoots with them.

Interest rates are controlled by CB. When they lower them, stocks move UP as do house prices.

When they raise them the inverse situation.

No? It’s that easy. Just admit it or does that take away from your business?

Please prove me wrong…this should be great to read

——–

If we had honest money ie a return to the gold standard, CBs would not be able to do this.

#97 Observer on 10.14.22 at 8:34 pm

#82 TurnerNation on 10.14.22 at 7:32 pm
If yesterday was a “Best Day”, I surely do not like today.

——–

Just another day in the Former First World Countries. Gee maybe one day we will figure out health care. Trust the Science! Soooo close to normal. It’s the plan yes??

.Biden extends COVID-19 public health emergency until January 2023 (latimes.com)

.Canadian military presses ahead with discipline for unvaccinated troops despite easing mandate (nationalpost.com)

.Ontario pediatric hospitals are under strain, and some are transferring kids far from home (thestar.com)

.Study links coronavirus lockdowns to birth rate drop in Europe (bbc.co.uk)

.Babies born in lockdown were less likely to have said their first word by the time they turned one (dailymail.co.uk)

.Emergencies Act wasn’t needed to quell convoy protests, Ontario police force says (theglobeandmail.com)

^^^^^^^^^^^^^^^

Headlines designed to be clickbait rarely tell whole story! (anyone with half a brain)

#98 Observer on 10.14.22 at 8:39 pm

Anyone watch tonight’s CBC Gem Marketplace episode: “Mortgage fraud caught on camera”?

#99 Observer on 10.14.22 at 8:47 pm

Anyone watched yesterday’s January 6th committee hearing? Weird how the many Trumper fans who hang here don’t talk about the hearings at all. Hmmm….

Anyway, Pelosi is bad ass! See those videos (from Jan 6th insurrection) where her 82 year old self took charge as certain Republican men (who later attacked her for doing nothing) did nothing?

#100 Observer on 10.14.22 at 8:48 pm

edit: watch not watched

#101 Stoph on 10.14.22 at 8:51 pm

#27 Sail Away on 10.14.22 at 4:32 pm

Similarly mysterious to the way things get done at work and my clothes magically become washed and pressed. Uncanny.

—————————————

You must have the magic basket and coffee table.
https://www.youtube.com/watch?v=SqQgDwA0BNU
Just don’t jinx it…

#102 DOWn on 10.14.22 at 9:03 pm

Blaming everything on the central bankers, your starting to sound like one of those tin foil hat wearing folk or kin..

#103 crowdedelevatorfartz on 10.14.22 at 9:22 pm

@#75 Sail away
“His head was two feet wide and ugly. It all happened much too fast.

——–

Ponzie also fits that description, and I wouldn’t put stealing a fry pan past him.

*****

Ahahahaha
Classic.

#104 robert james on 10.14.22 at 9:28 pm

ogdoad on 10.14.22 at 3:52 pm (Like Kelowna – don’t fret, Kelowna. You don’t wanna leave anything to your greedy offspring anyway). I don`t think that is anything to worry about because it will get stolen in that sh*t hole Kelowna long before that happens anyway.. It ain`t easy trying look like a millionaire on the cheapskate wages that are payed here in the OK… Sunshine tax !! lol Highest crime rate in Canada …

#105 EV on 10.14.22 at 9:30 pm

Electricity getting expensive in Europe.

Won’t help electric car sales.

#106 Reddy on 10.14.22 at 9:31 pm

Wow I checked out that townhome for 1.2 mil. Only been 7 days on the market, and I expect it to sell soon because zolo says the average resale price for that home in that area is 1.3 mil… So someone’s going to snap that of that deal quick.. (those comments (except for the 1.3 mil) are dripping in sarcasm by the way)

In Ottawa / Gatineau we haven’t seen any decrease in price… Not houses anyways…..

#107 Doug t on 10.14.22 at 9:48 pm

#85 yawn

LOL – the ONLY time “everyone” moves to Alberta is when they experience a slight “BOOM TOWN” period which is not that often – I moved there in ’88 and couldn’t wait to get out – Alberta is a seesaw province at best

#108 Observer on 10.14.22 at 9:59 pm

Does Alberta’s new premier have a learning disability? She claims on her first day as premier that the unvaccinated are the most discriminated against group she has seen in her lifetime. You really cannot make this stuff up. Surprised TurnerNation hasn’t copied/pasted a link somewhere.

And even better, the new premier wants to change Alberta human rights law to include “unvaccinated” as a protected group in line with: gender, race, sexual orientation and age. Like we can control any of those, but cannot control our vax status.

And even better, getting rid of all vaccine requirements would help (according to her) to reduce the healthcare worker shortage in Alberta. Because OBVIOUSLY, nurses and doctors who refuse to vaccinate (the .01 % or so) would flock to Alberta.

God help us. Polio resurgence anyone?

#109 Observer on 10.14.22 at 10:06 pm

edit: Dog help us.

#110 Dismal Science on 10.14.22 at 10:12 pm

I’ve skipped every comment;

Ben Graham’s famous line:

“That way lies sorrow”

#111 There's a reason for that on 10.14.22 at 10:16 pm

#99 Observer on 10.14.22 at 8:47 pm

Anyone watched yesterday’s January 6th committee hearing? Weird how the many Trumper fans who hang here don’t talk about the hearings at all. Hmmm….

———-

Because nobody who supports Trump cares about the sham hearings.

#112 Ponzius Pilatus on 10.14.22 at 10:26 pm

92 Shawn on 10.14.22 at 8:21 pm
#64 Old Boot on 10.14.22 at 6:39 pm

“Has access to credit” should be the dictionary definition of middle-class. Remove it, and you’re left with feudalism.

*********************************
Well, that’s not in the definition in the first place but anyhow…

Yes credit is the grease of the economy.

Very little can get done without credit.

Look at the correlation between the rise of credit availability and the rise in standards of living.

Without credit do you think farms could have ever got tractors?

All hail the wonders of credit!
——————
Haha.
I’d agree.
But only to affordable credit.
Remember, another name for Credit is Debt.

#113 Ponzius Pilatus on 10.14.22 at 10:31 pm

#105 EV on 10.14.22 at 9:30 pm
Electricity getting expensive in Europe.

Won’t help electric car sales.
——————
Exactly.
Shawn , how’s the Tesla doing?

#114 Ponzius Pilatus on 10.14.22 at 10:47 pm

#99 Observer on 10.14.22 at 8:47 pm
Anyone watched yesterday’s January 6th committee hearing? Weird how the many Trumper fans who hang here don’t talk about the hearings at all. Hmmm….

Anyway, Pelosi is bad ass! See those videos (from Jan 6th insurrection) where her 82 year old self took charge as certain Republican men (who later attacked her for doing nothing) did nothing?
——————
Agree.
I Watched the same video.
That’s why women politicians will soon rule the World.
Right after man can have babies.

#115 Idealistic Realist on 10.14.22 at 10:47 pm

#69 Jason on 10.14.22 at 6:56 pm

Lenders use a 2 year average for BFS income and allow either a gross up or add backs for some clients.

Thank you Garth for being my (and I’m sure many others) beacon of truth and stability. Especially during these times over the last few years. Don’t know where I would be without you freely sharing your wisdom.

#116 alexinvestor on 10.14.22 at 10:58 pm

Pro tip … TD just issued 8%+ bonds. Almost free money if you believe Canadian banks will never collapse.

#117 Russ on 10.14.22 at 11:13 pm

DELETED (Anti-vaccine)

#118 Faron on 10.14.22 at 11:22 pm

#86 Old Boot on 10.14.22 at 7:48 pm

licking my wounds

yeah, sorry about that

#119 Old Boot on 10.14.22 at 11:30 pm

“If your mom and dad give you a down payment and you put 6 students in your 1 bedroom basement suite and you ignore opportunity costs…”

https://www.theglobeandmail.com/real-estate/vancouver/article-in-vancouver-its-now-cheaper-to-own-than-to-rent/

#120 Harper House on 10.15.22 at 12:16 am

The FED created this mess by using the treasury as an ATM for the Great Reset , now they’re making us pay for their mistakes. There’s no way we get back to 2% while the grocery bill is melting up fast at over 13%. Transportation costs of everything imported has increased 40%, so don’t be surprised if consumer inflation keeps trending up.

Didn’t our Liberal Finance Minister state that high transport cost inputs for things like truck diesel are ‘a reminder how we should be moving into the transition faster’?

With the WEF attack on farming and age products we should transition in no time, into a Cambodian Khmer Rouge style killing field where starving homeless cretins hide grasshoppers in the butt cheeks to take home for the kids. The Liberal future under the Great Reset guidance seems awfully bright.

Are lunches on Parliament Hill still free? In that case we may all have to run for politics just to survive this insanity. .

#121 DJT on 10.15.22 at 1:30 am

If Putin’s peace terms are rejected and war breaks out we could see house prices surge %50, like WWII.

#122 Janet Yellen on 10.15.22 at 1:52 am

You posted some graph about Kelowna dropping 40% in price awhile back tracking in the coming months. I thought it might be a bit extreme, but apparently somebody over in BC knows what they are talking about.

Seems like the whole country is going that way.

#123 the addict on 10.15.22 at 1:56 am

#13 Old Boot on 10.13.22 at 3:07 pm
#27 Old Boot on 10.13.22 at 3:52 pm
#36 Old Boot on 10.13.22 at 4:42 pm
#44 Old Boot on 10.13.22 at 5:55 pm
#62 Old Boot on 10.13.22 at 8:44 pm
#93 Old Boot on 10.14.22 at 10:54 am
#96 Old Boot on 10.14.22 at 11:48 am
#106 Old Boot on 10.14.22 at 1:03 pm
#115 Old Boot on 10.14.22 at 2:01 pm
#121 Old Boot on 10.14.22 at 2:46 pm
#34 Old Boot on 10.14.22 at 4:43 pm
#42 Old Boot on 10.14.22 at 5:20 pm
#64 Old Boot on 10.14.22 at 6:39 pm
#83 Old Boot on 10.14.22 at 7:38 pm
#86 Old Boot on 10.14.22 at 7:48 pm

realy teaching foron

#124 Faron on 10.15.22 at 3:00 am

Getting dicey out there in equities land. Here’s a couple of threads on the i sane market move we saw this week:

https://twitter.com/PauloMacro/status/1580926269994434560

https://twitter.com/PauloMacro/status/1580933699247702016

TL;DR — the options tail is wagging the index dog and very few people are buying puts (VIX almost flat in a sharply down market) that might otherwise provide hedges and stabilize equities.

#125 Beavis on 10.15.22 at 3:08 am

#51 Adam – don’t forget realtor costs in your high level analysis
#60 Jens – good point. Apples to apples would be more like $379k to $1 MM.

Real Estate psychology is ingrained I can see people buying at any material drop in prices even if it doesn’t make (economic or practical) sense.

Unfortunate because in the past lower interest rates / lower capital would spur some some to start a business and generate different value for the country.

#126 Sweet Sorbet on 10.15.22 at 3:14 am

” If Cash is King”? Then Cash flow is Imperial. I’m seeing companies quadrupling my dividends as they pay down debt with cash flood and buy back shares. Issues trading at rock bottom sentiment multiples of 4xs are on sale. It’s generational wealth being created.

Oh Baby. I don’t care what Biden does with the strategic reserve to manipulate the oil price. He’s going to have to fill it a much higher prices when oil spikes back over $100.

The fundamentals are fantastic. Now Trudeaus saying he’ll green light production “for our allies”? Is Germany now in charge of our reserves? This is the floor in energy prices obviously.

The needy millions in Europe facing down several back to back freezing winters won the staring contest and Trudeau can no longer deny our energy potential. “Yes Mr Trudeau, there is a business case for sending abundant Canadian gas and oil to the world “.

Funny how quick he can pivot when polls on green transition and far leftist losers are on the run in so many G7 voting booths. Score People 1 – Green Goons 0. Mid terms look scary for Biden Dems.

Can Venezuela pump enough before the November expiry? Of course not. Doesn’t Joe know the Maduro crude is the thick greasy heavy sulphur crude that needs refining before transport?

Look, Bidens on the way out, IMHO so is Trudeau. Buying now at generation lows is a monster set up for an explosive melt up when political winds bring the next season of common sense instead of what we have now.

After all, how can the transition take place, even in the next decades if the technology to do so hasn’t been invented yet? GLTA.

#127 Jane24 on 10.15.22 at 3:47 am

In Irsina in the south of Italy right now. Been chatting to the locals. House prices still solid due to newcomers who holidayed here now deciding to take residency due to the new 7% income tax on world wide income. Here in the region of basilicata the provincial govt has announced free gas heating for those with central heating this winter for all residents provided you use 15% less each month than you used for the same month last year and prove it via your bill. Now this is a laugh as so many local Italian residents cheated the gas company that they can’t prove what they used last year and so will have to pay up this year in full. Looking at the numbers in the paper I would say it was half of the town. The corrupt local gas technicians here in town are waiting for their day in court in 10 years. The local population are furious with them. Italy is always so karma. These technicians didn’t involve any of the non-Italians in the town wide scam in case word got out so the brits, Americans, Belgium’s will be toasty warm while the local Italians freeze in the dark.

We just use propane gas bottles so we are out of it but we are not on this mountain top in the winter anyway. Beer has gone up to 2 euros a bottle at the bar from 1 euro and simple pizza is up from 3 euros to 4.50. Inflation is everywhere not just Canada.

#128 Summertime on 10.15.22 at 4:24 am

Credit is good when based on past savings, not based on made-up ‘money’ from private banks issued in abundance as the central bank will always buy the mortgages behind it /aka MBS in order to ‘provide liquidity’.

The later is causing inflation, suppresses market signals and interest rates and leads to bad investments.

It beats me how that can be legal.

There is nothing wrong with saving in order to make a major purchase, like a house, historically that has been the norm.

The main reason for the current inflation crisis is the excessive credit and money printing, apparently for that you get a Nobel prize.

Credit for Businesses is not ‘insured’ by government.

Banks should be hold accountable for their lending practices and take the whole risk.

1. Introduce minimum deposit reserves. The ONLY country with no deposit reserves requirement in the world is…. Canada. US has 10 % deposit reserves requirement

2. Close CHMC and invalidate all ‘insured’ mortgages.

3. Forbid the ‘purchase’ of MBS and government bonds by the central banks.

4. Let the market determine interest rates.

And the inflation will be gone.

#129 Summertime on 10.15.22 at 4:30 am

As for credit and debt – every medication in large quantities is guaranteed to become a poison.

There is no such thing as ‘credit is good’. It is good in moderations, not when excessive. Current credit and debt levels are extraordinary high. The ‘doctors’ /aka central ‘bankers’ screwed up with their prescriptions and now is the time to hold them accountable.

#130 under the radar on 10.15.22 at 6:22 am

Most with mortgages can handle the rate increases. Of the 7 million with mortgages in Canada, the estimate is about 250k will be severely tested. Falling prices are not translating into increased affordability since rates and rents keep rising.

Cashable 30 day GIC – 3.81 % Richer than you think. (not a posted rate.)

#131 Bob Loblaw on 10.15.22 at 6:55 am

So Google stock is down almost 40% and Toronto real estate is down less than 5% after nearly quadrupling in 20 years? $5 million homes in Saskatoon? I guess dirt really is priceless and technology ain’t worth much.

#132 Wrk.dover on 10.15.22 at 6:59 am

#75 Sail Away on 10.14.22 at 7:11 pm
#63 Wrk.dover on 10.14.22 at 6:28 pm
His head was two feet wide and ugly.
——–
Ponzie also fits that description, and I wouldn’t put stealing a fry pan past him.
___________________________________

The shark didn’t smell like moth balls though.

#133 WTF on 10.15.22 at 8:25 am

#80 45 “a couple of years ago, VERIZON was looking into entering the Canadian market. TELUS, Rogers and Bell made an all-out effort to stop them. They still refuse to inter-connect. Packets between the carriers, go through Chicago.”
—————————————————————-
Not sure where you get you info but… There are fiber gateways in Seattle Detroit Chicago Buffalo (and lots of other locations across the Can US border). The N American Network is wholly interconnected and robust. (Ever Google a US site? no difference in speed)

Regarding Verizon. Since its inception GTE (Connecticut) owned 51% of BC TEL/Quebec Tel. When Verizon acquired GTE and needed the cash to expand in the USA, THEY sold.

Telecom is heavily regulated by the CRTC. The Federal Govt in Canada is the biggest obstacle to increased competition. Maybe direct your concerns to them.

The threat was always that jobs would be moved south but that has already happened with much work now outsourced to Asia, India, Latin America or automated. The physical work will remain.

https://www.theglobeandmail.com/business/commentary/article-teluss-ceo-says-its-time-for-ottawa-to-relax-foreign-ownership-rules/

#134 TurnerNation on 10.15.22 at 9:04 am

#108 Observer on 10.14.22 at 9:59 pm

It’s of importance to recognize Controlled Opposition when you see it.

Real simple. The Long Game is being played.
Control over our Feeding, Breeding and Travel/Movement. We will be trapped in our Crowded, Fetid “UN Smart Cities” Don’t take my word for it
Travel will be for our elite rulers only.
Climate and Corvid. Nothing else.

CityNews – Mayoral candidate Penalosa wants to turn Toronto’s Island Airport into 215-acre park https://toronto.citynews.ca/2022/10/14/toronto-island-airport-penalosa-election/

—- BTW the past two years has spawned a new host of Anti’s. Three people including two previous proponents told me Never Again. After their short and medium term experiences. One person told me in hushed tone just last week what they went through. I’m not going to tell their stories.
A further 3 people said the same while in a group setting. That’s 6 people I know of openly declaring it.

#135 neo on 10.15.22 at 9:06 am

#97 Observer on 10.14.22 at 8:34 pm
#82 TurnerNation on 10.14.22 at 7:32 pm
If yesterday was a “Best Day”, I surely do not like today.

——–

Just another day in the Former First World Countries. Gee maybe one day we will figure out health care. Trust the Science! Soooo close to normal. It’s the plan yes??

.Biden extends COVID-19 public health emergency until January 2023 (latimes.com)

.Canadian military presses ahead with discipline for unvaccinated troops despite easing mandate (nationalpost.com)

.Ontario pediatric hospitals are under strain, and some are transferring kids far from home (thestar.com)

.Study links coronavirus lockdowns to birth rate drop in Europe (bbc.co.uk)

.Babies born in lockdown were less likely to have said their first word by the time they turned one (dailymail.co.uk)

.Emergencies Act wasn’t needed to quell convoy protests, Ontario police force says (theglobeandmail.com)

^^^^^^^^^^^^^^^

Headlines designed to be clickbait rarely tell whole story! (anyone with half a brain)

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

And what do you “observe” as the whole story about extending a state of emergency until Jan. 2023 when we are obviously not in a state of emergency? If you had half a brain you would realize it is to justify the continued Emergency Use Authorization of the Pfizer shots so they can continue to avoid liability. Three years into this they should be confident enough in their product that this isn’t necessary and moreover we are no longer in an emergency situation.

#136 WTF on 10.15.22 at 9:07 am

#83 “Magnet Cities” Like NY in the 80’s?

Supply is not the issue in TO. Vancouver data likely similar. BTW You still haven’t answered why prices are falling. Your assertions are simply that, yours.
————————————————————–

Toronto Real Estate Speculators Are Out of Control
Speaking of over dependence on real estate, Toronto’s investors are out of control. Nearly 3 in 5 (58.7%) newly built condos are owned by investors. Short-term rentals are ridiculous, with 3,555 whole home rentals on AirBNB.

Then there’s the 92,400 vacant and underused homes, about 7.4% of housing in the city. The industry attempted to dismiss this at Census by pointing out a small share are homes empty during a move. The OECD challenges that, since it’s the same standard used elsewhere. It’s a problem in other countries with less housing demand, but not in Canada — funny how that works.

Housing isn’t a luxury for the people that work and live in a city, it’s infrastructure for its operation. AirBNB needs stronger controls, and restriction of full unit rentals. We also need serious enforcement, and to close the current loopholes. This would be like increasing the number of units completed this year by 15%, almost instantly. Your tax dollars are being wasted mitigating a housing crisis to help investors. That’s not okay.

Toronto’s vacant home situation is partially due to the property tax rates. It’s low due to Federal and provincial subsidies, which people can appreciate right now. However, it’s also catnip for speculators, who also get these subsidies. Your tax dollars shouldn’t subsidize inefficient use. We need a vacant property tax of at least 3% to deter the use of land as a bond.

Vacant property will never get to zero, but even reducing it by half would be like putting two years of supply on the market.

#137 neo on 10.15.22 at 9:08 am

I assume Garth’s next blog post with be about that CBC marketplace episode about mortgage fraud. A lot of meat on that bone.

#138 Dharma Bum on 10.15.22 at 9:26 am

#37 Sammy

Hey Garth, I am looking at at townhouse in Vaughan which sells for $1.4MM (haven’t seen prices come down yet). When they plop 40% to $840,000 PLEASE LET ME KNOW I WANT TO BUY ONE!!
—————————————————————————————————–

Don’t hold yer breath!

Haven’t you heard? Prices in Vaughan only go uppa-Uppa-UPPA!

Vaughan people (the smug and self satisfied residents of Thornhill, Woodbridge, Concord, Maple, and Kleinburg) know that they live in the centre of the GTA universe!

We have the SUBWAY! We have BIKE LANES to nowhere! We have Vaughan Mills Mall! We have Coyotes galore. We have CANADA’s WONDERLAND! We have dedicated BUS LANES! We have Costco, Home Depot, Lowes, and Wal Mart! Yippppeeeeeeeeee!!!!

It’s the greatest of the vast, soulless, sprawling, featureless, uninspiring, dull, vacuous, unremarkable GTA suburbs!

McMansions will only get bigger, gaudier, and pricier!

Besides, we got a goombah named DE SANTIS running for mayor!

I’m gonna vote for him.

#139 ogdoad on 10.15.22 at 9:39 am

#104 robert james on 10.14.22 at 9:28 pm

Yep. Its a shame, really.

Og

#140 Dharma Bum on 10.15.22 at 9:41 am

#80 45 North

Nobody understands climate well enough to enforce the drastic and costly move to Green Energy. We cannot afford it.
——————————————————————————————————-

Truer words were never spoken.

As soon as toes and fingers start freezing, the rainbows and unicorns hunt for the magical zero carbon “green energy” fantasy will abate.

Imagine, throwing out proven technologies, then searching for miracles in dreamland. That’s the climate change alarmists for you.

Besides, modern nuclear energy technology is there for the taking NOW. Why are the woke SJWs so afraid of it. It addresses all of the problems.

Ok – so there could possibly be a meltdown here and there – but, at least it’s clean! The tree huggers will love it!

Win – Win!

Amirite?

#141 crowdedelevatorfartz on 10.15.22 at 10:01 am

@#130 Radar
“Most with mortgages can handle the rate increases. Of the 7 million with mortgages in Canada, the estimate is about 250k will be severely tested.”
+++
It will be interesting to see what happens to the wider economy as rising rates cause belts to tighten.
Restaurant visits, small purchases, large purchases, trips, etc etc etc, grind to a halt.
Layoffs, etc.
It’s just starting.
The 80’s were a 5 year grind before things turned.
Hopefully these bright young suspender snapping economists learned a thing or two back then and have all the answers and formulas to shorten this slow down by a year or two.

#142 DON on 10.15.22 at 10:17 am

#130 under the radar on 10.15.22 at 6:22 am
Most with mortgages can handle the rate increases. Of the 7 million with mortgages in Canada, the estimate is about 250k will be severely tested. Falling prices are not translating into increased affordability since rates and rents keep rising.

Cashable 30 day GIC – 3.81 % Richer than you think. (not a posted rate.)

********
My friend just had his LOC increased by $500 a month…he can handle it…but will now spend less in other areas. He is cutting back and if more do so it will be a cascading effect. Lack of demand leads to eventual job losses, financial stress etc. Mortgage fraud is not factored in yet.

Can you say for sure that ‘most’ will be able to handle the increases. My friend has yet to realize his mortgage increases.

#143 Dogman01 on 10.15.22 at 10:26 am

#111 There’s a reason for that on 10.14.22 at 10:16 pm
#99 Observer on 10.14.22 at 8:47 pm
Anyone watched yesterday’s January 6th committee hearing? Weird how the many Trumper fans who hang here don’t talk about the hearings at all. Hmmm….
———-
Because nobody who supports Trump cares about the sham hearings.

———————————-

Because anybody with any sense knows that such a Kangaroo Court going after their political enemies using the power and resources of the state is the Hallmark of a corrupt Uni-party state. Yet another sign of the decline of the Western tradition of Liberal democracy in the United States.

#144 Shawn on 10.15.22 at 10:49 am

#113 Ponzius Pilatus on 10.14.22 at 10:31 pm
#105 EV on 10.14.22 at 9:30 pm
Electricity getting expensive in Europe.

Won’t help electric car sales.
——————
Exactly.
Shawn , how’s the Tesla doing?

******************************************
Great. If you get an electric car be sure to get a proper home charger. Mine includes an energy management system whereby it automatically shuts off if the rest of the house needs the power. This avoided having to upgrade my electrical panel (which sometimes involves upgrading the service wires).

We locked in a cost of 10 cents per kWh which equates to about $10 to charge from empty. In reality it’s best to plug in after every trip and keep it charged at 80% which is best for the battery. You can’t risk having the car sit at say 30% in case a sudden need for say a 3 hour trip comes up.

#145 crowdedelevatorfartz on 10.15.22 at 10:55 am

@#111 Reason has left the room

Did you hear what was said in the recent Jan 6 hearings.

https://apnews.com/article/capitol-siege-donald-trump-presidential-elections-election-2020-congress-43c97dd8db5ce460e051204f91aa6cd1

“Numerous aides, advisors and staff told Trump he lost.
He turned to one person and said, “Can you believe I lost to this f#@*ing guy?”

Trump KNEW he lost and still encouraged right wing extremists to come to the Capital.
Even after his US Secret Service staff showed him daily briefs on how volatile the situation was.
6 people died.
Trump refuses to testify and he is losing appeal after appeal to avoid testifying.

Jail in general population would be too good for that duplicitous, orange skinned, pathological rodent.

#146 Shawn on 10.15.22 at 10:57 am

#87 Victor Rajkotwala on 10.14.22 at 7:58 pm

yield on five-year Government of Canada bonds is rising, so why are preferred shares falling?

**********************************
Clearly you mean rate reset preferred shares. They only reset after 5 years. So until then they are now paying a below market interest rate, that’s why.

Also in a fearful market many people just dump stuff so the price goes down in order to attract a buyer.

The reset responds to changes in the 5 year rate (only at reset which can be as much as 5 years away). The reset does not respond to increases in the market required spread over and above the 5 year government yield. Some resets were issued with small spreads. The spreads are all over the map. Issues with small spreads will now have lower prices.

The spread on an individual issue can vary depending on the financial strength of the issuer.

#147 Brent on 10.15.22 at 12:14 pm

In Nelson BC prices went sky high. This summer virtually nothing sold except a few mobile homes. The market has seized.

#148 DHG on 10.15.22 at 6:37 pm

To this point: FYI

Oil: There is a $30 per barrel difference for Western Canadian Select (WCS) from what Canada gets for their oil on the international markets, vs what the Americans get for their West Texas Intermediate (WTI), is there not something wrong with this picture for Alberta crude? Why is it that Canada always gets the —— end of the stick?
With an average of 5 million barrels per day exported, that’s a 150-million-dollar difference or shortfall every day of the year, something not right here. I know there are many driving factors causing the price difference, but to the tune of 150 million dollars in refinery cost per day, it puzzles a lot of us.
____________________________________________

From someone that is close to the oil business, the lion’s share of Canada’s oil exports are paid to us based on Syncrude synthetic blend etc. which are superior ultra low sulpur products compared to the heavy oil of which you are referring, Western Cdn select.

The majority of our export oil is paid to us in U.S. currency at a rate close to or even above WTI depending on the demand cycle.

#149 Linda on 10.16.22 at 11:31 am

#136 ‘WTF’ – there is an issue with proposed regulation of Airbnb properties as well as housing deemed vacant or underutilized. The issue is simply this: if investors deem that their $ are not making a sufficient return on investment (ROI) they will shift their funds to other venues. No money, no new housing – unless it is built using taxpayer dollar. Case in point is PBR (purpose built rentals). Those virtually disappeared from the public realm as a result of changes to the landlord/tenant rules that capped the rents that could be charged that made building those forms of housing unprofitable. The rule lifting said cap from new builds has miraculously resulted in builds resuming. However a hiatus of literal decades has led to a severe shortage. So sure, impose all sorts of rules/taxes to force those investors/homeowners to rent to the public at a loss. Just don’t expect them to continue to invest.

#150 Supergirl on 10.16.22 at 11:55 am

Happy i locked in a 10 year mortgage at 3.1%. My mortgage broker thought I was insane for going with the 10 year. Who’s insane now?