Liquidity

Realtor and statsfreak Scott Ingram came up with a juicy one this week.

The house below, a junker semi likely held aloft by bug spit, mold and duct tape in a trendy-up Toronto hood (Trinity Bellwoods) was bought 14 months ago – when people were still crazy – for $2.35 million. The specuvestor then gutted it, started a reno, and quit. Now it’s listed for $2.1 million under Power of Sale. So unless some dewey-eyed, financially-challenged newbie jumps in, the place should go for less. How much would you pay for a crumbly 16-foot-wide half-house with no kitchen, bathrooms or floors?

Forced sales are still rare. But more are coming. The forecast from Re/Max a couple of months ago that October would see a return to market sizzle is laughable. There’s barely a pulse in the $2+ million segment, and the outlook for housing is darkening a little more weekly.

On Friday our CB boss, Tiff (Macho) Macklem made it clear once again he’s not done with the rate hikes. In Washington for a gabfest of the World Bank and IMF he said this: “In the current context, inflation is not just high. It’s a long way above 2 per cent target. Against that background, we’re more worried about upside risks to inflation than downside risks.”

Translation: we’re jacking our rates until the beast retreats. If we kill housing and cause a recession in the meantime, it’ll be for the greater good. Suck it up.

Bloomberg economists concluded on Monday the odds of a US recession in the next 12 months are now 100%. It could be mild. It could be worse. But negative growth is a certainty, which is bad news for Joe Biden, just as a real estate plop in house-lusty Canada is an ill tide for Justin Trudeau. But it’s happening.

The next rate hike is a week Wednesday. Maybe a half point. Quite possibly more. The US Fed moves a week later. Both CBs have benchmarks now sitting in the 3% range after an aggressive run up from basically zero last March. Mortgages are well over 5%, the stress test is on its way to 7.5%, reverse mortgages are above 8% and folks with variable-rate mortgages they took out at less than 2% now have a grenade in their shorts.

After next Wednesday, our rates will rise again in December, then into 2023. It now appears no pivot will take place. No volte-face. No reductions until, maybe, 2024. And at that time mortgage rates could be floating in the 7% range. In fact, some people think a lot more than that is in the cards. Look at this scary headline:

Hmm. Well, if US rates go to 9%, as legendary money manager Mobius suggests, so will the Bank of Canada. After all, 92% of the time our central bank has followed the American one. If we were to lag the loonie would truly become a Northern peso. More inflation then as the cost of imports would soar.

Yikes. Is it even remotely possible 5% or 6% could be added to our BoC rate to get it above the current inflation tally? After all, that would return Canada to double-digit mortgages. So if sales in Toronto and Vancouver tumble by 45% year/year when home loans are 5%, what happens at twice that level?

Well, prices would crash. Not just correct, but end up in a smoky, 14-foot-deep crater with a blackened tail fin sticking out and body parts everywhere. We’re talking a 2006-vintage, Phoenix-style collapse of 70%. But politically, that’s unthinkable. After all, Canada has its next federal election in the summer of 2025. Will voters be ecstatic they can buy a nice urban house for $500,000 or terrified at taking on a 10% mortgage? Will politicians step aside and let it all happen?

We may be about to discover the answer. A CB rate of 8% or 9% is – at the moment – unthinkable. But adding, say, 2% in the next year is not. In other words, home loan costs could retrace to late-1990s levels. Remember, it was not until the year 2001 that average properties in Toronto crested $250,000, and that was 13 years after they had last reached that point. Those who believe house prices always rise, or that demand is a greater determining factor than interest rates, are on the cusp of a life lesson.

In short, it’s a swell time to be liquid.

About the picture: “This is Greta,” writes Sonia, “our nine year-old stumpy-tailed cattle dog, who, as you can appreciate living in a kid free household, is massively spoiled. She loves boating, swimming and enjoying lake life on Vancouver Island.”

166 comments ↓

#1 Squire on 10.17.22 at 4:10 pm

“…just as a real estate plop in house-lusty Canada is an ill tide for Justin Trudeau. But it’s happening.”

It’s about time. He’s gotten away with too much. Nothing seems to stick to this man.

#2 Bankrupting Landlords is good for the Economy on 10.17.22 at 4:11 pm

Hey Garth,

What’s your opinion on the CBC marketplace segment on mortgage fraud?

#3 wallflower on 10.17.22 at 4:13 pm

The rentals I am following in my southern Ontariowe are now at record numbers of listings.
15% decrease in asking price have been common
Many units busting 100 DOM

Who capitulates first? the specuvestors holding multiple units? or the low income prospective tenants who cannot currently qualify…

This unfolding epic crash has many streams in the confluence heading into the abyss, all in slow motion.

#4 Terry on 10.17.22 at 4:13 pm

Ummm…..another short covering rally in the markets today. I invest for dividends and a positive return. Gamblers worry about all the other stuff. Life is still good!

#5 Cash is King on 10.17.22 at 4:15 pm

Interest rates of 9%? Double that number!!

#6 meslippery on 10.17.22 at 4:22 pm

From yesterday.
“Is the goal of life really a condo?”
—–
Sad… it used to be a single detached family house.

#7 Moh on 10.17.22 at 4:22 pm

Hey Garth is it a good time to lock in my variable mortgage?

#8 cuke and tomato picker on 10.17.22 at 4:22 pm

We are as liquid as you can get. Everything paid for for
42 plus years and a sizeable liquid war chest with good
BCTF PENSIONS. LET THE GOOD TIMES TAKE OVER.

#9 TurnerNation on 10.17.22 at 4:25 pm

You must select a tipping level before posting on this weblog.

18% – Guest Blogger

25% – MSU

30% – I love Gartho

40% – Gartho for PM

50% – God will turn off Faron’s computer

————
This weblog may be a tad out of touch. Walk by your local post secondary (re)education facility.
FACT: These kids had to take 3-4 medical injections to be allowed on campus, many are wearing masks. They won’t be protesting anything. Smoking Man nailed it this is a Obedience Certificate.
No leaders only followers. To get that coveted Blue Check box beside your social media name means parroting the offical narratives of the global new order. Else you get flaged and banned/shadow banned as MisInformation.
This is ALL the young people know of, raised in this global system — helped run by the Big Tech data prison.

———–

— Yep I predict a 100% approval rate of everything.

https://www.dailymail.co.uk/health/article-11303017/PR-firm-represents-Pfizer-Moderna-sits-CDC-vaccine-advisory-committee.html
‘A PR company that represents Pfizer and Moderna has staff ’embedded’ in the CDC’s vaccine division, it has emerged.

#10 calgary on 10.17.22 at 4:27 pm

An avalanche of forced sales is coming!

#11 baloney Sandwitch on 10.17.22 at 4:27 pm

Brutal post today. Let’s ignore thoughts of a smoking crater and think positive. Nice stock rally today – any explanation or just random walk?

#12 Søren Angst on 10.17.22 at 4:31 pm

Mobius is looking at Fed Taylor Rule number range for 3rd Qtr 2022:

5.82% to 7.7%

at a Effective Fed Fund Rate of

2.19%

Which means, add this much to the range

= 3.25% – 2.19%
= 1.06%

Adjusting the range:

6.82% to 8.76%

Whatever. I agree the US Fed Rate has to be higher, BUT much higher to stomp down inflation, like

2x

as much – what worked in the 1980s to 90s. Currently at 8.2%; thus,

16% or so

will kill off inflation and ever last reckless investor there is.

To wit …

“… now have a grenade in their shorts.”

——————–

US Fed, BoC still trying for a soft landing, wait and see if this works approach numerically.

It hasn’t so far. Imagine that?

REPEAT OF SAME ERROR 2 years ago that got us into this mess in the first place.

Mobius is HALF correct.

#13 Maple leaf lover on 10.17.22 at 4:34 pm

It’s different this time until it isn’t.

Or how about bankruptcy happens slowly at first then all of a sudden.

Or have people collectively taken leave of their senses? $2mill plus for a Reno? More sense than money.

#14 Sail Away on 10.17.22 at 4:34 pm

Thanks Garth, good post.

This seems like a fine time to sock cash away in income-producing assets and watch the RE market smolder, flame and implode.

In a year or two or three… who knows? It may be time to free up some cash and buy RE either cash on the barrelhead, or using an RRSP mortgage if rates are favourable.

#15 Shawn on 10.17.22 at 4:34 pm

Well, in better news I was impressed by the Bank of America CEO’s chat on Bloomberg/ BNN. Brian Moynihan.

He’s reasonably upbeat although he thinks the next four quarters will see GDP down about 1.5% in real terms each quarter.

He sees consumers as still strong. Their bank balances rising. (He peeked and saw this.)

He really knows his stuff. He was clearly on top of all the banks various operations and risks. Never missed a beat in answering questions.

Hmmm, I think Warren Buffett invested hugely there around 2008 and has sung the praises of this CEO. (Though his fav is Jamie Dimon at J.P. Morgan)

Always assume Buffett is correct.

#16 PBrasseur on 10.17.22 at 4:36 pm

Scary stuff! Are you surprised? I’m not.

The best Canada can hope for at this point is that the US economy is as bad or in worse shape than ours. This would prevent the US from having to raise rates so much and us to follow.

Unlikely IMO, I think Canada is much much weaker, a fact hidden behind a debt binge.

Politicians won’t have it you say, but what can they do this time? As I said many times before inflation is not a problem you can kick down the road, which is all our politicians know how to do. Tough!

#17 Nonplused on 10.17.22 at 4:40 pm

The houses will all still be there no matter what the interests rates are. It may affect the pace of new builds, but that’s about it, out here in the real world.

Folks, money isn’t real, it is a unit of measure. You won’t be any worse off with a $500,000 mortgage at 6% than you were with a $1,000,000 mortgage at 3%. Only those who borrowed foolish amounts and those who foolishly lent to them are in trouble. The 71.36% of Canadian who don’t have a mortgage are unaffected. Of those, only roughly a third (so 10% of the population) are immediately affected (variable rate mortgages). Of that 10%, probably not all of them have jumbo mortgages.

We can’t let 100% of the people suffer from runaway inflation for the less than 10% of us who aren’t any good with spreadsheets. Raising rates is the only moral thing to do. We’ve probably already waited too long.

It’s the old “switchman” dilemma. Would you kill one so that ten could live? Or kill ten for the sake of the one? For the central bankers, the runaway train is coming, and they have to make a decision. They are going to throw the switch.

#18 RMTL on 10.17.22 at 4:41 pm

“In short, it’s a swell time to be liquid.”
For stocks too? A CB rate of 8% or 9% would be Armageddon as well for the current level of the S&P & TSX

History says otherwise. – Garth

#19 PeterfromCalgary on 10.17.22 at 4:43 pm

Canada seems to be getting inflation down quicker than the United States. This despite our Canadian dollar (CAD) trading today at only 73 cents US. This low CAD increases the cost of everything we import from the US.

So why is Canada’s inflation lower than inflation in the United States when our dollar is so weak compared to the US dollar?

#20 Captain Uppa on 10.17.22 at 4:43 pm

This blog is depressing. Every day I regret not taking that 10yr sub-3% mortgage.

But … at least I don’t got that variable grenade in my pantaloons.

#21 Paul on 10.17.22 at 4:45 pm

Never mind the quality feel the width!

#22 Søren Angst on 10.17.22 at 4:46 pm

For the 3rd Qtr Taylor Rule number source curious …

https://www.atlantafed.org/cqer/research/taylor-rule

Scroll down, click on the “Chart” graphic. Scroll down, accept the Fed default scenarios, scroll down to the chart and mouse over the fart right data points.

Actual (Effective) Fed Funds rate shown as 2.19%, it is actually 2.56%. I did not use the higher number in my prior Comment.

https://fred.stlouisfed.org/series/FEDFUNDS

The Effective Rate is a weighted average of all rates charged by the banks for lending to other banks across the country. The 3.25% rate is the US Fed target rate.

Why in my prior example I added the difference to the Taylor Rule numbers to convert them to the Fed Target rate number. Apples to Apples.

————–

The target rate is determined by the FOMC (Powell et. al.) or the

12 Riders of Your Financial Apocalypse

This is the end, my only friend
The end of our elaborate plans …

#23 froggy on 10.17.22 at 4:48 pm

Hi Garth thanks again great blog as always now my question is that no one is expecting or understands the severity of this mess we got our self in and can expect a house pictured in the blog my thoughts is within a few years that they will be selling for 400-600 thousand now if that sounds wrong please let me know or anyone why not its like you said in so many words that its a pos

#24 50 YEARS OF MAPLE LEAF INCOMPETENCE! on 10.17.22 at 4:49 pm

But Garth, this is Torontowe, don’t you get it!?

The BESTEST real estate market in the world!

Rated NUMBER ONE!!!!!

https://www.thestar.com/business/2022/10/12/toronto-now-has-the-highest-housing-bubble-risk-in-the-world-international-report-finds.html

Add in the fabulous start to the new season of the Make Believes, and what’s to lose!

Everybody will want to move to Toronthole!

Raise the price to $2.5 million – go for it!!!!!

#25 GratefulCanadian on 10.17.22 at 4:50 pm

Neah…even if interest rates were like in the 90s, gross salaries are much higher (double or more) today across the board, when compared to that period. Thus the purchase price will also be much higher than it was then, because the typical buyer “buys” (aka commits to) as much as he/she can, based on what the mortgage broker pre-approves, and not on what their real needs are. That’s on one hand.

On the other hand, the ancillary players (real estate market, construction industry, all levels of government, banking, insurance, etc. etc. etc.) are all dependent on these overly inflated home values.

Conclusion: all talk, no real action – when it comes to “solving the housing crisis”.

#26 Søren Angst on 10.17.22 at 4:56 pm

Speaking of Liquidity, October dividends all in.

October annualized yield

30.2%

Year to Date Average annualized yield

28.0%

S&P 500 at close today, year to date

-23.32%

I’d say, so far, I cushioned any stock price losses pretty well (actually to date no losses instead a stock price gain overall, excl. dividends +8.71% … elated as usual).

————-

Thanks Garth et. al., you all inspired me and freely advised. Grazie Mille.

#27 Old Boot on 10.17.22 at 4:58 pm

So, the $64,000 question is:

What will a spendy government with a divisive leader do, presiding over a cranky electorate with short memories, in a cratering economy with an election hanging over it?

Longer amorts? 35 years? 40 years?

Facing a second down with long yardage, we tend to punt the leader. Trudeau will be gone. How much harm will he do in the meantime, and who replaces him?

#28 TurnerNation on 10.17.22 at 4:59 pm

On the Permanent rolling Economic and Social Lockdowns. Year 4 here we go. In 2020 we knew it will run until 2025.

.Ontario’s top doctor urges mask wearing, warns mandate could return (globalnews.ca)

.Canadians urged to not let their guard down as covid-19 hospitalizations rise (ctvnews.ca)

.PEI- COVID-19 outbreak restricts admissions, visitors to Western Hospital inpatient unit (cbc.ca)

.The Nightmare COVID Variant That Beats Our Immunity Is Finally Here (yahoo.com)

.CDC recommends masks in Syracuse area again as Covid hospitalizations rise (syracuse.com)

.Costa Rica Reinstates Mask Mandate in Schools and Public transport(ticotimes.net)

—–
—– It’s 2023 and ‘Hospital Capacity’, still remains elusive – in this Former First World Country. Trust the science.

Tsk Tsk Boomers what’s with you, you do not wish to be healthy? This man cares about Your Health.

https://globalnews.ca/news/9196496/ontario-covid-19-kieran-moore-booster-masks/
Ontario’s top doctor fears rising COVID-19 cases and the approach of winter could further jeopardize the province’s struggling health-care system, forcing the Ford government to potentially re-implement a mandatory masking policy if the situation worsens.
“He said the rate of uptake for fourth doses by Ontarians aged 70 and older — around 16 per cent — was “not acceptable” and said public health measures like mandatory masking could return “if necessary.””
“Sixteen per cent is absolutely not acceptable to me,” he said, urging people to book an appointment

#29 Bill zufelt on 10.17.22 at 5:00 pm

9% seems crazy but to not the fox.We have higher inflation than in 1990 when a mortgage was 14% and even a lowly GIC was 12%,so it won’t be that surprising at all.

#30 Quintilian on 10.17.22 at 5:03 pm

“After all, Canada has its next federal election in the summer of 2025. Will voters be ecstatic they can buy a nice urban house for $500,000 or terrified at taking on a 10% mortgage? Will politicians step aside and let it all happen?”

I think Justin would do well under most scenarios.

If prices come down, and Canadians are OK with it; he can claim success on the affordability file.

If Canadians are incensed at loosing their unearned, and undeserved equity, Trudeau can blame the CB’s.

Win Win, It will be Pepe who will have to navigate the political mine field.
He is shrewd and could possibly navigate trough the treacherous landscape, but not to the extent he could keep his support intact.

Result: Liberal minority government. I hope

#31 Linda on 10.17.22 at 5:04 pm

Maybe it is the camera angle, but the slanty semi photo in todays blog actually does look like its porch is leaning towards the next door unit. Wonder what the foundations are like? Also, can not imagine paying millions for said semi. Given that it also needs to have floors, kitchen & bathroom(s) added the top amount I could see anyone paying for it is $500K & even that is probably too much. Not trying to be mean, just being realistic as to what the true value is as opposed to the speculation value.

#32 Garth vs. 45 on 10.17.22 at 5:07 pm

Double digit interest rates on the way.

#33 Condochick on 10.17.22 at 5:08 pm

Interesting times indeed, with more to come, I’m sure. We sold our big house in the GTA in the summer of 2020 (as things started picking up again after the first big wave of COVID) and downsized (“rightsized”) to a great resale urban condo in the 416. We bought the condo in the fall of 2020 when people were fleeing the city to Bunnypatch and nobody wanted condos. We’re a bit disappointed we didn’t wait another year to sell (and capitalize on the detached house insanity that swelled the following year), but on the other hand, if we’d waited, we wouldn’t have got the condo, which checked off all our “wish-list” boxes in our preferred area of the city. Didn’t have a crystal ball, and who knew the house-lust that would ensue into 2021? Anyhow, bottom line, happy to have offloaded the big “money-pit”, pocketed the cash, and to be now living a liquid, mortgage-free life.

#34 Søren Angst on 10.17.22 at 5:11 pm

You know, I don’t know how this all ends.

I used what happened in the 80s and 90s as a reference and that humanity rarely amends its ways (7 Deadly Sins).

You see headlines like this

Target CEO: Spending ‘healthy’ despite ‘unusual’ economy
Yahoo Finance
https://finance.yahoo.com/news/target-ceo-were-seeing-healthy-spending-despite-unusual-economic-times-190822738.html

then read this

Here’s how much the average American 60-year-old holds in retirement savings — how does your nest egg compare?
https://finance.yahoo.com/news/heres-much-average-american-60-140000455.html

Avg = roughly $256,000 but includes the wealthy (Gates, Buffett, et. al.) = SKEW
Median = about $90,000

and I surmise people just spending and forgetting that one day they will retire.

We’ll see how long that lasts. As an amateur Investor, hopefully for a long time. Still, I’m not holding my breath on that one.

#35 AM in MN on 10.17.22 at 5:15 pm

It’s called a debt death spiral. Pick your poison, there will be winners and losers.

They can either save homeowners by tanking the currency, or try and stabilize the currency by killing the asset bubbles.

Argentina offers clues as to what happens if you pick the sugar high of money printing.

If course the governments at various levels could try something novel, like letting the industrial economy grow. No chance though that the virtue signalers will change course….

#36 Adam on 10.17.22 at 5:17 pm

Yep. We are literally just getting started. We haven’t even seen bad earnings yet. Nothing will be safe in this environment. So far the GIC’ers are getting the last laugh this year.

Most GICs are not liquid. – Garth

#37 45north on 10.17.22 at 5:20 pm

The house below, a junker semi likely held aloft by bug spit, mold and duct tape in a trendy-up Toronto hood (Trinity Bellwoods) was bought 14 months ago – when people were still crazy – for $2.35 million. The specuvestor then gutted it, started a reno, and quit. Now it’s listed for $2.1 million under Power of Sale. So unless some dewey-eyed, financially-challenged newbie jumps in, the place should go for less. How much would you pay for a crumbly 16-foot-wide half-house with no kitchen, bathrooms or floors?

First, who am I? I’m not 24 years old anymore. I’d come home from work and then do plumbing, painting, whatever. Work till midnight. So just not doing it.

But if someone like my son was interested, I’d read the rest of the post.

Yikes. Is it even remotely possible 5% or 6% could be added to our BoC rate to get it above the current inflation tally? After all, that would return Canada to double-digit mortgages. So if sales in Toronto and Vancouver tumble by 45% year/year when home loans are 5%, what happens at twice that level?
Well, prices would crash. Not just correct, but end up in a smoky, 14-foot-deep crater with a blackened tail fin sticking out and body parts everywhere. We’re talking a 2006-vintage, Phoenix-style collapse of 70%.

so it is remotely possible that he could buy the house, put his heart and soul into fixing it, spend $300,000 and then not be able to sell it.

I’d say put your time and energy on your real job.

#38 Stoic Sam on 10.17.22 at 5:22 pm

High interest rates affect Landlords, first time homebuyers and those who own stocks funded by debt.

I say that we should help our politicians by CUTTING interest rates back to zero percent.

#39 XEQT and Chill on 10.17.22 at 5:25 pm

I have yet to check this on my own, but I saw a comment on Reddit the other day: “every time inflation has gone beyond 5%, interest rates have had to rise higher than that to get it back down again.”

If true, my oh my will we be in for some blood.

#40 alexinvestor on 10.17.22 at 5:28 pm

If the BOC goes to 8%, I wonder the GIC rate would be … 10% … 11% ? I’ve never bought a GIC, but at that point, everything in my RRSPs will go into GICs.

#41 Jean Mcgloitry on 10.17.22 at 5:30 pm

First

#42 SunShowers on 10.17.22 at 5:38 pm

“And where are the young warriors?”

Slowly destroying their souls working 40-80 hours a week at a job/jobs they hate, and are, as the late David Graeber put it, bullsh*t.

If your day to day life is consumed with the struggle to put food on the table and a roof over your head, it leaves little time for civic activities and worldly studies.

#43 omasare on 10.17.22 at 5:38 pm

#9 TurnerNation on 10.17.22 at 4:59 pm
On the Permanent rolling Economic and Social Lockdowns. Year 4 here we go. In 2020 we knew it will run until 2025.

.Ontario’s top doctor urges mask wearing, warns mandate could return (globalnews.ca)

.Canadians urged to not let their guard down as covid-19 hospitalizations rise (ctvnews.ca)

.PEI- COVID-19 outbreak restricts admissions, visitors to Western Hospital inpatient unit (cbc.ca)

.The Nightmare COVID Variant That Beats Our Immunity Is Finally Here (yahoo.com)

.CDC recommends masks in Syracuse area again as Covid hospitalizations rise (syracuse.com)

.Costa Rica Reinstates Mask Mandate in Schools and Public transport(ticotimes.net)

—–
—– It’s 2023 and ‘Hospital Capacity’, still remains elusive – in this Former First World Country. Trust the science.

Tsk Tsk Boomers what’s with you, you do not wish to be healthy? This man cares about Your Health.

https://globalnews.ca/news/9196496/ontario-covid-19-kieran-moore-booster-masks/
Ontario’s top doctor fears rising COVID-19 cases and the approach of winter could further jeopardize the province’s struggling health-care system, forcing the Ford government to potentially re-implement a mandatory masking policy if the situation worsens.
“He said the rate of uptake for fourth doses by Ontarians aged 70 and older — around 16 per cent — was “not acceptable” and said public health measures like mandatory masking could return “if necessary.””
“Sixteen per cent is absolutely not acceptable to me,” he said, urging people to book an appointment

———————————————————-

Why is this anti-science conspiracy theory claptrap allowed here?

This guy is like the Mr Hyde to Dr Turner.

Weird, and worrying.

#44 Doug t on 10.17.22 at 5:39 pm

I went fishing today on beaver lake in Victoria – beautiful day, had a sandwich, caught an eight pound carp lol – doing that more often and trying to lessen my exposure to the insanity of the world –

#45 epic bear on 10.17.22 at 5:40 pm

why don’t you talk about 9% rates and effects on the stock market?

surely, you don’t think stocks will go up in that environment, or bonds.

you’d be lucky to see the SP at 2000 if that happens.

Check out market performance in previous periods of monetary tightening when high rates reduced inflation. It’s always helpful to do some research, lest you appear as a fool. – Garth

#46 NOSTRADAMUS on 10.17.22 at 5:40 pm

EPIDEMIC MORTGAGE FRAUD!
I’m shocked, shocked to hear that there was lying going on in predatory lenders loans. You must be kidding, suggesting that the loan officer may have forged the borrowers name on the loan application along with a fraudulent statement of income and doctored the appraisal.. Why you ask ,would these upstanding pillars of society stoop so low? Could it possibly be because lying lenders, structured their bonuses to loan brokers to ensure that the brokers could make very large amounts of money inflating the borrower’s income and appraised value of the home.
Predatory lenders looking for additional revenue streams, also induced lower-risk, yes lower-risk borrowers to borrow at excessive levels in order to facilitate the updates to their forever dream home. Rational being, Real estate always go up. Win-Win-Win.
Or better still, encourage the purchase of homes they could not afford, by promising that the loan could always be refinanced as home prices always rise. The more expensive the home being purchased, the larger the loan, the greater the fee the loan brokers and officers would receive.
Higher bonuses kick in when lending to the unsophisticated and those who cannot comprehend the loan terms because they are not literate in the language used in the loan documents. Say hello to our newest immigrants.
The loan brokers and loan officers frequently created a “Gresham’s” dynamic (bad ethics drives good ethics out of the market) to induce an echo epidemic of appraisal fraud. By inflating the appraisal and the borrower’s income, inflated their fees and bring in huge loan volume.
Inflating the borrower’s income lowered the reported debt-to-income ratio and inflating the appraisal lowered the reported loan-to-value (LTV) ratio. These two forms of fraud made it appear to those purchasing liar loan’s that the loans were lower risk.
In the final analysis, when we ask what contributed to the 2022 real estate crash, and subsequent financial crisis all roads will be found to lead back to an “Epidemic” in mortgage fraud.
Could this have been prevented? ABSOLUTELY! 100%
Past history shouts loud and clear, that mortgage fraud would cause a financial crisis if it were not contained.
The CRA or other governing financial body could have sent undercover agents years ago into the 10 largest lying lenders. Lending institutions engaged in accounting control frauds operate in ways designed to superficially mimic honest lenders, but there are clear markers of fraud that a special agent who understands fraud mechanisms would be able to spot within days.
The Devil’s Advocate asks, for the sake of all the little people whose lives are about to be destroyed, why was this cancerous mortgage fraud allowed to happen?

#47 Observer on 10.17.22 at 5:46 pm

#1 Squire on 10.17.22 at 4:10 pm
“…just as a real estate plop in house-lusty Canada is an ill tide for Justin Trudeau. But it’s happening.”

It’s about time. He’s gotten away with too much. Nothing seems to stick to this man.

^^^^^^^^^^^^
Not convinced the lowering of house prices is bad for JT. Interest rates will fluctuate but purchase price is forever.

#48 ogdoad on 10.17.22 at 5:49 pm

#237 The meek? on 10.17.22 at 2:45 pm

:):):):)

Dood, to the core. I like it!

Reminds me of Tony little and his Gazelle that does nothing…but we’re too distracted by his shiny legs.

Social proof is a very powerful method that even the wealthiest, oldest and most seemingly unduped fall victim to.

What’s next for our blob of middle class being poked and prodded within the petri dish?

Og

#49 Father's Daughter on 10.17.22 at 5:52 pm

It’s kind of hard to feel bad for anyone who thought it was a good idea to buy a semi, in Trinity Bellwoods, that needs renovations, for 2.35M.
Most new listings I see seem like they should be worth about half.

#50 crowdedelevatorfartz on 10.17.22 at 5:53 pm

@#219 Observer
“I truly think CEF is a lefty in denial.”
+++
I’m channeling my inner Lefty….denial is not just a river.

#51 Brian on 10.17.22 at 5:55 pm

#43 omasare
Science is the pursuit and application of knowledge and understanding of the natural and social world following a systematic methodology based on evidence.
Scientific methodology includes the following:

Objective observation: Measurement and data (possibly although not necessarily using mathematics as a tool)
Evidence
Experiment and/or observation as benchmarks for testing hypotheses
Induction: reasoning to establish general rules or conclusions drawn from facts or examples
Repetition
Critical analysis
Verification and testing: critical exposure to scrutiny, peer review and assessment

https://sciencecouncil.org/about-science/our-definition-of-science/

#52 crowdedelevatorfartz on 10.17.22 at 5:57 pm

9% mortgages….?

Lets party like it’s 1999.

#53 Observer on 10.17.22 at 5:58 pm

#2 Bankrupting Landlords is good for the Economy on 10.17.22 at 4:11 pm
Hey Garth,

What’s your opinion on the CBC marketplace segment on mortgage fraud?

^^^^^^^^^^^^
Same. Could it be wide scale enough to trigger an even bigger crash than rising interest rates alone?

Of course not. – Garth

#54 Dave on 10.17.22 at 6:05 pm

Wealthy Real Estate developers will lobby the government….there’s no way interest rates will go that high.

The Prime Minister would never allow it

The government and the PM do not set rates. – Garth

#55 Faron on 10.17.22 at 6:13 pm

#35 AM in MN on 10.17.22 at 5:15 pm

They

Pro tip: referring to a nebulous “they” tells many people that you don’t have a good grasp of a topic you are pontificating about. Be specific and back up your claims.

You’re welcome!

#56 Dave on 10.17.22 at 6:18 pm

City of Surrey has a new Mayor….plans on getting rid of city police.

Previous Mayor spent years and hundreds of millions of Dollars to get rid of RCMP and putting in city police

Politicians will always do what the voters want

#57 Reality Check on 10.17.22 at 6:29 pm

After all, 92% of the time our central bank has followed the American one. If we were to lag the loonie would truly become a Northern peso. More inflation then as the cost of imports would soar.
——————-

This is what those people that thought the Canadian government would never let interest rates go up significantly failed to grasp.

Canada simply cannot get out of step with world rates. If BOC tried to keep rates below world levels – CDN dollar goes down – imported goods become more expensive – our exports surge – and inflation spirals up. And to boot, nobody would loan us money because we would not be paying competitive interest rates.

So the BOC would have to raise rates to competitive world levels.

Like so many things in the world of economic – there is no free lunch.

#58 Faron on 10.17.22 at 6:32 pm

For the Musk apologists, this is what a real philanthropist does:

https://apnews.com/article/health-business-philanthropy-berlin-c3e0441a186a17a060d83d9c7c7a9dba

Kinda makes lying about a donation then complaining about a trivial and shared cost while espousing the views of the occupier look childish and shallow.

#59 ogdoad on 10.17.22 at 6:38 pm

Keep your house, kids. Or, do what cool people do in cooler countries than ours – rent! With your family! In the core! Close to other renters! Who can actually look you in the eye and have a meaningful conversation. Like, you know, language, like, what our brains are actually meant to convey! YAY!

Eschew houses and their lawn equipment, bugs, rodents, neighbors, snowy driveways, leaky roofs, dudes putting covers on their teslas every night, rooms full of crap that you use once, Sunday’s full of yard/house work (I’ve heard)…save yourself the head ache.

Take Ogdoad’s three step course to REAL happiness. Email me at [email protected] for more info. You get a signed T and a hug from yours truly ;) (most DON’T regret it – especially the blonde types…just sayin’). Let’s start today!

**Full disclosure – for those who are current owners you’re not alone. And today only you will receive a 20% discount…yur gonna need it – Fun right?**

Happy Day after the day most people don’t work!

Og

#60 BCWally on 10.17.22 at 6:39 pm

Just ran into this over at the Epoch Times
https://www.theepochtimes.com/canary-in-the-gold-mine-asset-seizures-could-skyrocket-due-to-debt-default-says-bailiff_4798740.html
Basically, a bailiff observing a run up in repos, evictions, etc. and predicting his office will be overrun shortly. He describes his profession as “the canary in the coal mine”. The comment about the serious underlying drug problem was spot on.
He hasn’t even got started yet with the CRA, WCB and PST forcing people into asset sales to cover.
I’m thinking the smoking hole with corpses littering the edge too, but with the entire credit market. Most of the guys in the shop are arguing with their better halves about what to dump to cover increased costs, and they haven’t even renewed mortgages yet.
You could very well be right Garth, maybe we should be looking at worst case scenarios.
It wasn’t a month ago when the shop guys were thinking 6% max mortgages. Now the go to number is 7%.

Nobody, ever, should read the Epoch Times. Ever. – Garth

#61 Victor Llearna on 10.17.22 at 6:42 pm

Those stupid sheep that bought houses in horrid hellhole TOronto for $2million+ deserve to lose thier wool shirts!

#62 Reality check on 10.17.22 at 6:45 pm

So let’s say the fixer upper GT mentions sells for $2 million. Let’s say 200,000 down (you’ll need at least a couple hundred for renos).

A $1.8 million mortgage at just 5% is over $10,000/month, which is $120,000/year or about $210,000ish pretax income. Who in their right mind with that kind of income would want to live in a crap house like that. In a Toronto “pregentrified” “hood”?

It reminds me of people here in Victoria that pay 1.5 million for a house then have to rent out rooms to pay the mortgage. “Livin’ the dream”, buy your dream house and run it as a boarding house.

#63 Ed on 10.17.22 at 6:46 pm

omasare on 10.17.22 at 5:38 pm

#9 TurnerNation on 10.17.22 at 4:59 pm

Why is this anti-science conspiracy theory claptrap allowed here?

This guy is like the Mr Hyde to Dr Turner.

Weird, and worrying.
///////////////////////////////////////

I agree…quoting sources from Global news, G&M and other main stream media generally involves mostly BS and should not be tolerated.

Please Turner Nation…stick to MSNBC only…your posts are beginning to make me feel unsafe.

#64 crowdedelevatorfartz on 10.17.22 at 6:47 pm

@#30 Quinty’s questionably quirky quibbling
Your perfect housing scenario.
What if what if what if.
You neglect to discuss a recession between now and a 2025 election.
Or high unemployment.
All of which Little Potato will own in the voters eyes…
pepe only has to point out the Hundreds of billions of dollars squandered before we arrived at that point.

#65 Joseph R on 10.17.22 at 6:48 pm

Think of all the sovereign debt due to the pandemic legacy in developing and emerging countries, all in US Dollars. You see how the FED is walking a tightrope in controlling inflation and preventing a worldwide debt crisis.

#66 IHCTD9 on 10.17.22 at 6:52 pm

#30 Quintilian on 10.17.22 at 5:03 pm

Result: Liberal minority government. I hope.
————-

The only way that could happen how things are shaping up, is if Trudeau rolls out 30-40 year mortgages. That’s just how stupid Canadians are these days.

And if so, us crusties win again as our hard assets shoot back to the moon. Having a cognitive sloth for a PM is a small price to pay for 5-600% RE appreciation. I’ll take that deal any time.

A vote for Trudeau, is a vote to enrich the curmudgeon gang.

#67 Bezengy on 10.17.22 at 6:53 pm

Here in Niagara it seems things have slowed down quite a bit from my perspective. Very few dumpsters in driveways, or construction vehicles in Timmie’s lineups. Homes are now being sold as is, not staged or freshly painted. Official numbers probably won’t reflect this as no one gets a building permit to renovate, and even employment numbers won’t change as everyone works under the table, but times are definitely changing. Having said that houses are still selling, albeit noticeably cheaper than in February.

#68 crowdedelevatorfartz on 10.17.22 at 6:58 pm

@#56 Dave
“Previous Mayor spent years and hundreds of millions of Dollars to get rid of RCMP and putting in city police.”

+++
The previous mayor was an embarrassment.
He also has criminal mischief charges filed against him for filing a false statement to police last year.

He also just returned his Municipal car the day after the election with serious , unreported damage, to the front end.
Possible charges for damage to public property may happen.

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwjq1OOdruj6AhW_AzQIHYNmAQIQvOMEKAB6BAgMEAE&url=https%3A%2F%2Fwww.castanet.net%2Fnews%2FBC%2F391109%2FDoug-McCallum-returning-damaged-car-a-final-F-U-to-city-says-councillor&usg=AOvVaw3z73z0GXBxTeY_W-ZZ10bO

#69 Ole Doberman on 10.17.22 at 7:13 pm

Anyone else see a ‘price reduced’ sign in Calgary?
Haven’t seen that ever

#70 Sail Away on 10.17.22 at 7:17 pm

#58 Faron on 10.17.22 at 6:32 pm

For the Musk apologists, this is what a real philanthropist does

——–

Good golly, you are an exhausting child. Probably drove your mother to drink.

#71 Linda on 10.17.22 at 7:18 pm

#19 ‘Peter’ – I’ve been wondering the same thing for months now. All I can think is that Canada’s ‘official’ inflation number has taken a page out of the RE rule book. It is a Franken-number, manipulated to present the rosiest possible picture regardless of what reality might be. I believe our true inflation numbers are understated. At best we should be on par with official USA inflation numbers & even that is a stretch considering the exchange rate & how much we import from the USA. In fact, if one applies that 25-30% exchange premium to official numbers, our adjusted numbers would range from +6% in January 2022 to over 10% in June 2022 using ‘only’ 25%. Using the same 25% premium would put our inflation in August at 8.75% instead of the much lower 7% presented to a disbelieving public.

#72 crowdedelevatorfartz on 10.17.22 at 7:19 pm

I hired a 25 year old labourer today.
Seems like a good worker so far.
I’ll give it a few weeks to see if he lasts.
His father owns a construction company/reno biz for the last 35 years where he worked for the past 5 years.

Dads’ biz is…..D…E…A…D dead.

Jobs cancelled. No new work.

Its started.

#73 Dr V on 10.17.22 at 7:19 pm

“She loves boating, swimming and enjoying lake life on Vancouver Island.”
————————————

Lucky dog!

The lake looks well-developed with many floats visible
along the shore, and goes well into the distance, so I am
guessing either Sproat or Cowichan, but without more
horizon visible I cannot ID any mountains. Also guessing looking west as the sky seems brighter to the left of the pic.

#74 Pam on 10.17.22 at 7:20 pm

Thank you so much for taking the time to share your wisdom, Garth. Today’s post was exactly what I needed to hear to get me looking for another rental instead of buying. The daily posts from you and your team are a huge help in charting a financial plan!

#75 Faron on 10.17.22 at 7:20 pm

#60 BCWally on 10.17.22 at 6:39 pm

Just ran into this over at the Epoch Times

Nobody, ever, should read the Epoch Times. Ever.
– Garth

Wow, I’ve never seen Garth lay down a red line around a media source. I also had my own suspicions about The Epoch Times founded in some strange TV advertising I once saw promoting it and my general media discerning spidey sense. Anywho, I just had a read of the Wikipedia article and wow.

The Epoch Media Group’s news sites and YouTube channels have spread conspiracy theories such as QAnon and anti-vaccine misinformation,[39] and false claims of fraud in the 2020 United States presidential election.[42] In 2020, The New York Times called it a “global-scale misinformation machine”.[34] The Epoch Times frequently promotes other Falun Gong-affiliated groups, such as the performing arts company Shen Yun.[24][43][34]

Thanks for the heads up Garth. It’s like a polished version of The Saker.

Also explains the weird vibes I got from the Shen Yun advertising.

Seems about 40% of the commenters here draw from conspiracy material circulated by that rag.

#76 Sail Away on 10.17.22 at 7:32 pm

#59 ogdoad on 10.17.22 at 6:38 pm

Keep your house, kids. Or, do what cool people do in cooler countries than ours – rent! With your family! In the core! Close to other renters! Who can actually look you in the eye and have a meaningful conversation. Like, you know, language, like, what our brains are actually meant to convey! YAY!

Eschew houses and their lawn equipment, bugs, rodents, neighbors, snowy driveways, leaky roofs, dudes putting covers on their teslas every night, rooms full of crap that you use once, Sunday’s full of yard/house work (I’ve heard)…save yourself the head ache.

———

Different folks, different strokes, Og. I greatly greatly enjoy our little tree and flower-filled oasis. The house and yardwork is intermittent and pleasurable, with a full workshop at the ready to make anything. There is satisfaction in enjoying a space you’ve put a lot of time and effort into making exactly the way you want it.

As soon as the fall rains start, we’ll be planting another 500-600 bulbs for the springtime colour explosion.

#77 The Original Jake on 10.17.22 at 7:33 pm

I am liquid… waiting for the inevitable 40% plop. The unthinkable is indeed possible. Look what happened during covid. The reverse is possible too. Things always over shoot in both directions.

#78 IHCTD9 on 10.17.22 at 7:45 pm

#46 NOSTRADAMUS on 10.17.22 at 5:40 pm

Or better still, encourage the purchase of homes they could not afford, by promising that the loan could always be refinanced as home prices always rise.
———

This one is likely pretty common in certain areas of the gta. Low quality buyers obtain mortgages under usurious rates and plan to refinance once appreciation provides the needed equity, which allows their escape from serfdom. Except now the crystal ball was wrong and RE is tanking instead of going up. Buyers signed on for a temporary period of hell on earth – which has now become permanent.

#79 Quintilian on 10.17.22 at 7:49 pm

#66 IHCTD9 on 10.17.22 at 6:52 pm
“Having a cognitive sloth for a PM is a small price to pay for 5-600% RE appreciation. I’ll take that deal any time.”

The PM didn’t cause the housing bubble, don’t forget there are other countries with housing bubbles which Trudeau is not the PM.

RE bubble are a result of a confluence of factors; some cultures are more prone to get swept away by the mania, than others.

New Zealand, Australia, Canada, Ireland, England and USA, are some of the most susceptible.

But it’s inevitable that the bubbles end up bursting.
Plan accordingly.
I have.

#80 conan on 10.17.22 at 8:00 pm

Canada will join the “goldrush” to supply Europe with natural gas. Business models that made no sense before Russia went insane now make a lot of sense.

We just needs some long term deals signed with Europe. That will start a “Marshall Plan” equivalent in the Canadian energy sector.

I think we grab on to this with both hands.

#81 45north on 10.17.22 at 8:04 pm

let’s take the post again

Yikes. Is it even remotely possible 5% or 6% could be added to our BoC rate to get it above the current inflation tally? After all, that would return Canada to double-digit mortgages. So if sales in Toronto and Vancouver tumble by 45% year/year when home loans are 5%, what happens at twice that level?
Well, prices would crash. Not just correct, but end up in a smoky, 14-foot-deep crater with a blackened tail fin sticking out and body parts everywhere. We’re talking a 2006-vintage, Phoenix-style collapse of 70%.

here’s a proposed development

https://urbantoronto.ca/news/2022/10/sorbara-proposes-six-towers-weston-road-and-hwy-401?fbclid=IwAR3YO8ZZAaR5BD6Tq9fHYZYnFCWMBl-XDJimKToG3QKgGcJ5JSIhUmZFE8c

six towers, 2,452 units. I figure a $2 billion project.

I remember a young man Tomus Lanup (Swedish?). He lived on the land proposed for the development. We were maybe 14. He had some earphones. I tried them on and then shouted over the music. I guess everybody in the house heard me.

Now consider the remote possibility described in the post. The development becomes infeasible. Like totally.

#82 Shawn on 10.17.22 at 8:24 pm

Who’s Fooling Who

#71 Linda on 10.17.22 at 7:18 pm

#19 ‘Peter’ – I’ve been wondering the same thing for months now. All I can think is that Canada’s ‘official’ inflation number has taken a page out of the RE rule book. It is a Franken-number, manipulated to present the rosiest possible picture regardless of what reality might be. I believe our true inflation numbers are understated. At best we should be on par with official USA inflation numbers & even that is a stretch considering the exchange rate & how much we import from the USA. In fact, if one applies that 25-30% exchange premium to official numbers, our adjusted numbers would range from +6% in January 2022 to over 10% in June 2022 using ‘only’ 25%. Using the same 25% premium would put our inflation in August at 8.75% instead of the much lower 7% presented to a disbelieving public.

*******************************
Okay so Linda accuses StatsCan of manipulation and THEN suggests a completely made up adjustment as if everything in Canada is imported and as if that’s not ALREADY in the prices that StatsCan monitors.

#83 Faron on 10.17.22 at 8:28 pm

#70 Sail Away on 10.17.22 at 7:17 pm

Probably drove your mother to drink.

You need to apologize for that right now. What a shitty thing to say.

#84 yvr_lurker on 10.17.22 at 8:29 pm

So unless some dewey-eyed, financially-challenged newbie jumps in, the place should go for less. How much would you pay for a crumbly 16-foot-wide half-house with no kitchen, bathrooms or floors?
——-

Zero. I’d offer zero. Ugliest looking house I have seen in recent memory. If interest rates head to 10% and beyond, that would likely mean that GIC and CSB rates would rise significantly as well. For those who missed the 70s and early 80s where the CSB paid well and one did not have to worry about investments tanking, that would be okay.

#85 Amarok on 10.17.22 at 8:32 pm

Whether you are more correct in your prognostications than you are wrong Garth, I have a plan. I’m ready. Although I must admit, I very much hope that the edge case you outline is spot on.

Short-medium term pain, medium-long term gain.

#86 Ogdoad on 10.17.22 at 8:33 pm

#76 Sail Away on 10.17.22 at 7:32 pm

):):):):):

Ya! Some roof tops in Germany, right?

I should have thought of that.

Og

#87 Fidel on 10.17.22 at 8:33 pm

Thank you for your posts that provide financial literacy 101, Garth. On top of that, some days, you are the funniest blogger on the internet with your analogies; today’s pearl:
“the loonie would truly become a Northern peso”
thanks!

#88 IHCTD9 on 10.17.22 at 8:34 pm

#77 Quintilian on 10.17.22 at 7:49 pm
#66 IHCTD9 on 10.17.22 at 6:52 pm
“Having a cognitive sloth for a PM is a small price to pay for 5-600% RE appreciation. I’ll take that deal any time.”

The PM didn’t cause the housing bubble, don’t forget there are other countries with housing bubbles which Trudeau is not the PM.

RE bubble are a result of a confluence of factors; some cultures are more prone to get swept away by the mania, than others.

New Zealand, Australia, Canada, Ireland, England and USA, are some of the most susceptible.

But it’s inevitable that the bubbles end up bursting.
Plan accordingly.
I have.
——

Trudeau didn’t single handedly cause the bubble, but he sure didn’t hold back fiscal policy that pumped it even more – amirite? How would you feel if he rolls out 40 year mortgages? We’ll see what happens, but I wouldn’t put it past him. If he does, try to remember who wins, and who loses as a result. By rights – you should be exceedingly pissed-off if he does.

As far as planning for the the pop goes, I’m in a position to be unaffected. Rather, I’m going to keep working on LQAM, tax avoidance, and simplification.

#89 crowdedelevatorfartz on 10.17.22 at 8:41 pm

@#69 Ole Doberman
“Anyone else see a ‘price reduced’ sign in Calgary?
Haven’t seen that ever’
+++

Get used to it.
Everywhere…not just Calgary.
If bank mortgage rates hit 7% , 8 or Dog help us 9%
A cheap deal in 2009 Arizona won’t look cheap compared to what may happen..

Economists have noted that “Over the course of this year, nearly every major economy has jammed on the brakes.
In the past 50 years, policy has NEVER tilted so overwhelmingly towards bank rate rises.

Growing numbers of Economists have warned this rapid and synchronous, largely uncoordinated, bank policy has the makings of trouble…
A former chief economist ( Maurice Obstfeld) at the IMF is worried central banks are failing to consider the global effects of their simultaneous bank rate policies and may trigger a historic slowdown.

#90 Summertime on 10.17.22 at 8:46 pm

Yes, because it is ‘politically unthinkable’ they will continue to lie about inflation in order to justify lower rates.

There goes the BoC last remains of credibility.

That credibility has been steadily eroding for quite some time driven by extremely bad monetary policies, excessive money printing, banks ‘liquidity’ injections and outright lies, including the personal assurance by the BoC boss that rates will not rise for quite some time
and people should rest assured in that when purchasing a home just before the rate increases started.

Now the same people are saying that they will aggressively keep increasing rates until inflation is sub 2 %.

Why should people believe this is the question.

The real rates continue to be strongly negative, with real inflation far in excess of the laughable 6-7 % reported.

Below is stated that inflation will be soon sub 6.5 %.

https://ca.finance.yahoo.com/news/risk-overshooting-rates-lessening-bank-of-canada-cibc-172539980.html

Rents alone increased by 20-25 % in a year, considering that housing is over half of average household expenditure that should drive at least 10-12.5 % inflation and only if nothing else increases in price!

If somebody believes that inflation is or will be soon under 6.5 % they need some serious professional mental help and some very strong medication.

There is no way in hell for supply driven inflation on world scale to be lower in Canada than in US, plus due to our money printing in the last 2-3 years that was much higher than in US we also have demand driven inflation.

Supply driven inflation is not primarily driven by supply chain problems as openly lied lately, it is due to resource constraints, geopolitical turmoil and the general expectation of producers that the prices will keep rising.

The main driver for demand driven inflation – monetary policies will soon be replaced by wage inflation.

Once the inflation spiral starts only strongly positive real rates can subdue it combined with labour market crash, which contradicts the ‘real growth’ narrative.

You can’t have real growth in such conditions when inflation is eroding purchasing power and consumption,
debt is at peak levels and labour market is supposedly ‘tight’ but nobody will give you wage increase to compensate for the real inflation which IMHO is at least 15 %, maybe 18 % at the moment.

Considering that it appears that average Joe/Jane is hit with at least 10 % decline in purchasing power of income, his/her ‘investments’ that lost 20-25 % on the stock market in nominal values actually declined by 30-35 % in terms of purchasing power considering
the inflation, his/her house declined significantly in value, the economy and government are at peak debt….

So how in hell will real consumption pick up in real terms from now on in order to justify real returns on the stock market is beyond me.

Most likely outcome is a significant destruction of real asset values, continuing runaway inflation and declining real economy, real wages and consumption.

Deflating the credit driven everything bubble that drove asset values through the sky through elevated inflation that will persist.

#91 Mad Vlad on 10.17.22 at 8:48 pm

Nobody, ever, should read the Epoch Times. Ever. – Garth

Why? Are you scared of the truth?

If you think that is truth, Dog help you. – Garth

#92 IHCTD9 on 10.17.22 at 8:54 pm

#62 Reality check on 10.17.22 at 6:45 pm
So let’s say the fixer upper GT mentions sells for $2 million. Let’s say 200,000 down (you’ll need at least a couple hundred for renos).

A $1.8 million mortgage at just 5% is over $10,000/month, which is $120,000/year or about $210,000ish pretax income. Who in their right mind with that kind of income would want to live in a crap house like that. In a Toronto “pregentrified” “hood”?
————-

I’m thinking the owner here flipped his way into the ability to finance a 2.35 Mil property, and is now going to get his cumulative gains obliterated in one fell swoop.

#93 Observer on 10.17.22 at 9:04 pm

#70 Sail Away on 10.17.22 at 7:17 pm
#58 Faron on 10.17.22 at 6:32 pm

For the Musk apologists, this is what a real philanthropist does

——–

Good golly, you are an exhausting child. Probably drove your mother to drink.

^^^^^^^^^^^^^^^
To blame a son for his mother’s drinking problems is something only a lowlife would do – but not surprising coming from you SA.

#94 Observer on 10.17.22 at 9:22 pm

#91 Mad Vlad on 10.17.22 at 8:48 pm
Nobody, ever, should read the Epoch Times. Ever. – Garth

Why? Are you scared of the truth?

If you think that is truth, Dog help you. – Garth

^^^^^^^^^^^
I have a very close family member who has fallen down the misinformation hole (also reads Epoch Times). I’ve given up trying to talk sense into this person. :(

#95 crowdedelevatorfartz on 10.17.22 at 9:24 pm

@#83 faron.

I must admit…when I was young.
I drove my mom to drink.
She’s now 92 and still loves me and the occasional drink….
Unlike Ponzie.
:)

#96 Faron on 10.17.22 at 9:27 pm

#93 Observer on 10.17.22 at 9:04 pm
#70 Sail Away on 10.17.22 at 7:17 pm

Probably drove your mother to drink.

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

To blame a son for his mother’s drinking problems is something only a lowlife would do – but not surprising coming from you SA.

Yep. And, the sycophantic lovers of his right to far-right views, who may actually have ever-so-slightly sturdier moral and ethical backbones, will just quietly snicker about this. Sail Away’s “military attention to detail” paves over who he really is most of the time. But when he slips, whoa man.

#97 Phylis on 10.17.22 at 9:31 pm

#84 yvr_lurker on 10.17.22 at 8:29 pm
Xxxx
You could bid negative. You know, to help take it off their hands. Kinda like a service.

#98 Observer on 10.17.22 at 9:31 pm

#53 Observer on 10.17.22 at 5:58 pm
#2 Bankrupting Landlords is good for the Economy on 10.17.22 at 4:11 pm
Hey Garth,

What’s your opinion on the CBC marketplace segment on mortgage fraud?

^^^^^^^^^^^^
Same. Could it be wide scale enough to trigger an even bigger crash than rising interest rates alone?

Of course not. – Garth

^^^^^^^^^^^^^^^
Not doubting your position, but many do, so might be a good topic for a post. Looking at Old Ron’s tweets (which many read and respect), seems to me he thinks we should blame CRA for its role (by not doing anything to stop the fraud) in out of control house prices.

#99 IHCTD9 on 10.17.22 at 9:42 pm

#70 Sail Away on 10.17.22 at 7:17 pm
#58 Faron on 10.17.22 at 6:32 pm

For the Musk apologists, this is what a real philanthropist does

——–

Good golly, you are an exhausting child. Probably drove your mother to drink.
——

I predict eyeballs exploding from their sockets. Hair doused in accelerant and ignited. Banshee screams piercing the serene midnight. Torches burnishing the dimly lit streets. A pole fixed over a pyre, and a braid to tie your wrists. Last rites administered by a long resigned Father.

How! Dare! You!

#100 Quintilian on 10.17.22 at 9:43 pm

#88 IHCTD9 on 10.17.22 at 8:34 pm

Trudeau didn’t single handedly cause the bubble, but he sure didn’t hold back fiscal policy that pumped it even more – amirite? How would you feel if he rolls out 40 year mortgages?

It would make me angry.

But so far only the Cons have resorted to such a deceptive and unethical political maneuver.
Yes, the 40 and zero down mortgage is a Conservative shameful sham.

#101 I don't know on 10.17.22 at 9:45 pm

Central banks will talk tough about inflation, but they secretly don’t mind it (it’s deflation they really fear). Once inflation readings come down, even if it’s above the magical 2%, rate hikes will pause. That point is coming soon.

The GTA’s population in the late 80’s early 90’s was maybe half of what it is now. The city has also become an economic super power in Canada throughout the same time period.

Side to side comparisons don’t hold much weight.

Home prices are set beyond just interest rates. Think family formation trends, demographics, cultural preferences, cost of building, zoning laws and so on.

One thing is for certain, affordability is destroyed and won’t ever be coming back. The average person doesn’t understand the stock market and is scared of it. Cash is an utterly hopeless position for amateurs to get fleeced. That leaves real estate as the preferred investment for the average person. That will never change as people get older, get married, have children and life goes on as it always does.

IDK

#102 Ponzius Pilatus on 10.17.22 at 9:55 pm

91 Mad Vlad on 10.17.22 at 8:48 pm
Nobody, ever, should read the Epoch Times. Ever. – Garth

Why? Are you scared of the truth?

If you think that is truth, Dog help you. – Garth
—————————-
I always suspected it, and now it’s confirmed, many posters here get their “truth” from that rag.
I must admit, it looks like the real deal.
But don’t be fooled.

#103 Lisa on 10.17.22 at 9:59 pm

DELETED

#104 Waystar Royco Shareholder on 10.17.22 at 10:03 pm

Haven’t seen many posts in while from the RE pumpers commenting that the current slide is only temporary…

“It’s only a tiny gully”!!

The Audi lots are going to be full with lease returns come May

#105 Robert Ash on 10.17.22 at 10:07 pm

I would predict a crash is imminent, given the level of Shadow Banking, Mortage Income manipulation, slack Loan Approvals, and the picture of the slanty semi, for $2.5 Million.
The 2008 GFC was tipped into panic as a result of Subprime mortgages increasing from 6% to 14%.
Info will come forward that many folks, should not have received financing, even in good times… Sad Canada has only a large Housing market as the favored contributor to our GDP.

#106 Doug in London on 10.17.22 at 10:13 pm

It looks like what happened in the 1990s all over again. What we learn from history is that some people learn nothing from history.

#107 Sail Away on 10.17.22 at 10:30 pm

#99 IHCTD9 on 10.17.22 at 9:42 pm
#70 Sail Away on 10.17.22 at 7:17 pm
#58 Faron on 10.17.22 at 6:32 pm

For the Musk apologists, this is what a real philanthropist does

———

Good golly, you are an exhausting child. Probably drove your mother to drink.

———

I predict eyeballs exploding from their sockets. Hair doused in accelerant and ignited. Banshee screams piercing the serene midnight. Torches burnishing the dimly lit streets. A pole fixed over a pyre, and a braid to tie your wrists. Last rites administered by a long resigned Father.

How! Dare! You!

———

Haha

#108 Faron on 10.17.22 at 10:33 pm

DELETED

#109 Faron on 10.17.22 at 10:35 pm

My man Cem on the need for immigration to combat inflation.

https://twitter.com/jam_croissant/status/1581848360612696064

In a de-globalizing economy, it’s a way to effect change without monkeying with lending rates..

#110 Calgary on 10.17.22 at 10:40 pm

https://twitter.com/RE_MarketWatch/status/1582013454516637696

:-)

#111 It's all BS on 10.17.22 at 10:43 pm

DELETED

#112 IHCTD9 on 10.17.22 at 11:02 pm

#100 Quintilian on 10.17.22 at 9:43 pm
#88 IHCTD9 on 10.17.22 at 8:34 pm

Trudeau didn’t single handedly cause the bubble, but he sure didn’t hold back fiscal policy that pumped it even more – amirite? How would you feel if he rolls out 40 year mortgages?

It would make me angry.

But so far only the Cons have resorted to such a deceptive and unethical political maneuver.
Yes, the 40 and zero down mortgage is a Conservative shameful sham
——

I won’t deny you that point, for a very short time, Harper used the 40 year deal to juice the economy amid the GFC crises. Unfortunately, he gave Canadians too much credit for brains, and we collectively proceeded to loose our $hit over RE for 15 straight years (aided by BOC monetary policy) even after he cut things back again to 25 years. That includes Trudeau’s time where he was apparently unable to prevent a further 100% increase in house prices (way more than under Harper).

We’ll see how Trudeau does, his fiscal policy even when handed a near balanced budget from Harper was to blow it all to rat$h!t and spend bazillions, and then pump housing even more via boneheaded fiscal policies. Then he doubled the federal public debt on top of it all. His tenure presided over the single largest RE bubble to have ever existed in the history of all humanity. Now it looks like he’s presiding over the mother of all RE blowouts. He’s definitely got a well deserved front kick coming.

The guy is a walking disaster. I’ll be paying close attention over the next couple years. Hopefully you will be doing the same.

#113 yvr_lurker on 10.17.22 at 11:04 pm

#84 yvr_lurker on 10.17.22 at 8:29 pm
Xxxx
You could bid negative. You know, to help take it off their hands. Kinda like a service.–
—————-
Amusing. But then if accepted, on the first night sleeping there I’d have to bring tons of rodent traps to catch the inevitable army of mice/rats that probably live there. Hard pass for anyone who values basic hygiene and a good night’s sleep.

#114 AM in MN on 10.17.22 at 11:23 pm

#80 conan on 10.17.22 at 8:00 pm
Canada will join the “goldrush” to supply Europe with natural gas. Business models that made no sense before Russia went insane now make a lot of sense.

We just needs some long term deals signed with Europe. That will start a “Marshall Plan” equivalent in the Canadian energy sector.

I think we grab on to this with both hands.

——————————————————

You must be new to Canadian politics.

It didn’t need Vlad to justify a massive build of LNG terminals in BC, pipelines and drilling in the NE of BC to justify investing $10B’s. Look what the US has done with a dozen or so now operating and more in the works.

It all got killed on the altar of global warming, by both Fed and BC Liberals, and nothing has changed in terms of who is in charge.

It would take a political change of will of the people who might soon not feel so wealthy from their RE.

A stroke of the pen from the right people and the C$ would be pushing US$0.90. Harper had it up to US$1.09 during the big investment days ($200B+)in the oil sands.

#115 Tom from Mississauga on 10.17.22 at 11:52 pm

Really smart people thought inflation would be transitory, others thought the Ukraine War would be over quickly, many took Chinese economic data as fact (relief in sight) and now the same Pollyannas think a couple rate hikes will fix the global demographic, security and trade pillars that held inflation in check are all simultaneously being knocked out. No, rates can go way higher than anyone thinks.

#116 DON on 10.18.22 at 12:08 am

On the subject of housing crisis and Trudeau: I think Trudeau will pack it in at some point as he is not able to win a majority (unless War breaks out). He will take the fall for the liberal party and walk into the smoky red sunset to spend more time with family after three terms. Freeland will also be gone. No doubt a new Liberal leader will emerge and perhaps not a former central banker (optics). Pierre may get a minority gov and a majority if enough people are sulking about losing unearned home equity but he will be forced to drop the activists division and govern from the center or be gone. But 2.5 years is a long time in politics. Trudeau could bring in longer amorts but how many new buyers will want to be on the hook into retirement Or the timing of such initiative could be too late but performed for perception. Political parties seem to care about their political survival first and the intetest of the greater good last.

On the subject of that house: For that price, where’s the full length pool and 4 car garage? Most likely has gold plated appliances for the King and/or Queen of Greater Fool land.

#117 Linda on 10.18.22 at 12:13 am

#82 ‘Shawn’ – what I am questioning is how that number is arrived at. It is very easy to change a result by adding or deleting data. Given the amount of trade Canada does with the USA, it seems reasonable to expect that higher costs for goods or services there would translate into higher costs here especially given the exchange rate. The Canadian dollar currently is priced between $0.72 to $0.73 cents when purchasing USA dollars not taking into account the fees charged by financial institutions when buying/selling currency. The official inflation numbers in the USA are actually higher than Canada’s official numbers. Yet somehow despite the fact our dollar is not on par with the USA & trading volumes Canada’s inflation is coming in lower than the USA’s. How is this possible?

#118 Yorkville Renter on 10.18.22 at 12:36 am

are posters here genuinely offended by other people’s posts?

why? seriously, why? there’s a million more important things to do / worry about

this is rhetorical, don’t answer bc I don’t actually care

#119 DON on 10.18.22 at 12:44 am

#102 Ponzius Pilatus on 10.17.22 at 9:55 pm
91 Mad Vlad on 10.17.22 at 8:48 pm
Nobody, ever, should read the Epoch Times. Ever. – Garth

Why? Are you scared of the truth?

If you think that is truth, Dog help you. – Garth
—————————-
I always suspected it, and now it’s confirmed, many posters here get their “truth” from that rag.
I must admit, it looks like the real deal.
But don’t be fooled.

***********

ha ha ha!

#120 DON on 10.18.22 at 2:03 am

#78 IHCTD9 on 10.17.22 at 7:45 pm
#46 NOSTRADAMUS on 10.17.22 at 5:40 pm

Or better still, encourage the purchase of homes they could not afford, by promising that the loan could always be refinanced as home prices always rise.
———

This one is likely pretty common in certain areas of the gta. Low quality buyers obtain mortgages under usurious rates and plan to refinance once appreciation provides the needed equity, which allows their escape from serfdom. Except now the crystal ball was wrong and RE is tanking instead of going up. Buyers signed on for a temporary period of hell on earth – which has now become permanent.

*****

DAM!

Party Crasher

Add in Quint, Crowded, Ponzi, Linda, Phylis Robert Ash, Doug t etc with special mention to Summertime (well done bravo) we could moonlight as Party Crashers at Greater Fool gatherings.

#121 DON on 10.18.22 at 2:20 am

#73 Dr V on 10.17.22 at 7:19 pm
“She loves boating, swimming and enjoying lake life on Vancouver Island.”
————————————

Lucky dog!

The lake looks well-developed with many floats visible
along the shore, and goes well into the distance, so I am
guessing either Sproat or Cowichan, but without more
horizon visible I cannot ID any mountains. Also guessing looking west as the sky seems brighter to the left of the pic.

********
I had the same thought…but looks like the city side of Sproat Lake looking West – lower mountain range.

#122 Jane24 on 10.18.22 at 2:42 am

Now this is the bit that I didn’t get. How was it possible for banks to appraise and lend money at such high values? Were the appraisers so young that they had no knowledge of 1989? Was the bank too focused on market share? Were private second and third mortgages hidden by valuers and crooked lawyers? There is a lot to come out of the woodwork here and those 5 or 6 big Canadian banks won’t look good.

Plus will RE brokers, Remax, RE agents and the media be sued for reassuring clients in writing that houses always go up? They were selling investments with lies. Once the first law suit goes in there will be 1000s of them.

Went to the local IKEA in Italy yesterday. Prices way up. The guy said it was materials, shipping and Chinese costs. Verses buying last year’s crap I would say that prices were up by a third. Staff said that they expect prices to go up by 80% this year and this is the low end of the furniture market.

#123 Balmuto on 10.18.22 at 5:00 am

There’s too much debt in the system for 10% interest rates. Much more than the last time rates were that high. A lot more will crash than just housing if we ever get to that level. Governments, corporations and individuals would go bankrupt, left right and centre. It would be a disaster.

#124 under the radar on 10.18.22 at 5:53 am

84 – don’t kid yourself, 250k in renovations makes this house shine . There are probably 2 or 3 mortgages on title. First is likely a bank and the second, a private is selling. At an entry point of 2.5 no amount of work could save this seller.

I financed a lot of these in Little Italy for the last ten years. Purchase prices were between 700k to 1.7k builder always made money as he created value. Turnkey when he was done. Profit between 200 and 400k . People want DT 416 .

#125 Wrk.dover on 10.18.22 at 7:51 am

#122 Jane24 on 10.18.22 at 2:42 am
Went to the local IKEA in Italy yesterday. Prices way up.
Staff said that they expect prices to go up by 80% this year and this is the low end of the furniture market.
____________________________

I know you were buying mattresses , but other than that, Over here, antiques are deflated 80%.

Ikea caters to a sorry sorry society.

#126 Wrk.dover on 10.18.22 at 8:23 am

#213 IHCTD9 on 10.17.22 at 12:53 pm
#166 Wrk.dover on 10.17.22 at 6:57 am

Jethro Bodine’s UNI kids will develop technologies rendering natural systems obsolete/unnecessary.
________________________________________

As far as my kids go – we told ’em to study hard and get a good education or they might have to live off handouts from the wife someday.
___________________________

Good zinger but, after being raised by a misogynistic hillbilly, they too may fear women with the power to earn more than enough for two people for life in 27.5 years supporting them, and will drop the facade of bringing home pretty girls to placate daddy, and marry men.

Then I suppose, their being supported by an empowered male spouse would be acceptable by you!

Is it ever going to reach you, that yours and my couple tally among the richest 1% of people on the planet?

It doesn’t take much more than a CDN million.

#127 IHCTD9 on 10.18.22 at 8:25 am

#120 DON on 10.18.22 at 2:03 am
#78 IHCTD9 on 10.17.22 at 7:45 pm
#46 NOSTRADAMUS on 10.17.22 at 5:40 pm

Or better still, encourage the purchase of homes they could not afford, by promising that the loan could always be refinanced as home prices always rise.
———

This one is likely pretty common in certain areas of the gta. Low quality buyers obtain mortgages under usurious rates and plan to refinance once appreciation provides the needed equity, which allows their escape from serfdom. Except now the crystal ball was wrong and RE is tanking instead of going up. Buyers signed on for a temporary period of hell on earth – which has now become permanent.

*****

DAM!

Party Crasher

Add in Quint, Crowded, Ponzi, Linda, Phylis Robert Ash, Doug t etc with special mention to Summertime (well done bravo) we could moonlight as Party Crashers at Greater Fool gatherings.
____

Yes, we will all show up carrying our big buckets of water to splash on everyone. Then we will play some Cathedral while reading Poe. Then invite all the frightened and soggy partygoers to play a few rounds of DOOM II on the PS2. :)

#128 Steven Rowlandson on 10.18.22 at 9:45 am

Greed and insanity know no limits.

#129 Old Boot on 10.18.22 at 9:56 am

Are you really even a parent if your kids haven’t flipped their first dangerously leveraged crack shack by the time they’re 12?

Age is just a social construct if your 12 year old identifies as a lifelong smoking crater of financial ruin.

https://mobile.twitter.com/ThachNguyen/status/1559235091783909381

https://mobile.twitter.com/RE_MarketWatch/status/1582013454516637696

#130 Ole Doberman on 10.18.22 at 10:12 am

Ummm, why is the DOW up 1,000 points when rates will continue to rise?

#131 IHCTD9 on 10.18.22 at 10:25 am

#126 Wrk.dover on 10.18.22 at 8:23 am

Good zinger but, after being raised by a misogynistic hillbilly, they too may fear women with the power to earn more than enough for two people for life in 27.5 years supporting them, and will drop the facade of bringing home pretty girls to placate daddy, and marry men.

Then I suppose, their being supported by an empowered male spouse would be acceptable by you!

Is it ever going to reach you, that yours and my couple tally among the richest 1% of people on the planet?

It doesn’t take much more than a CDN million.

________

That was a good one, eh? TBH though, I don’t actually give a rip what you and the wife have arranged for yourselves, if it works, that’s good enough. Also, contrary to my rhetoric here in the steerage section, I’m not an actual hillbilly (well, mostly not…). I just like Hillbilly stuff.

Obviously I don’t fear a Woman who makes a great income either. I married one. She’s a pretty hard leftie too – how’s that grab ya? I fully hope if our kids get married someday, that they marry someone who has similar education, and earns a similar income. The single income deal is a tough way to go starting out these days.

#132 KLNR on 10.18.22 at 10:28 am

@#92 IHCTD9 on 10.17.22 at 8:54 pm
#62 Reality check on 10.17.22 at 6:45 pm
So let’s say the fixer upper GT mentions sells for $2 million. Let’s say 200,000 down (you’ll need at least a couple hundred for renos).

A $1.8 million mortgage at just 5% is over $10,000/month, which is $120,000/year or about $210,000ish pretax income. Who in their right mind with that kind of income would want to live in a crap house like that. In a Toronto “pregentrified” “hood”?
————-

I’m thinking the owner here flipped his way into the ability to finance a 2.35 Mil property, and is now going to get his cumulative gains obliterated in one fell swoop.

until very recently that house in that hood, fully reno’d would be 3+mil. some bad timing for whomever the flipper is.

#133 Shawn on 10.18.22 at 10:31 am

CPI manipulation accusations:

#117 Linda on 10.18.22 at 12:13 am
#82 ‘Shawn’ – what I am questioning is how that number is arrived at.

************************
If you really want answers to that start here:

https://www150.statcan.gc.ca/n1/pub/71-607-x/71-607-x2018016-eng.htm

There is a ton of information and transparency on the basket weights and how much each item has increased. Click and explore. You can graph individual items inflation going back decades.

There is loads of other info from StatsCan. Recently they have been giving monthly updates of price increases on individual grocery items.

#134 millmech on 10.18.22 at 10:36 am

Here is hoping for the CPI report tomorrow showing inflation is still strong and then up another 75 basis points on the 26th.

#135 Senator Bluto on 10.18.22 at 10:37 am

New pix of the Nordstream pipeline look like it was blown from the inside out, not collapsed from the outside in.

Geez, I wonder who has access to:

1. The part of the pipeline where stuff goes in.

2. Maintenance pigs ( if you don’t know what a pipeline pig is look it up)

3. Large amounts of C4.

Looks like some Russian unhappy with Putin did the deed.

WRT to Putin and nukes, one escalation step is missing. Before Putin drops a nuke, I would expect him to first drop a few MOABs, the massive fuel air bombs that the US used in Afghanistan to try to smoke Osama out of his mountain bunkers.

If Putin won’t drop a MOAB, he won’t drop a nuke.

#136 the Jaguar on 10.18.22 at 10:42 am

“Translation: we’re jacking our rates until the beast retreats. If we kill housing and cause a recession in the meantime, it’ll be for the greater good. Suck it up.”-GT ++
Agreed. And no way will OSFI walk back B20 with a return to longer amortizations. It would ruffle their chicken hawk feathers. Nor should they dump the stress test. There will be carnage, but it will be road kill in the rear view mirror. The Banks will have to clean up the mess and maybe relax the qualification rate requirement for hardship cases that need to be re-plumbed. No flies will be allowed to land on OSFI.

This will be a replay of what Andrew W Mellon said about ‘liquidate everything, etc”. Anyone who tries to plead their innocence in buying too much real estate will receive eye rolls.

There will be squawking, wailing, and real tears shed, but if the election results in BC are any indication, accountability is making a comeback.

#137 IHCTD9 on 10.18.22 at 11:34 am

#114 AM in MN on 10.17.22 at 11:23 pm

Harper had it up to US$1.09 during the big investment days ($200B+)in the oil sands.
____

I remember. Lots of Canucks where going south for shopping sprees. Trailers, Cars, Trucks, you name it. Prices were significantly cheaper there even when the dollar was ~par. I remember HONDA Canada came out and said any Canadian who went to the US and bought a vehicle would not have their warranty honoured in Canada. Left a bad taste in my mouth, and is part of the reason my garage today is filled with YAMAHA’s instead of HONDA’s.

I’ve forgotten what it’s like to read about big investments being made into the Canadian economy. It probably felt good though.

#138 Wrk.dover on 10.18.22 at 11:47 am

#131 IHCTD9 on 10.18.22 at 10:25 am
I’m not an actual hillbilly (well, mostly not…). I just like Hillbilly stuff.
_________________________

You missed an excellent morning felling a 24″ dia spruce, a half mile back and getting some logs home behind the old K5 with the PTO rear winch and a trailer with an arch back, which I laid on it’s side at one point, while side winching.

I have you pegged as a Bam Bam Flintstone. You would have been in your glory.

Gonna mill a 100 sq ft generator shed.

#139 Dogs Not Barking on 10.18.22 at 12:06 pm

#123 Balmuto on 10.18.22 at 5:00 am

There’s too much debt in the system for 10% interest rates. Much more than the last time rates were that high. A lot more will crash than just housing if we ever get to that level. Governments, corporations and individuals would go bankrupt, left right and centre. It would be a disaster.
==============

Sounds to me like you’re running scared. Were you one of the same people who said the government will never raise rates at all for all the same reasons??

Here’s a cold dose of reality. Inflation destroys everybody. High interest rates destroy the foolhardy.

Guess what the choice will be.

#140 Penny Henny on 10.18.22 at 12:07 pm

The house below, a junker semi likely held aloft by bug spit, mold and duct tape in a trendy-up Toronto hood (Trinity Bellwoods) was bought 14 months ago – when people were still crazy – for $2.35 million. The specuvestor then gutted it, started a reno, and quit. Now it’s listed for $2.1 million under Power of Sale.
//////////////

Trinty Bellwoods! You could have a tent city for neighbours. How is that for diversity!

#141 Shawn on 10.18.22 at 12:11 pm

Bam Bam ?

138 Wrk.dover on 10.18.22 at 11:47 am

I have you pegged as a Bam Bam Flintstone. You would have been in your glory.

***************************
I believe you refer to Bam Bam Rubble, Barney Rubble’s boy?

#142 Shawn on 10.18.22 at 12:23 pm

Interest rate on U.S. cash balances

TD Direct is paying 2.75% in TDB8152. This is basically almost as liquid as cash and you get 2.75%.

Given that U.S. bank deposit rates have risen quite instantly with higher rates, I am surprised that Bank of America has reported higher net interest margins so quickly. Surely much of their loans are not variable rate loans and there would be a delay to receive higher interest payments.

Some deposit interest has gone up instantly.

But they may have a lot of commercial deposits that earn 0%? Though with automated cash management systems that move cash to interest-bearing accounts automatically and nightly that is a surprise.

They may also have a ton of GICs from customers locked in at low deposit rates?

Any bankers can comment?

#143 Quintilian on 10.18.22 at 12:25 pm

#130 Ole Doberman on 10.18.22 at 10:12 am
“Ummm, why is the DOW up 1,000 points when rates will continue to rise?”’s

The cost of money is rising, but it’s still “free” and free money makes people do stupid things.

#144 IHCTD9 on 10.18.22 at 12:28 pm

#138 Wrk.dover on 10.18.22 at 11:47 am
#131 IHCTD9 on 10.18.22 at 10:25 am
I’m not an actual hillbilly (well, mostly not…). I just like Hillbilly stuff.
_________________________

You missed an excellent morning felling a 24″ dia spruce, a half mile back and getting some logs home behind the old K5 with the PTO rear winch and a trailer with an arch back, which I laid on it’s side at one point, while side winching.

I have you pegged as a Bam Bam Flintstone. You would have been in your glory.

Gonna mill a 100 sq ft generator shed.
___

Buddy built a pretty cool log arch. It’s one of those ones that levers the front of the log off the ground when pulled. Pretty sweet, can pull a decent size log with just an ATV, and keeps the log pretty clean during transport.

What sawmill do you have?

Sounds like fun, good luck on the shed.

#145 Faron on 10.18.22 at 12:30 pm

#126 Wrk.dover on 10.18.22 at 8:23 am
#213 IHCTD9 on 10.17.22 at 12:53 pm
#166 Wrk.dover on 10.17.22 at 6:57 am

after being raised by a misogynistic hillbilly, they too may fear women with the power to earn more than enough for two people for life in 27.5 years supporting them, and will drop the facade of bringing home pretty girls to placate daddy, and marry men.

Well done

#146 Faron on 10.18.22 at 12:32 pm

#225 IHCTD9 on 10.17.22 at 1:55 pm
#219 Observer on 10.17.22 at 1:19 pm

admit to the general facts

Such a telling word choice.

#147 Faron on 10.18.22 at 12:44 pm

#114 AM in MN on 10.17.22 at 11:23 pm

Harper had it up to US$1.09 during the big investment days ($200B+)in the oil sands.

And people say that O+G isn’t heavily subsidized. That $200B could have done a lot of good to move Canada away from O+G but instead went into the pockets of a cash gushing industry. Thanks for the reminder of the disaster Harper was.

Also, as a net exporter of goods at the moment, a weak dollar helps the economy. Your and IHCTD9s unsurprisingly derpy, simplistic view of the currency (cheap USA cheese n trailers) is an embarrassment.

#148 Ponzius Pilatus on 10.18.22 at 1:10 pm

147 Faron on 10.18.22 at 12:44 pm
#114 AM in MN on 10.17.22 at 11:23 pm

Harper had it up to US$1.09 during the big investment days ($200B+)in the oil sands.

And people say that O+G isn’t heavily subsidized. That $200B could have done a lot of good to move Canada away from O+G but instead went into the pockets of a cash gushing industry. Thanks for the reminder of the disaster Harper was.

Also, as a net exporter of goods at the moment, a weak dollar helps the economy. Your and IHCTD9s unsurprisingly derpy, simplistic view of the currency (cheap USA cheese n trailers) is an embarrassment.
—————————-
Very well done, Faron

#149 Shawn on 10.18.22 at 1:13 pm

Home Construction Rate extremely strong in September

The trend line is 277,000 dwelling units per year. That is vastly higher per capita that n the U.S. which is running at 1.6 million units per year. Canada has been vastly higher all the way back to the financial crisis.

Last gasp before a winter chill?

Alberta still very strong. (We’re making room for you all to move here.)

Click the download for details. See tables 1 and 2

https://www.cmhc-schl.gc.ca/en/professionals/housing-markets-data-and-research/housing-data/data-tables/housing-market-data/monthly-housing-starts-construction-data-tables

#150 theoryAndPractice on 10.18.22 at 1:16 pm

#62 Reality check on 10.17.22 at 6:45 pm
So let’s say the fixer upper GT mentions sells for $2 million. Let’s say 200,000 down (you’ll need at least a couple hundred for renos).

A $1.8 million mortgage at just 5% is over $10,000/month, which is $120,000/year or about $210,000ish pretax income. Who in their right mind with that kind of income would want to live in a crap house like that. In a Toronto “pregentrified” “hood”?

It reminds me of people here in Victoria that pay 1.5 million for a house then have to rent out rooms to pay the mortgage. “Livin’ the dream”, buy your dream house and run it as a boarding house.

—-
Your calculation is very conservative. The income amount needed is ~375K/year pretax for 1.6m @5% mortgage.

https://itools-ioutils.fcac-acfc.gc.ca/MQ-HQ/MQCalc-EAPHCalc-eng.aspx

#151 Sail Away on 10.18.22 at 1:21 pm

#144 IHCTD9 on 10.18.22 at 12:28 pm
#138 Wrk.dover on 10.18.22 at 11:47 am

You missed an excellent morning felling a 24″ dia spruce, a half mile back and getting some logs home behind the old K5 with the PTO rear winch and a trailer with an arch back, which I laid on it’s side at one point, while side winching.

Gonna mill a 100 sq ft generator shed.

——–

Buddy built a pretty cool log arch. It’s one of those ones that levers the front of the log off the ground when pulled. Pretty sweet, can pull a decent size log with just an ATV, and keeps the log pretty clean during transport.

——–

When backpack hunting big animals like moose and elk, we often build individual travois to haul the meat. Up to 100 lbs load per travois is no big deal.

In grizzly areas, it’s important to remove all meat in one go and get away from the carcass, since the bears are far more interested in the guts, marrow and fat than the meat. And the combo of a shot plus circling birds is a bear’s dinner bell.

#152 Faron on 10.18.22 at 1:33 pm

More in Elon’s Ukraine internet and peace garbage and why I think Ukrainians have every right to see him as an existential threat:

A great overview of why Elon’s Ukraine peace tweet poll was sheer idiocy of a cocaine addled doof:

https://youtu.be/TdIXfMjfiT8

Starlink is also massively funded by Urainian citizens:

https://mobile.twitter.com/MelaniePodolyak/status/1580875153726062593

Starlink is “donating” (partially) the $4500 per month tier of the service. Likely a massive tax dodge.

https://youtu.be/3qGg6wiXoSc

Enjoy!

#153 Randy on 10.18.22 at 1:58 pm

What a ridiculous news story…How can a counterfeiter lose money ??? https://www.thestar.com/politics/political-opinion/2022/09/12/the-bank-of-canada-for-the-first-time-in-history-is-losing-money-is-that-a-problem.html

#154 The General on 10.18.22 at 2:12 pm

#147- faron against the world, episode yada-yada: Some day, when you emerge from that moldy basement you dwell in, remember that being condescending and insulting others only works online. Are you like this in the metaverse also? How big is your virtual mansion, and how many virtual Ferrari cars do you own?

#155 crowdedelevatorfartz on 10.18.22 at 2:31 pm

Brazilian leader Bolsonaro who is a Trump acolyte is in the waning days of a nasty, bitter election.

He has been accused in a nation wide televised debate of cannibalism, pedophilia and devil worship…

https://www.reuters.com/world/americas/brazils-bolsonaro-caught-off-guard-by-campaigns-ugly-closing-chapter-2022-10-18/

Just when you thought democratic debates couldnt go any lower……

#156 Faron on 10.18.22 at 2:32 pm

#154 The General on 10.18.22 at 2:12 pm
#147- faron against the world

IRL, I am told I’m a kind, generous, hard working, funny person. The numerous friends I have reflect that.

What that implies is that this comments section isn’t “the world”. It’s a subset of it and the kind of people who make fun of addictions, espouse misogynistic views, hate trans people, see statue toppling as tantamount to racist murder, think oligarchs are our saviours and who are Putin and Trump apologists comprise it. Happy to be against this “world” and all it represents. L8r

#157 IHCTD9 on 10.18.22 at 2:48 pm

#151 Sail Away on 10.18.22 at 1:21 pm
#144 IHCTD9 on 10.18.22 at 12:28 pm
#138 Wrk.dover on 10.18.22 at 11:47 am

You missed an excellent morning felling a 24″ dia spruce, a half mile back and getting some logs home behind the old K5 with the PTO rear winch and a trailer with an arch back, which I laid on it’s side at one point, while side winching.

Gonna mill a 100 sq ft generator shed.

——–

Buddy built a pretty cool log arch. It’s one of those ones that levers the front of the log off the ground when pulled. Pretty sweet, can pull a decent size log with just an ATV, and keeps the log pretty clean during transport.

——–

When backpack hunting big animals like moose and elk, we often build individual travois to haul the meat. Up to 100 lbs load per travois is no big deal.

In grizzly areas, it’s important to remove all meat in one go and get away from the carcass, since the bears are far more interested in the guts, marrow and fat than the meat. And the combo of a shot plus circling birds is a bear’s dinner bell.
___

No ATV’s? They haul just about all the big stuff out of the bush here with those. They come in Tactical Black, Olive Drab, Desert Sand, and Real Tree Camo, you know :)

#158 Calgary on 10.18.22 at 2:49 pm

https://financialpost.com/executive/executive-summary/posthaste-canadas-housing-market-headed-for-historic-correction-says-rbc

Hang on.

#159 Faron on 10.18.22 at 2:54 pm

#142 Shawn on 10.18.22 at 12:23 pm
Interest rate on U.S. cash balances

TD Direct is paying 2.75% in TDB8152. This is basically almost as liquid as cash and you get 2.75%.

Simple arbitrage of the overnight rate for 50bps? If they can model that a certain percentage of cash isn’t treated as liquid, the they can hold short dated bonds that pay far more given the shape of the yield curve. They would still need substantial leverage to make it pay. Obvs not a banker here.

#160 crowdedelevatorfartz on 10.18.22 at 2:59 pm

Just breathing in the Lower Brain land is hazardous for your health

https://www.burnabynow.com/local-news/vancouver-weather-air-quality-metro-vancouver-app-5967127

#161 IHCTD9 on 10.18.22 at 3:16 pm

#132 KLNR on 10.18.22 at 10:28 am
@#92 IHCTD9 on 10.17.22 at 8:54 pm
#62 Reality check on 10.17.22 at 6:45 pm
So let’s say the fixer upper GT mentions sells for $2 million. Let’s say 200,000 down (you’ll need at least a couple hundred for renos).

A $1.8 million mortgage at just 5% is over $10,000/month, which is $120,000/year or about $210,000ish pretax income. Who in their right mind with that kind of income would want to live in a crap house like that. In a Toronto “pregentrified” “hood”?
————-

I’m thinking the owner here flipped his way into the ability to finance a 2.35 Mil property, and is now going to get his cumulative gains obliterated in one fell swoop.

until very recently that house in that hood, fully reno’d would be 3+mil. some bad timing for whomever the flipper is.
___

Hard for me to feel bad for the guy. Or any of the specuvestors and flippers. They’re half the reason we’re in this housing mess right now. A good Napalming of these folks is just what’s needed to fix the problem. After a painful lesson in the consequences of illiquidity, perhaps they’ll just stick with the stock market next time.

#162 TheDood on 10.18.22 at 3:16 pm

#123 Balmuto on 10.18.22 at 5:00 am
There’s too much debt in the system for 10% interest rates. Much more than the last time rates were that high. A lot more will crash than just housing if we ever get to that level. Governments, corporations and individuals would go bankrupt, left right and centre. It would be a disaster.
___________________________

The CB doesn’t care. Their only mandate is tackling inflation.

#163 Always the Same on 10.18.22 at 3:25 pm

#99 IHCTD9 on 10.17.22 at 9:42 pm
#70 Sail Away on 10.17.22 at 7:17 pm
#58 Faron on 10.17.22 at 6:32 pm

For the Musk apologists, this is what a real philanthropist does

——–

Good golly, you are an exhausting child. Probably drove your mother to drink.
——

I predict eyeballs exploding from their sockets. Hair doused in accelerant and ignited. Banshee screams piercing the serene midnight. Torches burnishing the dimly lit streets. A pole fixed over a pyre, and a braid to tie your wrists. Last rites administered by a long resigned Father.

How! Dare! You!

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

Yes. this is the Faron way. Sling insults, innuendo, stupid-long TL;DR rants, then when someone says something he doesn’t like…EXTREME petulance.

Dish it out, can never ever take it.
pretty funny.

scientist don’t think so.

#164 Sail Away on 10.18.22 at 3:57 pm

#157 IHCTD9 on 10.18.22 at 2:48 pm

Re: hunting

No ATV’s? They haul just about all the big stuff out of the bush here with those. They come in Tactical Black, Olive Drab, Desert Sand, and Real Tree Camo, you know :)

——–

Almost all the big game hunting we do is either totally inaccessible to vehicles or in designated ‘no motorized vehicle’ protected areas. Hiking in 7-8km to set up camp almost completely eliminates other hunters.

#165 Linda on 10.18.22 at 6:13 pm

#133 ‘Shawn’ – thanks for the link! I will certainly be looking over the data.

#166 Neo on 10.19.22 at 1:19 am

Vancouver had worse air quality than Hamilton in the 70s. Why so expensive?