Deja vu, all over again

In 2007 I was still warming a green chair in the House of Commons, some guy from Calgary was the PM, five-year mortgages were 7.2%, the central bank rate was 4.5% and prime rate at the banks was just a hair under 6%.

Here we are again. The prime is 5.95%, the CB rate will soon be over 4% and mortgages are 6%, likely on the way higher. Déjà vu. I mean, look at this:

Of course, in 2007 the average Van SFH was selling for $715,000, up 10% from the year before. Today that house is $1,892,100 – or about $1.2 million more. The math is daunting. With 20% down a mortgage carried for $4,077 (at 7.2%). Today the house needs monthly feeding of $9,995 (at 6.3%). Moreover, in 2007 that downpayment amounted to $143,000. Now a buyer must cough up $378,400 to avoid mortgage insurance.

So when does this pain stop?

As you know the US Fed on Wednesday upped its benchmark rate by a hefty 75 bps. It was aggressive, and the odds of a further 50-pointer next month are running high. Expect a bit more in early 2023. Then a pause. Probably. And ditto for our guys at the Bank of Canada, where the Fed path has historically been followed 92% of the time.

The economists say the CB rate in our nation should top out at 4.5%, which would mean a chartered bank prime of 6.7% and mortgages about exactly where they were when we had the last Conservative government. Of course houses have become vastly more unaffordable over the past 15 years. In 2007 nobody talked about a housing crisis in Canada, and we were all watching the real estate meltdown in the US. Average prices there toppled just over 30% between 2006 and 2008, leading into the credit crisis and crashing Wall Street banks.

In 2007, the average Millennial was 15 and more worried about zits than basis points. Today this is the largest home-buying cohort, entering the market at a moment of extreme idiocy. Taking a look at the rate chart above will tell you quickly why house prices soared, first following the credit crisis and then rolling into the pandemic. CBs from 2007 until today never thought they had a window to normalize the cost of money without throwing the economy under a bus. So they didn’t. Now the coach has arrived.

How do we solve this mess?

First, rates need to stay where they are, or accelerate more. That’s probably what will happen. Mortgages at 2% are not coming back in this lifetime and the market will have to adjust to the historical average of 6-7%.

Second, governments must cease throwing money at real estate. Already the crazy FHSA is barreling at us in 2023 – so let’s hope that’s the end of the special favours bestowed upon owners. Every one of them (closing cost tax credits, RRSP home buyer’s plan, property tax deferrals, shared equity mortgage etc.) makes houses cost more.

Third, the capital gains tax incentive for real estate should fizzle. We’ve turned houses from homes into investment assets, so why not tax them the same as stocks, funds or any other liquid security? The current break is an anachronism from a prehistoric time that today has caused massive speculation, dangerous leverage and excessive price inflation. Worse, it hugely discriminates against renters and encourages people to stuff all their investment bucks into a single asset class. Discrimination, societal risk and a trillion in mortgage debt is the result.

Will Pepe be man enough to start turning that ship around? Would Canadians vote for anyone who promised to gradually tax home profits in return for prices closer to where they sat in, say, 2007?

Not a chance, of course. Nobody in public life would be so bold.

So the real estate crisis will continue. Next year it will exacerbate. In 2023 we could see the mother of all price reductions as (a) mortgage rates continue to creep higher, then stick, and (b) a wave of new listings hits the market after sellers realize the sooner they sell, the more they keep.

The prediction does not change: real estate equity is going to fall until some measure of affordability is re-established. It could be a long way down. Meanwhile the Fed rate pause – which now seems certain to lie ahead – will ignite financial markets (as we saw during October).

As always, stay balanced. You only get so many eggs.

About the picture: “Here’s a photo is our old girl, Lucy, when she was about 8 years old,” writes Pete. “She was a farm dog, a blend of and had the the best attributes of a golden retriever and a border collie. Gentle, and even tempered, and wicked smart. She left us at the beginning of the pandemic.
Best dog ever.”

123 comments ↓

#1 Timmy on 11.02.22 at 2:26 pm

Consistent with how Trudeau has managed the housing problem so far, he will probably do something stupid such as extending amortizations to 30 years or more or brining in half a million people a year, putting more pressure on a dysfunctional housing market.

#2 Dave on 11.02.22 at 2:28 pm

So houses cost over two million in Vancouver and 1.5 way out in the traffic clogged soulless suburbs of Langley. Who is buying them if the median income is $60K? It must be with funny money.

#3 Richard L on 11.02.22 at 2:41 pm

I have bee thinking about precisely this issue – the capital gains exemption for real estate. Here is a suggestion on how to transition away from it without committing political suicide:

On purchase of residential real estate the purchaser may opt to do either of:

– maintain the current capital gains tax exemption on sale

– deduct mortgage interest payments from total income on an annual basis. Any capital gain on sale would be taxed

I suggest that the latter option would be selected by millennials & other new home purchasers, while the boomers could still collect their non taxable gain as promised by previous governments. Over time, the capital gains exemption would fade away.

#4 Habitt on 11.02.22 at 2:42 pm

Thank you Mr. Garth for the update. Please do remember no good deed goes unpunished. So stop it already. Lol

#5 Nonplused on 11.02.22 at 2:44 pm

Well, not much to comment on today, except taxing primary residences. I always argue with that.

How are we going to solve the problem of too much government interference in the housing market by adding one more government interference in the housing market?

This fundamental question is on top of the moral arguments against taxing what should be a necessity of life, that is a roof over your head, and ultimately a personal expense and not a financial scheme or a business. Nobody “makes” money owning a primary residence until they sell for the last time. A house is just a house, and when you sell, chances are you need another one, so no real gain has been made. It’s still just a house. There is no profit. Only mortgage payments, maintenance, taxes, and real estate fees. If we are going to tax primary residences as a business venture, deductions have to be allowed for all of the above, plus capital loses when they occur. The government might end up losing money on net.

But then there is also the moral question of allowing the government to tax bubbles that they are largely in control of creating. That puts them in direct conflict with the interests of the citizens. The current bubble has made housing damn near unaffordable for nearly everybody. How can the solution be to try and suck even more money out of the market? After all, the only people there are to pay this tax would be the very same people who have been overpaying for housing all these long years.

It also would disproportionately advantage corporations, who could buy the houses for rent and then never have to sell. That will certainly help the average citizen (not).

Anyway the cat is already out of the bag on this one. It doesn’t look like there are going to be any gains to tax for the foreseeable future. Not anything worth the paperwork, anyway. Instead it might produce large capital loss deductions.

If we want to fix the housing market, the place to start is to eliminate all the current government “fixes”. They “fixed” it alright. Same as a bookie rigging a horse race. Let’s get rid of the FHSA, closing cost tax credits, RRSP home buyer’s plan, property tax deferrals, and shared equity mortgage. And allow rates to “normalize”, deflating the bubble. Let’s then also consider all the substantial costs of home ownership including mortgage interest and taxes. Then, and only then, will we be in a position to analyze whether there are any real gains that one could consider taxable.

#6 Dave on 11.02.22 at 2:44 pm

What about the 500,000 immigrants per year. They will need housing

That’s the future target, and most folks coming here do not jump into houses. – Garth

#7 Captain Uppa on 11.02.22 at 2:47 pm

So what’s a family man like me supposed to do, Garth? My home is still worth 700K more than I have left on the mortgage. But moving sucks! We love our kids’ school. My wife is tired of moving already.

At least I didn’t buy in the 2020s, I guess.

#8 Calgary on 11.02.22 at 2:47 pm

Real estate price drop is very good news. Homes should be affordable for everyone.

#9 ElGatoNeroYVR on 11.02.22 at 3:00 pm

I surely hope that you are wrong about the political will.
I would totally support a gradual capital gains taxation progressive down starting at say 5 years full tax and no tax if property is held for 10 years.
That should apply to shares transfer if property is corporation owned – the most obvious way to skim the tax on ” foreign buyers” and a mechanism the BC notaries and lawyers have it worked up quite well.
All loopholes must be closed ,exceptions only for martial breakdown ( and that should be restricted as well to say every 5 years , else there will be a lof of unlucky couples/individuals who will mysteriosly make yearly poor relationship decisions ) , death , loss of job.
I believe if well presented a majority of Canadians would support it.
The Conservartives will not win an election without a bold move and a shift to the center(politically) and they must come across as supporting the regular person as no one else actually does.
You cannot be fiscally conseervative as a religion, there has to be a starting point and a 5/10/15/20 years blueprint.

#10 mike on 11.02.22 at 3:00 pm

Will Pepe be man enough to start turning that ship around?- GARTH TURNER “Pepe”….”man enough”…hmmnnn Density is what attracts people to the Toronto lifestyle. Two clotted arteries, Gardiner and don valley clown show expressways for the vibrant body politic. The missing other half of Toronto can never be built because there is a lake there, so real estate values are 2x too much. hint: drain the lake

#11 Bob on 11.02.22 at 3:02 pm

Will Pepe be man enough to start turning that ship around?

Interesting question, Garth. Mr. Poilievre was warming a seat in the house back in 2007, same as you. So what was he saying in caucus? Did he bemoan the foolishness of 0/40 mortgages? Did he speak out against the rising prices that followed? Or did he instead help write Harper’s talking points about how the “Harper Government” was “tightening mortgage lending rules.” I know where I’d put my money…

For those who’d like a reminder about how much damage the “steady hand on the tiller” and his attack dog in chief did to housing, here’s an interesting blast from the past: https://policyalternatives.ca/publications/monitor/canadas-sub-prime-mortgage-time-bomb. It’s astonishing that we kept the party going for 15 years, but it looks like the chickens are finally coming home to roost.

#12 AM in MN on 11.02.22 at 3:11 pm

A return to sound money is always a good thing.

Not holding my breath that voters have the discipline to demand it once the pain starts to set in for the asset owning classes.

Although it is good for those who live off paychecks, it also requires not having the govt. buy your votes with carrots here and there.

#13 Old Boot on 11.02.22 at 3:21 pm

#4 Dave on 11.02.22 at 2:44 pm

What about the 500,000 immigrants per year. They will need housing

That’s the future target, and most folks coming here do not jump into houses. – Garth

———-

Once immigrants get a taste of the rental market in YVR and GTA, they become as keen to buy as the rest of Canadians.

Unless rents substantially decrease and vacancies dramatically increase, the state of the rental market in magnet cities will continue to contribute to sale price pressure.

Renovictions, AirBnB, and the general dearth of social housing need to be addressed but there’s precious little political will (or the funds) to tackle these issues.

Schemes to re-zone SFH neighourhoods for density reduce absolute numbers of SFH and drive up land values. Construction costs are subject to inflationary pressures and won’t be falling anytime soon.

It’s highly unlikely that real estate values will fall to anything resembling 2007 levels, even if the interest rates are similar.

If immigration was the solution to our economic woes Canada would be leading the G7 economies, what with 23% of our population having been born elsewhere, but it isn’t.

Immigration, rightly or wrongly, will be the single biggest election issue facing the Libs/NDP.

#14 chalkie on 11.02.22 at 3:23 pm

Those of us who experienced or remember the Freddie Mac and Fanny Mae meltdown in 2007-2008 and have stupidly borrowed again in this mess have short memories, people loaded up on subprime, interest-only, or negative amortization mortgages—loans more typical of banks and unregulated mortgage brokers.

Fannie and Freddie made things worse by their use of derivatives to hedge the interest-rate risk of their portfolios.

The subprime mortgage crisis of 2007–10 stemmed from an earlier expansion of mortgage credit, including to borrowers who previously would have had difficulty getting mortgages, which both contributed to and was facilitated by rapidly rising home prices.

Let us not forget the Canadian wave of buyers in the past couple of years (now have come home to roost) a fair percentage of the borrowed money was fraudulently acquired through false documentation that was promoted or helped along with devious real estate agents and employees of some very well-known financial institutions. People who had trouble getting mortgages, (does this sound familiar from 2007-2008).

This time around, there were also a lot of loaned pension money from gramma and mom and dad, how did that end up, right now working at Walmart looks pretty good to them, its hard to argue with the truth, when the loaned money is now gone in thin air.
Then there was some selected Canadian Real Estate broker offices and some agents involved in that 2020-2022 documentation criminal scam, should be disqualified for a lifetime ban on their activity, but that is another story for another day, for now, we have a somewhat similar mess coming across our bow.

Canada’s last housing bust happened during the early 1990s recession, when Canada was facing low commodity prices, a large national debt and deficit that was weakening the value of the Canadian dollar, the possibility of Quebec independence, and a recession in Canada’s main trading partner, the United States.
If the US goes into a recession and they well, United States will suck Canada in like Hoover Vacuum cleaner.

For a soft landing before this financial mess is over, Canada’s only chance is to pray, because the Christmas Cake is already in the bowl and being stirred, very difficult to separate back into its original form.

Hold onto your pants Charlie, because the storm is coming like a freight train.

Quote of the day: Money is a tool. Used properly it makes something beautiful; used wrong, it makes a mess

#15 jess on 11.02.22 at 3:26 pm

https://data.oecd.org/interest/long-term-interest-rates.htm
Definition of
Long-term interest rates

Long-term interest rates refer to government bonds maturing in ten years. Rates are mainly determined by the price charged by the lender, the risk from the borrower and the fall in the capital value. Long-term interest rates are generally averages of daily rates, measured as a percentage. These interest rates are implied by the prices at which the government bonds are traded on financial markets, not the interest rates at which the loans were issued. In all cases, they refer to bonds whose capital repayment is guaranteed by governments. Long-term interest rates are one of the determinants of business investment. Low long-term interest rates encourage investment in new equipment and high interest rates discourage it. Investment is, in turn, a major source of economic growth.”

#16 enthalpy on 11.02.22 at 3:33 pm

And salaries have NOT kept up… at all

It’s abysmal

#17 jess on 11.02.22 at 3:34 pm

Maersk earned record profits last quarter due to “substantially higher freight rates,” it said that rates began to drop toward the end of the period “due to weakening customer demand, coupled with markets beginning to normalize with fewer supply chain disruptions” and less congestion.
=====================

American Importers Accuse Shipping Giants of Profiteering
https://www.nytimes.com › shipping-container-shortage
profiteering shipping containers from http://www.nytimes.com
May 4, 2022 — Carriers are exploiting the supply chain chaos to breach contracts and jack up rates, importers say in asking for federal intervention.

#18 Bonobo on 11.02.22 at 3:35 pm

Sigh…two more years until Trump gets back into office and Pierre takes over as PM here.

Keystone XL will restart and pipelines will be built with abandon. Energy prices will go back to 2020 levels, the war in Ukraine will end, Britney Griner will get released, Rocket Man in North Korea will settle down. Oh and inflation will begin dropping down to less than 2 % once Trump is back and Trudeau is out.

Netenyahu is back with a majority!

Biden and Trudeau/ are lame ducks and are ineffective.

Republicans are poised to take back the House and Senate.

Good times. Things are getting better with SoCons back in the driver seat. See there is always a silver lining.

With love from Alberta!

#19 Rook on 11.02.22 at 3:37 pm

“In 2007, the average Millennial was 15 and more worried about zits than basis points.”

I’m a millennial, and I was 24. What’s that make me, a geriatric mill?

Nomenclature aside, between 2007 (university) and now (career), my annual income has gone up by somewhere in the order of 9 or 10x. But the interesting thing is, I couldn’t afford a home then, and I can’t afford one now. So nothing’s really changed for me, save the number of commas in my net worth, and the colour on the excel sheet (from red to black).

plus ça change, amirite?

#20 Roial1 on 11.02.22 at 3:38 pm

The beautiful dog pictured very much reminds me of “Browne” My very first dog. Also a farm dog. Super smart.
1948 was a very long time ago.
Dad built a “war time house for——1500CDN$

#21 pBrasseur on 11.02.22 at 3:39 pm

Privatizing CMHC would by far the most needed and efficient policy change to return RE to “normal”. No way a private and free market would make it so easy for first time buyers to borrow the insane amounts we see today.

Also in a “normal” market you don’t need to tax capital gain on first residence because prices rises closely enough with regular inflation, most gain would be due to inflation and taxing inflation is wrong and unfair. Pepe won’t do it and nobody should.

#22 Prince Polo on 11.02.22 at 3:43 pm

Since nobody here is trusting politicians to do the right thing, what is stopping them from introducing 50yr amortizations to make housing more “affordable”? I can totally see our diabolical Photo-op Minister making such an announcement with a huge grin on his face.

#23 Linda on 11.02.22 at 3:45 pm

The numbers cited in today’s post makes one thing clear: even if house prices plopped by half, the amounts people would have to shell out to purchase would be beyond the reach of the majority of Canadians. Seriously, not too many folks could afford a monthly mortgage in excess of $4K & if a Van house goes for $1.8 million, a 50% haircut would still see that house selling for $900K. The $4K monthly was for a mortgage in the $572K range. Even with a 50% drop in price plus 20% down, the putative Van mortgage would be in the $720K range with a commensurate higher monthly.

So higher rates won’t suddenly allow hordes of Canadians to achieve home ownership without continuing to take on massive debt. As for the FHSA, seems to me that vehicle fits the ‘only for the rich’ label. Certainly it is a great gift for those who already have maxed out their RRSP & TFSA contributions.

#24 BMO Data Analyst on 11.02.22 at 3:51 pm

DELETED (Troll)

#25 ogdoad on 11.02.22 at 3:57 pm

Completely agree with what you say, G. Except for the balance, contentment and defn’s of fulfillment bit that y’all peddle…

But let’s touch one of the worlds REAL sources of influence that stands at the door…World Cup 2022 in Qatar (????)…5 bill. expected to watch

Where’s the dough gonna flow?

Time to get a new Barber.

Og

#26 Greta Fool on 11.02.22 at 3:57 pm

The top 1% of earners in the UK are responsible for the same amount of carbon dioxide emissions in a single year as the bottom 10% over more than two decades, new data has shown.

https://www.theguardian.com/environment/2022/nov/01/polluting-elite-enormous-carbon-dioxide-emissions-gap-between-poorest-autonomy-study

#27 Dragonfly58 on 11.02.22 at 3:58 pm

DELETED (Anti-immigration)

#28 Jennifer Soken on 11.02.22 at 3:58 pm

I just heard that fixed rates are starting to come down.

#29 wallflower on 11.02.22 at 4:00 pm

#6 Dave on 11.02.22 at 2:44 pm
What about the 500,000 immigrants per year. They will need housing
= = = = = = =
How is it new immigrants can be housed but most Canadians cannot afford either the house they are in (if they had to buy it today) or cannot get into the market at all?
The recent immigrants I talk to are heading out. Housing. (Also weather.)

#30 Søren Angst on 11.02.22 at 4:07 pm

They won’t sell in Spring.

They’re too greedy or in PC parlance:

“Recency Bias”

They, house horny, will have other things on their mind by then like a RAPIDLY emptying pocketbook.

——————

By Spring of next year inflation will careen. And it will be because of energy & transportation prices. Observe Supply/Demand Chart for oil per IEA:

https://www.ogj.com/general-interest/economics-markets/article/14284220/iea-revised-down-global-oil-demand-growth-forecasts

Petroleum refining shortfall since May of this year:

https://www.reuters.com/markets/commodities/global-refiners-falter-efforts-keep-up-with-demand-2022-05-31/#:~:text=Global%20refining%20capacity%20fell%20in,average%20of%2082.1%20million%20bpd.

EQUALS

High inflation coming early next year.

One of my investments relies on Contango, the spread between Spot and Future Oil prices (today: $86.54 vs. $89.12 per bbl oil).

The spread is there NOW and has been for awhile; otherwise, I would not have been raking in dividends on Covered Calls per the above … to the tune of 41% TD WebBroker calculates for me.

IEA trying to be conservative, rosy, “don’t worry, be happy” YET the pain has already started.

——————–

High inflation coming to a gas station near you + Transportation costs.

PETER PAN BoC paused in its recent rate increase. Trading Partner inflation rates:

US 8.2%
EU 10.7%
UK 8.8%

Canada 6.9% – I call bullsh!t, Occam’s Razor.

Peter Pan it is. Your pocketbook empties, already starting.

Spring 2023 will bring a whole lot of ugly.

#31 Lolo on 11.02.22 at 4:11 pm

In 2007, some owners may have a basement suite renting for $900-$1200. In 2022, many have at least 2 suites (some w/ an additional laneway house), so potential total for rental income can be $5000(conservatively $1K for the 1bdr, $1.5k for the 2br and $2.5K for the laneway). Between 2007 and 2022, wages would have gone up; 2% compounded over 15 years is over 30%. So, some owners have found ways to make the new math work over the years.

#32 Crystal ball futurist on 11.02.22 at 4:12 pm

Leverage works both ways. It’s time for a lot of speculators to learn that the downside risks are real.
The banks will be fine. Only ledger entries to be corrected.
Unfortunately a lot of folks will be wiped out.
The govt encouraged stupidity, but they did not force you to take that risk.
Now all of us will pay the price.

#33 You know Val on 11.02.22 at 4:16 pm

The world is in a wash of sucking blow

#34 Investx on 11.02.22 at 4:17 pm

And HISA’s continue to rise.

Manulife Bank Advantage Account promo just rose to 4.1% interest (from 3.75%).

#35 Damifino on 11.02.22 at 4:22 pm

#7 Captain Uppa

So what’s a family man like me supposed to do, Garth? My home is still worth 700K more than I have left on the mortgage. But moving sucks! We love our kids’ school. My wife is tired of moving already.
————————————————–

My suggestion would be to treat the 700K as if it simply didn’t exist. Because, for you, it doesn’t.

Instead, enjoy your home and live there happily with your wife and children until such time as it no longer meets your needs.

#36 NOSTRADAMUS on 11.02.22 at 4:32 pm

CHEESE ANYBODY?
You can’t make this stuff up. It is now the norm for real estate agents to take interior photos of their listed homes from a height of 40 inches. The same height from which a 5 year old child sees the world. It makes your run of the mill home look like a mansion in their advertised photos. This marketing ploy is much like what you see in the grocery store cheese section. This weeks special, Black Diamond cheese, reduced $4.00. Whoa! what happened to the cheese? Are my eyes deceiving me? The package is about a third smaller than a year ago. My favorite, the rain check for this weeks special that has sold out, empty bin. Going back week after week ,same excuse, supply issues. Takes a determined shopper to win this war. If you haven’t learned to spot these types of bait and switch marketing tactics, sue your parents for a crappy upbringing.

#37 Faron on 11.02.22 at 4:38 pm

#130 Sail Away on 11.02.22 at 1:03 pm

Because Sail Away failed to cite a single source for any of his claims (although obviously they were culled straight from a Tucker Carlson monologue) we have to see them as suspect if not outright lies. I’ll use facts to make him look uninformed and unserious even stupid. Sound fun? Let’s go!

First off, the progressive era took off under Obama in 2008. So, we had about 8 years of progressivism followed by four years in the dark ages under Drumpf. So, your first claim is bunk. Furthermore, the progressive party has utterly destroyed the conservative party in the US in all presidential elections from 2008 onward. So it’s really only through gerrymandering, voter suppression and the Electoral College that the GOP has any voice and the voice it has is not representative of the people it speaks for (US Citizens as a whole).

From massive retail crime in California

Interesting, here’s a Fox News article demonstrating that this is a nation-wide phenomenon. Including this quote relating to good ol’ republican AF Texas (you know, where you can carry guns around and do horrible things like shoot children in an elementary school without worry of the “thin blue line” getting in your way):

“So much so that the National Retail Federation named Houston one of the top 10 cities impacted by organized retail crime in 2021”

https://www.foxnews.com/opinion/organized-retail-crime-wave-must-stopped

accused violent criminals being released on bail and immediately committing mass murder (Waukesha)

Waukesha’s mayor is GOP, The county sheriff is GOP and Wisconsin’s legislature is GOP. These are the people who make and enforce the rules. Kinda seems like a repub issue to me. Not to mention that antisemitism tends to live with republicans i.e. the Unite the Right rally’s disgusting chant “the Jews will not replace us!”. Yep, that’s the Tucker Calrson amplified replacement theory being chanted the day before a right wind nutter ran over and killed counter protestors.

to record volumes of illegal immigrants

The population of illegal immigrants has declined since 2007 AKA, the Obama era.

https://www.pewresearch.org/fact-tank/2021/04/13/key-facts-about-the-changing-u-s-unauthorized-immigrant-population/

https://cis.org/Report/Estimating-Illegal-Immigrant-Population-Using-Current-Population-Survey

The number of apprehensions by ICE agents reached a low under Trump and has spiked under Biden.

https://www.statista.com/statistics/329256/alien-apprehensions-registered-by-the-us-border-patrol/

to the most gaffe-prone president the world has ever seen, to…

Sheer hyperbole. Meanwhile Biden has done more, by far, in terms of passing legislation and, most importantly, adding jobs while overseeing a red hot and robust economy.

See you in Maple Bay next week!

#38 Ole Doberman on 11.02.22 at 4:39 pm

#6 Dave on 11.02.22 at 2:44 pm
What about the 500,000 immigrants per year. They will need housing

That’s the future target, and most folks coming here do not jump into houses. – Garth
————————————————————-
One thing I noticed a while back is 2 families buying a house together. That will keep RE elevated.

#39 OK, Doomer on 11.02.22 at 4:48 pm

I’m OK with taxing capital gains on housing as long as we can deduct housing capital losses. Just addressing one side of the balance sheet is adolescent thinking. But with our present PM, let the Adolescent Games begin!!

Seriously, though. If you treat housing as an investment and tax it as such you need to allow deductions on expenses, upkeep, taxes, etc. Otherwise people do the math and you get slums.

#40 Bill zufelt on 11.02.22 at 4:58 pm

If RE is such a great tax protected vehicle why will it correct so severely? If inflation and rates stay high RE will eventually continue it’s merry way on up. The best idea obviously is to keep the home ,divide it up if possible,put a place up in the backyard and become an owner/landlord. Until they remove the capaital gains exemption RE will always be a better investment than stocks—and you get to live in your stock/bond portfolio. Could we see a 30% housing correction? Absolutely but we could also see a 30% stock market correction or worse.

Stocks have already corrected. Housing yet to come. And no, the capital gains tax exemption does not apply to rental units. – Garth

#41 Victor Llearna on 11.02.22 at 4:59 pm

Powell really gave a POW to the S&P today -2.5% after he spoke. Just like the worms for robin in the rain, traders are wishing Powell would stay at home

#42 Sail Away on 11.02.22 at 5:03 pm

Elon’s Twitter is the best Twitter. Everything he does is the best.

#43 Jason on 11.02.22 at 5:07 pm

All time low interest rates pulled forward a lot of demand. New demand is going to take time to build again. This is part of the reason sales have fallen off a cliff. New listings also fell off a cliff as it’s safe to assume that listings were also pulled forward with all time highs in home prices.

The Toronto and Vancouver markets are primarily equity driven which keeps a floor on prices. New home buyers don’t buy the average home. They buy a starter home – usually a condo – and build equity before moving up. And yes, the average earning person can’t afford a condo in Vancouver or Toronto. There are, however a lot of above average earners as well.

And of course there’s immigration, which initially increases rents, and incentivizes more real estate investors to buy. And eventually most of those renters want to buy as well.

For these reasons, it’s hard to see a crash in real estate. A slow down, sure. A drop in prices, of course, same as we’ve seen in stocks. Reversions to the mean are normal. But there won’t be a crash.

#44 Jens on 11.02.22 at 5:07 pm

With our without Garth’s desired government interventions, house prices will tank. In and of itself, that’s a good thing as it restores normalcy. But the well-being of our economy will depend on the mercy of the banks with all the households that find themselves financially under water. I don’t hold up high hopes, but just maybe they’ll realize that drastic measures such as loan forgiveness may be preferrable over a wave of defaults choking the financial markets.

#45 cramar on 11.02.22 at 5:11 pm

Yesterday, the Missus and I took a trip from west of the GTA to Markham via the “Highway of Hell”—the 401. I was shocked at the number of high-rise condos in the latter stage of construction. Now with the T2 Gubmint’s new immigration targets of 465,000 permanent residents in 2023, 485,000 in 2024 and 500,000 in 2025, maybe these 1.45 million will be the ones to buy these new condos, bidding up prices to even more insane levels.

If they actually need “affordable housing”… then everyone is screwed!

#46 Tony on 11.02.22 at 5:26 pm

DELETED

#47 Sail Away on 11.02.22 at 5:36 pm

#37 Faron on 11.02.22 at 4:38 pm

See you in Maple Bay next week!

——–

You do know the wings and drinkup invite was for the Oxy in Nanaimo… and organized by people who don’t like you, right?

You should enjoy your Maple Bay party, though. Say hi to all your friends.

#48 Randy on 11.02.22 at 5:39 pm

Mortgages are just a FRAUD….created by Central Banking Criminals….Make the Central Banks go away and watch Mortgages go away..End of FIAT Fraud….All Houses are purchased for cash. One Problem Solved.

#49 DON on 11.02.22 at 5:46 pm

#43 Jason on 11.02.22 at 5:07 pm
All time low interest rates pulled forward a lot of demand. New demand is going to take time to build again. This is part of the reason sales have fallen off a cliff. New listings also fell off a cliff as it’s safe to assume that listings were also pulled forward with all time highs in home prices.

The Toronto and Vancouver markets are primarily equity driven which keeps a floor on prices. New home buyers don’t buy the average home. They buy a starter home – usually a condo – and build equity before moving up. And yes, the average earning person can’t afford a condo in Vancouver or Toronto. There are, however a lot of above average earners as well.

And of course there’s immigration, which initially increases rents, and incentivizes more real estate investors to buy. And eventually most of those renters want to buy as well.

For these reasons, it’s hard to see a crash in real estate. A slow down, sure. A drop in prices, of course, same as we’ve seen in stocks. Reversions to the mean are normal. But there won’t be a crash.

********
Let me guess your favorite Beer is called ‘Hopium’ brewed by the Crashless Brewing Company.

How did past housing bubbles burst?

#50 Elon Superfan on 11.02.22 at 5:54 pm

#42 Sail Away on 11.02.22 at 5:03 pm

Elon’s Twitter is the best Twitter. Everything he does is the best.

+-+-+-+-+-+-+-+

Exactly correct

#51 Reality check on 11.02.22 at 6:07 pm

18 Bonobo
Sigh…two more years until Trump gets back into office
—————

The midterms show how unlikely it is that trump could pull off a successful 2024 presidential run.

Given the state of the US economy and the utterly lackluster performance of Biden, the republicans should be romping to a landslide retaking of house and senate majority.

But at best they will have a modest house majority and razor slim senate majority.

Why…….because of the clowncar full of “stolen-election myth”, Qanon loving candidates handpick by Trump. Most Republican voters are smarter than the average MAGA hat wearer – they will hold their nose and vote for nutty candidates only to a point – beyond that point of nuttiness they just don’t vote.

So thats the decision the Republican elite will have to make. Trump as 2024 candidate with his base of crazies or some other candidate that appeals to a saner group of Republican voters.

Either way, if the economy improves and the democrats put forward an inspiring 2024 candidate (like, somebody smart and under 50) the republicans will likely lose presidency and senate.

God help us if Biden is best candidate the dems can agree on for 2024.

#52 Yorkville Renter on 11.02.22 at 6:16 pm

2007 TREB average price was $376k

using the traditional 4% growth for RE, that takes us to $704k in a few months… last month TRREB average (yes, there’s a new R added), was “hovering just under $1.1m”

Still a LONG WAY to go…

#53 Observer on 11.02.22 at 6:24 pm

#21 pBrasseur on 11.02.22 at 3:39 pm

Also in a “normal” market you don’t need to tax capital gain on first residence because prices rises closely enough with regular inflation, most gain would be due to inflation and taxing inflation is wrong and unfair. Pepe won’t do it and nobody should.

^^^^^^^^^^^^^^^^
A lifetime exemption amount (for example, in USA I believe it is 250K per person) could take care of any inflationary gain.

#54 IHCTD9 on 11.02.22 at 6:35 pm

#45 cramar on 11.02.22 at 5:11 pm
Yesterday, the Missus and I took a trip from west of the GTA to Markham via the “Highway of Hell”—the 401. I was shocked at the number of high-rise condos in the latter stage of construction. Now with the T2 Gubmint’s new immigration targets of 465,000 permanent residents in 2023, 485,000 in 2024 and 500,000 in 2025, maybe these 1.45 million will be the ones to buy these new condos, bidding up prices to even more insane levels
— –

Probably more like established Canucks bidding up condos so they can rent to the newcomers. That’s been the GTA M.O. for a good 10 years already. The immigrants themselves have a longer road to travel towards home ownership today than ever in our history. Now, rents are insane too. Hence we have all kinds of shenanigans going on wrt becoming a homeowner – right across the board.

#55 Jane on 11.02.22 at 6:49 pm

We never owned a property, house etc. but always rented a house all our working lives. What we were smart about was maxing our our RRSPs later TFSAs, cash investments. We converted our RRSPs to RRIFs at age 60 and since then take out a flat 6% per year which brings in $61,000 a year..

This keeps our taxes from rising much higher than the required minimum yearly RRIF withdrawals.This always outpaces the minimum RRIF withdraw every year and will last us 23 years at 3% interest rates. It will last much longer now at 5% GIC rates 7 to 10 more years. However, we are still keep adding to our investments, bank balances so it really is not being spent that much. We can do much better now with 5% RRIF GIC rates for 10 years locked.

Our TFSAs are now $187,000 and cash investments $150,000 laddered GICs, term deposits $21,000 over 7 years. We get our $1,700 a month CPP and covers all our rent currently which is fixed for next 3 years as our lease expires then. Our landlord just wants to keep the place clean and rented.

For the next decade our net interest income after taxes, rent, living expenses is going to be $36,000 a year and we did not include our OAS income of $16,500 a year coming in 2 years. We have only 1 car, no debts at all so we are living well without being dragged down by monthly payments. We do not need a house, condo and all the costs, expenses, taxes etc. associated with it.

#56 45north on 11.02.22 at 6:51 pm

How do we solve this mess?

Second, governments must cease throwing money at real estate.

but there’s going to be tremendous pressure on the Ontario Government to throw money at real estate.

Randall Denley The provincial government is about to make major changes to Ottawa’s Official Plan that will dramatically alter development in the city over the next decade.
While the city’s plan anticipates 76,000 new housing units over 10 years, ambitious new targets released last week by Minister of Housing and Municipal Affairs Steve Clark call for the construction of 161,000 new units in Ottawa, and that’s considered a minimum.

https://ottawacitizen.com/opinion/denley-big-changes-to-ottawas-official-plan-will-challenge-new-council

In T.O. during September only 109 units (new builds) changed hands. And how many are currently under construction? Over ninety thousand.

so at the exact moment when the Government is calling for more construction, the construction companies are going bankrupt. Here’s a development I posted:

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. What kind of construction loan do you need? Who’s going to give it to you? Nobody.

#57 TalentScout on 11.02.22 at 7:11 pm

Absolutely agree with the idea that financial assets outperform property in the wake of a rate pause. The cost of money remains high for borrowers while markets look through and discount the future. Borrowers have no such luxury and while some may chance it on a VRM, there are no guarantees, while the elevated down payment required regardless of rates one year + out will be a deterrent for many.

#58 Dragonfly58 on 11.02.22 at 7:12 pm

DELETED. We are not discussing immigration numbers on this blog. I will write a post explaining why. – Garth

#59 Søren Angst on 11.02.22 at 7:14 pm

#26 Greta Fool

Please keep that handle.

Too funny.

PS:

Let StatCan know for next year’s Sh!t and Methane Report.

And, at least the cows weren’t blamed this time around.

#60 GratefulCanadian on 11.02.22 at 7:14 pm

Says Dave: “What about the 500,000 immigrants per year. They will need housing”

Responds Garth: “That’s the future target, and most folks coming here do not jump into houses.”

At the first glance, Garth’s right. However, newcomers generally want to buy houses, but settle for renting if the conditions are right (downtown, reasonable rent amount), until they can get the ‘right’ house. But this model/trend was the past. Current rents are almost on par with the ‘typical’ mortgage (even at the higher rates). Thus it became much more obvious that renting is detrimental to them, and as such they will rush to purchase, compromising however they can: going further away from the city/job, purchasing a substandard property they are planning to renovate, etc. Another bonus for buying is that typically when buying a larger family can reside in the same dwelling (some cultures really embrace that), something that isn’t possible when renting (for instance in a property management building).

The bottom line is that there are no good short-medium term solutions, excepting the case where the population quickly decreases (something no one wants). To make matters worse, a good chunk of the rental properties are old and need costly renovations – thus further discouraging investors to pour a lot of money in them only to keep the rents low – it’s more advantageous to tear them down instead and build something new&fancy.

Rents are on a par with home ownership… nowhere. – Garth

#61 Faron on 11.02.22 at 7:25 pm

#47 Sail Away on 11.02.22 at 5:36 pm
#37 Faron on 11.02.22 at 4:38 pm
#130 Sail Away on 11.02.22 at 1:03 pm

You do know the wings and drinkup invite was for the Oxy in Nanaimo… and organized by people who don’t like you, right?

You should enjoy your Maple Bay party, though. Say hi to all your friends.

I love The Lion Rampant. Great place to go after a 1400m Maple Mountain vert fest of a trail run. Thought it fair that we split the driving load given that the Oxy is your local and I’d be showing up to have my head made a “better place” or some such thinly veiled threat of violence. Kinda like that sailing trip you couldn’t live up to, right? Anyhow, I’ll wait for Russ’ confirmation.

Anyhow, you are squirming away from your silly, fever-dream claims in #130, aren’t you?

#62 Interesting on 11.02.22 at 7:28 pm

Some interesting stuff ahead for the US midterms. (I know I know not a political blog per se but definitely related to economics!)

I find it fascinating that white college graduates are moving rapidly from Democrat to Republican support. That is NOT what I would have expected.

“College graduates in general are moving away from Democrats, now just 55 percent saying they’re voting Democrat vs. 65 Last month. So that also is a problem for the Democratic Party this election.”

Perhaps they’re just tiring of being force-fed the nonsense that has shaped loons like Faron?

https://www.pbs.org/newshour/show/new-poll-reveals-political-mood-ahead-of-midterms-and-how-young-voters-could-sway-outcome

#63 crowdedelevatorfartz on 11.02.22 at 7:31 pm

@#51 Reality Check
“God help us if Biden is best candidate the dems can agree on for 2024.”

++++
True enough.
It’s sad that Biden and Trump are the best the US political Parties can scrape together for the second round.
Democracy is teetering on geriatric knees.
Biden should step back and allow the Dems to nominate a new leader.
Kamala Harris, while smart and energetic, doesn’t seem to have grabbed the voters attention.
Trump is an untethered, loaded, cannon rolling around on the deck of an unmanned ship in a tempest.

Democracy has never been so fragile.

#64 Faron on 11.02.22 at 7:37 pm

Elon Musk Says Twitter Will Give Blue Checks Only to Verified Conspiracy Theorists

#65 Quintilian on 11.02.22 at 7:39 pm

#43 Jason on 11.02.22 at 5:07 pm

“The Toronto and Vancouver markets are primarily equity driven which keeps a floor on prices. New home buyers don’t buy the average home.”
And:
“And yes, the average earning person can’t afford a condo in Vancouver or Toronto. There are, however a lot of above average earners as well.”

The abundance of crazy talk is amazing.

So what’s causing the current crash in some markets, and record volume sales drop and some prices reductions in the major markets?

Full employment, interest rates still below inflation, what has happened to the equity rich buyers, and high earners?

Tick Tock, Tick Tock

#66 Cash is King on 11.02.22 at 7:40 pm

Sucks for Canadian housing for the next 20 years. Elderly dwindling, broke kids moving back home, millennials and genzees flat broke, immigrants occupy basements, grandparents on the hook for all the mortgages they co-signed. End game. Terminal market collapses across Canada.

#67 jess on 11.02.22 at 7:42 pm

…”networks were made to appear as if they were operating from within the United States

https://www.eipartnership.net/blog/inauthentic-foreign-networks

https://www.washingtonpost.com/technology/2022/11/01/china-midterms-twitter-networks/

#68 Domino on 11.02.22 at 7:46 pm

Sure, house prices will drop like a stone because
Plumbers are reducing their rate
Electricians are reducing their rate
Dry wallers— 1/2 price coming
Oh, the framers— they want a 39%reduction in their rate
Concrete- 1/2 price, copper— free with purchase of recently reduced fixtures.
Oh, almost forgot – Windows now 1/2 price
Let’s not forget development fees— the government is giving it away
There is a lot more to housing prices then interest rates

#69 Søren Angsta on 11.02.22 at 7:49 pm

Oh Garth …

Fed hikes interest rates 75 basis points again, Powell says ‘very premature’ to talk about pause

https://finance.yahoo.com/news/fed-set-to-raise-rates-powell-rate-hike-path-101845316.html

Diddly-squat article.

I just liked the ‘very premature” part.

I think?

Ya, a whole lot of ugly in early 2023.

#70 Lower the Boom...er not on 11.02.22 at 7:50 pm

Yogism 4: “I learned long ago that the only thing I can count on is my own fingers”.

#71 Mattl on 11.02.22 at 8:01 pm

Hard to believe equity markets are at bottom. I get markets are forward looking, but as we enter recession in 2023 and corp profits are getting whacked, stock prices will rebound? With interest rates normalizing, what will the impetus for tech stocks – 25% of the SP – to rally? As RE is getting crushed, mortgages being renewed at huge numbers, consumer demand is going to roar back? While trillions in equity has evaporated and credit is scarce? Markets seem to be signalling that they agree, 2.5% in 30 minutes post Jpows press conference.

I’d love to see stocks roar back, but for the life of me can’t see where demand is going to come from.

#72 Simon on 11.02.22 at 8:08 pm

Please do a blog post on the historical impact of immigrants on real estate prices and its relative impact vs. interest rate increases on real estate prices. For example, what was the annual percentage of immigration + domestic population growth in the 1980’s and 1990’s vs. present statistics? Are we building similar levels today versus the past? Is the overall population growth similar? Bloomberg and other outlets are reporting that Mr. Trudeau will be letting in record immigratnts over the next three years. What is the average income of an immigrant? Do they typically use financing or personal wealth when buying a property? We can almost guarantee that rental rates will increase, if builders are not keeping up with homes for population growth. Or is this all smoke and mirrors to garner FOMO. Appreciate your insights.

#73 willworkforpickles on 11.02.22 at 8:10 pm

BANNED (Abusive)

#74 Flop… on 11.02.22 at 8:24 pm

Flop Drops.

I do a State Of The Union address, I guess.

Can you get a liveable detached house on the tony Westside of Vancouver for 1.5 million?

Yes.

This one went for 1.5 flat, after originally asking 1.99

Let’s focus on the assessment and you’ll cotton on to where I’m going with this post.

Assessed at 2.01, so it sold for around 0.74 percent of its assessment value, somewhere back around 2016/17 type of number.

https://www.zealty.ca/mls-R2726142/3444-HEATHER-STREET-Vancouver-BC/

Next, let’s check out the bottom of the market in Surrey, where realtors pose as renters during protest to keep the circus tent fully occupied at all times.

What these guys are up to is just no good for anyone but themselves.

I distinctly remember watching Oliver Twist growing up and I remember a realtor from Surrey posing as a poor renter, in the movie saying “Please, sir, can you remove the rent cap so I can pay more!”

This detached house in Bolivar Heights just went for 950k.

I’m told if you close your eyes real tight at night as the shots ring out is just like living in Bolivia.

Similar story, bottom of market, only went for 0.80 of assessment.

https://www.zealty.ca/mls-R2733622/11330-137A-STREET-Surrey-BC/

This one is assessed at 1.27, only got 990k, so less than 80% of the recommended retail price from the fine folks over at B.C Assessment.

https://www.zealty.ca/mls-R2731653/10145-144A-STREET-Surrey-BC/

It’s not all bad news though, the two from Surrey were on the market less than a week, so it has cooled, not seized up totally as long as enough sellers realize the outstanding gains.

The media seems more primed for this correction than last, dunno if they are trying to control the narrative, or just trying to be on the right side of history.

There’s a glimmer of hope for those that thought there time had come and gone, gotta pack your patience though, the bottom of the market where you are just looking to put a roof over your head is probably still 25% more than the last slight pullback in 2017.

Some homeowners are probably in for a shock next time the get their assessment envelope though.

Time for my latest Flopperism.

It’s hard to assess something, that is constantly being assessed, but I will keep assessing the situation, and give you my honest assessment…

M48BC

#75 VladTor on 11.02.22 at 8:24 pm

#5 Nonplused on 11.02.22 at 2:44 pm
Nobody “makes” money owning a primary residence until they sell for the last time.
____________________

Are you serious?

Did you carefully read what Garth wrote?
…. Third, the capital gains tax incentive for real estate should fizzle. We’ve turned houses from homes into investment assets, so why not tax them the same as stocks, funds or any other liquid security?…

Absolutely agree!!!!

The house is the same commodity as everything that is bought or sold.

Look.
I bought a house and sold it the next year or even two. I made a crazy profit and didn’t pay a cent in taxes. What the heck? People do business, investing their talents, take risks and must pay all taxes? Why I have not to pay? I’m in different Universe or in Canada?

Why should I not pay tax on the sold house. It was my business to buy and sell. No difference to what Walmart doing.

By the way, can you explain to us when the last time comes?

The tax must be introduced immediately. I wrote about this here a couple of years ago.
All you have to do is set the rules for selling.

For example, if I sold a house less than 1 year after purchase – 100% tax. 2-3 years – 90%. 5 years – 75%. If I have owned the house for more than 15 years (which means that I bought the house to live in) – 0% tax.

Do you understood the idea?

This tax should remove speculators from the market and improve health of the RE market.

#76 baloney Sandwitch on 11.02.22 at 8:29 pm

I am taking bets on how much the residential real estate will fall in the GTA. Its already down by 20% or so from peak in Feb. I think another 20% is almost a certainty. I’d add another 10% to be safe. So I am saying 50% from peak to trough. It might take a 3 to 5 year trip to the crazy dentist.
In the US prices fell by an amazing 65% peak to trough and it took 6 years to bottom out. https://userupload.gurufocus.com/1587962968476319744.png
Lots of RE agents will be changing professions. Lots of second hand audi’s on sale.

#77 yvr_lurker on 11.02.22 at 8:42 pm

#71 Hard to believe equity markets are at bottom. I get markets are forward looking, but as we enter recession in 2023 and corp profits are getting whacked, stock prices will rebound? With interest rates normalizing, what will the impetus for tech stocks – 25% of the SP – to rally? As RE is getting crushed, mortgages being renewed at huge numbers, consumer demand is going to roar back? While trillions in equity has evaporated and credit is scarce? Markets seem to be signalling that they agree, 2.5% in 30 minutes post Jpows press conference.

I’d love to see stocks roar back, but for the life of me can’t see where demand is going to come from.
———-

This is how I see it. Market should be sideways at best. Moreover, with the war still going on in the Ukraine and the impact it will have on energy in Europe this winter (driving inflation up), there are so many extra unknowns.

#78 DJT on 11.02.22 at 8:51 pm

#64 Faron
Verified Conspiracy Theorists like Mueller?

#79 Flop… on 11.02.22 at 9:06 pm

Flop Drops.

I’ll do this one separately, because it’s probably slightly more important for the younger gang on the blog.

I’ll do this one in my Don Cherry voice, “Kids!”, what he’s been canceled, oh o.k it was going to hurt my throat so I’ll just go back to my normal Flop voice.

Who do kids trust these days, Pete Davidson?

Kids, you don’t have to move to Alberta, you don’t have to live in a shoebox, you don’t have to stay in your Mums basement, but after housing policy the last 15 or so years I don’t blame you if you do.

Let’s have a look at something relatively affordable.

The details…

46235 RIVERSIDE DRIVE

Chilliwack.

Original ask 559k

Assessment 743

Just sold for 575k

So another one that didn’t touch 80% of assessment value.

Asking was low, tried the bidding war strategy I got them a respectable but not outstanding offer and they took it, probably happy times for all involved.

Only 3 days on market, get your ducks lined up but don’t march them out the door, you see a couple of houses a month go for less than 600k in Chilliwack, no shame in living in a place like that, although you might wanna do something about the Fred Flinstone Fireplace.

Nah, leave it, save your money, it’ll come back in fashion in another 15 or 20 years…

M48BC

https://www.zealty.ca/mls-R2732679/46235-RIVERSIDE-DRIVE-Chilliwack-BC/

#80 I don't know on 11.02.22 at 9:47 pm

In 2007, the population and economy were smaller. As our host mentioned, demographics were different as well. Millennials were not interested in starting families and buying homes as much. But they are now.

A return to previous interest rates does not mean a return to previous prices at those same interest rates.

People who locked in rock bottom rates can go to sleep.
Anyone on a variable mortgage will have to adjust, and they will. Besides there is nowhere to go. The rental market is under immense pressure currently and unlikely to relent.

Affordability? That horse left the barn long ago.

RE Powell: he’s well aware that he needs to continue tough talking, for a large component of his task is psychological. He needs to prove to the American public (and the world) that his institution still has credibility. Taken another way, he needs to instill some fear. The more astute will understand the terminal interest rate won’t end up anywhere near as high as is expected, and once reached, will fall rapidly.

Holding cash (junk)? Now is a good time to put it to work.

IDK

#81 crowdedelevatorfartz on 11.02.22 at 9:49 pm

Cruise Ship Season in the Lower Brainland comes to an end.

A record number of cruise ships.

However.

30% fewer passengers.

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwiH66j_8ZD7AhU_LzQIHdVnDKsQvOMEKAB6BAgNEAE&url=https%3A%2F%2Fdailyhive.com%2Fvancouver%2Fvancouver-cruise-ship-season-2022-canada-place-statistics&usg=AOvVaw2ua_qBfF-NaIuAhOFKIRB2

More ships, less people.

Might be some deals next year on Cruise ships.

#82 crowdedelevatorfartz on 11.02.22 at 9:52 pm

@#74 Floppie
“It’s hard to assess something, that is constantly being assessed, but I will keep assessing the situation, and give you my honest assessment…”
+++
Never assume an assessment is astute.
It makes an “ass” of ‘u” and “me”

#83 Hooped Homemoaners on 11.02.22 at 9:53 pm

The tide is going out and many who bought in the past 5 years will lose their homes and condos in foreclosures and insolvencies. Housing is a roof not a gambling chip over your heads. Serves the broke right. Keep cranking up the rates malkes us all richer.

#84 VladTor on 11.02.22 at 10:18 pm

#74 Flop… on 11.02.22 at 8:24 pm

….I’m told if you close your eyes real tight at night as the shots ring out is just like living in Bolivia.
….
___________________

I laughed like a child and still smile.

Damn it, I’m going to fall asleep in a good mood today.

Thanks!

#85 TurnerNation on 11.02.22 at 10:44 pm

Now there are up to 8 small businesses, I used to frequent that are closed, all due to what was unleashed upon is in 2020. Is this not a #reset?

—–
When I talk about our Crowded and fetid UN Smart Cities…I’m not making this up.
The Long Game is unfolding. We were primed for this in 2020 with prisoners being released due to ‘Corvid’.
Get to know the Long Game.

https://www.washingtonpost.com/dc-md-va/2022/10/31/dc-criminal-code-reform-controversy/
The D.C. Council is expected to take the first of two votes Tuesday on a massive rewrite of its criminal code. If passed, the bill would eliminate most mandatory minimum sentences, allow for jury trials in almost all misdemeanor cases and reduce the maximum penalties for offenses such as burglaries, carjackings and robberies.

—-
—-
What part about Permanent is not clear? No return to 2019 Normal is planned. The Long Game.

.Mask mandates not out of the question as Ontario faces ‘triple threat’ of flu, RSV and COVID-19: Moore (cbc.ca)

.‘Do our part’: B.C. health experts urge masks indoors due to COVID, flu (globalnews.ca)

#86 Ciena on 11.02.22 at 11:14 pm

#74
Heather Street …. Livable? That house was beyond a tear down.

Everyone would love to buy less expensive real estate if they have the means but let’s not make stuff up. That house is not representative of the lower end livable old timer SFD market in Van. At best you’re looking at $2.3 and that is very hard to find.

This is coming from a longtime Vancouverite and hopeful buyer.

#87 the Jaguar on 11.02.22 at 11:15 pm

#76 baloney Sandwitch on 11.02.22 at 8:29 pm
“Lots of RE agents will be changing professions. Lots of second hand audi’s on sale.” +++

Imagine so. RE agents, regular peeps unable to close contractural obligations with no exit or safe room to run to….
And then perhaps some developers going into receivership. More or less ” the order of events in an ecosystem, where one living organism eats another organism, and later that organism is consumed by another larger organism”. Chain of events, Contagion effect, Domino theory, call it like you see it. It ain’t pretty.

#88 Diamond Dog on 11.02.22 at 11:22 pm

Meanwhile the Fed rate pause – which now seems certain to lie ahead – will ignite financial markets (as we saw during October). – Garth

Let’s see… we are at 3.75% – 4% now. In mid December when the Fed meets again, it’s likely 4.25% to 4.5% as you say. Talking heads will make the case that the Fed pauses there, but there is potential for two .25% hike’s up to 4.75 to 5%, one in Feb first and next in March 21st-22nd. The Fed may not pause technically until their early May meeting.

2 reasons why we may see rate hikes until March (really around the first of May), is because the Fed may need to take it to 5% to create the demand destruction needed and secondly, to support the strength of the dollar. The dollar’s strength has been deflationary on imports of which the U.S. runs trade imbalances meaning currencies could weigh in.

So, to recap bonds just based on bond market reactions to the Fed alone, it makes sense to wait until February and really, it wouldn’t cost an investor anything to wait until the late March meeting to make a decision. It’s not like they’ll pivot. (at 5% though, a small pivot is possible right, give the markets some sugar?)

There is a currency concern to note in the Japanese Yen in relation to the dollar. We’ve talked on this blog periodically for a long time in terms of when the Yen might melt down and it may have started, but it’s too soon to declare it.

https://www.xe.com/currencycharts/?from=USD&to=JPY&view=10Y

Japan is running trade deficits:

https://tradingeconomics.com/japan/balance-of-trade

Japan can’t raise their CB rate meaningfully to combat inflation since they are too indebted to service the debt costs. Japan is not a one hit wonder here, there are emerging market currencies in trouble as well. Couple bond market disruption with a Fed rate pushing past neutral and we get a U.S. recession.

That’s what monetary policy is saying, it’s what the bond markets are saying (the 30 year and 3 month is inverted as an example today, not normal) and if bonds are any indication it won’t be mild and short meaning earnings will bite into valuations. It’s a blessing to see the Fed telegraphing it’s rate hikes into the future like this since it gives investors time to re-evaluate a plan.

As I’ve said in the past, to try to time it in relation to bonds, it’s fairly clear cut. Early Feb is a logical entry point but it makes sense to give it til’ late March for one more hike or wait til’ May if a March hike comes. Spreads could still widen from there depending on defaults, but the risk/reward suggests one get in from Feb to May depending on what the Fed does.

As for equities/stocks, I was thinking April through to the fall of next year for the largest caps but to remind, that could be early. There truly is risk building in terms of a credit crisis for 2024 that could throw a wrecking ball into everything. There will be defaults going forward, a thinning of the herd… widening spreads accounting for risk… we have to watch the leading indicators and take it from there.

We are in uncharted waters here. Public/private debt this elevated with mortgage, prime and CB rates popping at these levels and sure to rise higher… All we can do is watch the leading indicators and place our bets accordingly.

https://www.youtube.com/watch?v=-szsEz1wnLk

https://www.youtube.com/watch?v=UxzwAMP1AoA

#89 TurnerNation on 11.02.22 at 11:32 pm

Gee, it’s like we were trained on this in 2020-21. Remote learning. Long Game anyone?

.Toronto public schools will be closed for in-person learning for duration of CUPE strike: TDSB (cp24.com)

— How’s that Hosptial Capacity looking. As we enter Year 4. Permaenent.

.No plan from province to fix McMaster kids hospital crisis (thespec.com)

.Teens sent to adult ICUs as crisis grows at McMaster Children’s Hospital (thespec.com)

— Fun with numbers. Trust the Science.
Mainstream news links yo.

https://yle.fi/news/3-12668492
Covid-19 has not been the actual cause of death in up to 40 percent of fatalities attributed to the illness in Finland, according to Sirkka Goebeler, a chief specialist at the Finnish Institute for Health and Welfare (THL). As a result, they do not end up in Statistics Finland’s official data as coronavirus deaths.

https://www.cnn.com/2022/10/26/health/updated-boosters-omicron-imprint/index.html
Immunologists say a vaccine against two strains may not be better than a single strain shot because of a phenomenon called immune imprinting.
The original strain of the virus, sometimes called the ancestral or wild-type strain, is no longer circulating, however. When we boost, we are mostly boosting antibodies against a virus that’s long gone.

https://www.cbsnews.com/news/covid-19-vaccine-booster-shot-infection-rate/
Why boosted Americans seem to be getting more COVID-19 infections
BY ALEXANDER TIN UPDATED ON: JUNE 6, 2022 /

#90 Robert Ash on 11.03.22 at 12:08 am

The other consideration is the impact of ZIRP on the General population. This would include younger folks, who are at the stage of ” Saving for something”. When domestic depositors, are totally left out of any positive return, what will they do… Anything other than watch their hard work and positive employment funds, degraded to a fundamentally zero return. Why did Bitcoin, Meme Stocks, SPACS, Charlatans, etc., etc., all develop over the last 15 years…. Well because of CB’s. Real Estate was the most simple alternative, investment, that provided a hard tangible asset, with some possibility of a return.
In my opinion, it defies logic, that these same CB’s would formulate a plan, to essentially repeat the Subprime housing crisis, by not gradually increasing the Bank rate to a neutral level, starting on or about 2010. By Jawboning their intent, to quarterly raise rates, from 0.25% to a neutral rate of 4.0% would have taken 2-3 years. Interest is like Gravity, and yes companies pay interest expense for operations, but this is a flow through accounting function to some extent, as they also would receive a return on their deposits. Forcing Peter and Jane, Mom and Dad, into a corner has proven to be very foolish, but immediately after the disaster of the 2007/8 debacle is very hard for me to rationalize. I don’t consider Bernanke, Powel, et el, as deep thinkers. Rather the opposite.

#91 Ronaldo on 11.03.22 at 12:21 am

#23 Linda on 11.02.22 at 3:45 pm

The numbers cited in today’s post makes one thing clear: even if house prices plopped by half, the amounts people would have to shell out to purchase would be beyond the reach of the majority of Canadians. Seriously, not too many folks could afford a monthly mortgage in excess of $4K & if a Van house goes for $1.8 million, a 50% haircut would still see that house selling for $900K. The $4K monthly was for a mortgage in the $572K range. Even with a 50% drop in price plus 20% down, the putative Van mortgage would be in the $720K range with a commensurate higher monthly.

So higher rates won’t suddenly allow hordes of Canadians to achieve home ownership without continuing to take on massive debt. As for the FHSA, seems to me that vehicle fits the ‘only for the rich’ label. Certainly it is a great gift for those who already have maxed out their RRSP & TFSA contributions.
—————————————————————-
Well Linda, I clearly recall in the early 2000’s after the very long drought in real estate prices when prices started to climb the banks were offering prime minus mortages of prime minus 1.5 and greater. This at a time when a new home in Red Deer as an example was selling for $150,000.

There was a major building boom going on in that part of Alberta and Shawn can verify that. My son had purchased a townhouse for $150,000 in a town near Red Deer in 2005 and exactly a year later it sold for $250000. I told him at the time that this is not sustainable and that he should look at unloading some of his properties.

Like most he figured prices would keep on rising but in May of 2007 prices peaked and remained flat for many years. I was on a flight from Edmonton to Vancouver and was sitting next to a property developer from Edmonton and I asked him why prices had risen so much in the past year and his reply was “Super profits”.

Everyone was in on the bandwagon from the framer to the drywaller. It was party time. The province was booming. Those prime minus rates certainly helped to blow up that bubble.

Even today after all those years, prices in those areas are barely where they were in 2007 or even earlier. In Vancouver in 2007 a couple I know bought an old 1911 slanty shack for $875,000. At that time the banks were once again offering prime minus mortgages and the talk around the water cooler was “how low of a rate did you manage to get?” And the talk was about buying more properties on spec and renting them out.

Homes in the Mt. Pleasant area were being bought up and torn down and monster homes being rebuilt on these tiny lots. It was party time. That house they bought for $875000 they sold for 1.790 million 9 years later(2016).

The person who bought it did a complete redo inside and out. The place today is assessed at 2.08 million. Previous year it was 1.764 million. So even after 6 years they would be hard pressed to break even if sold at the 2021 assessment.

This has been the case for most of the properties in that area. This market corrected some years ago. And it was purchased when rates were still very low. I can see a huge drop from this point with rates at where they are today.

It will be a disaster for many who bought even back then. I believe that the rise in average prices had a lot to do with the rate of tear downs and rebuilds. I can see prime minus mortgages coming in the near future.

#92 AM in MN on 11.03.22 at 12:27 am

#37 Faron on 11.02.22 at 4:38 pm

——————————————————

Do you have any idea how the US system works? Ever lived in any US cities?

Here’s a few ppints;

– The US House writes the budget. Check out growth rates when the GOP is in charge. It is more important than who the president is. Energy industry permitting is probably the biggest exception, but that is a new phenomenon.

– Prosecutions are done at the Country level. Check out Milwaukee (of which Waukesha is a suburb). Try walking through there at night. Also, check out the statistical differences in year to year voting patterns in these one-party cities/counties.

– Houston/Harris County might as well be another country compared to the rest of TX. Again, walk through at night.

– There are 3300 Counties, 18,000 police departments. 98% of people live areas with a near zero murder rate.

– If US elections were run like they are in Canada, in-person voting with ID, the GOP would do far better than it does, especially in urban areas. Take a deep look at Ballot Harvesting!

– Where is there “voter suppression”? You must watch MSNBC/CNN all day.

Also, it’s a big country with big differences between states. Check out the flows of people to FL & TX, TN etc. Saw a CTV story about a nurse moving from ON to FL, with no mention of the underlying differences, an no mention of why not move to NY or Chicago.

Victoria is La-La land. A govt. seat isolated on an island where it rains taxpayer money on the people. It can certainly warp the perspective of how the real world works.

#93 Tom from Mississauga on 11.03.22 at 12:44 am

Anti immigrant? Have these people seen our demographic pyramid? We’re running out of 20 y/o. Just ask my company HR! Food inflation? Well not if we have people coming to farm, process and distribute it. Yeesh!

You mentioned taxes G which got me to think with the collapse in new and resale homes that’s a lot of missing HST, LTT and development tax.

#94 Jane24 on 11.03.22 at 2:41 am

The immigration picture has changed so much in Canada.

In 1967 my parents arrived here from England and on one middle-class job my father brought a new home and supported a family of 8 plus the dog. All around us were other new families mostly from Northern Europe and Britain who felt they has won the lottery. A much higher standard of living then at home. Professional qualifications accepted in fact Canada was crying out for Drs, engineers etc.

Compare that with the immigration experience in Canada today and you can see why so many new immigrants, even the ones from developing countries decide to go back home within 3 years of arriving. Life for them is better in India etc. The latest numbers I have seen on the web is up to 300,000 returning home each year. Maybe this is why Justin needs to up those numbers arriving.

I am off to Portugal next week to see if I will be immigrating for the third time in my life. Like my parents in 1967 I am looking for a better deal. Life changes.

#95 DON on 11.03.22 at 2:52 am

#68 Domino on 11.02.22 at 7:46 pm
Sure, house prices will drop like a stone because
Plumbers are reducing their rate
Electricians are reducing their rate
Dry wallers— 1/2 price coming
Oh, the framers— they want a 39%reduction in their rate
Concrete- 1/2 price, copper— free with purchase of recently reduced fixtures.
Oh, almost forgot – Windows now 1/2 price
Let’s not forget development fees— the government is giving it away
There is a lot more to housing prices then interest rates

**********
All that has to happen is the opposite of a housing boom. I see plumbers, electricians, framers, roofers etc everyway. Like Old Ron stated…when building slows down unemployment starts to increase at some point. Lots of contractors chasing few jobs…this HAS happened before. Given recency bias no one thinks this can happen again. Dogs are more logical than most humans.

The price of lumber will come down to, when it becomes unloved. All those windows will go on fire sale.

#96 Wrk.dover on 11.03.22 at 6:40 am

#95 DON on 11.03.22 at 2:52 am
The price of lumber will come down to, when it becomes unloved.
____________________________________

Good luck bringing cost of production back to the old price point.

Won’t happen.

The floor was $350, now $450. Below that, supply dwindles and dries up. In other words…that inflation has been baked in to stay within the price.

#97 IHCTD9 on 11.03.22 at 8:13 am

#95 DON on 11.03.22 at 2:52 am

All that has to happen is the opposite of a housing boom. I see plumbers, electricians, framers, roofers etc everyway. Like Old Ron stated…when building slows down unemployment starts to increase at some point. Lots of contractors chasing few jobs…this HAS happened before. Given recency bias no one thinks this can happen again. Dogs are more logical than most humans.

The price of lumber will come down to, when it becomes unloved. All those windows will go on fire sale.
____

Yep, and I’ve been looking forward to the day. Couple house projects were put on hold during the pandemic because I wasn’t going to pay 80.00 for a sheet of plywood. No rush, so that job will sit till someone actually wants to sell me the material rather than keep it on the shelf.

#98 crowdedelevatorfartz on 11.03.22 at 8:23 am

@#94 Jane24
“I am off to Portugal next week to see if I will be immigrating for the third time in my life. Like my parents in 1967 I am looking for a better deal. Life changes.
++++
Yes life changes.
Alas the “Golden” visas are soon to be a thing of the past in Portugal.
Apparently ….
The voters tired of the off shore rich immigrants snapping up houses and making housing/ renting unaffordable.

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwiN-qyTgJL7AhUsAjQIHSgoCfgQvOMEKAB6BAgyEAE&url=https%3A%2F%2Fwww.reuters.com%2Fworld%2Feurope%2Fportugal-likely-scrap-much-criticised-golden-visa-scheme-pm-says-2022-11-02%2F&usg=AOvVaw0XRbhEpmkUPyS2MUqdiptO

#99 Bill zufelt on 11.03.22 at 9:56 am

Garth says”Stocks have already corrected,RE is to come” The TSX is off 9% YTD and RE in Toronto is down 18% and more in other areas. I would say stocks have as much of a risk to fall from here…possibly more.

#100 millmech on 11.03.22 at 9:59 am

The BOE has raised rates 75 basis points today, Powell is talking of another 75 basis points in December and more to come in the New Year. I wonder if Canada will now have to raise rates 100 basis points in December to keep up, does the markets know something our host does not.
If rates keep marching up and the average income is around 100k per household, it looks like they will qualify for a mortgage of around [email protected]% in the spring,so I guess the housing market will come down quite substantially to meet the new normal I would believe.
The layoffs in tech are picking up steam as investment capital dries up as investors are seeking the safer returns of fixed income to ride out the upcoming storm.
Weekend overtime at our plant is now being done through a rotating system as people were removing the signup sheet and not giving everybody a chance to get on it.
I see that another plant is now offering a gas allowance bonus of $20/day for trades, $5000/year and they have bumped their trade rate to $48/hr, overtime is all double time as they are short 20 trade positions. A go getter could make close to $12k gross a month in overtime alone (talk about wage inflation).

#101 Faron on 11.03.22 at 10:09 am

#92 AM in MN on 11.03.22 at 12:27 am

Gosh, you had some good points. Far more useful than Sail Away’s projectile vomiting of tripe then walking away… Until you got to ballot harvesting.

Dudes dressed in flak jackets carrying assault weapons and grilling voters in AZ is overt voter suppression. Gerrymandering is voter suppression. Shutting down polling places in predominantly black neighbourhoods is voter suppression. There are 100s of examples and a long history behind most of them.

I’m from Oregon, a US State. You?

#102 Chris on 11.03.22 at 10:34 am

Garth – question for you. Could real estate “correct” just by not rising for the next 3-5 years? If RE prices historically have risen by about 5%, then 5 years of staying flat would be equivalent to a 25% drop, but nobody goes under water. Whaddaya think?
Also, TurnerNation is tedious.

#103 Don Guillermo on 11.03.22 at 10:37 am

“It’s like déjà vu all over again”

Yogi Berra

Nice one Garth!

#104 Quintilian on 11.03.22 at 10:40 am

The Crazy talk continues.

Some of the RE pumpers, the heavily indebted, and the one trick ponies, continue to defend and justify the aberration of unsustainable rising home prices, citing tangible reasons such as rising costs of labour and materials.

How nutty is that.

Inflation would have had to be in the triple digits to have justified cost push as a reason.

Prices for Vancouver hovels were increasing by $50.00 per hr, without corresponding costs, even for plumbers.

RE pumpers would do better to dredge out the old slogan template:

Prices in (place) have gone up and will continue to go up, because (place) is a world class city, and billionaires from all over the world want to live here. And in (place ) we are running out of land.

#105 Wrk.dover on 11.03.22 at 10:57 am

#97 IHCTD9 on 11.03.22 at 8:13 am
I wasn’t going to pay 80.00 for a sheet of plywood. No rush, so that job will sit till someone actually wants to sell me the material rather than keep it on the shelf.
______________________________

Who will afford to put it on the shelf for under $70.00?

You might save $10 waiting, but why bother?

I have lived in a softwood producing/reliant area for four decades. I know players in all stages of supply and production. There is not much money to be made, after stellar expenses.

Late 90’s boomed at $350, overhead is mega uppa since that era, and still rising. Permanently.

Small contractors must clear-cut acres/day for overhead, then a few more logs for lunch money. Stuff breaks. Days get lost. There is no future in it.

Nation wide forests are sick, free wood is over.

#106 OK, Doomer on 11.03.22 at 11:18 am

Going off topic here. Not sure who’s following the uproar from multimillionaire leftist celebrities like Stephen King who think that we should pay them for their views, rather than have Elon Musk charge the celebrities $8 per month for the coveted Twitter “Blue Check Mark”.

This is the most hilarious thing I’ve seen in ages:

Elon Musk says he stole the idea for charging people for insults and arguments from Monty Python. That alone makes him the Most Interesting Man in the World

https://twitter.com/elonmusk/status/1587629049635110912

#107 WTF on 11.03.22 at 11:41 am

#18 “Good times. Things are getting better with SoCons back in the driver seat. See there is always a silver lining. With love from Alberta!”

—————————————————————–
Sigh, Speaking of Alberta, might be some disappointment in the “SoCon driver seat”.

https://www.cbc.ca/news/canada/calgary/danielle-smith-rachel-notley-ucp-ndp-alberta-janet-brown-1.6638402

#108 Shawn on 11.03.22 at 11:45 am

Recession watch- Construction declined rapidly in September

Note the precents here would be month over month September versus August on a seasonally adjusted basis. StatsCan does not make that clear.

“The total value of building permits in Canada fell 17.5% in September to $10.2 billion, the largest recorded monthly decline. This was the first time all survey components posted monthly decreases since September 2019. Both the residential (-15.6% to $7.0 billion) and the non-residential (-21.5% to $3.2 billion) sector posted declines.”

“Construction intentions in the single-family homes component declined 7.7%. Seven provinces posted decreases, with notable declines in Ontario (-7.0%), Manitoba (-35.1%), and Alberta (-15.9%).” (et tu Alberta?)

https://www150.statcan.gc.ca/n1/daily-quotidien/221103/dq221103b-eng.htm?CMP=mstatcan

#109 Dharma Bum on 11.03.22 at 11:54 am

People have nobody to blame except themselves.

We are the architects of our own suffering.

The insatiable desire for stuff is bad enough.

Feeding the addiction through exorbitant debt guarantees our perpetual anxiety and misery.

Nobody listens. Nobody learns.

Learn The Way.

#110 Sail Away on 11.03.22 at 12:53 pm

#109 Dharma Bum on 11.03.22 at 11:54 am

Nobody listens. Nobody learns.

——–

“Nobody loves me, nobody cares,
Nobody picks me peaches and pears.
Nobody offers me candy and Cokes,
Nobody listens and laughs at my jokes…

…So, if you ask me who’s my best friend, in a whiz,
I’ll stand up and tell you NOBODY is!
But yesterday night I got quite a scare
I woke up and Nobody just WASN’T there!”

-Shel Silverstein

#111 Faron on 11.03.22 at 1:06 pm

#109 Dharma Bum on 11.03.22 at 11:54 am

Learn The Way.

Just FYI, the Tao (roughly meaning The Way) Te Ching is Chinese. China’s government has been repressing practitioners of Buddhism (where dharma originates) for many decades. One wonders if your apparent pop-culture belief in a blend of eastern religions and cultural practice reflects a bias toward seeing SE Asian populations as homogeneous?

#112 IHCTD9 on 11.03.22 at 1:09 pm

#105 Wrk.dover on 11.03.22 at 10:57 am
#97 IHCTD9 on 11.03.22 at 8:13 am
I wasn’t going to pay 80.00 for a sheet of plywood. No rush, so that job will sit till someone actually wants to sell me the material rather than keep it on the shelf.
______________________________

Who will afford to put it on the shelf for under $70.00?

You might save $10 waiting, but why bother?

I have lived in a softwood producing/reliant area for four decades. I know players in all stages of supply and production. There is not much money to be made, after stellar expenses.

Late 90’s boomed at $350, overhead is mega uppa since that era, and still rising. Permanently.

Small contractors must clear-cut acres/day for overhead, then a few more logs for lunch money. Stuff breaks. Days get lost. There is no future in it.

Nation wide forests are sick, free wood is over.
_____

I guess we’ll see. If everyone starts thinking like me, wood will get less expensive when it looks like Home-Depot is going to get $0.00 for it if the price is 80.00.

If you turn out to be correct – I’ll look at other materials. The last couple months have seen huge declines in steel prices – maybe aluminum could be an option.

There are always options…

#113 Sail Away on 11.03.22 at 1:10 pm

The Pelosi attacker, David Depape, was an illegal immigrant.

If he’d been stopped at the border, the attack wouldn’t have happened. Lawless foreigners.

https://www.foxnews.com/politics/pelosi-attack-suspect-david-depape-illegal-immigrant-may-face-deportation-criminal-trial

#114 KLNR on 11.03.22 at 1:29 pm

@#106 OK, Doomer on 11.03.22 at 11:18 am
Going off topic here. Not sure who’s following the uproar from multimillionaire leftist celebrities like Stephen King who think that we should pay them for their views, rather than have Elon Musk charge the celebrities $8 per month for the coveted Twitter “Blue Check Mark”.

This is the most hilarious thing I’ve seen in ages:

Elon Musk says he stole the idea for charging people for insults and arguments from Monty Python. That alone makes him the Most Interesting Man in the World

https://twitter.com/elonmusk/status/1587629049635110912

That’s the most hilarious thing you’ve seen in ages?
You need to get out more.

#115 Airfix on 11.03.22 at 1:35 pm

#111 Faron on 11.03.22 at 1:06 pm

Faron, you need to take a break…again.

You are just a critic now.

#116 DON on 11.03.22 at 1:55 pm

#105 Wrk.dover on 11.03.22 at 10:57 am
#97 IHCTD9 on 11.03.22 at 8:13 am
I wasn’t going to pay 80.00 for a sheet of plywood. No rush, so that job will sit till someone actually wants to sell me the material rather than keep it on the shelf.
______________________________

Who will afford to put it on the shelf for under $70.00?

You might save $10 waiting, but why bother?

I have lived in a softwood producing/reliant area for four decades. I know players in all stages of supply and production. There is not much money to be made, after stellar expenses.

Late 90’s boomed at $350, overhead is mega uppa since that era, and still rising. Permanently.

Small contractors must clear-cut acres/day for overhead, then a few more logs for lunch money. Stuff breaks. Days get lost. There is no future in it.

Nation wide forests are sick, free wood is over.

*********
Partially depends on fuel prices. If we listen to the experts inflation will go away (aka won’t get baked in). For the longest time a 1000 board feet was $275 USD. Then the get away from people pendemic and the housing boon goosed the price of wood. Cedar prices sky rocketed due to stay at home projects (above usual that is). When those smaller millers need to eat they will drop prices. – been in the business…still in the family (BIL). I still dabble in it as it will be my retirement job…love the smell of cedar or douglas fir in the morning.

Not saying they will drop back to 2018. Right now it is cheaper to go to a smaller milling company and buy 1×6, 1×8 Grand or Hemlock or even Douglas Fir then it is to buy plywood. Going to Rona, Lowes, Home Depot, Windsor plywood etc and they will stick it to you. Lots of new builds are replacing press board and plywood with 1x6s etc.

All fall down from cutting fir beams and it often goes unloved till someone wants a hard wood floor or a cheap fence that will need to be replaced in 5 years (rather then using expensive and longer lasting cedar).

New machinery is expensive at the moment but there is lots of used machinery on the market especially in the Western States and of course BC which does the trick.

Wages haven’t really gone up at the big operations.

We shall see.

#117 OK, Doomer on 11.03.22 at 3:02 pm

KLNR:

If you don’t see the humor in humorles mega-riche giving Elon Musk the opportunity to turn a classic 70’s Monty Python skit into reality, well you must have missed the 70s. In its time the skit was so outrageously stupid that no one could have imagined anyone paying to be insulted and argued with.

And yet here we are. Musk understands the humorless mega-riche well enough to know that they’ll grumble but cough up the $8 because their egos won’t allow them to ride the pine.

Maybe Garth can take a page from Musk. He can charge those I the steerage section $1 per insult. Millions to be made!!

#118 Westcdn on 11.03.22 at 3:13 pm

IMHO, deeming a principal residence as a taxable asset is a terrible idea. What a can of worms! I would consider a lifetime capital gains exemption (notice the word gains) of somewhere between 500K$ and 1m$ if the taxable gain stays at 50%.

I can hardly wait for Singh to pay a wealth tax

#119 crowdedelevatorfartz on 11.03.22 at 3:24 pm

@#113 Sail Away
The Pelosi attacker, David Depape, was an illegal immigrant.

If he’d been stopped at the border, the attack wouldn’t have happened. Lawless foreigners.”

+++
He immigrated on a visa 20 years ago and then just stayed illegally.
Damn Canucks blend in so well until the say stuff like “out and about” or “Toboggan” or “pop”.

Should build a Wall on the Northern Border after the southern wall is done.

#120 VladTor on 11.03.22 at 6:14 pm

Garth
….That a nation of house-lusty little beavers who leveraged their rubbery tails off to buy an asset at its dearest moment will be rodent-pissy if real estate crashes.

___________

This is a very small part of the nation !

But other part of the nation (significantly large) that cannot afford to buy a house has been furious for 5 years. So what – no one cares about them. And the fury is growing and the politicians should think about the interests of this part of the nation, and not protect the interests of developers.

#121 Double Tax on 11.03.22 at 7:33 pm

Not sure why you keep beating the “eliminate the principle residence tax exemption”. Makes no sense unless you make interest tax deductible like the US. What we really need to do is tax capital gains on investment properties at 100% inclusion. Leave the 50% inclusion rate for a second property per family like a cottage. Other than that, the inclusion rate should be 100% for all landlords big and small. This will reduce house prices because it will discourage speculative investments in housing which will reduce demand, not taxing a home that someone lives in for 40 years. Of course there are 100,000 real estate agents, their associations and their lobbyists that would fight this.

#122 4 out of 3 people find math hard on 11.03.22 at 11:41 pm

Right now, the concern is inflation. I foresee a near future when deflation will be the concern. Within a decade, I foresee an economy where the marginal cost of producing energy is near zero. Solar, wind and battery will be the dominant energy generation , new homes will have solar panel shingles and be equipped with a battery, being able to sell their excess energy to the grid on peak periods.Transportation costs per person or ton mile could be cheaper than existing due to autonomous electric taxis and semi trucks. Labour for jobs could be eventually replaced with AI autonomous “seeing” humanoid bots. So with the cost of energy, transport and labour approaching zero, deflation could be the future meme, not inflation.

#123 Bob Dog on 11.04.22 at 2:44 am

10 years ago, Canadians were the biggest collection of losers / hosers the human race has ever produced. Since then the standard of living has halved.

Well done.