Triggered 2

What a conundrum. Everybody wants ‘affordable’ housing. But real estate now accounts for something close to a quarter of the economy. Seven in ten of us little beavs own property. There’s well over a trillion in mortgages outstanding. Canadians have shovelled an astonishing amount of net worth into one asset. Moreover, we’ve then borrowed almost $170 billion in the form of equity-take-out loans. Yeah, to buy more real estate.

In short, everybody says they want cheaper houses. But can the country afford a house crash?

As we detailed here yesterday a third of homeowners with mortgages rolled the dice and went variable in the last year or two. Half now face the dreaded trigger rate. In a few months it will be two-thirds. Payments are swelling. Families are panicking. If houses truly become ‘affordable’, tens of thousands of people will be underwater, owing more debt than they own in equity. Shades of the USA in 2006. And you remember where that led, right?

The Bank of Canada – set to raise rates again in a few days – is painfully aware. This will bring consequences.

Here’s what the No.2 at the CB (Carolyn Rogers) said this week:

First, this: “Mortgage costs for some Canadians have already increased, and they will likely increase for others in time, making home ownership more expensive.”

Then this: “We need lower house prices to restore balance to Canada’s housing market and make home ownership more affordable for more Canadians.”

And then this: “But lower house prices may add stress for those people who purchased recently. They will have reduced equity, and this may limit their options to refinance.”

Finally, here’s the bottom line, and what she really wanted to say: “Canada’s economy has long-standing vulnerabilities in the form of escalating house prices and elevated levels of household debt that were further exacerbated during the pandemic. And the risk of a trigger that may affect financial stability has increased, as a result of high inflation and the response of increasing interest rates.”

The translation is simple: rates must rise more. House prices must fall. Some of you will be crushed as a result. That’s a vulnerability we cannot abide. So stay tuned.

After this decisive message from the nation’s central bank, it seems clear to this pathetic blog what is about to transpire. A lifeline will be thrown to the debt-pickled, former-FOMO’d, financially-illiterate, house-rich and cashflow-stressed people by politicians and agencies who no longer have a clue how to make homes cheaper without puréeing society.

“Banks are getting calls from people who can’t pay their mortgages,” says venerable money lender Ron Butler. “What now? An increasing barrage of calls about massively higher variable rate payments or renewals that raise rates 50% to 100% Payments jumping There are no lower rate solutions What happens?”

Well, remember during the pandemic when we had that massive wave of mortgage deferrals? Turns out millions took advantage of lender largesse and federal government approval to set aside their monthlies while household finances were under stress.

Word from Ottawa sources is that a program of mortgage forbearance is under consideration for those silly folks who opted for a 1.5% VRM when they could have locked into a five-year, no-surprises mortgage at 2.3%. Of course, forbearance does not mean you stop paying and miss those payments forever. They’re set aside to be made up later – and in this case most typically by increasing the size of the principal upon renewal. You keep the house but you lose equity.

Another solution: longer amortizations. As mentioned here days ago, 30-year ams have doubled in the last three months. With mortgage rates swelling in a way many thought would never happen, thirty-year loans will become ever more common.

But wait. Would the feds bring back a 40-year mortgage? The advantage is a seriously lower monthly payment than with the traditional 25-year amortization. The big disadvantage is far more paid in interest, far longer to retire the debt, and an increased amount owing upon a renewal. In order for this to happen, CMHC would have to extend mortgage insurance to this product. And we’re betting they do.

Finally, there’s the ‘solution’ a couple of major banks have already rolled out. When a VRM borrower gets triggered, unpaid monthly interest is added to the principal amount of debt, leaving the payment unchanged. Yes, this is negative amortization. Yes, it means you can owe more than you borrowed even after making regular payments. And, yes, lots of people will be only too happy to sign up.

These are some of the reasons Canada will not see a wave of foreclosures, powers of sale or front lawns covered with furniture as front door locks are changed. This will mitigate the flood of new listings and perhaps stem the inevitable cascade lower in overall prices. Or not. We have no idea what actually happens next.

And neither do the authorities. Gulp.

About the picture: “I thoroughly enjoy your blog every day,” writes Ian, “and appreciate the free advice that many Canadians need. I have been talking about how crypto and the housing market is unsustainable for years now, and your blog has been my go to confirmation bias as well as great advice on many other things, and have convinced some of my friends to read it as well. I currently am also a canine enthusiast as me and my girlfriend have a shepherd husky that I have attached pictures of. He’s a sassy loveable typical of the breed dog named Apollo:) and loves to sleep on tables and talk about his day when I get home.”

173 comments ↓

#1 Dogman01 on 11.24.22 at 2:04 pm

Chrystia (the Impaler) Freeland:

“Just spent a lot of time in the U.S. last week, and we were being called a ‘joke’ by people. I had one investor say ‘I won’t invest another red cent in your banana republic in Canada’. That adds to an already tough investment perspective on Canada,” the unnamed CEO is noted as saying.”

https://nationalpost.com/news/politics/chrystia-freeland-worried-u-s-would-use-freedom-convoy-for-protectionist-measures?__vfz=medium%3Dstandalone_content_recirculation_with_ads

Ironic— as I recently choose USA Oil and Gas ETF over Canadian as I am confident our Banana Republic Ideologues are not yet done destroying the Canadian O&G sector and continuing the de-facto embargo of Alberta.

#2 Shaun on 11.24.22 at 2:08 pm

Welp, two years ago I was looking at cottages (though none of my reasonable offers were being considered), instead I moved for work to a cheaper housing market (ON->SK) and eliminated my mortgage.

What a difference my standard of living would have been had I not been blessed by chance. 600k at VRM vs no mortgage.

#3 Polozified on 11.24.22 at 2:11 pm

All these schemes are great for one thing: making sure the house-poor are shackled to, and trapped inside, their terrible investment for years to come.

Maybe shock therapy is better?

#4 Quintilian on 11.24.22 at 2:11 pm

“This will mitigate the flood of new listings and perhaps stem the inevitable cascade lower in overall prices. Or not. We have no idea what actually happens next.”

That’s just fine. As long as these over indebted fools are quarantined and priced in perpetuity, and not move up or leverage to buy more RE.

The new buyers will set the price downward.

#5 Dr V on 11.24.22 at 2:20 pm

Great post Garth!

And on this (American) Thanksgiving, thank you for your continued work on this blog.

#6 Doug in London on 11.24.22 at 2:21 pm

Well, we’ll, we’ll it seems we’ve been complaining about high house prices since Gronk the caveman wanted to sell his cave for an outrageous price. Now, at long, long, long last it looks like prices might come down enough that they can be seen with the Hubble Space Telescope and now there’s complaining that those fools who bid prices so high in the first place might get burned. BRING IT ON, those more affordable prices will MAKE CANADA GREAT AGAIN. Yahoo, there’s still hope, light at the end of the tunnel!

#7 A guy at work on 11.24.22 at 2:24 pm

40 year amorts give everyone what they want… Not prudently, but who cares about that these days?

What needs to happen for 40 year amorts to become available to us plebs?

#8 Wiz Dog on 11.24.22 at 2:25 pm

What if we could buy farmland in the Greenbelt and lobby politicians to pave it over for donations? Is that legit or corruption?

#9 West New West on 11.24.22 at 2:27 pm

Oh boy that table looks shiny make sure you clip his claws often

#10 Get Back Loretta on 11.24.22 at 2:30 pm

We don’t owe a lot on our mortgage, but all I can say is that I’m so glad I took your advice to heart a couple of years ago and locked in a 5 year rate at 1.59%. Thank-you Garth.

#11 J on 11.24.22 at 2:32 pm

Sounds like they are going to kick the can until something breaks. They are probably just hoping it’s a global crash so they can blame external circumstances. It very well might be considering similar situations with real estate are playing out across the world.

This is the result of long-term systemic irresponsible governance by the BoC and the Liberal government of Canada supported by a financially illiterate and passive populace who care more about pronouns than economic stability.

If all their friends jump off a bridge with real estate, they will too.

God help us if another crisis occurs. What tools would be left to fight it?

Any Canadian who can should move to the USA asap. Earn more for the same job, buy a house for a reasonable price, pay less taxes in most states, much better healthcare if you are middle-class or better, and much better weather. Canada is going down the gutter.

Canada only works as long as there is a greater fool trying to immigrate to it.

#12 Sunshine on 11.24.22 at 2:37 pm

Turns out it won’t be that bad as it was in the US

#13 Steve on 11.24.22 at 2:39 pm

So, bail out homeowners, don’t make houses more affordable, hand out stimmies to help beat inflation, financial repression to inflate the debt away……

Seems like they know what they’re doing? We trust them too much. Wake up. Pay attention. There is an escape hatch.

Get off 0.

#14 Habsfan60 on 11.24.22 at 2:41 pm

Anecdotal GTA real estate observations.

A look at Craigslist this am shows 4 condos up for assignment sales, clearly what this pathetic blog predicted would happen as condos under construction coem to the finish line and investors are forced to pay up.

But then, a 5.5 Million mansion for sale has a 1 picture post on craigslist. That has a small smell of desperation.

#15 Sail Away on 11.24.22 at 2:41 pm

Thanks Garth, good situation summary.

One thing we’ll see with the expected governmental jiggery-pokery, is that homeowners will basically work their butts off and pay the banks big. Forever.

For evil capitalists, this means we should invest in the banks, obviously. Guaranteed long, long, long term revenue. Mortgage debt retirement never. Shackle the slave to the waterwheel for life.

#16 Captain Uppa on 11.24.22 at 2:49 pm

So, all these measures come in, let’s say, and home prices are relatively sticky. Housing remains unaffordable.

But “… we need to build more homes!” will be the cry from governments … and developers sit happy as pie.

#17 Bubbles on 11.24.22 at 2:50 pm

We a re waaaaaay in uncharted territory.

Canada’s central bank rate is up 1500% since March 1st.
The traditional 60/40 stock/bond portfolio is down 20%, worst performance since 1931.
Global Debt now tops $305 trillion – or 350% of global GDP.
The UK £ hit a 37 year low against the US dollar.
Unfunded US State pension liabilities total $8.28 trillion.
Growing geopolitical tensions include threats of nuclear weapons in the Ukrainian conflict and the Chinese takeover of Taiwan. (And the last thing better not happen or Xi makes the world very ugly, more than it is now)

#18 Star rider on 11.24.22 at 2:53 pm

Lots of pain on the way for Canada, UK, Australia, NZ (worse than Canada bubble wise). The USA might be OK as they have 30 year terms.

#19 cuke and tomato picker on 11.24.22 at 2:53 pm

What Canadian bank is giving the best rate for a five
year GIC?

#20 Earlybird on 11.24.22 at 2:54 pm

Glad someone at the helm gets it…Carolyn Rogers is on point!

Who the heck do renters call when they cant make the payment…..the moving company!

So why the eff do homeowners get a free pass??
Just incentivizes more of the same….

#21 Cash is King on 11.24.22 at 2:55 pm

So sad, too bad. Savers have subsidized home buyers for 20 years having to put up with pitiful interest while they have been letting their money in the bank be used by homebuyers to pickle themselves in debt. Now the tables are turned. Pay up or move out. No sympathy for poor people masquerading as rich on other people’s money.
Run on moving boxes as the broke stooges all run back to their parent’s basements. Better luck next time suckers.

#22 Graeme on 11.24.22 at 2:58 pm

Disaster averted, can kicked again! See you in 20 years to discuss the retirement crisis nobody saw coming. #facepalm

#23 Soviet Capitalist on 11.24.22 at 3:00 pm

DELETED (Anti-immigrant)

#24 Bdog on 11.24.22 at 3:06 pm

I just pulled 500K of my baby boomer mothers estate from the market and payed down my ~900k mortgage. Moms sick and would have wanted her money to go towards a roof over grandkids head. Without this boomer winfall, I’d be doomed to paying 4K a month in just interest at 5.25%

Did she agree, or did you steal it? – Garth

#25 Jason on 11.24.22 at 3:13 pm

It’s not only folks with variable rate mortgages that are getting shocked. People who chose shorter term fixed mortgages over the last couple of years to qualify at lower rates (shorter term = lower rates) are also feeling the pain upon renewal. When the only world you’ve lived in is a steady decline in mortgage rates, and a steady increase in home prices, this is more than a bit surprising for most.

#26 Prince Polo on 11.24.22 at 3:16 pm

Ima gonna have to go shopping for a clothesline this weekend cuz it looks like loser renters are hung out to dry, yet again. When will the gov’t get serious in escalating housing to 100% of GDP? Only then we will have succeeded as a country!

#27 IHCTD9 on 11.24.22 at 3:17 pm

When a VRM borrower gets triggered, unpaid monthly interest is added to the principal amount of debt, leaving the payment unchanged. Yes, this is negative amortization. Yes, it means you can owe more than you borrowed even after making regular payments. And, yes, lots of people will be only too happy to sign up.
————

LOL! This is the way to go. I’ve thought for years already that my fellow Canadians have become uber-dumb somehow. I’d love to confirm my suspicions by watching hoards of them pile into a deal that has them paying interest on interest.

I won’t need Netflix during retirement, I’ll just read this blog, and the financial news. Comedy and horror, all at a price my Dutch genes can approve of.

#28 Roger Mellie on 11.24.22 at 3:21 pm

No lifelines. Not on this taxpayer’s dime.
There is no painless way out of this dumpster fire, and anything done to “save” people’s homes will just kick the problem further down the road to an even bigger reckoning.
All at the expense of those who played no part in this mindless Ponzi scheme.

#29 alexinvestor on 11.24.22 at 3:22 pm

The original sin was the mortgage insurance funds which kept the rates way too low and house prices way too high. The banks know that the mortgage insurance will never pay out since the private insurers will default anyways. So now they are all going to put a ton of pressure on the BOC and Ottawa to change the rules … and of course they will change the rules and bail out the homeowners.

How could they not after bailing out GM, etc … optics and all in politics.

#30 Mean Gene on 11.24.22 at 3:28 pm

As the old saying goes, don’t put all of your eggs in one basket… oops too late.

#31 jess on 11.24.22 at 3:40 pm

hear that election deniers

BREAKING: Brazil court rejects Bolsonaro’s attempt to invalidate votes, issues $4.3 million fine for ‘bad faith litigation’ – Reuters

#32 Dave on 11.24.22 at 3:44 pm

Vancouver is a construction zone. The building is relentless and of course the developers got the ear of politicians. Why else are we brining in more people to Canada than any developed nation? I hope rates continue to rise. Something has to stop this incessant papering over the city with ugly towers being sold to offshore interests.

#33 Nonplused on 11.24.22 at 3:44 pm

So, if they implement some sort of forbearance, most likely negative amortizations, how long can that go on before all the equity is gone? And what then?

I mean the end point is mathematically clear; either interest rates drop significantly, and soon, or negative amortization will eat up all the equity, eventually leading if taken to infinity to houses that have mortgages that are more than the value of the house and increasingly so with each month.

At some point you have to foreclose. Pretending a loan is good just because the borrower doesn’t have to pay it back is delusional. And now we’re talking about the borrower not even having to pay all the interest. Why have him pay anything at all?

On the other hand, the government has been doing it for years. We’re long past the point where the government has been borrowing to make interest payments on government debt. It’s the same thing really. What’s good for the goose is good for the gander.

(Any time you borrow more money while making interest payments you are borrowing to make interest payments. This is true of households, corporations, and governments. Saying silly stuff like “taxes fund interest payments, borrowing is for operational and capital expenses” is silly. The proper way to do it is to put all expenses including interest payments in one column and all sources of cash in the other. If you do it that way, it is clear that if the interest payment wasn’t there, the amount needed to be borrowed would be less by exactly the amount of the interest payment. Therefore the government, corporation, or household is insolvent.)

But I guess if we are talking about student loan forgiveness, this is the next illogical step. After that, credit cards. Why not? Why should one type of debt be forgiven or put in “forbearance” but not others? Why should a liberal arts major get loan forgiveness but not a plumber?

Where will this all end? In the complete collapse of the credit system. Without the ability to enforce repayment of loans, no one will lend. And that will lead to a deflation like we’ve never seen before. Or alternatively, the government could just print the money, leading to the collapse of the currency.

Folks, I’ve often said that money isn’t real. And it isn’t. It’s like math or laws. It’s a concept. An accounting system, really. A convention like driving on the right side of the road. But that doesn’t mean it isn’t important. If you throw out all the rules that define the currency, the currency gets thrown out too. The currency is the rules. You mess with them at your own peril.

I’d say it isn’t going to end in deflation. Thus, buy all the things. Maybe even houses. After all, it looks like you might not have to pay the mortgage back. You’d be a fool to miss out on this one.

#34 jess on 11.24.22 at 3:46 pm

..”The G7, including the United States, as well as the whole of the European Union and Australia, are set to implement the price cap on sea-borne exports of Russian oil on Dec. 5.

Some 70%-85% of Russia’s crude exports are carried by tankers rather than pipelines. The idea of the price cap is to prohibit shipping, insurance and re-insurance companies from handling cargos of Russian crude around the globe, unless it is sold for no more than the price set by the G7 and its allies.”(Reuters)

#35 OK, Doomer on 11.24.22 at 3:47 pm

When the government rewards stupid and irresponsible behavior you’ll get:

A: Even more stupid and irresponsible behavior.
B: Smart and responsible behavior

Governments know they’ll get more A. And they’re counting on it.

People with options don’t vote for a government that’s stupider and more irresposible than them.

#36 chalkie on 11.24.22 at 3:48 pm

My friend sent me this newspaper article today from his home town of Brampton ON.
It is an example where the housing market is headed, sure looks like there has been lots of pain dished out in this home ownership town.
Average Brampton detached home price hits lowest mark since December 2020, after falling for the ninth straight month.

WOW, we have reversed home prices two full years in Brampton, I suspect the rest of the country is within striking distance of the same.

The decision to buy or rent a home is a big one—and the first step in making any big financial decision, including home ownership, is evaluating your own situation on its own merits—that is, based on the facts, rather than opinions and emotions.

Not every home purchase is a success story, if you buy with a short-term time horizon or FOMO, you will significantly increase your chances of sustaining a loss, you need to factor in all the other additional costs that goes with closing and ownership, there are plenty of them.

Real estate carrying cost involves much more than monthly mortgage payments.

This way of thinking often grossly underestimates the true cost of home ownership, however; for one, it does not factor in the opportunity of growth on the initial down payment and upfront costs if that money were instead invested or left invested. Equity-Based-Market investments like stocks or equity funds have historically outperformed real estate.

If you must use a Real Estate agent to sell your home, negotiate well and refuse to pay 5%, there is a long list of agents that will work for much, much less, do not be afraid to seek them out, the real estate industry is starving for the most part right now and it is getting worse.

If the agent says no to a reduced rate, it is hit the road Jack, “next”.

If you do not know or understand yourself on how to invest without a financial advisor. It is best to seek the services of a long term well experienced knowledgeable advisor, one that has a great track record. Stay away from the run of the mill inexperienced advisors. Some of the advisors that I have run into at investment conferences, it is laughable at times to listen to some of their questions that are asked on the floor. Your thoughts are like “oh wow” are you for real, “yes they were;” and perhaps they are the ones looking after your own investment accounts.

Do not be afraid to ask the tough questions, get prepared with a list of questions well before you show up to invest.

Keep in mind, less than 5% of people understand investing, it may not be the best idea to seek advice from neighbors or friends, if you do that, understand their background.

Do not leave your hard-earned money on the desk at your first visit, research, question, research again and question everything. Understand who and what you are dealing with. Question the MER’s that is where the savings are at.

If you become unhappy with your advisor and cashed in within six months or transferred your funds in kind to another institution, is there a charge and what would that charge be?

Never go to any financial advisor blind, learn to open your eyes, only you can do that. Keep in mind, experience, knowledge, and longevity means everything.

Another sector of our economy that is about to take a major hit is the Car Dealerships.

This slowdown into recession is going to hit harder than the average person thinks, its going to be slow/hard/painful, best to get prepared and adjust and make family concessions where necessary and affordable.

There have been a lot of people being hosed with ridiculous prices that small vehicles are being sold for, often new car buyers being charged thousands more if they want delivery once the vehicle has arrived.

The shortage of vehicles is about to become a well-stocked and then overstocked item’s, the dealership crying will begin and no pity should be given.
Take another entire look at your older vehicle and give it another life, a few parts, muscle grease and little shine will do wonders. The recession is looming and after home sales suffer, the next to go is the following largest item on the list, it’s a vehicle.

Pay attention to your spending, do not let the Christmas season override your perception to keep track of what you are buying/doing.

Charge cards are most often a surprise when they come to your attention on the billing dates, “it is oh”, I forgot about that. If you cannot pay for it in cash, chances are, you did not need or should have not bought it in the first place.

Set Christmas budgets and do not go over, discipline, strictness, training, or a firm hand, whatever you need to call it. Once the season is over with, you will be proud of your accomplishments.

Pay with cash and look at the $20 dollar bills as you peel them out, it sets home more than a piece of plastic. It is much easier to pay with plastic, society has learned to rely on credit cards much too easily and our habits should change.

Question the purchase against returns, do not get surprised with the return policy this year, things are changing quickly. Our retail sector is headed toward much like the dollar store stories that were previously discussed in the comments.

Go to the bank as many times as needed, understand what you are doing and you will be surprised of what you will be able to save in dollars.

Quote of the day: The stock market is filled with individuals who know the price of everything, but the value of nothing

#37 Doug t on 11.24.22 at 3:58 pm

Quag meet Mire – gosh golly gee grown a** people asking the government to save them yet again because of their own actions meh – this country needs a good dose of reality and a top down shakedown

#38 Dave on 11.24.22 at 3:58 pm

DELETED (Anti-immigrant. Again.)

#39 Doug t on 11.24.22 at 3:59 pm

#19 cuke and tomatoes

It called Google

#40 Re-Cowtown on 11.24.22 at 4:04 pm

#1 Dogman01 on 11.24.22 at 2:04 pm
Chrystia (the Impaler) Freeland:

“Just spent a lot of time in the U.S. last week, and we were being called a ‘joke’ by people. I had one investor say ‘I won’t invest another red cent in your banana republic in Canada’. That adds to an already tough investment perspective on Canada,” the unnamed CEO is noted as saying.”

https://nationalpost.com/news/politics/chrystia-freeland-worried-u-s-would-use-freedom-convoy-for-protectionist-measures?__vfz=medium%3Dstandalone_content_recirculation_with_ads

Ironic— as I recently choose USA Oil and Gas ETF over Canadian as I am confident our Banana Republic Ideologues are not yet done destroying the Canadian O&G sector and continuing the de-facto embargo of Alberta.

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

The rest of Canada gets the absolute best services that Alberta can pay for. The ROC is just so bad at math that they think the money actually comes from the Feds.

Alberta provides the safety blanket for the Feds to keep screwing up and look good anyway. Trust fund babies understand that totally and use it without a care or thought. That’s how they were brought up.

Wind and solar can’t even replace themselves over their lifetimes. They only exist because of massive energy subsidies from fossil fuels.

Ditto with hydroelectric. I didn’t see one solar powered earth mover when they built James Bay or Site C. No diesel, no hydroelectric. It’s basic.

People who think that the future is in renewables only have to look at Germany. They’re on the verge of a cold, dark and disastrous winter. Totally self-inflicted and totally avoidable.

I’m not sure why our government thinks they can make renewables work when Germany’s engineers got it so spectacularly wrong.

While politicans believe in something called Political Science, there’s no such thing as Political Physics or Political Chemistry. Not yet anyway.

#41 Ronaldo on 11.24.22 at 4:05 pm

All caught up in a mortgage trap and too underwater to sell. Their world will be getting much smaller. Zero liquidity, no mobility to find other work, in debt up to their neck. Going to be lots of work for the divorce lawyers.

#42 IHCTD9 on 11.24.22 at 4:05 pm

Back in 2015, Harper had whittled our Federal deficit down to less than 1 billion. Now, after 7 years of Trudeau, you’d be forgiven if you thought a lemonade stand couldn’t be run for that.

The Federal debt has doubled. Home prices have doubled. More than a Trillion in outstanding mortgage debt. A Trillion plus more in Provincial and local government debt. Over a Trillion in consumer debt. Now we have the banks proposing solutions where paying down the mortgage increases your principal amount – and the expectation is that Canadians would jump at the “opportunity”. We are a nation of drooling numpty financial dunces.

It’s time to just admit it. The solutions to our problems now are officially bizarre. The can kicking is today is done at any cost, and we’re collectively too stupid anymore to see where we’re headed. One PM presided over it all.

Save a pile, eliminate debt, get out of the Metros, toss your shades in the trash bin. Post-Trudeau Canada is not looking too bright. We won’t stand for the pain, so we won’t be reaping the gain.

I’ll be on the front porch, watching from a safe distance.

#43 Dolce Vita on 11.24.22 at 4:08 pm

✅ We have no idea what actually happens next.

✅ And neither do the authorities.

✅ ✅ Gulp.

#44 jess on 11.24.22 at 4:10 pm

Q: What is correspondent banking? How does it work in the real world, and what is it used for?

https://www.occrp.org/en/troikalaundromat/faq-what-is-correspondent-banking

#45 Bob on 11.24.22 at 4:11 pm

I don’t have the word to express my disgust at this idea. The debt piggies don’t deserve a lifeline. They deserve to drown. These are the people most directly responsible for our stupid house prices. I sincerely hope you’re wrong about this. Any sort of bailout for the over-indebted would be an outrage.

#46 4 out of 3 people find math hard on 11.24.22 at 4:14 pm

Remember the story about the GrassHopper and the Ant. It was a childrens fable with the message to work hard, prepare for the future. The moral was being a hard working Ant is better than being a shortsighted GrassHopper. Now the joke is on the Ant. The GrassHoppers will get bailed, and the best part !…. the Ant’s taxes will be raised to pay for it all.

#47 Ronaldo on 11.24.22 at 4:14 pm

#17 Bubbles

The traditional 60/40 stock/bond portfolio is down 20%, worst performance since 1931.
——————————————————————-
If your 60/40 is down 20% you need to fire your financial adviser. Shouldn’t be much more than 10% down.

The ‘traditional’ 60/40 is fourth-tenths government bonds. This blog has never recommended that weighting. – Garth

#48 Dolce Vita on 11.24.22 at 4:15 pm

Forgot …

❎ Or not.

¬

#49 Steve French on 11.24.22 at 4:15 pm

Since Aug 2021 my DIY liquid balanced and diversified ETF investment portfolio (including dividends and fees but pre-tax) is sitting at….

… minus – 2.4%

Since December 2016 it’s at:

… plus + 7.1%.

Not bad for a rookie.

SteveO.

#50 Foggy on 11.24.22 at 4:20 pm

So the options that over extended home owners will face with interest rates rising:

1. Interest only mortgages – once the trigger is hit, pay the increased mortgage to cover only the interest. How long can a homeowner do this? Years, decades?

2. Same payment – add additional interest to the mortgage debt. Assuming the home owner is already under water, how can this work? The bank allows the homeowner to increase the mortgage debt on a property that is already under water?

3. Sell the house – home owner is already under water. Would have to cough up serious $$$ when the house sells to cover the short fall. Probably does not have the $$$, declares bankruptcy. Ruins the families finances for years.

4. Wait for the Canadian government to ride in to the rescue with 30 or 40 year amortizations! Lowers the payments substantially. Who cares about ever paying off the debt. They have a house, which apparently is the sole goal of every Canadian.

Housing is really screwed up. As you say, the government sucks and blows!

They try to kill the housing Frankenstein and then revive it at the same time. I don’t see how housing will ever be affordable again.

#51 Dolce Vita on 11.24.22 at 4:36 pm

Revenge of the Rookies, YTD incl. dividends …

#49 Steve French = + 7.1%

Me = + 26.4% (after-tax)

BDWY = + 10% or more if I recall correctly

—————

BRK.A • NYSE = + 5.00% *

TSLA = — 54.09% (Em for effect) **

* The Oracles (whose wisdom, per this Blog comments section, is DIVINE)
** MIA @Twitter, tweets every 20 sec, 24/7 (ibid)

#52 Neo on 11.24.22 at 4:37 pm

Seems pretty simple to me. Trace the transactions back and force the seller to refund the money they should not have been paid in the first place.

Of course the corrupt puppet regime will do the opposite.

Honestly I have no respect for this country any more. When I look around me I no longer see fellow Canadians, I see adversaries. Competition that must be crushed and destroyed.

#53 30 minus 30 on 11.24.22 at 4:40 pm

Why is there an expectation that the ridiculous 30 percent increase in home prices over the pandemic should stick. And that those evaporating are a crash. Boulder dash.

That 30 should disappear immediately (it already has). Then prices should keep falling (steeply) to where people can afford them.

Inflation (maintenance, cost of operation) under the green new steal will surely chase seniors out of these big homes and into something more reasonable around 350sq ft per person. I have 80y olds on my street squatting on 3,500 sq ft homes. They sit in one chair all day for God sake. It’s simply not sustainable with all the people arriving in Canada.

#54 Sail Away on 11.24.22 at 4:42 pm

#49 Steve French on 11.24.22 at 4:15 pm

Since December 2016 it’s at:

… plus + 7.1%.

Not bad for a rookie.

SteveO.

———

Please say that’s CAGR, and not total return, S.

#55 Bubbles on 11.24.22 at 4:48 pm

#47 Ronaldo on 11.24.22 at 4:14 pm

Just a statistic….not mine….Congrats if your down only 10 points but given inflation your down more then you think.
I have investments that are inflation proof. Essential services renters and commercial has no rent controls.
A small % of my stuff is in the market…I don’t even look. Preferreds are down 20% plus…REITs down way more from the top.. I got a few of those..
Just depends on your bonds I guess.
I don’t use brokers. A low return cycle which I do believe we are in and minus Fees and inflation say at 7%…..Your down more than you think. I think TI fees are very reasonable though.
So 40/60 Garth?
Anywho most stuffs down period….Its OK…I just care about cashflow at this point.

#56 ogdoad on 11.24.22 at 4:53 pm

talk about ‘triggered’…my human nature is being triggered at an alarming rate recently…hugs are popping up for fun, I got baby blues at my volunteer gig, baby blues offering to give me a private yoga lessons…yearning, big browns at v-ball…early morning snuggles with dark greens….phew!!

The earth may be speeding away from the sun but life in this neck of the woods warm and toasty.

’till next time.

Og

#57 Dolce Vita on 11.24.22 at 4:57 pm

#54 Sail Away

good catch

Hey make it a year for the Rookies, come on, take one for the team – so to speak.

——————–

The end is indeed NYE for Russia …

https://twitter.com/AgatheDemarais/status/1595733969202561026

Per Rosstat, so, it’s probably worse.

#58 UCC on 11.24.22 at 5:04 pm

Housing shouldn’t be subsidized by tax dollars.

Lets right this ship by making leveling the playing field by lowering, better yet, removing the inclusion rate for all those folks who rent. Why should a home owner get a tax free gain, while a renter does not?

#59 the Jaguar on 11.24.22 at 5:06 pm

Nothing new under the sun about the implementation of short term solutions to offer ‘relief’ to those in need, (towns burn down, massive floods happen, pandemics, etc). Call them empathetic and supportive measures undertaken to offer peeps a temporary lifeline. Always with the idea that the ‘crisis’ is of short duration and with certainty that normal times will return. Not the case here unless lesser minds think interest rates will revert back to March 29th 2022 of 2.45 versus likely 6.45 on December 7th 2022. 30 year amortizations have also been widely available since Elon Musk was in short pants, so factor that in.

Thinking 40 year amortizations will become fashionable again? That would be ‘loss of face’ for OSFI the regulator. A return of Disco and polyester pantsuits has more traction than the return of 480 months.

Any qualification process involved in determining who deserves to get a reprieve from dead man walking status? Any stress test involved? Will it apply to the gobs of rental property mortgages undertaken by some who don’t like paper investments, only real estate? Hi Brampton, how’s it going these days?

Given the rather large mortgages peeps have taken on in recent years, it seems likely those mean ol’ banks might want some security, and then there is that ‘sticky wicket’ of section 418 of the Bank Act, never mind contemplating a third position charge behind another unknown secondary charge that pops up on a title search. ‘Back of the bus’ in a significantly declined and uncertain/falling marketplace isn’t very attractive, is it?

Let us not forget also that old chestnut called “Reputational Risk’ and Transparent Reporting to Shareholders. Does it really make sense to air one’s dirty laundry and questionable lending practices out on the clothesline? The clothesline sometimes referred to as ‘non performing loans’?

Who’s going to look worse?….the house horny peeps who borrowed too big for their britches, the bank that lent too much, too leniently, to so many , or the bank regulator who was supposed to be watching the pot on the stove to make sure it didn’t boil over? They might make a movie some day similar to ‘The Big Short’. Or maybe ‘Scrooge’.

Pretty sure Evan Siddall can scoop a role as the equivalent of the ghost of Christmas Past… Garth maybe the ghost of Christmas Present. Left up to me I would borrow an expression from Fishman and say “Cut the line”.

#60 Victor Llearna on 11.24.22 at 5:07 pm

Those sheep stupid enough to buy over priced real estate over the last few years don’t deserve a life line. Let them try to swim underwater, upstream!

#61 Lower the Boom....er not on 11.24.22 at 5:11 pm

Yogism 8: “An explanation is a reminder to remember not to forget what I meant, if you know what I mean”.

#62 Felix on 11.24.22 at 5:13 pm

Hmm. Strike three.

Three days now of photos of dogawful, languid, amorphous canine lumps, accomplishing absolutely nothing.

Time for some cats.

#63 Faron on 11.24.22 at 5:15 pm

#52 Neo on 11.24.22 at 4:37 pm

When I look around me I no longer see fellow Canadians, I see adversaries. Competition that must be crushed and destroyed

This nutjob sounds about a half-step away from committing a mass shooting. Wow.

#64 TraderX on 11.24.22 at 5:25 pm

My son just turned 25, him and two others sold a startup tech company for big bucks. He is now a university drop out making well over 6 figures who is paid by an international company and can work anywhere in the world he wants… just needs to keep Canadian residency.

You know what Dad’s talk to him was about? It isn’t buying a house, or investing his money… nope, it is about moving to whatever province in Canada will charge him the least amount of tax! His reply, well Dad me and some of my friends are figuring out what it looks like to leave Canada!

His friends are all smart and well paid too. So we raise kids, we pay for their education, but somehow our government doesn’t get the message that once adults they MUST BE COMPETITIVE WITH THE REST OF THE WORLD when it comes to paying tax on high income earnings.

This is a new world. These kids are digital citizens of it. If you want them to stay in Canada and build lives (and pay taxes and contribute) we must have a competitive tax code!

Imagine the boom our country would have if everyone paid a flat tax rate of 15% regardless of how much money you made. Then if the government needs more money, they can focus on growing the economy.

sigh… I’m just a dreamer, hoping for future grandkids I can drive over to visit.

#65 BNorth on 11.24.22 at 5:25 pm

Sure is getting tough to stay working and fiscally responsible as the government keeps tossing out safety nets for the financially illiterate. Feels like it’s time to renew the mortgage on a 40 year term and sit on pogey beach. Gonna take a turn as a net tax consumer instead of contributor.

#66 KrisTea on 11.24.22 at 5:25 pm

Being a non home owner…these prospects make me sad. Home prices are still insane. But voter home’owners’ are in the majority. Curious to see the outcome. Even more curious as homeowners need to re-mortgage and see little advances from debt release. Sigh. No one wins, is the way I see it. Homeowners still have big advantages when it come to government support, though. This will continue as governments always pander for votes (power) :(

#67 GD in CGY on 11.24.22 at 5:26 pm

Any possibility they would allow 40 year amorts for a restricted group of owners (purchased before Aug 1/2022, primary residence only, etc). This would let them pay off the debt they took, punish spec-ers with multiple properties and still keep pricing down as new buyers couldn’t leverage the 40 year payments.

#68 cramar on 11.24.22 at 5:31 pm

#1 Dogman01 on 11.24.22 at 2:04 pm

Chrystia (the Impaler) Freeland:

“Just spent a lot of time in the U.S. last week, and we were being called a ‘joke’ by people. I had one investor say ‘I won’t invest another red cent in your banana republic in Canada’. That adds to an already tough investment perspective on Canada,” the unnamed CEO is noted as saying.”

———-

“WE are a banana republic? Talk about the burnt pot calling the kettle black! Did you learn that technique from your former President? In my view, the U.S.—and Canada is a Parliamentary Democracy, while YOU are a Republic—is in danger of losing global respect because of your self-serving politicians and an increasingly narcissistic divided population. In your politics and foreign relations, you only know a zero-sum game. You only believe you can win if the other party loses. You lost the moral high ground and are a fading superpower. Your people believe in a conspiracy under every rock, and cannot work together on anything. Fix your OWN problems before pointing the finger at other nations. YOU are fast becoming history’s ultimate “Banana Republic!”

#69 PeterfromCalgary on 11.24.22 at 5:37 pm

Inflation is a very tricky problem to solve because by helping people deal with rising prices and rising rates government’s fuel inflation. So the more government helps people with this duel problem of rising prices and rising interest rates the worse inflation will be and the higher interest rates will have to go to fight inflation.

#70 Brandon on 11.24.22 at 5:39 pm

#45 Bob on 11.24.22 at 4:11 pm

I don’t have the word to express my disgust at this idea. The debt piggies don’t deserve a lifeline. They deserve to drown. These are the people most directly responsible for our stupid house prices. I sincerely hope you’re wrong about this. Any sort of bailout for the over-indebted would be an outrage.

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

C’mon man! Everyone knows that borrowing money and not paying it back is A-OK! How are people supposed to study things like Social Justopia and live like Kim Kardaginians if they can’t borrow like there’s no tomorrow. Paying debt back is Malarkey!

#71 Ponzius Pilatus on 11.24.22 at 5:47 pm

Well, remember during the pandemic when we had that massive wave of mortgage deferrals? Turns out millions took advantage of lender largesse and federal government approval to set aside their monthlies while household finances were under stress.
—————–
The same thing happened in the mid 80s.
Banks were weary of “jingle mail” and the Governments were sending out relief checks.
The banks don’t like being landlords.
Too much hassle.

#72 Senator Bluto on 11.24.22 at 5:47 pm

Sometimes I think Alberta should leave Canada and become the 27th Canton of Switzerland.

Just think of it:

1. 7% flat tax on all income
2. Unlimited amounts of chocolate
3. Shania Twain would want to live in Alberta
4. More World Cup races at Lake Louise
5. No worries about frozen bank accounts

*POP*

And then I woke up…

#73 Chalkie on 11.24.22 at 5:54 pm

UCC #58
You make a very good point and argument, should the liberals try and play favouritism with the FOMO gamblers.

#74 Crystal ball futurist on 11.24.22 at 6:01 pm

Inflation and increased income can be a painless solution for all.
A 1mil mortgage is inconsequential if incomes are upwards of 400k.
Will politicians and CBs sacrifice the dollar or the people?

#75 Pulp Faction on 11.24.22 at 6:01 pm

Well, the can on the road must be getting really beaten up from all the kicking.
I predict that people will be forced to lie in the bed they made and make good on their poor financial decisions, making mortgage payments into their retirement years.

For those who like to make good financial decisions and are involved in equities trading, I hope you are building a short position on Meta/Facebook and everything Musk-related, as the hype and senseless/endless investment will not last forever. The chickens will come home to roost sooner or later.
ASML and TSMC are long term players no matter what the stock price does from day to day.
Apple will reinvent itself once again, never doubt the value of premium technology and a history of leading innovation. Apple has built a launch pad so big that you can even play in the venue. Wait until you see what they do to the likes of Intel and IBM.
Sometimes you have such a huge arsenal at your disposal that adversaries have lost the contest before it begins.

Live long and prosper and never discount the value of the tech geek that lives, eats, breathes, and sleeps innovation.
I use it and evaluate it and critique it harshly.
I remember lawyer friends losing their shirts after I told them nor till was a dog long before the ceo himself cashed out.

#76 Kilt on 11.24.22 at 6:03 pm

So, what you are really saying is Buy the Bank Stocks!

Kilt

#77 Balmuto on 11.24.22 at 6:05 pm

They’re going to have to allow all those negative amortization VRMs to convert to 40 year fixed mortgages if they want to keep people in their homes.

It’s inevitable and the longer they wait the more damage will be done.

It was reckless of the banks to issue so many VRMs when rates were rock bottom and post-pandemic inflation was on the horizon. But that’s where we are now, in damage control mode.

#78 Cici on 11.24.22 at 6:14 pm

Well, I know one thing that will happen: by rewarding the debt junkies once again, they sure as heck aren’t going convince the peeps on the sidelines who have budgeted and saved hard to accumulate real money for a down payment to jump in.

#79 Penny Henny on 11.24.22 at 6:15 pm

#19 cuke and tomato picker on 11.24.22 at 2:53 pm
What Canadian bank is giving the best rate for a five
year GIC?

Go to ratehub.ca

#80 Steve French on 11.24.22 at 6:16 pm

Re: #54 Sail Away on 11.24.22 at 4:42 pm

… Yes that’s CAGR.

– SteveO

#81 Steve French on 11.24.22 at 6:18 pm

Re: #54 Sail Away on 11.24.22 at 4:42 pm

I mean the 7.1% since December 2016 is CAGR….

Steve

#82 Yukon Elvis on 11.24.22 at 6:24 pm

Word from Ottawa sources is that a program of mortgage forbearance is under consideration for those silly folks who opted for a 1.5% VRM when they could have locked into a five-year, no-surprises mortgage at 2.3%
++++++++++++++
The most likely scenario. And the prudent ones will pay for their bailout.

#83 Pulp Faction on 11.24.22 at 6:29 pm

I’m just happy to hear that there isn’t going to be government subsidization of people who made really poor and Ill-conceived financial decisions.
They should be lying in the bed they made.

#84 OwlEyes on 11.24.22 at 6:30 pm

I certainly hope my frugal, row house-dwelling tax return is not going to fund overambitious McMansion owners. I can support a bailout after people downsize to prevent abject poverty. I have a heart. But really why should I pay for other people’s spacious suburban backyards?

#85 Sail Away on 11.24.22 at 6:30 pm

#56 ogdoad on 11.24.22 at 4:53 pm

talk about ‘triggered’…my human nature is being triggered at an alarming rate recently…hugs are popping up for fun, I got baby blues at my volunteer gig, baby blues offering to give me a private yoga lessons…yearning, big browns at v-ball…early morning snuggles with dark greens….phew!!

———

I hear you. Yearning brown eyes, in my case. Everywhere, all day long.

Adoring, devoted, lovingly undivided attention to my every whim. The purest of pure loyalty. No greater goal than fulfilling my needs…

…then a quick glance to the top of the fridge where the liver treats are stored…

#86 BCWally on 11.24.22 at 6:39 pm

There’s enough evidence that a housing collapse would destroy our economy for quite some time. I don’t think any government has a choice but to prevent that.
There is one unalterable fact that isn’t being highlighted in the media that the housing market backstops almost all credit the Canadian people have. This is the 170 billion plus mentioned in the article. Therefore, systemic risk with the financial institutions doing the lending.
This is a lot like covid lockdowns, government created the mess with far too generous credit terms, so it is on the hook to support the people caught in it.
What’s important here is that the breaks given to existing homeowners to retain home ownership do not get extended to new buyers. This should give the CMHC, OSFI, and the feds time to tighten credit rules to bring housing prices in line with existing incomes.
The financial lives of those people who bought beyond their means will be ruined for a decade or so until they are above water again.
I read the statement from Carolyn Rogers and to me it was a clear message to Ottawa from the CB to get their act together, because the CB isn’t interested in political interference, and it won’t fold.
As a central bank governor, who would you fold to the current financial illiterates we elect?

#87 crowdedelevatorfartz on 11.24.22 at 6:40 pm

@#64 TraderX
“This is a new world. These kids are digital citizens of it. If you want them to stay in Canada and build lives (and pay taxes and contribute) we must have a competitive tax code!”
++++

Total agreement.
people who have jobs that they can do anywhere in the world are taking advantage of low tax countries.
More and more high earning individuals are jumping on the internet “electronic office” and living elsewhere while they work for a company in another country.

Some tax agencies have taken to auditing Phone records to see what country the taxpayer was in…. and when.
Dual citizens take note.

Time for a world wide flat tax system.
No deductions, no flim flam, .
Just a flat tax.
Say 5% on the first 50k, then 10% to 100k. etc etc etc.
But will never happen.
Think of all the accountants and lawyers that will be unnecessary.

#88 crowdedelevatorfartz on 11.24.22 at 6:41 pm

Yo Floppie!
On holidays in the deep south?

#89 DOWn on 11.24.22 at 6:43 pm

I’ve figured out the solution for those in or soon to be in over their financial heads.

It’s based on the same moral principles surrounding those poor disease ridden gamblers that fill up the casinos and are draining their bank accounts.

What’s different from borrowing from the banks or going to the Casino?
Odds in both cases favour the house.

So people who are getting in over their financial heads and can’t control it because of the banks policies should be subsidized by the mortgage and alcohol/drug and tobacco pumping government of ours.

Our government is fuelling these diseases.

So it’s their responsibility to help these people out…

#90 Shawn on 11.24.22 at 6:44 pm

Montage Payment Arrangements

I have no issue with banks and the system increasing the amortization on existing mortgages so that people who can still pay at least the interest get to keep their house.

A win for them and the banks.

This will NOT stop home prices from declining if new mortgages are still subject to 25 year amortizations at these higher rates.

It’s all entertainment to me.

To sort of borrow an old saying:

If you can’t make your mortgage payments you are in trouble. If a million Canadians can’t make their mortgage payments then the banks and CMHC are in trouble and so a solution will be found.

#91 Ohm on 11.24.22 at 6:45 pm

Your pathetic blog has been warning people for years about the real-estate adjustment coming and now it is happening.

The biggest issue is inflation. I thought a few years back that $7 for cauliflower was bad now they want almost $6 for a lousy head of lettuce, never mind tomatoes.

Energy prices are an additional issue; trying to keep warm and paying the bills will be a real problem this winter.

Most municipalities (that I have read so far) want to raise taxes by another 3 to 5 % per year on top of raised garbage disposal, up fees to use any municipally owned recreation services, phone and cable up,up,up, insurance rates up,up,up, it just never ends.

Food donation places are running out of food due to so many relying on them.

This should never have happened in such a rich country. Our ancestors are rolling in their graves in disgust!!

#92 Linda on 11.24.22 at 6:47 pm

‘Apollo’ looks like he is a sun seeker, hence the table perch. Looks very well groomed, beautiful fluffy coat & tail:)

One wonders why the BoC even bothers to try to corral inflation when governments are pushing through legislation to ‘help’ the indebted. Legislation that probably comes with a hefty taxpayer price tag & will continue to keep this RE gasbag afloat for a while longer. As for increasing mortgage terms to 40 years, did this not get rolled back because it was seen as a major contributor to the insane RE values that led to the resultant affordability mess? Ditto the ‘negative amortization’ solution. Yes, it may permit debt piggies to continue to ‘own’ the RE they are occupying, but at some point some of those little piggies are going to leave home. I can just imagine the squealing that will occur when they discover (because somehow I doubt they will pay attention to the downside) that far from walking away with windfall profits, they are selling at a loss & may actually still owe their mortgage holder of choice a hefty chunk of change post sale.

#93 PBrasseur on 11.24.22 at 6:48 pm

None of these “solutions” will work IMO, they all consist in making people even more debt slaves than they already are. It is not the people that get protected here, it’s the damn system, the politicians, the CMHC and the bank cartel.

What these people need to recognize is that their financial life is ruined for the rest of their lives unless they walk out and declare bankruptcy if they have to, there is no alternative so the sooner they do it the sooner they can start rebuilding their lives. Yes it is that bad.

#94 Regjeg on 11.24.22 at 6:48 pm

Word check:

> Nigh, not Nye
> Balderdash, not Boulder Dash

Y’re welcome!

#95 Penny Henny on 11.24.22 at 6:52 pm

#63 Faron on 11.24.22 at 5:15 pm
#52 Neo on 11.24.22 at 4:37 pm

When I look around me I no longer see fellow Canadians, I see adversaries. Competition that must be crushed and destroyed

This nutjob sounds about a half-step away from committing a mass shooting. Wow.

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

That’s what we say about you Faron.

Funny that. Hey?

#96 DonCarlos on 11.24.22 at 7:02 pm

Sometimes I stress about my financial situation, and of two minds about the house lust I was seemingly born with. It drives me to succeed in business, but also natters away at me that I need to buy a bigger better house before I’m too old to enjoy it.

Then I come here, read this blog, and it helps me be patient and appreciate what I have. Thanks!

#97 TurnerNation on 11.24.22 at 7:04 pm

Life in Kanada. Setting us up for Energy Poverty.

“Emera Inc.’s wholly owned subsidiary Nova Scotia Power Inc. has filed a proposed settlement agreement for its 2022-2024 general rate application (GRA) with the Nova Scotia Utility and Review Board (UARB)…..

If approved by the UARB, the settlement will implement Bill 212, the provincially legislated cap on non-fuel rates for 2023 and 2024……. Combined, these amounts would result in rate increases of 6.9 per cent each year for 2023 and 2024”

#98 crowdedelevatorfartz on 11.24.22 at 7:04 pm

The photo of the dog on the table was funny but it would never happen in my house.
Cats on the table…never.
Animals have diseases and I eat at the table.
Cats eat mice, rats, birds, etc.
Dogs eat poop.
No animals allowed on the kitchen counter or tables.
Thats my rule.
I’ve been to houses where they allow their cat free reign on the table the counter etc.
I pick it up and place it on the floor.
The cat looks at me and jumps back up.
I put it back on the floor.
Two or three times of this and the inherently lazy feline will wander off to sleep elsewhere.
No muss no fuss just relentless human training.
No animals allowed to sit their lazy, dirty arse where I eat.
Unless its a grizzly eating….me.

#99 Elon Fanboy on 11.24.22 at 7:14 pm

#36 Chalkie “ Another sector of our economy that is about to take a major hit is the Car Dealerships.”

Yep. Got a call from my local dealer yesterday that I purchased new from back in July. They called on the pretence of checking how things were going my new truck…..and then the followup question…..do I know anyone looking to buy a car?

And their lots are filling up with new vehicles now supply chain issues have eased a bit, at the same time all those 2nd hand trade-in’s still sitting on the lot are dropping in value.

Can you hear my tiny violin.

Btw Chalkie, always enjoy your posts, you’re like an extra mini Garth article every day.

#100 Ohm on 11.24.22 at 7:17 pm

#93 PBrasseur

Sad but true, how disgusting!!!

#101 Mad Money on 11.24.22 at 7:19 pm

So, in other words buy into the real estate market for the government to have your back with financial options…

but if you rent and miss a rent payment, enjoy being kicked out and homeless.

#102 Burnaby Boy on 11.24.22 at 7:20 pm

Burnaby Now , 24 Nov, has a nice article on the highrises sprouting up around me which replace the 3 storey walkups of 900 sq ft for $901/month. Of 188 non market units provided by Concorde Pacific at Metrotown 58 will be between 323 and 346 sq ft. One bedroom apartments start at 450 sq ft.

#103 The Original Jake on 11.24.22 at 7:21 pm

“The translation is simple: rates must rise more.”

They sure do… food inflation is still ongoing. Stopped into my local deli today and my typical shopping basket cost me 25% more just in the last month. I have yet to see any relief in food prices. And, the store was packed, mid afternoon. People are simply not deterred yet.

#104 Shawn on 11.24.22 at 7:22 pm

Please, Mommy, Make it All Better

#52 Neo on 11.24.22 at 4:37 pm

Seems pretty simple to me. Trace the transactions back and force the seller to refund the money they should not have been paid in the first place.

Of course the corrupt puppet regime will do the opposite.

Honestly I have no respect for this country any more. When I look around me I no longer see fellow Canadians, I see adversaries. Competition that must be crushed and destroyed.

***********************************
Sounds more like you want your Mommy to make it All Better for people who over-paid.

The enforcement of contracts (as opposed to their repudiation that you seek) is an absolute cornerstone of our economic system that has worked to raise living standards by vast amounts.

If you can’t compete, get out of the game.

#105 TurnerNation on 11.24.22 at 7:24 pm

Kanada — a nation of renters . Feudalism is back. The Crown’s Bankers own it all.

“Rent” your house on a 40-50 year amort. from the banks

“Rent” your car from the leasing company on a 72-96 month term.

You will own nothing? (and be happy?)

——— The Science in Kanada is progressing at breakneck speed. Only 2 err 6 weeks!
Year 4, this is permanent in the Former First World countries.

.Burlington municipal employees will have to wear masks for the next six weeks (globalnews.ca)

.Heated Ottawa-Carleton District School Board meeting on mask mandate ends with no audience, no vote (cbc.ca)

.U of A Staff Association requests return of indoor mask mandate on campus (globalnews.ca)

.D.C. public schools requiring negative covid tests after Thanksgiving (washingtonpost.com)

#106 Ben Caballero on 11.24.22 at 7:28 pm

I have a bit of experience with real estate. Between 2004 and 2019, I sold 36,827 new homes totalling $13.141 billion in volume.

Will Canada see a meaningful house price decline? Doubtful. I will believe it if I see it and it has not happened yet. The Canadian government has a lot of interest in keeping house prices lofty.

#107 Wrk.dover on 11.24.22 at 7:30 pm

When it says AQN volume is six million, does that mean a big boy is buying every panic share that comes to market, thus keeping the price down?

#108 Dogman01 on 11.24.22 at 7:31 pm

Lifeboat Problems?

“If you owe your bank a hundred pounds, you have a problem. But if you owe a million, it has.” – ― John Maynard Keynes

In Jarred Diamonds book Collapse he describes the Greenland Vikings.
They had a East and a West settlement and due to inappropriate agriculture practices the East Viking settlement entered a resource (food) crisis.
So all those East Greenland Vikings had to leave and had nowhere to go but to their relatives home in the West Viking Settlement.

The West Greenland Viking settlement was self-sufficient until the masses of their East Relatives showed up destitute.

Archeological evidence showed soon after resource stress followed by extreme violence , and rapid societal collapse of the entire West Greenland Viking settlement.

https://www.newyorker.com/magazine/2005/01/03/the-vanishing-2

Hence: some trepidation on the part of the Canadian Ants towards the Canadian Grasshoppers.

Principle of First Aid: you shouldn’t put yourself in danger in order to apply first aid.

#109 Dogman01 on 11.24.22 at 7:39 pm

Lifeboat Problems II?

In other words…my resources are adequate for me and my family to stay afloat, I have accomplished this by long periods of hard work, gaining competence , applying discipline, appetite control, foresight, smarts, and a bit of luck.

I can spare a life-preserver but I will use my oar to wack you hard if you try and swamp my boat….or as many posters are proposing, I may be forced to use my lifeboat to row as far away from the struggling yahoos drowning in masses.

#110 IHCTD9 on 11.24.22 at 7:44 pm

#90 Shawn on 11.24.22 at 6:44 pm
Montage Payment Arrangements

I have no issue with banks and the system increasing the amortization on existing mortgages so that people who can still pay at least the interest get to keep their house.

A win for them and the banks.
———

I think you’d need to roll out a calculator before declaring 30-40 year mortgages a win for homeowners. A quick calculation for a 30yr amortization at 5% on a 1 Mil house shows a $5300.00 monthly, and $921,000.00 paid in interest. Big win for the banks for sure, but that’s a big “L” for the home owner IMHO.

5.3K/mo. stuffed into a B+D at 5% for 30 years results in 4.3 Mil. That’s conservative, and definitely a win. You’d have enough to pay cash for a 1 Mil house at the 12 year mark.

If you rented for 2k/mo. You might still invest a residual of 4.3K/mo. compared to owning same, all costs of owning considered. That’ll get you a roof and 3.6 Mil after 30 years – rough math.

Long amortizations are a killer with debt, and magic makers with investments.

#111 ogdoad on 11.24.22 at 7:53 pm

#85 Sail Away on 11.24.22 at 6:30 pm

:):):):)

…then a quick glance to the top of the fridge where the liver treats are stored…

(:(:(:(:(

eeewwww!

Og

#112 Ian on 11.24.22 at 7:59 pm

So if the Government is just going to bail out FOMO’d homeowners with what you say is mortgage forbearance by shoring up the loss to banks and combine this with 40 year amortization by CMHC, then this is definitely the bottom of the market. As the forbearance will prevent higher volume of homes for sale and the 40 Amortization will just help keep precises elevated, stable. So is this not a good time to start looking to buy if it won’t gut my family finances?

#113 Outrage on 11.24.22 at 8:10 pm

On a another subject ,I’m some what confused. Why does Canada allowing Youth in Asia. Anyone that is poor ,old and sick ,homeless and soon to be people with mental issues will have assisted suicide. Have their been any other governments do this ? I was quite shocked Canada is allowing this to happen ? Only people that can afford housing can live and pay their share of taxes.

#114 What 'Bailout'? on 11.24.22 at 8:36 pm

Lots of commenters here reacting with alarm to today’s blog at the prospect of a ‘bailout’, a ‘lifeline’, or ‘government subsidies’ picked up by the taxpayer to support those who’ve made bad decisions and are over-stretched on their mortgages.

I’ve read the blog 3 times. I get why all of the options suck in the economic scheme of things. But unless I’m reading them wrong, none of the scenarios Garth has taken pains to describe entail tax dollars supporting or ‘bailing out’ the afflicted. Longer term indirect costs of kicking the can down the road need to be recognized and avoided wherever possible, but equally, what would be the opportunity costs of *not* supporting financially distressed families? We can argue about financial illiteracy and failure to take personal responsibility until the cows come home, but if we want our policymakers to minimize taxpayer-supported bailouts, some of the measures Garth describes look like far better options for the taxpayer than seeing families renege on their debts and/or end up on the taxpayer-funded dole once their financial roof caves in. Be assured that the social costs of a family’s financial ruin often come back to haunt the taxpayer. In many ways.

If that’s part of what the B0C’s Carolyn Rogers was trying to convey to policymakers, then good. This taxpayer is mortgage and debt free, but I want my government thinking along those lines.

#115 Cow Man on 11.24.22 at 8:38 pm

Sir Garth:

One missed point that throws the wrench into the cog wheel is a recession that results in higher unemployment. EI will not pay even a 40 year amortized mortgage.

If we get a full blown recession all of the adjustments suggested are of little value. Remember 14% unemployment ?

#116 Faron on 11.24.22 at 8:44 pm

#95 Penny Henny on 11.24.22 at 6:52 pm

That’s what we say about you Faron

Rent free. Get a life.

#117 45north on 11.24.22 at 8:46 pm

Captain Uppa

So, all these measures come in, let’s say, and home prices are relatively sticky. Housing remains unaffordable.
But “… we need to build more homes!” will be the cry from governments … and developers sit happy as pie.

here are the measures:
mortgage forbearance, longer amortizations, negative amortization

The measures are not going to make the banks more eager to loan money. They are not going to raise the price of homes. Price has already come down 10% and will go down further. The banks know the price is down. They are going to be tougher on construction loans. I imagine that the developers are already aware of the banks’ tougher position. Put simply, lower price means lower supply.

#118 crowdedelevatorfartz on 11.24.22 at 8:53 pm

@#102 Burnaby Boy
“Burnaby Now , 24 Nov, has a nice article on the highrises sprouting up around me which replace the 3 storey walkups of 900 sq ft for $901/month. Of 188 non market units provided by Concorde Pacific at Metrotown 58 will be between 323 and 346 sq ft. One bedroom apartments start at 450 sq ft.”

++++
Yep.
As a long term resident of Burnaby ( 40 years) I look with disdain at the developer rape of the city.

Burnaby has turned from a quiet , suburb of Vancouver into a High rise Hell in less than 5 years.
The various areas of Burnaby ( Brentwood, Metrotown, Lougheed, SFU ) that have been transformed into 40 and 60 story Condo beehives is unprecedented.
Most of the towers have been built in the last 5 years. Unbelievable.

The latest nightmare of development is more condo/apartment 40 and 60 story towers approved across from BCIT on Canada Way ( aboriginal land developement…no criticism allowed) and the Alpha dairy site on Lougheed Highway at Bainbridge.

Both sites will have 5-10 towers (40-60 stories) in a “village” site.

Unfortunately Burnaby has done NOTHING for traffic, hospitals, police and schools other than upgrade or promise to upgrade existing facilities.

My prediction?
With hundreds of thousands of daily commuters pouring onto the same old Skytrain or the same old roads…..
10 years from now?
Jammed streets. Clogged hospitals. Jammed city police cells…More pollution. Higher crime. Angrier voters.

And the same politicians promising the same pabulum.

I’m outta here in less than 5 years.
Ponzie wins.
He gets to have the Lower Brainland all for himself.

#119 The real Kip (Ret) on 11.24.22 at 9:01 pm

If 1,000 people default on their mortgage, that’s their problem. If a million people default on their mortgage, that’s the banks problem. BoC is about to reap what they’ve sown. Go ahead Tiff, raise rates some more.

#120 SK on 11.24.22 at 9:01 pm

#112
I suggest you do not buy in the GTA, Vancouver/Victoria/ Lower Mainland or Smokanagan. There are so many wonderful off the radar locations in Canada to settle in. There is beauty all across this great land. Do not be a lemming and buy into overvalued hyped up locations. A house is to make a home to enjoy. You can’t enjoy it if you overpay. All the best in your home search.

#121 Paul on 11.24.22 at 9:12 pm

#101 Mad Money on 11.24.22 at 7:19 pm
So, in other words buy into the real estate market for the government to have your back with financial options…

but if you rent and miss a rent payment, enjoy being kicked out and homeless.
————————————————————————————————
Well tenants are not homeless for missing a months rent. Some stay for a year or more so I guess the landlord has their back.

#122 Shawn on 11.24.22 at 9:43 pm

How ar ethe car dealers doing?

#99 Elon Fanboy on 11.24.22 at 7:14 pm
#36 Chalkie “ Another sector of our economy that is about to take a major hit is the Car Dealerships.”

Yep. Got a call from my local dealer yesterday that I purchased new from back in July. They called on the pretence of checking how things were going my new truck…..and then the followup question…..do I know anyone looking to buy a car?

********************************
Seems its different in Alberta

CBC Alberta at noon had guests calling saying that their were extremely long waiting lists to get popular vehicles like a hybrid Toyota Rav 4.

All the calls I heard were talking about shortages of new vehicles at this time. Used cars still selling at like-new prices. (I gotta admit it almost sounded like something from this past Spring, but it was today’s show)

Then again, this is Alberta where the street are paved in (Black) Gold. And the place is spacious so you need vehicles to get around. We don’t walk to the grocery store around here. Big box stores only. Gonna need a pickup for the Costco run. Even the Dollarama run requires an SUV. Go big or stay home.

#123 Quintilian on 11.24.22 at 9:44 pm

Huge political capital can be amassed for the astute politician who can figure out whom to make the least number of angry people over the mortgage bomb.

There are going to be some winners and some very angry loosers.

Tick Tock Tick Tock

#124 Tony on 11.24.22 at 9:48 pm

Word from Ottawa sources is GIC holders from 2009 to 2021 will get nothing, no compensation. No one cares about them.

#125 Purple Ocean on 11.24.22 at 9:51 pm

Thanks for the daily blog Garth.
I decided to purchase some of the Ukraine Sovereignty Bonds, thanks for writing about them. Is there any way to see how many have sold?

#126 mark on 11.24.22 at 9:52 pm

The solution is always more debt.

#127 Overheardyou on 11.24.22 at 9:57 pm

Despite all the news about our housing market falling in price recently, everyone I talk to is either:

a) believes the dip is short term temporary
b) still holding buy now or never mentality
or
c) the Government won’t let it crash

Well looks like they may be right; Canadian residential real estate is the most resilient asset class in the land

#128 mike from mtl on 11.24.22 at 10:01 pm

#118 crowdedelevatorfartz on 11.24.22 at 8:53 pm
….
As a long term resident of Burnaby ( 40 years) I look with disdain at the developer rape of the city.
///////////////////////////////////////////////////////////

This isn’t just a BC or Toronto problem, but a national mass stupidity.

We’d rather leave unscrupulous developers free reign to future tax payers than really question: what are we doing?

T2 & the communists I would have thought some regard presiding over a housing crash – but my mistake… they will defer that ‘problem’ to some other soul.

#129 AQN on 11.24.22 at 10:09 pm

#107 “When it says AQN volume is six million, does that mean a big boy is buying every panic share that comes to market, thus keeping the price down?”

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

Um, no, a big buyer would be keeping the price up, not down.

Looks like typical retail ‘investors’ buying high and selling low.

They never learn. Thank god.

#130 Tony on 11.24.22 at 10:11 pm

There’s another way. Change the legislation to let the mortgage holder “own” the mortgagor. Force him/her/they to work two jobs at the same time like mortgagors did in the early 1980’s when mortgage rates hit 23 percent.

#131 AQN Pt II on 11.24.22 at 10:16 pm

I’m somewhat tempted to buy AQN at this level, but their foray into ‘clean’ energy scares me enough that I’ll probably pass.

Maybe once those assets are valued at less than zero I’ll be tempted.

#132 Irish Stew on 11.24.22 at 10:22 pm

I just pulled 500K of my baby boomer mothers estate from the market and payed down my ~900k mortgage. Moms sick and would have wanted her money to go towards a roof over grandkids head. Without this boomer winfall, I’d be doomed to paying 4K a month in just interest at 5.25%

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

Is this serious?
You stole your mother’s money while she is alive?

#133 Wait There on 11.24.22 at 10:32 pm

If the government can throw a lifeline out for those who purchased, then they should also throw out a lifeline for those who did not purchase.

TAXATION of gains is the only solution. How do you throw a lifeline to a landlord speculator? Justify that?

#134 Me on 11.24.22 at 10:32 pm

It was kind of expected.
These measures are taken with the sole hope that RE will weather the high rates, until CB tames inflation.
Once infaltion is under control, CB will drop the rates and RE prices might start rising again.
We’ll see.

#135 Wait There on 11.24.22 at 10:42 pm

So as we stretch out payments the whole country falls into a retirement trap. Nothing saved except the home at retirement. But wait, look at the demographics…..down the road.
Let the house prices fall and tax the gains. That way people can actually afford to live and save and invest in the country…not residential real estate.
However the govt will kick the can down the road again.

#136 Tony on 11.24.22 at 10:42 pm

Re: #19 cuke and tomato picker on 11.24.22 at 2:53 pm

Saven Financial a credit union in Ontario their 5 year GIC rate is currently 5.3 percent. You have to live in Ontario. Not many good reviews about them. Membership fees are 25 dollars. GIC brokers I’ve seen 5.51 percent for 5 years.

#137 Calgary on 11.24.22 at 10:57 pm

Property prices should be the construction costs. Real estate agent fee should be 1%.

#138 Mr Canada on 11.24.22 at 10:57 pm

Surprised nobody talks about the 2yr inverted bond yield vs 5yr — has not been so wide in 3 decades = recession.
VRM – so, does a holder now convert to fixed say for a 3-4 year term which is higher than the 5 year term or wait and see how many more rate hikes there will be in 2023. Decisions..

#139 Catalyst on 11.24.22 at 10:59 pm

It just continuously reinforces what we already know, put all your capital in residential real estate. Its the only spot that is preferred in this country. Can you imagine if we put a forbearance on margin calls or 40yr am to borrow for a stock portfolio?

#140 Statsfreak on 11.24.22 at 11:05 pm

Garth, Blackrock is terminating the ETF “CSD” in January. Maybe you could do a post about this sort of thing, ie: is this an unusual occurrence? First I’ve come across in 13 years of investing. Wondering what happens to rbe underlying Holdings as they must still have individual value. Thanks so much for all you do day in and day out!

#141 Buckwheat on 11.24.22 at 11:56 pm

Dude …hang out a crying towel for all those who took out VRM and now face Negative Am. Over 30 years after paying “rent” and no principal repayment you’ve paid out hundreds of thousands interest that should have been your retirement fund. Ipso facto you end up broke and still have the same mortgage hanging over your head. I think it’s a good time to buy the banks .

#142 Diharv on 11.25.22 at 12:08 am

The government should stand back, be hands off and let the chips fall where they may. The point of raising rates I thought was to cause some degree of pain to stem borrowing and spending. How are the people who have made and are about to make stupid financial decisions supposed to learn if more and more loopholes are put in place so said bad behaviour can continue?

#143 MalcolmM on 11.25.22 at 12:55 am

When people say they want affordable housing they often aren’t hoping for lower prices. Instead they want governments to build lots of housing and rent/sell it at affordable rates. They never stop to think where the money to do this will come from. They aren’t willing to pay higher taxes so certainly the money will have to come from elsewhere, hopefully the wealthy, I.e. anyone other than themselves.

#144 Elon Fanboy on 11.25.22 at 1:00 am

#122 Shaun “ Seems its different in Alberta

CBC Alberta at noon had guests calling saying that their were extremely long waiting lists to get popular vehicles like a hybrid Toyota Rav 4.”

Might possibly depend on the manufacturer. In my case Ford. Our local dealer now has a pretty full lot of new vehicles.

Japanese makers maybe not so much.

Used car prices are definitely dropping. I follow a few private car auctioneers on Twitter, they’re seeing bid prices drop across the board.

#145 millmech on 11.25.22 at 1:11 am

#58 UCC
Do the math and see for yourself how bad it is to own a house at these prices and rising rates for a forty-year amortization. It roughs out to just over $3,000,000 in total costs to pay off an $800,000 mortgage, in after tax dollars, pre-tax one would have to gross $4,500,000+ in that time which is around $100,000 a year or about $2000 a week in pre-tax earnings for your working career to own a $800,000 investment.
ttps://www.rew.ca/properties/4506788/1804-89-nelson-street-vancouver-bc.
Now do the math for renting and investing the difference and you come out ahead substantially better.

#146 DON on 11.25.22 at 1:31 am

The lay offs in tech are increasing. The World is now worried about unemployment numbers while enduring slower growth. The housing bubblicious Countries are worried about the loss of housing demand on their individual economies as the consumer becomes too squeezed and taps out.

Everyone’s mileage will vary of course, depending on individual circumstsnces and the amount of debt one holds. When reality sets in…

Yikes!

#147 AM in MN on 11.25.22 at 1:40 am

My guess is the money printing and inflation stays on track, and people will keep voting for it.

Look at the results of the US mid-terms, and then the whining from the virtue signalers about Qatar’s human rights record.

Very few seem to be able to put two and two together and understand that when the west builds economies of consumption (like residential RE), and kills production, like the LNG plants the BC Liberals killed 5-10 years ago, the world gives its money to places like Qatar to buy the LNG they need.

The western countries will decline (are declining) in standard of living because they vote the path of poverty to make themselves feel good.

It is a global world though, and you need to look out for yourself at some point, you can’t save the stupid people and don’t need to join them in their poverty. So many opportunities for young people these days.

#148 Enough on 11.25.22 at 2:11 am

I say we march on Ottawa to tell them subsidies for people who gamble with their finances won’t be stood for.

They make dumb single asset decisions and savers are left with the bill. How do we get the message across that enough is enough?

#149 Summertime on 11.25.22 at 6:14 am

Government and BoC should keep their incompetent hands out of the housing market.

Remove all policies that incentivize house purchases.

Close CHMC and move all the ‘insured’ mortgages back to the banks balance sheets.

BoC should not be allowed to determine rates except in rare cases for government bonds.

And then let the market determine the rates and duration of mortgages.

All this ‘affordable housing’ BS and meddling in markets
only exacerbates the problem by making housing more expensive and by further increasing inflation.

If the government want to convert all citizens to mortgage debt slaves for the banks, they are doing the perfect job.

After 40 years mortgages we certainly will get intergenerational mortgages along with all possible tricks around prolonging and de-risking mortgages for the profit of the banks.

It would have been pathetically stupid, if it was not tragic for many of the same time.

With increase in velocity of money and strongly negative real rates, we have seen close to nothing of inflation yet.

#150 under the radar on 11.25.22 at 6:19 am

Seems to me the 40 year am will be brought back, not just to assist those that are drowning but to ensnare those who are supposed to buy the 1.5 million homes Doug’s friends will build.

This will benefit society by adding infrastructure built by the vertically integrated cartel , roads , sewers etc, much needed hospitals, named after the families founder who came from Calabria with nothing in their pockets. Leon’s and the Brick will be busier than ever, so will the Bag boy , sorry I meant Bad boy equipping each home sold with appliances .
The spillover is endless, more Ferraris being sold to sons of wealthy developers, the price of G63’s will once again exceed list. Dime a dozen Porsche’s will become the people’s car. Mortons will be busy every night not just Thursday – Saturday. A perfect world, you just need to be part of it .

#151 Wrk.dover on 11.25.22 at 7:23 am

#131 AQN Pt II on 11.24.22 at 10:16 pm
I’m somewhat tempted to buy AQN at this level, but their foray into ‘clean’ energy scares me enough that I’ll probably pass.
________________________________

The modelling is, when energy goes uppa for conventional utilities, green power energy input is still a no-cost on the books of green utilities.

Here at my house, our electricity will still be free when the rate goes up 6.5% each of the next two years.

Capital cost remains the same, paid for and depreciating.

AQN though not paid for, owns a bunch of water supplies and sewers too.

#152 Steven Rowlandson on 11.25.22 at 7:45 am

“Canada only works as long as there is a greater fool trying to immigrate to it.”

If that is the case, then Canada is no longer a viable entity.

As for real estate it needs some serious regulation of price and ownership and the subsidies like mortgage insurance and capital gains exemption need to be removed. The three years pay rule based on one income only at minimum wage and a 25% down payment should be made a national law. As for interest rates let them fly to the stars to curb the excesses of out-of-control debtors especially governments and real estate investors. No mercy until we see that the offending parties have cleaned up their act and paid off their debts. HFC once had a slogan, and it went like this. “Never borrow needlessly”

This thing called puberty economics instituted since the early 1980s obviously doesn’t work and needs to be abandoned in favor of strict fiscal discipline that lasts for multiple decades or even centuries.

As for losses due to home price abatement the banks and real estate investors cum homeowners will have to eat the loss. Their greed and foolishness caused the problem so they can suffer for it. Reciprocity is a bitch, isn’t it?

#153 Kiril Peev on 11.25.22 at 7:47 am

I published some interesting charts looking at the changes that the Ottawa Real Estate market has gone through the past few years.

Ottawa Real Estate – List vs Sold Prices Ratio:
From paying 112% over list to 95% of list price.
https://www.kirilpeev.ca/ottawa-real-estate-list-vs-sold-prices-ratio/

Ottawa Real Estate – cancelled listings double
Oct 25th 2022 – Nov 24th 2022 – 696
Oct 25th 2021 – Nov 24th 2021 – 300
Oct 25th 2020 – Nov 24th 2020 – 281
https://www.kirilpeev.ca/canceled-listings-explained/

Relationship Between Inventory and Sales Prices
https://www.kirilpeev.ca/relationship-between-inventory-and-sales-prices/

The market is November is doing well for this time of year. I’m seeing price reductions but also good deals happening daily. There is definitely activity and prices seem to be flat as compared to October 2022.

In my opinion any federal regulation that reduces the monthly cost of ownership will ignite this market again. There are definitely buyers and sellers waiting in the sideline and ready to act.

#154 Steven Rowlandson on 11.25.22 at 8:17 am

“So many opportunities for young people these days.”

Yes, indeed there are plenty of opportunities for young people. They can go into debt for an education so that they can get skills that allow them to work for at or close to minimum wage and no raises in pay and for an employer who thinks minimum wage is too much to pay anyone for their time and efforts. Also, young people have the inadvisable chance and some think obligation to buy or rent a place to live at costs that are damned near equal to or greater that their pathetic incomes when it comes to rent and contract unpayable debt if buying to boot. Then there is the problem of arrested development of families due to the afore mentioned adverse economic factors. Canadians are not reproducing due to adverse economic factors and social engineering and not due to statistics like sperm and egg cell counts. The cost of living and endless lies and BS have stopped normal life in Canada hence the misplaced idea that Canada needs immigration or we are doomed as a country. We have immigration because Canada is doomed due to economic factors and the political and financial sins of our governments.
It is time to dispense with toenail clipping, bribes and Band-Aids and deal with the real problems.

#155 Vegard the Great on 11.25.22 at 8:26 am

#56 ogdoad on 11.24.22 at 4:53 pm
talk about ‘triggered’…my human nature is being triggered at an alarming rate recently…hugs are popping up for fun, I got baby blues at my volunteer gig, baby blues offering to give me a private yoga lessons…yearning, big browns at v-ball…early morning snuggles with dark greens….phew!!

The earth may be speeding away from the sun but life in this neck of the woods warm and toasty.

’till next time.

Og

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

Why does every skin-crawling post by this guy give the impression he drives a rusted out GMC van with the words “Free Disneyland Shuttle” spray painted on the side?

Ugh. *shudder*

#156 Pause fer thot on 11.25.22 at 8:35 am

#15 Sail Away on 11.24.22 at 2:41 pm

For evil capitalists, this means we should invest in the banks, obviously. Guaranteed long, long, long term revenue. Mortgage debt retirement never. Shackle the slave to the waterwheel for life.

—————

Can people really be referred to as slaves when they race eagerly and enthusiastically to clamp their chains on and completely embrace their punishment and punisher with adoration and willingness in their eyes?

Appears far more a fetish from where I sit. But yes, a bankable one to be sure.

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

#63 Faron on 11.24.22 at 5:15 pm

This nutjob sounds about a half-step away from committing a mass shooting. Wow.

——————-

BWAHAHAHAH!

“Dear Gods Of Irony,

THANK YOU for the above gift.”

*wipes tears of laughter from eyes*

#157 Steven Rowlandson on 11.25.22 at 8:38 am

“After this decisive message from the nation’s central bank, it seems clear to this pathetic blog what is about to transpire. A lifeline will be thrown to the debt-pickled, former-FOMO’d, financially-illiterate, house-rich and cashflow-stressed people by politicians and agencies who no longer have a clue how to make homes cheaper without puréeing society.”

Society is already sliced and diced, blood sucked, poisoned and tossed into the compost. What is next? Getting plowed under?
Better an end in horror for the financial offenders than an endless horror of putting up with their excesses and being expected to subsidize them or put one’s life on hold because of them. Bring on the medieval interest rates.

#158 IHCTD9 on 11.25.22 at 8:38 am

Here in the Boonies, I don’t hear too much grumbling about rates. The average peaked at about 650K, now it’s down to about 550K.

Just about everyone in my peer groups paid off their house years ago at prices I won’t mention on account of our younger dogs for the maintenance of their mental health. Canada was a totally different country 15+ years ago.

I’d love to know just how concentrated all this mortgage and consumer debt is in our big Metros. I’d bet good $ that the ultra-bulk of this horror show is located in just a handful of big Canadian cities.

#159 maxx on 11.25.22 at 8:39 am

@ #7

When it comes to RE, Canadians are so stupid that even 40-year amorts will only temporarily kick the payment can down the road.

Any such measures only serve to delay the inevitable. Canuckleheads will blithely end up increasing their debt loads yet again – and it won´t take very long at that, because gubbmint has and will continue to step in with its band aid measures – won´t it?

Despite this, Canada´s real economy will continue to deteriorate because no one will take the interest rate medicine.

#160 Senator Bluto on 11.25.22 at 9:58 am

After watching excerpts of the testimony about the Emergencies Act several things are clear:

1. CSIS screwed up in advising all law enforcement parties on what might happen and when, advising them the truckers convoy was minor and not a big problem.

2. The CSIS Screw Up led to all levels of law enforcement getting caught flat footed when things did not go according to CSIS advisements.

3. CSIS is now unilaterally attempting to redefine what the Emergency Act states by adopting a far broader defition of what a National Emergency is so as not look incompetent.

4. The Federal Government wants the country to accept the CSIS post ad-hoc re-definition because a plain word reading of the Emergencies Act shows that they were wrong to implement it.

The tell is that the narrative has shifted.

Latest political spin is that implementation of the Emergencies Act wasn’t about what the Truckers in Ottawa, it was about the Coutts Blockade in Alberta. Not sure that this spin will stick, but the Liberals threw it out to see if got traction.

Shifting narratives show the political agenda, not alegal basis.

After watching this sad debacle, if Trudeau does a mea culpa and throws CSIS under the bus on this mess I’d be inclined to believe him. And maybe even forgive him for following crappy advice that looked OK at the time. We’ve all fallen prey to that folly.

#161 Linda on 11.25.22 at 10:06 am

#114 – ‘What’ – did you read the bit in the post about CMHC possibly changing the rules to insure 40 year mortgage terms if they are brought back? Do you know CMHC is a Crown corporation? That means it is 100% taxpayer backed, so if any of those debt piggies default on their insured mortgages the taxpayer backed CMHC is on the hook. Which is why banks are so happy to loan the $ in the first place.

#162 Dharma Bum on 11.25.22 at 10:27 am

No time to post, love. It’s Black Friday down here – gotta hit the bricks to catch those super sales!

Maybe a new toy?

No permits required in AZ.

It’s dangerous out here.

#163 Sarah on 11.25.22 at 11:02 am

Don’t forget all the HELOCs that were maxed out to afford the new kitchen renovation or deck. What happens when the interest-only payments become too high, you can’t liquidate cabinets or 2x4s. Maybe the resale of boats and RVs will increase, but who is buying? Each of these individuals should be held accountable for their poor financial decisions, but I can’t help but be furious with the banks/lender/retailers and airlines offering buy now, pay later/car dealerships that offered predatory loans to people who could not afford to pay them back. When we will we start seeing the effects of many people defaulting on their loans.

I just re-watched The Big Short last night so I’m feeling a bit hopeless. But, what about REITs and ETFs in housing. How much Canadian money is invested in these and what will happen to the greater economy if more and more individuals are underwater on their real estate investments?

#164 Shawn on 11.25.22 at 11:09 am

Nothing New in this Mortgage Relief

Since time immemorial, the logical solution to a debtor that can’t pay is to offer more time but of course with higher total interest. (Banks can’t threaten physical violence Afterall)

If it’s a better solution than a huge wave of foreclosures then of course it makes sense.

Banks may need permission from regulators to not have to count these extended mortgages as delinquent. That’s what was done in the Summer of 2020. You could skip about 6 payments and the bank did not have to mark that as a delinquent loan. This was very helpful to the banks. And when the economy fired back it up, these people still owed the full mortgage and some added interest. It all worked out well for the borrower, the bank and the country as a whole. Well, I suppose the losers were young people hoping to buy houses at lower prices. Without these special measures, home prices would have declined or not increased as much in 2020.

With the 2023 mortgage debt extensions, individuals will still have negative equity and probably be unable to sell and move to Alberta which is particularly sad for them.

#165 Bubbles on 11.25.22 at 11:11 am

No chance of a home owner bailout here.
Corrupted rained Supreme in the USA. Mr Burry fired up the big short…Wall Street got bailed out not main Street.
And many were victims of the corruption.
Here no such thing happened. No one deserves a bailout.
Garth is likely right….just extend payments and debt forever…
Our gov has already buried us in debt and bolstered inflation.

#166 Don on 11.25.22 at 11:12 am

DELETED

#167 SHANE GALLANT on 11.25.22 at 11:19 am

BOC screwed up. Should have not dropped rates so fast.

#168 Randy on 11.25.22 at 11:26 am

Brainwashed with cognitive dissonance….people love being debt slaves….

#169 Observer on 11.25.22 at 11:47 am

#148 Enough on 11.25.22 at 2:11 am
I say we march on Ottawa to tell them subsidies for people who gamble with their finances won’t be stood for.

They make dumb single asset decisions and savers are left with the bill. How do we get the message across that enough is enough?

^^^^^^^^^^^^
Perhaps tag along with Operation Bear Hug, aka Freedom Convoy 2.0 scheduled for February 2023.
Get in touch with James Bauder (author of the Memo Of Understanding to overthrow the government) who is organizing it. Tell him God told you that you need to do this and he will understand.

#170 Halifax Fish Fry on 11.25.22 at 12:08 pm

If you were stupid enough to gorge yourself on overpriced real estate, and in most cases over bid to win it, and then be even more insane to take a VRM and just manage the payments instead of riding out the madness, then you deserve what is coming. Also shame on our high and mighty banks for allowing this to take place!!

#171 Flop… on 11.26.22 at 6:03 pm

#88 crowdedelevatorfartz on 11.24.22 at 6:41 pm

Yo Floppie!
On holidays in the deep south?

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

No Crowdie, heading down to Tempe in about a month, pretty soon I’ll start counting the days.

Not looking forward to this week in Vancouver, a couple days of snow and then some minus 8 overnight will give my world-class glass ankles a workout.

Hey, why move to New Brunswick when it’s weather can come to you?

I went to put up a real estate post maybe 3 weeks ago, and the two Septic Yanks were going at each other about abortion rights in the States, so I decided it was time for a good old fashioned Blog Break.

Checking back in, the abortion talk seems to have dropped, but the two protagonists are still going at with each other.

Just don’t remember it being this hateful 7 or 8 years ago.

Maybe I missed something along the way.

When did this blog get filled up to the brim with so many extremists…

M48BC

#172 DOWn on 11.27.22 at 1:44 am

Gemo
Generational mortgages.
It’s not a new concept.

#173 cv5 on 11.27.22 at 12:56 pm

PREMIER CALLAGHAN ADDRESSING LABOUR PARTY CONFERENCE

This British Statesman seem to possess keen insights….

https://www.youtube.com/watch?v=76ImzIwB1-k