Going bush

Would you like the good news first? Or the bad stuff?

Okay. The good news is that the Fed’s document this week showed US interest rate increases will probably be slowing. After a spat of crazy-big 75 bps hikes, the next one is expected to be a halfer. Markets like that. Investors have been buying as a result. The American economy is strong. Employment is robust. The midterms were no disaster. Corporate profits are okay. Elon is getting spanked. All good.

The bad: the peak in rates, Mr. Market suggests, will be higher than previously thought. The CB rate will hit 5% before it halts, up from a range of 3.75-4% now (the highest in 14 years). This suggests there is a full 1% to go before we get a pause.

Whazzat mean for us?

Our guys move again a week from Wednesday and the expectation is a 50-pbs increase, to 4.25%. Over time our central bank has followed the Fed more than 90% of the time. If we don’t do that, our currency gets shellacked – and already it’s battered. So you can pretty much count on us hitting 5% if the Yanks do. Ergo, another three-quarters of a point to come in early 2023.

The chartered bank prime is now 5.95%. On December 8th it will be 6.45%. If the above is correct, by the Spring real estate rutting season, it will sit at 7.2%. HELOCs will be close to 8%. Reverse mortgages could be pushing 10%. Variable-rate loans will be north of 6% and five-year fixed about a point above that. A lot depends on the bond market, the odds of a recession plus inflation and employment data.

As we detailed here over the last two days, we already have a big, hairy problem. A third of Canadians with a mortgage have VRMs. Last year over 50% of all new loans went variable, just to get the cheapest rate. Now half of them have hit the trigger point where payments don’t even cover interest. Next year it will be two-thirds. And policymakers are worried. Either something big breaks, or these grasshopper homeowners get a lifeline.

Count on this to be one of the biggest stories of the next six months. Plus what happens to Zelenskyy.

By the way, a blog dog named Garyll sent me a mortgage statement with this note attached: “I Thought you and your lovely viewing audience might like to see this. It’s what happens when you have a VRM that goes from free money to now. $50 is going to the principle instead of $500. Feel free to share.”

Here it is. Have a look at how long it will take to pay off a loan of less than $200,000 at a rate just over 5% with a VRM payment that is almost all consumed by accumulating interest. Sisyphus, baby. You just never get there…

Now, trust the politicians to make everything worse. Atop negative market sentiment, plunging sales, falling prices and increasingly-freaked-out homeowners, we have a plethora of new regs and taxes designed to crash real estate in a generational way. Do not underestimate how some of the following will play out:

Ontario has an anti-foreigner levy (NRST) of a stunning 25% of the purchase price. Plus land transfer tax and other charges. It effectively ends the trickle of offshore money hitting places like the GTA.

BC, of course, has its own 20% non-resident buyer tax, plus a speculation tax conveniently aimed at untrustworthy Albertans.

The empty-house tax in Vancouver is about to explode from 3% to 5% in a few weeks. That’s 5% of assessed value each and every year, on top of property tax, condo fees and all other ownership overhead. This is how a regional city guarantees it will never be an international business centre.

Sadly Toronto is following suit. Its ‘empty house’ tax also clicks in soon, unless you live in a unit full time or rent it to tenants (who can actually stop paying rent, live there for free for many months and face no consequences). BTW, Toronto is ripe for an epic property tax hike in ’23.

In NS, where that province needs every dollar of non-local investment capital it can get, there’s a new anti-CFA (Come-From-Away) tax. It means anyone from Ontario, for example, must pony up an extra 5% of the purchase price on closing just to have a deed transferred. So much for citizenship.

Of course Toronto has its famous double land transfer tax in place. So to buy the average slanty semi worth $1.5 million, you have to pay $52,950 for… nothing.

It gets worse.

In five weeks Canada becomes one of the few nations on earth where a non-resident buyer is banned from purchasing residential real estate. Yes, banned. Go away. The impact will be felt most in those luxury markets which depend on international wealth and where Canadians do not participate. No, houses will not get cheaper. But our country looks bush.

And now, just when nobody is flipping houses and families are hanging on by their rate-ravaged fingernails, Canada is getting an anti-flipping tax likely to snare a lot of incredulous citizens in the CRA web. The intent of the new rules is to “reduce speculative demand in the market place and help to cool excessive price growth.” Yup, exactly when we don’t have any FOMO to curb.

So, if you sell a house purchased less than a year earlier – and cannot prove the sale was because you had to relocate for work, got divorced or died – any gains will not be covered under the PR exemption, But added 100% to income. Ouch. In fact, as my tax-buddy Jamie Golombek detailed in a media story the other day, the CRA is already chasing people they think need Hoovering.

Sadly, none of the above will make a house cost less, as the price of money rises. Elect clowns. Expect a circus.

About the picture: “Sad days here Garth. Sending a picture of our gentle giant Wyatt,” writes Jillian. “These are from his younger days, in his happy place hiking through the North Shore Mountains. He was with us for 12 years, which is a lot for a Greater Swiss Mountain Dog. Made the hard decision to put him down this week, had to let him go…You were the best dog ever, we love you Wyatt. From long time regular blog readers, and friends. Thanks for everything – to you and the whole team.”

120 comments ↓

#1 Captain Uppa on 11.25.22 at 12:40 pm

“BTW, Toronto is ripe for an epic property tax hike in ’23.”

The fact that Toronto has the lowest property tax rate in Ontario is insanity. They are always begging for money (see John Tory’s latest plea for help) but have remained low on taxes (relatively speaking).

It reminds me of when my brother, who lives in a well-to-do burb in the 416 kingdom, asked all his family and friends to help support his child’s local elementary school playground renovation because they were lacking funds.

This is in an area with 1.8 to 4M homes and a sea of luxury cars. Drove me nuts.

#2 Damifino on 11.25.22 at 12:47 pm

The PM rolled in late. That pretty much says it all.

“Of course he was late” said my wife, “but he looked like a million bucks when he did appear.”

Which says a little bit more.

#3 Hindsight on 11.25.22 at 12:52 pm

Eyes wide open Garth, wide open !!

#4 Faron on 11.25.22 at 12:57 pm

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

Also shame on our high and mighty banks for allowing this to take place!!

It ain’t the banks fault. They operate within their regulatory environment. It’s the Chretien, Harper and Trudeau governments that didn’t have sufficient spine to depart from international trends and protect Canadians. Homes are not and should not be financial instruments for individual citizens nor for corporations.

The end result will be corporate holding of a much larger portion of detached housing and eventual oligopolistic price control of the rental market. Canada is the land of oligopolies taking Canadians for all they are worth (banks and telecom).

#5 the Jaguar on 11.25.22 at 1:02 pm

” This is how a regional city guarantees it will never be an international business centre.”-GT +++

Investment in cities, investment in countries…you decide.
Found in a small corner of the business section of yesterday’s NP. Sometimes people don’t get mad, they just vote with their feet. Appears the Anti Globalists may soon have a reason to celebrate. :

“Chinese oil and gas major CNOOC has sounded out potential buyers of its interests in U.S. oilfields, two sources said, stepping up its retreat from Western nations amid sanctions concerns and calls for domestic investment.
Reuters reported in April that CNOOC was considering an exit from its operations in Britain, Canada and the United States, because of concerns in Beijing that those assets could become subject to Western sanctions, owing to China’s refusal to condemn Russia’s invasion of Ukraine.
CNOOC has hired Jpmorgan to advise it on a potential exit from its interests in U.S. shale gas assets, which could raise around US$2 billion, the sources familiar with the matter said.
The sources cautioned a sale was not guaranteed, and CNOOC could retain these interests if it did not receive suitable offers or political situations changed swiftly.”

#6 James on 11.25.22 at 1:11 pm

Interesting question:

Property taxes are based on assessed values.

Will new assessments reflecting the insane valuations that have become the norm affect property taxes anytime soon?

Seems like a good way to finance some of the government freebies that have been tossed out

Just a thought…

#7 Train Wreck on 11.25.22 at 1:15 pm

This blog is both amazingly informative, yet incredibly painful in its honesty at the same time.

“Elect clowns. Expect a circus.” Damn that gets me in the feels as its so true

#8 YVR2ZRH on 11.25.22 at 1:15 pm

We are at a strange crossroads. The government is playing 2 opposing sides of the housing market computation. On one side they are pushing very hard on immigration while on the other side they are really blocking foreign capital from being in the market. How is it that a country as big and massive as Canada can’t find a way to fit people into it in a way that prevents runaway real estate values. We need to promote regional centres, create more big cities, change the type of housing and evolve. Instead we push the market both directions at the same time.

There are some solutions. Perhaps we force supply onto the market by penalizing land hoarders and developers who hold the land banks – with small holding costs – withholding supply when they could be forced to build. Perhaps the crown/provinces could take their own stock of land and force supply into the market (this is the Austrian model from what I understand) but we need to have the ability to make the market crash when prices get to high and not have the supply (which is already too low) totally dry up because the landowners know they can control the supply and bring prices back.

Or – we can decide we want to achieve a particular price level . . whatever that is – say 30-50% lower than we have now. And – immigration will not be processed until that is achieved (with a combination of forced supply). Ultimately – if it is truly desired- it can be done – but we have to find a way to push land values as low as possible by restricting access or forcing any land banks into the market.

#9 Nonplused on 11.25.22 at 1:19 pm

Well, I been saying right from the start that capital gains taxes on primary residences make no sense. The first is a moral argument: Primary residences are a living expense, not a financial investment. The second is a practical argument: They are already taxed to death. The third is a mathematical argument: Bubble valuations cannot be realized without collapsing the bubble.

Things like land transfer taxes, non-resident taxes, and the like are just an attempt to reap some of the gains from capital appreciation. Where else is the money going to come from? The only way most people can come up with $50,000 in tax payments to buy a house is to borrow it, and the economics only work if the house is expected to appreciate.

But, like is the case with most bubbles, these proposals are an attempt to somehow monetize wealth that isn’t really there. There are many similarities between crypto and housing speculation. The wealth you and your neighbors think you have because one guy down the block sold his house for a stupid amount of money only really exists if everyone can sell their house for a stupid amount of money. And that sort of finance depends on a constant supply of greater fools. I know, I know, it seems like the supply of fools is infinite, and it may well be, but the supply of fools with money is not. A fool and his money are soon parted.

“Elect clowns. Expect a circus.” Truer words were never spoken. But unfortunately, the electorate is mostly also clowns. They tend to vote for their champions.

Intelligence is very real and also varies widely, much as body size varies from short and wimpy like Ed Grimley all the way to big, strong, and invincible like Dr. Smolder Bravestone. The difference is everyone can see the difference between Ed and Dr. Bravestone. With intelligence on the other hand, what you don’t have you can’t see in others. It is invisible, unless you have it. Only Einstein could tell whether others were as smart as he was. Your average Joe cannot fathom what set Einstein apart. It’s like trying to solve differential equations on a simple calculator that can’t even do order of operations. The concept of “x” and “y” don’t exist on most calculators. Thus, the thinking provided by the concept of a variable cannot be done.

Thus, elections highly favor the folks that can pander to the masses. And yes, those panderers can be very smart people. But they are evil-smart. That’s why they pander. Smart enough to tell you what you want to hear without telling you what they actually want to do. That’s why politicians start off their campaigns in Detroit and then proceeded to sell of American manufacturing. They’re evil-smart.

#10 PBrasseur on 11.25.22 at 1:22 pm

The situation in your example is not great but non catastrophic either, still room to pay more to diminish the principal and clear that debt earlier. I’m sure there are plenty of far worse cases out there.

But the real kicker is this: That property can likely no longer be use as a cash machine to stimulate consumption, no more “free” Audis and trips to the Bahamas!

if anything is going to kill this economy this is it.

#11 Balmuto on 11.25.22 at 1:23 pm

Sixty-one years eight months. Wow.

So even if converted to a 40 year amort her monthly payments would increase sharply.

The same scenario will play out in many other households I’m sure. This does not bode well for the economy.

I think we’re about to find out that 2022 is not 1980 and central banks can’t pull a Paul Volcker without crashing the economy. People saved back then and there was nowhere near the same amount of debt in the system as there is now, even adjusting for inflation. The only bright spot is that unemployment is extremely low, much lower than it was back then. But for how long?

#12 Søren Angst on 11.25.22 at 1:30 pm

… a lot of incredulous citizens in the CRA web … Elect clowns. Expect a circus.

– Garth

————-

The WHOLE Blog prose was hilarious Garth.

The content pretty serious if not depressing but a lot easier to take with humour (says me with no skin in the game).

CRA web or Charlotte’s Web … poor Charlotte.

If there were something that was less than nothing, then nothing would not be nothing, it would be something – even though it’s just a very little bit of something. But if nothing is nothing, then nothing has nothing that is less than it is.

– CRA

#13 SHANE GALLANT on 11.25.22 at 1:31 pm

Wow depressing blog today! What’s the point of owning a house anymore lol!

#14 Brent on 11.25.22 at 1:33 pm

In April 2022 we sold our 1977 4 bedroom bungalow in Port Alberni. Our jobs were there and once we retired we couldn’t wait to leave. The 2 highest bids were 780K cash (older retired buyers with cash) and 792k financed to a young couple. The young couple had a letter included in their bid on how our house would give them a life of marital bliss with the 2 children they planned. Their incomes would have just barely qualified them. We took the 780 cash. These people hopefully now realize they dodged a bullet that would have ruined their lives.

#15 West New West on 11.25.22 at 1:41 pm

Sad to hear about Wyatt. For us all Swiss Mountain Dogs are the best breed allround. Its the way that they look in your eyes as if they fully understand what you are thinking. Hopefully when you finish mourning this one you will give another one a great life that can be had, in the mountains where they always seem to thrive….

#16 Wetcoast on 11.25.22 at 1:43 pm

Living in the Lower mainland, we see first hand the real estate crowd trying to save face. Claiming no substantial house price declines. Yet we know first hand the price declines are real! We sold our home of 9yrs in May. One offer! A full price offer, no subjects. Now 2 properties have sold in our old haunt for $500,000 less! New listings are added $4-5 hundred less than they would have in January of 2022. The ones that sell are always for less than list!

#17 Scott in Gibsons on 11.25.22 at 1:45 pm

Garth you used to claim foreign buyers had little effect on the real estate market so why the change of opinion?

#18 IHCTD9 on 11.25.22 at 1:48 pm

As the market churns with rates and inflation a stalwart foe, it’s easy to see the end of the part-time amateur land lord era coming (where things are done legally and above board).

Just across the street from my office, there is a brand new duplex built 2 years ago. I know the guy who built it, and tha gal who sold it. It was sold to a gta couple for 650K and they rent it out for 4400/mo. everything included. It’s already a zombie investment, and they got about as high rents as can be expected for the area. The house has surely depreciated at least 75K, and when they renew (assuming they were smart and went fixed), it’s dead money at anything over 5%. Future prospects on this place are worse than they are now. It’s a small town with no fancy jobs, and a barely maintaining population.

It’s over. The big appreciation insurance policy is toast. You need to cashflow going forward, and right now RE prices and rates are too high for current rents to make it an investment. Problem is, future prices will be lower, and rates higher. I’d even bet rents could sink too. Horror show for newly minted LL’s.

#19 TalentScout on 11.25.22 at 1:49 pm

What interests me is how/when the stock market senses an inflection point in rates and responds positively. JP Morgan just published a note suggesting that a sustained recovery will not materialize until the Fed makes its first cut, but I think the idea that they won’t make another raise will be enough to turn the tide. Housing, however, will remain moribund, perhaps deteriorating further, as buyers will be reluctant to invest in an illiquid asset where price discovery is a potentially slow process.

#20 chalkie on 11.25.22 at 1:54 pm

Good information today, Garth, I cherish the information that you publish for your readers, you are the best.

Our economy no doubt will undergo some severe choppy consequences before the fog lifts on our country’s housing, by the time we can see and understand what is again in front of us, the Federal Government will have switched over to the Progressive Conservatives, then there is room for the blame game, what a world of absolutely no consequences for any actions.

MP’s will stand in parliament and argue on economic proceedings, issues they have unconditionally no understanding about, it is funny and embarrassing at the same time, now they all get to play economist and tell us what is best for us.

The BA in Economics program is a 3-year program designed to provide a general education:
Out of the 338 Members of parliament (house of commons) I wonder how many of them can unequivocally say that they have a BA in Economics, let alone a Master’s degree in Economics, but these are the very individuals making the decisions on such important property ownership matters.

Members of Parliament. There are 158 Liberals, 118 Progressive Conservatives, 25 New Democratic, 32 Bloc Quebecois, 2 Green and 1 vacant currently.

Very few will have a degree in economics, Trudeau has a bachelor of arts degree in literature from McGill University and a bachelor of education degree from the University of British Columbia, nowhere does any research show that he has a degree in economics, unless he mastered it in some other country.

You can take this to the bank, watch all the MPs argue over those very important matters, and bring lots of popcorn.

Get prepared to pay for the decisions for those who wanted to get rich quick, people that never understood, slow and steady gets you home, (pun it was a home).

For the smart as a whip and dumb as a doorknob buyers, you thought you have seen it all, stay tuned.

So, there you have it, hope for the best.

Quote of the day: Everything is worth what its purchaser will pay for it. There was a time when a fool and his money soon parted, but now it has happened to so many in a short period of time, homeowners made their own choices, the best way to ruin a country is to debauch its currency. The free enterprise system is too important to be left to the competitive forces of the marketplace.

#21 Fragrant Cookie on 11.25.22 at 1:57 pm

“So, if you sell a house purchased less than a year earlier – and cannot prove the sale was because you had to relocate for work, got divorced or died – any gains will not be covered under the PR exemption, But added 100% to income.”

LOL. What gains? This rule comes into effext when the likely outcome of selling a home within a year is generating a loss. Actually, that begs the question, can you now claim the loss since the PR exemption doesn’t apply to dwellings that are flipped within one year? Or this PR exemption is only disallowed if you have a gain? Can one net that loss against employment income?

#22 Shawn on 11.25.22 at 2:03 pm

Higher Interest Rates Coming

People in trouble! Lives ruined! Sad to watch and yet like watching a hurricane roll in and destroy we feel compelled to watch.

And yet the 5 year government of Canada yield has slipped back down to about 3.0% as of yesterday, although up a bit today.

Mixed signals!

Wishful thinking that rates will drop a lot within a year or so?

Who invests in these bonds? Are there structural reasons that pensions and more so insurance companies feel forced to invest in these?

Is the Bank of Canada unloading any of these (it seems not) or just letting them mature and roll off the balance sheet?

#23 Soviet Capitalist on 11.25.22 at 2:05 pm

Is the rule that any gains when a property was help for less than 1 year are not exempt new?
Hasn’t it been there for at least 10 years? Or, at least that is when I first heard about it.

#24 Dr V on 11.25.22 at 2:05 pm

” Canada is getting an anti-flipping tax likely to snare a lot of incredulous citizens in the CRA web.”

https://financialpost.com/personal-finance/taxes/cra-anti-flipping-rules-challenging-transactions

The rules have always been clear (or murky depending on viewpoint!). CRA just had to apply them more consistently. It looks like the law just draws a line.

#25 Gorn on 11.25.22 at 2:08 pm

Garth, I think you would absolutely love the new Disney + series called Andor.

Synopsis:

The obscenely wealthy sip wine, joke and play politics while the poor are rounded up for no reason and sent to a forced labor camp where they build weapons of mass destruction intended to destroy any planet that falls out of line with the rules set by the wealthy.

#26 Søren Angst on 11.25.22 at 2:09 pm

StatCan, Average weekly earnings $1,175.37 September 2022, y/y:

+3.5%

or HALF of Inflation, still, UP better than down.

Nearly ONE MILLION job vacancies

[NOT Seasonally Adjusted]

“The number of job vacancies was up 3.8% (+36,300) to 994,800 in September.”

https://www150.statcan.gc.ca/n1/daily-quotidien/221124/cg-a002-eng.htm

—————–

Yup, BoC rates doing a number on the economy. So much so that there is endemic joblessness in Canada.

That’s right Bank of Canada, you raise 50 bps in December …

‘Cause that’ll SLOW ‘ER DOWN FOR SURE. You betcha. More like:

A Snowball’s * Hope in Hades
[Chasing Rainbows for the Lower Brainland]

* Canadiana op cit

#27 Dolce Vita on 11.25.22 at 2:21 pm

#24 Dr V

The rules have always been clear

——————–

You go through 3 Audits with Charlotte’s Web and then get back to me.

For the Record, W T L:

2 – 0 – 1

The 2 Wins because I wore them out and I passed TOEFL which half of CRA didn’t when pertains to interpreting the Tax Code.

The Loss was chump change. Go away money to let them have their Pyrrhic Victory, the Children Born out of Wedlock that they are.

#28 Adam Smith on 11.25.22 at 2:21 pm

I know we are bringing the hammer down super heavy way too late in the game with all of these taxes and restrictions, but could it be for the best?

Don’t we need to be drastic here to break the Canadian obsession with real estate as an investment? It has warped our society so horribly that it seems we need to aggressively purge the idea it is the best growth asset there is and that you should be buying up extra properties (leveraged to the Ts) instead of investing in companies that bring cash into Canada from abroad.

#29 I’m stupid on 11.25.22 at 2:25 pm

Desperation

We’ll this is new… homeowner couldn’t close or did want to close on a new build in Bradford so he snuck onto the site and tried lighting the house on fire hoping it gets delayed enough so he can walk and not lose 120k deposit plus being sued by the builder. Well he’s an idiot for 2 reasons
1- he was caught on camera and will face charges
2- he used diesel instead of gasoline so it burned slower allowing the house to be saved.

Another homeowner same situation in Innisfil was hoping to do the same except he disconnected the drains in the home and turned the water on. He did it on Friday night and it was Monday when someone realized.
Again caught on camera.

#30 Ponzius Pilatus on 11.25.22 at 2:28 pm

#13 SHANE GALLANT on 11.25.22 at 1:31 pm
Wow depressing blog today! What’s the point of owning a house anymore lol!
————
Nothing wrong with owning a house.
Just buy the size and type you need, and at a price you can afford.
And stay away from realtors.

#31 Jens on 11.25.22 at 2:29 pm

“So, if you sell a house purchased less than a year earlier…”

then you lose a ton of money, and the CRA is the last thing you worry about.
Now you can’t deduct the losses from your income by any chance, can you?

#32 Jens on 11.25.22 at 2:34 pm

Garyll’s statement is truly fascinating. Compare the mortgage balance with the maturity balance, and you’ll find that he will have paid a staggering $1760.28 off his $200k mortgage over the next 3 1/2 years! That’s what paying $898.60/month gets him!
He better have generous prepayment privileges and the financial means to use them.

#33 ogdoad on 11.25.22 at 2:35 pm

Going bush???!!!

G, c’mon man. I almost fell outta my chair.

Besides, trim is where is at these days.

VERY happy Friday!

Og

#34 Sail Away on 11.25.22 at 2:41 pm

Oh man, all those poor unfortunates with giant mortgages in the population centres, who must now work forever (61yrs!).

If only they had logically chosen a less-expensive location before accepting lifetime, brain-blowing debt. Sad.

The WSJ yesterday had an article about a single 37yo American woman who was in a slight, but fixable, pickle with rising rates on her $135k mortgage.

Come to Canada and multiply by 10x. No fix. Just give up. Crazy.

My bros in the US: one bought a nice house on an acre for $33k, then later picked up the adjacent acre of bare land for $14k; another bought a nice house in a medium city for $80k.

If things seem crazy, choose differently. But you may have to wade through tons of bad advice.

#35 cuke and tomato picker on 11.25.22 at 2:41 pm

Justin Trudeau did an excellent job at the Emergencies
Act Inquiry. We should be THANKFUL we have him running the country.

#36 GVASeller on 11.25.22 at 2:45 pm

#16 Wetcoast on 11.25.22 at 1:43 pm
Living in the Lower mainland, we see first hand the real estate crowd trying to save face. Claiming no substantial house price declines. Yet we know first hand the price declines are real! We sold our home of 9yrs in May. One offer! A full price offer, no subjects.
====================
Location, location ,location and condition. We sold ours (5 years old) a month ago for 10% less than the absolute top in the hood .8 showings ,5 offers , sold in 2 days ,well over 1.5 mil. And yes ,it was South of the Fraser , in a decent area mind you. This was when everyone and their dog on this blog was writing how all is dead and RE is crashing.
Not disputing that some areas have gotten well ahead of themsleves and will correct royally,alwasy look at the history of the neighbourhood .

#37 baloney Sandwitch on 11.25.22 at 2:46 pm

No one cares about the FOMOers who bought a house in the last year (except their Mom’s). Hopefully they can get a second job at Uber or Doordash to meet mortgage payments. (I pumped gas in 1990 and was in a similar situation, those times passed and this time shall too).

There is light at the end of the tunnel. Billionaire Stephen Smith is plunking down $2Billion dollars to buy Home Trust. Its a big bet on Canadian housing. Banks look very undervalued.
https://www.gurufocus.com/news/1899193/home-capital-groups-acquisition-highlights-value-in-canadian-banks

#38 Sail Away on 11.25.22 at 2:48 pm

#15 West New West on 11.25.22 at 1:41 pm

Sad to hear about Wyatt. For us all Swiss Mountain Dogs are the best breed allround. Its the way that they look in your eyes as if they fully understand what you are thinking.

——–

All dogs think you’re constantly thinking about bacon, every time you go out without them, you are going to chase rabbits, and you definitely want to know when there are raccoons on the deck at 2am.

#39 ElGatoNeroYVR on 11.25.22 at 2:50 pm

My main concern is about those seniors who believed the lie and went for a reverse mortgage. Within 2-5 years a lot of them wil be toast at 10% rates. Compounding interest at 10% will kill the equity extraquick.

#40 Yukon Elvis on 11.25.22 at 2:54 pm

Plus what happens to Zelenskyy.
+++++++++
So what about Zelenskyy ?

#41 Dogman01 on 11.25.22 at 2:54 pm

#9 Nonplused on 11.25.22 at 1:19 pm

That’s why politicians start off their campaigns in Detroit and then proceeded to sell of American manufacturing. They’re evil-smart.

——————————————-

“We are societies of altruists governed by psychopaths, that those who claim to represent us, those who get into positions of power, are very often wildly different in that psychology to those whom they claim to represent.” – George Monbiot

I personally am awaiting rule by dispassionate AI….I for one welcome the ascendancy of our Robot Masters.

#42 Dolce Vita on 11.25.22 at 2:58 pm

Sorry Garth but …

1st Half done.

USA 0 – England 0

Americani doing well playing Soccer. English not so good so far, playing Football.

Pulisic let a cracker go that hit the upper goal post – so hard that Dolby Atmos made me jump out of my couch.

Italian Announcer Laconic reaction:

“Bella”

Italian has gender so names end in a vowel indicating gender (e.g., a denotes Feminine, o denotes Masculine). Of course, neutered English has no GENDER REVEAL but Italians cannot resist de-neutering Inglese …

Rice becomes “Raa – ees – ah”
Wright becomes (no W in Italian) “Rah – eet- ah”

They nailed the name McKennie and only because he plays in Serie A for Juventus (good player).

Hopefully America fields player:

Weah.

So much fun and too funny listening to play by play from the Italians.

#43 Dave on 11.25.22 at 3:12 pm

In five weeks Canada becomes one of the few nations on earth where a non-resident buyer is banned from purchasing residential real estate. Yes, banned. Go away.

20 years too late.

#44 Bob on 11.25.22 at 3:19 pm

Either something big breaks, or these grasshopper homeowners get a lifeline.

What breaks exactly? What’s so wrong with a giant wave of foreclosures? Renters get kicked to the curb all the time, and no one bats an eye.

#45 OK, Doomer on 11.25.22 at 3:20 pm

The NDP/Liberals want to be helicopter parents to the FOMO millennial. Too bad they weren’t there to help me when I crashed and burned in the ’80s.

I might have voted for them. Desperate people are easy and cheap to buy.

#46 kommykim on 11.25.22 at 3:27 pm

#6 James on 11.25.22 at 1:11 pm
Interesting question:

Property taxes are based on assessed values.

Will new assessments reflecting the insane valuations that have become the norm affect property taxes anytime soon?

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

Nope. Property taxes are based on assessed values AND the mil rate. So as long as your house doesn’t go up more than the average in your municipality, it’s price increase has NOTHING to do with any property tax increases. Municipalities adjust the mil rate every year so that they get enough money to run the municipality. So even if your house price goes down, your property taxes can still go up.
But inflation will increase the costs incurred in running the municipality so look out for that!

#47 PeterfromCalgary on 11.25.22 at 3:32 pm

“BC, of course, has its own 20% non-resident buyer tax, ”

So if your a nurse or some other highly in demand professional do you have to pay this if you move to BC for a job and buy a house? It is already a huge hassle to move and this just adds to it.

The more hoops you have to jump through the less labour mobility we will have in Canada. That will ultimately hurt productivity as workers face increasing obstacles to go where they are most needed.

In failed states truck drivers often have to bribe someone to cross a border. These taxes are the failed state Canadian version. Sure in Canada they go to the government and not some corrupt official but they have the same impact on the mobility of labour, capital and ultimately lower productivity.

The more I learn about all Beggar-Thy-Neighbour crap (like real estate transfer taxes) people have to put up with in other provinces the more I love Alberta.

#48 Shawn on 11.25.22 at 3:36 pm

How Property Tax works

#46 kommykim on 11.25.22 at 3:27 pm
#6 James on 11.25.22 at 1:11 pm
Interesting question:

Property taxes are based on assessed values.

Will new assessments reflecting the insane valuations that have become the norm affect property taxes anytime soon?

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

Nope. Property taxes are based on assessed values AND the mil rate. So as long as your house doesn’t go up more than the average in your municipality, it’s price increase has NOTHING to do with any property tax increases. Municipalities adjust the mil rate every year so that they get enough money to run the municipality. So even if your house price goes down, your property taxes can still go up.
But inflation will increase the costs incurred in running the municipality so look out for that!

**********************************
Kommykim is exactly correct and I don’t think one person in ten understands this.

Property tax increases to my knowledge have always (for decades at least) been set in a way that that does not take advantage of inflation in home prices. A 4% increase means 4% if average house prices stay the same.

There will be no general property tax decrease if home prices fall.

#49 "NUTS!" on 11.25.22 at 3:38 pm

Lipstick on a Pig

And that’s it. With all the debate surrounding economic forces that should dictate a healthy housing market, it all amounts to nothing. Regardless of how ludicrous the statistics say the fundamentals are, our system continues to find ways to prevent the healthy reset to. Instead it develops new programs designed to perpetuate the insanity. Just pucker up and keep applying more lipstick on the swine. If G has the stomach to continue this forum, we’ll be having the same conversation in 10 years.

#50 Prince Polo on 11.25.22 at 3:40 pm

Speaking of electing clowns, they’ll probably buckle to the demands of existing underwater & heavily FOMO’d circus-attendees (aka gargantuan mortgage owners).

Introducing, the totally-affordable seven-generation mortgage! Buy now and give your great-great-great-great-great grandkids the bragging rights to that final mortgage payment on the pile of rubble that wasn’t built to last, or buy never and be a total loser in Canada.

Politicians don’t pander to total losers.

#51 Housing Crash 2022 on 11.25.22 at 3:45 pm

Banks getting into mortgages when you can buy 20 houses in the USA instead of one house in Canada.
Bloodbath Cities across Canada.
Many markets down 500k with steady 50k losses per month
People have figured it out CANADA IS A COLLOSAL WASTE OF MONEY

#52 Summertime on 11.25.22 at 3:48 pm

BoC losing money, but no worries, they will print some more

https://ca.finance.yahoo.com/news/tiff-macklem-acknowledges-bank-canada-123144627.html

No doctors in Ontario.

https://ca.yahoo.com/news/nurse-ontario-family-doctors-emergency-shortage-175844282.html

G7 country can’t produce enough doctors.

Horrific food prices

https://ca.finance.yahoo.com/news/canadas-lettuce-problem-15-bag-152312276.html

#53 Feds on 11.25.22 at 3:59 pm

All I seem to hear is why everything will be ineffective or won’t work? What are your ideas to fix this mess Garth? Status quo? I don’t think all the solutions you talk about will work great, but they will help some. More supply or less demand, not sure the best way to get there.

#54 Fixed on 11.25.22 at 4:00 pm

Where do you get your estimate of the five year fixed rate?

Ron Butler is reporting they are actually starting to come down a bit, like treasury yields. I think we will soon be at a point where variable is higher than fixed.

For you to be correct and Ron Butler to be wrong, yields need to jump again.

#55 NeoCanadian on 11.25.22 at 4:09 pm

I don’t see the problem. Interest rates go back to normal, you just pay more. Canada is totally worth the price. If you don’t agree with me, just ask any wealthy family in Russia, Saudi Arabia or China. You won’t have long to wait. They will be moving here soon and buying the home you can no longer afford because you payed WAY too much.

This will be good for capital markets.

Our strength is our diversity.

#56 BC_Doc on 11.25.22 at 4:12 pm

ER Doc here.

When I’m sewing up patients’ wounds, they love to ask, “How many stitches are you going to put in?” My typical response is, “I don’t know but I’ll tell you when I’m done.” Sewing people up is an art and every wound is different. Sometimes a laceration looks like it will come together with five stitches, but by the time I’m done it’s eight. Conversely the wound which looked at the start looked like it might needs six stitches only needs four. It’s an art, and most times I don’t know the number until I’m finished. When I’m finished though, it’s common to hear the patient comment, “That’s a lot of stitches!”

Bank of Canada and the Federal Reserve— same thing. Tiff and Chairman Powell aren’t quite sure where there going with the interest rate hikes yet. It’s a work in progress and everyone is just speculating.

#57 BABY'S BUM on 11.25.22 at 4:12 pm

With all that racket regarding housing just means more money goes into Crypto.

Keep your bricks and dirt.

The new age investor is going digital!

BITCOIN TO THE MOON!!!

#58 Dolce Vita on 11.25.22 at 4:15 pm

#47 PeterfromCalgary

The more I learn about all Beggar-Thy-Neighbour crap (like real estate transfer taxes) people have to put up with in other provinces the more I love Alberta.

——————

Says the guy that will be dressing like the Michelin Man in about 2 days time and plugging his car in like a Toaster Oven, same for the ‘Chuck.

Both emerging from their Igloo’s each morning hoping for a Hail Mary Lourdes Fatima Chinook. Later, lights out at 3 PM.

Repeat.

– AB Born & Raised, glad for it, gladder yet to have left for heat (and sunlight).

Chopped down my Canna’s yesterday, they were still going strong. Same with the Rose and Bougainvillea. Me letting them know its Winter.

It’s hell here in Italia.

#59 Why no inventory? on 11.25.22 at 4:15 pm

The transaction costs of moving down or to a new location are so enormous now that you would need about a $500,000 price difference to make it worthwhile.

Just another example of unintended consequences.

Everyone is staying put until the bitter end.

Now imagine if you tax people for selling, no one would ever sell.

#60 VS on 11.25.22 at 4:16 pm

ah Garth thinks the US economy is strong; but Stanley Druckenmiller expect a recession in 2023.

And rates increase (including HELOC rates) seems exaggerated in your post today – could be 0.5 in Dec, then 0.25% early Jan. And with the current (fragile) shape of the economy i do not think the rates will stay such high for a long time (6months max) then cut again. Otherwise that recession could be a depression instead.

I am holding 30% in bonds ETF such as TLT etc. rest – HSUV or similar. Let’s see in half year if i am wrong…

#61 Felix on 11.25.22 at 4:28 pm

So, don’t elect clowns.

Elect Cats.

Happy Feline Black Friday!

Spend all your shopping money on stuff for your cats, and you will never regret it.

#62 alexinvestor on 11.25.22 at 4:33 pm

I personally think the BOC will give in … 25bps. I’m interested in what will make houses more affordable though. Capital gains tax ? Nah. Change bidding process. Nah. Interest rate hikes ? Maybe, but it has to be prolonged to absolutely wreck the housing market … which means the banks are in trouble.

Everyone keeps complaining about housing prices, but no one gives any kind of workable solution.

#63 Steven Rowlandson on 11.25.22 at 4:35 pm

Anyone ever hear of offering less? The worst that could happen is the seller says no to the deal. But if you meet the asking price you are on the hook. Do you feel lucky?

#64 Dolce Vita on 11.25.22 at 4:43 pm

#59 VS

Oddly, no YTD information provided by you. Efficacy.

Willing to go out on a limb and say that your batting average YTD is this:

Only 6% of ETFs in first 3 quarters of 2022 had positive returns: Analyst
https://finance.yahoo.com/video/only-6-etfs-first-3-210458082.html

If so, the odds are 94% that you will be wrong.

Me, all my ETF/ETNs + Return for the year.

With that batting average, all I will say is the CBs not raising rates high or fast enough.

Clear from the data so far … little or no effect on spending. For example, Americans spent in the first 24 days of November, on Holiday Shopping alone …

USD $77.7 Billion

I look for the dividends, the only solace until Inflation is stomped down. With the CB effort so far …

in a Month of Sundays is when they will get the job done.

#65 Steven Rowlandson on 11.25.22 at 4:49 pm

How high does interest rates have to go before bad financial behavior is corrected?
Considering the performance of bad actors since the 1970s interest rates might have to go higher than in 1980. Much higher. The punishment must fit the crime to have any deterrent value. 40+ years of mercy for the government and the real estate market was too much as they have not restrained or made amends for their bad financial behavior. Long term disciplinary action is needed.

#66 David Eby on 11.25.22 at 4:59 pm

We are seizing the assets tied to any “unexplained wealth”.

All secondary suites in BC will be legal.

All lots in BC will be able to rebuild multi-unit (up to 3 units per lot in any zone). Municipal land use zoning to be abolished.

At least the above two points will count as an explanation for the upcoming wealth to be accumulated as properties in BC can now produce income without municipal interference in shutting down what they call illegal suites, as well as increasing property value due to the fact a lot will be able to house 3 units.

That means your property will be worth 3x what it is now and you will be able to explain this wealth used for buying more houses and luxury cars so that David does not come take it away when he sees you living in a house or driving in a car better than his.

#67 Dolce Vita on 11.25.22 at 5:03 pm

Why I like to watch World Cup TV from RAI TV.

S. Korea vs. Uruguay

https://twitter.com/Football__Tweet/status/1595775065752313857

Reading from the S. Korea Defense and Goalie line-up …

https://www.google.com/search?q=world+cup+2022&oq=world+cup+&aqs=chrome.0.0i512j69i57j0i512l5j46i512l2j0i512.5805j0j4&sourceid=chrome&ie=UTF-8#sie=m;/g/11spny_y9v;2;/m/030q7;ln;fp;1;;;

Forgot, England 0 – USA 0

Let the moaning begin …

https://inews.co.uk/sport/football/englands-period-national-moaning-usa-draw-never-speak-this-game-again-1995728?utm_medium=Social&utm_source=Twitter#Echobox=1669413234

#68 IHCTD9 on 11.25.22 at 5:07 pm

#35 cuke and tomato picker on 11.25.22 at 2:41 pm
Justin Trudeau did an excellent job at the Emergencies
Act Inquiry. We should be THANKFUL we have him running the country.
———

Aye. Without Trudeau, there wouldn’t even be an emergencies act inquiry. Nor would houses cost 100% more, and our Federal debt would not be 100% higher. Food bank usage would likely not be up over 100% either. Homelessness and drug addiction would probably not be so ubiquitous. Let us give thanks to Trudeau for his good works.

Hey, jokes aside – I really am truly thankful for Trudeau though, I have a garage full of Yamahas paid for by Ottawa instead of me. There’s just no way that would have ever happened under crappy PM’s like Harper, Chrétien, or Martin. If Trudeau decides to run again in ‘25, he’ll get my vote for sure. According to the OECD’s outlook for Canadian prosperity – I’m definitely going to need the money.

#69 Observer on 11.25.22 at 5:10 pm

I was always under the impression that you had to live in a home for one year to avoid capital gains tax.

#70 Reality check on 11.25.22 at 5:10 pm

Canada becomes one of the few nations on earth where a non-resident buyer is banned from purchasing residential real estate.
—————-
In my homeland we have tourist zones where non-citizens are not allowed to buy property. People get around that by incorporating locally and buying through the corporation. So essentially anyone can buy anywhere – you just have the incorporation cost and annual corporation reporting fees.

I wonder whether this work around will allow foreigners to buy in Canada, thus rendering the new regulation toothless.

One thing it does do is keeps a better paper trail of the purchase/sale transaction. So taxation of capital gains by foreigners may be easier.

#71 Newsflash on 11.25.22 at 5:18 pm

DELETED (Abusive)

#72 Sail Away on 11.25.22 at 5:39 pm

#56 BC_Doc on 11.25.22 at 4:12 pm

ER Doc here.

When I’m sewing up patients’ wounds, they love to ask, “How many stitches are you going to put in?”

——–

Followed by: “In hindsight, egging that tourist art octopus mural was a really, really bad idea.”

#73 IHCTD9 on 11.25.22 at 5:41 pm

#69 Observer on 11.25.22 at 5:10 pm

I was always under the impression that you had to live in a home for one year to avoid capital gains tax.
——-

Folklore. The CRA could come at you anytime they felt you were running a biz vs just selling your house. The reason folks don’t understand this, is because the CRA has never gone after these folks. I know one couple who built, moved in, immediately listed, and then sold – 13 consecutive times as a PR. Obviously it’s a side gig, but not a peep from the CRA.

#74 fishman on 11.25.22 at 5:44 pm

Zelensky’s fate will be largely decided by Surovikin & whomever the American General(s) that established a working relationship with him as Russian commander in Syria. The Americans liked working with Surovikin. By all accounts no screw ups. When its open season on some Moslems but not others, by jets bombing away, honest communication is important. Americans & Russians had to be careful of who’s allies they were killing. Also not accidentally killing each other, since they were in the same field of battle. Surovikin is in charge of the Ukrainian front now. Not Putin, not the Kremlin. Of course Putin & Biden will make the final decisions. The input will come by way of back channels between Surovikin & an American General. Zelensky is a knight, a rook, maybe even a queen. But there’s only two kings & everyone else can be sacrificed. The Russians tactical sacrifice for a quick checkmate in the opening failed. We’re in the middle game now. Grinding out a winter war on the Russian steppes. Its sounds romantic if your 10,000 miles away.

#75 Nonplused on 11.25.22 at 5:53 pm

#58 Dolce Vita on 11.25.22 at 4:15 pm
#47 PeterfromCalgary

The more I learn about all Beggar-Thy-Neighbour crap (like real estate transfer taxes) people have to put up with in other provinces the more I love Alberta.

——————

Says the guy that will be dressing like the Michelin Man in about 2 days time and plugging his car in like a Toaster Oven, same for the ‘Chuck.

——————————

I blame global warming. Er, climate change. Definitely CO2. And methane. There are a lot of cows in Alberta. And where there aren’t cows there are deer. Or mountain goats. Or Elk. Some moose. Moose are funny, unless you piss one off. All of them farting all day long.

I long for the days when the prairies were buffalo as far as the eye could see, because buffalo don’t fart and it never got cold.

#76 crowdedelevatorfartz on 11.25.22 at 5:55 pm

Faron!
Now is your chance to “go electric” AND snub Elon.

Vinfast!

https://www.reuters.com/business/autos-transportation/vietnams-vinfast-ships-first-electric-vehicles-us-customers-2022-11-25/

#77 Wrk.dover on 11.25.22 at 6:00 pm

Garyll, I paid an amount equal to 25% of your payment on an amount equal to 5% of your principle.

Who is the jackass that loaned you so much, for such a paltry monthly????

Boomers had it harder! Even so, we paid it down the 25-year term, in seven years.

#78 IHCTD9 on 11.25.22 at 6:01 pm

#62 alexinvestor on 11.25.22 at 4:33 pm
I personally think the BOC will give in … 25bps. I’m interested in what will make houses more affordable though. Capital gains tax ? Nah. Change bidding process. Nah. Interest rate hikes ? Maybe, but it has to be prolonged to absolutely wreck the housing market … which means the banks are in trouble.

Everyone keeps complaining about housing prices, but no one gives any kind of workable solution
———-

High rates will do it. 6+%, and yes they’ll have to stay that way for years. But, if Trudeau decides to give 30-40 year amortizations, then forget about it.

It’s pain. If we receive it, prices will drop. If it’s taken away, then no. BOC, and fiscal policy need to be aligned for a long time if it’s ever going to happen.

My bet is our clown show in Ottawa will do something stupid to undo all the good that is happening right now via organic monetary policy. It’ll happen next year. Pretty much a guarantee looking at their history. They just don’t have a clue what they’re doing.

#79 Wrk.dover on 11.25.22 at 6:02 pm

My bad, 10% of Garyll’s principle.

#80 ROB on 11.25.22 at 6:28 pm

“Elect clowns, expect a circus”. Gold! Absolute Gold! Going to steal that one.

#81 Regjeg on 11.25.22 at 6:42 pm

Going bush? Maybe

Going bust? Assuredly

#82 Classified CDN Real Estate Information on 11.25.22 at 6:43 pm

Home ownership ate up about 50% of household earnings from the late 80s until Y2K.

There was a high level meeting with government and banks in 2000/2001 that resulted in the starting finacialization of Canadian real estate.

By 2007, the gap between home ownership costs and household earnings had closed.

2012 was the first (and only) affordability entry year that matched the generous ownership costs/earnings gap of Y2K and prior, thanks to the fall out from the 2007/08 financial crisis.

It was short lived. The banks were hell bent on getting back on track.

Most people didn’t notice this opportunity in 2012 and it went by in a flash.

By 2018, the financialization of Canadian real estate was pushing ownership costs above total household earnings – uncharted territory.

But what happened next made everything else look minor…

A culmination of the 20 years of financializing Canadian real estate led to the home ownership psychology of Canadians going all in on a buy a home at any cost mentality that was set off like a rocket when stimulus was injected into the financial system during the pandemic.

Everyone put in all of their chips at the same time as a bet of confidence into Canadian real estate, doubling the ownership cost from a level that was already exceeding total household earnings. This wasn’t a good time to buy and now it is just a silly pipe dream.

Rising ownership costs that took over 30 years to get to a stratospheric level that nobody can afford DOUBLED in 1-year from mid 2020 and STILL remains at this level today.

To say that this 20+ year financialization movement spun out of control and morphed into some sort of frankenstein home ownership affordability crisis is an understatement and most are in denial as we are right in the eye of this storm.

But like any good crisis, some will make a lot of money while others are losing it.

It will be interesting to see how big of losses mount along with the next set of tools (highlighted in yesterdays blog) and when these tools will be implemented to regain control of this beast in stabilizing the market of financializing Canadian real estate.

The financialization of Canadian real estate movement isn’t going away, but is going to be one heck of a roller coaster ride through this once in a generation storm.

My bet is that the rules are changed so that people can continue putting all of their money into an unaffordable asset, which would be the best outcome for the banks.

There is also a chance they let the whole thing crash to open up the door for investment firms to scoop in and buy up all of the distressed assets for pennies on the dollar.

The chosen path will become obvious over the next year or two.

#83 crowdedelevatorfartz on 11.25.22 at 6:50 pm

@#78 IHCTD9
“My bet is our clown show in Ottawa will do something stupid to undo all the good that is happening right now via organic monetary policy. It’ll happen next year. Pretty much a guarantee looking at their history. They just don’t have a clue what they’re doing.”
+++
I think they are fully aware what they are doing…
They just don’t care.
The insurmountable debt will be another govt’s problem, not theirs.

#84 483 why not on 11.25.22 at 7:03 pm

We are told to look over the long run at investments. But for some reason we have bent our minds towards the last 20y being normal in real estate where things compounded astronomically.

If you said a home was $250k in 2000, then at the 3% average it should be close to $500k now. I doubt they will go back down that much, but I think they’re already off 20 to 30% and if things don’t come back in a decade, they will eventually be on track again.

The Internet changed the game in real estate. More so than low interest rates. It’s necessary to adapt with new regulation. Though I am in no way an advocate of Trudeau and taxation. So don’t spin me wrong.

#85 Doing my Part on 11.25.22 at 7:07 pm

DELETED

#86 Graeme on 11.25.22 at 7:10 pm

Just pondering my own situation in the context of the broader, very messed up picture. Assume they do manage to kick the can with forbearance, 40yrs, neg equity payments etc. AND prices don’t fall AND rates stay high. Assume also parallel can-kicking measures prevent a big stock crash. Still, I think these people in ivory towers have no idea how this is affecting average middle class people. We bought what we could afford, according to the magic rule of 90 in 2014. Thankfully as a result we aren’t insolvent now (even on a variable) but we’re still being squeezed BIG TIME. We are saving basically zip at this point. This is in contrast to just back in January. If this isn’t going to revert significantly within 12-24 then we are going to need WAY more money for the long haul to retire. Simple as that. I can’t see how I’m special here? Massive wage inflation pressure is going to mean general inflation ain’t going nowhere. There’s other factors like supply and demographics but it’s not like either of those are supportive of deflation anytime soon. We are getting a tiny bit of disinflation right now but it seems like people don’t realize that means prices are still high and rising! Central Banks are the ONLY thing playing the other side of this tug of war and I think they’re really hoping to scare inflation off without a real, protracted fight. I’d love to hear how this happens but I just don’t see how it’s possible.

#87 IHCTD9 on 11.25.22 at 7:16 pm

#75 Nonplused on 11.25.22 at 5:53 pm

I long for the days when the prairies were buffalo as far as the eye could see, because buffalo don’t fart and it never got cold.
———

Buffalo definitely fart, but said farts are carbon neutral. They can only fart out the carbon contained in the plants that they ate. The plants they ate absorbed only carbon from the active carbon cycle. Not to mention, a good portion of the carbon consumed ends up stuck in the buffalo pies deposited on the prairie grasslands. Some of this may end up sequestered.

Much different than Cats. Cats eat other carbon neutral animals, thus ending their farting habits forever. Cats don’t fart. In addition, upon digestion; Cats bury their excrement, thus rendering both themselves, and ultimately their prey – carbon negative.

Maybe Felix has been right all along.

#88 Old timer on 11.25.22 at 7:30 pm

Fools game…governments plan inflation, we fall for it and think we are gaining ground. Why do we need extreme expansion and growth…. what’s wrong with the way things are? More people, more problems, more pollution . 8 billion and counting Stop the madness !
Take me back to 1960…1000 sq ft house 12 K, CMHC backed mtg 35 yrs under $100 month at 6% interest. Money was costly but inflation was held at bay. Governments screwed us all.

#89 Broader Mind on 11.25.22 at 7:33 pm

And yet the 5 year bond yield keeps falling. Hmmmm. At the risk of being told I’m hallucinating again a quick check of developed nations bank rate to 5 year bond yields shows that 5 year yields are equal or mostly greater than the bank rate. The exception being Canada where the BOC purchased almost 50% of the float. This manipulated low bond yield is holding down mortgage rates and damaging preferred rate resets . This slow motion game is keeping the inevitable from occurring. House prices should fall and weak corporations should fail. BOC raising rates on one hand while holding bond rates down is the very definition of suck and blow.

#90 Reality is stark on 11.25.22 at 7:36 pm

I wonder who predicted massive Toronto property tax increases 3 years ago?
Anything else you’d like to know 3 years ahead of figureheads like John Tory?
Peak to trough, 50% price drop guaranteed, predicted a year ago.
And now for my final magic trick, I am going to predict that our socialist strategy of rewarding the risk averse will help to double our productivity vis a vis our neighbours south of the border.
You can take that one to the bank.
Keep electing green woke lunatics.

#91 Leo Trollstoy on 11.25.22 at 7:39 pm

Most are wrong re: Elon Twitter
People will be shocked when it IPOs

#92 Ottawan on 11.25.22 at 8:00 pm

Garyll should have thrown every nickel they saved during covid to the principal, then aggressively pay down the remainder, or 4000$/month. No excuses, the writing was on the wall back in march.

#93 Senator Bluto on 11.25.22 at 8:13 pm

DELETED

#94 mark on 11.25.22 at 8:16 pm

Most of these new regs sound like great ideas to me. Too little too late perhaps, but they much needed. we got in to this mess because the government financialized housing. turned it in to a speculative asset class through cheap money and preferential tax laws..now shockingly, they seem to be starting to understand. anything which lowers the expected return or decreases the buyer pool will decrease investor demand. this is a good thing. whether it’s through taxes, levies, bans on certain investor classes…these are all things we need. not sure why you are getting so huffy about all of it, Garth. canadians can no longer afford shelter anymore. we need to get the investors out. local, foreign, mom and pop, it doesn’t matter. every house that an investor doesn’t buy is a house a family can actually consider.

#95 joe on 11.25.22 at 8:18 pm

The end of RE agent welfare…and a return to market based rates…bring it on and with it, a return to more sane house prices. Long suffering pensioners are finally getting a fair return on their savings.

#96 45north on 11.25.22 at 8:41 pm

In NS, where that province needs every dollar of non-local investment capital it can get, there’s a new anti-CFA (Come-From-Away) tax. It means anyone from Ontario, for example, must pony up an extra 5% of the purchase price on closing just to have a deed transferred. So much for citizenship.

our son went to Acadia (in Wolfville, nice place). We were from Ontario. Out-of-province students were common. I wouldn’t say it was common practice, but some parents would buy a house. The son or daughter would get a room and rent the rest out to other students. You might not call it investment capital but it is definitely money going into Wolfville. Under the new come-from-away tax, the parents would have to pay an extra 5%. The extra tax makes it less likely the parents would buy.

Another family project, we went to Glace Bay NS for a couple of days. Glace Bay needs every dollar it can get.

Who are the bright lights who came up with this tax?

#97 Foodie on 11.25.22 at 8:42 pm

BCs new Uber socialist premier EBY also just voiced a point I had written here over a year ago, ‘ renting spare bedrooms’. When Trudeau insisted we had to disclose the number of bedrooms in our homes in his forced census I immediately asked ‘why’? Now, with EBYs slip of the tongue we see where this NDP fantasy of confiscating owners rights. As in Russia , you don’t rent an apartment comrade, you rent part of an apartment, boarded off or curtained listening to goats being slaughtered in the hallway. You no longer own your home comrade, that’s just a writ away.

#98 Tony on 11.25.22 at 9:20 pm

I’ll see if any renters magically appear before the end of this year at the new townhouse complexes at Markham Road and Major Mackenzie in Markham. So far very, very few are rented.

#99 H on 11.25.22 at 9:20 pm

Calling it now – tax credit for mortgage interest in 2023 budget. You know, help out the middle class.

#100 Ronaldo on 11.25.22 at 9:22 pm

#88 Old timer on 11.25.22 at 7:30 pm

Take me back to 1960…1000 sq ft house 12 K, CMHC backed mtg 35 yrs under $100 month at 6% interest. Money was costly but inflation was held at bay. Governments screwed us all.
——————————————————————
$2.00/hr wage or $4000/yr. House 3 times annual salary. Mtg. interest $700/yr. 1/6 your salary. Yep, those were better times indeed. I was making $1.00 per hour as a bellboy during high school. A desk clerk made $1.25 and a waiter $1.50. Carpenter $2.00. Case of beer $2.50. Coffee .10 a cup and free refills. Glass of beer 20 cents. Hamburger 3 lbs. for a buck. Banana’s 10 lbs. for $1.00. JuJubes 3 for a penny. Can of Pacific Milk 20 cents. etc etc. Yep, those were better times indeed.

#101 crowdedelevatorfartz on 11.25.22 at 9:24 pm

The BC NDP govt predicted a $700 million dollar surplus for 2022.
They were wrong.
The surplus is shaping up to be $5.7 Billion…..

Apparently the Federal govt taxes were $1.5 billion alone.
The other 4.2 billion?
Taxes, taxes taxes.

#102 DON on 11.25.22 at 9:38 pm

#48 Shawn on 11.25.22 at 3:36 pm
How Property Tax works

#46 kommykim on 11.25.22 at 3:27 pm
#6 James on 11.25.22 at 1:11 pm
Interesting question:

Property taxes are based on assessed values.

Will new assessments reflecting the insane valuations that have become the norm affect property taxes anytime soon?

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

Nope. Property taxes are based on assessed values AND the mil rate. So as long as your house doesn’t go up more than the average in your municipality, it’s price increase has NOTHING to do with any property tax increases. Municipalities adjust the mil rate every year so that they get enough money to run the municipality. So even if your house price goes down, your property taxes can still go up.
But inflation will increase the costs incurred in running the municipality so look out for that!

**********************************
Kommykim is exactly correct and I don’t think one person in ten understands this.

Property tax increases to my knowledge have always (for decades at least) been set in a way that that does not take advantage of inflation in home prices. A 4% increase means 4% if average house prices stay the same.

There will be no general property tax decrease if home prices fall.

******
A big big YUP!

An with that info accessible 24 hours of the day…one would hope that more would know.

On another note but somewhat related the liquor store was Christmas busy tonight. World Cup or ?

#103 Doug t on 11.25.22 at 9:42 pm

The CIRCUS is here to entertain nothing more lol – when your in the business of PLEASING people well HELLO you get CLOWNS AND BALLOONS

#104 Tom from Mississauga on 11.25.22 at 9:58 pm

So if a desperately needed millwright from Germany came to Pickering to help start the nuke plant’s refurbishment, a nurse from the Philippines or American executive came to run Magna they aren’t allowed to buy a house?

#105 Sail Away on 11.25.22 at 10:18 pm

#103 Doug t on 11.25.22 at 9:42 pm

The CIRCUS is here to entertain nothing more lol – when your in the business of PLEASING people well HELLO you get CLOWNS AND BALLOONS

—————

‘you’re’

#106 IHCTD9 on 11.25.22 at 10:41 pm

#100 Ronaldo on 11.25.22 at 9:22 pm
#88 Old timer on 11.25.22 at 7:30 pm

Take me back to 1960…1000 sq ft house 12 K, CMHC backed mtg 35 yrs under $100 month at 6% interest. Money was costly but inflation was held at bay. Governments screwed us all.
——————————————————————
$2.00/hr wage or $4000/yr. House 3 times annual salary. Mtg. interest $700/yr. 1/6 your salary. Yep, those were better times indeed. I was making $1.00 per hour as a bellboy during high school. A desk clerk made $1.25 and a waiter $1.50. Carpenter $2.00. Case of beer $2.50. Coffee .10 a cup and free refills. Glass of beer 20 cents. Hamburger 3 lbs. for a buck. Banana’s 10 lbs. for $1.00. JuJubes 3 for a penny. Can of Pacific Milk 20 cents. etc etc. Yep, those were better times indeed.
——-

Best to look at it as hours of work required to purchase X product. My Eldest at 18 made 17.00/hr working a construction labour job. So he’s working 4.24 minutes for a litre of gas (pre Covid), 139 minutes for a case of beer, 7 minutes for a coffee. He can watch a movie locally for 28 minutes work, buy a good used car for 177 hrs work, and by a cheap 27” LCD TV for 12 hrs work.

All things considered, kids probably have it easier today. I had to work 6 minutes for a litre of gas, and 290 minutes for a case of beer in the 80’s as a teen at 5.00/hr.

Houses? Good up till the early 2000’s (we bought a fixer upper for 1.37X dual income in ‘01) after that things went right to crap.

#107 Ponzius Pilatus on 11.25.22 at 10:49 pm

101 crowdedelevatorfartz on 11.25.22 at 9:24 pm
The BC NDP govt predicted a $700 million dollar surplus for 2022.
They were wrong.
The surplus is shaping up to be $5.7 Billion…..

Apparently the Federal govt taxes were $1.5 billion alone.
The other 4.2 billion?
Taxes, taxes taxes.
———————
You don’t understand .
When budgeting, always over-estimate expenses and under-estimate revenues.
It’s called “managing expectations”.
Every Accountant knows that.

#108 Faron on 11.25.22 at 11:06 pm

#72 Sail Away on 11.25.22 at 5:39 pm
#56 BC_Doc on 11.25.22 at 4:12 pm

“How many stitches are you going to put in?”

Followed by: “In hindsight, egging that tourist art octopus mural was a really, really bad idea.”

Ah, rent free livin’ in the mind of a violent sociopath. Too bad it’s in Nanaimo.

#109 THE DANDADA on 11.25.22 at 11:07 pm

“GICs and CRYPTO in epic tug-of-war for young investors: Dale Jackson”

https://www.bnnbloomberg.ca/gics-and-crypto-in-epic-tug-of-war-for-young-investors-dale-jackson-1.1851183

It’s the result of lost trust in the gate keepers of the current centralized financial system. Boomers thought their traditional practices would last forever.

The 2nd amendment is in place for a reason.

#110 crowdedelevatorfartz on 11.25.22 at 11:12 pm

@#107 Ponzie’s Paradigm
“When budgeting, always over-estimate expenses and under-estimate revenues.”

+++
Excuse my shocked ignorance at an actual massive budget surplus….
Since most of the past few decades of Municipal, Provincial and Federal govts have proven incapable of estimating the cost of anything and have repeatedly gone massively overbudget.
Remember the 2010 Owe-Limp-Icks?
How many billion overbudget? 2? 3 ?
Or the Site C dam in northern BC that has ballooned from 3 billion cost estimate under Queen Christy to 16 billion actually spent under Horgie Porgie….and its still not finished.

Spare me the “estimate low, produce high” accounting lecture Ponzie.

I heard it years ago from Scottie on Star Trek….

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwjDi4GL_cr7AhUvCjQIHRexBhEQwqsBegQIKxAF&url=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3D8xRqXYsksFg&usg=AOvVaw2WQzv1r0_7aOCJLqVL7lq6

#111 Michael in-north-york on 11.25.22 at 11:31 pm

If a bunch of homeowners took a VRM that they could barely afford before, and now they can’t make the higher monthly payments; well, let them make the old monthly payments for 3 years.

No bailouts, the difference will be added to the principal. And make them apply for the special payment arrangement, so they realize this is not business as usual and they need to review their options.

In 3 years, they will either find better paying jobs, or they will sell the house but not in extreme rush. A soft landing is always better than a crash.

===
#55 NeoCanadian on 11.25.22 at 4:09 pm
Canada is totally worth the price.
===

Absolutely. If anyone says live is hard here .. well they have no idea of a real hard life.

#112 Faron on 11.26.22 at 12:05 am

#105 Sail Away on 11.25.22 at 10:18 pm
#103 Doug t on 11.25.22 at 9:42 pm

The CIRCUS is here to entertain nothing more lol – when your in the business of PLEASING people well HELLO you get CLOWNS AND BALLOONS

—————

‘you’re

Violent threats and the brains of a paperclip. #SailoWin

#113 MalcolmM on 11.26.22 at 12:53 am

I’m all in favour of a ban on non-resident RE purchases and I don’t care if that makes us look “bush” to globalists. The only reason locals don’t buy our high end RE is that they are priced out of it. Of course that has an effect on other RE in Canada – the high earners who in past decades would buy the high end properties instead buy slightly less desirable properties and so on down the RE value chain.

#114 Steven Rowlandson on 11.26.22 at 6:21 am

“In five weeks Canada becomes one of the few nations on earth where a non-resident buyer is banned from purchasing residential real estate. Yes, banned. Go away.”

As a car dweller that could apply to me since I have been priced out of the country and I was born in Canada and my family has been here since 1883 and the 1750s.
What the real estate market has done is outrageous and genocidal.

Genocidal? Stop throwing around words you do not understand. – Garth

#115 Is Anybody Listening? on 11.26.22 at 7:56 am

Insects for your dog Garth? From that trusted news source CNN. LOL!

Frimberger noted there are some new food developments on the market that are worth looking into, especially for dogs, including lab-grown meat. A 2014 study found insects are a good and nutritious source of protein for pets — and not likely to gross your companion out (unlike humans who would find eating such critters revolting).

https://www.cnn.com/2022/09/15/us/pets-climate-impact-lbg-wellness#:~:text=According%20to%20a%202017%20study,million%20cars%20on%20the%20road.

My dog is now addicted to his cricket treats. – Garth

#116 Kevin on 11.26.22 at 8:21 am

Supply and demand. House prices are bound to increase, just going to be a few more months before that starts, The world population is increasing, and good places to live are not. People need to realize we now live in a global market for everything. The government can ban foreign buyers but that will be changed or a way around it found, always happens.
Canada is a very good place to live compared to the rest of the world and the demand to live here is being driven even higher by the nutbars outside our borders.
Interest rates are not that high, actually they are low and a buying opportunity exists. Remember, when there is a problem, there is always an opportunity to take advantage.

#117 What 'Bailout'? ~ CMHC on 11.26.22 at 9:56 am

#114 What ‘Bailout’ on 11/25
#161 Linda on 11/25

Re: CMHC, glad you picked up on that Linda, and I mean that genuinely. I had a quick look at CMHC’s financials in their last annual report and my layman’s eye can’t make heads or tails of them. CMHC is such a sprawling multi-purpose outfit now. So I’m left with a few questions:

1) To what extent would / could defaults on CMHC-insured mortgages be covered by the proceeds from CMHC insurance fees or premiums?

2) If there’s a shortfall, what happens, i.e., where would CMHC get the $ to pay off the banks / what’s the mechanism that’s in place?

3) How healthy is CMHC’s mortgage insurance operation what with all the changes and uncertainties of the last half-year, and with what appears to be coming?

4) What are the risks for the taxpayer? How are these changing?

A topic for a future blog, Garth?

#118 Dharma Bum on 11.26.22 at 10:12 am

Seems that a lot of policy is being driven by the politics of envy and jealousy.

Canada lacks vision.

We need more people. More infrastructure. More markets. A larger economy. Value added manufacturing and processing.

Mobility should be promoted, not discouraged.

The nation is small minded and provincial.

Leaders’ heads buried in the sand.

Pollyanna.

#119 Regjeg on 11.26.22 at 10:28 am

CRA’s denies a PR claim from 2011 sale transaction:

https://financialpost.com/personal-finance/taxes/cra-anti-flipping-rules-challenging-transactions

#120 Shawn on 11.26.22 at 11:52 am

Nova Scotia and Bad Policy

#96 45north on 11.25.22 at 8:41 pm

Quoted Garth: “In NS, where that province needs every dollar of non-local investment capital it can get, there’s a new anti-CFA (Come-From-Away) tax. It means anyone from Ontario, for example, must pony up an extra 5% of the purchase price on closing just to have a deed transferred. So much for citizenship.”

And said:

our son went to Acadia (in Wolfville, nice place). We were from Ontario. Out-of-province students were common. I wouldn’t say it was common practice, but some parents would buy a house. The son or daughter would get a room and rent the rest out to other students. You might not call it investment capital but it is definitely money going into Wolfville. Under the new come-from-away tax, the parents would have to pay an extra 5%. The extra tax makes it less likely the parents would buy.

Another family project, we went to Glace Bay NS for a couple of days. Glace Bay needs every dollar it can get.

Who are the bright lights who came up with this tax?

****************
Totally agree. We live in Alberta but with roots in Nova Scotia. Our oldest went to St. F. X. in Antigonish Nova Scotia and graduated in 2017. Lots of Ontario and Alberta students.

He was just back in Halifax for a visit and said almost everyone he knew from St. F. X. (local and come-from-away) had left the province. Only those what were now teachers remained. Thank Nova Scotia for subsidising and training the labour supply of the nation.

I don’t know how the Nova Scotia economy manages. Halifax is doing well. The rest of the province chases away investment every chance they can. They particularly hate any kind of resource extraction except the fisheries. The population in generally anti-business.

So the politicians passed rules that the aging population votes for. But they too shall pass (on).