The fearful

The latest news: house sales in Vancouver fell by 53%. In Victoria last month there were 38% fewer buyers. In Montreal, the country’s second-biggest market, deals fell by 41%. In the mighty GTA there were 49% fewer offers inked.

In fact, in a metro area of more than six million souls, just four and a half thousand properties – houses, condos, semis, townhomes, parking spots and vacant lots – changed hands. This is a collapse by any measure.

Now, what about valuations?

All real estate is local. So while in some markets (like Montreal) prices are reasonably stable, in others we see turmoil. The average price in Chilliwack is down 30% now, to just over seven large from the February peak. Langley, at an average of a million, has seen a 40% drop.

In the GTA here’s the scorecard: a detached in 416 was $2.074 million in February. Now $1.56 million, for a plop of 24.6%. In the soulless 905, the current SFH average of $1.329 million is lower by 23%. For context, the greatest price decline in post-war history took place between 1990 and 1992, and averaged 32%. The 2022 tanking is only 10 months old. And mortgage rates go up again tomorrow (Wednesday).

Here is where we stand according to the latest realtor stats, hood by hood:

Click to enlarge. Source: @himansh36013599

.
As you can see, reductions so far in 2022 are between 16% and 45%. Concurrent with that, months have inventory has been rising (climbing towards three). Days-on-market has erupted higher by 240%. And, as mentioned off the top, sales levels have cratered. It seems the cheaper properties get the more that people don’t want them.

This is weird, of course. Remember a year or two ago when the steerage section teemed with comments like, “If prices ever, ever, ever fall by 15% in Toronto or Vancouver, buyers will be all over them like an epic fungus.” Well, so much for that.

Now the latest commentary and analysis from the Toronto Real Estate Board is worth repeating. “The marked downward price trend experienced in the spring has come to an end,” Jason Mercer, chief market analyst, says. “Selling prices have flatlined alongside average monthly mortgage payments since the summer.”

Could this be? Has the spiral lower actually stopped? Or is this realtor crud?

Beats me. But when sales have been cut in half, it’s probably too early to be trotting out stats on overall market trends. And maybe the slowdown in recent price declines is a function of a low level of listings and lousy choice as thousands of sellers withdraw their listings, and buyers wait.

Or perhaps we’re just seeing monumental financial illiteracy at play before our very eyes. When prices flared higher, competition among buyers was ruthless, blind bidding became ubiquitous and sellers chanted ‘greed is good’, FOMO flourished. Prices romped higher. Sales exploded.

But now that we’ve seen prices crash 20%, 30% or even 40%, it’s the worst market in realtor memory. Buyers have vanished. Sellers are turtling. Mortgage originations have crashed. So much evidence that real estate is an emotional asset, and at this moment that emotional needle has swung to ‘Fear’.

Fear of what?

Paying too much. Fear of ending up with more debt than equity in a year as prices decline further. And fear of the economy, as media wusses beat the drum of recession. Yes, mortgage rates and carrying costs are far higher. But prices and debt loads are, in many cases, far lower. There’s little competition, lots of time to shop and do research, and sellers are happy to get a conditional offer – on financing, home inspection or even the sale of another property.

If the fearmongers are correct, prices could fall further. Risk. If the realtors are right, this could be a massive missed opportunity. Fail.

Truth is, we don’t know. Interest rates have yet to peak, but evidence mounts the worst of the storm is behind us. Bond yields and fixed mortgage rates have dipped a little recently, but the stress test remains at a withering level. Logic tells us prices remain absurdly high for average incomes, but when a property can be bought with just 5% down, 20x leverage and with a tax-free raid on an RRSP, doesn’t a 20% or 30% price drop make for tasty math?

Our advice. No change. If you truly need a home and buying ione won’t gut your finances of endanger your family, go ahead. In a year you might look heroic. Or not.

About the picture: “Garth, I captured this photo of “Tiny” on Queen Street in Auckland NZ,” writes Jim. “Tiny was a little shy and got some protection from his owner’s legs but I’m sure he could put up quite a fight if he had to.”

121 comments ↓

#1 TurnerNation on 12.06.22 at 2:35 pm

Vote crossbordershopper for guest blogger haha.

—————

The Smart Cities are here. Electronic Lockdowns.
Oh yes, did you think I was making it up?

The purpose of the 2020-22 lockdowns and QR codes was training for this. China is the model.
Control over Travel/Movement is Permanent — license plate cameras will be enforcing this.

https://www.oxfordmail.co.uk/news/23073992.traffic-filters-will-divide-city-six-15-minute-neighbourhoods-agrees-highways-councillor/
Traffic filters will divide city into six “15 minute” neighbourhoods, agrees highways councillor
And he insisted the controversial plan would go ahead whether people liked it or not.

He said the filters would turn Oxford into “a 15-minute city” with local services within a small walking radius.
People can drive freely around their own neighbourhood and can apply for a permit to drive through the filters, and into other neighbourhoods, for up to 100 days per year. This equates to an average of two days per week.
A maximum of three permits a household will be allowed where there are several adults with cars registered to the address.

Hotelier Jeremy Mogford, who owns the Old Bank Hotel in High Street and the Old Parsonage Hotel and Gees, both in Banbury Road, described the plan as disastrous for business.

https://www.dailymail.co.uk/news/article-11352725/Controversial-plans-stop-cars-travelling-neighbourhoods-Canterbury-press-ahead.html
Controversial plans to stop cars travelling between neighbourhoods in Canterbury press ahead despite being branded a ‘draconian ban on free movement’
A plan to stop people driving between neighbourhoods has come under fire
Canterbury City Council is proposing to divide the city into five districts
Under the plan, drivers would be unable to cross between zones without a fine

#2 Ponzius Pilatus on 12.06.22 at 2:40 pm

One fear is certainly a thing of the past:
FOMO.

#3 Brett in Calgary on 12.06.22 at 2:44 pm

Agreed, nobody can know the future, but I am betting this is our 2008.

#4 Ponzius Pilatus on 12.06.22 at 2:47 pm

Alberta Cowboys:
In case you missed this from the NP.

Rex Murphy: Alberta hasn’t been ‘ignored’ Danielle Smith, quite the opposite

Et Tu, Rexus

#5 Pain_Trade on 12.06.22 at 2:49 pm

Attention all shoppers! The Xmas event is now over. Please exit this market place.

#6 TurnerNation on 12.06.22 at 2:50 pm

What’s really going on in Kanada.

RSV and Corvid are being removed from the news cycle. Replacing it is MAid. Not a penny extra spent on health care, mental health care in this Former First World Country. (In some countries the “donation” part is forced…that’ll never happen here!!)

.Medically assisted deaths prove a growing boon to organ donation in Ontario (ottawacitizen.com)

——–
——-

2023 will be a(nother) hell of a year. Everything financial will continue to be turned against us.
– Inflation/prices
– Interest Rates
– Mortgage rules
– Taxation (income, property)

And, finally, your house will be taxed upon its sale – cap gains. All these years the people thought their home a “retirement plan”. Nope all the above means retirement will be but a dream for many.

—— Say….remember when Energy Audits were just an Internet Consp. Theory? If you cannot or will not perform the repairs, the State will seize your property. You will not be able to buy or sell without the Mark from the government.
Of course each year the requirements will be tightened (karbon you recall) and the costs, fines will become increasingly prohibitive

https://www.gov.uk/buy-sell-your-home/energy-performance-certificates
Energy Performance Certificates (EPCs) are needed whenever a property is:
built
sold
rented

#7 cuke and tomato picker on 12.06.22 at 2:51 pm

Why are the TSX and DOW in the red so much?

#8 Luddite on 12.06.22 at 2:52 pm

Much love to Garth and D, thank you as always!

#9 Garrett on 12.06.22 at 2:55 pm

As always, thanks for the wise words. Much appreciated in what seems like uncertain times. Thank you.

#10 Leftover on 12.06.22 at 2:57 pm

FOOP and the market is at a standstill. Truth is that rates will level, but stay there for years. That makes owning a house, at current prices, not just risky, but maybe irresponsible.

#11 Dolce Vita on 12.06.22 at 3:04 pm

Total Consumer Debt Climbs to $2.36 Trillion as Consumers Lean on Credit Cards
– Equifax

+7.3%

3rd Qtr 2022 vs. 2021

Good news, delinquencies remain low.

And the above includes mortgages. Their volume dropped by about 23%. *

https://www.bnnbloomberg.ca/consumer-debt-tops-2-36-trillion-in-third-quarter-up-7-3-from-last-year-1.1855427

* That -23% drop in volume a kick in the nards to the Banks. And they started to nose-dive again, YTD Big 5 Bank share prices …

https://www.google.com/finance/quote/BNS:TSE?comparison=TSE%3ATD%2CTSE%3ACM%2CTSE%3ARY%2CTSE%3ABMO&window=YTD

————————-

Garth, the short term here is not looking good. Mr. Market again today in the red by a lot and the above disheartening to say the least.

#12 chalkie on 12.06.22 at 3:10 pm

One of the things that I follow that you never hear much hype about when following how the economy is doing, is the amount of money being spent in Commercial and Retail Advertisement (Ads). Radio, Television, social media, and outdoor advertising are examples of where business owners focus their advertisements.

In my opinion, this gives us a good overview on how the business owners and merchants confidence levels are for the foreseeable future both shorter and long term.
Consumer spending is key to every market economy, it is our behavior that produces fundamental consumption indicators, for the good, bad, or indifferent economy, business owners are watching you and I, as we spend and what habits we currently have, is how they make and determine what goes into their advertising budgets to support tomorrow’s shopping habits.

Consumer spending is the MOST vital component of any economy. No business wants to get stuck with back rooms and warehouses full of merchandise that is not turning over, outdated, and not producing a return on their investment.

Consumer spending ranges anywhere from 50 to 75% of our gross domestic products (GDP); it cannot be ignored. If our sentiment went unmeasured, there would be NO indicators to show signs of growth, cutbacks, downturns, or any sort of the ugly word (recessions).

The amount of business Advertisement budgets appear to be getting smaller in my tracking, creating a negative spending budget, there is a picture here that should be looked at more closely and not disregarded.

Today’s overview on home sales for November, listings and price reductions for homes were not a positive one for current homeowners, the rising interest rates has put a damper onto the housing market values, a slide of 7% this is nothing to sneeze about, its serious money & at the same time there is a new low on listings and in fact it is an historical low.
On an annual basis, sales were down -49%, for the Toronto region, this is a number that can only be carefully assisted, (confidence levels).
Looks like the TRREB opinion message is now getting closer to what we already knew, commented on prior in this blog and continue to know, we have hurdles to get beyond before there is enough confidence to leap back into the real estate markets with any volumes of sales, tough days ahead for the longer term.

This morning, The Toronto Real Estate chose their words carefully, in saying over the coming years home ownership will pick up, notice the wording, (over the years). That part of the interview alone spoke volumes for today’s interview. It would be nice to be part of the inside conversations that are being held inside the TRREB boardrooms, they are very cautious on spreading short term optimum for home sales, that was my opinion of today’s statement, perhaps they may have been following Garths Blog and learned a few things, we have been discussing this since last spring, “oh well”, some people are slow to learn, we cant help that or can we?

My own calculations-based on the Toronto area alone, there was a shortfall of 4,800 less home sales for November that translates into approximately 3.6 billion Dollars that DID NOT turn into consumer spending, that’s right, Toronto area and surrounding alone, on a normal month, the sales would have been 7.2 billion Dollars.
There were a lot of people with smaller paychecks that worked on commission for November, money that was needed for family expenses and the soon to come Christmas season in front of us.

Factor in all of Canada, you come up with a lot of consumer spending that did not take place in November. Pay attention to big business advertisements, they are telling you when to save and keep a little cash, it is king in a bear market.
Myself, I can see at least another good six months that will be very rocky months ahead, with a few upticks here and there, but it is not a time to be rushing out and spending all your money, keep a reserve for a rainy day.

Loblaws got called before the Federal Government yesterday December 5th to explain their excessive profits at a time of retail price suffering increases for all Canadians. The response from Loblaws was “in a nutshell”, it is not true what people are saying, we have been pushing back on suppliers and in fact we have saved Canadians a big 500 million dollars this year from excess cost from our suppliers.

We are not stupid Loblaws, numbers are just numbers to sound good if displayed in a boardroom setting, 500 million dollars divided up by the population of Canada, works out to a saving of $13.21 each for the full year. Divide that by 12 months and we each saved a whopping $1.10 each per month, thank you Loblaws for the big gift. The Federal price gouging inquiry was to deal with excessive profits. Do you feel justified in saving one dollar and ten cents per month? I do not, go figure, you could not even buy one chocolate bar for your great big savings from Loblaws answer to the Feds, but it looks like all indications point to their answer being accepted.

Mr. Loblaws, do not forget there may have been a few of us consumers that finished university, BA, MA, including MBAs in business degrees etc. We can figure in statistics, geometry, probability theory, math and applied mathematics, nothing adds up to your less retail sales vs an increase of a 30% profit margin. Did you know that lawyers can surely figure, but figures do not lie. I would love to have been part of the interview panel, but life is life and I know where I set in the hierarchy as an ordinary Canadian in not being able to set on the handpicked panel, your example of Pepsi Cola-Frito Lay chips was preposterous and irrational, not acceptable to this great country of ours.
To show you are serious Mr. Weston & Loblaw’s, you could donate 5 billion dollars to the Canadian food banks, shared up by our Provinces and Territories by population proportion, then we would know, Loblaws does have a Christmas heart of joy, its money that you should not even have in your coffer stash right now, it belongs to the grocery clients who are Canadians, money that was taken by unnecessary markups in groceries, we ask that you give it back to the people who needs it most.
For the record Weston’s and Loblaws, we are not talking about the begging donations asked for at the cash register checkouts and self serves, but rather right from your own pocket.
Loblaws, what happened to the extra 30% profit margins that you were called into Ottawa over to explain how you earned this money, the inquiry may have gone by the wayside, I guess PR does a lot for the average consumer. “Oh well, that is my two cents worth.” My views are just that, My own opinions.

Looks like Porter Air Lines out of Toronto are about to become a thorn in WestJet and Air Canada’s side with their new 132 passenger carrying E-195 Embracer jets, their focus will be on the economy-class passengers, so long to the elite flyers, we will have a better selection with many more stops from the skies across our great land and “oh yell by the way” better pricing than you bigger guys.

Quote of the day: A bargain is not a bargain until it is something you need.

#13 Captain Uppa on 12.06.22 at 3:15 pm

You touched on mortgage rates a tad, but is this not the overriding factor for lower sales and a vanishing demand?

I know emotion plays a role as well, but can it not simply be that people cannot get mortgages for the prices that stubborn sellers are holding onto?

Also, investors are now more highly indebted and have no way to buy.

As a side note: York Region seems to be holding up well against the rest of the GTA. I wonder why that is.

#14 Bob on 12.06.22 at 3:16 pm

If you truly need a home and buying [one] won’t gut your finances [or] endanger your family, go ahead.

What if you truly need a home and can’t possibly buy one without gutting your finances and endangering your family (and maybe not even then)? What do you propose in this case, Garth? Is it really so much to ask for a secure and comfortable place to live?

Nobody has a right to own real estate. – Garth

#15 Marvin on 12.06.22 at 3:17 pm

The chart you just put in the post Garth is exactly why Tiff and our inept Prime Minister should be on EI right now. These people stood in front of the country and assured them that low interest rates were here to stay. It was insane to think that interest rates could stay at <2% for a protracted period of time.

An entire legion of buys have been financially destroyed by a government and central bank that did not do it's job. And yes, people are responsible for their own actions, but people, especially average, non financially savvy people should be able to rely on the guidance offered to them by their central bank and finance minister.

#16 Nonplused on 12.06.22 at 3:17 pm

“Interest rates have yet to peak, but evidence mounts the worst of the storm is behind us.”

Maybe. But prices are still rising by 6.9% per year. I guess that’s better that 8%, but still not good news. It’s sort of like Satan announcing good news! Today only, hell will only be 690 degrees instead of 800! Take it for what it is. You are still going to burn.

The economics of buying a house for $1,000,000 on an income of say $100,000/y only ever made sense if the house was appreciating rapidly. This is the true definition of a bubble; when asset value disassociate from their economic utility. The price of housing should always have been some sort of reflection of the avoided rent. It is not. Same as how a stock price should reflect expected forward earnings (which many do not).

Houses are not going to be a “buy” until the cost of ownership is around the cost of renting, with maybe a 6-7% annual gain which would compete with the profit you might get in a conservative portfolio. We got a ways to go.

As for interest rates, the stunning thing to me is that people really came to believe 2% and lower was “normal”. It defies human nature. It is too close to the natural time value of money which is brought about by mortality. If we assume 60 years of useful life, by that I mean the time from when you enter the work force to the time when you can no longer enjoy your money (so age 20 to 80), the natural time value of money is 1.7%. And if you put a 50% tax burden on it then it is 2.5%. This means that if interest rates are below 2.5%, the economic thing to do is buy that boat now rather than invest. And that is exactly what people did. And then you add inflation to that, because if the boat keeps going up by 7% per year, you’d best get it now before it gets away on you. This is human nature in economics. And after all, what is economics but the study of human nature?

(That’s why economics is “the dismal science”. It would work if we just used observation and statistics, but we don’t like the findings because it suggests a less altruistic state of human nature than we like to assume of ourselves. So we do silly things like support socialism because we believe everyone would be happy to share the fruits of their labor, when reality states that we are more likely to steal stuff from our neighbors than share with them.)

Interest rates are going to keep going up until inflation is back down to 2%. Rates are going to stabilize at the inflation rate plus the natural time value of money, which is about 1.7% so rates will be 3.7%. But then, given the tax regime we live under, that is 5.5% before taxes. 5.5% is the natural rate for Canada when inflation is 2%. Get used to it. Don’t plan on anything lower.

Folks, investment returns have to be inflation plus the natural time value of money plus taxes just to be neutral, or you are better off buying a boat. After all, you will die. The net present value of all the money you have after you are dead is zero.

#17 The Original Jake on 12.06.22 at 3:20 pm

Here in the GTA, prices are still higher than pre-pandemic. I will wait. The rapid price declines may have passed but I still think we slowly bleed lower from here on until the first rate drop which is not happening next year… maybe late 2024. That will be the trigger.

#18 Sask to AB on 12.06.22 at 3:23 pm

re #9 Garrett on 12.06.22 at 2:55 pm

Could not have said it better myself!!!!
Thank you Garth for all you do to enlighten and educate us.

F59AB

#19 Winnie on 12.06.22 at 3:33 pm

This not the end, or the beginning of the end. It is the end of the beginning.

Consumer debt growing at annualized rate of 30% means that people blew past their limits long ago and are panicking now.

Clean up on aisle 2 bad so sad coming.

#20 Dolce Vita on 12.06.22 at 3:33 pm

Well, remember me preaching about EV vs. Power Grid capacity?

And this from the Bankers that have cash and mountains + lakes + rivers coming out of your yin yang …

“Switzerland plans to BAN electric cars from the roads and order games consoles turned off during power shortages in a bid to reduce energy consumption’

https://www.dailymail.co.uk/news/article-11494991/Switzerland-BAN-electric-cars-roads-power-shortages.html

“Electric car journeys could be restricted in Switzerland under plan to deal with energy shortages”

https://www.telegraph.co.uk/world-news/2022/12/03/electric-car-journeys-could-restricted-switzerland-plan-deal/

——————–

Basically, it’s going to boil down to this for all you Cdn EV Mavens:

1. Generate your own power at home *

or

2. Pay to have power generation plants built for your battery powered Tonka Toy. Mucho big Denaros.

or

3. The Switzerland option.

or

4. Power Rationing.

—–

So far, only 1 or 2 Elon, Tesla generate your own power charging stations in the World. Means #1 above is wishful thinking if Tesla can’t even get the job done.

* Avg US Home consumes 10,715 kwh/yr
Tesla Model 3 = 4,260 kwh/yr (20,050 km/yr … 21.25 kwh/100 km) +40% of regular home consumption.

They won’t see your home for all the Solar Panels and Wind Turbines on the lawn, roof, fence line, wharf/beach (for La La Land & Lunenburg), etc.

Great curb appeal for future Cdn RE. Can’t wait to read the BS Realtors will write trying to make the Cdn EV Home fetching.

#21 kubie on 12.06.22 at 3:36 pm

Can anyone recommend where I find this information for AB? I would love to keep a pulse on the Calgary market but don’t know where to find reliable and accurate information that is not pieced together by Realtors. Thanks!

#22 Polozified on 12.06.22 at 3:40 pm

Greed has ruled for much too long; let fear get its fair shake

#23 SK on 12.06.22 at 3:47 pm

#4 PP
You completely misunderstood the article whilst stewing in your vile anti-Alberta hatred.

#24 Dolce Vita on 12.06.22 at 3:48 pm

… speaking of the Anti-EV Bankers

Portugal 5 – Bankers 1

89′

and that’s without playing Ronaldo.

Morocco eliminated Spain today.

————

Garth, these are all bad omens.

#25 RMTL on 12.06.22 at 3:51 pm

Hey Garth,

Any chance you could focus on Québec’ RE (and Montréal’s, country’s second-biggest market as you said) in one of your futur article ?

All the focus seems on VAN, TOR and Bunny patch…
We, inhabitants of La Belle Province, are feeling a little bit deprived of your wisdom here ;-)

Thanks for your great articles as always !

#26 Slim on 12.06.22 at 3:52 pm

“Alberta hasn’t been ‘ignored’ Danielle Smith, quite the opposite”
— Rex Murphy

The squeaky wheel gets greased, but sometimes it gets replaced, too.

Alberta voters make sure you mark May 29th, 2023 on your calendars!

#27 Is Anybody Listening? on 12.06.22 at 3:53 pm

DELETED

#28 Honest Realtor on 12.06.22 at 3:54 pm

“If the realtors are right, this could be a massive missed opportunity. Fail.

Truth is, we don’t know. Interest rates have yet to peak, but evidence mounts the worst of the storm is behind us.”

Thank you for this balanced view, Mr Turner. I am in general agreement. This time will end up looking a lot like 2003 or 2013 in retrospect. And no, I am not trolling for buyers, the smart ones already keep my phones ringing every week. When others are nervous can be a great time to buy. The gains over the next 10-20 years should be very pleasant. Regret may last much longer.

#29 kommykim on 12.06.22 at 3:56 pm

RE: #14 Bob on 12.06.22 at 3:16 pm
If you truly need a home and buying [one] won’t gut your finances [or] endanger your family, go ahead.
What if you truly need a home and can’t possibly buy one without gutting your finances and endangering your family (and maybe not even then)?

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

Then rent or move to where housing is cheaper.

#30 SAN DIEGO CHICKEN on 12.06.22 at 3:57 pm

CANADA’S HOUSING MARJETS ARE TOAST.
PUT ON YOUR CRASH HELMETS AND PADS.
BUY IN USA. RENT IN CANADA.

#31 the Jaguar on 12.06.22 at 4:03 pm

@#139 Don on 12.06.22 at 1:03 pm++

Medvedev already published a map in six months ago. Macron in Washington, and Joe B making statements as well. As predictable as Z being named Time Mag’s ‘Person of the Year’. It was always going to end this way. All so unnecessary and tragic.

#32 Faron on 12.06.22 at 4:05 pm

#20 Dolce Vita on 12.06.22 at 3:33 pm

You need to look a little more closely at this. First, these are contingency plans, not standard operational plans. The EV bans kick in at the absolute worst (near blackout) power shortage level and long after limitations on most things. This is very unlikely and, frankly, totally prudent.

You are far too susceptible to media sources that are aiming to get people like you worked up (so they can sell more ads). Calm down, look more closely at what the Swiss Government is saying, not what trashy Brit tabloids are luring you with.

JFC

#33 The real Kip (Ret) on 12.06.22 at 4:12 pm

Anything less than a rate hike of .75% by the BoC tomorrow will be a FAIL. Inflation is still front running the BOC and the puppet banks posted rates.

#34 crowdedelevatorfartz on 12.06.22 at 4:23 pm

@#129 Lorne
“Or a boss that recognizes talent and promotes her to Global National.”
+++
Talent?
Newsreaders have talent?
I thought gender , color and the endless, politically correct, anti colonialism, harangue had more to do with it.
Not to worry.
National viewers will tire of the endless, colonialist blame session as well.
And then she can go work for the CBC.

#35 Linda on 12.06.22 at 4:28 pm

Well, the fear of paying too much due to higher interest rates may be one of the reasons folks are not buying. Using the lowest price from today’s table – $713,450 (Brock) with 20% down, the monthly 5 year fixed from a ‘Canadian Lender’ would result in a monthly mortgage payment of $3,284. Not to mention wanting bragging rights for the lowest possible price. Everyone wants a bargain & of course now prices are dropping everyone thinks they will be able to get their dream home for a lot less.

#36 TheSpangler on 12.06.22 at 4:34 pm

#14 Bob on 12.06.22 at 3:16 pm
If you truly need a home and buying [one] won’t gut your finances [or] endanger your family, go ahead.

What if you truly need a home and can’t possibly buy one without gutting your finances and endangering your family (and maybe not even then)? What do you propose in this case, Garth? Is it really so much to ask for a secure and comfortable place to live?

Nobody has a right to own real estate. – Garth

——————————————————–

Move to somewhere with cheaper housing, pretty easy. I can vouch for this also, as I did this.

#37 December on 12.06.22 at 4:38 pm

It is December.

It was November.

We’ll need to wait and see March. April.

#38 Faron on 12.06.22 at 4:39 pm

#125 Sail Away on 12.05.22 at 4:39 pm
#122 Faron on 12.05.22 at 2:12 pm

…any and all of my activity on this blog is only and exclusively on this blog. I’ve not shared your (or anyone’s… except Garth’s) name, position or viewpoints with anybody IRL.

Further to this, that’s not how the internet works. Your activity here is broadly searchable with Google and other engines. This is not an isolated room. Your activity here is no different than publishing an anonymous op ed about me in a paper. My partner’s colleague reads/lurks steerage as do many others. Given that readers dwell IRL, then your activity is, in fact, IRL.

This is very strange. More so given your disappearance. Either you got served or you are concocting some kind of effort against me.

#39 Diamond Dog on 12.06.22 at 4:44 pm

Momentum and trends:

Lets get right to it. First, lets talk about U.S. PMI because it’s a leading indicator and it’s formally now in recession:

https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/november/

PMI in recession shouldn’t be a surprise to investors as the trend in growth has steadily declined for those who follow it. This does not bode well for the U.S. economy considering the Fed will continue to raise rates. Corporate earnings/employment are lagging indicators meaning the impacts of recent rate hikes (including the one to come in 8 days or so) have not hit the books.

When we look at a chart of the Dow Jones Industrial:

https://www.cnbc.com/quotes/.DJI

It’s too soon to call, but the trend is headed down. If the last 3 market wobbles are any indication, we are looking at what looks like a sell off that will last into the end of January meaning experienced traders have already put in their puts as of Monday, especially those following PMI. The selloff could last longer this time. The rate sensitive, highly speculative NASDAQ:

https://www.cnbc.com/quotes/.IXIC

… looks poised to find new lows. It’s been said many times on this blog. The Fed, in a bid to battle inflation, needs to crush demand. If they don’t crush demand, high inflation will lead to worse than a recession so they haven’t got much choice now but to keep raising rates and put the money supply into contraction.

In so doing the Fed will raise rates above “neutral” (the rate that is neither growth or recessionary), thought to be by Larry Summers between 4 and 4.5%. (why do I mention Summers? He has cred, he’s a Democrat and so is Brainard who is vice chair of the Fed responsible for monetary policy) The Fed rate is at 4% now (add QT and we are likely at neutral). When the Fed raises rates to 4.5% next week, the money supply will be thought in the minds of those who follow the money supply, to be in contraction.

Contraction means recession for just as expansion of the money supply means the mother of all wealth effects (but leads to high inflation when the money supply rapidly expands), contraction of the money supply means the mother of all poverty effects, dictated by how far the Fed pushes past neutral and that means demand destruction.

Simply put, when you have more money circulating in the broader economy chasing the same amount of widgets, it gets priced in, in the form of inflation. When you have less money circulating in the money supply chasing the same number of widgets, it also gets priced in and prices come down. So, it’s a big deal when the money supply reverses.

We are seeing this take effect in the bond markets. Yields have dropped this week (helping prices so investors owning bonds aren’t in a total wash) and the catalyst is a higher Fed rate. (this doesn’t mean government bonds stay in a ditch though, more on that later) The Fed rate decides credit conditions “through which new money is created in the money supply”. As the Fed rate goes higher, credit conditions tighten, (less new money is created) and the effect is reduced demand for bonds. Thus, we are seeing this effect play out now with growing inversions and have all year:

https://www.cnbc.com/bonds/

The 30 year bond for example, is linked to the U.S. housing mortgages as all housing mortgages are 30 year terms. As mortgage rates go higher for the 30 year, the price of the 30 year treasury goes lower because of decreasing demand in housing sales/prices reducing the demand for 30 year bonds. We are seeing the same effects here in Canada in different terms of course, where volumes/prices are tailing off because housing has become an illiquid asset, a realtor’s nightmare.

Sellers don’t want to accept less for their homes and buyers out of a lack of affordability more than any other driver coupled with smelling a future buyers market, aren’t buying, so houses sit. Take a wild guess as to who wins the battle between sellers and buyers as time marches on and if recession hits Canada and unemployment ticks up forcing sales… Hence, Garth has expanded on this phenom well. My point is, we are also seeing it in the bond markets as demand falls and bond prices plump.

A couple things of important note are bond price inversions between the 1 year and 10 year plus the 2 year and 10 year. The inversion between the 1 and 10 year has now widened to 1.2%, while the 2 and 10 is at .82%. The wider these inversions grow, the worse the recession tends to be in historically. In fact, all other U.S. government bonds are inverted with the 1 year presently and there’s a message in this as well.

To wit, I would council readers to search for 1 and 10 year inversion charts to note the causality of widening spreads and recession over 60… 70 years or longe if we can find it. There is only one time in history where a recession didn’t follow inversions going back to the 50’s, it was in the early 60’s and the reason why it didn’t cause a recession was because GDP was around 10% and fell to .2%.

Those were boom times, hence baby boomers and swollen middle class, different times but today? Its not different this time, its a question of severity. If the spreads of inversions are any indication, the U.S. is headed for a bruiser and Canada is not an island. Interesting times ahead.

#40 Timmy on 12.06.22 at 4:48 pm

Why haven’t we seen reductions of similar magnitude on the West Coast where valuations are even more ridiculous?

#41 BEENTHERE on 12.06.22 at 4:59 pm

“Truth is, we don’t know. Interest rates have yet to peak, but evidence mounts the worst of the storm is behind us.”

I bought a house in 1979 with a 9 3/4% mortgage and thought the same thing. It was many more years until that rate was seen again.

My point – nobody knows the future.

#42 Zed on 12.06.22 at 5:02 pm

Just like an airliner, the BoC has to slow the climb well before it reaches its cruising altitude so as to not overshoot.

If the pilot wants to level off at 25’000ft (FL250) he has to reduce his rate of climb a few hundred feet before if he doesn’t want to go beyond the cleared altitude. Similarly, the BoC has to slow down its increases to let time do its thing to the markets.

More than a quarter point increase tomorrow will unduly hurt the economy and the people.

#43 GratefulCanadian on 12.06.22 at 5:03 pm

“Nobody has a right to own real estate. – Garth”

Garth, could you please elaborate on that statement, please?

Do you mean in Canada, or globally?

#44 Lower the Boom....er not on 12.06.22 at 5:06 pm

Yogism 11: “I am periodically reluctant to make the point normally found at the end of each sentence . “

#45 Ronaldo on 12.06.22 at 5:18 pm

#24 Dolce Vita on 12.06.22 at 3:48 pm
… speaking of the Anti-EV Bankers

Portugal 5 – Bankers 1

89′

and that’s without playing Ronaldo.

Morocco eliminated Spain today.
————————————————————-
I needed a break ok?

#46 "NUTS!" on 12.06.22 at 5:18 pm

Is a 20% drop a good time to buy? Not when prices increased far more than that over the past two years. Yes, 2-3 years ago people were saying a 20% drop would trigger buyers to jump in. The problem is prices are WAY higher than they were 2-3 years ago. I agree it’s impossible to predict what can happen, however, it certainly isn’t more affordable because prices fell to where they were 14 months ago.

#47 Headline Reading Ponzi-putz on 12.06.22 at 5:25 pm

#4 Ponzius Pilatus on 12.06.22 at 2:47 pm
Alberta Cowboys:
In case you missed this from the NP.

Rex Murphy: Alberta hasn’t been ‘ignored’ Danielle Smith, quite the opposite

Et Tu, Rexus

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

Why do you keep embarrassing yourself by only reading headlines and not the actual articles?

The link you posted is very much in support of Smith. Makes the point that Alberta WISHES it had been ignored by Ottawa.

Maybe if they published in German you wouldn’t be so lazy and come off so silly?

#48 Cray-cray Alert on 12.06.22 at 5:27 pm

#38 Faron on 12.06.22 at 4:39 pm

This is very strange. More so given your disappearance. Either you got served or you are concocting some kind of effort against me.

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

No just the voices in your head again.

Please get help. It’s been said so many times and you never do.

Mental illness is a serious condition.

#49 Bankersorta on 12.06.22 at 5:28 pm

As a wise man has said don’t sell into a storm or out of fear, prices on these “securties” will also come back up over time as history has demonstrated, but at this point it is only a “paper” loss from extreme highs. Stay the curse and ride it out.

#50 jess on 12.06.22 at 5:37 pm

“in /on behalf of” so why would one running a company keep paying these “rogues”?

This was a case about greed and cheating,” said Manhattan District Attorney Alvin Bragg. “The Trump Corporation and the Trump Payroll Corporation got away with a scheme that awarded high-level executives with lavish perks and compensation while intentionally concealing the benefits from the taxing authorities to avoid paying taxes. Today’s verdict holds these Trump companies accountable for their long-running criminal scheme.”

#51 Shawn on 12.06.22 at 5:37 pm

What’s It Cost to Live?

#136 Russ on 12.06.22 at 12:40 pm
#132 Shawn

Try this one, about 2 choices down in leftish column is a specific inter-city function pick.

https://www.statcan.gc.ca/en/subjects-start/prices_and_price_indexes

Cheers, R

***********************************
Thanks Russ. Stats Can does have some great links and data on that page.

I’m not sure they have a nice simple presentation for me as follow:

Cost of a typical single to live in Edmonton ANd then Toronto and Vancouver

1 bedroom rent (or 1/2 a two)
Utilities, if not included
Food
Bus pass
Clothing
Outside the apartment entertainment allowance
Cell phone Plan
Streaming Services
Grooming
Miscellaneous
Did I miss some categories? (savings?)

Total
Hourly rate to make that income at 1950 hours per year

Probably another scenario for those with a car

I know everyone’s situation is different but maybe can come with a typical minimal budget for a single and for a couple?

Maybe the following site is not too bad. I need someone to run the numbers and indicate if various cities are in any way affordable for let’s say the 3 middle income quintiles for young people.

https://www.numbeo.com/cost-of-living/in/Edmonton

#52 Victor Llearna on 12.06.22 at 5:39 pm

Hopefully it gets to point where people give away their houses for $1 on condition the buyer assumes the massively underwater mortgage.

#53 I don't know on 12.06.22 at 5:44 pm

“If the fearmongers are correct, prices could fall further. Risk. If the realtors are right, this could be a massive missed opportunity. Fail.”

-The fearmongers are never correct so who cares what they say (about anything).

Peel away the layers a tiny bit and you’ll see they are motivated almost entirely by cynicism, paranoia, jealousy, and greed.

Not the best personality traits.

It’s a ruse. When they complain about “affordability”, they don’t really care about providing shelter for the needy, or affordable rentals. The uncomfortable truth is what they really want is to steal a home from someone struggling.

Truth is, all long term trends are still in play for real estate, particularly GTA real estate. The economy and population will continue to grow. An entire generation is looking for backyards and garages. Our culture views home purchase as a rite of passage in adulthood (along with marriage, full time jobs, children etc.) You don’t have to do any of those things to be happy, of course, but most people expect/are expected to accomplish these things in their life.

This isn’t going to change.

Regarding the current market. Of course it’s an opportunity. We are nearing the end of the rate hike cycle. That much is obvious, according to the bond market. What is coming down the pipe is a nasty combination of high prices, coupled with higher rates. It is going to gutter any semblance of affordability that existed over the past few years (buyers today are paying hundreds more per month than they were just a year ago).

How can the average family afford the average home? They can’t. Average families have been priced out for a while now. Most home owners are existing buyers with equity, older investors, or DINKs.

As our host mentioned, if you can afford real estate without gutting your finances, you buy. Otherwise, renting and investing is the only viable alternative.

IDK

#54 45north on 12.06.22 at 6:14 pm

In fact, in a metro area of more than six million souls, just four and a half thousand properties – houses, condos, semis, townhomes, parking spots and vacant lots – changed hands. This is a collapse by any measure.

Could this be? Has the spiral lower actually stopped? Or is this realtor crud?
Beats me. But when sales have been cut in half, it’s probably too early to be trotting out stats on overall market trends. And maybe the slowdown in recent price declines is a function of a low level of listings and lousy choice as thousands of sellers withdraw their listings, and buyers wait.

It’s too early.

#55 kommykim on 12.06.22 at 6:18 pm

RE: #43 GratefulCanadian on 12.06.22 at 5:03 pm
“Nobody has a right to own real estate. – Garth”
Garth, could you please elaborate on that statement, please?
Do you mean in Canada, or globally?

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

I take it to mean that no one has the right to be able to purchase RE at a set price.
It would be like saying, “It’s my right to be able to buy a new iPhone14-pro for $400 because that’s all I can afford” even though they retail for $1100 (Or whatever).

#56 BillinBC on 12.06.22 at 6:30 pm

#48 Cra-Cra Alert
Faron is not mentally ill, he is the epitome of a “know-it -all”
From Free Dictionary… know it all:
To seem or affect to know everything about any given topic, and to make an irritating point of demonstrating that knowledge to others.

#57 Ponzius Pilatus on 12.06.22 at 6:40 pm

At least in Canada, the Budget balances itself.
No need for fighting over it.
——————
Fighting at a Budget meeting in the Turkish Parliament sends one politician to hospital.

https://www.spiegel.de/ausland/tuerkei-abgeordnete-liefern-sich-schlaegerei-a-728c5d08-0cb4-4918-9bb6-1f36dab926a1

#58 crowdedelevatorfartz on 12.06.22 at 6:45 pm

@#23 SK
“You completely misunderstood the article whilst stewing in your vile anti-Alberta hatred.”

@47 Ponzie Putz
“Why do you keep embarrassing yourself by only reading headlines and not the actual articles?’

++++
While I appreciate the both of you pointing out Ponzies Egregious errors……
It’s the Christmas season.
Lets give Plagiarist Ponzie a break.
He can’t help himself.
4 day old Turnip Stew makes a man half crazy.

#59 Ponzius Pilatus on 12.06.22 at 6:58 pm

#34 crowdedelevatorfartz on 12.06.22 at 4:23 pm
@#129 Lorne
“Or a boss that recognizes talent and promotes her to Global National.”
+++
Talent?
Newsreaders have talent?
I thought gender , color and the endless, politically correct, anti colonialism, harangue had more to do with it.
Not to worry.
National viewers will tire of the endless, colonialist blame session as well.
And then she can go work for the CBC.
————————
Why don’t you just turn the news off.
Your blood pressure and the steerage section will thank you.
The Nature Channel is quite relaxing.
Just skip the scenes where the lions eat little bambies.

#60 Paul on 12.06.22 at 7:11 pm

#52 Victor Llearna on 12.06.22 at 5:39 pm
Hopefully it gets to point where people give away their houses for $1 on condition the buyer assumes the massively underwater mortgage.
%/////////////////////////////////////////////
What makes you think the bank would allow you to assume the the financing? Even if they did you still wouldn’t step up.

#61 Quintilian on 12.06.22 at 7:16 pm

Nobody has a right to own real estate. – Garth

That is CRAZY TALK, and I call it that just to be polite.

Somewhat of a syllogism. Void of any substantive reasoning.

#62 jack on 12.06.22 at 7:20 pm

Lets look at this price drop a different way. For Toronto a detached house that cost 1.35M in Feb, now costs 1.1M. That same house cost 850k pre-pandemic. So house prices are still up 30% since Jan 2020. Prices need to drop another 20% or so just to get back to where they were before the pandemic started.

#63 Neo on 12.06.22 at 7:24 pm

“Logic tells us prices remain absurdly high for average incomes”

Let’s just leave it at that shall we.

Third world living at its best in the frigid north. Brought to you by the traitors you elected to represent you.

#64 Dave on 12.06.22 at 7:27 pm

The Bank of International Settlement BIS….has lost $65 Trillion in derivatives?

Is this a concern or business as usual?

#65 Ronaldo on 12.06.22 at 7:27 pm

#52 Victor Llearna on 12.06.22 at 5:39 pm
Hopefully it gets to point where people give away their houses for $1 on condition the buyer assumes the massively underwater mortgage
==================================
That makes no sense.

#66 Nora Lenderby on 12.06.22 at 7:33 pm

#54 45north on 12.06.22 at 6:14 pm
“It’s too early.”

Agreed. The right time is when no-one wants to buy a house, unless they absolutely have to – especially in unfashionable areas or distant exurbs. The RE equivalent of market capitulation.

It will happen, but it could be years away. Let’s carry on with our lives (or as Nonplused says, buy a boat).

#67 Yukon Elvis on 12.06.22 at 7:42 pm

#38 Faron on 12.06.22 at 4:39 pm

This is very strange. More so given your disappearance. Either you got served or you are concocting some kind of effort against me.
++++++++++++++

We are all concocting secret efforts against you. There is even a link to a secret chatroom here. If a tree falls in the forest, how do we get you under it? That sort of thing.

#68 Old gringo on 12.06.22 at 7:55 pm

Looks like Trump’s going to serve 4 more years.
Just not sure if as a prisoner or president

#69 crowdedelevatorfartz on 12.06.22 at 7:58 pm

@#59 Puerile Ponzie
“The Nature Channel is quite relaxing.
Just skip the scenes where the lions eat little bambies.”
++++
Thanks for the viewing suggestion my Teutonic Troubadour

However.

After catching 4 mice in one day last weekend at my shop and then feeding their carcasses to the appreciative crows outside…….
I can handle the tv version of ….nature.

#70 crowdedelevatorfartz on 12.06.22 at 8:01 pm

@#67 Yukon Elvis
“We are all concocting secret efforts against you. There is even a link to a secret chatroom here. If a tree falls in the forest, how do we get you under it? That sort of thing.”

+++
Yukie!
The whole idea of the secret chat room was….
It’s a secret!
Now we have to double down to “double secret chatroom”

#71 crowdedelevatorfartz on 12.06.22 at 8:09 pm

@#61 Quintillians in DEBT
“Nobody has a right to own real estate. – Garth
That is CRAZY TALK, and I call it that just to be polite.
Somewhat of a syllogism. Void of any substantive reasoning.”

++++
Everyone has a human right to shelter.

Everyone OWNING….a shelter?

Whole different ballgame.

+++
Hell even Communist Russia, China and Cuba back in the “good old days ” of totalitarianism allowed people access to “communal housing”
The result?
No one looked after their homes.
They all became paint peeling, rat infested, shitholes….

Thus ” No one has a right to own a home” especially if they are fools with their money and WOULDN’T be able to own a car, let alone finance a house.

Sometimes capitalism is cruel….and fools hopefully learn from their mistakes.
Why should taxpayers subsidize the financially stupid and gift them a home?

Renting is not a shameful destination.

#72 Wrk.dover on 12.06.22 at 8:09 pm

#7 cuke and tomato picker on 12.06.22 at 2:51 pm
Why are the TSX and DOW in the red so much?
__________________________

Some little retail investor sold everything in the family portfolios printed in green ink Saturday night.

Then the rest of them started following suit, right after opening bell Monday.

This is gonna be bigger than GameStop!

The institutional investors are being out gunned.

Just another black swan event. Again.

#73 DON on 12.06.22 at 8:15 pm

#53 I don’t know on 12.06.22 at 5:44 pm
“If the fearmongers are correct, prices could fall further. Risk. If the realtors are right, this could be a massive missed opportunity. Fail.”

-The fearmongers are never correct so who cares what they say (about anything).

Peel away the layers a tiny bit and you’ll see they are motivated almost entirely by cynicism, paranoia, jealousy, and greed.

Not the best personality traits.

It’s a ruse. When they complain about “affordability”, they don’t really care about providing shelter for the needy, or affordable rentals. The uncomfortable truth is what they really want is to steal a home from someone struggling.

Truth is, all long term trends are still in play for real estate, particularly GTA real estate. The economy and population will continue to grow. An entire generation is looking for backyards and garages. Our culture views home purchase as a rite of passage in adulthood (along with marriage, full time jobs, children etc.) You don’t have to do any of those things to be happy, of course, but most people expect/are expected to accomplish these things in their life.

This isn’t going to change.

Regarding the current market. Of course it’s an opportunity. We are nearing the end of the rate hike cycle. That much is obvious, according to the bond market. What is coming down the pipe is a nasty combination of high prices, coupled with higher rates. It is going to gutter any semblance of affordability that existed over the past few years (buyers today are paying hundreds more per month than they were just a year ago).

How can the average family afford the average home? They can’t. Average families have been priced out for a while now. Most home owners are existing buyers with equity, older investors, or DINKs.

As our host mentioned, if you can afford real estate without gutting your finances, you buy. Otherwise, renting and investing is the only viable alternative.

IDK

*******
You should get a job writing spin for the realtors.

#74 VicPaul on 12.06.22 at 8:26 pm

Garth writes… “a plop of 24.6%”, “lower by 23%”.

I thought the financial brain-trust in media were just speaking a few weeks ago about a “lag” effect with the rate hikes – that the full measure of interest rates have yet to pummel er, kick in. I thought that meant, maybe February we would really start to see greater pressure on heavily-financed folks…and then a spike in listings as they try to get out from under.

I wonder if, after the stress that this rate cycle has imbued overly-leveraged, cash-flow challenged homeowners with, said homeowners will be ready to say “we’re selling! I don’t need the grief, there’s more to life” – much like many working peeps did with “the great resignation”?

Yeah, armchair psychology.

I’m guessin’ that in 8-12 months time it will be shopping season.

M58BC

#75 Ustabe on 12.06.22 at 8:35 pm

#67 Yukon Elvis on 12.06.22 at 7:42 pm

#38 Faron on 12.06.22 at 4:39 pm

This is very strange. More so given your disappearance. Either you got served or you are concocting some kind of effort against me.
++++++++++++++

We are all concocting secret efforts against you. There is even a link to a secret chatroom here. If a tree falls in the forest, how do we get you under it? That sort of thing.

This sort of thing, the piling on, just isn’t very helpful. At all. You all profess to dislike Faron, to not want him here, but time over time you lay these little provocations to draw him out.

#76 VicPaul on 12.06.22 at 8:38 pm

#11 Dolce Vita on 12.06.22 at 3:04 pm
Total Consumer Debt Climbs to $2.36 Trillion as Consumers Lean on Credit Cards
– Equifax

*********

Yeesh! Is there ANYTHING more unsustainable?

M58BC

#77 Shawn on 12.06.22 at 8:43 pm

Budget Balances itself?

#57 Ponzius Pilatus on 12.06.22 at 6:40 pm

At least in Canada, the Budget balances itself.
No need for fighting over it.

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

Well it sure did in Alberta and went to a HUGE surplus.

It’s very weak and childish to quote just a sentence fragment from Trudeau. Have the decency to quote his whole thought.

#78 Yukon Elvis on 12.06.22 at 8:44 pm

#70 crowdedelevatorfartz on 12.06.22 at 8:01 pm
@#67 Yukon Elvis
“We are all concocting secret efforts against you. There is even a link to a secret chatroom here. If a tree falls in the forest, how do we get you under it? That sort of thing.”

+++
Yukie!
The whole idea of the secret chat room was….
It’s a secret!
Now we have to double down to “double secret chatroom”
++++++++
Yah ok. Lips are sealed. See u on the next secret Zoom call.

#79 Quintilian on 12.06.22 at 8:51 pm

#71 crowdedelevatorfartz on 12.06.22 at 8:09 pm

Sometimes capitalism is cruel….and fools hopefully learn from their mistakes.
Why should taxpayers subsidize the financially stupid and gift them a home?

Crowdie, your logic is as faulty and as dishonest as Garth’s.

Capitalism is not cruel, the return to feudalism is.

When politicians, and Central Bankers, firmly place their hand on the scale to tip it as to advantage of one group over another it is called a “moral hazard”.

The housing mess was not caused by the ” invisible hand” of a free market system.

Tick Tock Tick Tock

#80 Ponzius Pilatus on 12.06.22 at 8:56 pm

Interesting:
Looking for a set of new tires for the family car.
Checked Costco and Canadian Tire.
Both were twice as expensive as 3 years ago.
So, what the heck.
Checked with the Dealer.
20% cheaper?!
Lesson: Never go with the Narrative.!

#81 Steven Rowlandson on 12.06.22 at 9:09 pm

Prices have to implode to 5 or less cents on the dollar or society and the economy will not be able to function and the alternative is minimum pay of half a million a year for everyone with a job. I think that would be a bigger problem than making home prices disappear because employers and jobs would disappear. We need the employers and jobs, but we don’t need home prices that can’t be paid.

#82 crowdedelevatorfartz on 12.06.22 at 9:14 pm

@#79 Queen Quintillion’s Quandry
“Capitalism is not cruel, the return to feudalism is.’

+++
“Feudalism”

Painful. Histrionic. Drivel.

Next time you insult Garth…we feudalists….shall burn your village, sell the peasants to the next Landowner, cut out your impertinent tongue , chop off your typing hand and banish you to a dungeon.

On second thought.
I’m kinda liking feudalism….

#83 Ponzius Pilatus on 12.06.22 at 9:15 pm

#77 Shawn on 12.06.22 at 8:43 pm
Budget Balances itself?

#57 Ponzius Pilatus on 12.06.22 at 6:40 pm

At least in Canada, the Budget balances itself.
No need for fighting over it.

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

Well it sure did in Alberta and went to a HUGE surplus.

It’s very weak and childish to quote just a sentence fragment from Trudeau. Have the decency to quote his whole thought.
——————————-
Shawn,
Next time, read my whole post incl. link.
“Turkish Parliamentarians in a fist at Budget session”
Put a little smile in your heart.
And the World will be a better place.

#84 crowdedelevatorfartz on 12.06.22 at 9:23 pm

AAAAANNNNDDDD
The saga of the ridiculous “catch and release” policies of the BC Court system.

A traffic stop in New Westminster netted $2.4 million dollars worth of illegal drugs.
18 POUNDS of Fentanyl was part of the seizure.
3 POUNDS of Heroin.
Chrystal Meth . etc etc etc

“The suspect was arrested, charged and released…… ”

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwjX_Pqfueb7AhUOHTQIHWoLDnYQFnoECAoQAQ&url=https%3A%2F%2Fwww.castanet.net%2Fnews%2FBC%2F400188%2FNew-Westminster-police-seize-drugs-estimated-at-24-million&usg=AOvVaw0roTd2gR1ygqkGH6wugAG8

#85 Johnny Longbottom on 12.06.22 at 9:23 pm

In todays Vanc Sun the story of poor Ms Zhang who bought at 2.9 , dropped a $150 deposit, hoped to go PR but was stopped from travel due to Covid restrictions, misled by an inferior agent about her status. Try as she might judge says she’s stuck with the deal , loses her deposit, must complete at cost, pay the 20%/ $590,000 foreign buyers tax. I don’t think stories like this will play well in HK media. I’d say stick a fork in it. Ms Zhang may be the last of the last. If prices have to match local pay the price has to drop maybe 70%.

#86 Steven Rowlandson on 12.06.22 at 9:26 pm

“Capitalism is not cruel, the return to feudalism is.”

If by capitalism you mean private ownership of the means of production I would tend to agree. A home priced above three years pay at minimum wage does not qualify as a means of production, but it does qualify as a means of imposing debt slavery even to the point of genocide as it has done in our time. In this country it is damned near a legal requirement to have residence to function as an adult citizen. As for the taxpayer subsidizing the less well-off homeowner wannabees that should be unnecessary if home prices can be suppressed by regulation as in government command to roll back prices so that any working man can buy a home or land that he could build a home on. If people wish to get rich, there are other means to do so that don’t have an adverse impact on the lives of others.

#87 Marquis on 12.06.22 at 9:31 pm

I believe “crossbordershopper” is some kind of god who makes his own vino. He is wise and deserves a guest column!

#88 I don’t know on 12.06.22 at 9:38 pm

73 DON on 12.06.22 at 8:15 pm

I don’t see a single rebuttal in your comment.

Do you disagree that:

-Our society views home ownership as a rite of passage?
-The population will continue to increase?
-The economy will continue to grow?
-We have an affordability crisis?

Probably not.

Besides, if you do, you haven’t been paying attention to the message are host keeps droning on about every evening, which is that there is another way (renting, investing) to find success. The corollary to that argument is that home ownership is incredibly expensive and out of reach for more and more people who now have no choice but to follow our host’s advice and succeed.

Shelter is a right. Real estate is not, nor will it ever be.

It’s not fair, nor just. It’s simply reality.

IDK

#89 Yukon Elvis on 12.06.22 at 9:40 pm

#75 Ustabe on 12.06.22 at 8:35 pm
#67 Yukon Elvis on 12.06.22 at 7:42 pm

#38 Faron on 12.06.22 at 4:39 pm

This is very strange. More so given your disappearance. Either you got served or you are concocting some kind of effort against me.
++++++++++++++

We are all concocting secret efforts against you. There is even a link to a secret chatroom here. If a tree falls in the forest, how do we get you under it? That sort of thing.

This sort of thing, the piling on, just isn’t very helpful. At all. You all profess to dislike Faron, to not want him here, but time over time you lay these little provocations to draw him out.
++++++++++++++++
He is the drive by shooter here. He dumps on everyone. I am just trying to help. In my own way.

#90 Hmm on 12.06.22 at 9:47 pm

@#75 Ustabe on 12.06.22 at 8:35 pm
#67 Yukon Elvis on 12.06.22 at 7:42 pm

#38 Faron on 12.06.22 at 4:39 pm

This is very strange. More so given your disappearance. Either you got served or you are concocting some kind of effort against me.
++++++++++++++

We are all concocting secret efforts against you. There is even a link to a secret chatroom here. If a tree falls in the forest, how do we get you under it? That sort of thing.

This sort of thing, the piling on, just isn’t very helpful. At all. You all profess to dislike Faron, to not want him here, but time over time you lay these little provocations to draw him out.

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

They are children, they can’t help themselves.

#91 crowdedelevatorfartz on 12.06.22 at 9:56 pm

@#80 Ponzies pickleball panic
“Looking for a set of new tires for the family car.’
++++

I didnt realize electric mobility carts required tire changes.
Winter tires for electric carts is a thing?
Is there snow on the path to the indoor pickle ball court ?
Or do you just rampage around the old folks home in a maniacal frenzy of former Germanic glory?

#92 VicPaul on 12.06.22 at 10:18 pm

#69 crowdedelevatorfartz on 12.06.22 at 7:58 pm
@#59 Puerile Ponzie
“The Nature Channel is quite relaxing.
Just skip the scenes where the lions eat little bambies.”
++++
Thanks for the viewing suggestion my Teutonic Troubadour

However.

After catching 4 mice in one day last weekend at my shop and then feeding their carcasses to the appreciative crows outside…….
I can handle the tv version of ….nature.

*********

Reminds me of an unrelenting scene of courtship I was made audience to while preparing to hit my second shot from 195 into nine green, years ago.
Geese – two youngish boy geese and one youngish girl goose. I watched her take off from one fairway, across nine fwy in front of me and into pond beside the green…with boys in pursuit. They landed, she took off – but they always caught up to her – back and forth, two three, four times – as stated, unrelenting, until finally…

Mhmm – fewer rules in nature.

M58BC

#93 richard on 12.06.22 at 10:21 pm

“Why haven’t we seen reductions of similar magnitude on the West Coast where valuations are even more ridiculous?”

Most realtors here use median prices to get a current accurate look of where prices are at least in Victoria. Its become an ongoing joke among realtors here how badly the MLS home price index has been lagging. Victoria single family home median prices dipped beiow 1 million for the first time since February 2021 in November. That drop has now become the largest drop in home prices here in 40 years. You won’t hear that from most news media here
https://victoria.citified.ca/news/november-2022-condos-edged-higher-houses-nudged-lower-in-november-as-victoria-real-estate-settled-into-winter-slow-down/

#94 Doug t on 12.06.22 at 10:24 pm

Do you remember when this country was not obsessed with the “real estate” market – , not rabidly looking at mls, not making it a daily topic of conversation with friends and colleagues – it’s become an absolute obsession in Canada- sad really – we lost our way as a nation and the government is complicit in this mess

#95 crowdedelevatorfartz on 12.06.22 at 10:31 pm

My My My
Where and when will inflation end…?
2023? 2024?

On the West Coast of Canada

The BC Federation of labour is asking for 15 PAID sick days per year…when BC already has Legislated 5 paid sick days per year.

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwjOuuPGyOb7AhVaGjQIHQSGBLQQvOMEKAB6BAgJEAE&url=https%3A%2F%2Fglobalnews.ca%2Fnews%2F9330708%2Fbc-federation-of-labour-presses-for-15-days-paid-sick-leave%2F&usg=AOvVaw1f4m3sypdUnww85P9MiTpI

On the East Coast of Canada labour is demanding a $20 an hour minimum wage and 10 paid sick days per year…

https://www.halifaxexaminer.ca/economy/labour/justice-for-workers-nova-scotia-demanding-20-minimum-wage-10-paid-sick-days/

Would the last Small Business owner to leave Canada….please turn out the lights

#96 Tony on 12.06.22 at 11:20 pm

The Trump organization charged Donald Trump not charged.

#97 DON on 12.06.22 at 11:43 pm

#88 I don’t know on 12.06.22 at 9:38 pm
73 DON on 12.06.22 at 8:15 pm

I don’t see a single rebuttal in your comment.

Do you disagree that:

-Our society views home ownership as a rite of passage?
-The population will continue to increase?
-The economy will continue to grow?
-We have an affordability crisis?

Probably not.

Besides, if you do, you haven’t been paying attention to the message are host keeps droning on about every evening, which is that there is another way (renting, investing) to find success. The corollary to that argument is that home ownership is incredibly expensive and out of reach for more and more people who now have no choice but to follow our host’s advice and succeed.

Shelter is a right. Real estate is not, nor will it ever be.

It’s not fair, nor just. It’s simply reality.

IDK

************
Blank Stare!

Our society has viewed housing with a frenzy for all of 15 years…15 years is a fad that can easily be reversed as people suffer bad experiences just like the people in the past. You conveniently cherry pick Garth’s messages. Remember your stance of rates will never rise?

Like watching a kid tell a lie.

Blank Stare!

#98 Tony on 12.07.22 at 12:11 am

Re: #51 Shawn on 12.06.22 at 5:37 pm

Save-On-Foods stores saves you a lot of money on groceries and rents are overstated. The City Center was a mistake for anyone who bought there.

#99 crowdedelevatorfartz on 12.07.22 at 12:16 am

@#90 Hummer
“They are children, they can’t help themselves.”
++++
Children that can reason and count…..
Unlike the children of today…

********

@#92 VicPaul
courtship

++++

Reminds me of a story (sorry Ponzie).
Several decades ago some environmentalists were moaning about the NATO Tank training ground in Alberta.
Yes ladies and gentlemen….Canada has Tanks ….and they train.
Anyway.
The environmentalists were bitching and moaning about the effect on the wildlife.
When the news media of the day asked some British military officers at the Base if they had seen any Canadian Wildlife while training….an officer laughed and said,
‘We were on full maneuvers and firing live rounds when a bull elk and mare decided to copulate….in the middle of the simulated battle. We couldnt believe what we were seeing …so we stopped and took pictures.”.

Wildlife…….. and conservative voters….will find a way…..

#100 Jens on 12.07.22 at 12:51 am

“With just 5% down, 20x leverage and with a tax-free raid on an RRSP, doesn’t a 20% or 30% price drop make for tasty math?”

Like most, I thought this was Garth being sarcastic. Turns out there’s some tastiness to the math after all.

Scenario A: a FOMO buyer who bought a 1M home a year ago with 20% down and 2% interest for a 5yr-fixed, 25yr amortization. Renewal is at 6%, a reasonable historical average, for the remaining 20 years.
After 5 years, they will have paid 203k and a balance remaining of 670k.
After 25 years, they will have paid 1.549M in total, down payment included.

Scenario B: a savvy shopper buying the same home now at 800k, also with 20% down and 5% for a 5yr-fixed.
Renewal is at 6% also.
(Note that their mortgage starts out as 640k, already less than FOMO buyer’s balance after 5 years.)
After 5 years, they will have paid 223k and a balance remaining of 566k.
After 25 years, they will have paid 1.351M in total, down payment included. That’s almost 200k less — almost exactly the difference in the original price. So FOMO buyer’s lower initial interest payments were almost entirely eaten up by interest on higher balances over the remaining 20 years.

FOMO buyer A might have assumed they could always renew at 2%, which would have set them back only 1.216M over 25 years. But that figure coming out of their bank’s mortgage calculator was purely delusional.

#101 jane24 on 12.07.22 at 2:40 am

Good question posed by a dog here, what happens to a RE sale if the outstanding mortgage is more that the house is worth. This happened a lot in the late 1980s when I was a TO agent. The seller wanted out, the buyer didn’t want to overpay and the bank didn’t want to take back the house. We usually found a way around it usually by the buyer taking over the existing mortgage and the bank being helpful. Then the agent earned their money via juggling and multi party negotiation including putting our commission on the table. These days are coming back.

#102 Faron on 12.07.22 at 3:36 am

#78 Yukon Elvis on 12.06.22 at 8:44 pm
#70 crowdedelevatorfartz on 12.06.22 at 8:01 pm

Pssst…. The 1990s called… It’s for you… Seems it wants its chatrooms back…

Pro tip: try Signal. End to end encryption, free, non-profit. True freedom of speech. Maybe have your comfort woman set it up for you.

#103 Faron on 12.07.22 at 3:46 am

Warnock elected to the US Senate over a Trump nutter.

Trump’s business convicted on numerous counts of fraud. Other investigations gaining steam. US Congress hands the capital police the Congressional Gold Medal with sincere remarks from Mitch McConnell. The US is healing.

Downside of a Trump conviction is that the US would be a better place with Trump as the republican nominee. If he goes to jail, that would put the kibosh on his run. That would leave the smarter and probably more effective DeSantis as the candidate. He would thoroughly send the US to the dark ages.

#104 crowdedelevatorfartz on 12.07.22 at 8:19 am

The CERB gift that just keeps on giving….to the taxpayers.

https://vancouversun.com/news/politics/auditor-general-27-billion-suspicious-covid-payments/wcm/7a87aec9-2727-4ff9-8b1b-bb7bad9edf22

#105 Dharma Bum on 12.07.22 at 9:29 am

#103 Faron

That would leave the smarter and probably more effective DeSantis as the candidate. He would thoroughly send the US to the dark ages.
———————————————————————————————————

Interesting point.

I like the implication that incompetence, buffoonery, senility, simplemindedness, naivete, pandering, corruption, fragility, political correctness, and vacuous smiling is the better overall option for the U.S.

I never really thought of it that way, but you do have a good point. I tend to agree.

De Santis is smart. Charismatic. Educated. Former varsity athlete. Well spoken. Former NAVY JAG Officer, former federal prosecutor. Not a dummy.

He is far too smart to be a U.S. president. That would be a dangerous thing. He is probably also a bit too power hungry. A bit harsh on the weak, stupid, and less fortunate.

A population as intellectually backwards and narrow minded as that of the U.S. (i.e., Louisiana, Arkansas, Mississippi, Alabama, West Virginia, etc.) would be putty in the hands of a highly educated, decorated, and eloquent leader. He could easily manipulate them.

https://worldpopulationreview.com/state-rankings/dumbest-states

Ultimately, the majority of the population would be better off with a milquetoast centrist. Even keeled. Stable. Simple. Bland. Boring. Stagnate.

Like Canada.

#106 Ustabe, The Pious on 12.07.22 at 9:30 am

#75 Ustabe on 12.06.22 at 8:35 pm

This sort of thing, the piling on, just isn’t very helpful. At all. You all profess to dislike Faron, to not want him here, but time over time you lay these little provocations to draw him out.

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

From all observations this guy doesn’t appear to need any provocation whatsoever. Hardly has to be coaxed to comment multiple times/day most days. Seems motivated mostly by anger and some petty need to be seen as the smartest in the room (so to speak) and always “right”, and obviously enjoys both the attention and the discord he sows. If that isn’t childish what is.

As such he makes himself a target for derision, with his latest delusion of some plot against him. As if anyone cares enough to bother.

Any day without a Faron comment is a relief, a breath of fresh air, as there’s a marked reduction in bickering, insults, and general nastiness.

Blame his adversaries too, sure, but he’s the catalyst the majority of the time. Hands down.

#107 Quintilian on 12.07.22 at 10:06 am

#97 DON on 12.06.22 at 11:43 pm

Like watching a kid tell a lie.
Blank Stare!

Now that’s funny!

IDK forgot the cardinal selling sales clincher in his latest yarn:
“we are running out of land”

I’m waiting for that one to change to:

“we are running out of sky”
Of course he forgets to mention there are cities in the world that have greater populations than some of our provinces.

#108 Shawn on 12.07.22 at 10:15 am

Evidence that real GDP is indeed UP

Summertime, are you not seeing this?

Breaking News: Record potato crop.

And notice that Alberta grew more potato’s than P.E.I.

https://www150.statcan.gc.ca/n1/daily-quotidien/221207/dq221207d-eng.htm?CMP=mstatcan

#109 Shawn on 12.07.22 at 10:20 am

Good debt and bad debt

Few would argue that a farmer borrowing money for seed potatoes is a bad idea. He can easily repay the debt in the Fall and otherwise might have lost the farm.

Some fools think there should be no such thing as borrowing. They are SO wrong.

Imagine if farmers had not borrowed to buy tractors. There’d be lots of jobs for farm labour – paying bare subsistence wages. You get to sleep in the barn.

Bad debt would be borrowing to go on a vacation that you can’t afford.

Debt and credit have been the grease of the economy for hundreds of years. This will never change. But, yes, it can occasionally get out of hand.

#110 NJ on 12.07.22 at 10:26 am

Buy a home as soon as you can!

Do you know why people always praise or congratulate people who buy real estate to rent out to others? Because being a landlord is a great business move. Being a renter SUCKS.

Don’t pay someone elses mortgage. Pay your own

#111 Shawn on 12.07.22 at 10:35 am

Trump Real Estate and Tax cheating and Mortgage Fraud

#96 Tony on 12.06.22 at 11:20 pm
The Trump organization charged Donald Trump not charged.

*******************************
The news media I think has been confused on this point for years. They often talked as if Trump owned properties directly. And maybe he did own a lot of properties directly at times. Real Estate can be owned in partnerships as opposed to corporations. Political commentators are not that knowledgeable about business ownership structures.

Trump and the Trump organization’s holdings are probably extremely convoluted.

Again, Trump’s response to the next President will certainly be “Pardon Me”.

#112 the Jaguar on 12.07.22 at 10:38 am

Hydraulics still functional. Prime rate now 6.45% (never mind the 4.25, it’s the other one that matters..). Too bad the most affected will hardly be paying attention.

#113 the Jaguar on 12.07.22 at 10:42 am

@#97 DON on 12.06.22 at 11:43 pm++

The hilarious part was this ” ..the message are host keeps droning on about every evening,…”

‘Droning on about”? Omg! (are meant to be our one supposes)….

#114 Dr V on 12.07.22 at 10:55 am

Yay Tiff!

#115 Yukon Elvis on 12.07.22 at 11:05 am

#102 Faron on 12.07.22 at 3:36 am
#78 Yukon Elvis on 12.06.22 at 8:44 pm
#70 crowdedelevatorfartz on 12.06.22 at 8:01 pm

Pssst…. The 1990s called… It’s for you… Seems it wants its chatrooms back…

Pro tip: try Signal. End to end encryption, free, non-profit. True freedom of speech. Maybe have your comfort woman set it up for you.
+++++++++++++++++
We have that here. You just don’t know about the links. We concoct plots and plans and schemes right under your nose. Dossiers, hidden cameras, microphones, tracking devices, whispers in dark places, crampons. Any day now…….

#116 Ponzius Pilatus on 12.07.22 at 11:12 am

108 Shawn on 12.07.22 at 10:15 am
Evidence that real GDP is indeed UP

Summertime, are you not seeing this?

Breaking News: Record potato crop.

And notice that Alberta grew more potato’s than P.E.I.

https://www150.statcan.gc.ca/n1/daily-quotidien/221207/dq221207d-eng.htm?CMP=mstatcan
————————
There’s nothing like a Cavendish Potato.
At Cavendish, me make Potatos right.

#117 Faron on 12.07.22 at 11:30 am

#115 Yukon Elvis on 12.07.22 at 11:05 am

I’d be worried but I don’t think you have the mental faculties to sneak a snickers bar past the Walmart greeter.

#118 Alphonse on 12.07.22 at 11:37 am

Look at the yields go on the CA1Y

That’s it folks we’re at the peak.

#119 BillBC on 12.07.22 at 11:56 am

Here’s a story from a happier time. As a young man in 1970, I bought my first house, in a small western city. Storey and a half, 60 years old, 3 bedrooms, a three minute walk from my office. It cost $10,000. Amazing. But even more amazing was that this was equal to one year’s salary. How long has it been since a year’s salary would buy a decent house?

#120 Graeme on 12.07.22 at 12:55 pm

“If prices ever, ever, ever fall by 15% in Toronto or Vancouver, buyers will be all over them like an epic fungus.”

This was only uttered by people who had no clue in what context homes would fall significantly–rising rates and scary times. Welcome to both!

#121 Russ on 12.07.22 at 1:31 pm

A little light offering to help any “bad dog!” get a better outlook on life.

Jann Arden and young friends:
https://youtu.be/8GzLHgdz4ag

Cheers, R