Calling the bottom?

So. Is it over?

Here are some reasons the realtors who skulk among us think the worst is over. The bottom has been plumbed. The commission drought may be ending.

First, inflation. A big drop last month, down to 6.3%. That beat economists’ forecasts. It was a hefty half-point plop from November’s annualized number. And it was the lowest month/month change since April, of 2020, when the slimy little pathogen was just slithering into our lives.

So, second, the betting now is the central bank can stop with the toxic-masculine rate increases. Another quarter point pop next week, the industry figures, then a pause. The Bank of Canada rate will have gone from 0.25% last March to 4.5% today. Mission accomplished.

Third, a soft landing is looking more plausible. Did you see the latest jobs numbers for Canada? Staggering. A hundred thousand new hires, when the mighty US came in at just over two hundred. This suggests the economy is cooling enough for interest pain to ease, but not enough to curtail employment or income growth. It rarely happens. But maybe this time is different?

Fourth, listings still suck. The inventory of resale homes is scant. Choice is seriously reduced, so even with far few buyers in the market, the big price declines seem to have halted. After all, rutting season is around the corner. Loins are rustling. Hormones coursing. The kiddos can’t help it.

Fifth, sales volumes have stabilized. Yes, the year/year numbers are still awful but the month/month stats tell another story.

Six, prices have fallen far more than the media is reporting and have actually pushed national real estate into a bear market. While CREA announced an average price drop of 12% year/year this week (the largest on record), the number is far bigger. Since the peak (last February), the typical house in Canada has lost 23% of its value. In Bunnypatch, up to 40%. Even detacheds in the Kingdom of 416 are off 22%. The realtors now figure (delusionally or not) that valuations cannot fade much further.

And look at mortgage rates. At least two of the Big Five guys are offering five-year fixed-rate home loans at 5.2% or less. How can that be such a bad deal when inflation is still 6.3% and the chartered bank prime rate is even higher? Those scary predictions of 7% or 9% loans never materialized, so won’t buyers just acclimatize to these levels once the rate tightening ends and stability breaks out all over?

Those are some of the reasons Audis are not being turned in, the lights are still on at the Re/Max skyscraper and rock star realtors may again strut.

But wait. Is this even reasonable?

After all, the combo of 5% mortgages and prices still far above pre-pandemic levels is deadly. RBC tells us affordability has never been this bad. Not even when loans were priced at 19%. Generation Squeeze (bless its little ageist, egomaniacal heart) says it still takes Mills and Zs decades to amass a downpayment. The bank regulator has indicated new mortgage restrictions will be coming later this year, aimed at making it harder to buy. The stress test of more than 7% still stands, and going nowhere. Household debt is at record levels and MNP’s latest survey finds nearly half of Canadians are worried about how much they owe with a third saying they don’t earn enough to cover payments.

Moreover, wonky stock markets have not been kind to those using RRSPs to build up house money. Lots of people still think a recession is around the corner. Wage gains still seriously trail increases in the cost of living. And crap houses on dodgy city streets still cost well over a million.

So, when average couples cannot afford to buy average houses, how can this real estate correction be done? Do we not need a chop of forty or fifty per cent before sanity is restored?

Rishi Sondhi’s an economist at TD. He looked at the CREA numbers just published for December and says they “signal that a bottom in the housing market may be forming.

“With new listings dropping significantly last month and the level remaining low, there are no real signs so far that forced selling is dominating the supply picture.”

Is this correct? You don’t know. I don’t know. Rishi doesn’t know.

Sorry, kids.

About the picture: “How about a pic of a one-humped camel with attitude?” ask Fred and Heather. “We stumbled across this handsome dromedary on our recent trip to Morocco, and we thought  a photo of said camel would be perfect for your blog. We never miss a day of reading your delightful free blog,  no matter where our travels take us.”


138 comments ↓

#1 Captain Uppa on 01.17.23 at 2:46 pm

If indeed a bottom is nigh, people from the olden times of 2020 and yonder are gonna start clucking and strutting.

#2 Jens on 01.17.23 at 2:53 pm

Why can’t the folks at RBC find a proper definition of affordability? If I am correct, they only look at whether one can make the mortgage payments at current rates. But buying an overpriced home at 2021 rates, where you pay off the first 5% of the mortgage amount in the first 5 years, and then have to renew the remaining 95% at historical average rates, was never affordable in the first place.

#3 the Jaguar on 01.17.23 at 2:58 pm

Rishi Sondhi is an economist? But seemingly unaware that listings generally dry up in the month of December?

Hasn’t considered that many who purchased at the high point might just be trying to absorb the coming impact on their monthly costs, their current property valuation versus what they owe, and how they are going to survive the coming debacle. Sounds like Rishi is into the property market with both feet. You’re in stage one, Rishi… ( denial, anger, bargaining, depression, acceptance).

#4 Jim on 01.17.23 at 3:00 pm

They’re still asking over 800K for small two bedroom condos in Vancouver. It’s not Paris!

#5 Dave on 01.17.23 at 3:00 pm

Will the USA debt ceiling saga effect interest rates. As long as the rates don’t decrease then real estate will continue to decline.

Rates drop….the millions of people with too much money in Canada will start buying again

#6 Legal Beagle on 01.17.23 at 3:01 pm

Pretty clear where we are on this chart now…

https://i0.wp.com/betterdwelling.com/wp-content/uploads/2018/09/Toronto-Real-Estate-Prices-Literally-Look-Like-The-Textbook-Chart-For-Asset-Bubble-Chart.png?resize=875%2C568&ssl=1

#7 cuke and tomato picker on 01.17.23 at 3:06 pm

Yes the direction of house sales are up in the air but
nobody knows. However the Trump virus has infected
the Republican Party excellent examples George Santos
Soloman Pena. THE POSTER BOYS.

#8 The Original Jake on 01.17.23 at 3:07 pm

No way this is the real estate bottom. And no way a rate pause drops the inflation rate down to 2% either. 6.5% is a loooonnng way off from the target so any pause will only be temporary before the tightening begins again. They will be small 1/4 pts but each one slowly erodes people’s affordability to buy.

#9 Alois on 01.17.23 at 3:08 pm

Any lost value in RE ???

Use your mettle detector to find it.

#10 Theory of Everything on 01.17.23 at 3:11 pm

System is rigged.

These guys claimed the earth for themselves, enslave us with this thing called money, and make us go in debt due to it to live.

Then they chop away at you with inflation.

Then they wonder why you don’t want to play the game…prop the house of cards.

$10,000 today? Buys $5,000 worth in few years.

Honestly, we talk about how bad communism is because few at the top end up with all the riches. And capitalism is much different? Just two brands of same thing.

Except in communism you don’t see students put into piles of debt at tender age of 22.

#11 PeterfromCalgary on 01.17.23 at 3:14 pm

Elon just slashed the price on Tesla cars. I think he may realize something about interest rates cutting demand for the the second most expensive purchase most people make. You can blame Twitter if you want but the realist in me says this is about higher payments due to higher interest rates.

Houses are the most expensive purchase people make. But the real estate pumpers can’t admit that house prices need to be cut even more than Tesla prices before buyers return.

#12 jimmy zhao on 01.17.23 at 3:17 pm

Here is a mnemonic device to distinguish between two type of Camels:

One hump camel: Dromedary. The ‘D’ in Dromedary has 1 ‘hump’

Two hump camel: Bactrian. The ‘B’ in Bactrian has 2 ‘humps’

#13 Jane on 01.17.23 at 3:18 pm

If the rise of the BoC rate from 0.25 to o 4.25 brought the prices down by 20%, by how much another increase of 0.25 will additionally lower the prices?
Consider also that the sellers still don’t look too motivated and there’s a bunch of people who are waiting to see the bottom.
Let’s see what the spring season will bring us.

#14 American House Buyer on 01.17.23 at 3:24 pm

Ha Ha! Most Canadians have never thought of buying all the investment houses and condos they can carry at one twentieth to one tenth the cost of houses and condos in Canada. Call the bottom at your peril -because word is out on the street and investors are dumping Canada to buy in the USA. When are people going to learn not to waste money and seek out the biggest bang for their bucks wherever it is? Secret of life – Buy in USA. Rent in Canada.

#15 Francisco on 01.17.23 at 3:25 pm

Vancouver and Ontario were crazy before, and still are. Who buys homes there? No clue, but someone does. Check out this from Calgary:

https://calgaryherald.com/executive/executive-summary/calgary-housing-market-bucks-trend/wcm/34bc4cac-4076-43ba-ab87-ed24a59b7e0f

#16 Lower the Boom....er not on 01.17.23 at 3:28 pm

Yogism 30: (unavailable)

Yogism 31: “Lifetime investments should not be housed in one location”.

#17 DON on 01.17.23 at 3:28 pm

Most of the newly minted experts don,t know anything different then the past ten years.

They don’t realize that the house of cards is bulit on a sand foundation that is shifting the context.

Another economist compared the 1970-73 period with now.

As for jobs…more layoffs being announced by Microsoft. 5% of 220,000 jobs at risk.

Employment is a lagging indicator. The whole layoff process can happen abruptly over night, no consultation required.

Oil is more expensive than in December. Cherry picking the inflation data. The only thing that matters in consumer driven economies is the ability of the consumer to keep spending.

#18 Brett in Calgary on 01.17.23 at 3:29 pm

How can a market bottom when affordability is the worst ever? What percent of avg. households can afford to buy the avg. house? Now plot that over time.

#19 ogdoad on 01.17.23 at 3:37 pm

What, oh what to talk about at the water cooler? oh wait, WFH….aaannnd not sure if there are even water coolers anymore…aaanddd water coolers are just a middle class thing, right?

Oh, I know! Seems like the logical thing to talk about amongst your piers. You have to fluff the dog and spin the yarn somehow. You’re definitely not going to talk about the horrible, consumer based decisions you’ve made. Not when you’re being instantly judged and compared to Kim Kardashian (Full. Dis. not sure if she’s even alive…but you get the picture) or Brad Pitt….gotta think fast…my life is NOT interesting at all, everything sucks, my kids are zombies, I’m in an endless, painful, manufactured loop of wannabee excess!!!!!! What do i say????WHAT DO I SAY!!!????…..

…..

…..

At the water cooler:

Dupe number 1: Hey, how ya doin’?

Dupe number 2: REALLY busy…so busy…you?

Dupe number 1: busy, really busy, too…

Dupe number 1: Cool, talk soon!

Dupe number 2: See ya!

:):):):):)

Og

#20 baloney Sandwitch on 01.17.23 at 3:38 pm

No bottom, till “power of sale” signs are cropping up like crocuses.

#21 Love_The_Cottage on 01.17.23 at 3:44 pm

#18 Brett in Calgary on 01.17.23 at 3:29 pm
How can a market bottom when affordability is the worst ever? What percent of avg. households can afford to buy the avg. house?
_____
You’re right, they can’t afford to buy. But they have to live somewhere. So they rent. I’m in the GTA bunny patch division and I never saw homes for rent but now I have renters in 2 houses directly across the street.

So rent is driven up, houses are rented reducing the available homes for sale.

There will be a lot of posts here saying that prices ‘should’ come down. ‘Must’ come down. But wishing doesn’t make it so. There is more demand for housing (rental or owner) than supply.

#22 Habitt on 01.17.23 at 3:46 pm

Wait until the carbon tax increases fifteen cents per litre April first. It’ll give inflation a good bump.

#23 Yorkville Renter on 01.17.23 at 3:51 pm

Rishi was about 10 years old when the last serious market correction happened… I know people can read books and data, but nothing beats lived experience

#24 So far on 01.17.23 at 3:55 pm

I think the key phrase is: “so far”

“With new listings dropping significantly last month and the level remaining low, there are no real signs so far that forced selling is dominating the supply picture.”

Most likely people will have no idea until they get a trigger rate letter from the bank. I’m sure there are many in the shock/denial stage.

#25 JP on 01.17.23 at 3:56 pm

It isn’t the bottom because when I compare Canada-US border towns it’s still ridiculous.

https://www.zillow.com/homes/for_sale/?searchQueryState=%7B%22mapBounds%22%3A%7B%22west%22%3A-82.45557770983885%2C%22east%22%3A-82.37506852404783%2C%22south%22%3A42.94607090993176%2C%22north%22%3A43.000016211770166%7D%2C%22isMapVisible%22%3Atrue%2C%22filterState%22%3A%7B%22sort%22%3A%7B%22value%22%3A%22days%22%7D%2C%22ah%22%3A%7B%22value%22%3Atrue%7D%7D%2C%22isListVisible%22%3Atrue%2C%22mapZoom%22%3A14%7D

Sarnia, Ontario vs. Port Huron, MI. Port Huron has many houses in the low $100K range and you can’t find anything decent in Sarnia for under $300-400K. They’re literally across the river from one another! And yet it’s 2-3x as expensive on one side!

https://www.zillow.com/homes/for_sale/?searchQueryState=%7B%22mapBounds%22%3A%7B%22west%22%3A-122.81475016028527%2C%22east%22%3A-122.65373178870324%2C%22south%22%3A48.93985655844273%2C%22north%22%3A49.036619936501296%7D%2C%22isMapVisible%22%3Atrue%2C%22filterState%22%3A%7B%22sort%22%3A%7B%22value%22%3A%22days%22%7D%2C%22ah%22%3A%7B%22value%22%3Atrue%7D%7D%2C%22isListVisible%22%3Atrue%2C%22mapZoom%22%3A13%7D

White Rock, BC vs. Blaine WA. I hope you like spending 4x the price or more to live in Canada. Again, literally right across the border.

#26 Ponzius Pilatus on 01.17.23 at 3:59 pm

Not one to defend an Economist.
But, in my hood, listings started to dry up about 6 months ago.
As I said before.
Let’s see who blinks first.
The future ain’t ours to see.

#27 Ponzius Pilatus on 01.17.23 at 4:02 pm

#21 was in response to #3

#3 the Jaguar on 01.17.23 at 2:58 pm
Rishi Sondhi is an economist? But seemingly unaware that listings generally dry up in the month of December?

#28 Dolce Vita on 01.17.23 at 4:06 pm

#17 DON

Oil going up, so far, beyond analyst 2023 predictions.

15:48 pm CDT 17/01/2023, US $/bbl:

Brent = 86.68
WTI = 81.04

https://oilprice.com/oil-price-charts/

Compare to analyst chart “Oil price forecasts for 2023”:

https://www.reuters.com/business/energy/economic-weakness-set-weigh-oil-price-2023-2022-12-30/

Feb to Mar forecast prices here now in mid Jan.

———

Oil not weighted heavily by StatCan in its CPI calc. Transportation is 16.91%, Gasoline is 4.28%, Energy 7.41% Relative Importance (out of 100%).

Nov –> Dec the latter two represented the largest % change drops. Large contributor to Dec CPI decreasing even though weighted on the “light” side.

https://www150.statcan.gc.ca/n1/daily-quotidien/230117/t001a-eng.htm#fn03

If oil keeps increasing as it is, it will make CPI sticky on the way down. For example:

Jan Brent Forecast price = about $76

today it’s about 14% higher than forecast.

#29 Me on 01.17.23 at 4:06 pm

As much as I want to see the listings appearing like mushrooms after rain on the realtor website, I still try to put the pros and cons of further price declines together:

Pros:
1. Houses are still unaffordable.
2. OFSI wants tighter rules (I hope they adopt them).
3. The rate increases take around 9 to 12 months to affect the market.

Cons:
1. Getting around 100k new people in GTA every year. Consider that 2.5 people need one dwelling, that makes a demand of 40k new dwellings to rent out or live in.
2. A lot are waiting for the bottom, ready to jump in.
3. Scant listings. Sellers are not frightened enough.
4. If inflation dropped by 0.5% in 1 month, can we expect to get to 2% in 8-10 months? I assume the Bank of Canada will start lowering the rate when inflation will be around 3-3.5%.

I guess in a month or two we will see: either the sellers panic and start selling, or the buyers give up and start buying.

#30 Sail Away on 01.17.23 at 4:08 pm

#102 epic bear on 01.17.23 at 12:10 pm

with just a few more days until expiry, friday’s 130 C with an open interest of 33200 contracts, have traded an amazing 140,000 contracts, and it’s just 10 min after noon today.

i wonder where TSLA will end up on friday. lol. who can ever know.

——–

Interesting. Although I occasionally sell calls, I wouldn’t do it in this volatile time.

My plain vanilla meat and potatoes long TSLA position from Dec 28/Jan3 is +20%, which is not bad for 2 weeks. Not bad at all. Projected CAGR of +1100% and all…

#31 Deflation on 01.17.23 at 4:14 pm

Asset deflation must take place…still.

Nothing goes up forever endlessly. Not even TSLA.

I’m sensing a fake little bounce Here. Really a non-bounce being sold as a bounce, out of necessity of “facts” reenforcing the message.

Soon the real slaughter will take place.

#32 Love_The_Cottage on 01.17.23 at 4:18 pm

#22 Habitt on 01.17.23 at 3:46 pm
Wait until the carbon tax increases fifteen cents per litre April first. It’ll give inflation a good bump.
__________
The Canadian Taxpayers’ Federation says that will increase the current 11.05 cents per litre carbon price to 14.31 cents per litre of gas.

Let me help you with the math. 14.31 – 11.05 = 3.26
Not 15. And no thanks, I don’t want fries with that.

https://www.ctvnews.ca/canada/here-are-some-of-the-new-laws-and-rules-coming-into-effect-in-canada-in-2023-1.6211918#:~:text=The%20federal%20government's%20carbon%20pricing,cents%20per%20litre%20of%20gas.

#33 Mattl on 01.17.23 at 4:22 pm

No way the RE bottom is in. We are early cycle in this correction.

And Faron, AQN plus 7% today, around 8.5% for the week. Looks like others agree the dividend cut is good for the long term health of the company. Who would have guessed?

Its a long play for me so doesn’t really matter, but you were pretty proud of yourself last week, so there you go. Let’s see where we are at this time next year.

#34 Summertime on 01.17.23 at 4:22 pm

Drop in inflation?

I am not sure what some here are smoking, but pass it around please.

Inflation in food worldwide is 20-40 %, on average 35 % +, some 50 % + on annual base.

Inflation is dropping for those who do not eat or use energy or services.

https://ca.news.yahoo.com/canadians-stealing-high-priced-food-grocery-stores-232257562.html

Grocery theft has always been a major problem, but with food inflation as it is, shopkeepers now fear the wrongdoers more than before,” the Halifax-based Agri-Food Analytics Lab director wrote in an article published on Jan. 10.

“According to some industry data, an average-sized food retail store in Canada can have between $2,000 and $5,000 worth of groceries stolen per week. With the relatively narrow profit margins in grocery, this amount is huge. To cover losses, grocers need to raise prices, so in the end, we all pay for grocery theft.”

That reduction in inflation is in the lies of statisticians and central bankers. Watching you in the eyes and repeating: there is no inflation, we are raising rates (to 4 %) while necessities/rents increase by 15-20 %, food by 35 %.

Be aware the cry of the stomach, it is stronger than the voice of reason.

#35 CL on 01.17.23 at 4:29 pm

Hard to believe people panic with historically normal mortgage rates such as 5.2%.

#36 Dolce Vita on 01.17.23 at 4:30 pm

One other CPI item that I think will make it sticky on the way down:

Shelter, CPI weight = 29.8%, indices/clacs per StatCan:

Dec 2021 = 156.8
Nov 2022 = 167.2
Dec 2022 = 167.8
m/m = +0.4%
y/y = +7%

If Rents negotiated primarily monthly then Shelter should drop soon enough, if negotiated yearly then Shelter will drop slowly.

Hard to say the proportion (year vs. month to month) but this outfit shows no abatement in Cdn Rents as of Oct 2022:

https://rentals.ca/blog/rentals-ca-october-2022-rent-report

They say +15.4% by Oct 2022, with some skew as sq. ft. higher in Sep 2022 vs. Sep 2021.

StatCan says +7% y/y (Dec).

Who to believe?

That is to say it is unlikely Rents went down 8.4% from Oct to Dec 2022.

1 of the 2 has it wrong or maybe the truth lies somewhere in between?

#37 Domino on 01.17.23 at 4:31 pm

I think we are already in a recession.when was the last time you read headlines like this
The central banks will none the less crank up the rates again….just to make sure

Jan 17.2023
Microsoft (NASDAQ:MSFT) is on the verge of laying off jobs in engineering divisions and could let go a “significantly larger” number of employees than in past cuts.
The Redmond, Washington-based Microsoft (MSFT) may make the layoff announcement as soon as tomorrow, Bloomberg reported, citing a person familiar with the matter.
Separately on Tuesday, Sky News reported Microsoft (MSFT) was planning to cut thousands of jobs, a move that could impact perhaps as much as 5% of its workforce. Microsoft (MSFT) employs more than 220,000 workers globally.
In October, Microsoft (MSFT) laid off roughly 1,000 employees across several area of its business, including some in its Xbox division.

#38 Victor Llearna on 01.17.23 at 4:36 pm

lol, the camel in today’s picture looks like the left wing liberals sqauwking after Ford announced for-profit healthcare in Ontario.
They prefer healthcare crappy and free I guess.

#39 Twitter Option Experts on 01.17.23 at 4:43 pm

I see the Twitter educated options experts are opining again on the number of TSLA calls that will expire this Friday. (As they do every Friday lol)

Yet no prediction of which way they will force the price of TSLA, just absolutely positive that whatever the move is, it was ‘dem options.

Can hardly wait for the pretentious nonsense commentary about gamma, theta and ‘call heavy’ whatever.

So cringe I can barely stand it.

And now for real news, yes it’s true, inflation has peaked, it’s all downhill from here. Not sarcasm. Reality.

#40 Dolce Vita on 01.17.23 at 4:44 pm

Forgot Dec Report on Rentals (= Shelter CPI):

https://rentals.ca/blog/rentals-ca-december-2022-rent-report

+12.4% y/y (Dec).

Slowed down by 3% from Oct 2022, good news I think?

Though they say not so good:

“Rents showed no signs of slowing down last month, rising 2.5% from October and 4.9% over the past three months.”

Dec 2021 to 2022:

StatCan = +7%
Rentals.ca = +12.4%

Toss a coin as to who you believe?

———

Either way, “heavily” weighted CPI Shelter will be sticky or very sticky vs. CPI decreasing in 2023.

#41 wallflower on 01.17.23 at 4:44 pm

Since affordability remains a critical issue, begs the question:
How much is left in the vault at the Bank of M&D?

That factor pretty much indicates where new blood comes from.

#42 Private Healthcare on 01.17.23 at 4:46 pm

Not sure what all the fuss is about so called private healthcare.

It’s already here.

Since the ‘free’ healthcare here in Canada is nearly impossible to access unless you are in serious trouble, most of us get our healthcare in Latin America.

Cheap, excellent, immediate.

Why would anyone with even a little bit of money wait for years for minor surgery?

#43 Summertime on 01.17.23 at 4:55 pm

#36 Dolce Vita on 01.17.23 at 4:30 pm

Statistics job is to lie. Plain and simple.

Outrages, hedonics, substitution trickery and lies. Lie after lie. And then some more.


There is lies, damned lies, and statistics

Benjamin Disraeli
former Prime Minister of UK.

#44 Faron on 01.17.23 at 5:00 pm

#25 JP on 01.17.23 at 3:56 pm
It isn’t the bottom because when I compare Canada-US border towns it’s still ridiculous

Partly because US border towns (Blaine and Sumas come to mind) are hellscapes. White Rock is 30mins from Vancouver. Blaine is 1.5 hours from Seattle.

All that said, Port Angeles has my heart. A good-enough town with one of the most beautiful National Parks around.

#45 Faron on 01.17.23 at 5:01 pm

#33 Mattl on 01.17.23 at 4:22 pm
No way the RE bottom is in. We are early cycle in this correction.

And Faron, AQN plus 7% today

Yeah, I told you it would bounce. LOL

#46 PBrasseur on 01.17.23 at 5:02 pm

Is this the light at the end of the tunnel?

No, it’s another train!

#47 Faron on 01.17.23 at 5:03 pm

#30 Sail Away on 01.17.23 at 4:08 pm
#102 epic bear on 01.17.23 at 12:10 pm

long TSLA position from Dec 28/Jan3

LOL. What about those numerous other purchases you made on the way down. Just conveniently not gonna mention those heinous losses, are you?

#48 Faron on 01.17.23 at 5:09 pm

#102 epic bear on 01.17.23 at 12:10 pm

with just a few more days until expiry, friday’s 130 C with an open interest of 33200 contracts, have traded an amazing 140,000 contracts, and it’s just 10 min after noon today.

Guess who has a massive (10 figure) Twitter debt payment to make at end of Jan?

Anyhow, predictable, which is why I went long.

#49 Ponzius Pilatus on 01.17.23 at 5:11 pm

Again,
Posters harp obout the price of gas and carbon taxes.
The solution is simple:
Get a smaller car, drive less, walk more.
Get it?

#50 Father's Daughter on 01.17.23 at 5:12 pm

There is no way that this is the bottom. Houses are still exorbitantly priced, after their drops, for what they are.
No regular people can afford these prices, not even close. Down she goes.

#51 hold the fort on 01.17.23 at 5:12 pm

I’m not an economist, so I’m not sure about the excitement of the Dec CPI numbers..looking forward..
Pump prices are on the way ..UP
Feb 1 Dairy prices going UP
Feb/March traditionally produce prices..UP
April 1 booze Tax..up
Climate tax ..up
looks like inflation is….transitory

#52 Covid Variant Math on 01.17.23 at 5:17 pm

Just because sellers are holding their water for now doesn’t mean there isn’t a flood coming. Same as the crypto market; it all holds together until one too many people hits the sell button. Then oops…. jumbo Depends time.

#53 Joe on 01.17.23 at 5:23 pm

Atta boy Garth!

#54 Islandgirl on 01.17.23 at 5:29 pm

Vancouver Island (mid-island)- House up the street sold in April of 2021 for $515,000, was listed this last fall for $505,000, just sold this week. Found out it sold for $450,000. So the buyer lost well over $100,000 in 2 years of owning (once factoring in all sorts of costs with buying and selling). Assessment is $625,000. We shall see what the spring holds for the neighbors hoping to sell, but I don’t see good things.

#55 Habitt on 01.17.23 at 5:34 pm

32 LTC Thanks for the correction. Much appreciated. Don’t like fries? Lol Do take care.

#56 Linda on 01.17.23 at 5:35 pm

For a herbivore, that camels bicuspids sure look pointy:)

Maybe there will be a housing market rebound come spring. Right now sales & listings are way down in our neck of the woods. However, we live where housing values never went to the stratosphere so while homes were selling for less than asking, the asking price wasn’t so high in the first place. Makes for a much more reasonable market.

#57 Steven Rowlandson on 01.17.23 at 5:36 pm

“So. Is it over?”

It better not be!
Pain has not yet been felt and homes are still not affordable except for prime ministers and lotter winners.

The prime minister makes $357,800. The tax payable on that is $151,546 at a marginal rate of 53.3%. Just for clarity. – Garth

#58 Wrk.dover on 01.17.23 at 5:37 pm

Edmonton below freezing 24/7 since Nov. 27!!!

Explains the other Alberta interest in all things oil & gas.

6cm. of snow in Halifax so far this winter.

#59 Dolce Vita on 01.17.23 at 5:39 pm

#43 Summertime

The StatCan numbers I used were not Seasonally Adjusted – so no statistical manipulation just the numbers they gathered without smoothing. Read the title:

https://www150.statcan.gc.ca/n1/daily-quotidien/230117/t001a-eng.htm

Rentals.ca just gathers the whole numbers as well.

Still, it makes a person wonder where the truth lies between their numbers, y/y % increases?

I mean you know that BoC is looking at these disparate numbers as well and probably scratching their heads as well?

Typically, people that do not understand statistics like to bash them yet offer no other viable alternative incl. Mark Twain the Fiction Author and Benjamin Disraeli the Politician.

You know, fiction and politics – there’s a pair for you. They make stats look good.

Think:

WAG (fiction, politics) vs. SWAG (stats) and you have it.

#60 Penny Henny on 01.17.23 at 5:42 pm

#38 Victor Llearna on 01.17.23 at 4:36 pm
lol, the camel in today’s picture looks like the left wing liberals sqauwking after Ford announced for-profit healthcare in Ontario.
//////////////

To me it looks more like cranky old Ponzi

#61 Adam on 01.17.23 at 5:42 pm

Prices don’t need to drop anymore, they just need to not go up for 5 years. Inflation will take care of the rest, just like it did in the 90’s. If inflation averages 5% a year over the next 5 years, and prices remain flat, then that’s a 28%~ compounded loss. Add that to the 30% or so that houses actually dropped and you’re at a 50% drop in about 6 years. Take a look at what’s happened in placed like Calgary and Edmonton, prices basically flat for 15 years. I purchased an investment condo in Edmonton for $400k that sold for $800k new back before the recession. It dropped to about 500k by 2011, then slowly over the last 10 years dropped another 100k. That’s BEFORE inflation. Imagine the enormous loss that seller took. Inflation is the best way for houses to drop because it reduces the cost of houses while home sellers don’t feel like they have lost anything because they can still get what they paid for their house 5 years later.

#62 Reality is stark on 01.17.23 at 5:48 pm

All I know is that property tax increases as a percentage will be much higher than your wage increases which definitely will drive real estate prices higher.
Economics 101.

#63 Linda on 01.17.23 at 5:50 pm

#2 ‘Jens’ – don’t know about RBC, but as per the mighty Google the rule of thumb for affordability is RE prices that are 2 (two) or 2.5 times one’s annual income. So ‘affordable’ doesn’t exist in most of Canada. If average household income as per StatsCan is about $68K per annum, that means said household can ‘afford’ a mortgage of $170K. Good luck with that! These days ‘affordable housing’ is a synonym for renting.

#64 Ronaldo on 01.17.23 at 5:52 pm

Prime minus rates coming to a bank near you. They will be scrambling for market share. Wait and see.

#65 Reality check on 01.17.23 at 5:55 pm

It will take years for people to understand that the great housing bull market of the last 20 years is finished.

We have been condition for decades that “house prices only go up” and that houses are Joe average’s best way to save for retirement.

People are still desperate to buy thinking internet rates will retreat back to the emergency levels of the past decade. And believe house prices will return to appreciating 10, 15, 20% a year.

But sorry folks interest rates are not actually high now, they have just returned to a normal level – actually they are still at the lower end of the normal range.

And at normal internet rates the average Canadian house is light years from even being in the realm of affordable.

So get used to a moribund, slow degassing of the bubble over the next decade – as Canadians slowly realize house prices don’t always go up.

#66 crowdedelevatorfartz on 01.17.23 at 5:56 pm

43 Pickle Ponzie
“The solution is simple:
Get a smaller car, drive less, walk more.
Get it?
++++

Commuting advice from a retired accountant/ pickle ball addict…

#67 Niall Ferguson on 01.17.23 at 5:57 pm

The period of 1989 to 1996 saw average Canadian 5-year mortgage rates decline from 12 percent to 7 percent and single detached home prices fall 34 percent in value. The population of Canada increased from 27.7 million to 29.9 million people during the same period.

Neither falling interest rates or increased population (immigration) could stop the slow and steady return to affordability.

Let that sink in…

#68 Quintilian on 01.17.23 at 6:04 pm

“With new listings dropping significantly last month and the level remaining low, there are no real signs so far that forced selling is dominating the supply picture.”

CRAZY TALK

Rishi should know that if listings are low, and demand is even lower, it will still put downward pressure on prices, and the longer the shadow inventory builds up, the more torrid the gush will be when the specuvestors need to bail out of their assignment.

Tick Tock, Tick Tock

The build up of inventory always follows the bursting of the bubble, not before.

#69 Dolce Vita on 01.17.23 at 6:13 pm

#58 Wrk.dover

Putin not getting his wish of Europa freezing this Winter.

Weather tracker: January temperatures smash records across Europe
https://www.theguardian.com/weather/2023/jan/06/weather-tracker-january-temperatures-smash-records-across-europe

and if that were not enough

Europe’s warm January weather to continue
https://www.theguardian.com/environment/2023/jan/16/weather-tracker-europe-warm-january-weather-to-continue

————–

Finished my Monte Santo di Lussari, Tarvisio, sojourn today. They got snow last day there. Beautiful Julian Alps. And, I stayed at an honest to goodness Alpine Chalet (cheesy music):

https://www.chaletvalcanale.com/

6 min walk to the ski hill and gondola lift. Same time to the bar.

Off to Malta on Saturday though I think it will rain for my 5 days there?

Off to do my own personal Knights Templar fact finding tour (Peasant style at the Domus Zamittello).

#70 Neo on 01.17.23 at 6:27 pm

A quick reminder just incase the traitors in Ottawa decide that nobody under the age of 40 should own a home in Canada. And yes, they probably will..

The NAFTA T1 Visa is your ticket to paradise. Lots of jobs or young professionals tired of living in a third world country.

https://travel.state.gov/content/travel/en/us-visas/employment/visas-canadian-mexican-nafta-professional-workers.html

#71 chalkie on 01.17.23 at 6:29 pm

The average price of homes sold in Canada will fall 5.9 per cent on an annual basis to $662,103 in 2023, but will bounce back modestly in 2024, according to a new forecast released by the Canadian real estate association, but expect them to rebound in 2024.

It’s about time CREA put out some solid projections and not reflect on what the bigger real estate companies and their agents are saying about home prices going up. As for 2024, CREA let’s get part way through this year first and then let us know your projections for 2024, I feel it also may not be so realtor awesome as you think it will be. Have we reached the bottoming out of home prices? not likely. 2023 will be a year of turmoil and unknowns. It will be an interesting spring market this year, I am a half full kind of person, but I see nothing that supports a rise in home prices in Canada for quite some time out, little pockets in remote areas hardly moves the pendulum.
For the spring of 2023, a small two- or three-week home sales market with a little pressure, it will do nothing to tame the dropping of prices for the time being. Waiting for that right home, hold your money back for now, it will not burn your pockets, the bottom is out there somewhere, but it’s not here currently.
Our new 6.3% for inflation was mostly driven by lower oil and gas prices in the last quarter, since January came around, gas prices have been Northbound with no end in sight yet.

Have you noticed a few food companies reports with smaller revenues that had higher profits, there is a name for that, it’s called gouging.

Staying with 2023, another 6% reduction on a million-dollar home, will shave an additional $60,000 of value from the home this year.

Indicators to watch when making a large purchase decision, the last quarter of 2022 saw a 2.2% decline in GDP and it is forecasted to reach an additional 3.4% in our next two quarters. Only time can fix this, first we must break even on the downward pressure for our GDP before we begin to see any excitement in our forward future.

There most likely will be another 25-basis-point hike on Jan. 25, opening the door for a further economic contraction, patience is Golden if you are spending large dollars.

For the Elon Musk stock supporters, he put a 7% or $9.00 gain in your pockets today.

Quote of the day: Patience and perseverance have a magical effect before which difficulties disappear and obstacles vanish, hold your horses, keep the barn door closed for now.

#72 This is the Great Reset on 01.17.23 at 6:32 pm

The prime minister makes $357,800. The tax payable on that is $151,546 at a marginal rate of 53.3%. Just for clarity. – Garth

So you’re saying that even the PM can’t afford a house in his own country. Got it.

Bottom? Not even close.

#73 Hmm on 01.17.23 at 6:35 pm

unless you’re just fishing for huge payday, houses in my SW Ontario bunny patch are selling with regularity right now. I know first hand – just sold.
the shite hasn’t hit the fan just yet.

#74 Ed on 01.17.23 at 6:37 pm

SIL mortgage broker in Calgary having a hard time taking any time off. Idiots still snapping up osb boxes out there.

#75 This is the Great Reset on 01.17.23 at 6:42 pm

DELETED

#76 Shirl Clarts on 01.17.23 at 6:51 pm

Warning to first time buyers, whatever generation you are. Think about what age you want the mortgage paid off. Your amortization period should be that minus your current age. e.g. if you are 40 with a 25 year mortgage, you might be 65 when it’s done.

So much for FIRE.

#77 Lisa on 01.17.23 at 6:57 pm

I work at a diner in Hamilton and a young realtor brought their resume in for me to look at. I think they’re just starting out but if hours are being cut already that isn’t good for the mortgage payment.
Same with FedEx. All the parties got their hours cut n half. It’s happening.

#78 bubu on 01.17.23 at 7:04 pm

I don’t know where you get these numbers as I don’t see the prices going down yet. 2bed in Coquitlam is still over 700k…

#79 crowdedelevatorfartz on 01.17.23 at 7:10 pm

“The prime minister makes $357,800.”

+++
Unfortunately if he was able to live forever, was reelected forever, and agreed to work for free and donate his entire salary to removing the $1,200,000,000,000.00 National Debt…..

It would take 3,353,829…… years.
But, perhaps, by that time, he would have solved global warming…..

I think he’ll just raise taxes for the rest of us….

#80 I don’t know on 01.17.23 at 7:19 pm

Very few believe the real estate correction is completely done, but it’s becoming clear to the majority that we are getting closer with the lion’s share behind us, including the market bottom. Ditto the stock market.

Well maybe the doomers who became experts on 1920’s German monetary policy overnight. But there will always be people who cannot see anything but negativity. They never learn that their negative bias is what holds them back. Or the maybe the greedy who thought they would get to buy a home in downtown Toronto next to transit and parks for a huge discount. Not going to happen.

Why? All the reasons our host mentioned apply, plus the understanding that demand is elastic. We had demand artificially elevated in 2021, then it was artificially depressed in 2022. Artificially depressed demand will only stay for so long before some catalyst breaks it, which will be the peak of interest rates (coming soon).

IDK

#81 Saint Herb on 01.17.23 at 7:27 pm

“So, when average couples cannot afford to buy average houses, how can this real estate correction be done? Do we not need a chop of forty or fifty per cent before sanity is restored?”

YES! That is exactly what we need and what I have been saying for years. This time is not different!

#82 Brett in Calgary on 01.17.23 at 7:31 pm

#21 Love_The_Cottage on 01.17.23 at 3:44 pm
———
Yep fair point. So then the question is who owns them? The most likely answer is people over 40, and now we’re back to ageism.

#83 Ronaldo on 01.17.23 at 7:31 pm

#52 Covid Variant Math on 01.17.23 at 5:17 pm
Just because sellers are holding their water for now doesn’t mean there isn’t a flood coming. Same as the crypto market; it all holds together until one too many people hits the sell button. Then oops…. jumbo Depends time.
—————————————————————–
Give it a couple more months and look out below. Remember that? Hang on tight. Took awhile. https://www.youtube.com/watch?v=hqOn5XEm86A

#84 Ronaldo on 01.17.23 at 7:36 pm

#49 Ponzius Pilatus on 01.17.23 at 5:11 pm
Again,
Posters harp obout the price of gas and carbon taxes.
The solution is simple:
Get a smaller car, drive less, walk more.
Get it?
——————————————————————
Better still, buy the energy stocks and cheer win the price of gas goes up.

#85 maxx on 01.17.23 at 7:54 pm

Markets and traders would love to call a bottom, however some (Blackrock at Davos) disagree:

https://www.bloomberg.com/news/articles/2023-01-16/brace-yourself-for-more-rate-hikes-blackrock-s-hildebrand-says?cmpid=BBD011623_NEF&utm_medium=email&utm_source=newsletter&utm_term=230116&utm_campaign=nef#xj4y7vzkg

#86 Old gringo on 01.17.23 at 8:09 pm

That’s an unusual photo of Donny Trump.
Hope you got his permission to use it!!

#87 Alex on 01.17.23 at 8:17 pm

#49 Ponzius Pilatus on 01.17.23 at 5:11 pm
Again,
Posters harp obout the price of gas and carbon taxes.
The solution is simple:
Get a smaller car, drive less, walk more.
Get it?
———
So quit your job and get one within walking distance? Or perhaps if you are a tradesman sell your truck and get a job doing something else? Maybe farmers should get rid of all that carbon heavy equipment and go back to manual tools to work their land? Maybe just double up on sweaters and blankets when it gets cold in your house rather than use a natural gas furnace The arrogance of your posts never cease to amaze me. Give your head a shake.

#88 Ham and Eggs on 01.17.23 at 8:32 pm

BANNED

#89 TurnerNation on 01.17.23 at 8:41 pm

I’m hearing from those in the know that the used car market is falling apart. Large inventories all financed; interest rates uppa uppa – affects dealers and customers both.

—-
Say, anyone recall a few years ago when a new bio-weapon was unleased globally (Bats and wet markets right?) and our rulers took this surprise opportunity to turn every system onto its head?

https://www.cbc.ca/news/canada/toronto/ontario-doug-ford-private-clinics-health-care-1.6712444
In January 2021, the Ministry of Health sought applications from independent health facilities to perform cataract operations.

https://www.ipolitics.ca/queens-park/health-canada-concerned-about-ontario-company-that-charges-for-virtual-doctor-visits
Health Canada ‘concerned’ about Ontario company that charges for virtual doctor visits
Maple, a Loblaw-funded virtual care business based in Toronto, charges $69 per doctor’s visit

—-
— Once again…as expected 2023 will be a HUGE push in the ‘news’ toward MAID.

https://www.ctvnews.ca/health/canada-performing-more-organ-transplants-from-maid-donors-than-any-country-in-the-world-1.6234133
Canada performing more organ transplants from MAID donors than any country in the world

#90 Russ on 01.17.23 at 8:54 pm

Steven Rowlandson on 01.17.23 at 5:36 pm


The prime minister makes $357,800. The tax payable on that is $151,546 at a marginal rate of 53.3%. Just for clarity. – Garth

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

That tax payable amount seems a little low.

As there are employer paid benefits that should also apply, like:
– monthly groceries delivered
– pleasure trips, such as surfing near Tofino

I may not begrudge these benefits but let’s be clear on who the tax code applies to.

Cheers, R

Worry about things that matter. – Garth

#91 Nonplused on 01.17.23 at 8:57 pm

We have almost achieved affordability in YYC. It’s coming.

About YVR nobody can really say. It hasn’t been affordable for something like 40 years.

YYZ has caught the left coast flu. Time will tell what will happen there. I wonder if there is a correlation between voting left and house prices? I mean, if you vote left it means you do math with your heart and not your brain, so it could be that there is a correlation.

#92 Quintilian on 01.17.23 at 9:03 pm

#80 I don’t know on 01.17.23 at 7:19 pm

[ understanding] that demand is elastic. We had demand artificially elevated in 2021

Thanks for the slow pitch.

Demand is elastic

them’s big words for a Realtor.

Demand has been artificially elevated for many years, by political tinkering and reckless monetary policy which has now run its course.

Nobody is saying that demand will never return, but at what price is the question.

Tick Tock, Tick Tock

#93 Oblio on 01.17.23 at 9:05 pm

The bottom is nigh? With so much wishful thinking induced optimism flowing from everyone in the financial, investment, & real-estate industries, a Ouija Board would be more helpful.

My property purchase money is hanging back until the second no-increase BoC Interest Rate announcement.

#94 Ponzius Pilatus on 01.17.23 at 9:07 pm

66 crowdedelevatorfartz on 01.17.23 at 5:56 pm
43 Pickle Ponzie
“The solution is simple:
Get a smaller car, drive less, walk more.
Get it?
++++

Commuting advice from a retired accountant/ pickle ball addict…
———————-
The last twenty years of my 35 year career, I took public transport to work.
Saved myself a ton of dough, that comes in handy in my retirement years.

#95 Alois on 01.17.23 at 9:13 pm

#89 TurnerNation on 01.17.23 at 8:41 pm

I’m hearing from those in the know that the used car market is falling apart. Large inventories all financed; interest rates uppa uppa – affects dealers and customers both.

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

In South Richmond BC….major off load facility of new vehicles.

In 40 + years of observations…never see it so bare…usually stuffed full of new vehicles……at times it is EMPTY…currently my guess is at 30% capacity.

#96 crowdedelevatorfartz on 01.17.23 at 9:20 pm

Almost exactly one year ago the RCMP busted a drug “superlab” in Abbotsford BC
27 MILLION doses of Fentanyl, ecstasy, etc.
The three men arrested?
Released on bail….
RCMP are now appealing for the publics help to find the suspects.

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwjjl56Fh9D8AhV0IX0KHdALA_gQvOMEKAB6BAgJEAE&url=https%3A%2F%2Fwww.abbynews.com%2Fnews%2Fdrug-super-lab-in-abbotsford-could-have-produced-27m-lethal-doses-of-fentanyl-say-police%2F&usg=AOvVaw1oy4ZnDjv8oatmxcEXZMO5

The Liberal “catch and release” bail program….is….a….joke.

#97 mike from mtl on 01.17.23 at 9:24 pm

DELETED

#98 Faron on 01.17.23 at 9:30 pm

What’s fun about the “arbitrage” that some commenters gab on about is that those commenters seem to buy right after the announcement. Then, after time passes and the target dribbles lower, people like me can buy at ~10% cheaper. Considering another acronym for this to go with the SAGI. CRAP might work — Chowderhead Realized Arbitrage Profit.

#99 TurnerNation on 01.17.23 at 9:46 pm

Roger that #95 Alois

—-
Spam alert:

https://streetsoftoronto.com/this-is-torontos-newest-food-trend-and-its-actually-a-blast-from-the-past/
Toronto condo developer predicts supply shortages and falling rates for 2023
Developer Brad Lamb gives us his take on what to expect from the market
What do you predict for when the interest rate stabilizes?

Predicting future events is what everyone wants to see, but it is impossible to know. My prediction is that rates will start falling by mid-2023. If I am correct in that, once the Bank of Canada rate falls approximately 1.5 per cent (to 2.5 to 2.75 per cent), the market will surge back and quickly overshoot the previous peak.



Still a million loonies for this obtuse sht bung??

https://torontorealtyblog.com/blog/an-early-litmus-test-for-the-2023-market/

#100 Russ on 01.17.23 at 10:12 pm

Russ on 01.17.23 at 8:54 pm

…..

I may not begrudge these benefits but let’s be clear on who the tax code applies to.

Cheers, R
.

Worry about things that matter. – Garth

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

I am a child of the 70s.

https://jacobsmedia.com/wp-content/uploads/2013/06/Alfred-E.-Neuman_What-Me-Worry2.jpg

And my theme for many years, with help from Bobby:
https://www.youtube.com/watch?v=d-diB65scQU

And for the scientists out there:
https://www.youtube.com/watch?v=ne6tB2KiZuk

Cheers, R

#101 Lawnboy on 01.17.23 at 10:16 pm

Garth. Long time no speak.

I’m in NZ , north and south rock, fyi , it’s nuts.
Prices like GTA only boxes are one level with tin roofs.
Luckily you can’t buy here as a non resident. Gas today is 2.60 L!!!! And wait for it , capitalism gains on all homes.

Nice.

Lawnboy out.

#102 American House Buyer on 01.17.23 at 10:47 pm

Here is why we dumped all our Canadian homes, townhomes and condos 20 years ago.

Buy in USa. Rent in Canada.

http://vancouvercondo.info/coaster

#103 Sail Away on 01.17.23 at 10:59 pm

#48 Faron on 01.17.23 at 5:09 pm

Guess who has a massive (10 figure) Twitter debt payment to make at end of Jan?

—————

In your ear and out your mouth, bud. No discernment. Again. Same media source, too. Lol.

If you close your eyes, hop around in a circle three times and yell ‘Bubble!’, it sounds like ‘Gullible’

#104 Hey Ace Goodheart on 01.17.23 at 11:13 pm

are you also posting on Toronto RE blog?
what Annette street property you referring to?

I can’t find a property on Annette that recently sold for 1.2 mil

#105 Hey Ace on 01.17.23 at 11:19 pm

NM… found it, the semi at 181. started at 1.46 and sold for 1.2

kinda dump to live in, but a decent rental I suppose

#106 I don't know on 01.17.23 at 11:25 pm

#92 Quintilian on 01.17.23 at 9:03 pm

A few months ago I read a comment of yours where you presented an analogy. You compared the current tightening economic cycle to a hypothetical individual trying to lose weight. You (incorrectly) stated that big changes would need to be made for this hypothetical individual to lose weight. The analogy was that big rate hikes would be needed to tame tough inflation because the financial system was “addicted” to it.

As someone who works in health care -definitely not real estate- I chuckled since the opposite phenomen of what you described is closer to reality (small lifestyle changes have big positive impacts). The same is true of the current financial situation, where small hikes are having big impacts (also the opposite of what you said).

It’s clear your comments are more grounded in emotion and hope/desperation than they are in reality. I make no judgements and understand that it’s not fair that houses are so expensive. It’s an issue affecting all of us (worldwide actually). But the objective reality is houses are expensive here for a number of reasons.. ranging from our geography, to how they are built, to our culture, to our banking sector, to our economy, to our demographics and so on. None of those factors are going to change any time soon.

Essentially, if you want a home, you’ll have to slog it out and sacrifice like the rest of us.

With regards to today’s blog post. No one knows for sure, but the bottom is likely in the rear view mirror. There are more signs saying this than otherwise. “Tick tock tick tock” indeed, but more in relation to the deals that are coming either in the next few months or here now. They won’t last long. Ditto the stock market.

IDK

#107 Han anf oeuf on 01.17.23 at 11:26 pm

BANNED

#108 Faron on 01.17.23 at 11:35 pm

#103 Sail Away on 01.17.23 at 10:59 pm
#48 Faron on 01.17.23 at 5:09 pm

Same media source, too

Nope. Good luck extracting that foot. Woops.

And, do you think that Elon is, magically, not going to have to pay interest on his debt? That would be cool, but it’s also an idea from children’s fairy land.

#109 DON on 01.17.23 at 11:39 pm

#80 I don’t know on 01.17.23 at 7:19 pm
Very few believe the real estate correction is completely done, but it’s becoming clear to the majority that we are getting closer with the lion’s share behind us, including the market bottom. Ditto the stock market.

Well maybe the doomers who became experts on 1920’s German monetary policy overnight. But there will always be people who cannot see anything but negativity. They never learn that their negative bias is what holds them back. Or the maybe the greedy who thought they would get to buy a home in downtown Toronto next to transit and parks for a huge discount. Not going to happen.

Why? All the reasons our host mentioned apply, plus the understanding that demand is elastic. We had demand artificially elevated in 2021, then it was artificially depressed in 2022. Artificially depressed demand will only stay for so long before some catalyst breaks it, which will be the peak of interest rates (coming soon).

IDK

************
Let us go back a full year and re read your thoughts.

You are definitely spare parts bud.

Say hi to the homie the cliwn for me.

#110 DON on 01.17.23 at 11:44 pm

#106 I don’t know on 01.17.23 at 11:25 pm
#92 Quintilian on 01.17.23 at 9:03 pm

A few months ago I read a comment of yours where you presented an analogy. You compared the current tightening economic cycle to a hypothetical individual trying to lose weight. You (incorrectly) stated that big changes would need to be made for this hypothetical individual to lose weight. The analogy was that big rate hikes would be needed to tame tough inflation because the financial system was “addicted” to it.

As someone who works in health care -definitely not real estate- I chuckled since the opposite phenomen of what you described is closer to reality (small lifestyle changes have big positive impacts). The same is true of the current financial situation, where small hikes are having big impacts (also the opposite of what you said).

It’s clear your comments are more grounded in emotion and hope/desperation than they are in reality. I make no judgements and understand that it’s not fair that houses are so expensive. It’s an issue affecting all of us (worldwide actually). But the objective reality is houses are expensive here for a number of reasons.. ranging from our geography, to how they are built, to our culture, to our banking sector, to our economy, to our demographics and so on. None of those factors are going to change any time soon.

Essentially, if you want a home, you’ll have to slog it out and sacrifice like the rest of us.

With regards to today’s blog post. No one knows for sure, but the bottom is likely in the rear view mirror. There are more signs saying this than otherwise. “Tick tock tick tock” indeed, but more in relation to the deals that are coming either in the next few months or here now. They won’t last long. Ditto the stock market.

IDK

************
Did you even get the main jist of the post Garth wrote today? Did you get the under lying message? Or did you assume too much in an effort to continue your confirmation bias?

Last time you were spanked for twisting Garth’s words.

#111 VanIslander on 01.18.23 at 12:15 am

In 1982 the fun didn’t start til late spring and summer. By the fall reality set in and it was death by a thousand cuts over the next year to two. Few at the banks experienced that era so they are going by economic books not reality. People are hurting.

I got out near the top and waited two years then repurchased similar shack at similar price and it still went down for another year before rebounding.

Few at the banks experienced that era so they are going by economic books not reality. People are hurting.

#112 Quintilian on 01.18.23 at 12:37 am

IDK, you are obviously trolling.

We had demand artificially elevated in 2021, then it was artificially depressed in 2022. Artificially depressed demand will only stay for so long before some catalyst breaks it, which will be the peak of interest rates (coming soon).

For one thing you cannot talk about the elasticity of demand without considering the price elasticity of supply.

If you were to be intellectually honest you would soon realize that the economic theory that deals with that issue would tell you that as price rises the demand drops, and furthermore supply will eventually catch up.

But all that goes out the window when the market is driven by pure speculation and animal spirits and that catalyst eventually results in a housing crash.
IDK you are a salesman, but have no knowledge of economics.

Tick Tock, Tick Tock

#113 DON on 01.18.23 at 12:47 am

Blog dogs who have been following the Ukraine War. It apears that things are starting to escalate, between all the countries and a body blow to the old globalization of yester years. How does this unfold in an orderly and controlled manner?

I wish the adults were in the room and not sitting at the kids table watching cartoons.

#114 Steven Rowlandson on 01.18.23 at 1:34 am

Well Garth under the 3 years pay rule your dear leader Justin could buy a million dollar home. People who actually do work for their pay don’t qualify for the cheap end of the market or even to rent. That is why the market and even the economy is in a dream world that must crash and burn.

#115 DON on 01.18.23 at 2:02 am

https://www.nsnews.com/local-news/tesla-suddenly-accelerates-into-bc-ferries-ramp-breaks-in-two-638525

After reading the article.

Is it easy to confuse the accelerator and the brake in a Tesla?

#116 millmech on 01.18.23 at 2:36 am

#33 Mattl
Yup I am bag holding 5000 shares now, enjoying the ride up and a nice little dividend to redeploy in the portfolio. A good play so far and great potential for stellar returns.

#117 Wrk.dover on 01.18.23 at 5:10 am

Ace is still among the living!

Exists on a different RE blog now.

How ’bout that.

#118 Oblio on 01.18.23 at 5:27 am

#93 Oblio
“hanging back until the second no-increase BoC Interest Rate announcement.”

OK, that’s not so relevant to fixed mortgage rates; will someone kindly steer me to a graph showing long term bond yields that might influence Canadian mortgage rates?

#119 Steven Rowlandson on 01.18.23 at 6:05 am

The classical 3 years pay rule isn’t about after tax take home pay and it is about pretax income and one income only and not two incomes. The 3 years pay is the maximum price of a house on a lot that should be paid and ideally one should pay less than 3 years pay. My father did but he was a bargain hunter. He averaged 1.25 to 1.5 years pay from buying his first home until retirement from the air force.
The rest of the 3 years pay rule requires a 25% down payment and the balance financed at a fixed rate for 25 years not for 5 years at a time. No double incomes to be included in the calculations. Women are for making babies with, house keeping, looking after the children and your best friend and helper. You should not depend on their income if any to make ends meet when it comes to the basics. This rule was devised long ago for the protection of yourself, the economy and society.
If you break the rule you risk all.
Remember, real estate is merely a place to live. It isn’t an investment.

#120 maxx on 01.18.23 at 7:21 am

@ #5

I´d qualify that with ¨or too much ability to borrow¨, otherwise agree 100%.

If CB´s raise and hold, the tide will reveal all of the buyers who have been swimming naked. Unfortunately, contrary to what they believe, they are not more important than the future of the economy.

IF CB´s hold rates at normal levels, currency value will return, prices will normalize to healthier levels and the economic landscape will diversify out of obscene RE and mortgage distortion.

#121 under the radar on 01.18.23 at 7:25 am

Stock market recovery in 23 will spillover to real estate. Bottom in 23 , people will feel confident when CB’S pause and their portfolios recover. Watch out for a few bumps , Republicans and debt ceiling. Warning- When you take hostages you better be prepared to kill them.

#122 maxx on 01.18.23 at 7:28 am

@ #12

Excellent sense of humour! :-)))

Guess you´re waiting to see if anything sticks in the grand scheme….

#123 crowdedelevatorfartz on 01.18.23 at 8:08 am

@#94 Ponzies pedestrian playbook
“The last twenty years of my 35 year career, I took public transport to work.”
++++

So you worked a white collar job at the same jobsite for 20+ years.
No tools.
No materials.
No remote worksites all over the Lower Brain Land.

And you took a bus ( the looser cruiser) to work…where you sat at the same desk, pushing paper for 35 years.
Ugh.
A frugal, penny pinching, accountant.
Shocking.
Here’s a medal.

#124 Re-Cowtown on 01.18.23 at 9:24 am

My cousin is an aeronautical engineer. He said they teach you two principles of flight on the first day:

The first is that if you apply enough thrust, even a rock will fly. The second thing is that when you stop applying thrust, it will fall out of the sky like a rock because rocks have bad flight characteristics.

If you apply those principles to “Green Energy”, you get the same result. Once massive tax subsidies are withdrawn collapse is inevitable, as the Brits are finding out:

https://wattsupwiththat.com/2023/01/18/uk-green-jobs-narrative-unravelling-battery-collapse-parliamentary-inquiry/

Bottom line is that if something is a good idea and is a genuine leap forward market forces support it and propel it forward. If it’s a boondoggle that can’t stand on it’s own legs, the market kills it, and only later, much later, does the government admit reality and stop pi$$ing away tax dollars on it.

You want to know who will kill the electric car? The consumer. Why? Because it’s a bad idea and no amount of tax money will make it into a good one.

Trudeau thinks that he’s bright enough to bend physics and chemistry to his will. But it’s just the recklessness of the malinformed.

#125 the Jaguar on 01.18.23 at 10:10 am

Snippets (NP). Slippery slopes. But when will we hit bottom?

‘ A parliamentary committee on government operations will hold an emergency meeting on Wednesday to take a closer look at more than $100 million in contracts given to the consulting firm Mckinsey & Company since the Liberals took office in 2015.
Previous reports had mentioned the total amount of contracts was closer to $66 million, but Public Services and Procurement Canada (PSPC) released new numbers this week that show that it has awarded a total of 23 contracts to Mckinsey that come up to $101.4 million.’
++

‘Bosses have resorted to sending their staff messages on Instagram because an increasing number of young employees ignore work emails altogether, according to a major global IT company.
Thierry Delaporte, chief executive of Wipro, which employs 260,000 people globally, said about 10 per cent of his staff “don’t even check one email per month.”

#126 Sail Away on 01.18.23 at 10:14 am

A secondary pleasure from owning the fast-rising Tesla stock is knowing that all other owners are also benefitting. The best win is when everyone wins.

#127 Calgary Observer on 01.18.23 at 10:23 am

A few themes starting to emerge in Calgary’s inner city RE market:

$600s are the new $700s. And $700’s were last year’s low $800s

Realtors attempts to list well under the market in hopes of igniting a bidding war are not hugely successful. Bidders are still offering the new (lower) price. And the seller is accepting it. Can’t fault a realtor for tryin’ last years shenanigans, but they ain’t workin’ no more.

Inner city properties for re-devlopment are plopping. Land prices are dropping as developers scale back their bids. This makes sense as developers are highly interest rate sensitive, so they set the price for the entire market, often buying distress or estate sale properties.

Flippers are in trouble. Those who bought a 1000 sq.ft. box last year and dumped a pile of cash into it will be lucky to get their original purchase price back. No upside for upgrades as the property is reverting back to to land value status.

Here’s roughly what’s happening in the sales cycle:

1. Seller lists with a realtor at $40K over current market
2. 10 – 14 days later, house price is cut by 20K
3. 30 days after listing it is cut by another 20K
4. House goes pending, but there’s a 25 – 30% chance that it ends up back on the market after financing falls through
5. Seller cuts price another 15-20K
6. Two weeks later (just before relators listing expires) house sells for $15K – 20K less than new (lowered, lower) asking.

In broad strokes, in Calgary inner city, houses are losing $25K per month and selling at around $15 – $25K under asking.

#128 Dharma Bum on 01.18.23 at 10:38 am

Many major US universities BANNING Tik Tok!

Recognizing the risk of hacking and infiltration by a hostile foreign entity.

US House of Representatives BANNING the Tik Tok app on government issues devices.

Are they on to something?

Or is this “racism”? Like everything else conveniently is.

Until it isn’t.

Hmmmmmmmmmm……

#129 Crystal ball futurist on 01.18.23 at 10:49 am

Still a long way to go down, before we even see the bottom with a telescope.

#130 Ponzius Pilatus on 01.18.23 at 11:01 am

123 crowdedelevatorfartz on 01.18.23 at 8:08 am
@#94 Ponzies pedestrian playbook
“The last twenty years of my 35 year career, I took public transport to work.”
++++

So you worked a white collar job at the same jobsite for 20+ years.
No tools.
No materials.
No remote worksites all over the Lower Brain Land.

And you took a bus ( the looser cruiser) to work…where you sat at the same desk, pushing paper for 35 years.
Ugh.
A frugal, penny pinching, accountant.
Shocking.
Here’s a medal.
———————
Actually,
I took the classy Westcoast Express from Coquitlam to Downtown to my cushy office.
Our CEO took the bike to work from Point Grey.
Pretty woke place, I gotta admit.
And then at 4 pm, off to Steamworks for some cool ones.
And then race to catch the “Last Train Home”.
Traffic?
What traffic?

#131 Ponzius Pilatus on 01.18.23 at 11:06 am

At a court in San Francisco.
Tesla’s Auto Pilot is on trial.
Does not look too good for Musk.

#132 Ponzius Pilatus on 01.18.23 at 11:13 am

#125
Thierry Delaporte, chief executive of Wipro, which employs 260,000 people globally, said about 10 per cent of his staff “don’t even check one email per month.”
———————
Easy solution.
Send them their pink slips via e-Mail.
And then watch their faces when they show up for work.
And their replacement is sitting on their desk.
Priceless.

#133 The Grifter Challenge on 01.18.23 at 11:13 am

Memes starting to catch on regarding the WEF in Davos, Switzerland attended by jet setter billionaire elites, where a thousand private jets are on the tarmac:

The Grifter Challenge

Joe Rogan hosts a reality show where WEF participants must live by the rules that they tell everyone else to live by. So far a couple of events are:

1. Riding a bicycle through downtown Saigon in the middle of the summer with 300 lbs of firewood and a newborn balanced on the back.

2. Running naked through Churchill, MB in polar bear season.

What other events should Joe Rogan have??

#134 Oblio on 01.18.23 at 11:22 am

#124 ReCow
“Once massive tax subsidies are withdrawn collapse is inevitable”
I don’t know about there, but here in BC the O&G and Forest industries receive substantial subsidies & allowances (tax & development costs).

#135 the Jaguar on 01.18.23 at 11:32 am

re: #127 Calgary Observer on 01.18.23 at 10:23 am++
Most of the ‘inner city’ was hoovered years ago for the infill/duplex builds, and focus now seems to be townhouse development with the city’s blessing given their strategy for renovation and densification.
https://engage.calgary.ca/Riley?redirect=/riley

Not just the big corner lots either. Quite interesting how creative some of these ‘developers’ are about squeezing in more units on smaller lots. More peeps for the roving bands of meth heads and other criminal elements to prey upon.

#136 Looking Up on 01.18.23 at 11:56 am

Hey Ace Goodheart on 01.17.23 at 11:13 pm
are you also posting on Toronto RE blog?
what Annette street property you referring to?

I can’t find a property on Annette that recently sold for 1.2 mil

——————

What’s the exact name of the blog where Ace is posting? I don’t think it’s Toronto RE blog. I always liked his posts.

#137 Sail Away on 01.18.23 at 12:51 pm

#131 Ponzius Pilatus on 01.18.23 at 11:06 am

At a court in San Francisco.
Tesla’s Auto Pilot is on trial.
Does not look too good for Musk.

—————

Incorrect. The owner is on trial, Tesla is not charged. Be accurate, accountant.

#138 American House Buyer on 01.19.23 at 2:08 pm

If you are still buying houses in Canada, you are a special kind of stupid. Buy in USA. Rent in Canada.
https://www.realtor.com/realestateandhomes-detail/85-Hill-St_Hornell_NY_14843_M45006-49771