What if…?

For more than 60 days it sat there. A few showings. No bids. Then, on day 63 – last week – an offer landed. Then another, unexpectedly. And a third three hours later. The non-descript house in Outer Bunnypatch sold that evening for fifty grand over asking, at a buck and a half.

“Buyers are coming out of the woodwork,” said one of the agents involved, a guy who normally works mid-town in the City. “Things really took a turn last week.”

Regular blog addicts will recall a blasphemous post here days ago listing the reasons realtors and house-floggers think it’s impossible for property values and sales to continue a descent into 2023. This will be the year of recovery, they insist. You were warned.

Of course, many are disbelievers. We’re not even back to BeforeTimes pre-Covid levels, they say, and real estate was already insane in 2019. When average people with two good incomes and savings in hand cannot afford the average house, how can the market be robust? With the stress test north of 7% and the regulator about to make borrowing rules worse, who the hell is buying?

Here’s the conundrum. It could be worth hundreds of thousands of dollars.

If prices inevitably fall further – especially in a recession – a purchaser now would be grasping a falling knife, spending oodles more than prudent. Buyers would be losers. But, but, but. If recent substantial declines are all we get (as central banks stop rate-hiking, leading to a market rebirth) an opportunity will have passed. Maybe forever. Waiters would be losers.

Here’s what we know.

Prices:
The decline from the 2/22 Peak House moment has been substantial. Not historic, but close. The average national valuation dropped 12% year/year by last month (a record) and the plop since last Spring is a consequential 23%. In Toronto the average detached has dropped 22%. In the Fraser Valley, it’s a 30% reduction. Halifax has seen a big whack in the past eight weeks. In the whole GTA (six million souls) detached houses which sold (on average) for $1,797,200 in February of 2021 are now $1,384,500. The difference: $412,000, or 22.9%.

We may argue that a 50% drop is required. But is it realistic to expect in a country where political leaders still coddle homeowners, subsidize 20x leverage loans for property and make real estate the only tax-free asset class?

So, isn’t a drop of more than 20% in less than 12 months a gift? Or merely a harbinger?

Sales:
The other big story is a collapse in sales during the second half of 2022. Volumes have never declined this far for this long this fast in modern history – off between 40% and 50% in most major markets. As the CB raised rates seven times and mortgages went from 2% to 6%, buyers wilted. Pre-con deals immediately looked in jeopardy. Mortgage brokers started taking in laundry. Over a third of all agents in Toronto were assumed unable to pay their annual licensing fee. Months of inventory shot higher, even as listings were scant.

In Canada last year, there were 168,000 fewer resales. So did all the people who want houses stop wanting them? Or did they just move to the sidelines to sit on their insatiable pent-up demand?

If the former, more price and sales drought lies ahead. If the latter, we’re headed for panic buying.

Rates:
The pathetic Blog has long argued the inverse relationship between the cost of money and the cost of houses was the one thing to keep an eye on. Not Chinese dudes or other offshore meanies. Not flippers or amateur landlords. Not REITs snapping up inventory. Not AirBnB. Not citizens from other provinces. Not folks who own residences they don’t sleep in 180 nights a year. And not because Canada has too few homes for sale (there are currently 202,300 resales available).

Nope, it all about rates. And we have news on that front.

First, the Bank of Canada will hike again this week, but only by a quarter point and (most economists think) for the final time in this cycle. We’re done. This is it. The ‘terminal’ rate will top out at 4.5%. That will bring stability to everything. Moreover, long-term rates have been falling in the bond market on expectations of a soft landing and CB surrender. Five-year mortgages are reflecting that – and are set to decline further.

Meanwhile here is what Mr. Market thinks central banks will do over the next few years. Yes, rate reductions.

If that inverse ratio of rates/houses holds, you know what to expect. But if houses are simply unaffordable for all but the fortunate few, will the correction continue nonetheless?

The economy:
A recession this year? Don’t count on it. The latest consensus forecast for the US economy is expansion of 2.6% – not even close to the two quarters of negative growth required for a technical recession. Inflation has come down consistently over the past six months, The labour market is robust. In fact, all those tech layoffs announced in recent days (Google, Amazon etc.) are good news – part of the desired impact of higher interest rates. The economy is cooling, not chilling. The kiddos will get over it. Good experience.

Meanwhile, says my Scotia economist bud Derek Holt, American consumers are frisky.

US consumers’ debt load has been wound back to levels that we have not seen in twenty-two years (chart 8). Twenty-two years folks! A combination of working off the excesses leading into the GFC and regulatory changes have driven improved health of household balance sheets not to fully skirt the tightening of monetary policy, but to adapt to it perhaps in healthier ways than expected. And let’s not forget that existing mortgage debt has overwhelmingly been financed at the 30-year mortgage rate in a very different mortgage market than many other parts of the world where households have a one-way option to refi only when rates are falling and only at a glacial speed when rates are rising which the 30-year mortgage rate stopped doing over two months ago as it fell back by nearly a percentage point from the peak.

So the market signals: soft landing. It also says 150 beeps of rate cuts will start later in 2023. In Canada, we created over 100,000 new jobs in a single month. The unemployment rate is just barely above the all-time low. Inflation has careened from over 8% to near 6%. And the odds are for a 2% rate drop coming over the next year. The CB, after Wednesday, will be resting.

These are facts. In a rational world, houses would fall more, to the point of affordability for most people. We are not rational.

About the picture: “Hi Garth: Was wandering about Hanoi this morning with my wife Evelyn,” writes Peter, “and came across this  Doggie Mobile. Thought of you!  We celebrated Lunar New Years last night in Hanoi.  Next up a two week  ‘ Apocalypse Now ‘ Mekong River cruise.  Happy New Year.”

115 comments ↓

#1 Doug t on 01.22.23 at 12:38 pm

LOL – you can’t make this shite up – up is down, down is up

#2 Flop… on 01.22.23 at 12:46 pm

Since we’re forecasting things, I saw this chart the other day.

I think the reason Australia is more worried about the coming year than Canada or the US, is because they just found out they can be denied toilet breaks at 4 o’clock in the morning while playing tennis…

M48BC

$$$$$$$$$$$$$$$$$$$$$$$$$$

Survey Results: Will Global Stock Markets Crash in 2023?

The percentage of adults the believe it is likely that global stock markets are about to crash.

Canada 45%

Australia 57%

USA 47%

Malaysia 71% (most pessimistic)

https://www.visualcapitalist.com/cp/survey-will-global-stock-markets-crash-in-2023/

#3 Drill Baby Drill on 01.22.23 at 12:47 pm

Rates IMHO will stay higher over 2023 unless a recession truly does kick in.

#4 crowdedelevatorfartz on 01.22.23 at 12:58 pm

Sales down 40%
Prices down 22%
Another interest rate hike this week.
Two thumbs up.

#5 Dave on 01.22.23 at 1:01 pm

Townhouses sold in Surrey BC on King George Hwy for $1.4M….now selling at $900k.

#6 T-Rev on 01.22.23 at 1:03 pm

Jobs and interest rates- short of OFSI/CMHC regulatory changes those are the only two things capable of significantly moving the market. Jobs are, as you stated, strong. Rates have peaked, although I personally think both 5-yr money and variable rates will be stickier coming down than everyone wishes for. I don’t know jack about what may be cooking at OFSI or CMHC, so that a blind spot in my outlook. So we have jobs that are favorable (along with rising wages) and rates that have stabilized, which should combine to keep a floor under prices, assuming that regulatory changes aren’t forthcoming. I would think this means the biggest prices declines in most markets are behind us, and the likely outcome is sideways movement for most of 2023. You could even see a small subset of markets gain a point or two through the year.

Downside risk coming from weakening labor market in H2 as a potential slowdown hits (likely minor if there is one). Major downside risk is inflation stays pesky and CBs are forced to resume tightening later in 2023.
Upside in H2 if rates fall (I don’t think they will).

Odds are things are flat.

#7 jess on 01.22.23 at 1:22 pm

social antagonism

https://albertaviews.ca/populism-in-alberta/

#8 AnonyMusk on 01.22.23 at 1:22 pm

Watching online twitter economists opine about inflation and real estate prices has made me acutely aware of how many people cannot distinguish the past from the future.

Some can’t even sort out the present: “But interest rates are going up this week!” they yammer.

As bond yields fall again.

So nice to have these people on the other side of trades.

#9 Alois on 01.22.23 at 1:34 pm

#4 crowdedelevatorfartz on 01.22.23 at 12:58 pm
Sales down 40%
Prices down 22%
Another interest rate hike this week.
Two thumbs up.

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

Crowdie mentioned a friend at Seaspan in last post.

My indicator is “stalled RE projects”.

Driving around Vancouver, seeing more holes in the ground but no activity.

#10 Cici on 01.22.23 at 1:34 pm

In my market, there was no drop. At all. Many of the houses available for sale have been sitting on the market for over two years with no drops or drops of just $100! Yes, I kid you not.

Well, that all changed a couple of days ago, when the run-down old bungalows with asking prices ranging about $150,000 over their February peak started appearing with prices up another $50,000. The math has never made less cent$ for me; renting is absurdly expensive, but still way cheaper than owning.

#11 BOC Rates at 2% in 2025 on 01.22.23 at 1:38 pm

Don’t count on it. Interest Rates are madevo in Moscow and Beijing…loool

#12 the Jaguar on 01.22.23 at 1:45 pm

“Price stability is the bedrock of a healthy economy and provides the public with immeasurable benefits over time. But restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy.” Jerome Powell, Jan 10, 2023.

No, not Tiff Macklem, but close enough. Note also that OSFI’s Annual Risk Outlook is scheduled for release April 18th, another semi-annual update on same October 12th, with a Minimum Qualifying Rate announcement set for December 12th. The Chicken Hawk as always loves to lead from the rear. Monday morning Quarterback behaviour. Can we blame them?

Maybe not. A review of what’s gone on these past 12 months with interest rates, housing prices, and now huge Tech sector job layoffs tells me one true thing: The outlook is so foggy the birds are walking.

Until the price of toilet paper, cheese, lettuce, and every other damn thing comes down from the stratosphere I ain’t buying anything Mr. Market sez. He sometimes talks out of the side of his mouth.

#13 mattbg on 01.22.23 at 1:51 pm

I know that markets fluctuate, etc. but it’s hard for me to believe that anyone is truly confident what will happen over the next few years.

Lots of people have confident opinions but they have a short shelf life. Even if you only talk to smart people, the variety of opinions is all over the map and depend on who you are talking to. Certain industries have their lines (i.e. financial advisors will always tell you to stay invested; real estate agents will always tell you that it’s a great time to buy or sell a house for…(reasons)).

Most smart people speaking for themselves talk in terms of maybes and “if this then that” but not in truly certain terms.

The shining light of Davos didn’t even have any representation from Russia or China this year, and Middle East rep was also scant, so they’re not really “World” Economic Forum anymore… more like “how can we convince people that reliable energy doesn’t matter when it’s really all that matters and half of us don’t own any”?

Canada does have energy and, if this particular prime minister doesn’t know what to do with it, the next one will as long as we can survive this excessive push toward renewables and figure out what we are going to do with nuclear.

So, for now, I’ll go with the real estate agents. Nobody knows what will happen, so if you want to buy then it’s a great time to buy or sell a house. Just don’t wait too long to buy back in and don’t go variable :)

#14 Honest Realtor on 01.22.23 at 1:58 pm

This is a thoughtful essay today, Garth.

I agree that the doomsayer downturn is simply not as likely to happen. The long term picture for real estate looks very strong.

Here’s what the Toronto Star had to say this weekend:

“Why Canada’s housing market is stronger than it looks — and a recovery is not far off”

“The country’s real estate market has seen a historic drop, writes David Olive, but it will bounce back. Immigration is strong, people still want houses and many are waiting on the sidelines for the bottom to be revealed.”

https://www.thestar.com/business/opinion/2023/01/21/the-worst-of-falling-home-prices-is-over-and-recovery-is-not-far-off.html

Plus:

The mortgage delinquency rate is barely 1/4 what it was in 2012.

Buyers mostly avoided last spring’s frenzy. They are ready now with cash on hand.

Immigration is in a historic surge that will likely last for decades and redefine our country.

Property values will soar again into the next twenty to thirty years, as population moves to 50 million, then 70 million. I feel sad for anyone who misses buying opportunities in the next two years on the most important investment of their lives.

Some final thoughts from the Toronto Star:

“You might want to brace for reports in early April of a further steep decline in house prices in this year’s first fiscal quarter.

But the reports will be misleading, because they will compare an anemic first quarter of 2023 with the same quarter last year when prices were at their peak.”

#15 DON on 01.22.23 at 2:02 pm

What has happened in the last year is a loss of the hyper momentum that was propelling all markets forward. Also proven wrong is the realtor sales pitch of prices rise forever. I still don’t see food price prices going down nor energy as I watch the price at the pump jump yet again. Is inflation now baked in?

Consumers relying more on credit cards. The markets should check under the hood to see if the consumer pistons are still functioning as expected.

Those tech job losses are higher paying jobs and jobs are a lagging indicator. Not a stable pillar.

I heare car prices are coming down also…see how that plays out.

#16 Grandv!ew on 01.22.23 at 2:13 pm

There is still too much money sloshing around. And that is (in my opinion)the reason for potential market recovery. Make no mistake if recovery happens at present pricing levels it will be the final nail in the coffin for Canadian society. For over decade ONLY way to enter the real estate market in Canada was/is to get help from the bank of mom and dad. We are levering existing homes in more ways then anyone wants to know or care about. Family may enjoy house that is mortgage free alas HELOC is most likely drawn to the max in order to offset impossible down payment for the kids for the purpose of entry into the market at these levels. And yes walking the tight rope have been successful for much longer then anticipated. And we might make it to the other side but something tells me we are not going to like what we find on that end of the shore. The name for it ends in *ism and it takes care of entire community.

#17 Mattl on 01.22.23 at 2:16 pm

Wait until summer and the inevitable increase in gas prices driving increased inflation. If the BOC is truly serious about the 2% target we likely have 1-2% in increases still to go.

I’m betting that RE and financial assets are only mid correction.

#18 Hans on 01.22.23 at 2:24 pm

Out of curiosity, why wouldn’t we move to make 30 yr mortgages the standard here in order to create some rate stability? Wouldn’t that help with rate anxiety and stress testing issues? I get that we like our 5 yr bond/5 yr mortgage, but wouldn’t being more like the US market be better for Canadian mortgagees?

The Canada Interest Act legislates all mortgages be open after five years when the maximum term ends. – Garth

#19 Jim on 01.22.23 at 2:26 pm

Two bedroom condos are going for over 800K in Vancouver. Who would pay that for 800 square feet? –other than people that want to stash money through real estate. The median salary is 60K.

#20 Mattl on 01.22.23 at 2:30 pm

Also, if the centrals back off rate hikes this year, with inflation at 3x target and the economy at full employment then they aren’t serious about their primary function, managing inflation. They won’t get to use the “but everyone missed it, what about the war” excuse going. It will be clear their new mandate is a global one (you aren’t independent if everyone moves in lockstep) and that mandate is to support financial and RE markets. Next 12 months will instructive, pay attention.

#21 Ken on 01.22.23 at 2:32 pm

$1.8M at 2% with 25% down = $5720/month
$1.4M at 6% with 32% down = $6100/month

The difference in down payment accounts for the same dollar amount of $450K.

Average single detached home in GTA still more expensive today, in real living costs, than hyper-inflated value of early 2022.

I think prices have a long way to go and quite a long time period to get there. The GTA downturn in the 1990’s took 6 years to reach bottom and a total of 14 years to recover, despite falling interest rates and rising population.

#22 kommykim on 01.22.23 at 2:33 pm

RE: Inflation has careened from over 8% to near 6%. And the odds are for a 2% rate drop coming over the next year.

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

I’ll have even less respect for central banks than I do now. 6% is still well above the target range and real essentials like food (10%) are well above that still. Absolute dereliction of duty on the BOC if they are even thinking of dropping rates now. Disgusting.

#23 I'm figuring on ... on 01.22.23 at 2:43 pm

a looong lingering illness …

#24 Alois on 01.22.23 at 2:51 pm

Going over my 2022 assessment…

Our SFH was built in 1980…Assessors value this “Improvement” @ $ 100,000…which is fine…it will continue to depreciate.

Local zoning would allow a larger home…so overall it’s basically @ lot value.

Since we moved in…the assessed value has risen 5 X’s what we paid for back in 1996.(we bought when the market was very slow).

#25 MapleLeafwannabe on 01.22.23 at 2:53 pm

Garth

Are you faltering, wavering or succumbing to self doubt?As you would say grow a spine! It’s about facts not assertions. So ignore what Mr Market says about the future path of interest rates! The market is based on assumptions about other peoples beliefs predicated on opinions of others based on others feelings. Its wrong.

Why would CBs drop rates if we get a soft landing? Suppose no recession and exuberant markets spur more economic froth. Relax. Higher for longer and focus what’s cutting through.

I offer this simple evidence to bolster my case. Read how many are assignment sales. Spring will be a corker and not for traditional reasons:

https://www.zolo.ca/burlington-real-estate/page-2

#26 crowdedelevatorfartz on 01.22.23 at 3:00 pm

@#14 Hopium Realtor
“Immigration is in a historic surge that will likely last for decades and redefine our country.

Property values will soar again into the next twenty to thirty years, as population moves to 50 million, then 70 million. I feel sad for anyone who misses buying opportunities in the next two years on the most important investment of their lives.”

+++
Ahhh yes.
The great Boogie Man of Immigration causing everyone else to ” buy now or be left out forever”.

FOMO with a little Realtor gasoline poured on the fire.

“Uppa uppa uppa”.

Its always a good time to buy….even when the market is dropping.

Gotta lock in those commissions eh Realtor?
Disgusting doesnt even begin to describe your “profession”.

#27 Ed on 01.22.23 at 3:02 pm

#7 jess on 01.22.23 at 1:22 pm

social antagonism

https://albertaviews.ca/populism-in-alberta/
////////////////////////////////////////////

Author has tenure at Simon Fraser University…say no more.

#28 James on 01.22.23 at 3:04 pm

Don’t worry about agents being unable to afford their licencing fees, these people are clearly financial geniuses who know how to deploy their limited funds!

Just the last few weeks I have seen multiple reports of real estate agents winning….the LOTTERY!?!!

Seriously!

Two (likely underemployed) RE agents have picked up million dollar 649 jackpots in the GTA since December, another won a big Lottario jackpot, and last week an agent from Richmond Hill won a $60,000,000 Lotto Max jackpot from November!

Then there’s a local realtor I know who is also a habitual Pick 4 player, and his name also shows up on the OLG website prize winner list with dozens of wins from $1000 -$5,000 every few months.

This is why we should always trust the financial acumen of real estate agents and do whatever they tell us to…..um, I guess…?

#29 Transitory my axe! on 01.22.23 at 3:10 pm

Hey, what don’t you understand about what I kept saying about inflation. It will be “tragic story”.

– J. Powell

#30 Cto on 01.22.23 at 3:17 pm

What are you saying Garth?
Oh! I get it!!!
Move to Vietnam for better life, living standards and stability.
Right????

#31 Jason on 01.22.23 at 3:19 pm

I suspect real estate prices will fall through the spring, assuming we see a bunch of inventory come on the market as sellers have been staying on the sidelines. If inventory stays low though, who knows. And I can’t see prices getting back to early 2022 levels anytime soon. Stabilizing would be nice. Just going sideways for awhile and let incomes catch up. Wishful thinking probably…

As for a soft landing – yes, data seems to suggest that’s more and more likely. And that central banks know what they’re doing. Which is going to be devastating for folks who have been disparaging central banks, governments, WEF etc. I think people should look at a chart for standard of living since central banks became the norm. Spoiler alert: Global standard of living has increased dramatically. So governments, central banks, international organizations etc. can’t be all bad right?

#32 Mark on 01.22.23 at 3:20 pm

So now you’re saying the bottom is probably in? ppl would take this pathetic blog much more seriously if you didn’t flip-flop every 2 weeks. Lol.

I presented facts. Grow a brain. – Garth

#33 Blobby on 01.22.23 at 3:24 pm

But isnt the US fed talking about loads more rate hikes needed?

Wouldnt Canada be forced into raising our rates to match the US, or have our dollar tank (causing inflation on goods we import from them?)

#34 S O on 01.22.23 at 3:30 pm

Rates are not coming down for a while. Fed Powell made that clear. They don’t want to repeat what happened in the 70’s. And we fallow what America does because of our dollar.

#35 Quintilian on 01.22.23 at 3:38 pm

We are not rational.

Of course not, people smoke, drink and drive, eat too much, and gamble/ oops I mean invest in the stock market and Bitcoin etc.

But that aside, there is antidote to irrationality; it is called a calculator, and that ultimately wins, although at times it takes a while for it to emerge as victor.

Tick Tock, Tick Tock

#36 DON on 01.22.23 at 3:53 pm

CNBC
European Central Bank’s Lagarde says China’s Covid reopening will push inflation higher
2 days ago

Not saying we are going in this direction just pointing out that only a few saw the dot com and GFC storms nearing our shores. Venture back to the years and months preceding the GFC and one can see the embers of the slowly approaching fire.

How many people know what a recession looks like?
So many talking heads out their predicting events but lacking an analysis of all the variables at the same time.

The Ukraine War should have been over by now according to many folks. Too bad we as a species have a hard time learning from hindsight.

#37 Faron on 01.22.23 at 3:56 pm

#57 Ponzius Pilatus on 01.22.23 at 10:23 am

Ponzius, i think it would benefit you to explore North America more. Just ’cause it’s not “old” by Euro standards doesn’t mean there is no interesting stuff. And, if you want old stuff, hit up the desert SW. You can see dwellings dating back thousands of years; the artistic expressions of the inhabitants; pottery and the living remnants of that culture.

Flop, go body surfing at San Simeon. Check out the Elephant Seals near there. Walk around Montana de Oro. Maybe find some oro? BTW, you can take a train there from Vancouver.

#38 Alois on 01.22.23 at 4:14 pm

#37 Faron on 01.22.23 at 3:56 pm
#57 Ponzius Pilatus on 01.22.23 at 10:23 am

Ponzius, i think it would benefit you to explore North America more. Just ’cause it’s not “old” by Euro standards doesn’t mean there is no interesting stuff.

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

Mr. PP is still traumatized by Mickey Mouse, Porky Pig and Goofy.

Th- th -the… That’s All Folks !

#39 Nonplused on 01.22.23 at 4:18 pm

Wait… The “terminal rate” is going to be 4.5% while inflation is still 6%, so “real” interest rates will still be negative by a whopping 1.5%, and we think this is somehow good and sustainable?

I guess anything can happen in “bizarro world”. Except the “sustainable” part.

Keep buying all the things folks, the money is still collapsing.

#40 Warren-the-lagging_indicator on 01.22.23 at 4:40 pm

Housing market plop = 33%,
No recession in 2023 proving Yellen correct,
V-Safe data to be ignored at all costs,
We are in WW3.

#41 wallflower on 01.22.23 at 4:43 pm

My canary metric remains MLS rental listings which are now 3.61 X just over a year ago. More than 3X higher than listings of recent past. And this number is at its all time peak and keeps climbing, week after week wit DOMs extending in like fashion.
If landlords (all mom poppers) cannot identify qualified tenants…. in this GTA-reach southern Ontariowe city… what can we say about qualified buyer volumes?
…and of course, how long do the mom poppers hold on with empty rentals?

#42 Quintilian on 01.22.23 at 4:44 pm

#14 Honest Realtor on 01.22.23 at 1:58 pm

The mortgage delinquency rate is barely 1/4 what it was in 2012

CRAZY TALK

Delinquency rate is always very low in bubble markets, because the debtors can sell fast and get out.

It’s after the bubble bursts prices drop, and the delinquency rate increases.

TICK TOCK, TICK TOCK

#43 PBrasseur on 01.22.23 at 4:45 pm

This blog starting to sound like a fairytale.

The price of the “soft landing”: Household debt rising ever faster than income. Enjoy it while it lasts.

But in the end it is totally unsustainable and the mess has barely started.

#44 Yorkville Renter on 01.22.23 at 4:52 pm

anecdotally, sales appear to be picking up… a few houses I have been watching sit for months have all recently sold. BUT, I think it’s more about pre-approvals expiring and lack of inventory more than lots of pent up demand.

on that note, I am buying this year… wish me luck!

#45 Westsider on 01.22.23 at 4:52 pm

604 is still delusional. A small apartment we looked at to rent 4 years ago for $2700 is now up for rent for $4200.
If rent should be no more than 33% of your income, then you need an income of $150K just to rent that apartment.
How is this sustainable??

#46 THE DANDADA on 01.22.23 at 4:55 pm

Went to the RC Superstore today.

Loaf of bread went up to 3.33 from 2.49.

Someone’s fibbin on inflation unless it doesn’t count food which is what has gone up the most and effects every single one of us!

Nice try.

#47 Penny Henny on 01.22.23 at 5:02 pm

#50 Mousey on 01.22.23 at 12:39 am
Sailo, thanks for the follow up on Smoking Man. The only thing missing is the signature stab at the teachers. The AI did manage to nibble at the edges. He was one of a kind and is now shooting about in the stardust.
///////////////

Also Smoking Man’s dog’s name was Wyatt not Vegas.

#48 Ponzius Pilatus on 01.22.23 at 5:03 pm

#37 Faron on 01.22.23 at 3:56 pm
#57 Ponzius Pilatus on 01.22.23 at 10:23 am

Ponzius, i think it would benefit you to explore North America more. Just ’cause it’s not “old” by Euro standards doesn’t mean there is no interesting stuff. And, if you want old stuff, hit up the desert SW. You can see dwellings dating back thousands of years; the artistic expressions of the inhabitants; pottery and the living remnants of that culture.
——————
Agree.
Lots of history.
But not castles.
Pueblos and Teepees.
Unless you talk about the Mayas and Actecs.
And the surf.
Lots of it around the World.
America is not special.
BTW
Been to plenty of America.
No need to lecture.
North to South.
West to East.
Even to Texas.
Not any more.
Not my cupa Tea.

#49 Flywest29 on 01.22.23 at 5:13 pm

anecdotally, sales appear to be picking up… a few houses I have been watching sit for months have all recently sold. BUT, I think it’s more about pre-approvals expiring and lack of inventory more than lots of pent up demand.

on that note, I am buying this year… wish me luck!

Imagine being this guy and thinking you’re smart. Lol.

#50 crowdedelevatorfartz on 01.22.23 at 5:31 pm

@#48 Ponzie’s Paradise.
“Not my cupa Tea.”
+++

How dare Faron suggest a sunny vacation.
Gray skies, blustery wind and rain.
Sets the tone for touring a castle ruin.
Miserable weather and grumpier people than him ….is what makes Ponzie smile.

Bran Castle in Transylvania at the top of the bucket list Ponze?

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwi_oLfznNz8AhV9ATQIHQKzB4sQFnoECBEQAQ&url=https%3A%2F%2Fen.wikipedia.org%2Fwiki%2FBran_Castle&usg=AOvVaw0HJd0FiNHskpXdvctwIBSb

To get your dose of Bran?

#51 Flop… on 01.22.23 at 5:48 pm

Dr V

21.23 at 3:02 pm

Then there is this
CIB587 (Balanced index premium) MER 0.44%.
Yes, 0.44% for a mutual fund. It is the same fund as CIB901, you just need $50k to play.

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

Doc, you tried to help out the hack, so I looked into your suggestion and came up with this.

I punched 10 years in because it would most likely be buy it, and forget it.

CIB 587 10 year return 6.23%

CIB 901 10 year return 5.12%

I generally try and stay away from numbers when I talk about investments because I find that a bit tacky, so I’ll just say with the comparable fund it wouldn’t take much to switch the two over next time Mrs Flop is dealing with the nice lady at the bank.

Yeah it’s small potatoes, but one man’s small potatoes is another man’s French Fries…

M48BC

#52 Very interesting on 01.22.23 at 5:50 pm

#41 wallflower on 01.22.23 at 4:43 pm

My canary metric remains MLS rental listings which are now 3.61 X just over a year ago. More than 3X higher than listings of recent past. And this number is at its all time peak and keeps climbing, week after week wit DOMs extending in like fashion.
If landlords (all mom poppers) cannot identify qualified tenants…. in this GTA-reach southern Ontariowe city… what can we say about qualified buyer volumes?
…and of course, how long do the mom poppers hold on with empty rentals?

————

Nice catch. I think you may be onto something…

I couldn’t find historical data for mls rental listings, do you have a link?

Thanks!

#53 ts on 01.22.23 at 5:58 pm

With Trudeau laser-focused on climate change and “just transition” of Alberta, I find it unlikely that inflation will decrease any time soon. High energy costs affect everything including food, home heating, etc. and cost of energy will only go up because of war in Ukraine, U.S. policy, etc. Story in the Star recently concerning cost of home heating going up 120% in one case and this is just the beginning.

#54 Flop… on 01.22.23 at 6:04 pm

Return Flights to San Luis Obispo $900 for two people.

Hotel for 7 nights $1,150

Not having to worry about bumping into Ponzie on holiday.

Priceless…

M48BC

#55 Dave on 01.22.23 at 6:14 pm

Do you still believe:
– Ukraine war to end in 2023?
– Covid is over?
– inflation getting much better?
– stock market and our portfolios actually make money?
– real estate will get more affordable?

#56 Bezengy on 01.22.23 at 6:15 pm

I attended a couple of open houses in Hamilton today. Folks were lined up before 2 pm waiting their turn to have a look and see what a cool million will buy you, which isn’t much. Even with the recent decline in prices the numbers still don’t add up, not even close for the the large majority of buyers. Down she goes.

#57 Ponzius Pilatus on 01.22.23 at 6:47 pm

#51 flopolla

Yeah it’s small potatoes, but one man’s small potatoes is another man’s French Fries…
——————-
Wrong.
You can’t make decent fries from small patatoes.
Every line cook and investment adviser knows that.
Time you learn that, too.
BTW
How was the fake castle?

#58 American House Buyer on 01.22.23 at 6:48 pm

Yeah sure feel sorry for the vinyl village folks who think the cute fower pot by the front door makes it worth a mill. Toronto and Vancouver are crashing. Turns out more people are leaving the big cities than arriving and all the markets are downhill for the next 20 years. Every 30 years or so – Canadians pull the pin on Liberal Tax & Spend governments, cash out and buy their dream houses in the USA for cheap and roll around in piles of their cash for the rest of their lives, never having to ever go to work again. Buy in USA. Rent in Canada. Hook up broadband or starlink and your friends and family are a click away.

https://theoldhouselife.com/2023/01/22/this-is-cute-almost-5-acres-in-arkansas-circa-1907-192500/?fbclid=IwAR0mTTb7jnobg8M7n1DkyEgDdf1NtmB_INEohrn3CD-8CInud87xd0FZPck

#59 Ed on 01.22.23 at 6:49 pm

Do you still believe:
– Ukraine war to end in 2023? Yep.
– Covid is over? Everywhere except China and JT’s brain
– inflation getting much better? Garth said so…he should know.
– stock market and our portfolios actually make money? Mine is
– real estate will get more affordable? Don’t need any but seems to be less than a year ago.

Of course you didn’t expect any answers but the world looks pretty rosy.

#60 Ponzius Pilatus on 01.22.23 at 7:03 pm

Last post on “fake castles in America”
If I may.

Prince Harry (who obviously is an expert on “genuine” castles.
Had the following to say, when visiting GraceLand:

“People variously called the house a castle, a mansion, a palace. But it reminded me of the badger sett,” Prince Harry wrote. “Dark, claustrophobic. I walked around saying, ‘The King lived here, you say? Really?’”
—————————-
Quite funny, is it not?

#61 VladTor on 01.22.23 at 7:11 pm

Garth…. Inflation has careened from over 8% to near 6%.
…. First, the Bank of Canada will hike again this week, but only by a quarter point and (most economists think) for the final time in this cycle.
…..Inflation has come down consistently over the past six months

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

I feel an unprecedented spiritual uplift. Before my eyes, the foundations of a new economic theory are being created – inflation is being suppressed by rates below inflation itself. FANTASTIC!!!

I’m waiting for lower prices in grocery stores. I’ll eat less now. Save money until next decreasing rate and lowering inflation.

#62 Wrk.dover on 01.22.23 at 7:37 pm

Flop; Faron’s body surfing idea….the water temperature is at least zero degrees warmer in Ca. than the water under the Artic ice cap.

Even the Gulf of California inside the Baja turned my ankles blue, wading in it!

Surfing in a rubber suit would be like doing something else in a rubber… suit. But your frozen corpse will float.

#63 45north on 01.22.23 at 7:37 pm

US consumers’ debt load has been wound back to levels that we have not seen in twenty-two years (chart 8). Twenty-two years folks! A combination of working off the excesses leading into the GFC and regulatory changes have driven improved health of household balance sheets not to fully skirt the tightening of monetary policy, but to adapt to it perhaps in healthier ways than expected. And let’s not forget that existing mortgage debt has overwhelmingly been financed at the 30-year mortgage rate in a very different mortgage market than many other parts of the world where households have a one-way option to refi only when rates are falling and only at a glacial speed when rates are rising which the 30-year mortgage rate stopped doing over two months ago as it fell back by nearly a percentage point from the peak.

US consumer debt load has been wound back but the Canadian debt load hasn’t. Therefore the US can tolerate higher interest rates than Canada. Canada may find itself following the US.

#64 Wrk.dover on 01.22.23 at 7:43 pm

#57 American House Buyer on 01.22.23 at 6:48 pm
_____________________________

I hear the Deliverance banjos, when I click on your links.

#65 crowdedelevatorfartz on 01.22.23 at 8:17 pm

@#60 Ponzie’s Princely Pulp
“Prince Harry (who obviously is an expert on “genuine” castles.
Had the following to say, when visiting GraceLand:

+++++

You paid money for that gossiping tripe?
bwahahahaha.
I thought you were smarter than THAT.

#66 Ronaldo on 01.22.23 at 8:17 pm

#60 Ponzius Pilatus on 01.22.23 at 7:03 pm
Last post on “fake castles in America”
If I may.

Prince Harry (who obviously is an expert on “genuine” castles.
Had the following to say, when visiting GraceLand:

“People variously called the house a castle, a mansion, a palace. But it reminded me of the badger sett,” Prince Harry wrote. “Dark, claustrophobic. I walked around saying, ‘The King lived here, you say? Really?’”
—————————-
Quite funny, is it not?
—————————————————————-
Not really. He explained it quite well. It was nothing to write home about. The grounds were very nice.

https://www.youtube.com/watch?v=OSRQnF2fJ3U

#67 Sail Away on 01.22.23 at 8:21 pm

We’ve always enjoyed San Diego’s Mission Bay as a simple warm winter trip.

#68 VladTor on 01.22.23 at 9:13 pm

Garh…. The Canada Interest Act legislates all mortgages be open after five years when the maximum term ends. – Garth

————–

Garth, interesting. It always was like this in RE Canada history? ….OR… it was long time ago similar to US

#69 crowdedelevatorfartz on 01.22.23 at 9:33 pm

Hmmm.
perception vs reality

https://www.burnabynow.com/opinion/survey-pessimism-over-the-economy-personal-finances-in-canada-is-up-across-the-country-6404461

Interestingly.
The age cohort 18-34 which traditionally votes Liberal…..is the most pessimistic about the future.

As gas and food continues its upward climb…the govt assurances that the worst is over….is falling on deaf ears.

#70 Bk on 01.22.23 at 9:37 pm

What’s the possibility of the Fed claiming inflation has come down to its target of 2% when in fact it is much higher than it is now? Would they try blowing smoke up everyone’s ass? Record food, record gas, record rent/housing, record everything and yet you hear all over the news that we’ve reached target inflation???? I’m not buying this last drop in inflation as NOTHING has come down yet

#71 Doug t on 01.22.23 at 9:46 pm

#55 Dave

Things that make you go hmmmmmm

#72 Alois on 01.22.23 at 10:02 pm

#60 Ponzius Pilatus on 01.22.23 at 7:03 pm
Last post on “fake castles in America”
If I may.

Prince Harry (who obviously is an expert on “genuine” castles.
Had the following to say, when visiting GraceLand:

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

I’ ve seen Elvis’ home…went on a tour.

In contrast and context to modern homes…..it is surprisingly small…..

#73 Adam on 01.22.23 at 10:29 pm

What’s the rational for the prediction that the CB would cut rates? If it turns out 4.5% keeps us neutral, why would they cut them?

#74 wallflower on 01.22.23 at 11:19 pm

#52 Very interesting on 01.22.23 at 5:50 pm

Manually tracking the data since 2021 November. Have a bet with a friend so now I am proving the bet, so to speak. Using MLS/realtor.ca but also consult a few other sites for aggregate data.
I collect macro large data and for micro data, focus specifically on the $1900 through $2500 new condo builds because my bet is premised on this is where the major stress is going to come from. And, it is.
One thing that has astonished me throughout this exercise is the number of basements listed on MLS. It used to be that almost ZERO basements showed up on MLS with agency. Now, there are routinely about 60. That is an insane increase in the listings volume. And, it is steady and some of the basements are empty for half a year now. So, the basement could also become an interesting canary metric as it appears alot of these basements are being rented in SFHs that also rent upstairs as well… more over leveraged, high value mortgage stress? Could be.
At any rate, it appears that even basements cannot find qualified tenants. [comedic, or, frightening?]

#75 AnonyMusk on 01.22.23 at 11:34 pm

#70 Bk on 01.22.23 at 9:37 pm

Proving my point that when it comes to inflation people don’t understand the difference between past and future.

Prices do not need to come down for inflation to be zero.

They just need to stop going up.

#76 Yorkville Renter on 01.22.23 at 11:49 pm

oh no! anonymous person on the internet made fun of me!

#77 SK on 01.23.23 at 12:25 am

Many new listings in Canmore AB for fully furnished condo’s being shilled as Airbnb money makers. If the sellers could not make money , why would they think anyone else could? Airbnbust has arrived in Canada. And no insult to the fine people of Brampton ON, but what a lot of overpriced junk. Cudo’s to fellow Canadian’s all across the country enjoying their beautiful under the radar choice locations. We are certainly thankful and enjoy the view from our downsized home.

#78 Summertime on 01.23.23 at 4:01 am

So basically we are saying that central bankers will keep the rates at 3-4 % for a year or two, then reduce to 2 %.

With the picking up speed wage inflation this will result in real inflation of 10 % + for necessities that will be reported as 4-5 % for years to come.

Food inflation will most likely double that 10 %.
In the last year the world wholesale food prices increased by over 33 % .

So after the 42 $ Caesar salad:

https://ca.news.yahoo.com/if-youre-thinking-of-immigrating-to-canada-dont-42-sobeys-salad-1499-pc-maple-syrup-draws-anger-from-ontario-grocery-shoppers-172418256.html

and 27 $/kg chicken breast

https://twitter.com/theJagmeetSingh/status/1615471526102409222?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1615471526102409222%7Ctwgr%5E70cfa31341e993e4341b7d9be03038a813390d12%7Ctwcon%5Es1_

expect soon $ 50/kg real cheese (from real milk, not the basterdized substitution versions), 10 $/kg tomatoes etc. ‘luxuries’.

But not to worry, the junk filled-with-glucose-fructose syrup ‘food’ will still be around, even with skyrocketing diabetes epidemic in Ontario, the wonderful free health care system will take care of it. /sarcasm off.

#79 under the radar on 01.23.23 at 6:24 am

Doubtful rates will move meaningfully lower in 2023. I can see some easing on a 5 year fixed rate but CB’S not cutting. Why would they ? with a decent economy and inflation above the policy rate. Liquidity is being wrung out and the debt addicted are running out of options. The table is turned. Savers being rewarded – Nice .

#80 maxx on 01.23.23 at 6:44 am

@ #8

¨So nice to have these people on the other side of trades.¨

And that´s how most money is made.

#81 Steven Rowlandson on 01.23.23 at 7:13 am

What is meant by a buck and a half? $1.50 or $1,500,000?

#82 Steven Rowlandson on 01.23.23 at 7:20 am

#59

“Do you still believe:
– Ukraine war to end in 2023?
– Covid is over? Everywhere except China and JT’s brain
– inflation getting much better? Garth said so…he should know.
– stock market and our portfolios actually make money? Mine is
– real estate will get more affordable? Don’t need any but seems to be less than a year ago.”

My answer to the above is not yet. To many big problems to be resolved and BS and band aids won’t work.

#83 TurnerNation on 01.23.23 at 8:29 am

Kanadians have had it easy for to long. They did not have to use their brains. Only follow.
The recipe was:

Get an Obedience Certificate, repeat what you are told. Pat on head. Wag wag wag.

Get a government job or in the tax farm cubicles. Do what your company told you. Roll up your sleeve. Don a pink shirt. Don an orange shirt. Tailor your email signature (‘THINK before your print’. In green font). Your virtue was showing. Dear He/His/Him.

Just buya da house. As much as the bank would lend you. And more. HELOC and YOLO.

Always obey your TeeVee. Stay 6 feet away from all humans, disown your family? Fly another country’s flag? Done and done!

This is how our rulers were so easily able to enact that coup, globally, that cold winter week 2020.
—–

Alllmost back to normal guys!

Pay your fair share Comrade. You get the service cuts. Just another day in a Former First World Country.
Year 4 of forced health care rationing our Ruler are baffled. Just baffled.

.Public transit users concerned proposed TTC service cuts will increase safety risks (toronto.citynews.ca)

. Ontario pediatric hospitals ask for help to deal with backlog of 12K surgeries (toronto.ctvnews.ca)

#84 Bezengy on 01.23.23 at 8:43 am

I guess this is what happens when you shell out hundreds of billions without even so much as requiring a SIN, and then ask your employees to get the money back. This along with silly programs like the FHSA has undoubtedly made working at the CRA a real hell on earth. I blame Trudeau.

https://www.cbc.ca/news/canada/ottawa/cra-union-pay-increase-1.6718176#:~:text=The%20Union%20of%20Taxation%20Employees%20(UTE)%20is%20proposing%20the%20following,effective%20Nov.%201%2C%202023.

#85 Harvey on 01.23.23 at 9:10 am

Hey Debt Slaves…..Imagine a world with sound money …..for Freedom

#86 TurnerNation on 01.23.23 at 9:22 am

Tax slaves: Pay Your Fair Share! While, our elite global rulers and their ruling Big Tech companies get off Scot, err Irish free.

“”The Globe and Mail reports in its Monday edition that Microsoft Canada became owned by an Irish affiliate in its 2021 fiscal year, as the parent company takes advantage of Ireland as a tax haven. The Globe’s Josh O’Kane writes that the move allows Microsoft Canada to transfer profits to the lower-tax country. Mr. O’Kane reports that a Microsoft Corp. branch called Microsoft Round Island One UC became tax resident in Ireland as of Jan. 1, 2021. In Microsoft’s 2021 fiscal year, ended June 30, the subsidiary took ownership of Microsoft Canada from a separate, unidentified branch of the company…. If not for tax avoidance, The Globe wonders what the purpose is of Microsoft owning Canadian and global operations through Irish structures that were previously tax resident in Bermuda.””
© 2023 Canjex Publishing Ltd. All rights reserved.

#87 millmech on 01.23.23 at 9:26 am

#74 Wallflower
Those suites are the only thing keeping some owners from insolvency. People who bought to get away from the multi family situation are right back where they started and are now the landlord.
Co worker has rented out his basement and now has tenants who smoke, recently rescued a pitbull that barks non stop and they are pooper scooping themselves, weekends are full of boisterous get togethers until 11pm and the list goes on, it seems like a special kind of hell to me.
People always say buy now or be priced out forever, but for a lot of these buyers us renters are the ones keeping the roof over their heads.
They need renters(the 36%) more than we need the owners, for every house built now there seems to be two suites put in as well and I am seeing more and more units coming available as well as the financial screws are tightened.

#88 Alex on 01.23.23 at 9:27 am

People forget that inflation is a rate of increase, if it went to zero today nothing that has already inflated in price would drop.

#89 Steve on 01.23.23 at 9:49 am

Garth – I thought the peak was Feb 2022 not Feb 2021

Indeed. – Garth

#90 Love_The_Cottage on 01.23.23 at 10:21 am

#70 Bk on 01.22.23 at 9:37 pm
Record food, record gas, record rent/housing, record everything and yet you hear all over the news that we’ve reached target inflation???? I’m not buying this last drop in inflation as NOTHING has come down yet
__________

1) I haven’t heard a single report that we’ve reached the target, only that the trend is in the right direction. If you are getting news from anywhere that says we have hit the target please share with us and then stop following it.

2) As others here have pointed out, prices are not likely to fall nor is that the goal. The goal is to reduce the rate of increase.

#91 Dharma Bum on 01.23.23 at 10:22 am

About the picture:

Uber Eats?

#92 Westcdn on 01.23.23 at 11:12 am

I read an article Davos. It was an interesting dissertation on the behavior of power. What struck me was who did not attend. Unfortunately for Canada, Freeland was front and center.

Then I moved onto Scotland’s Just Transition plans. It looks to me that T2 is copying them. The article had good critiques. https://www.zerohedge.com/energy/dangerous-fantasy-scotlands-net-zero-energy-transition

I see the West doing the heavy lifting.

Personally I don’t see inflation coming down much more before it “sticks” say a bit less than 5%. It seems to me that wage expectations are high among Canada’s valuable (primary?) employees, and they intend to make up for lost ground. Many public servants have failed to prove their value to me, but they do have their hands out too.

I have been whittling my Helco down. I don’t want to go too fast as the BoC may reduce interest rates sooner than I expect. My preference has been that interest rates should be higher than the inflation rate so if I am right, interest rates will “stick” at higher levels than most expect.

I still expect a mild recession to be announced. Timing is tough to get right but if I even come close, it will work for me.

Disclaimer: No stock in my portfolio has been harmed by my opinions.

#93 DON on 01.23.23 at 11:33 am

#75 AnonyMusk on 01.22.23 at 11:34 pm
#70 Bk on 01.22.23 at 9:37 pm

Proving my point that when it comes to inflation people don’t understand the difference between past and future.

Prices do not need to come down for inflation to be zero.

They just need to stop going up.

***********

Unless you have a big wallet…the prices not going down take money away from consumerism which is the main engine for our economy.

#94 zxcvbnm on 01.23.23 at 11:49 am

I feel like voting for the “Rent Is Too Damn High” party next go-around. I suspect I’m not alone.

Isn’t the rule 32% of gross maximum housing cost. For someone making $90k/year, that’s $2400/month rent.
Or a couple, each making $90k, $4800/month rent. That’s virtually 50% of net income – on rent.. Who can afford that and still save for retirement? How is that the “rule” ??

Maybe my expectations are askew, but my partner and I pay 18% of gross on rent, and it feels like being gutted, monthly. After other necessities, I feel like I had more disposable income when I worked part-time at a restaurant in my early 20s while going to University.

Dreams of owning a house if only to put a pin in this nonsense, suffer for 15 more years, and hopefully come out with some pocket change at the end of the month after that? This can’t how things are “supposed to be.”

What’s a family to do?

#95 Quintilian on 01.23.23 at 11:52 am

“If Macklem and his deputies have been reading Rosenberg, they will be reluctant to push borrowing costs higher.”

https://www.msn.com/en-ca/money/topstories/this-will-be-a-pivotal-week-in-the-bank-of-canada-s-inflation-fight-what-you-need-to-know/ar-AA16Ev0P?cvid=0b0572826640487ead1a19a599cb52ff

Now imagine if you will…. Central Bankers taking advice from Rosenberg.

#96 Sail Away on 01.23.23 at 12:07 pm

Wow, while a couple of individual stocks have been on a tear the last few weeks (TSLA +30% in 3 weeks and AQN +9% in one week), don’t forget about the arbitrages.

One of continued interest is the Activision/Microsoft merge. Expected to close in June 2023 at a benefit from today of +26%. Always some risk, but worst case you end up with a profitable company in Activision. Uncle Warren and I are in big time.

As Charlie Munger says, and I paraphrase: ‘Use extreme patience until you know the time is right, then go in hard’.

#97 Charity on 01.23.23 at 12:33 pm

#55 Sail Away on 01.21.23 at 11:33 am
That was classic, and close to his non drinking and cigar rant moments.
Now let’s see what the AI accomplishes with the added variables of 2am drunk rants.
I’m curious to see if it will get a Garth delete. Lmao

#98 Ronaldo on 01.23.23 at 1:04 pm

#94 zxcvbnm on 01.23.23 at 11:49 am
I feel like voting for the “Rent Is Too Damn High” party next go-around. I suspect I’m not alone.

Isn’t the rule 32% of gross maximum housing cost. For someone making $90k/year, that’s $2400/month rent.
Or a couple, each making $90k, $4800/month rent. That’s virtually 50% of net income – on rent.. Who can afford that and still save for retirement? How is that the “rule” ??

Maybe my expectations are askew, but my partner and I pay 18% of gross on rent, and it feels like being gutted, monthly. After other necessities, I feel like I had more disposable income when I worked part-time at a restaurant in my early 20s while going to University.

Dreams of owning a house if only to put a pin in this nonsense, suffer for 15 more years, and hopefully come out with some pocket change at the end of the month after that? This can’t how things are “supposed to be.”

What’s a family to do?
—————————————————————
Have you considered relocating or are you tied to current location for some reason?

#99 jess on 01.23.23 at 1:14 pm

how many homes for sale sat and now have for lease signs on the property?

#100 AnonyMusk on 01.23.23 at 1:16 pm

Wondering if the epic bears have any more stocks that ‘are going to $10’?

I still have too much cash to deploy and the perma bears seem to be experts in picking winners for me.

Then there’s Faron, he’s making money but his joy is diluted because his obsession is doing well too.

What a way to go through life. Don’t want to imagine.

#101 Transitorydisinflation on 01.23.23 at 1:16 pm

The discourse RE inflation on this blog, Twitter, Facebook and real life goes to show the disconnect between the masses and monetary policy. Most genuinely don’t understand what the heck inflation is. Even some above avg investor types (on this blog).
The vast majority of people are incredulous that they hear “inflation down” but they don’t see any price relief.
The goal is %2 INFLATION.
Prices, generally speaking, are staying where they are.
Yes there will be ups and downs in certain sectors but inflation is measured by an average of a basket of goods. Some goods will go up and/or down more than others.
The target is for the change in the average price of the whole basket is for it to INCREASE by 2% year over year.
If prices overall began to decline we would have deflation and that’s not the goal.
So the question is, how will the average Canadian handle prices increasing at %2 again? If and when that happens.

Also, if the economy can handle it, and everything keeps humming along, why would any CB lower interest rates? These calls for lower interest rates at end of year indicate some kind of deterioration or crisis.

#102 Two-thirds on 01.23.23 at 1:45 pm

Yep, mortgage rates are set to come down. Rates are set by the bond market, as Garth has mentioned here a million times before, and this chart says it all:

https://ycharts.com/indicators/canada_5_year_benchmark_bond_yield

House buyers in Q3 will likely hit the sweet spot of lower rates and stabilized prices. Pent-up demand and record-breaking immigration will add fuel to the fire.

And IF the war were to take a bad turn this spring… look out. Rates could come down in a hurry.

Risks are coming down in the economy so will house buyers recognize it soon enough?

#103 The Original Jake on 01.23.23 at 1:48 pm

if the FED starts cutting over the next year as the market predicts then no way they reach their 2% inflation target. The big drops are always the easiest to achieve. Getting back to 2% requires more pain. Guess we will be living with high inflation for years.

#104 Squire on 01.23.23 at 1:53 pm

Will JT pull a Jacinda Ardern ? Only time will tell but at least now he has a potential off ramp. Although his personality types don’t tend to leave unless forced out. Too bad he can’t take the debt with him.

#105 zxcvbnm on 01.23.23 at 2:00 pm

#98 Ronaldo on 01.23.23 at 1:04 pm
#94 zxcvbnm on 01.23.23 at 11:49 am
I feel like voting for the “Rent Is Too Damn High” party next go-around. I suspect I’m not alone.

Isn’t the rule 32% of gross maximum housing cost. For someone making $90k/year, that’s $2400/month rent.
Or a couple, each making $90k, $4800/month rent. That’s virtually 50% of net income – on rent.. Who can afford that and still save for retirement? How is that the “rule” ??

Maybe my expectations are askew, but my partner and I pay 18% of gross on rent, and it feels like being gutted, monthly. After other necessities, I feel like I had more disposable income when I worked part-time at a restaurant in my early 20s while going to University.

Dreams of owning a house if only to put a pin in this nonsense, suffer for 15 more years, and hopefully come out with some pocket change at the end of the month after that? This can’t how things are “supposed to be.”

What’s a family to do?
—————————————————————
Have you considered relocating or are you tied to current location for some reason?

_____________________________

We’ve already relocated. Priced out of BC two years ago, currently in AB. Turned down two job offers in Vancouver because we simply can’t afford rent there without eating dog food and forgoing retirement savings. It shouldn’t be one or the other.

Rent in Alberta is cheaper, sure. But it’s still too damn high. Not to mention all of Alberta is just shades of Fort McMurray weather. We don’t want to buy here because we find the climate miserable. We’re able to save for retirement here, but will that retirement look like if we’re forced to live somewhere we dislike?

USA is looking like our best option, unfortunately. Maybe it’s for the best, but I’m salty about being priced out of my own country.

%50 of net income on housing?? Phoooey!

#106 Graeme on 01.23.23 at 3:27 pm

Well now I’m really confused. Many conflicting signals here. I don’t understand this victory lap over 6% inflation.

As you say–worth 100s of 1000s. Desperate humans can be defiant initially.. for a while. I’m only recently just starting to hear the stories of people who cannot pay mortgages. What happens to them over the next 6-12mo? Maybe they’ll just go out and buy new homes by this soft landing logic LOL. Going with my gut here to sit out a bit longer.. and I’m risking spousal murder doing this!

#107 American House Buyer on 01.23.23 at 6:56 pm

Tennesse and Kentucky are high on our list for acquisitions.
The Ford Electic Truck plant will bring eleven thousand jobs and spin off work and investment in other industries across the State and nearby in Kentucky with the Battery Park. Go with your money where big money is already going.

https://corporate.ford.com/operations/blue-oval-city.html

#108 American House Buyer on 01.23.23 at 9:24 pm

DELETED (Enough. We get it. – Garth)

#109 Ameican House Buyer on 01.23.23 at 9:33 pm

40 million people in California same as in Canada
Prices are lower in California. Canada is crashing.

https://open.spotify.com/track/5VbePtZp1at8gH990zVyTI?si=54bbfd56803a4995

#110 American House Buyer on 01.23.23 at 10:39 pm

DELETED

#111 Reddy on 01.24.23 at 9:03 am

40 million people in Cuba and haiti same as in Canada
Prices are lower in Cuba and haiti. Canada is crashing.

#112 America House Buyer on 01.24.23 at 9:17 am

CMHC has left Canadians in the dark and blind to market fluctuations for over 25 years. In the late 1980s and early 1990s market reports across Canada’s major urban centres were published quarterly identifying if housing markets were over supplied, under supplied or balanced.
CMHC did the research from communities looking at development applications, building permits and occupancy completions and sales. Banks and lenders relied on the information to make properly considered mortage decisions. These reports started disappearing around 1996 and the analysis and research ceased. 25 years later Canada’s housing crisis could easily have been avoided if the reporting had never stopped. Back then there were hardly any hoarders or off shore oners sitting on empty units and homes because they were easily identified through the research. The big question has always been – Who convinced the CMHC that their research and reports were no longer necessary?

#113 Franco on 01.24.23 at 10:31 am

Housing is in a temporary pause, it will eventually start it’s way back up, hopefully back to the traditional yearly 5% growth, not 20%, housing has always been a safe investment, it has it’s bear moments just like the the stock market, where you can actually lose everything.

#114 The Original Jake on 01.24.23 at 11:35 am

#107 American House Buyer on 01.23.23 at 6:56 pm
Tennesse and Kentucky are high on our list for acquisitions.

Be sure to buy a gun. It may even come with the house!

#115 rentin on 01.24.23 at 12:59 pm

Garth,

Just got my assessment, I don’t like it. Says +53%. And this is a commercial property. People purchase these properties with a calculator, not a heart….

But, if I calc the annual return since 2002, I get 11% annualized return. Remove the crazy 53% increase in 1 year and I get just under 8%. Both numbers seem reasonable.

Realestate is a long game for those who don’t want to gamble. The risk of course is that you need to exit at the wrong time, if you have only been holding for a few years. Get it right like Buy 2019 sell 2022 (just by luck) and you will be holding your own seminar convincing others that you are the next Tommy Vu.

Housing can become illiquid. I think that’s what we are going to see this spring. No buyers, no sellers.

I know a doctor who is picking up extra shifts to cover their variable mortgage payments which have shot to the moon.

I think the stress test is now called life.

Start looking for cheap Audis.